<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12.
</TABLE>
GENERAL CHEMICAL GROUP INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: ...........................................................
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<PAGE> 2
THE GENERAL CHEMICAL GROUP INC.
April 13, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The General Chemical Group Inc. (the "Annual Meeting") to be held at the Mellon
Bank Building, 8 Loockerman Street, Dover, Delaware on Tuesday, May 11, 1999 at
9:30 a.m. local time.
The Annual Meeting has been called for the purpose of (i) electing six
Directors for a one-year term; (ii) ratifying the appointment of Deloitte &
Touche LLP as the Company's independent auditors; and (iii) considering and
voting upon such other business as may properly come before the Annual Meeting
and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 5, 1999 as
the record date for determining stockholders entitled to receive notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors recommends that you vote "FOR" the election of the
six nominees of the Board of Directors as Directors of the Company and the
ratification of Deloitte & Touche LLP as the Company's independent auditors.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
Very truly yours,
/s/ Todd M. Duchene
-------------------
TODD M. DUCHENE
Secretary
<PAGE> 3
THE GENERAL CHEMICAL GROUP INC.
Liberty Lane
Hampton, New Hampshire 03842
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 1999
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of THE
GENERAL CHEMICAL GROUP INC. (the "Company") will be held at the Mellon Bank
Building, 8 Loockerman Street, Dover, Delaware on Tuesday, May 11, 1999 at 9:30
a.m. local time for the following purposes:
1. The election of six Directors for a one-year term;
2. The ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors; and
3. Such other business as may properly come before the Annual Meeting
and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 5, 1999 as
the record date for determining stockholders entitled to receive notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
Only holders of the Company's Voting Stock (i.e., Common Stock and Class B
Common Stock) of record at the close of business on the record date will be
entitled to receive notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
In the event that there are not sufficient shares of Voting Stock to be
voted in favor of any of the foregoing proposals at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit further
solicitation of proxies.
By Order of the Board of Directors
Hampton, New Hampshire
April 13, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 4
THE GENERAL CHEMICAL GROUP INC.
Liberty Lane
Hampton, New Hampshire 03842
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The General Chemical Group Inc., a Delaware
corporation (the "Company" or "General Chemical"), for use at the Company's
Annual Meeting of Stockholders to be held at the Mellon Bank Building, 8
Loockerman Street, Dover, Delaware, May 11, 1999 at 9:30 a.m. local time, and
any adjournments or postponements thereof (the "Annual Meeting").
At the Annual Meeting, the stockholders of the Company will be asked to
consider and vote upon the following matters:
1. The election of six directors, each for a one-year term expiring at
the 2000 annual meeting of stockholders and until each Director's successor
is duly elected and qualified, or until such Director's earlier resignation
or removal;
2. The ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors; and
3. Such other business that may properly come before the Annual
Meeting.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are first
being mailed to stockholders of the Company on or about April 12, 1999 in
connection with the solicitation of proxies for the Annual Meeting. The Board of
Directors (the "Board"), has fixed the close of business on April 5, 1999 as the
record date for determination of stockholders entitled to receive notice of, and
to vote at, the Annual Meeting (the "Record Date"). Only holders of record of
Common Stock and Class B Common Stock at the close of business on the Record
Date will be entitled to receive notice of, and to vote at, the Annual Meeting.
As of the Record Date, there were 10,973,192 shares of Common Stock and
9,758,421 shares of Class B Common Stock outstanding and entitled to vote at the
Annual Meeting and approximately 170 holders of record of Common Stock and 5
holders of record of Class B Common Stock. Except as described in the next
sentence, each holder of a share of Common Stock outstanding as of the close of
business on the Record Date will be entitled to cast one vote for each such
share and each holder of a share of Class B Common Stock outstanding as of the
close of business on the Record Date will be entitled to cast ten votes for each
such share with respect to each matter submitted at the Annual Meeting. In
connection with the Spinoff (described below), a total of 5,800,000 shares of
Class B Common Stock are expected to be converted (the "Conversion") into Common
Stock after the Record Date and before the Annual Meeting; however, since the
Conversion is expected to occur, the number of shares entitled to vote at the
Annual Meeting will be 10,973,192 shares of Common Stock and 3,958,421 shares of
Class B Common Stock.
The presence, in person or by proxy, of shares of Common Stock and Class B
Common Stock (collectively the "Voting Stock") representing a majority of the
voting power of the outstanding shares of Voting Stock issued, outstanding and
entitled to vote at the Annual Meeting is necessary to constitute a quorum for
the transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the votes cast is necessary to elect the
Director-nominees as Directors of the Company. With respect to Proposal 2 --
Ratification
3
<PAGE> 5
of the Appointment of Deloitte & Touche LLP as the Company's independent
auditors, the affirmative vote of a majority of the voting power of the Voting
Stock present, or represented, and entitled to vote is required for approval.
Shares that reflect abstentions or "broker non-votes" (i.e., shares represented
at the Annual Meeting held by brokers or nominees as to which instructions have
not been received from the beneficial owners or persons entitled to vote such
shares and with respect to which the broker or nominee does not have
discretionary power to vote such shares) will be counted for purposes of
determining whether a quorum is present for the transaction of business at the
Annual Meeting. Broker non-votes will have no effect on the outcome of the
election of the Directors.
A proxy may confer discretionary authority to vote with respect to any
matter presented at the Annual Meeting as to which a stockholder's notice
thereof was not timely given to the Secretary of the Company. A stockholder's
notice shall be timely if delivered to, or mailed to and received by, the
Company at its principal executive office not less than 75 days nor more than
120 days prior to May 12, 1999.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE. SHARES OF VOTING STOCK
REPRESENTED BY PROPERLY EXECUTED PROXIES AND RECEIVED BY THE COMPANY AND NOT
REVOKED WILL BE VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH ANY INSTRUCTIONS
CONTAINED THEREON. IF INSTRUCTIONS ARE NOT GIVEN THEREON, PROPERLY EXECUTED
PROXIES WILL BE VOTED "FOR" THE ELECTION OF THE SIX DIRECTOR-NOMINEES LISTED IN
THIS PROXY STATEMENT AND "FOR" THE RATIFICATION OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS. IT IS NOT ANTICIPATED THAT ANY
MATTERS OTHER THAN THE ELECTION OF DIRECTORS AND THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS WILL BE PRESENTED AT THE ANNUAL MEETING. IF
OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDERS.
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by giving written notice of such revocation to the Secretary of the
Company, or by signing and duly delivering a proxy bearing a later date, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not, by itself, revoke a proxy.
THE SPINOFF
The Board of Directors of the Company has determined to separate its
Performance Products and Manufacturing business from its Industrial Chemicals
business through a spinoff (the "Spinoff") by transferring the Performance
Products and Manufacturing business to its subsidiary, GenTek Inc. ("GenTek"),
and distributing the stock of GenTek to stockholders of the Company of record on
April 16, 1999, on a share-for-share basis. The distribution of the stock of
GenTek and the completion of the Spinoff is expected to occur on or about April
30, 1999 (the "Effective Time"). The stockholders of the Company who do not hold
shares as of the close of business on April 16, 1999 will not receive shares of
GenTek. The Spinoff, however, is subject to a number of conditions, including
closings under new financing facilities for each of GenTek and the Company.
After the Spinoff, the Company and GenTek will be separate, independent
companies; the Company will own and operate the Industrial Chemicals business,
and GenTek will own and operate the Performance Products business and the
Manufacturing business. As a result, the Company's activities and operations
will be significantly different following the Spinoff.
For additional information regarding the Spinoff, GenTek and the Company
after the Spinoff, see the Amendment No. 2 to Registration Statement on Form 10
(file No. 001-14789) of GenTek filed with the Securities and Exchange Commission
(the "SEC") on April 8, 1999. In addition, the Company will mail an Information
Statement, which is included in the Form 10, to stockholders of the Company of
record on April 16, 1999, which will describe the Spinoff.
At the Effective Time, the Board of Directors of the Company will consist
of Paul M. Montrone, Paul M. Meister, Philip E. Beekman, John M. Kehoe, Jr.,
Gerald J. Lewis and Joseph Volpe. Four of the Company's
4
<PAGE> 6
current Directors will resign as Directors of the Company prior to the Effective
Time and will be elected as Directors of GenTek. Messrs. Montrone and Meister
will also be elected as Directors of GenTek as of the Spinoff. In addition,
certain executive officers of the Company, including Richard R. Russell, the
Company's President and Chief Executive Officer, will resign as officers of the
Company and will be appointed as officers of GenTek or its subsidiaries prior to
the Effective Time. The management of the Company after the Spinoff will include
the officers of the Company currently responsible for the Industrial Chemical
business. The Company's President and Chief Executive Officer will be Mr. John
M. Kehoe, Jr., who has extensive experience managing substantial public
companies.
PRINCIPAL STOCKHOLDERS
The following table sets forth, to the best knowledge and belief of the
Company, certain information with respect to the beneficial ownership of more
than five percent of the Company's Common Stock and Class B Common Stock as of
April 5, 1999. For information concerning ownership by management, see
"Management Stockholders."
<TABLE>
<CAPTION>
SHARES OF CLASS B
SHARES OF PERCENT OF COMMON PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK CLASS(1) STOCK(2) CLASS(1)
- ------------------------ ------------ ---------- ----------------- ----------
<S> <C> <C> <C> <C>
Paul M. Montrone(3)...................... 9,811,421 47.3% 9,758,421(3) 100%
Thomson Horstmann & Bryant(4)............ 889,250(5) 4.3%(6)
Franklin Resources Inc.(7)............... 878,100(8) 4.2%(6) -- --
C. A. Delaney Capital Management Ltd.
(9).................................... 755,132(10) 3.6%(6)
J O Hambro Capital Management (Holdings)
Limited(11)............................ 753,400(12) 3.6%(6) -- --
J. P. Morgan & Co. Incorporated(13)...... 747,700(14) 3.6%(6) -- --
Equitable Life Assurance Society(15)..... 650,000(16) 3.1%(6) -- --
John W. Gildea(17)....................... 590,996(18) 2.9%(6) -- --
</TABLE>
- ---------------
(1) The percentage ownership of Common Stock has been calculated assuming the
conversion of all outstanding shares of Class B Common Stock. Applicable
percentage figures based on 20,731,613 shares, which represents the total
number of shares of Common Stock and Class B Common Stock outstanding as of
April 5, 1999. As of such date, there were 10,973,192 shares of Common
Stock and 9,758,421 shares of Class B Common Stock outstanding.
(2) Holders of Class B Common Stock may convert each share of Class B Common
Stock at any time and from time to time into one fully-paid and
nonassessable share of Common Stock.
In order to obtain a private letter ruling from the Internal Revenue
Service concerning the tax-free nature of the Spinoff, Mr. Montrone and his
family trusts have agreed to convert, on or prior to the Effective Time, a
total of 5,800,000 shares of Class B Common Stock into Common Stock.
Following the Conversion, there will be 16,773,192 shares of Common Stock
and 3,958,421 shares of Class B Common Stock outstanding. As a result of
the Class B Conversion, the total voting rights represented by the shares
held by Mr. Montrone and his family trusts will decrease from 89.9% to
80.6%. Since the Class B Conversion will take place after the Record Date
and before the Annual Meeting, Mr. Montrone and his family trusts will not
be able to exercise, at the Annual Meeting, the voting rights of the
5,800,000 shares of Class B Common Stock being converted and, as a result,
at the Annual Meeting, Mr. Montrone and his family trusts will have the
voting rights represented by 3,958,421 shares of Class B Common Stock
(representing 78.4% of the voting rights of the Company's capital stock).
(3) The address for Mr. Montrone is c/o The General Chemical Group Inc.,
Liberty Lane, Hampton, New Hampshire 03842. See footnote (4) of "Management
Stockholders" table.
(4) The address of Thomson Horstmann & Bryant ("Horstmann") is Park 80 West,
Plaza Two, Saddle Brook, New Jersey 07663.
5
<PAGE> 7
(5) The information presented herein is based solely upon a Schedule 13G filing
made with the United States Securities and Exchange Commission (the "SEC")
by Horstmann on January 28, 1999. According to the Schedule 13G filing,
Horstmann possesses sole voting power over 572,600 of the above shares,
shared voting power over 15,600 of the above shares and sole dispositive
power over all of the above shares.
(6) The percentage ownership of Common Stock has been calculated assuming the
conversion of all outstanding shares of Class B Common Stock into Common
Stock. Prior to such conversion, the percentage ownership of Common Stock
for each of Horstmann, Franklin Resources Inc. ("Franklin"), C. A. Delaney
Capital Management Ltd. ("Delaney Capital"), J O Hambro Capital Management
(Holdings) Limited ("Hambro"), J.P. Morgan & Co. ("J.P. Morgan"), Equitable
Life Assurance Society ("Equitable") and Mr. Gildea is 8.1%, 8.0%, 6.9%,
6.9%, 6.8%, 5.9% and 5.4%, respectively.
(7) The address of Franklin, Mr. Charles B. Johnson and Mr. Rupert H. Johnson,
Jr. is 777 Mariners Island Boulevard, 6th Floor, San Mateo, CA 94404. The
address of Franklin Mutual Advisers, Inc. is 51 John F. Kennedy Parkway,
Short Hills, NJ 07078.
(8) The information presented herein is based solely upon a Schedule 13G filing
made with the SEC by Franklin on January 28, 1999. According to such
filing, Franklin filed such Schedule 13G on behalf of the following
individuals: (i) Franklin itself (parent holding company); (ii)Mr. Charles
B. Johnson, (principal shareholder of parent holding company); (iii) Mr.
Rupert H. Johnson, Jr. (principal shareholder of parent holding company);
and (iv) Franklin Mutual Advisors, Inc. (investment advisor). According to
the Schedule 13G filing, Franklin Mutual Advisors, Inc. possesses sole
voting and dispositive power over all of the above shares. Neither Franklin
nor Messrs. Charles or Rupert Johnson possess sole voting or sole
dispositive power over any of the above shares.
(9) The address of Delaney Capital is BCE Place, Canada Trust Tower, 161 Bay
Street, P. O. Box 713, Suite 5100, Toronto, Ontario, Canada M5J 2S1.
(10) The information presented herein is based solely upon information provided
by Delaney Capital to General Chemical in February 1999. According to
Delaney Capital, Spectrum United Canadian Growth Fund and the private
clients, for which Delaney Capital acts as the investment manager, are
registered holders of 493,500 of the above shares and 261,632 of the above
shares. According to a Schedule 13G filing made with the SEC by Delaney
Capital on February 13, 1998, Delaney Capital possesses sole voting and
dispositive power over the shares whose registered holders are Spectrum
United Canadian Growth Fund and private clients.
(11) The address of Hambro is 10 Park Lane, London SW1A 1LP, England.
(12) The information presented herein is based solely upon a schedule 13G filing
made with the SEC by Hambro on April 1, 1999. According to such filing,
Hambro filed the Schedule 13G on behalf of the following persons: (i)
Hambro (parent holding company); (ii) J O Hambro Capital Management Limited
("Capital Management") (investment adviser); (iii) Christopher Harwood
Bernard Mills ("Mills") (director of Capital Management); (iv) Growth
Financial Services Limited ("GFS"); (v) North Atlantic Smaller Companies
Investment Trust plc ("NASCIT"); (vi) American Opportunity Trust plc
("Opportunity Trust"); (vii) Orxy International Growth Fund Limited
("Orxy") and (viii) Consulta (Channel Islands) Limited ("Consulta").
According to the Schedule 13G filing, each of Hambro, Capital Management
and Mills possess shared voting and dispositive power over all of the above
shares; each of GFS and NASCIT possess shared voting and dispositive power
over 110,000 of the above shares; and each of Orxy and Consulta possess
shared voting and dispositive power over of the above 75,000 shares.
(13) The address of J. P. Morgan is 60 Wall Street, New York, NY 10260
(14) The information presented herein is based solely upon a Schedule 13G/A
filing made with the SEC by J.P. Morgan on February 22, 1999. According to
such filing, J.P. Morgan possesses sole voting power over 656,200 of the
above shares and sole dispositive power over all of the above shares.
(15) The address of Equitable is City Place House, 55 Basinghall Street, London
EC2V 5DR, England.
(16) The information presented herein is based solely upon a Schedule 13D filing
made with the SEC by Equitable on May 2, 1997. According to such filing,
Equitable possesses sole voting and sole dispositive power over all of the
above shares.
6
<PAGE> 8
(17) The address of Mr. John W. Gildea is c/o Gildea Management Co., 115 East
Putnam Avenue, Greenwich, CT 06830. The address of Network Fund III, Ltd.
("Network") is P.O. Box 219, Butterfield House, Grand Cayman Island, B.V.I.
(18) The information presented herein is based upon a Schedule 13D filing made
with the SEC by Mr. Gildea, a director of the Company, on behalf of himself
and Network on February 16, 1999. Network is a investment fund managed by
Gildea Management Company, of which Mr. Gildea is the Chairman of the Board
of Directors, Chief Executive Officer and sole stockholder. According to
such filing, Network possesses sole dispositive power over 470,996 of the
above shares, while Mr. Gildea possesses sole voting and sole dispositive
power over all of the above shares.
PROPOSAL 1
ELECTION OF DIRECTORS
Following the Effective Time and at the time of the Annual Meeting, the
Board of Directors of the Company will consist of Paul M. Montrone, Paul M.
Meister, Philip E. Beekman, John M. Kehoe, Jr., Gerald J. Lewis and Joseph
Volpe. Messrs. Montrone, Meister, Beekman and Lewis are currently Directors of
the Company and will remain as Directors after the Effective Time. Messrs. John
W. Gildea, Richard R. Russell, Scott M. Sperling and Ira Stepanian (the "Former
Directors") are currently Directors of the Company, but they will resign as
Directors on or prior to the Effective Time and, together with Messrs. Montrone
and Meister, will be elected to the Board of GenTek. Upon the resignation of the
Former Directors, Messrs. Kehoe and Volpe will be elected as Directors of the
Company and the size of the Board will be decreased to six members. In this
proxy statement, references to "Prior Board" mean the Board of the Company
before it is reconstituted for the Spinoff.
At the Annual Meeting, six Directors will be elected to serve until the
2000 annual meeting of stockholders and until such Director's successor is duly
elected and qualified or until his earlier resignation or removal. The
Nominating Committee has recommended, and the Board has nominated, each of
Messrs. Paul M. Montrone (Chairman), Paul M. Meister (Vice Chairman), Philip E.
Beekman, John M. Kehoe, Jr., Gerald J. Lewis and Joseph Volpe, for election as
Directors of the Company. Unless otherwise specified in the proxy, it is the
intention of the persons named in the proxy to vote the shares represented by
each properly executed proxy for the election of Messrs. Montrone, Meister,
Beekman, Kehoe, Lewis and Volpe as Directors. Each Director-nominee has agreed
to stand for election and to serve, if elected, as a Director. However, if any
person nominated by the Board fails to stand for election or is unable to accept
election, the proxies will be voted for the election of such other person or
persons as the Board may recommend.
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary for the election of each nominee as a Director of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES OF THE BOARD OF DIRECTORS OF THE COMPANY.
BOARD OF DIRECTORS NOMINEES (ALL FOR A TERM EXPIRING IN 2000)
Paul M. Montrone, 57, Chairman of the Board, has been a Director of the
Company since 1988 and was President of the Company from 1987 to 1994. Mr.
Montrone has been Chairman of the Board of Fisher Scientific International Inc.
("Fisher") since March 1998, Chief Executive Officer and a Director of Fisher
since prior to 1994, and President from 1991 until 1998. Mr. Montrone is also a
Director of Waste Management, Inc. (refuse to energy). Mr. Montrone will be a
Director and the Chairman of the Board of GenTek as of the Effective Time.
Paul M. Meister, 46, Vice Chairman of the Board, has been a Director of the
Company since 1996 and Vice Chairman of the Board since 1998. Mr. Meister has
been Vice Chairman of the Board and Executive Vice President of Fisher since
March 1998, Chief Financial Officer of Fisher since prior to 1994 and Senior
Vice President from prior to 1994 to 1998. Mr. Meister is also a Director of
Mineral Technologies Inc. and M&F Worldwide Corp. Mr. Meister is a Director of
and as of the Effective Time will be the Vice Chairman of the Board of GenTek.
7
<PAGE> 9
Philip E. Beekman, 67, has been a Director of the Company since 1996. Mr.
Beekman has been President of Owl Hollow Enterprises (consulting and investment)
since prior to 1994, and was Chairman of the Board and Chief Executive Officer
of Hook-SupeRx, Inc. (retail) from prior to 1994 to 1994. Mr. Beekman is also a
Director of Linens 'n Things Inc. and Kendle International Inc.
John M. Kehoe, Jr., 65, will be appointed as a Director and elected
President and Chief Executive Officer of the Company at the Effective Time. Mr.
Kehoe has served as President and Chief Executive Officer of Wheelabrator
Technologies Inc. (energy and environmental services) since 1994.
Gerald J. Lewis, 65, has been a Director of the Company since 1996. Judge
Lewis has been Chairman of Lawsuit Resolution Services since 1997, and was of
counsel to the law firm of Latham & Watkins from prior to 1994 to 1997.
Joseph Volpe, 58, will be appointed as a Director of the Company at the
Effective Time. Mr. Volpe has been General Manager of the Metropolitan Opera
since prior to 1994.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Prior Board held five (5) meetings during 1998. During 1998, each of
the members of the Prior Board attended at least 75 percent of the total number
of meetings of the Prior Board and of the Committees of which he was a member.
The Board has an Audit Committee, a Compensation Committee and a Nominating
Committee. Information contained in this Proxy Statement concerning the
Company's Board of Directors and Committees refer to the Board and Committees to
be established following the Effective Time unless otherwise noted.
After the Effective Time, the Audit Committee will consist of Messrs.
Beekman, Lewis and Volpe with Judge Lewis serving as Chairman. The Audit
Committee of the Prior Board consisted of Messrs. Gildea, Lewis and Stepanian
with Judge Lewis serving as Chairman. The Audit Committee is responsible for,
among other things, recommending the firm to be appointed as independent public
accountants to audit the Company's financial statements and to perform services
related to the audit; approving in advance the general nature of each
professional service performed by the independent public accountants; reviewing
the scope and the results of the audit with the independent public accountants;
reviewing with management and the independent public accountants the Company's
year-end operating results; considering the adequacy of the internal accounting
and control procedures of the Company; reviewing the non-audit services to be
performed by the independent public accountants if any; considering the effect
of such performance on the independent public accountants' independence;
directing and supervising, when appropriate, special investigations into matters
within the scope of the independent public accountant's duties; and performing
such other tasks related to and in furtherance of the foregoing as it may
consider necessary or appropriate or as may be assigned to it by the Board from
time to time. The Audit Committee of the prior Board met twice during 1998.
After the Effective Time, the Compensation Committee will consist of
Messrs. Beekman, Meister and Volpe, with Mr. Beekman serving as Chairman. The
Compensation Committee of the Prior Board consisted of Messrs. Beekman, Meister
and Sperling, with Mr. Beekman serving as Chairman. The Compensation Committee
is responsible for, among other things, reviewing and recommending compensation
arrangements for Directors and officers; approving such arrangements for other
senior level employees; administering certain benefit and compensation plans of
the Company and its subsidiaries; monitoring the activities of an internal
committee of members of management established to carry out policies and
guidelines with respect to such plans; and performing such other tasks related
to and in furtherance of the foregoing as it may consider necessary or
appropriate or as may be assigned to it by the Board from time to time. The
Compensation Committee of the Prior Board met twice during 1998.
After the Effective Time, the Nominating Committee will consist of all
members of the Board, with Mr. Montrone serving as Chairman. The Nominating
Committee is responsible for nominating persons for election to the Board. The
Nominating Committee will consider nominees properly recommended by
stockholders. The Bylaws of the Company prescribe an advance notice procedure
with regard to the nomination, other than by or at the direction of the Board or
a committee thereof, of candidates for election as directors (the "Nomination
Procedure"). The Nomination Procedure requires that a stockholder give prior
written notice, in
8
<PAGE> 10
proper form, of a planned nomination to the Secretary of the Company. The
requirements as to the form and timing of that notice are specified in the
Bylaws. The Company's Bylaws provide that any stockholder of record wishing to
nominate candidates for election as directors must provide written notice of
such proposal and appropriate supporting documentation, as set forth in the
Bylaws, to the Company at its principal executive office, not less than 75 days
nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting (the "Anniversary Date"), provided, however, that in
the event the annual meeting is scheduled to be held on a date more than 30 days
before the Anniversary Date, a stockholder's notice shall be timely if delivered
to, or mailed and received by, the Company at its principal executive office not
later than the close of business on the later of (i) the 75th day prior to the
scheduled date of such annual meeting or (ii) the 15th day following the day on
which public announcement of the date of such annual meeting is first made by
the Company. If the inspectors of election determine that a person was not
nominated in accordance with the Nomination Procedure, such person will not be
eligible for election as a director. Stockholder recommendations may be sent to
the Nominating Committee, c/o Secretary, The General Chemical Group Inc.,
Liberty Lane, Hampton, New Hampshire 03842. The Nominating Committee of the
Prior Board met once during 1998.
COMPENSATION OF DIRECTORS
Non-Employee Directors of the Company are entitled to receive cash and
other compensation pursuant to the plans described below.
Cash Compensation. Non-Employee Directors of the Company (other than
Messrs. Montrone and Meister) receive compensation of $40,000 per year, with no
additional fees for attendance at the Company's Board or committee meetings.
Employee Directors are not paid any fees or additional compensation for service
as members of the Company's Board or any of its committees. All Directors are
reimbursed for expenses incurred in connection with attending the Company's
Board and committee meetings.
Deferred Compensation Plan for Non-Employee Directors. Pursuant to the
Company's Deferred Compensation Plan for Non-Employee Directors, any Director
entitled to compensation may elect, generally prior to the commencement of any
calendar year, to have all or any portion of such Director's compensation for
such calendar year and for succeeding calendar years credited to a deferred
compensation account. Amounts credited to the Director's account will accrue
interest based upon the average quoted rate for ten-year U.S. Treasury Notes.
Deferred amounts will be paid in a lump sum or in installments at the Director's
discretion commencing on the first business day of the calendar year following
the year in which the Director ceases to serve on the Company's Board or of a
later calendar year specified by such Director.
Retirement Plan for Non-Employee Directors. Pursuant to the Company's
Retirement Plan for Non-Employee Directors, any Non-Employee Director who
retires from the Company's Board with at least five years of service as a
Director (other than Messrs. Montrone and Meister) will be eligible for an
annual retirement benefit for the remainder of such Director's lifetime. The
annual retirement benefit is equal to 50 percent of the Director fee in effect
at the date of such Director's retirement for a Director who retires with five
years of eligible service and is increased by 10 percent of the Director fee in
effect at the date of such Director's retirement for each additional year of
service, up to 100 percent of such fee for 10 or more years of service as a
Director or for Directors who retire after age 70. Payment of the retirement
benefits to any Director will commence upon the later of the Director's
retirement from the Company's Board or the attainment of age 60. Retirement
benefits may be suspended or terminated if the retired Director refuses to
render consultative services and advice to the Company or engages in any
activity which competes with the Company's business.
Restricted Unit Plan for Non-Employee Directors. Pursuant to the Company's
Restricted Unit Plan for Non-Employee Directors, each Non-Employee Director of
the Company (other than Messrs. Montrone and Meister), upon becoming a Director
of the Company, receives a one-time grant of 5,000 restricted units under the
Restricted Unit Plan for Non-Employee Directors evidencing a right to receive
shares of Common Stock, subject to certain restrictions. The Company will
maintain a memorandum account for each Director who received the grant of
restricted units and credit to such account the amount of any cash dividends and
shares of stock of any subsidiary distributed on the shares of Common Stock
("Dividend Equivalents") underlying such Director's restricted units from the
date of grant until the payment date described below. No shares of Common Stock
will
9
<PAGE> 11
be issued at the time restricted units are granted, and the Company will not be
required to set aside a fund for any such grant or for amounts credited to the
memorandum account. Pursuant to the terms of the Plan neither the restricted
units nor the memorandum account may be sold, assigned, pledged or otherwise
disposed of. Twenty-five percent of the restricted units and the related
Dividend Equivalents will vest for each year of service as a Director of the
Company. Vested restricted units and the related Dividend Equivalents will not
be payable until the Director ceases to be a member of the Company's Board. At
that time, the Director will receive one share of Common Stock for each vested
restricted unit, provided that a Director may elect, prior to the date on which
restricted units vest, to have payment deferred to a later date. Any restricted
units and related Dividend Equivalents that have not vested at the time the
Director ceases to be a Director of the Company will be cancelled unless service
has terminated because of death or disability, in which event all such
restricted units and related Dividend Equivalents will vest immediately. When
payment of restricted units is made, eligible Non-Employee Directors will also
receive cash and securities equal to the related Dividend Equivalents, together
with interest on the cash based upon the average quoted rate for ten-year U.S.
Treasury Notes. In the event of a stock dividend, stock split, recapitalization,
merger, liquidation or similar event, the Board, in its sole discretion, may
make equitable adjustments in outstanding awards and the number of shares of
Common Stock reserved for issuance under the plan.
Stock Options. On each of May 27, 1998 and December 2, 1998, the Prior
Board approved grants of 10,000 options to each Non-employee Director (other
than Messrs. Montrone and Meister). The options have a ten year term and an
exercise price of $24.5625 and $16.7188 per share, respectively, the fair market
value of the Common Stock on the date of each respective grant. The options are
exercisable in full at the date of grant pursuant to the terms of the 1996 Stock
Option and Incentive Plan. The options generally must be exercised, if at all,
not later than 90 days following the termination of grantee's service as a
director of the Company, or in the event of the grantee's death, disability or
normal retirement, not later than one year following the termination of
grantee's service as a director of the Company.
MANAGEMENT STOCKHOLDERS
The following table sets forth, to the best knowledge and belief of the
Company, certain information with respect to the beneficial ownership of the
Company's Common Stock and Class B Common Stock as of April 5, 1999 by (i) each
Director after the Effective Time and each Named Executive Officer (as defined)
of the Company, and (ii) all Directors and executive officers of the Company as
a group. In connection with the spin-off, all of the Named Executive Officers
other than Mr. Bloomquist will resign as officers of the Company and will be
appointed as officers of GenTek or its subsidiaries prior to the Effective Time.
Regarding the changes to the Company's Board, see "Proposal 1 -Election of
Directors".
<TABLE>
<CAPTION>
PERCENT SHARES OF
SHARES OF OF CLASS B PERCENT OF
NAME OF BENEFICIAL OWNER(1) COMMON STOCK(2) CLASS(3) COMMON STOCK CLASS(3)
- --------------------------- --------------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
Paul M. Montrone...................... 9,811,421(4) 47.3% 9,758,421(4) 100%
Richard R. Russell.................... 76,972(5) * -- --
Ralph M. Passino...................... 76,986(6) * -- --
James N. Tanis........................ 69,986(7) * -- --
Bodo B. Klink......................... 39,157(8) * -- --
DeLyle W. Bloomquist.................. 37,268(9) * -- --
Philip E. Beekman..................... 30,000(10) * -- --
Gerald J. Lewis....................... 25,000(10) * -- --
Paul M. Meister....................... 17,500(11) * -- --
John M. Kehoe, Jr..................... 0 * -- --
Joseph Volpe.......................... 0 * -- --
All Directors and executive officers
As a group (14 persons)............. 10,265,372(12) 48.6% 9,758,421 100%
</TABLE>
10
<PAGE> 12
- ---------------
* Less than 1%
(1) The address for all Directors and executive officers is c/o The General
Chemical Group Inc., Liberty Lane, Hampton, New Hampshire 03842.
(2) Assumes conversion of all outstanding shares of Class B Common Stock into
shares of Common Stock. Holders of Class B Common Stock may convert each
such share of Class B Common Stock at any time and from time to time into
one fully-paid and non-assessable share of Common Stock. See footnote (2)
of "Principal Stockholders" table.
(3) The percentage ownership of Common Stock has been calculated assuming the
conversion of all outstanding shares of Class B Common Stock into Common
Stock. Applicable percentage figures are based on 20,731,613 shares, which
represents the total number of Common Stock and Class B Common Stock
outstanding as of April 5, 1999. As of such date, there were 10,973,192
shares of Common Stock outstanding and 9,758,421 shares of Class B Common
Stock. See also footnote (2) to "Principal Stockholders" table.
(4) Includes 20,000 shares of Common Stock held by Mr. Montrone directly;
30,000 shares of Common Stock held by Mr. Montrone's wife; 3,000 shares of
Common Stock held by a family trust; 2,205,919 shares of Class B Common
Stock held by Mr. Montrone directly, 2,044,021 shares of Class B Common
Stock held by a grantor retained annuity trust formed in 1996 (the "1996
GRAT"); 1,508,481 shares of Class B Common Stock held by a grantor retained
annuity trust formed in February 1998 (the "February 1998 GRAT"); 2,000,000
shares of Class B Common Stock held in a grantor retained annuity trust
formed in December 1998 (the "December 1998 GRAT"); and 2,000,000 shares of
Class B Common Stock held in a grantor retained annuity trust formed in
March 1999 (the "1999 GRAT"). Mr. Montrone is the settlor, and is the
annuity beneficiary of both the 1996 GRAT and the February 1998 GRAT, and
is co-trustee, settlor and annuity beneficiary of the December 1998 GRAT
and the 1999 GRAT. Mrs. Montrone is the sole trustee with investment and
voting discretion of the 1996 GRAT and the February 1998 GRAT. Mr. and Mrs.
Montrone are co-trustees of the December 1998 GRAT and the 1999 GRAT; by
virtue of their positions as co-trustees, each of Mr. and Mrs. Montrone may
be deemed beneficial owner of all the shares held by the December 1998 GRAT
and the 1999 GRAT. By virtue of her position as trustee, Mrs. Montrone may
be deemed the beneficial owner of all shares held by the 1996 GRAT and the
February 1998 GRAT.
Does not include 100,000 shares of Common Stock held by a charitable
foundation, of which Mr. Montrone is a Director and Mrs. Montrone is a
Director and officer. By virtue of their positions with the charitable
foundation, Mr. and Mrs. Montrone may be deemed to be beneficial owners of
the shares of Common Stock held by the charitable foundation. Mr. and Ms.
Montrone disclaim any beneficial ownership of the 100,000 shares of Common
Stock held by the charitable foundation.
The shares of Class B Common Stock beneficially owned by Mr. Montrone
represents 89.9% of the combined voting power of the outstanding shares of
the voting stock. See also footnote (2) to "Principal Stockholders" table.
Pursuant to a registration rights agreement with General Chemical, Mr.
Montrone and his family trusts may request, at any time prior to April
2004, the registration of their shares of Common Stock (including shares of
Common Stock received upon the conversion of any Class B Common Stock) for
sale under the Securities Act of 1933. The Company will be required to
accept up to three requests for registration and, in addition, to include
the shares of Mr. Montrone and his family trusts in a proposed registration
of shares of Common Stock under the Securities Act in connection with the
sale of shares of Common Stock by the Company or any other stockholder of
the Company. The Company will be responsible for the expenses of the
registration of shares of Mr. Montrone and his family trusts other than
brokerage and underwriting commissions and taxes relating to the sale of
the shares.
(5) Includes 20,000 shares of Common Stock held by Mr. Russell directly, 1,000
shares of Common Stock held by Mr. Russell's daughter, an aggregate of
55,972 restricted units granted pursuant to the Company's Restricted Unit
Plan, of which 11,194 restricted units vested on each of November 15, 1996,
May 15, 1997 and May 15, 1998 and 22,390 restricted units will vest on May
15, 1999. Mr. Russell disclaims any beneficial ownership of the 1,000
shares of Common Stock held by his daughter.
11
<PAGE> 13
(6) Consists of 9,000 shares of Common Stock held by Mr. Passino's wife and
children, an aggregate of 27,986 restricted units granted pursuant to the
Company's Restricted Unit Plan, of which 5,597 restricted units vested on
each of November 15, 1996, May 15, 1997 and May 15, 1998 and 11,195
restricted units will vest on May 15, 1999, options to purchase 40,000
shares of Common Stock, which options vested 12,000 shares on each of May
15, 1997 and May 15, 1998 and 16,000 shares of which will vest on May 15,
1999. Mr. Passino disclaims any beneficial ownership of the 9,000 shares of
Common Stock held by his wife and children.
(7) Includes 2,000 shares of Common Stock held by Mr. Tanis directly, an
aggregate of 27,986 restricted units granted pursuant to the Company's
Restricted Unit Plan, of which 5,597 restricted units vested on each of
November 15, 1996, May 15, 1997 and May 15, 1998 and 11,195 restricted
units will vest on May 15, 1999; options to purchase 40,000 shares of
Common Stock, which options vested 12,000 shares on each of May 15, 1997
and May 15, 1998 and 16,000 shares of which will vest on May 15, 1999.
(8) Includes 500 shares of Common Stock held by Mr. Klink directly, an
aggregate of 18,657 restricted units granted pursuant to the Company's
Restricted Unit Plan, of which 3,732 restricted units vested on each of
November 15, 1996, May 15, 1997 and May 15, 1998 and 7,461 restricted units
will vest on May 15, 1999. Also includes options to purchase 20,000 shares
of Common Stock, which options vested 6,000 shares on each of May 15, 1997
and May 15, 1998 and 8,000 shares on May 15, 1999.
(9) Includes 500 Shares of Common Stock held by Mr. Bloomquist directly, an
aggregate of 21,768 restricted units granted pursuant to the Company's
Restricted Unit Plan, of which 4,353 restricted units vested on each of
November 15, 1996, May 15, 1997 and May 15, 1998 and 8,709 restricted units
will vest on May 15, 1999. Also includes options to purchase 15,000 shares
of Common Stock, which options vested 4,500 shares on each of May 15, 1997
and May 15, 1998 and 6,000 shares of which will vest on May 15, 1999.
(10) Includes 5,000 restricted units granted pursuant to the Company's
Restricted Unit Plan for Non-Employee Directors. Pursuant to this plan,
twenty-five percent of the restricted units and related Dividend
Equivalents (as defined in the plan) vest for each year of service as a
Non-Employee Director. Except as otherwise provided in the plan, vested
restricted units are payable when the grantee ceases to be a Director of
the Company. Also includes options to purchase 20,000 shares of Common
Stock, which options vested on the dates of grant.
(11) Includes 10,000 shares of Common Stock owned by Mr. Meister directly; an
aggregate of 7,500 restricted units granted pursuant to the Company's
Restricted Unit Plan, of which 1,500 restricted units vested on each of
November 15, 1996, May 15, 1997 and May 15, 1998 and 3,000 restricted units
will vest on May 15, 1999.
(12) Includes 2,288,217 shares of Common Stock held directly and 7,599,855
shares of Common Stock held indirectly. Also includes 177,800 restricted
units granted pursuant to the Company's Restricted Unit Plan which have
become vested, 10,000 restricted units granted pursuant to the Company's
Restricted Unit Plan for Non-Employee Directors, which vest according to
the schedule described in footnote 8 above, and options to purchase 189,500
shares of Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's Directors, executive officers and owners
of more than ten percent of a registered class of the Company's equity
securities to file initial reports of beneficial ownership and reports of
changes in beneficial ownership of such equity securities with the Securities
and Exchange Commission and the New York Stock Exchange. Pursuant to regulations
promulgated by the SEC, reporting persons must furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations that no other
reports were required, during the fiscal year ended December 31, 1998, the
Section 16 reporting persons complied with all Section 16(a) filing requirements
applicable to them.
12
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table summarizes the compensation paid to the Company's Chief
Executive Officer and to its four other most highly compensated executive
officers or key employees (the "Named Executive Officers") with respect to
Fiscal Years 1996, 1997 and 1998. In connection with the Spinoff, all of the
Named Executive Officers other than Mr. Bloomquist will resign as officers of
the Company and will be appointed as officers of GenTek or its subsidiaries
prior to the Effective Time. In addition, the Company's Board will be
reconstituted for the Spinoff as of the Effective Time. See "Proposal 1-Election
of Directors".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ----------------------- -------
OTHER RESTRICTED SECURITIES LTIP
NAME AND PRINCIPAL ANNUAL STOCK UNDERLYING PAY- ALL OTHER
POSITION YEAR SALARY$ BONUS$ COMPENSATION$ AWARDS OPTIONS OUTS COMPENSATION$(1)
- ------------------ ---- ------- ------- ------------- ---------- ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard R. Russell....... 1998 400,000 75,000 26,000
President,Chief
Executive............ 1997 400,000 375,000 -- -- -- -- 46,000
Officer and Director... 1996 400,000 425,000 -- -- 400,000 -- 49,000
Ralph M. Passino......... 1998 250,000 50,000 16,000
Vice President......... 1997 250,000 225,000 -- -- -- -- 28,000
Chief Financial
Officer.............. 1996 250,000 265,000 -- -- 65,000 -- 30,000
James N. Tanis........... 1998 250,000 50,000 16,000
Vice President and..... 1997 250,000 225,000 -- -- -- -- 28,000
General Manager........ 1996 250,000 225,000 -- -- 65,000 -- 28,000
Derivative Products &
Services of General
Chemical
DeLyle W. Bloomquist..... 1998 200,000 50,000 13,000
Vice President and..... 1997 180,000 150,000 -- -- 10,000 -- 20,000
General Manager........ 1996 140,000 125,000 -- -- 30,000 -- 16,000
Industrial Chemical
General Chemical
Bodo B. Klink............ 1998 205,000 35,000 13,000
Vice President,........ 1997 205,000 120,000 -- -- 5,000 -- 20,000
Business Development... 1996 195,000 150,000 -- -- 20,000 -- 20,000
And Services
General Chemical
</TABLE>
- ---------------
(1) Amounts listed in this column reflect the Company's contributions to the
Company's Savings and Profit Sharing Plan and Supplemental Savings Plan.
OPTION GRANTS IN LAST FISCAL YEAR
There were no stock options granted by the Company to the Named Executives
during 1998.
13
<PAGE> 15
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table includes information for each Named Executive Officer
with regard to the aggregate number of stock options held on December 31, 1998.
No stock options were exercised by Named Executive Officers in 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY
ACQUIRED VALUE 12/31/98(#) OPTIONS AT 12/31/98 ($)
ON REALIZED ---------------------------- ----------------------------
EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard R. Russell... -- -- -- 400,000 0 0
Ralph M. Passino..... -- -- 24,000 41,000 0 0
James N. Tanis....... -- -- 24,000 41,000 0 0
DeLyle W.
Bloomquist......... -- -- 9,000 31,000 0 0
Bodo B. Klink........ -- -- 12,000 13,000 0 0
</TABLE>
PENSION PLANS
The General Chemical Corporation Salaried Employee's Pension Plan (the
"Pension Plan") is a defined benefit plan that generally benefits full-time,
salaried employees. A participating employee's annual retirement benefit is
determined by the employee's credited service under the Pension Plan and average
annual earnings during the five years of the final ten years of service credited
under the Pension Plan for which such employees' earnings were highest. Annual
earnings include principally salary, overtime and short-term incentive
compensation. The Pension Plan provides that a participating employee's right to
receive benefits under the Pension Plan becomes fully vested after five years of
service. Under the Pension Plan, benefits are adjusted by a portion of the
social security benefits received by participants.
In addition, the Named Executive Officers participate in an unfunded
nonqualified excess benefit plan which pays benefits which would otherwise
accrue in accordance with the provisions of the Pension Plan, but which are not
payable under the Pension Plan by reason of certain benefit limitations imposed
by the Internal Revenue Code of 1986, as amended,(the "Code").
The table below indicates the estimated maximum annual retirement benefit a
hypothetical participant would be entitled to receive under the Pension Plan and
the excess benefit plan (without regard to benefit limitations imposed by the
Code) before any deduction for social security benefits if the retirement
occurred December 31, 1998, at the age of 65, after the indicated number of
years of credited service and if average annual earnings equaled the amounts
indicated.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE (2)
AVERAGE ANNUAL ---------------------------------------------------------------
EARNINGS(1) 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $40,000 $60,000 $80,000 $100,000 $100,000 $105,000
250,000 50,000 75,000 100,000 125,000 125,000 131,250
300,000 60,000 90,000 120,000 150,000 150,000 157,500
400,000 80,000 120,000 160,000 200,000 200,000 210,000
500,000 100,000 150,000 200,000 250,000 250,000 262,500
600,000 120,000 180,000 240,000 300,000 300,000 315,000
700,000 140,000 210,000 280,000 350,000 350,000 367,500
800,000 160,000 240,000 320,000 400,000 400,000 420,000
900,000 180,000 270,000 360,000 450,000 450,000 472,500
1,000,000 200,000 300,000 400,000 500,000 500,000 525,000
</TABLE>
- ---------------
(1) Compensation qualifying as annual earnings under the Pension Plan
approximate the amounts set forth as Salary and Bonus in the Summary
Compensation table for the individuals listed on such table.
(2) The number of years of credited service under the Pension Plan for Messrs.
Russell, Passino, Tanis, Bloomquist and Klink is approximately 22, 19, 11,
10 and 24, respectively.
14
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE
The overall objectives of the Company's compensation programs are to
attract, motivate and retain the most qualified and talented executives and to
provide the incentive for these executives to achieve the Company's business
objectives and to create an alignment of the interests of the stockholders and
those of the executives. To achieve these objectives, the Company has developed
compensation plans that tie a substantial portion of an executive's compensation
to the Company's performance as well as to the price of the Company's stock.
The principal components of the Company's executive compensation program
consists of fixed compensation in the form of base salary, variable compensation
in the form of annual incentive compensation and long-term compensation in the
form of stock options and other equity-based compensation awards. The policies
of the Compensation Committee with respect to the base salary and incentive
compensation awarded to the Company's senior executives, including Mr. Russell,
the Company's Chief Executive Officer, are discussed below.
Base Salaries. The initial base salaries for executive officers are
determined by the Compensation Committee based on its evaluation of the
responsibilities of the position held by the executive, their business
experience, past performance and anticipated contributions to the Company's
future success.
Salary adjustments are based on a periodic evaluation of the performance of
the Company and of each executive officer. The Compensation Committee will take
into consideration in the case of each executive officer the scope of their
responsibilities, time commitments, financial results, product quality
improvements, regulatory compliance, new business development and any other
applicable factors. Mr. Russell's base salary was not increased during 1998.
Annual Incentive Compensation. Pursuant to the terms of the Company's
Performance Plan, annual and other periodic incentive compensation becomes
payable to the extent that performance objectives specified by the Compensation
Committee are achieved. The performance objectives may be based upon either
Company-wide or operating unit performance in the following areas: earnings per
share, revenues, operating cash flow, operating earnings, working capital to
sales ratio and return on capital.
For 1998, the Compensation Committee made annual incentive compensation
awards to executive officers based on achievement of certain net income and
earnings per share objectives. Mr. Russell was awarded annual incentive
compensation for 1998 of $75,000 reflecting the Company's performance for 1998.
Long-Term Incentive Compensation. Long-term compensation awards to
executive officers consist of stock options, restricted stock, unrestricted
stock, performance share awards and stock appreciation rights. During 1996, the
Company granted stock options at the IPO price to executive officers in
connection with the Company's IPO.
During 1998, the Company did not grant options or restricted units to the
Company's executive officers.
Compliance with Section 162(m). The Compensation Committee believes that,
unless circumstances warrant an exception, the Company should only pay
compensation to its executive officers in excess of $1 million if such excess
amount is performance-based compensation exempt from the limit on deductibility
of such compensation under Section 162(m) of the Code.
The Compensation Committee
of the Board of Directors
Philip E. Beekman, Chairman
Paul M. Meister
Scott M. Sperling
15
<PAGE> 17
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 on May 15,
1996 (the date of the Company's initial public offering of Common Stock) in each
of (i) The General Chemical Group Inc. Common Stock (ii) the Standard & Poor's
500 Index and (iii) the Standard & Poor's Chemical Composite Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE GENERAL CHEMICAL GROUP INC. COMMON STOCK,
THE STANDARD & POOR'S 500 INDEX AND THE STANDARD & POOR'S
CHEMICAL COMPOSITE INDEX
<TABLE>
<CAPTION>
S&P MIDCAP
THE GENERAL CHEMICAL CHEMICAL
GROUP, INC. S&P CHEMICALS INDEX S&P COMPOSITE INDEX INDEX
-------------------- ------------------- ------------------- ----------
<S> <C> <C> <C> <C>
5/16/96 100.00 100.00 100.00 100.00
12/31/96 135.85 113.62 112.11 99.82
21/31/97 155.02 139.65 149.51 114.72
12/31/98 81.24 127.19 192.24 87.87
</TABLE>
ASSUMES $100 INVESTED ON MAY 15, 1996
ASSUMES DIVIDENDS REINVESTED
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
---------------------------------------------------
COMPANY/INDEX/MARKET 5/16/1996 12/31/1996 12/31/1997 12/31/1998
- -------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
General Chemical Group Inc....................... 100.00 135.85 155.02 81.23
S&P Chemical Composite Index..................... 100.00 108.63 132.16 132.08
S&P 500 Index.................................... 100.00 112.96 150.64 193.70
S&P Midcap Chemical Index........................ 100.00 99.82 114.72 87.87
</TABLE>
16
<PAGE> 18
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Messrs. Montrone and Meister are Managing Directors of Latona Associates
Inc. (the "Management Company") a management company controlled by Mr. Montrone.
On January 1, 1995, the Company entered into an agreement with the Management
Company to provide the Company with strategic management, business and financial
advisory services including guidance and advice relating to financing, security
offerings, recapitalizations restructurings and acquisitions, tax, corporate
secretarial, employee benefit services and other administrative services.
Pursuant to its agreement with the Management Company, the Company paid the
Management Company $6.3 million of fees for such services in 1998. In connection
with the spin-off, Latona agreed to provide services to GenTek and the Company
following the spin-off and to split the fee between the Company and GenTek.
Following the Spinoff, the Company's annual fee for such services will be
approximately $1.5 million., payable quarterly in advance, adjusted annually
after 1999 for increases in the U.S. Department of Labor, Bureau of Labor
Statistics, Consumer Price Index. Following the Spinoff, GenTek will pay the
Management Company annual fees of approximately $4.5 million plus fees in
connection with any acquisition or business combination for which the Management
Company advises it, comparable to those received by investment banking firms for
such services (subject to the approval of a majority of the independent
directors of the Company). The Management Company will not receive any fees for
the Spinoff (other than reimbursement of its expenses).
Both the Company's and GenTek's agreement extends through December 31,
2004. The agreement may be terminated by either party if the other party ceases,
or threatens to cease, to carry on its business, or commits a material breach of
the agreement which is not remedied within 30 days of notice of such breach. The
agreement may also be terminated by the Company if Mr. Montrone ceases to hold,
directly or indirectly, shares of the Company's capital stock constituting at
least 20 percent of the aggregate voting power of its capital stock.
See footnote (5) to the "Management Stockholders" table.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board, the Board has
appointed Deloitte & Touche LLP as the Company's independent auditors for the
1999 fiscal year and hereby requests that the stockholders ratify such
appointment.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting with the opportunity to make such statements as they desire. They
will also be available to respond to appropriate questions from stockholders.
SUBMISSION OF PROPOSALS FOR 2000 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy statement
and form of proxy statement, stockholder proposals intended to be presented at
the Company's 2000 annual meeting of stockholders must be received by the
Company on or before December 13, 1999. However, if the date of the Company's
2000 annual meeting will be changed by more than 30 days from the date of the
1999 Annual Meeting, then such date will be a reasonable time before the Company
begins to print and mail its proxy materials for its 2000 annual meeting. The
Company's By-Laws provide that any stockholder of record wishing to nominate
candidates for election as Directors or to have a stockholder proposal
considered at the annual meeting must provide written notice of such proposal
and appropriate supporting documentation, as set forth in the By-Laws, to the
Company at its principal executive office, not less than 75 days nor more than
120 days prior to the anniversary date of the immediately preceding annual
meeting. In the event, however, that the annual meeting is scheduled to be held
more than 30 days before such anniversary date or more than 60 days after such
anniversary date, notice shall be timely if
17
<PAGE> 19
delivered to, or mailed to and received by, the Company at its principal
executive office not later than the close of business on the later of (A) the
75th day prior to the scheduled date of such annual meeting, or (B) the 15th day
following the day on which public announcement of the date of such annual
meeting is first made by the Company. Any such proposal should be directed to
the attention of the Secretary, The General Chemical Group Inc., Liberty Lane,
Hampton, New Hampshire 03842.
EXPENSES OF SOLICITATION
The Company will pay the entire expense of soliciting proxies for the
Annual Meeting. In addition to solicitations by mail, certain Directors,
officers and regular employees of the Company (who will receive no compensation
for their services other than their regular compensation) may solicit proxies by
telephone, telegram or personal interview. Banks, brokerage houses, custodians,
nominees and other fiduciaries have been requested to forward proxy materials to
the beneficial owners of shares held of record by them and such custodians will
be reimbursed for their expenses.
ANNUAL REPORT
The Annual Report on Form 10-K of the Company for the year ended December
31, 1998, an Information Statement relating to the Spinoff and this proxy
statement are being mailed together to all stockholders of the Company of record
on April 5, 1999, the record date for voting at the Annual Meeting. Neither the
Annual Report nor the Information Statement, however, is part of the proxy
solicitation material.
By Order of the Board of Directors,
April 13, 1999
The Company's 1998 Annual Report on Form 10-K, filed with the Securities
and Exchange Commission, is available without charge by written request from the
office of the Secretary, Liberty Lane, Hampton, NH 03842.
Additional information about the Company can be found at the Company's
internet site: http://www.genchem.com
<PAGE> 20
THE GENERAL CHEMICAL GROUP INC.
ANNUAL MEETING, MAY 11, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Messrs. Paul M. Montrone, Paul M. Meister, Richard R. Russell and Todd M.
DuChene, each with power of substitution, are hereby authorized to vote all
shares of common stock of The General Chemical Group Inc., which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of The General Chemical Group Inc. to be held on
Tuesday, May 11, 1999, and at any adjournments, as specified on the reverse
side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE
REVERSE SIDE HEREON AND RETURN IT IN THE ENCLOSED ENVELOPE.)
FOLD AND DETACH HERE
<PAGE> 21
<TABLE>
<S> <C> <C> <C>
Please mark
A VOTE FOR PROPOSALS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS. your vote as /X/
indicated in
this example
1. Election of Directors with terms expiring at the Annual Meeting in 2000. 2. Ratify the appointment of Deloitte &
Touche as independent auditors of the
For each WITHHOLD AUTHORITY Nominees: Paul M. Montrone, Paul M. Meister, Company for the current fiscal year.
nominee to vote for each Philip E. Beekman, John M. Kehoe, Jr.,
listed nominee listed Gerald J. Lewis and Joseph Volpe FOR AGAINST ABSTAIN
(Instructions: To withhold authority to vote for
/ / / / any individual nominee, write the nominee's name / / / / / /
on the space provided below)
________________________________________________
A MAJORITY (OR IF ONLY ONE, THEN THAT ONE) OF
3. In their discretion, on such other business THE ABOVE PERSONS OR THEIR SUBSTITUTES WHO
as may properly come before the meeting. SHALL BE PRESENT AND ACTING AT THE MEETING
SHALL HAVE THE POWERS CONFERRED HEREBY.
Dated: _______________________________, 1999
____________________________________________
____________________________________________
Signature of Stockholder(s)--please sign name
exactly as imprinted (do not print). Please
indicate any change of address.
NOTE: Executors, administrators, trustees and
others signing in a representative capacity
should indicate the capacity in which they
sign. If shares are held jointly, EACH holder
should sign.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
</TABLE>
FOLD AND DETACH HERE
