<PAGE>
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>
[Logo]
BUSH BOAKE ALLEN INC.
7 MERCEDES DRIVE
MONTVALE, N.J. 07645
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 8, 1999
------------------------
The Annual Meeting of Stockholders of Bush Boake Allen Inc. will be held at
the Montvale Holiday Inn, 100 Chestnut Ridge Road, Montvale, New Jersey, on
Wednesday, September 8, 1999, at 11:00 A.M., to consider and act upon the
following:
(1) The election of seven directors for the ensuing year;
(2) The ratification of the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants for the year 1999;
and
(3) Such other matters as may properly come before the meeting.
Only stockholders of record at the close of business on July 21, 1999 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
July 23, 1999
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.
<PAGE>
BUSH BOAKE ALLEN INC.
7 MERCEDES DRIVE
MONTVALE, N.J. 07645
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF STOCKHOLDERS
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, September 8, 1999, and any adjournment
thereof. Notice of Annual Meeting, proxy statement and proxy are being mailed to
all stockholders on or about July 23, 1999. Proxies in the accompanying form
which are properly executed and received prior to the Annual Meeting will be
voted in accordance with the instructions in the proxy, or if no such
instruction is provided, in accordance with the recommendations of the Board of
Directors as set forth in the accompanying proxy. Abstentions and broker
non-votes are counted for quorum purposes, but will not affect the determination
of whether more votes have been cast in favor of a proposal than have been cast
against it or the plurality of votes cast for the election of directors. A proxy
may be revoked at any time before its exercise by filing with the Secretary of
the Company either a written revocation of that proxy or a new proxy bearing a
later date. A proxy may also be revoked by voting in person at the Annual
Meeting. Attendance at the Annual Meeting will not in itself constitute
revocation of a proxy.
The Board of Directors has fixed the close of business on July 21, 1999, as
the record date for the determination of the stockholders entitled to notice of,
and to vote at, the Annual Meeting. On June 15, 1999, there were 19,293,665
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. The presence in
person or by proxy of the holders of a majority of the votes entitled to be cast
constitutes a quorum for the transaction of business.
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. Six of the nominees listed below
are currently members of the Board of Directors and five were elected by the
stockholders at the last Annual Meeting. The other two nominees, C. Wesley
Smith, who was appointed as a director by the Board of Directors in May 1999,
and C. Cato Ealy, are executives with the International Paper Company
('International Paper'). Through the merger of Union Camp Corporation ('Union
Camp') with and into International Paper on April 30, 1999, International Paper
became the majority stockholder of the Company.
Votes (other than votes withheld) will be cast pursuant to the accompanying
proxy for the election of the nominees listed unless one or more of such
nominees shall not be available for election, in which event such votes will be
cast for a substitute nominee designated by the Board of Directors, or if no
substitute nominee is selected by the Board of Directors by the Annual Meeting,
an appropriate candidate may subsequently be appointed. The Board of Directors
has no reason to believe that any of the nominees will not be available for
election as a director.
Set forth below is a brief description of the background of the nominees
for election.
PETER L. ACTON, 52, has been a Director of the Company since November 1994.
Mr. Acton is General Manager -- Commercial Business Operations of Arizona
Chemical Company (a manufacturer of resins, polymer additives, coating
chemicals, fatty acids and related products), a subsidiary of International
Paper. Before that he was Vice President and General Manager of the Chemical
Products Division of Union Camp (a manufacturer of paper, paperboard, packaging,
and wood and chemical products) from December 1995 until April 30, 1999 and
prior to that he was General Manager of the Chemical Products Division.
<PAGE>
JULIAN W. BOYDEN, 54, has been President, Chief Executive Officer and a
Director of the Company since February 1994 and Chairman of the Board of the
Company since January 1, 1997. Prior to February 1994, Mr. Boyden had been 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.
C. CATO EALY, 42, has been Vice President of Business Development and
Planning for International Paper (a manufacturer of paper, paperboard,
packaging, and wood and chemical products) since June 1996. Before that he was
Director of Corporate Development from the time he joined International Paper in
April 1993.
L. ROBERT PFUND, 62, 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. and a
Trustee on the Board of The Valley Hospital in Ridgewood, New Jersey.
JAMES M. REED, 66, has been a Director and Vice Chairman of the Board of
the Company since February 1994 and is Chairman of the Audit Committee and a
member of the Compensation Committee. He was the Vice Chairman of the Board and
the Chief Financial Officer of Union Camp from April 1993 until June 1997 and
Vice Chairman and Chief Administrative Officer from June 1997 until his
retirement from active employment with Union Camp in November 1997. Mr. Reed is
also a Director of Martin Marietta Materials, Inc.
C. WESLEY SMITH, 60, has been Executive Vice President -- Operating Group
of International Paper since 1998. Prior thereto, he was Executive Vice
President -- Printing Papers from 1992 and President of International Paper
Europe from 1989 to 1992. Mr. Smith is also a Director of International Paper.
WILLIAM H. TRICE, 65, 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. He is Chairman of the Compensation Committee and a
member of the Audit Committee. 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 1998, the Board of Directors held four meetings. Directors are
reimbursed for their expenses associated with each meeting attended. The
directors who were not officers or employees of the Company or Union Camp
received as compensation for their services in 1998 an annual retainer of
$15,000 and fees of $1,000 for each Board meeting and $750 for each Committee
meeting attended. A $1,000 annual Committee Chairperson retainer was also paid.
A stock option grant valued at $10,000 was made to non-employee directors.
Directors who are officers or employees of the Company or Union Camp or,
subsequent to April 30, 1999, International Paper, do not receive any
compensation (and are not eligible to receive options under the Directors' Stock
Option Plan) by reason of their service as a director of the Company.
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, Union Camp or International Paper. There is no
nominating committee.
The Audit Committee held two meetings during 1998. 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 audit to be
performed by 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.
2
<PAGE>
The Compensation Committee held three meetings during 1998. Generally, the
Compensation Committee (i) reviews the compensation plans and establishes the
compensation for executive officers of the Company, (ii) authorizes awards of
incentive compensation and bonuses to executive officers of the Company and
(iii) administers the Company's stock option and stock award plan and authorizes
awards of options, restricted stock, stock appreciation rights and bonuses
payable in stock.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Certain Beneficial Owners. The following sets forth certain information as
to beneficial ownership of each person known to the Company to own beneficially
more than 5% of the Common Stock of the Company as of May 15, 1999.
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL OWNER NUMBER OF SHARES(1) CLASS
---------------- ------------------- -----
<S> <C> <C>
International Paper Company .............................. 13,150,000 68.16
Two Manhattanville Road
Purchase, NY 10577
</TABLE>
- ------------
(1) Through the merger of Union Camp with and into International Paper on April
30, 1999, International Paper became the majority shareholder of the
Company.
Stock Ownership of Directors and Executive Officers. The following table
sets forth certain information as to beneficial ownership of the outstanding
Common Stock of the Company and of International Paper as of May 15, 1999, by
each director and nominee of the Company, by each of the named executive
officers listed in the Summary Compensation Table, and by all executive officers
and directors of the Company as a group. Except as otherwise indicated, all
persons listed below have sole voting and investment power with respect to such
shares. No director, nominee or executive officer beneficially owns more than
one percent of the total outstanding Common Stock of the Company or
International Paper and all directors and executive officers as a group own 2.6%
of the total outstanding Common Stock of the Company and less than one percent
of the outstanding Common Stock of International Paper.
<TABLE>
<CAPTION>
NUMBER OF SHARES
---------------------------
BBA IP
NAME OF BENEFICIAL OWNER COMMON(1)(2) COMMON(3)(4)
------------------------ ------------ ------------
<S> <C> <C>
Peter L. Acton............................................ 2,900 20,730
Julian W. Boyden.......................................... 129,726 0
Fred W. Brown, Jr......................................... 40,870 1,300
James H. Dunsdon.......................................... 59,970 0
C. Cato Ealy.............................................. 0 25,515
P. C. Mathew.............................................. 51,480 0
L. Robert Pfund........................................... 3,370 0
James M. Reed............................................. 6,380 173,912
C. Wesley Smith........................................... 0 237,206
Peter A. Thorburn......................................... 45,520 73
William H. Trice.......................................... 12,370 52,878
Directors & Executive Officers as a Group (19 Persons).... 508,825 514,117
</TABLE>
- ------------
(1) BBA Common Stock.
(2) The shares shown as beneficially owned include shares of BBA Common Stock
that such persons had the right to acquire on or within 60 days after May
15, 1999 pursuant to unexercised options under BBA stock option plans as
follows: 124,726 shares for Mr. Boyden, 39,720 shares for Mr. Brown, 59,970
shares for Mr. Dunsdon, 47,380 shares for Mr. Mathew, 1,370 shares for Mr.
Pfund, 1,380 shares for Mr. Reed, 44,720 shares for Mr. Thorburn, 1,370
shares for Mr. Trice and 473,775 shares for all directors and executive
officers as a group (19 persons).
(footnotes continued on next page)
3
<PAGE>
(footnotes continued from previous page)
(3) International Paper Common Stock.
(4) The shares shown as beneficially owned include shares of IP Common Stock
that such persons had the right to acquire on or within 60 days after May
15, 1999 pursuant to unexercised options under International Paper stock
option plans as follows: 20,730 shares for Mr. Acton, 10,800 shares for Mr.
Ealy, 70,200 shares for Mr. Smith, 158,353 shares for Mr. Reed, 52,874
shares for Mr. Trice and 312,957 for all directors and executive officers as
a group (19 persons).
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 fiscal years which ended December 25, 1996,
1997 and 1998, 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
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ----------------
AWARDS
OTHER ANNUAL ------ ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (# OF SHARES)(2) ($)(3)
- --------------------------- ---- --------- -------- --- ---------------- ------
<S> <C> <C> <C> <C> <C> <C>
Julian W. Boyden ........... 1998 435,000 285,900 0 35,910 17,507
Chairman, President and 1997 410,000 255,400 0 25,740 21,897
Chief Executive Officer 1996 380,000 205,399 0 0 20,550
James H. Dunsdon ........... 1998 259,200 103,100 0 17,880 7,887
Executive Vice President 1997 240,000 120,800 0 12,090 3,600
1996(1) 185,554 57,971 0 0 1,749
P. C. Mathew ............... 1998 236,580 83,500 0 10,070 9,053
Vice President, Aroma 1997 227,700 94,000 0 7,310 11,254
And Terpene Chemicals 1996 220,000 88,901 64,004 0 9,900
Peter A. Thorburn .......... 1998 224,900 78,100 0 8,150 9,198
Vice President, Chemical 1997 217,300 94,000 0 6,570 11,892
Sales 1996 211,000 84,033 0 0 11,472
Fred W. Brown, Jr. ......... 1998 198,500 90,000 0 8,150 6,984
Vice President and Chief 1997 187,300 83,000 0 6,570 9,145
Financial Officer 1996 175,000 68,892 0 0 8,682
</TABLE>
- ------------
(1) Compensation was converted into U.S. dollars from pounds sterling at a rate
of U.S. $1.56/`L'.
(2) 1994 option awards constituted a grant for the years 1994, 1995 and 1996.
(3) The compensation reported represents (i) Company contributions under the
Union Camp Salaried Employees Savings and Investment Plan in 1995 and
through June 30, 1997 and, thereafter, under its replacement, the Bush Boake
Allen Inc. Employees Savings and Investment Plan and (ii) amounts imputed or
credited to the named executive officer for premiums paid for group life
insurance. The Company contributions for 1998 pursuant to the Employee
Savings and Investment Plans were as follows: $13,610 for Mr. Boyden, $7,887
for Mr. Dunsdon, $7,776 for Mr. Mathew, $6,788 for Mr. Thorburn and $5,969
for Mr. Brown. The amounts imputed or credited for life insurance premiums
for 1998 were as follows: $3,897 to Mr. Boyden, $1,277 to Mr. Mathew, $2,410
to Mr. Thorburn and $1,015 to Mr. Brown.
4
<PAGE>
OPTIONS
The following two tables summarize option grants to, and exercises by, the
executive officers named in the Summary Compensation Table during 1998 and the
value of the options held by them as of December 25, 1998. No stock appreciation
rights were granted in 1998.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
- -------------------------------------------------------------------------------- RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(3)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED(1) IN 1998 ($/SH)(2) DATE 5%(4) 10%(5)
---- ---------- ------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Julian W. Boyden............ 35,910 14.3 28.72 5/5/08 $648,535 $1,643,601
James H. Dunsdon............ 17,880 7.1 28.72 5/5/08 322,913 818,368
P. C. Mathew................ 10,070 4.0 28.72 5/5/08 181,864 460,904
Peter A. Thorburn........... 8,150 3.3 28.72 5/5/08 147,189 373,026
Fred W. Brown, Jr........... 8,150 3.3 28.72 5/5/08 147,189 373,026
</TABLE>
- ------------
(1) The options become exercisable three years from the date of grant, i.e., on
May 5, 2001.
(2) The exercise price is the fair market value of the underlying stock on the
date of the option grant.
(3) The dollar amounts under these columns are the result of calculations at an
annual rate of 5% and 10%, rates set by the SEC, and are not intended to
forecast possible future appreciation, if any, of Company Common Stock.
(4) Company Common Stock would be trading at $46.78 per share for the values
shown to be realizable, an increase in stock price which would benefit all
shareholders.
(5) Company Common Stock would be trading at $74.49 per share for the values
shown to be realizable, an increase in stock price which would benefit all
shareholders.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS AT OPTIONS AT FISCAL
SHARES ACQUIRED REALIZED FISCAL YEAR-END (#) YEAR-END ($)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- --------------- --- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Julian W. Boyden....... 0 0 51,076/73,650 869,383/540,783
James H. Dunsdon....... 0 0 24,000/35,970 432,000/265,900
P. C. Mathew........... 0 0 24,000/23,380 432,000/199,559
Peter A. Thorburn...... 0 0 24,000/20,720 432,000/185,534
Fred W. Brown, Jr...... 0 0 22,000/17,720 327,875/131,534
</TABLE>
- ------------
(1) Value is the difference between the market value of the Company's Common
Stock on December 25, 1998, i.e., $34.00 per share, and the exercise price.
5
<PAGE>
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.
Under Section 162(m) of the Internal Revenue Code, beginning in 1994 a
publicly held corporation may not deduct compensation in excess of one million
dollars per year paid to the CEO or to any of the other four most highly
compensated executive officers except to the extent the compensation was paid
under compensation programs meeting tax code requirements to be considered
performance-based. The Committee believes that all of the compensation paid in
1998 to its CEO and other named executive officers was within the deduction
limits of Section 162(m). 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 under Section 162(m) 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 retained by the Company, is competitive with
the average total compensation earned by executives who hold comparable
positions or have similar qualifications and responsibilities 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 in
the peer group in the Performance Graph below, but they also include companies
in other businesses because competition for executives extends beyond such
companies. To determine average competitive levels of base salary and target
incentive compensation, the Committee regularly reviews information drawn from
various sources, including public filings and industry surveys which are
presented by an independent compensation consultant. The Committee then examines
specific salary and target incentive recommendations for the 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
<PAGE>
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 1998 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
1998.
BASE SALARY
Base salaries are intended to be externally competitive and internally
equitable. They reflect an individual's performance, level of responsibilities
and length of time in the position. Base salary levels are adjusted periodically
based on an individual's performance and the external market for positions of
similar scope and responsibility. 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
as generally determined in connection with an independent compensation
consultant. Base salaries may be less than or exceed the targeted averages if
warranted by sustained performance.
1998 Action: The base salary for executive officers for 1998 was considered
and established by the Committee at its November 18, 1997 meeting.
Recommendations for the 1998 base salaries for the executive officers other than
the CEO were made by the CEO to the Committee based on his evaluation of the
1997 performance of each such officer in his current position. The base salary
for the CEO for 1998 was determined by the Committee based on its evaluation of
his performance as chief executive officer in 1997. 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 November 18,
1997 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 compensation 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.
1998 Action: Incentive compensation for 1998 performance by the CEO and the
Company's executive officers was awarded by the Committee in early 1999. The
award process began in early 1998
7
<PAGE>
when the Committee established financial performance measures for the CEO and
the other executive officers. Since the Company's 1998 earnings results were
less than the Company financial performance measure established, the portion of
the targeted incentive based on Company financial performance measures was
decreased. The earnings results of the key business also were below the
financial measures established. The executive officers responsible for these key
business units had their targeted incentives decreased accordingly.
In addition, at the beginning of 1998, 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.
1998 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 Committee approved stock option grants in May 1998
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 reexamines this
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. The stock options granted to the CEO and
the named executive officers in 1998 are shown in the Option Grants table.
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.
Compensation Committee:
L. Robert Pfund
William H. Trice
8
<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 from BBA's initial public offering on May 12, 1994 and
ending on December 25, 1998 (and assumes 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. (from May 12, 1994 - December 25, 1996, the last full
year it traded publicly), 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, 1998
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
May 12, 1994 Dec. 25, 1994 Dec. 25, 1995 Dec. 25, 1996 Dec. 25, 1997 Dec. 25, 1998
<S> <C> <C> <C> <C> <C> <C>
Bush Boake Allen Inc. 100.00 158.59 171.88 164.84 165.23 212.50
S&P 500 100.00 105.16 143.65 180.27 227.95 304.88
Peer Group 100.00 101.75 132.98 159.86 200.97 218.52
</TABLE>
RETIREMENT PLANS
Mr. Boyden and other named executives, except Mr. Brown, participate in the
BBA Pension Scheme and the BBA Executive Pension Scheme as deferred members. As
of February 1997, the BBA Executive Pension Scheme was merged with the larger
BBA Pension Scheme (collectively the 'BBA Pension Scheme'). The years of
pensionable service credited under the BBA Pension Scheme are 31 for Mr. Boyden,
29 for Mr. Dunsdon, 18 for Mr. Thorburn and 14 for Mr. Mathew.
The BBA Pension Scheme is a defined benefit arrangement, funded solely by
company contributions, and is exempt approved under the United Kingdom Income &
Corporation Taxes Act 1988. An enhanced level of benefit is granted, at the
discretion of the company, to a limited number of executives who have attained a
predetermined employment grade based primarily on the level of job
responsibility. The participants who have been granted enhanced benefits are Mr.
Boyden and the other named executives, except Mr. Brown, and three other
executives based in the United Kingdom.
The calculation of benefits under the BBA Pension Scheme is directly linked
to pensionable service and final average compensation, which includes base
salary and bonuses (see 'Summary Compensation Table' above), as well as certain
ancillary benefits in kind, received by the member during the 36 consecutive
most highly compensated months of the 120 months preceding retirement ('Final
Pensionable Salary').
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The amount of benefit provided for participating members is 1.6667% of
Final Pensionable Salary for each year, and completed months of pensionable
service, subject to the benefits payable not exceeding limits imposed by the UK
Inland Revenue regulations, which are reflected in the table shown below.
The table shows the approximate pension payable under the BBA Pension
Scheme and assumes retirement at age 65 and Final Pensionable Salary and years
of pensionable service in the classifications indicated. Such benefits are not
subject to deduction for social security benefits or other offset amounts.
BBA PENSION SCHEME
APPROXIMATE ANNUAL PENSION AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
FINAL PENSIONABLE SALARY 15 20 25 30 35 40
- ------------------------ -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$100,000............... $ 25,000 $ 33,300 $ 41,700 $ 50,000 $ 58,300 $ 66,700
200,000............... 50,000 66,700 83,300 100,000 116,700 133,300
300,000............... 75,000 100,000 125,000 150,000 175,000 200,000
400,000............... 100,000 133,300 166,700 200,000 233,300 266,700
500,000............... 125,000 166,700 208,300 250,000 291,700 333,300
600,000............... 150,000 200,000 250,000 300,000 350,000 400,000
700,000............... 175,000 233,300 291,700 350,000 408,300 466,700
800,000............... 200,000 266,700 333,300 400,000 466,700 533,300
900,000............... 225,000 300,000 375,000 450,000 525,000 600,000
</TABLE>
The calculation of the amounts shown above assumes that employees remain in
service of the company until age 65 and that the BBA Pension Scheme continues in
its 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, Dunsdon, 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 and bonuses (see
'Summary Compensation Table' above), as well as any ancillary benefits in kind
and certain 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
under its supplemental retirement plan on an unfunded basis out of its general
assets.
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The following table shows the approximate annual pension payable under the
Retirement Plan to Messrs. Boyden, Brown, Dunsdon, 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............. $ 13,500 $ 20,300 $ 27,000 $ 33,800 $ 40,500 $ 47,300 $ 54,000
200,000............. 28,500 42,800 57,000 71,300 85,500 99,800 114,000
300,000............. 43,500 65,300 87,000 108,800 130,500 152,300 174,000
400,000............. 58,500 87,800 117,000 146,300 175,500 204,800 234,000
500,000............. 73,500 110,300 147,000 183,800 220,500 257,300 294,000
600,000............. 88,500 132,800 177,000 221,300 265,500 309,800 354,000
700,000............. 103,500 155,300 207,000 258,800 310,500 362,300 414,000
800,000............. 118,500 177,800 237,000 296,300 355,500 414,800 474,000
900,000............. 133,500 200,300 267,000 333,800 400,500 467,300 534,000
</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, 1998, Messrs. Boyden
and Thorburn were each credited with 4 years, Mr. Mathew credited with 3 years,
Mr. Dunsdon credited with 2 years, and Mr. Brown credited with 27 years, of
vested service under the Retirement Plan.
RELOCATION RETIREMENT PLAN
The Bush Boake Allen Inc. Relocation Retirement Income Plan for Executives
(the 'Relocation Plan'), in which Messrs. Boyden, Dunsdon, Mathew and Thorburn
participate, is a non-qualified defined benefit plan funded solely by Company
contributions. The Relocation Plan is designed, in part, to provide participants
who have worked for the Company outside the United States, and who then
transferred to the Company in the United States, with pension benefits
calculated as if they worked for their entire careers in the United States.
Benefits under the Relocation Plan equal (1) the amount that a covered
participant would have received under the Retirement Plan (without regard to
limitations imposed by the Code) had the participant served all years of
employment with the Company in the United States, minus (2) the participant's
actual benefits payable at retirement under the Retirement Plan (without regard
to limitations imposed by the Code) and the BBA Pension Scheme. Benefits payable
under the Relocation Plan will be paid by the Company on an unfunded basis out
of its general assets, and will be paid at the same time and in the same form as
the participant is paid under the Retirement Plan.
Messrs. Boyden, Dunsdon, Mathew and Thorburn were granted, respectively,
26.5, 27.4, 11.2 and 13.5 years of foreign service for purposes of the
Relocation Plan.
The estimated annual benefits payable under the Relocation Plan upon
retirement at age 65 to Messrs. Boyden and Dunsdon are, respectively, $169,397
and $32,436. Estimated payments to Messrs. Mathew and Thorburn are zero. This
calculation assumes that the participants remain in service with the Company
until age 65 at their present compensation and that the Relocation Plan,
Retirement Plan and BBA Pension Scheme all continue in their present forms.
SEVERANCE ARRANGEMENTS
The individuals named in the Summary Compensation Table and six other
executive officers have executed individual severance agreements with the
Company which provide that if, 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
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<PAGE>
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). A 'change in control' is defined generally
to include significant changes in the stock ownership or board of directors of
the Company or Union Camp, or either's dissolution. 'Good reason' is defined
generally to include certain reductions in duties or reporting responsibilities,
certain unapproved relocations, certain reductions in compensation or benefits
and material breaches of the agreement by the Company. 'Cause' is defined
generally to cover certain failures to perform duties to the Company or
willfully engaging in conduct injurious to the Company. An executive officer
would also be entitled to continue to receive certain 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 International Paper.
TRANSACTIONS WITH PRINCIPAL STOCKHOLDER
The Company and Union Camp entered into various agreements which initially
provided for the transition of the Company from a wholly-owned subsidiary of
Union Camp to a public company and which governed certain ongoing relationships
between the Company and Union Camp. These agreements were assumed by
International Paper upon Union Camp's merger with and into International Paper
on April 30, 1999.
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 entered into
a Services Agreement with Union Camp under which Union Camp agreed to continue
to make these services available to the Company. Any or all of the services
covered by the Services Agreement may be terminated by either party upon ninety
days prior written notice. The obligations of Union Camp, and now International
Paper, under the Services Agreement are subject to the reasonable demands and
requirements of its ongoing operations. The rates charged to the Company under
the agreements approximate the fair market value of the services to be provided
by the Company. None of these services agreements other than that involving
research and development have been terminated through the end of 1998.
Technology Agreement. Union Camp and the Company 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 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.
12
<PAGE>
Cross-Indemnification Agreement. The Company and Union Camp entered into an
agreement whereby each party is required to 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 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 Company's initial public offering.
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 received 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 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
PricewaterhouseCoopers 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 financial statements of the Company
and its subsidiaries for the 1999 fiscal year. PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP
will be present at the Annual Meeting and will be available to respond to
appropriate questions from stockholders. The representative from
PricewaterhouseCoopers LLP will have an opportunity to make a statement at the
meeting if he so desires.
The Board of Directors recommends that you vote FOR this proposal. The
accompanying proxy will be voted FOR the proposal unless a contrary
specification is made. The Proposal will have been adopted if more votes are
cast in favor of it than are cast against it.
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. 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 in accordance with their
judgment on such matters. The Company's bylaws provide that stockholders who
wish to nominate any person for election as a director or to propose the
transaction of any business at the Annual Meeting must give the Company's
Secretary written notice of such intent at least sixty (60) days in advance of
the day established by the bylaws as the date of the Annual Meeting (in 1999,
September 8, thereafter on the first Wednesday in May). Such notice must contain
the information required by the bylaws and, in the event of a nomination for
director, such additional information as is 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.
13
<PAGE>
STOCKHOLDER PROPOSALS
Any proposal of a stockholder for presentation at the 2000 Annual Meeting
of the Stockholders of the Company must be received by the Company not later
than November 22, 1999 for inclusion in the Company's 2000 Proxy Statement and
Proxy.
EXPENSES
This proxy solicitation is being made on behalf of the Company and 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
July 23, 1999
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APPENDIX I
The Board of Directors recommends a vote "FOR" Items 1 and 2.
(1) Election of Directors
FOR all nominees
listed below
WITHHOLD AUTHORITY to vote
for all nominees listed below
*EXCEPTIONS
Nominees: P.L. Acton, J.W. Boyden, C.C. Ealy L.R. Pfund, J.M. Reed, C.W. Smith,
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.
FOR AGAINST ABSTAIN
Change of Address and
or Comments Mark Here
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:-----------------------, 1999
- -----------------------------------
Signature(s)
- ------------------------------------
Signature(s)
Votes MUST be indicated
(x) in Black or Blue ink.
Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
BUSH BOAKE ALLEN INC.
Proxy Solicited by the Board of Directors for Annual Meeting of Stockholders
September 8, 1999
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
Montvale Holiday Inn, 100 Chestnut Ridge Road, Montvale, N.J. on Wednesday,
September 8, 1999 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 July 23, 1999.
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
STATEMENT OF DIFFERENCES
------------------------
The British pound sterling sign shall be expressed as...................... 'L'
