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Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BUSH BOAKE ALLEN INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which 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):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
<PAGE>
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[Logo]
BUSH BOAKE ALLEN INC.
7 MERCEDES DRIVE,
MONTVALE, N. J. 07645
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1997
------------------------
The Annual Meeting of Stockholders of Bush Boake Allen Inc. will be held at
the Woodcliff Lake Hilton, 200 Tice Boulevard, Woodcliff Lake, New Jersey, on
Wednesday, May 7, 1997, at 11:00 A.M., to consider and act upon the following:
(1) The election of a Board of Directors for the ensuing year;
(2) The ratification of the appointment by the Board of Directors of
Price Waterhouse LLP as independent accountants for the year 1997; and
(3) Such other matters as may properly come before the meeting.
Only stockholders of record at the close of business on March 17, 1997 are
entitled to notice of, and to vote at, the meeting.
Your attention is directed to the accompanying proxy statement.
DENNIS M. MEANY
Secretary
Montvale, New Jersey
March 22, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO DATE, SIGN
AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ADDRESSED ENVELOPE, WHICH
REQUIRES NO UNITED STATES POSTAGE. THE PROXY IS REVOCABLE AND YOU MAY VOTE YOUR
SHARES IN PERSON IF YOU ATTEND THE MEETING AND WISH TO DO SO.
<PAGE>
<PAGE>
BUSH BOAKE ALLEN INC.
7 MERCEDES DRIVE
MONTVALE, N.J. 07645
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF STOCKHOLDERS FOR 1997
The accompanying proxy is solicited by the Board of Directors of Bush Boake
Allen Inc. ('BBA' or the 'Company') for use at the Annual Meeting of
Stockholders to be held on Wednesday, May 7, 1997, and any adjournment thereof.
Notice of Annual Meeting, proxy statement and proxy are being mailed to all
stockholders on or about March 22, 1997. Proxies in the accompanying form which
are properly executed will be voted and, if a choice is specified with respect
to any matter to be acted upon, the shares will be voted in accordance with such
specification. If a choice is not specified on such proxies, the shares will be
voted in accordance with the recommendations of the Board of Directors as set
forth on the accompanying proxy. Abstentions are counted for quorum purposes,
but such a vote will not affect the determination of whether more votes have
been cast in favor of a proposal than have been cast against it. A proxy may be
revoked by the person giving it at any time before its exercise.
The Board of Directors has fixed the close of business on March 17, 1997,
as the record date for the determination of the stockholders entitled to notice
of, and to vote at, the annual meeting. On March 1, 1997, there were 19,222,200
shares of common stock of the Company outstanding. Each share is entitled to one
vote on each matter presented for a vote at the annual meeting.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Seven directors are to be elected to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected. The
nominees will be elected if they receive a plurality of the votes cast by the
shares entitled to vote at the Annual Meeting if a quorum (a majority of the
votes entitled to be cast) is present in person or by proxy. An abstention is
counted for quorum purposes, but is not a vote cast. All of the nominees listed
below are currently members of the Board of Directors and were elected by the
stockholders at the last annual meeting.
Votes (other than votes withheld) will be cast pursuant to the accompanying
proxy for the election of the nominees listed unless, by reason of death or
other unexpected occurrence, one or more of such nominees shall not be available
for election, in which event it is intended that such votes will be cast for a
substitute nominee or nominees designated by the Board of Directors, or, if no
substitute nominee or nominees are selected by the Board of Directors by the
date of the annual meeting, an appropriate candidate or candidates will be
selected and appointed to fill the vacancy and to then serve until the next
stockholders' meeting. The Board of Directors has no reason to believe that any
of the nominees listed will not be available for election as a director.
The names of the directors and nominees, their ages, their principal
occupations during at least the past five years, other directorships held and
certain other biographical information are set forth below.
PETER L. ACTON, 50, has been a Director of the Company since November 1994.
He is Vice President and General Manager of the Chemical Products Division of
Union Camp Corporation (a manufacturer of paper, paperboard, packaging, and wood
and chemical products) ('Union Camp'). Prior to December 1995, Mr. Acton was
General Manager of the Chemical Products Division of Union Camp.
JULIAN W. BOYDEN, 52, has been a Director, President and Chief Executive
Officer of the Company since February 1994 and Chairman of the Board of the
Company since January 1, 1997. Prior to February 1994, Mr. Boyden was a Vice
President of Union Camp since January 1991 and the General Manager of the
Company since January 1989. Mr. Boyden has been associated with the Company
since 1968.
<PAGE>
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THOMAS R. CRANE, JR., 56, has been a Director of the Company since June
1994 and is Chairman of the Audit Committee and a member of the Compensation
Committee. Since January 1, 1987, Mr. Crane has been a Director, President and
Chief Executive Officer of Castrol North America Holdings Inc. (a manufacturer
and marketer of motor oil and other lubricants) and is also a Director of
various affiliates of Castrol North America.
L. ROBERT PFUND, 60, has been a Director of the Company since July 1995 and
is a member of the Audit Committee and the Compensation Committee. Mr. Pfund
retired in 1993 from the position of Corporate Group Vice President of Avon
Products, Inc. (a manufacturer and marketer of fragrances and cosmetics), which
position he held since 1990. Mr. Pfund is also a Director of Techart, Inc.
JAMES M. REED, 64, has been a Director and Vice Chairman of the Board of
the Company since February 1994. He has been the Vice Chairman of the Board and
the Chief Financial Officer of Union Camp since April 1993. Prior to that, Mr.
Reed was an Executive Vice President and the Chief Financial Officer of Union
Camp. Mr. Reed is also a Director of Union Camp, Martin Marietta Materials,
Inc., Savannah Foods & Industries, Inc., and the Bulgarian-American Enterprise
Fund, Inc.
GEORGE J. SELLA, JR., 68, has been a Director of the Company since February
1994 and is Chairman of the Compensation Committee and a member of the Audit
Committee. Mr. Sella retired in March 1993 from the positions of Chairman of the
Board and Chief Executive Officer of American Cyanamid Company (a research-based
biotechnology company), which positions he held since January 1991. Mr. Sella is
a Director of The Equitable Life Assurance Society of the United States, The
Equitable Companies Incorporated and Union Camp.
WILLIAM H. TRICE, 63, has been a Director of the Company since February
1994 and was Chairman of the Board of Directors of the Company from that time
until December 31, 1996. Mr. Trice was Executive Vice President of Union Camp
from 1985 until his retirement from active employment on December 31, 1996.
BOARD OF DIRECTORS AND COMMITTEES
In 1996, the Board of Directors held five meetings. Directors are
reimbursed for their expenses associated with each meeting attended. The
directors who are not officers or employees of the Company or Union Camp
received as compensation for their services in 1996 an annual retainer of
$15,000 and fees of $1,000 for each Board meeting and $400 for each Committee
meeting attended. On February 18, 1997, in response to the report of an
independent compensation consultant which found compensation to eligible Board
members to be below competitive levels, the Board of Directors prospectively
increased Committee meeting fees to $750 and instituted an annual Committee
chairperson retainer of $1,000. Directors who are officers or employees of the
Company or Union Camp do not receive any additional compensation by reason of
their membership on, or attendance at meetings of, the Board.
The Board of Directors has appointed an Audit Committee and a Compensation
Committee, which are composed entirely of directors who are not officers or
employees of the Company or Union Camp.
The Audit Committee held two meetings during 1996. Generally, the Audit
Committee (i) recommends to the Board of Directors the independent accountants
to be appointed for the Company, (ii) meets with the independent accountants,
the chief internal auditor and corporate officers to review matters relating to
corporate financial reporting and accounting procedures and policies, adequacy
of financial, accounting and operating controls and the scope of the audits of
the independent accountants, (iii) reviews and reports on the results of such
audits to the Board of Directors and (iv) submits to the Board of Directors its
recommendations relating to financial reporting and accounting practices and
policies and financial accounting and operating controls.
The Compensation Committee held three meetings during 1996. Generally, the
Compensation Committee (i) reviews the compensation plans and sets the
compensation for executive officers of the Company, (ii) awards incentive
compensation and bonuses to executive officers of the Company and (iii)
administers the Company's stock option and stock award plan and awards options,
restricted stock, stock appreciation rights and bonuses payable in stock.
2
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The Company's bylaws provide that any stockholder who wishes to nominate
any person for election as a director at the annual meeting must give the
Company's Secretary written notice of such intent at least sixty (60) days in
advance of the date established in the bylaws as the day of the annual meeting
(the first Wednesday in May of each year). Such notice must contain the
information required by the bylaws including information regarding such person
to be nominated 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
person been nominated by the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Company, and based on a review of filings on
Schedule 13G and Schedule 13D in February 1997 with the Securities and Exchange
Commission, no person or group owned beneficially more than five percent of the
outstanding Common Stock of the Company except:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- --------------- ------------------------------------- ----------------- ----------
<S> <C> <C> <C>
Common Union Camp Corporation(2) 13,150,000 68.4
1600 Valley Road
Wayne, N.J. 07470
</TABLE>
- ------------
(1) As used in this proxy statement, 'beneficially owned' or words of similar
import mean the sole or shared power to direct the voting of a security or
the sole or shared power to direct the disposition of a security.
(2) Union Camp owns these shares through its wholly-owned subsidiary, Union Camp
Patent Holdings, Inc.
SECURITY OWNERSHIP OF MANAGEMENT
AS OF DECEMBER 25, 1996
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
----------------------------
BBA UCC PERCENT OF
NAME OF BENEFICIAL OWNER COMMON(1)(2) COMMON(3)(4) CLASS
- ------------------------------------------------------------ ------------ ------------ ----------
<S> <C> <C> <C>
Peter L. Acton.............................................. 1,100 18,000 *
Julian W. Boyden............................................ 29,000 19,190 *
Fred W. Brown, Jr. ......................................... 17,150 3,762 *
Thomas R. Crane, Jr. ....................................... 2,500 0 *
James H. Dunsdon............................................ 12,000 8,300 *
P. C. Mathew................................................ 16,000 8,800 *
L. Robert Pfund............................................. 1,500 0 *
James M. Reed............................................... 5,000 125,486 *
George J. Sella, Jr. ....................................... 3,500 2,221 *
Peter A. Thorburn........................................... 12,800 7,245 *
William H. Trice............................................ 10,000 108,577 *
Directors & Executive Officers as a Group (19 Persons)...... 167,750 333,834 *
</TABLE>
- ------------
* Less than one percent of the BBA common shares outstanding and less than one
percent of the UCC Common shares outstanding.
(1) BBA common stock.
(2) The shares shown as beneficially owned include the number of shares of BBA
common stock that directors and executive officers had the right to acquire
within 60 days after December 25, 1996 pursuant to unexercised options under
BBA stock options plans as follows: 24,000 shares for Mr.
(footnotes continued on next page)
3
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<PAGE>
(footnotes continued from previous page)
Boyden, 16,000 shares for Mr. Brown, 12,000 shares for Mr. Dunsdon, 12,000
shares for Mr. Mathew, 12,000 for Mr. Thorburn and 129,400 for all directors
and executive officers as a group (19 persons).
(3) Union Camp common stock.
(4) The shares shown as beneficially owned include the number of shares of UCC
common stock that directors and executive officers had the right to acquire
within 60 days after December 25, 1996 pursuant to unexercised options under
Union Camp stock option plans as follows: 18,000 shares for Mr. Acton,
19,190 shares for Mr. Boyden, 2,950 shares for Mr. Brown, 8,300 shares for
Mr. Dunsdon, 8,800 shares for Mr. Mathew, 89,119 shares for Mr. Reed, 7,200
shares for Mr. Thorburn, 78,729 shares for Mr. Trice and 256,638 for all
directors and executive officers as a group (19 persons). The shares shown
include restricted stock held by directors which becomes free of
restrictions on sale over a period of five years from the date of grant as
follows: 7,555 shares for Mr. Reed and 6,779 shares for Mr. Trice.
EXECUTIVE COMPENSATION
The following table shows information with respect to the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries during the Company's initial fiscal year which ended December 25,
1994, December 25, 1995 and 1996, paid or accrued to the chief executive officer
and the other four most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------
------------------------------------------- AWARDS
OTHER ANNUAL ---------------- ALL OTHER
COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(4) (# OF SHARES)(5) ($)(6)
- ---------------------------------- ---- -------- -------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Julian W. Boyden ................. 1996 $380,000 $205,399 0 0 $ 17,100
President and Chief Executive 1995 350,000 214,083 0 3,076 12,614
Officer 1994(1) 234,532 174,611 0 60,000 1,186
P. C. Mathew ..................... 1996 220,000 88,901 $ 64,004 0 9,900
Vice President, Aroma and 1995(2) 137,772 106,266 81,716 0 1,406
Terpene Chemicals 1994(1) 131,750 47,038 75,396 30,000 1,186
Peter A. Thorburn ................ 1996 211,000 84,033 0 0 9,495
Vice President, Chemical Sales 1995(2) 184,604 102,909 0 0 4,784
1994(1) 128,650 50,003 0 30,000 1,186
James H. Dunsdon ................. 1996(3) 185,554 57,971 0 0 1,749
Executive Vice President 1995(2) 146,280 73,889 0 0 1,534
1994(1) 122,400 47,413 0 30,000 1,106
Fred W. Brown, Jr. ............... 1996 175,000 68,892 0 0 7,875
Vice President and Chief 1995 153,750 82,790 0 0 4,613
Financial Officer 1994 103,270 74,545 31,250 25,000 3,259
</TABLE>
- ------------
(1) Compensation was converted into U.S. dollars from pounds sterling at a rate
of U.S. $1.53/`L'.
(2) Compensation was converted into U.S. dollars from pounds sterling at a rate
of U.S. $1.59/`L'.
(3) Compensation was converted into U.S. dollars from pounds sterling at a rate
of U.S. $1.56/`L'.
(4) Other annual compensation consists of housing and education allowances.
During 1996 the Company provided $64,004 for tax equalization in connection
with the forgiveness of an educational loan due to the relocation of Mr.
Mathew from the U.K. to the U.S.
(5) 1994 option awards constituted a grant for the years 1994, 1995 and 1996.
See section entitled '1994 Stock Option and Stock Award Plan' in the Report
of the Compensation Committee on Executive Compensation (below).
(footnotes continued on next page)
4
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(footnotes continued from previous page)
(6) The compensation reported represents (i) Company contributions for a medical
plan, (ii) Company contributions under the Union Camp Salaried Employees
Savings and Investment Plan in 1994 and through June 30, 1996 and,
thereafter, under its replacement, the Bush Boake Allen Inc. Employees
Savings and Investment Plan, (iii) amounts imputed or credited to the named
executive officer for premiums paid for group life insurance. The Company
contribution during 1996 for the medical plan was $1,749 for Mr. Dunsdon.
The Company contributions during 1996 pursuant to the Employee Savings and
Investment Plans were as follows: $17,100 for Mr. Boyden, $7,875 for Mr.
Brown, $9,900 for Mr. Mathew and $9,495 for Mr. Thorburn.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following two tables summarize option grants to, and exercises by, the
executive officers named in the Summary Compensation Table during 1996 and the
value of the options held by them as of December 25, 1996. No stock appreciation
rights were granted in 1996.
OPTION/SAR GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
- ----------------------------------------------------------------------------------------------- AT ASSUMED ANNUAL
% OF TOTAL RATES
NUMBER OF OPTIONS/ OF STOCK PRICE
SECURITIES SARS EXERCISE APPRECIATION
UNDERLYING GRANTED TO OF BASE FOR OPTION TERM
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION ------------------
NAME GRANTED(#) IN 1996 ($/SH) DATE 5% 10%
- ---------------------------------------- --------------- ---------- -------- ---------- ------- -------
(1)
<S> <C> <C> <C> <C> <C> <C>
Julian W. Boyden........................ 0 -- -- -- -- --
P. C. Mathew............................ 0 -- -- -- -- --
Peter A. Thorburn....................... 0 -- -- -- -- --
James H. Dunsdon........................ 0 -- -- -- -- --
Fred W. Brown, Jr....................... 0 -- -- -- -- --
</TABLE>
- ------------
(1) Each of the listed individuals received a three year option grant in 1994.
See section entitled '1994 Stock Option and Stock Award Plan' in the Report
of the Compensation Committee on Executive Compensation (below).
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS/SARS AT OPTIONS /SARS AT FISCAL
SHARES ACQUIRED REALIZED FISCAL YEAR-END (#) YEAR-END ($)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ----------------------------- --------------- -------- --------------------------- ----------------------------
<S> <C> <C> <C> <C>
Julian W. Boyden............. 0 0 24,000/39,076 $249,000/$373,500
James H. Dunsdon............. 0 0 12,000/18,000 124,500/ 186,750
P. C. Mathew................. 0 0 12,000/18,000 124,500/ 186,750
Peter A. Thorburn............ 0 0 12,000/18,000 124,500/ 186,750
Fred W. Brown, Jr............ 0 0 16,000/ 9,000 97,875/ 93,375
</TABLE>
- ------------
(1) Value is the difference between the market value of the Company's common
stock on December 25, 1996, i.e., $26.375 per share, and the exercise price.
5
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REPORT OF THE
COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
THE COMMITTEE'S FUNCTION
The Compensation Committee (the 'Committee') is composed entirely of
independent, non-employee directors. The Committee reviews and approves each
element of the Company's executive compensation program and assesses the
effectiveness of the program as a whole. The Committee approves the salaries of
the Company's Chief Executive Officer (the 'CEO') and its other executive
officers, makes awards to the CEO and other executive officers under the Bush
Boake Allen Annual Executive Incentive Plan (the 'Annual Incentive Plan') and
grants stock options under the 1994 Stock Option and Stock Award Plan (the
'Stock Option Plan').
OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
The executive compensation program is designed to: (a) attract, retain and
motivate talented executives to work on behalf of stockholders, the Company's
employees, customers and the communities within which the Company operates; (b)
provide compensation at levels that are competitive with those provided in the
various markets where BBA competes for executive resources; (c) place a
significant portion of executive pay at risk; and (d) recognize and reward
exceptional individual accomplishments. The Company's CEO participates in the
same programs and receives compensation based on the same factors as the other
executive officers.
The Committee considered soon after it was formed the deductibility of
executive compensation under Section 162(m) of the Internal Revenue Code which
was enacted in 1993. Under this provision, beginning in 1994 a publicly held
corporation is not permitted to deduct compensation in excess of one million
dollars per year paid to the CEO and the other executive officers named in the
proxy statement except to the extent the compensation was paid under
compensation plans meeting tax code requirements to be considered
performance-based. The Committee noted that compensation paid in 1996 to its CEO
and other named executive officers was fully deductible. The Committee
determined that, in reviewing the design of and administering the executive
compensation program, the Committee will attempt to preserve the Company's tax
deductions for executive compensation unless this goal conflicts with the
primary objectives of the Company's compensation program.
The Committee also seeks an appropriate balance among program objectives.
Particular attention is paid to the two key objectives discussed below.
PROVIDING COMPETITIVE LEVELS OF COMPENSATION
The Committee intends to provide the Company's CEO and its executives with
total compensation that, at targeted levels of performance, according to an
independent compensation consultant, is competitive with the average total
compensation earned by executives who hold comparable positions or have similar
qualifications in the flavor and fragrance and the aroma chemical industry and
within general industry for companies of comparable size. Those companies
include some of the companies which were selected on the basis of the business
set forth in the Performance Graph below, but they also include companies in
other businesses (regressed to comparable size) because competition for
executives extends beyond the Company's current lines of business. To determine
average competitive levels of base salary and target incentive compensation, the
Committee regularly reviews information drawn from various sources, including
proxy statements and industry surveys which are presented by an independent
compensation consultant. The Committee then examines specific salary and target
incentive recommendations for BBA's CEO and other executive officers,
considering each position's relative content, accountability, scope of
responsibility as well as the individual's performance and experience. While the
targeted value of an executive's total compensation is generally set at average
competitive levels, a large portion of an executive's compensation is at risk
and will exceed or fall below the targeted levels depending on actual
performance measured against predetermined objectives.
6
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ENSURING THAT INCENTIVE COMPENSATION VARIES WITH PERFORMANCE
BBA's Annual Incentive Plan is designed to ensure that incentive
compensation is predictable with the financial and strategic performance of the
Company and/or its business units as measured against predetermined objectives
which are approved annually by the Committee.
OVERVIEW OF EXECUTIVE COMPENSATION AND 1996 ACTIONS
The Company's executive compensation program for its CEO and its executive
officers including the four most highly compensated executive officers shown in
the Summary Compensation Table (the 'named executive officers') has three
principal elements: base salary, the Annual Incentive Plan and the Stock Option
Plan. Following is an overview of each program element and actions taken in
1996.
BASE SALARY
Base salaries are intended to be externally competitive and internally
equitable. They reflect an individual's sustained performance and length of time
in the position. Base salary levels are adjusted periodically based on an
individual's performance and the external market. Base salaries are annually
targeted at average base salary levels for similar positions in the flavor and
fragrance and aroma chemical industry and within general industry for companies
of comparable size. Base salaries may be less than or exceed the targeted
averages if warranted by sustained performance.
1996 Action: The base salary for executive officers for 1996 was considered
and established by the Committee at its December 5, 1995 meeting.
Recommendations for the 1996 base salaries for the executive officers other than
the CEO were made by the CEO to the Committee based on his evaluation of the
1995 performance of each such officer in his current position. The base salary
for the CEO for 1996 was recommended by the Chairman of the Board of Directors
based on his evaluation of the CEO's performance as chief executive officer in
1995. The recommended base salaries for both the CEO and the other executive
officers were also based on the salaries paid to other chief executive officers
and executive officers at other companies as described under this caption 'Base
Salary' as well as differing pay scales in different areas of the world. This
data was presented by and discussed with an independent compensation consultant
at the December 5, 1995 Committee meeting.
BUSH BOAKE ALLEN ANNUAL EXECUTIVE INCENTIVE PLAN
The amount of the incentive targeted for the CEO and the Company's
executive officers including the named executive officers under the Annual
Incentive Plan is the average competitive annual incentive recommended by an
independent consultant based on the average annual incentive compensation paid
to individuals in comparable positions by the comparable group referred to under
the caption 'Providing competitive levels of compensation'. The incentive
targeted is based on (i) the Company and/or key business units achieving their
annual financial plan and (ii) the CEO and the named executive officers
achieving predetermined operating or strategic goals that are established as
part of the Company's annual planning and budgetary process. At the beginning of
each year the Committee will review the operating or strategic goals established
for the CEO and the named executive officers and the financial performance
measures for the Company and its key business units.
Executives' awards are tied to the financial performance measures most
appropriate to their responsibilities. To reinforce the need for teamwork and
focus attention on overall corporate objectives, all participants have a portion
of their award tied to the financial performance measures for the Company as a
whole. While the portion of the award based on financial performance measures
for Mr. Boyden and Mr. Brown is determined solely by corporate earnings results,
the other named executive officers have a portion of their awards based on
financial performance measures linked to the performance of the key business
units for which they are responsible.
1996 Action: Incentive compensation for 1996 performance by the CEO and the
Company's executive officers was awarded by the Committee in early 1997. The
award process began in early 1996 when the Committee established financial
performance measures for the CEO and executive officers. Since the Company's
1996 earnings results were less than the Company financial performance measure
7
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established, the portion of the targeted incentive based on Company financial
performance measures was decreased. The earnings results of the key business
units varied against the financial measures established. The executive officers
responsible for these key business units had their targeted incentives adjusted
accordingly.
In addition, at the beginning of 1996, a number of specific operational and
strategic goals were established and approved by the Committee. These goals were
weighted and the CEO and the executive officers had to accomplish them in order
to receive the targeted awards after those targeted awards were adjusted for
achievement of the financial performance measure. The Committee regards the
specific operational and strategic goals as competitively sensitive information.
Since the CEO and named executive officers met some but not all of these goals,
the Committee approved further adjustments of their incentives in accordance
with each's performance.
1994 STOCK OPTION AND STOCK AWARD PLAN
Stock options are the final element of the Company's compensation for its
CEO and executive officers. The primary objective of issuing stock options is to
encourage the CEO and the officers of the Company to maintain an equity interest
in the Company and provide financial incentives linked to the future performance
of the Company's common stock.
1996 Action: The starting point for the determination of stock option
awards for the CEO and the executive officers is the average competitive total
compensation for comparable positions recommended by the independent
compensation consultant (as discussed under the caption 'Providing competitive
levels of compensation'). The full Board approved initial three year grants of
1994 stock options based on the recommendation of the independent consultant.
These grants were determined by offsetting the average competitive total
compensation reported by the consultant, by the CEO's and executive officers'
base salaries and the Annual Incentive Plan target awards. For this calculation,
the expected present value of the stock option grants was determined by the
independent consultant using a version of the Black-Scholes formula. The
Committee expects to use the same methodology each year it grants options and
does not consider the amount of stock options previously awarded in determining
the size of a grant of stock options under the Stock Option Plan. In 1996 there
were no grants to the CEO and the named executive officers due to the
aforementioned three year grant.
SUMMARY
The Company's emphasis on variable pay and the compensation programs'
direct link to both short and long-term financial performance, as well as stock
performance, tie executive pay to critical measures of corporate performance.
George J. Sella, Jr.
Thomas R. Crane, Jr.
L. Robert Pfund
8
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<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return of BBA
common stock, the S & P 500 Composite -- 500 Stock Index and an index of a peer
group, for the period of approximately thirty-one and one-half months beginning
on May 12, 1994, the date BBA common stock was registered under Section 12 of
the Securities Exchange Act of 1934, as amended, and ending on December 25,
1996, the end of the Company's fiscal year (assuming that the value of the
investment in BBA common stock and each index was $100 on May 12, 1994 and that
all dividends were reinvested). The peer group index is comprised of the
following companies: Alberto-Culver Company, Avon Products, Inc., Block Drug
Company, Inc., Borden Inc. (from May 12, 1994 -- December 25, 1994, when it
ceased to trade publicly), Church & Dwight Inc., Crompton & Knowles Corp.,
Ecolab Inc., Ethyl Corporation, Helene Curtis Industries, Inc. (from May 12,
1994 -- December 25, 1995, when it ceased to trade publicly), Hershey Foods
Corp., International Flavors & Fragrances Inc., McCormick & Company, Inc.,
Morton International, Inc., NCH Corporation, Nalco Chemical Company, The Quaker
Oats Company, Ralston Purina Company, Tambrands Inc., Wm. Wrigley Jr. Company
and W. R. Grace & Company. The performance of the peer group is weighted based
on market capitalization.
TOTAL CUMULATIVE SHAREHOLDER RETURN FOR
PERIOD ENDING DECEMBER 25, 1996
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
May 12, 1994 Dec. 25, 1994 Dec. 25, 1995 Dec. 25, 1996
<S> <C> <C> <C> <C>
Bush Boake Allen 100.00 158.59 171.88 164.84
S&P 500 100.00 105.16 143.65 180.27
Peer Group 100.00 101.75 132.98 159.86
</TABLE>
RETIREMENT PLANS
Mr. Boyden and the other named executives except for Mr. Brown participate
in the BBA Pension Scheme and the BBA Executive Pension Scheme in the United
Kingdom. As of December 25, 1996, the years of service credited under the BBA
Pension Scheme and the BBA Executive Pension Scheme, respectively, were 26 and
16 for Mr. Boyden, 27 and 7 for Mr. Dunsdon, 14 and 14 for Mr. Thorburn and 11
and 11 for Mr. Mathew.
Both Schemes are defined benefit arrangements, funded solely by company
contributions, and are exempt approved under the United Kingdom Corporation
Taxes Act 1988. Membership in the BBA Executive Pension Scheme is limited to
participants in the BBA Pension Scheme who attain a pre-determined employment
grade based primarily on the level of job responsibility. Executive Pension
Scheme participants are Mr. Boyden and the other named executives except Mr.
Brown and four other executives resident in the United Kingdom.
The calculation of benefits under both Schemes is directly linked to
periods of membership in each and final average compensation. Final average
compensation is determined by dividing by three the sum of all compensation,
including base salary, bonuses, taxable benefits in kind and any vacation
payments, received by the member during the 36 consecutive most highly
compensated months of the 120 months preceding retirement (the 'Final
Pensionable Salary').
9
<PAGE>
<PAGE>
The amount of benefit provided for participating members is the sum of: (i)
1.6667% of the Final Pensionable Salary times the number of years of pensionable
service in the BBA Pension Scheme plus (ii) 0.55% of Final Pensionable Salary
times the number of years of pensionable service in the Executive Pension
Scheme, subject to the sum of the benefits payable not exceeding limits imposed
by U.K. Inland Revenue regulations which limits are reflected in the following
tables.
The first of the following tables shows the approximate pension payable
under the BBA Pension Scheme and the second table shows the approximate pension
payable under the BBA Executive Pension Scheme, in each case assuming retirement
at age 65 and Final Pensionable Salary and years of service in the
classifications indicated.
BBA PENSION SCHEME
APPROXIMATE ANNUAL PENSION AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
FINAL PENSIONABLE SALARY 15 20 25 30 35
- ----------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000................................. $ 25,000 $ 33,300 $ 41,700 $ 50,000 $ 58,300
200,000................................. 50,000 66,700 83,300 100,000 116,700
300,000................................. 75,000 100,000 125,000 150,000 175,000
400,000................................. 100,000 133,300 166,700 200,000 233,300
500,000................................. 125,000 166,700 208,300 250,000 291,700
600,000................................. 150,000 200,000 250,000 300,000 350,000
</TABLE>
BBA EXECUTIVE PENSION SCHEME
APPROXIMATE ANNUAL PENSION AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
FINAL PENSIONABLE SALARY 15 20 25 30 35
- ------------------------------------------------ ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
$100,000........................................ $ 8,300 $11,100 $13,900 $ 16,700 $ 8,400
200,000........................................ 16,700 22,200 27,800 33,300 16,600
300,000........................................ 25,000 33,300 41,700 50,000 25,000
400,000........................................ 33,300 44,500 55,500 66,700 33,400
500,000........................................ 41,600 55,500 69,500 83,300 41,600
600,000........................................ 50,000 66,600 83,300 100,000 50,000
</TABLE>
The calculation of the amounts shown above assumes that the employees
remain in the service of the Company until age 65 and that the pension schemes
continue in their present form. The employee receives the benefit shown for life
and a surviving spouse receives a benefit of fifty percent of such amount for
life following the employee's death after retirement.
The Pension Plan for Eligible Employees of BBA in the United States (the
'Retirement Plan') in which Messrs. Boyden, Brown, Mathew and Thorburn
participate is a defined benefit plan and is funded solely by Company
contributions. The calculation of benefits under the Retirement Plan is based
upon final average earnings. Final average earnings are determined by dividing
by five the sum of all compensation, including base salary, bonuses, taxable
benefits in kind and any vacation payments, received by the member during the 60
consecutive most highly compensated months of the 120 months preceding
retirement (the 'Final Average Earnings'). The amount of the retirement benefit
provided to a participating employee under the Retirement Plan equals the
product of the sum of 1.05% of the participating employee's Final Average
Earnings plus .45% of those Final Average Earnings in excess of the average
applicable Social Security wage base at the date of retirement, multiplied by
the number of years of credited service of the employee with the Company.
Benefits under the Retirement Plan are not subject to any deduction for Social
Security benefits or other offset amounts. To the extent that retirement
benefits payable exceed limitations imposed by the Internal Revenue Code of
1986, as amended (the 'Code'), with respect to payments from tax qualified
trusts, such excess amounts will not be paid from a qualified trust fund, but
will be paid by the Company on an unfunded basis out of its general assets.
10
<PAGE>
<PAGE>
The following table shows the approximate annual pension payable under the
Retirement Plan to Messrs. Boyden, Brown, Mathew and Thorburn assuming
retirement at age 65 and Final Average Earnings and years of service in the
classifications indicated.
BBA RETIREMENT PLAN
APPROXIMATE ANNUAL PENSION AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE -------------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35 40
- ------------------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000........... $13,700 $ 20,500 $ 27,400 $ 34,200 $ 41,000 $ 47,900 $ 54,700
200,000........... 28,700 43,000 57,400 71,700 86,000 100,400 114,700
300,000........... 43,700 65,500 87,400 109,200 131,000 152,900 174,700
400,000........... 58,700 88,000 117,400 146,700 176,000 205,400 234,700
500,000........... 73,700 110,500 147,400 184,200 221,000 257,900 294,700
600,000........... 88,700 133,000 177,400 221,700 266,000 310,400 354,700
</TABLE>
The calculation of the amounts shown above assumes that these executives
remain in the service of the Company until age 65, that the retirement programs
are continued in their present form and that each of them receives the benefits
in the form of a single life annuity. As of December 25, 1996, Messrs. Boyden
and Thorburn were each credited with two years, Mr. Mathew credited with one
year, and Mr. Brown credited with 25 years, of vested service under the
Retirement Plan.
SEVERANCE ARRANGEMENTS
The individuals named in the Summary Compensation Table and six other
executive officers have executed individual severance agreements with the
Company. Each agreement provides that if, during the thirty month period
following a change in control of the Company or Union Camp, the Company
terminates the executive's employment without 'cause' (other than for
'disability') or the executive terminates his employment for 'good reason' (as
such terms are defined in the severance agreements), the executive will receive
from the Company as a severance benefit a lump sum payment equal to two and
one-half times the sum of such executive's annual salary and two and one-half
times the amount of his 'normal bonus opportunity' (as such term is defined in
the severance agreements). An executive officer would also be entitled to
continue to receive certain welfare insurance benefits for thirty months. The
Company will also make an additional payment to the executive to ensure that the
components of the severance benefit described above that are multiples of salary
and bonus will not be subject to net reduction due to the imposition of excise
taxes under section 4999 of the Code. The individual severance agreements
provide for the distribution to the executives of their benefits under the
Company's Supplemental Retirement Plan promptly following both a change in
control of the Company or Union Camp and termination, as noted above.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The discussion set forth below includes summaries of significant terms of
various agreements between the Company and Union Camp and between the Company
and certain of the Company's officers and directors.
EMPLOYMENT CONTRACTS
The Company and Mr. Boyden have entered into an employment agreement
setting forth the terms and conditions of Mr. Boyden's employment as President
and Chief Executive Officer of the Company. Although Mr. Boyden's employment is
at will, the agreement provides that if Mr. Boyden's employment is terminated
during the three year period starting May 1, 1994 (other than for voluntary
resignation, retirement, death or disability) he shall receive twenty-four
months salary in lieu of notice. As partial consideration for Messrs. Dunsdon,
Mathew, Wright (Vice President, Commerce and Technology) and Thorburn's
acceptance of positions requiring relocation to the United States, the Company
agreed that if their employment is terminated during the initial three years
after relocation (other than for voluntary
11
<PAGE>
<PAGE>
resignation, retirement, death or disability) they shall receive six months
salary (twelve months for Mr. Dunsdon) in lieu of notice.
TRANSACTIONS WITH PRINCIPAL STOCKHOLDER
The Company and Union Camp have entered into various agreements described
below which provide for the transition of the Company from a wholly-owned
subsidiary of Union Camp to a public company and which governs certain ongoing
relationships between the Company and Union Camp.
Services Agreement. Prior to the initial public offering of the Company's
common stock, Union Camp provided to the Company certain administrative
services, including treasury activities, employee benefit administration, human
resource administration, environmental, tax, risk management, legal, accounting,
safety and health administration, transportation logistics, corporate
communication and research and development activities. The Company has entered
into a Services Agreement with Union Camp under which Union Camp will agree to
continue to make these services available to the Company for a minimum of one
year. Union Camp or BBA may terminate any or all of the services covered by the
Services Agreement upon ninety days prior written notice, except for research
and development services which will require two years prior written notice. The
obligations of Union Camp under the Services Agreement will be subject to the
reasonable demands and requirements of the Company's ongoing operations. Union
Camp may provide for independent subcontractors to perform the work if it is
unable to do so itself. The rates charged by Union Camp to the Company
approximate the fair market value of the services to be provided by the Company.
None of these services agreements have been terminated through the end of 1996.
Technology Agreement. Union Camp and BBA have each granted (or caused one
or more of their subsidiaries to grant) to each other an irrevocable,
non-exclusive, royalty-free license to use their respective patents, patent
applications, know-how and trademarks that are used or useful in their
respective businesses.
Supply Agreement. The Company and Union Camp have entered into a Supply
Agreement relating to the terms and conditions pursuant to which the Company
will purchase turpentine from Union Camp as well as the procurement of
turpentine by Union Camp from other sources for sale to the Company, in each
case at approximately fair market value.
Tax Allocation Agreement. The Company has entered into a tax allocation
agreement with Union Camp. Under terms of this agreement Union Camp and the
Company agree to mutually indemnify each other against potential claims,
assessments or adjustments made by any taxing authority with respect to any tax
position taken by the Company or Union Camp for periods prior to the initial
public offering of the Company's common stock.
Cross-Indemnification Agreement. The Company and Union Camp have entered
into an agreement whereby each party will indemnify the other party against
liabilities relating to the business of the indemnifying party as it has been
conducted prior to the initial public offering of the Company's common stock,
including Union Camp's agreement to indemnify the Company against all
liabilities relating to the operations and business of the Company's
Jacksonville facility at any time up to and including December 31, 1986, after
which date the Jacksonville facility was operated as part of BBA.
Registration Rights Agreement. The Company and Union Camp have entered into
a Registration Rights Agreement pursuant to which the Company has granted
certain registration rights to Union Camp and certain of its affiliates with
respect to the shares of common stock of the Company owned by Union Camp or
acquired by any such affiliate from Union Camp following the public offering of
Company common stock. In the event that the Company proposes to register any of
its shares of common stock for sale under the Securities Act of 1933, as amended
(the 'Securities Act'), Union Camp is entitled to require the Company to include
all or a portion of the shares of common stock of the Company held by Union Camp
or its affiliates, subject to the restrictions set forth in the Registration
Rights Agreement. Union Camp also has the right to require that the Company
register all or a portion of the common stock of the Company held by Union Camp
or its affiliates for sale under the Securities Act three times, subject to the
terms of the Registration Rights Agreement. The Company's obligations are
subject to limitations relating to a minimum number of shares of common
12
<PAGE>
<PAGE>
stock of the Company required for any such registration, the timing of
registration and other similar matters. The Company is obligated to pay all
expenses incidental to any such registration, excluding underwriters' discounts
and certain legal fees and expenses. The Company has agreed to indemnify Union
Camp for certain liabilities, including liabilities under the Securities Act, in
connection with any such registration. Under the Registration Rights Agreement,
Union Camp and certain of its affiliates have the right to transfer their
respective rights to a transferee other than pursuant to a public offering.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been recommended by the Audit Committee and
appointed by the Board of Directors, subject to ratification by the
stockholders, to make an examination of the consolidated balance sheet of the
Company and its consolidated subsidiaries as of December 25, 1997 and the
related consolidated statements of income and cash flows for the year ended
December 25, 1997, and for such other purposes incidental thereto as may be
required. Price Waterhouse LLP has been the Company's independent accountants
since it became a public company in May 1994 and, prior to that, since its
acquisition by Union Camp in 1982.
The Company expects that a representative of Price Waterhouse LLP will be
present at the meeting and will be available to respond to appropriate questions
from stockholders. The representative from Price Waterhouse LLP will have an
opportunity to make a statement at the meeting if he so desires.
OTHER MATTERS
The Board of Directors has at this time no knowledge of any matters to be
brought before the meeting other than those referred to above. The Company's
bylaws provide that stockholders who wish to propose the transaction of any
business at the annual meeting must give the Company's Secretary written notice
of such intent containing the information required by the bylaws at least sixty
(60) days in advance of the day established by the bylaws as the date of the
annual meeting (the first Wednesday in May). However, if any other matters
properly come before the meeting, it is the intention of the persons named in
the accompanying form of proxy to vote said proxy in accordance with their
judgment on such matters.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder for presentation at the 1998 Annual Meeting
of the Stockholders of the Company must be received by the Company not later
than November 22, 1997 for inclusion in the Company's 1998 Proxy Statement and
Proxy.
EXPENSES
All expenses in connection with solicitation of proxies will be borne by
the Company. In addition to the solicitation of proxies by use of the mails,
certain directors, officers and regular employees of the Company may solicit the
return of proxies in person and by telephone and other means of
telecommunication. The Company will reimburse brokers and other nominees for
their expenses in forwarding soliciting materials to beneficial owners of the
stock held of record by such persons.
By Order of the Board of Directors
DENNIS M. MEANY
Secretary
March 22, 1997
13
STATEMENT OF DIFFERENCES
------------------------
The British pound sterling sign shall be expressed as ........ `L'
<PAGE>
<PAGE>
APPENDIX 1
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
<TABLE>
<S> <C> <C> <C>
(1) Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote
listed below [X] for all nominees listed below [X] *EXCEPTIONS [X]
</TABLE>
Nominees: P.L. Acton, J.W. Boyden, T.R. Crane, Jr., L.R. Pfund, J.M. Reed,
G.J. Sella, Jr., W.H. Trice
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
*Exceptions_________________________________________________________________
(2) Ratification of appointment of independent accountants.
Change of Address and
FOR [X] AGAINST [X] ABSTAIN [X] or Comments Mark Here [X]
Please sign exactly as your names
appear. If Executor, Trustee, etc.,
give full title. If stock is
registered in two names, both should
sign.
Dated:__________________________, 1997
______________________________________
Signature(s)
______________________________________
Signature(s)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD VOTES MUST BE INDICATED
PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. [X]
<PAGE>
<PAGE>
[LOGO]
BUSH BOAKE ALLEN INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS MAY 7, 1997
The undersigned hereby appoints JULIAN W. BOYDEN, FRED W. BROWN, JR. and
DENNIS M. MEANY, and each of them, proxies, with power of substitution and
revocation, to vote all Common Stock of BUSH BOAKE ALLEN INC. standing in the
name of the undersigned at the annual meeting of stockholders of said
corporation at the Woodcliff Lake Hilton, 200 Tice Boulevard, Woodcliff Lake,
N.J. on Wednesday, May 7, 1997 at 11:00 A.M., and any and all adjournments
thereof, with all the powers which the undersigned would possess if personally
present, upon and in respect of the following matters and in their discretion
for the transaction of such other business as may properly come before the
meeting; all as set forth in the Proxy Statement dated March 22, 1997.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE REVERSE
SIDE. IN THE ABSENCE OF ANY INSTRUCTIONS, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES AS DIRECTORS AND FOR THE RATIFICATION OF INDEPENDENT
ACCOUNTANTS, ALL AS REFERRED TO ON THE REVERSE SIDE.
(Continued, and to be SIGNED on the reverse side.)
BUSH BOAKE ALLEN INC.
P.O. BOX 11330
NEW YORK, N.Y. 10203-0330
