---------------------------------------------------------
THIS DOCUMENT IS A COPY OF THE DEFINITIVE PROXY STATEMENT
FILED ON MARCH 22, 1996.
---------------------------------------------------------
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 Rule 14a-11 or Rule 14a-12
UCAR INTERNATIONAL 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(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. Identified 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>1
[LOGO]
UCAR INTERNATIONAL INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 1996 AND
PROXY STATEMENT
March 22, 1996
<PAGE>2
[LOGO]
UCAR INTERNATIONAL INC. 39 Old Ridgebury Road, Section J-4, Danbury, CT
06817-0001
ROBERT P. KRASS
Chairman of the Board,
President and
Chief Executive Officer
March 22, 1996
To Our Stockholders:
It is my pleasure to invite you to our annual meeting. It will be held on
Tuesday, May 7, at 10:30 a.m., in the Grand Ballroom of the Danbury Hilton and
Towers, 18 Old Ridgebury Road, Danbury, Connecticut.
On the following pages, you will find the formal notice of the annual
meeting and our proxy statement. When you have finished reading the proxy
statement, please promptly mark, sign and return the enclosed proxy card, to
insure that your shares will be represented.
We hope that many of you will be able to attend our annual meeting in
person. If you do so, please write your name where indicated on the enclosed
ticket and bring it with you to the annual meeting.
We appreciate the continuing interest of our stockholders in the business
of UCAR International Inc. and I look forward to seeing many of you at the
annual meeting.
Sincerely yours,
/s/ ROBERT P. KRASS
-------------------
Chairman of the Board, Chief Executive
Officer and President
<PAGE>3
[LOGO]
UCAR INTERNATIONAL INC. 39 Old Ridgebury Road, Section J-4, Danbury, CT
06817-0001
PETER B. MANCINO
Vice President,
General Counsel
and Secretary
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 1996
March 22, 1996
The annual meeting of stockholders of UCAR International Inc. will be held
at 10:30 a.m. on Tuesday, May 7, 1996, in the Grand Ballroom of the Danbury
Hilton and Towers, 18 Old Ridgebury Road, Danbury, Connecticut, for the
following purposes:
1. To elect 8 directors to serve on the Board of Directors until the
annual meeting of stockholders for 1997.
2. To transact such other business as may properly come before the
meeting.
To ensure that your shares will be represented at the annual meeting in the
event that you do not attend, please sign the enclosed proxy card and return it
in the enclosed envelope.
By Order of the Board of Directors
/s/ PETER B. MANCINO
--------------------
Vice President, General Counsel and
Secretary
<PAGE>4
[LOGO]
UCAR INTERNATIONAL INC. 39 Old Ridgebury Road, Section J-4, Danbury, CT
06817-0001
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS FOR 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information for Stockholders.................................... 1
Election of Directors................................................... 1
Nominees........................................................... 1
Committees of the Board............................................ 2
Compensation of Directors.......................................... 3
Compensation of Executive Officers................................. 3
Compensation Committee Interlocks.................................. 12
Report of the Board on Executive Compensation...................... 13
Performance Graph.................................................. 15
Security Ownership of Management and Certain Beneficial Owners..... 16
Certain Transactions............................................... 17
Stockholder Proposals for the Annual Meeting of Stockholders for 1997... 18
Other Information....................................................... 18
</TABLE>
<PAGE>5
GENERAL INFORMATION FOR STOCKHOLDERS
Proxies are solicited from stockholders by the Board of Directors (the
'Board') of UCAR International Inc. ('UCAR') in order to provide every
stockholder an opportunity to vote on all matters scheduled to come before the
annual meeting of stockholders for 1996, whether or not he or she attends in
person. When the enclosed proxy card is properly executed and returned, the
shares represented will be voted by the proxyholders named on the proxy card in
accordance with the stockholder's directions. Stockholders may vote on a matter
by marking the appropriate box on the proxy card. If the proxy card is executed
and returned and no box is marked for a specified matter, the shares will be
voted as recommended by the Board on that matter. If a stockholder is a
participant in the UCAR Carbon Savings Plan (the 'Savings Plan'), the proxy card
will represent both the number of shares registered in the participant's name
and the number of whole shares credited to the participant's account in the
Savings Plan, and all such shares will be voted in accordance with the
instructions on the proxy card.
Management knows of no matters other than those set forth on the proxy card
that will be presented for action at the meeting. Execution of a proxy card,
however, confers on the proxyholders discretionary authority to vote the shares
represented in accordance with their best judgment on any other business that
may come before the annual meeting.
This Proxy Statement and the enclosed proxy card (together, the 'Proxy
Materials') are being mailed to stockholders beginning on March 22, 1996. Any
stockholder executing a proxy may revoke that proxy or submit a revised one at
any time before it is voted. A stockholder may also vote by ballot at the annual
meeting, thereby canceling any proxy previously returned as to any matter voted
on by ballot. A stockholder wishing to name as his or her proxy someone other
than those designated on the enclosed proxy card may do so by crossing out the
names of the three designated proxyholders and inserting the name(s) of the
person(s) he or she wishes to have act as his or her proxy. No more than three
persons should be so designated. In such a case, it will be necessary that the
proxy be delivered by the stockholder to the person(s) named and that such
person(s) named be present and vote at the annual meeting. Proxy cards on which
other proxyholders have been named should not be mailed directly to UCAR.
Stockholders of record at the close of business on March 15, 1996 are
entitled to notice of and to vote the shares held on that date at the annual
meeting. Each share of common stock, par value $.01 per share, of UCAR (the
'Common Stock') is entitled to one vote. As of March 15, 1996, 46,155,518 shares
of Common Stock were outstanding. Those shares were held by 55 stockholders of
record.
ELECTION OF DIRECTORS
NOMINEES
Unless a stockholder specifies otherwise, each returned proxy card will be
voted for the election to the Board of the 8 nominees who are named on the
following pages. These nominees were recommended by the Nominating Committee of
the Board and approved by the Board. Each director has consented to being named
as a nominee for director and agreed to serve if elected. Each director, if
elected, would serve until his successor is elected at the annual meeting of
stockholders for 1997 and qualified or upon his removal or resignation. If any
of the nominees is not available for election at the time of the annual meeting,
discretionary authority will be exercised to vote for substitutes unless the
Board chooses to reduce the number of directors. Management is not aware of any
circumstances that would render any nominee unavailable. All nominees are
currently serving on the Board. The ages of the nominees are given as of March
1, 1996.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
o Robert P. Krass, age 59, was elected director and Chairman of the Board
in connection with the leveraged recapitalization effected by UCAR and
its subsidiaries (collectively, the 'Company') on January 26, 1995 (the
'Recapitalization'). The Company is a successor to the Carbon Products
Division of Union Carbide Corporation ('Union Carbide'). Mr. Krass joined
Union Carbide in 1963 and held various sales and management positions in
the United States and Europe, including Director of Marketing, Europe, of
the Carbon Products Division and Managing Director of the Division's
business in the United Kingdom. He was Vice President, Marketing, of the
Electrode Systems Division from 1983 to 1986. In 1987, he became
President of the Carbon Products Division and Vice President of
1
<PAGE>6
Union Carbide. He has been President of the Company since 1989 and Chief
Executive Officer of the Company since 1991. Mr. Krass is a member of the
Compensation and Nominating Committees of the Board.
o R. Eugene Cartledge, age 66, was elected director of UCAR in February
1996. From 1986 until his retirement in 1994, he was the Chairman of the
Board and Chief Executive Officer of Union Camp Corporation, where he had
served in various sales and management capacities since 1956. Mr.
Cartledge is a director of Union Camp Corporation, Chase Brass
Industries, Inc., Sun Company, Inc., Delta Air Lines, Inc., Blount, Inc.
and Savannah Foods & Industries, Inc. Mr. Cartledge is a member of the
Audit Committee of the Board.
o John R. Hall, age 63, was elected director of UCAR in November 1995. He
has been the Chairman and Chief Executive Officer of Ashland Inc. since
1981. Mr. Hall served in various engineering and managerial capacities at
Ashland Inc. since 1957. Mr. Hall is a director of Banc One Corporation,
Canada Life Assurance Company, CSX Corporation, Humana Inc. and Reynolds
Metals Company. Mr. Hall is member of the Audit Committee of the Board.
o Glenn H. Hutchins, age 40, was elected director of UCAR in connection
with the Recapitalization. He has been a General Partner of Blackstone
Group Holdings L.P. since September 1994. Mr. Hutchins was a Managing
Director of Thomas H. Lee Co. from 1987 until 1994 and, while on leave
from Thomas H. Lee Co. during parts of 1993 and 1994, was a Special
Advisor in the White House. Mr. Hutchins is a member of the Compensation,
Stock Compensation and Nominating Committees of the Board.
o Robert D. Kennedy, age 63, was elected director of the Company in June
1990. He joined Union Carbide in 1955 and held various marketing and
management positions in the United States and Europe. He was Senior Vice
President of Union Carbide from 1981 to 1985. In 1985, Mr. Kennedy was
elected a director and President of Union Carbide. In 1986, he was
elected Chief Executive Officer and Chairman of the Board of Union
Carbide. Mr. Kennedy retired as Chief Executive Officer and President of
Union Carbide in April 1995 and as Chairman of the Board (but not as a
director) of Union Carbide in December 1995. Mr. Kennedy is also a
director of Union Camp Corporation and Sun Company, Inc. Mr. Kennedy is a
member of the Audit and Stock Compensation Committees of the Board.
o Howard A. Lipson, age 32, was elected director of UCAR in connection with
the Recapitalization. Mr. Lipson has been a General Partner of Blackstone
Group Holdings L.P. since January 1996. Mr. Lipson was a Managing
Director from 1994 to 1995, was a Vice President from 1991 to 1994 and
joined The Blackstone Group L.P. in 1988. Mr. Lipson is a director of
U.S. Radio Inc., Volume Services, Inc. and Ritvik Holdings, Inc. and the
Treasurer of Transtar Holdings Inc. Mr. Lipson is a member of the
Nominating Committee of the Board.
o Peter G. Peterson, age 69, was elected director of UCAR in connection
with the Recapitalization. He is a Co-Founding Partner of Blackstone
Group Holdings L.P. and has served as Chairman of The Blackstone Group
L.P. since 1985. Mr. Peterson is also a director of Rockefeller Center
Properties, Inc., Sony Corporation, Transtar Holdings L.P. and the
Federal Reserve Bank of New York.
o Stephen A. Schwarzman, age 49, was elected director of UCAR in connection
with the Recapitalization. He is a Co-Founding Partner of Blackstone
Group Holdings L.P. and has served as President and Chief Executive
Officer of The Blackstone Group L.P. since 1985. Mr. Schwarzman is also a
director of Great Lakes Dredge & Dock Corporation, Transtar, Inc. and
Collins & Aikman Corporation.
The Board met two times in 1995. Each director listed above who was then
serving attended 100% of such meetings, except Mr. Peterson, who did not attend
the sole meeting that occurred while he was a director, and two former
directors, who did not attend the sole meeting that occurred while they were
serving as directors. No meetings of committees of the Board occurred during
1995.
COMMITTEES OF THE BOARD
The Board has four standing committees. Their functions are as described
below.
The Audit Committee was formed in July 1995 and consists of three
directors, none of whom may be an employee of the Company or an employee of
Blackstone Capital Partners II Merchant Banking Fund L.P. or its affiliates
(collectively, 'Blackstone'). The Audit Committee is responsible for policies,
procedures and other
2
<PAGE>7
matters relating to accounting, internal financial controls and financial
reporting, including the engagement of independent auditors and the planning,
scope, timing and cost of any audit and any other services they may be asked to
perform, and reviews with the auditors their report on the financial statements
following completion of each such audit. In addition, the Audit Committee is
responsible for policies, procedures and other matters relating to business
integrity, ethics and conflicts of interest. The Audit Committee did not meet in
1995.
The Nominating Committee was formed in July 1995 and consists of three
directors. The Nominating Committee is responsible for nominating individuals
for election as directors of UCAR. The Nominating Committee did not meet in
1995.
Candidates for nomination as director are considered on the basis of their
broad business, financial and public service experience, their ability to
represent the interests of all stockholders, their professional reputation and
their ability and willingness to devote the time required to serve effectively
as a director and as a member of one or more committees of the Board, all in
light of any conflicts of interest and the composition of the Board as a whole.
Nominees must also be free of any legal impediments or other considerations that
might preclude service as a director. The Nominating Committee will consider
nominees recommended by stockholders in accordance with UCAR's Certificate of
Incorporation and By-Laws and applicable provisions of the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), and the rules and regulations
promulgated thereunder. The By-Laws provide that notice of nominations for the
election of directors by a stockholder must be received by the Secretary of UCAR
not later than 80 days before the meeting before which such nominations are to
be brought, except in certain circumstances, and must contain detailed
information regarding such nominee and the stockholder making such nomination.
The Compensation Committee was formed in 1993 and consists of three
directors, a majority of whom may not be employees of the Company. There is
currently one vacancy. The Compensation Committee is responsible for policies,
procedures and other matters relating to employee benefit and compensation
plans, including compensation of the executive officers as a group and the chief
executive officer individually. The Compensation Committee is also responsible
for policies, procedures and other matters relating to management development
and for reviewing, monitoring and recommending (for approval by the Board) plans
with respect to succession of the chief executive officer. The Compensation
Committee did not meet in 1995.
The Stock Compensation Committee was formed in July 1995 and consists of
three directors, none of whom may be an employee of the Company. Members of the
Stock Compensation Committee must be disinterested within the meaning of Rule
16b-3 under the Exchange Act and outside directors under Rule 162(m) of the
Internal Revenue Code of 1986, as amended (the 'Code'). There is currently one
vacancy. The Stock Compensation Committee is responsible for administering and
making awards under the stock based compensation plans (other than the Savings
Plan) of UCAR. The Stock Compensation Committee did not meet in 1995.
COMPENSATION OF DIRECTORS
Prior to the initial public offering of Common Stock in August 1995 (the
'IPO'), directors of UCAR served without compensation or reimbursement of
expenses in connection with rendering services as such. Since the IPO, directors
who are not employees of the Company or Blackstone are entitled to receive an
annual retainer of $20,000 (or $22,000, if such director serves as a chairman of
one or more committees of the Board), which retainer is prorated if a director
is not a director on January 1 of the relevant year and was prorated to avoid
compensating a director for services rendered as such prior to the IPO, a fee of
$1,000 for each meeting of the Board attended and awards of shares of Common
Stock as described under '--1995 Directors Stock Plan.' At the option of the
Board, such retainers and fees may be paid in shares of Common Stock. Directors
who are employees of the Company or Blackstone will not receive any compensation
for rendering services as such. Since the IPO, all directors are entitled to
reimbursement for all expenses in connection with rendering services as such.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning compensation
received by the chief executive officer and each of the other five most highly
compensated executive officers who received total salary and bonus compensation
in excess of $100,000 (collectively, the 'Named Executive Officers') for
services rendered in all capacities (including service as a director of UCAR or
an officer or director of its subsidiaries) during UCAR's last fiscal year.
3
<PAGE>8
SUMMARY COMPENSATION TABLE(A)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------- ----------------------- ----------
OTHER RESTRICTED SECURITIES LONG TERM
NAME AND VARIABLE ANNUAL STOCK UNDERLYING PLAN
PRINCIPAL POSITION SALARY COMPENSATION(B) COMPENSATION(C) AWARDS(D) OPTIONS PAYOUTS(E)
- ----------------------------------------- -------- --------------- --------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Krass ......................... $512,500 $ 1,366,750 $ 219,119 $1,032,597 970,385 $3,434,086
Chairman of the Board,
President and
Chief Executive Officer
Robert J. Hart .......................... 292,917 756,000 133,653 628,467 453,777 1,545,339
Vice President and
General Manager (North
and South America)
Peter B. Mancino ........................ 177,500 430,200 42,317 82,604 314,153 858,521
Vice President, General
Counsel and Secretary
Maurice Marcellin(g) .................... 261,300 587,600 9,078 -- -- 1,030,226
Vice President and General Manager
(Europe and South Africa)
William P. Wiemels ...................... 195,833 481,000 132,927 183,806 363,022 858,521
Vice President, Chief Financial
Officer and Treasurer
Fred C. Wolf ............................ 162,333 382,350 40,232 82,604 258,304 858,521
Vice President, Administration
and Strategic Projects
<CAPTION>
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION(F)
- ----------------------------------------- ---------------
<S> <C>
Robert P. Krass ......................... $75,752
Chairman of the Board,
President and
Chief Executive Officer
Robert J. Hart .......................... 50,466
Vice President and
General Manager (North
and South America)
Peter B. Mancino ........................ 10,028
Vice President, General
Counsel and Secretary
Maurice Marcellin(g) .................... 15,240
Vice President and General Manager
(Europe and South Africa)
William P. Wiemels ...................... 11,486
Vice President, Chief Financial
Officer and Treasurer
Fred C. Wolf ............................ 9,253
Vice President, Administration
and Strategic Projects
</TABLE>
- ------------------
(a) Includes compensation earned in 1995 but deferred under the Deferral Plan
(as defined) or other applicable plans or statutory provisions.
(b) Includes Annual Plan Variable Compensation (as defined) and Supplemental
Plan Variable Compensation (as defined).
(c) Includes, for Messrs. Krass, Hart, Mancino, Wiemels and Wolf: $72,975,
$41,700, $25,020, $27,800 and $22,935, respectively, of payments under a
group profit sharing plan for employees in the United States; $4,920,
$6,000, $6,000, $6,000 and $6,000, respectively, of financial planning
services and related tax advice; and $141,224, $85,953, $11,297, $25,137
and $11,297, respectively, of imputed interest income and reimbursement for
tax liabilities on loans made in connection with the Equity Ownership
Program (as defined). Also includes, for Mr. Wiemels, $62,182 of
reimbursement of relocation expenses and $11,808 of reimbursement for tax
liabilities on certain relocation expenses.
(d) Consists of restricted matching stock granted under the Equity Ownership
Program which vested in connection with the IPO. The value of such stock at
December 31, 1995 was: for Mr. Krass, $4,585,545; for Mr. Hart, $2,790,889;
for Mr. Mancino, $366,829; for Mr. Wiemels, $816,244; and for Mr. Wolf,
$366,829. Any dividends payable on the outstanding shares of Common Stock
are payable in the same manner on such restricted matching stock.
(e) Consists of payments under the Company's Long Term Incentive Compensation
Plan (the 'Long Term Plan'). Prior to the Recapitalization, approximately
25 management employees, including the Named Executive Officers,
participated in the Long Term Plan, which provided for cash awards based on
the achievement of annual and cumulative financial performance goals for
1993, 1994 and 1995. The Company substantially exceeded most of the
performance goals for 1993 and 1994. The Long Term Plan provided that, in
the event of a change in control of the Company, the performance goals for
the period following the change in control would be deemed to be 100%
achieved and payment of the awards would be accelerated. The
Recapitalization constituted such a change in control. Includes payments
deferred under the Deferral Plan.
(f) Includes: for Mr. Krass, $70,239 for annual life insurance premiums paid on
a split dollar life contract and $5,513 for employer contributions to the
Savings Plan; for Mr. Hart, $44,677 for annual life insurance premiums paid
on a split dollar life contract and $5,789 for employer contributions to
the Savings Plan; for Mr. Mancino, $7,186 for annual life insurance
premiums paid on a split dollar life contract and $2,842 for employer
contributions to the Savings Plan; for Mr. Wiemels, $7,250 for annual life
insurance premiums paid on a split dollar life contract and $4,236 for
employer contributions to the Savings Plan; and for Mr. Wolf, $5,361 for
annual life insurance premiums paid on a split dollar life contract and
$3,892 for employer contributions to the Savings Plan. The amount of the
whole life insurance portion reported as paid for the Named Executive
Officer is the entire premium minus that portion of the premium actually
paid by the Named Executive Officer. The Company recovers its contributions
following the latest of the Named Executive Officer's retirement,
attainment of age 65 or tenth year of participation.
(g) The exchange rate used for Salary, Other Annual Compensation and All Other
Compensation was an average exchange rate for the French franc for 1995.
Other Annual Compensation includes productivity incentives of $9,078 under
a group incentive program for employees in France. Productivity incentives
can be paid when earned or can be deferred for five years, at the
employee's option. Productivity incentives plus interest thereon are
non-taxable when received more than five years after earned. All Other
Compensation includes profit sharing (mandated by French law) of $15,240.
Profit sharing is not paid for five years, although special circumstances,
such as retirement, lay off or death, permit earlier payment.
4
<PAGE>9
The following tables set forth certain information relating to options to
purchase shares of Common Stock granted to the Named Executive Officers during
1995.
OPTION GRANTS IN 1995 WITH RESPECT TO UCAR COMMON STOCK
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(A)
--------------------------------------------------
PERCENT
OF
TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED PRICE APPRECIATION FOR OPTION
UNDERLYING TO EXERCISE TERM
OPTIONS EMPLOYEES PRICE EXPIRATION -----------------------------
NAME GRANTED IN 1995 PER SHARE DATE 5% 10%
- --------------------------------- ---------- --------- --------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Krass.................. 970,385 20.3% $7.60 1/25/07 $ 5,870,829 $15,768,756
Robert J. Hart................... 453,777 9.5 7.60 1/25/07 2,745,351 7,373,876
Peter B. Mancino................. 314,153 6.6 7.60 1/25/07 1,900,626 5,104,986
Maurice Marcellin................ -- -- -- -- -- --
William P. Wiemels............... 363,022 7.6 7.60 1/25/07 2,196,283 5,899,108
Fred C. Wolf..................... 258,304 5.4 7.60 1/25/07 1,562,739 4,197,440
</TABLE>
- ------------------
(a) Includes options, which are subject to vesting in 1998 and 1999 if
specified performance targets are achieved, as to the following number of
shares: for Mr. Krass, 161,731 shares; for Mr. Hart, 75,630 shares; for Mr.
Mancino, 52,359 shares; for Mr. Wiemels, 60,504 shares; and for Mr. Wolf,
43,051 shares. See '--Management Stock Option Plan.'
AGGREGATED OPTION EXERCISES IN 1995
AND OPTION VALUES AT DECEMBER 31, 1995
WITH RESPECT TO UCAR COMMON STOCK
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE
ACQUIRED UNDERLYING UNEXERCISED MONEY OPTIONS
ON VALUE OPTIONS AT DECEMBER 31, 1995 AT DECEMBER 31, 1995
NAME EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
- ---------------------------------- --------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert P. Krass................... -- -- 808,654/161,731 $ 21,146,302/4,229,266
Robert J. Hart.................... -- -- 378,147/75,630 9,888,544/1,977,725
Peter B. Mancino.................. -- -- 261,794/52,359 6,845,913/1,369,188
Maurice Marcellin................. -- -- -- --
William P. Wiemels................ -- -- 302,518/60,504 7,910,846/1,582,180
Fred C. Wolf...................... -- -- 215,253/43,051 5,628,866/1,125,784
</TABLE>
5
<PAGE>10
Prior to the sale of 50% of the equity of the Company by Union Carbide to a
joint venture partner on February 25, 1991, certain executive officers of the
Company were granted options to purchase shares of common stock of Union Carbide
under Union Carbide's incentive compensation plans. The following table sets
forth certain information as to such options. No options to purchase shares of
common stock of Union Carbide were granted to officers of the Company following
such sale.
AGGREGATED OPTION EXERCISES IN 1995
AND OPTION VALUES AT DECEMBER 31, 1995
WITH RESPECT TO UNION CARBIDE COMMON STOCK
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE
ACQUIRED UNDERLYING UNEXERCISED MONEY OPTIONS
ON VALUE OPTIONS AT DECEMBER 31, 1995 AT DECEMBER 31, 1995
NAME EXERCISE REALIZED (EXERCISABLE) (EXERCISABLE)
- -------------------------------- --------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert P. Krass................. 20,000 $578,420 48,000 $1,323,972
Robert J. Hart.................. -- -- -- --
Peter B. Mancino................ 4,000 71,710 -- --
Maurice Marcellin............... 9,000 185,651 -- --
William P. Wiemels.............. -- -- 2,500 71,293
Fred C. Wolf.................... -- -- -- --
</TABLE>
Employment and Other Agreements
In connection with the Recapitalization, UCAR entered into employment
agreements (the 'Employment Agreements') with Messrs. Krass, Hart, Mancino,
Wiemels and Wolf (the 'Senior Executives'). Each of the Employment Agreements
has a three year term, which will automatically renew annually for additional
one year terms unless UCAR or the Senior Executive gives written notice of
nonrenewal not less than 90 days prior to the expiration of the then current
term. Each of the Employment Agreements is terminable by UCAR for cause or by
the relevant Senior Executive for good reason and contains a non-competition
covenant which remains in effect for a period of two years beyond the expiration
of the then current term.
Under the Employment Agreements, base salaries are: for Mr. Krass,
$525,000; for Mr. Hart, $300,000; for Mr. Wiemels, $200,000; for Mr. Mancino,
$180,000; and for Mr. Wolf, $165,000. The Employment Agreements provide the
Senior Executives with the opportunity to receive two bonuses, one of which is
payable pursuant to the UCAR International Inc. 1991 Annual Incentive
Compensation Plan ('Annual Plan Variable Compensation') and the other of which
is payable only if actual EBITDA (as defined in the Employment Agreements)
equals or exceeds specified targets ('Supplemental Plan Variable Compensation').
In addition to the Senior Executives, Mr. Marcellin and certain other management
employees of the Company have been provided with the opportunity to receive such
bonuses. The amount of Annual Plan Variable Compensation for each of 1995 and
1996 will not exceed an aggregate of $690,000 for the Senior Executives and
$110,000 for Mr. Marcellin. If UCAR achieves 100% of the specified target for
any year, Supplemental Plan Variable Compensation will equal 75% of base salary,
plus an additional 5% of base salary for each percentage point by which actual
EBITDA for such year exceeds such specified target.
The Employment Agreements provide that if UCAR terminates the employment of
a Senior Executive without cause or a Senior Executive resigns for good reason,
the Senior Executive will be entitled to severance payments and enhanced pension
benefits. Retirement prior to January 26, 1998 is considered resignation without
good reason. If such termination or resignation occurs on or prior to January
26, 1998, severance payments will equal 2.99 times the sum of the Senior
Executive's base salary and his prior year's Annual Plan Variable Compensation.
If such termination or resignation occurs after January 26, 1998, severance
payments will equal two times the sum of the Senior Executive's base salary and
his prior year's Annual Plan Variable Compensation, reduced by any pension
payments paid by the Company under its qualified and nonqualified pension plans
for the two year period following such termination (or, if the Senior Executive
elects to defer receipt of such benefits, the amount the Senior Executive would
have received). In addition, in connection with any such termination or
resignation, the Senior Executive's pension benefits will be calculated as if
the Senior Executive had an
6
<PAGE>11
additional three years of age and three years of service. These benefits shall
be payable commencing immediately following termination of employment and shall
not be reduced for early commencement of benefits.
Management Stock Option Plan
In connection with the Recapitalization, the UCAR International Inc.
Management Stock Option Plan (the 'Management Stock Option Plan') was adopted by
the Board and approved by UCAR's stockholders. Since the IPO, it has been
administered by the Stock Compensation Committee, which is authorized to grant
and determine the manner of settlement of options under and otherwise implement
the Management Stock Option Plan. The Board made the initial grant of options
under the Management Stock Option Plan at the time of the Recapitalization.
All management employees of the Company (including the Named Executive
Officers) are eligible to participate in the Management Stock Option Plan.
4,886,828 shares of Common Stock were reserved for issuance under the Management
Stock Option Plan. Such shares may consist in whole or in part of authorized and
unissued shares, treasury shares or a combination thereof. If an option expires
or is forfeited or terminated prior to exercise, the shares previously subject
to such option will be available for future options granted under the Management
Stock Option Plan. Options to purchase 4,771,183 shares have been granted, of
which options to purchase 4,761,183 shares were granted at the time of the
Recapitalization. Under the Management Stock Option Plan, the exercise price per
share of an option is the fair market value of a share of Common Stock on the
date of grant. The exercise price per share of options granted at the time of
the Recapitalization is $7.60, which was the price per share paid for the shares
of Common Stock purchased by Blackstone and the other investors in connection
with the Recapitalization. The exercise price of options may, under certain
circumstances, be paid with shares to be issued upon exercise of such options.
The shares so reserved and any shares subject to, and the exercise prices of,
options are subject to adjustment for stock dividends, stock splits, share
combinations and certain other events. All options which have been or may be
granted under the Management Stock Option Plan are non-qualified stock options.
Of the 4,761,183 shares subject to options granted at the time of the
Recapitalization, options to purchase 2,777,350 shares were 'time options'
which, under their original terms, vested in connection with the IPO. The
balance of such options were 'performance options' which, under their original
terms, were to vest as to 20% of the shares subject thereto in 1995 and each of
the following four years that actual EBITDA (as defined in the Management Stock
Option Plan) equaled or exceeded specified targets. If the targets were not
attained in any year, performance options were to vest in a subsequent year if
the targets were achieved for such year and the cumulative targets for such year
and the prior years were achieved. The Management Stock Option Plan was amended
at the time of the IPO to provide that the performance options with respect to
the first three years vested upon the IPO. The Management Stock Option Plan
provides that the targets may be adjusted under certain circumstances to reflect
the effect of various transactions.
The following table sets forth the number of shares of Common Stock subject
to options, and the dollar value of the underlying shares of Common Stock at the
date of grant of options, granted under the Management Stock Option Plan during
1995 for certain participants.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERLYING DOLLAR VALUE
NAME OPTIONS OF OPTIONS
- ----------------------------------------------- --------------- ------------
<S> <C> <C>
Robert P. Krass................................ 970,385 $ 7,374,926
Robert J. Hart................................. 453,777 3,448,705
Peter B. Mancino............................... 314,153 2,387,563
Maurice Marcellin.............................. -- --
William P. Wiemels............................. 363,022 2,758,967
Fred C. Wolf................................... 258,304 1,963,110
Executive Officers as a Group.................. 2,359,641 17,933,272
Non-Executive Directors as a Group............. -- --
Non-Executive Officer Employees as a Group..... 2,411,542 18,327,719
</TABLE>
7
<PAGE>12
Options granted under the Management Stock Option Plan have a 12 year term.
Options held by Senior Executives terminate (i) immediately upon termination of
employment for cause or resignation without good reason on or prior to January
26, 1998 and (ii) within 90 days following a resignation without good reason
after January 26, 1998.
UCAR has the right to cancel options granted under the Management Stock
Option Plan in the event of a change in control, in which event UCAR is required
to pay the participant an amount equal to the difference between the exercise
price of the cancelled options and the fair market value of the underlying
shares. For this purpose, a change in control occurs on (i) the date on which
any person (other than Blackstone) beneficially owns more than 35% of the total
voting power of UCAR and Blackstone beneficially owns a lesser percentage of
such voting power and does not have the right or ability to elect or designate
for election a majority of the Board or (ii) the date, at the end of any two
year period (or at any time during the two year period ending January 26, 1997),
on which individuals, who at the beginning of such period were directors of
UCAR, or individuals nominated or elected by a vote of 66 2/3% of such directors
or directors previously so elected or nominated ('Incumbent Directors'), cease
to constitute a majority of the Board.
If UCAR pays an extraordinary or special dividend on the outstanding shares
of Common Stock, UCAR will pay into an escrow account an amount equal to the
amount which would have been paid on shares subject to options (other than
non-vested performance options) if such shares had been outstanding, and such
amount will be used to reduce the exercise price of each option if and when each
such option is exercised. If the amount per share which would be paid into
escrow exceeds the exercise price per share of each such option, an amount equal
to such excess will be paid to the option holder, such option will be deemed
exercised and the shares subject to such option will be issued.
Shares issued upon the exercise of options are entitled to certain
'piggy-back' registration rights with respect to public offerings by Blackstone
of its shares of Common Stock. Such shares are also entitled to certain
'tag-along' rights which provide that, if Blackstone accepts an offer to sell to
a third party its shares of Common Stock, each participant in the Management
Stock Option Plan shall have the right to sell to the third party some or all of
such shares at the same price and on the same terms. Each participant is also
required to vote such shares in the same manner as Blackstone votes its shares
of Common Stock or to give Blackstone a proxy to vote such shares.
The grant of a stock option pursuant to the Management Stock Option Plan
creates no immediate federal income tax consequences for the participant or the
Company. Upon exercise of a stock option, the participant must recognize
ordinary income in an amount equal to the difference between the exercise price
per share and the fair market value of a share of Common Stock on the date of
exercise, unless the shares are subject to certain restrictions. The Company
will receive a deduction for the same amount on the date of exercise (or the
date the restrictions lapse), subject to the provisions of Section 162(m) of the
Code which provides for a possible denial of a tax deduction to the Company for
compensation for any Named Executive Officer in excess of $1 million in any
year. The Management Stock Option Plan is designed so that stock options awarded
thereunder should qualify for an exemption to the $1 million cap on tax
deductibility under Section 162(m). The tax treatment upon disposition of shares
purchased upon exercise of options will depend on how long the shares have been
held. There will be no tax consequences to the Company upon the disposition of
shares issued upon the exercise of options granted under the Management Stock
Option Plan.
Equity Ownership Program
In connection with the Recapitalization, an Equity Ownership Program (the
'Equity Ownership Program') was adopted by the Board. Management employees who
participated in the Long Term Plan were eligible to participate in the Equity
Ownership Program.
Under the Equity Ownership Program, the participants were given the
opportunity to purchase from UCAR shares of Common Stock at the same price per
share paid for shares of Common Stock purchased by Blackstone and the other
investors in connection with the Recapitalization. In addition, for each two
shares of Common Stock purchased by a participant, UCAR granted such participant
approximately one matching restricted share of Common Stock which, under their
original terms, vested in connection with the IPO. A majority of the eligible
8
<PAGE>13
employees participated in the Equity Ownership Program and an aggregate of
1,061,838 shares of Common Stock were issued thereunder.
The shares issued pursuant to the Equity Ownership Program are subject to
voting requirements, and are entitled to 'piggy-back' registration rights, which
are substantially similar to those applicable to shares of Common Stock issued
upon exercise of options granted under the Management Stock Option Plan.
In connection with the Recapitalization, UCAR provided interest-free tax
assistance loans (i) in an aggregate amount of $2 million to participants in the
Equity Ownership Program and (ii) in the aggregate amount of $1 million to
participants in the Equity Ownership Program who elected to recognize income at
the time they received a grant of matching restricted shares of Common Stock
pursuant to Section 83(b) of the Code. In addition, UCAR has agreed to gross-up
the income tax liability on such loans (at such time as such liability is
incurred) by paying the borrowers such additional amounts as are necessary to
compensate them for the incremental income taxes due on the imputed interest
income recognized because of the interest free nature of the loans. Although the
loans generally are non-recourse to the borrowers, UCAR will be permitted to
offset severance payments which are otherwise payable to the borrowers upon
their termination of employment by the amount of any outstanding loan. The loans
are secured by all shares and options issued pursuant to the Equity Ownership
Program and the Management Stock Option Plan. Payment on the loans must be made
upon sales of the shares securing such loans (including shares issued upon an
exercise of options) in an amount equal to 20% of the net pre-tax proceeds of
such sales until the loans are paid in full. The outstanding amount of each such
loan to a Named Executive Officer at December 31, 1995, which is also the
largest aggregate amount of each such loan outstanding during 1995, was:
$1,281,832 for Mr. Krass; $780,162 for Mr. Hart; $102,547 for Mr. Mancino;
$228,166 for Mr. Wiemels; and $102,547 for Mr. Wolf.
1995 Equity Incentive Plan
In connection with the IPO, the UCAR International Inc. 1995 Equity
Incentive Plan (the '1995 Equity Incentive Plan') was adopted by the Board and
approved by UCAR's stockholders. The Incentive Plan is administered by the Stock
Compensation Committee, which is authorized to make awards under, determine the
vesting schedules, term and manner of settlement of awards under and otherwise
implement the 1995 Equity Incentive Plan. The 1995 Equity Incentive Plan (but
not then outstanding awards thereunder which will continue in effect in
accordance with their terms) will expire in 2005. The Board may amend the 1995
Equity Incentive Plan, except that the approval of a majority of UCAR's
stockholders is required for any such amendments that would increase the number
of shares subject thereto, materially amend the benefits thereunder or
materially modify eligibility requirements for directors and officers.
All employees of the Company serving in a managerial, administrative or
professional position (including the Named Executive Officers) are eligible to
participate in the 1995 Equity Incentive Plan. 500,000 shares of Common Stock
were reserved for issuance under the 1995 Equity Incentive Plan, subject to
adjustment for stock splits, stock dividends, recapitalizations and similar
events. Such shares may consist in whole or in part of authorized and unissued
shares, treasury shares or combination thereof. If an award expires unexercised
or is forfeited, surrendered or cancelled, terminated or settled in cash in lieu
of Common Stock, the shares previously used for such awards will be available
for subsequent awards under the 1995 Equity Incentive Plan, except under certain
circumstances with respect to subsequent awards to participants subject to
Section 16 of the Exchange Act.
The 1995 Equity Incentive Plan permits grants of the following types of
awards: (i) options, including incentive stock options and non-qualified stock
options; (ii) stock appreciation rights ('SARs'); (iii) restricted stock; (iv)
stock equivalent units; (v) dividend equivalents; (vi) performance units; and
(vii) restricted matching stock. In addition, the Stock Compensation Committee
may award payments upon exercise of stock options and SARs. No stock option may
vest in less than one year from the date of grant (or, if earlier, the death of
the participant who received such grant or the occurrence of a change in
control). A change in control has the same meaning as it has under the
Management Stock Option Plan. In general, the exercise or base price of an award
cannot be less than the fair market value of the underlying shares on the date
of award. The exercise price of options may, under certain circumstances, be
paid with shares of Common Stock, including shares to be issued upon exercise of
such options. No individual may be granted awards under the 1995 Equity
Incentive Plan which
9
<PAGE>14
in the aggregate cover at any one time in excess of 100,000 shares. No awards
have been made under the 1995 Equity Incentive Plan.
The term of a stock option may not exceed ten years. Stock options may be
exercised after termination of employment only: (i) if the termination resulted
from a participant's death, disability or retirement with the right to receive a
non-actuarially reduced pension; (ii) during the three year period commencing on
the date of a participant's termination of employment by the Company other than
for cause; (iii) during the three year period commencing on the date of a
participant's termination of employment by the Company or the participant after
a change in control unless such termination is for cause; or (iv) if the Stock
Compensation Committee so permits.
1995 Directors Stock Plan
In connection with the IPO, the UCAR International Inc. 1995 Directors
Stock Plan (the '1995 Directors Stock Plan') was adopted by the Board and
approved by UCAR's stockholders. All directors who are not employees of the
Company or Blackstone participate in the 1995 Directors Stock Plan. The 1995
Directors Stock Plan is administered by the Stock Compensation Committee. The
1995 Directors Stock Plan will expire on January 1, 2000.
The 1995 Directors Stock Plan provides that each director who was a
participant on or before January 1, 1996 would be granted 1,000 shares of Common
Stock, which have and will become non-forfeitable over five years at the rate of
200 shares per year on January 1 of each year commencing January 1, 1996. The
1995 Directors Stock Plan further provides that a director who becomes a
participant after January 1, 1996 will be granted that number of shares of
Common Stock equal to 200 times the number of full or partial years between such
date and December 31, 1999, which shares will become non-forfeitable in the same
manner. If a participant ceases to be a director after age 65 or by reason of
death or disability or in the event of a change in control, the shares which
have not otherwise become non-forfeitable shall immediately become
non-forfeitable. A change in control has the same meaning as it has under the
Management Stock Option Plan.
UCAR reserved 20,000 shares of Common Stock for issuance under the 1995
Directors Stock Plan, subject to adjustment for stock splits, stock dividends,
recapitalizations and similar events. Such shares may consist in whole or in
part of authorized and unissued shares or treasury shares. If shares granted
under the 1995 Directors Stock Plan are forfeited, such shares will be available
for future grants under the 1995 Directors Stock Plan. There are currently three
participants, Messrs. Kennedy, Cartledge and Hall, and to date an aggregate of
2,800 shares have been issued under the 1995 Directors Stock Plan.
Each participant in the 1995 Directors Stock Plan will have voting rights
with respect to those shares which are non-forfeitable. On each date on which
shares become non-forfeitable, a cash payment will be made by the Company to the
participant for the purpose of paying any federal, foreign or state income tax
liabilities associated with the award of those shares.
Deferral Plan
The Company maintains a compensation deferral plan (the 'Deferral Plan')
for the benefit of its United States-paid management employees who participate
in variable compensation programs. The Deferral Plan is effective for
compensation that would otherwise be paid on or after January 1, 1995. Under the
Deferral Plan, participants are able to defer up to 85% of the variable
compensation awarded to them and/or up to 50% of base salary. Contributions to
the Deferral Plan will mirror the investment experience of a fixed income fund,
a balanced fund or an equity fund (which equity fund would not relate to the
Common Stock), pursuant to the election of the participant. The Deferral Plan
also restores the Savings Plan matching contribution lost on compensation
between $150,000 and $235,840 (as such amounts may be increased under Section
415(d) of the Code) because of the limitations imposed under Section 401(a)(17)
of the Code, provided that the employee is participating in the Savings Plan and
the Deferral Plan. Distributions from the Deferral Plan generally will be made
upon retirement or other termination of employment, unless further deferred by
the participant. In addition, a participant may irrevocably elect to receive
interim distributions prior to retirement or other termination of employment.
10
<PAGE>15
Savings Plan
The Company maintains the Savings Plan, which is qualified under Sections
401(a) and 401(k) of the Code. All regular employees of the Company in the
United States are eligible to participate in the Savings Plan. The Savings Plan
consists of two types of accounts, a personal investment account to which
participants may make contributions on an after-tax basis and a tax deferred
account to which participants may contribute on a pre-tax basis. For each
eligible employee who elects to participate in the Savings Plan and makes a
contribution thereto, the Company makes a matching contribution. The matching
contribution is 30% of the amount contributed by the employee to the extent that
the employee contributes between 1% and 7 1/2% of the employee's compensation
(including profit-sharing under group plans for employees in the United States
but excluding other variable compensation). The maximum contribution for any
participant for any year is 17 1/2% of such participant's compensation (as
similarly defined). Contributions to the Savings Plan are invested, as the
employee directs, in a fixed income fund, a balanced fund, equity funds or
Common Stock funds (either at fair market value or, subject to restrictions on
resale and reinvestment, at a discount of 10% from fair market value). Some
accounts may also be invested in common stock of Union Carbide, but only to the
extent that common stock of Union Carbide was held in accounts in the savings
program for employees of Union Carbide that were transferred to the Savings Plan
when it was established in 1991. Distributions from the Savings Plan generally
will be made only upon retirement or other termination of employment, unless
deferred by the participant.
Retirement Plan
Prior to February 25, 1991, substantially all of the Company's domestic
employees participated in the Union Carbide retirement program (the 'Union
Carbide Retirement Program'). Effective February 25, 1991, the Company adopted
its own similar retirement program (the 'UCAR Retirement Plan'). The cost of the
UCAR Retirement Plan is borne entirely by the Company. The UCAR Retirement Plan
covers substantially all employees of the Company in the United States,
including the Named Executive Officers (other than Mr. Marcellin) and certain
United States nationals employed by foreign subsidiaries of the Company.
Retirement and death benefits related to employee service through February 25,
1991 are covered by the Union Carbide Retirement Program. Benefits paid by the
Union Carbide Retirement Program are based on final average pay through February
25, 1991 plus salary increases (not to exceed 6% per year) through January 26,
1995. All employees of the Company who retired prior to February 25, 1991 are
covered under the Union Carbide Retirement Program. Subject to certain
limitations, all service and earnings recognized under the Union Carbide
Retirement Program prior to February 25, 1991 is recognized under the UCAR
Retirement Plan.
The following table sets forth the estimated annual benefits payable, based
on the indicated credited years of service and the indicated average annual
compensation used in calculating benefits, assuming a normal retirement at age
65 in 1995, under the combined qualified and non-qualified pension plans of the
Company and Union Carbide.
RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE ANNUAL --------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- -------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
150,000 33,750 45,000 56,520 67,500 78,750 90,000
250,000 56,250 75,000 93,750 112,500 131,250 150,000
500,000 112,500 150,000 187,500 225,000 262,500 300,000
750,000 168,750 225,000 281,250 337,500 393,750 450,000
1,000,000 225,000 300,000 375,000 450,000 525,000 600,000
</TABLE>
Under the UCAR Retirement Plan, the monthly amount of an employee's
retirement benefit upon retirement at age 65 is a percentage of average monthly
compensation received during the three year period preceding retirement, or the
highest average monthly compensation received during any three calendar years in
the 10 calendar years preceding retirement if it would result in a higher
pension benefit, multiplied by the number of years of service credit, less up to
50% of projected primary Social Security benefits and deducting therefrom any
public pension except any military pension or any benefit under the Federal
Social Security Act. An employee who is (i) age 62 or over with ten or more
years of service credit or (ii) whose age and service credit add up to 85 may
voluntarily retire earlier than age 65 with a retirement benefit unreduced
because of early retirement, based on years of service credit at the date of
retirement. The compensation covered by the UCAR Retirement Plan
11
<PAGE>16
includes salary and certain variable compensation and includes profit sharing
under group plans for employees in the United States in an amount up to 8% of
the employee's base salary. The benefits payable reflected in the Retirement
Plan Table are calculated on a straight-life annuity basis and are subject to an
offset for such Social Security benefits.
For federal income tax purposes, the amount of benefits that can be paid
from a qualified retirement plan is restricted. The Company has adopted
non-qualified unfunded plans for payment of those benefits at retirement that
cannot be paid from its qualified retirement plan. Employees who retire after
January 1, 1994 may elect to receive the payment of benefits from these
non-qualified unfunded plans in a lump sum payment. Employees may elect to defer
receipt of these lump sums under the Deferral Plan. The practical effect of
these non-qualified plans is to calculate benefits to all employees on a uniform
basis, including those who are officers and directors.
Benefits under these non-qualified plans are generally paid out of the
general assets of the Company, although they may also be paid through a grantor
trust adopted by the Company or by purchase of annuities. If the Company
purchases annuities, this would not increase the after-tax amount of benefits to
which employees are entitled, but would relieve the Company of liability for the
benefits under the non-qualified plans covered by such annuities.
As of March 1, 1996, Mr. Krass, age 59, is credited with 33 years of
service; Mr. Hart, age 58, is credited with 35 years of service; Mr. Mancino,
age 53, is credited with 20 years of service; Mr. Wiemels, age 51, is credited
with 28 years of service; and Mr. Wolf, age 51, is credited with 28 years of
service.
Employees of the Company's French subsidiary, which include Mr. Marcellin,
participate in three contributory retirement plans. Two of these plans are
mandated by French law and one is sponsored by the Company. In addition,
employees hired prior to 1969 and who were age 30 within 15 years of service at
December 31, 1989 (as was Mr. Marcellin) are entitled to benefits under two
other pension plans sponsored by the Company. If Mr. Marcellin (age 61 as of
March 1, 1996) had retired in 1995, his aggregate annual benefits at age 65
under these plans would have been approximately $160,000.
Benefit Security
UCAR has adopted a grantor trust to assist it in providing for payment of
certain benefit plan obligations to management of the Company which are
currently paid out of the general assets of the Company. The trust may be used
to set aside compensation which is deferred under the Deferral Plan. The trust
may also be used to set aside accrued benefits under nonqualified retirement
plans and severance obligations under the Employment Agreements. The trust
contains a benefits protection account which makes funds available to the
trustee to assist participants and their beneficiaries in enforcing their claims
with respect to those benefits and obligations upon a change in control. UCAR
may from time to time contribute assets to or, with the approval of a majority
of the Board, withdraw assets from the trust (other than from the benefits
protection account to which $250,000 has been contributed), except that no
withdrawal can be made after a change in control until all such benefits and
obligations are paid or discharged. The Board may amend or terminate the trust
at any time prior to a change in control. Upon a change of control, the trust
becomes irrevocable, UCAR is required to make contributions to the trust
sufficient to discharge such obligations or pay such benefits and the trustee is
required to use the amounts held in the trust for such purposes. Upon a change
in control, no amendment of the trust may be adopted without the written consent
of a majority of the participants and the beneficiaries who are receiving
benefits. Consistent with the requirements of applicable law, the assets of the
trust are subject to the claims of creditors of UCAR in the event of UCAR's
insolvency or bankruptcy. A change in control has the same meaning as it has for
the Management Stock Option Plan, except that any transaction approved by a
majority of the Incumbent Directors shall not constitute a change in control if
so determined by two-thirds of the Incumbent Directors.
COMPENSATION COMMITTEE INTERLOCKS
Robert P. Krass, the Chairman of the Board, President and Chief Executive
Officer of UCAR, has served on the Compensation Committee since its formation in
December 1993.
12
<PAGE>17
REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
In accordance with the rules and regulations of the Securities and Exchange
Commission (the 'Commission'), the following report of the Board and the
Performance Graph appearing immediately thereafter shall not be deemed to be
soliciting material within the meaning of Regulations 14A and 14C under the
Exchange Act, filed with the Commission under the Exchange Act or otherwise
subject to such Regulations 14A or 14C or the liabilities of Section 18 of the
Exchange Act and shall not be deemed to be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Exchange Act,
notwithstanding any general incorporation by reference of this Proxy Statement
into any other document filed with the Commission.
The compensation of executive officers of the Company reflects both the
long-held philosophy of senior management regarding compensation and the impact
of various transactions that have affected the Company as well as the impact of
changes in the Company's industry.
Senior management has consistently held a philosophy that the Company's
success is attributable to the efforts of its employees, including its executive
officers and other senior and mid-level executives. As a result, it has sought
to establish base and incentive compensation programs and benefit arrangements
at levels sufficient to retain, attract and motivate qualified personnel. In
addition, senior management has sought to provide incentive compensation
programs which align compensation with performance of the Company and provide
amounts of incentive compensation commensurate with the difficulties and risks
associated with achieving various levels of performance. Finally, it has sought
to make the Company's incentive compensation broad-based, extending to all
senior and mid-level management (and, as appropriate, to other employees) who
may contribute to the performance of the Company.
From February 25, 1991 until the Recapitalization, the Board and the
Compensation Committee consisted solely of members of management of Union
Carbide and its then joint venture partner, Mitsubishi Corporation (with a
representative of the Company on the Compensation Committee beginning in
December 1993). Compensation of executive officers was determined by the Board,
based on recommendations of the Compensation Committee. At the time of the
Recapitalization, compensation was reset by the Board, which was reconstituted
to reflect the new ownership of the Company.
The Company has been the subject of three major transactions which have
affected executive compensation. On February 25, 1991, Union Carbide, which had
been the parent of the Company for almost 75 years, sold 50% of the common
equity of the Company to its joint venture partner. On January 26, 1995, the
Company consummated the Recapitalization, pursuant to which: (i) UCAR issued
Common Stock representing approximately 75% of the then outstanding Common Stock
to Blackstone and other investors, including certain members of management; (ii)
UCAR refinanced and increased its outstanding debt by approximately $710
million; and (iii) UCAR repurchased all of the common equity then held by the
joint venture partner and paid to Union Carbide a cash dividend on the common
equity then owned by Union Carbide, which equity thereafter represented
approximately 25% of the then outstanding Common Stock. In August 1995, UCAR
completed the IPO and, in connection therewith, sold Common Stock representing
22% of the then outstanding Common Stock for net proceeds of $227 million. As
part of the IPO, Union Carbide sold all of the Common Stock then owned by it.
Prior to the Recapitalization, compensation consisted primarily of
salaries, annual bonuses and broad-based group benefit and profit sharing plans.
Since the Company was wholly owned by Union Carbide and its joint venture
partner, management had no equity interest in the Company. Effective January 1,
1993, the Company adopted the Long Term Plan, which provided for substantial
cash payments in the first quarter of 1996 if certain annual and cumulative
financial targets were achieved in 1993, 1994 and 1995. There were 25
participants, including the Senior Executives, in the Long Term Plan. The
Company exceeded some of those targets for 1993 and all of those targets for
1994. Under the terms of the Long Term Plan, upon a change in control of the
Company, all targets for periods after the change in control were deemed to be
100% achieved and payments due thereunder were accelerated. The Recapitalization
constituted such a change in control and aggregate payments of approximately
$10.7 million were made under the Long Term Plan upon the closing of the
Recapitalization.
In connection with the Recapitalization, new compensation programs were
adopted which sought to implement the philosophy described above. These programs
also sought to encourage management to invest in UCAR to provide for
risk-sharing with the new owners of UCAR, to obtain long term commitments from
management to work toward meeting new financial goals for the Company and to
provide potential short term
13
<PAGE>18
and long term rewards to reflect the Company's radically different risk and
opportunity profile. To achieve these goals, these programs consisted of several
elements. One element was obtaining contractual commitments, supported by
non-competition covenants, from each Senior Executive to remain with UCAR for at
least three years. In addition, UCAR increased salaries and annual incentive
compensation of the Senior Executives to levels competitive with those of
comparable companies. As the second element, UCAR offered management, through
the Equity Ownership Program, the opportunity to share the risks and rewards of
equity ownership by enabling them to invest their payments under the Long Term
Plan in equity of UCAR. UCAR provided an incentive for such investments with
grants of matching restricted stock and facilitated such investments with tax
loans and tax gross-ups to cover tax consequences arising from such investments.
The third element consisted of grants of options under the Management Stock
Option Plan to provide long term incentives based on the value of the equity of
UCAR. Options were granted to approximately 70 participants. A portion of the
options granted to each participant vested only upon achievement of certain
financial targets ('performance options') and the balance vested ratably over
five years ('time options'), with all such options being forfeited upon
termination of employment under various circumstances not in the best interests
of the Company. The final element consisted of Supplemental Plan Variable
Compensation to the Senior Executives and certain other members of management
which was designed to provide short term performance-based incentives.
The Company's financial performance has improved significantly over the
past four years, as reflected in the appreciation of the value of the equity of
the Company. This improvement has been due in large part to business strategies
developed and implemented by management. This improved financial performance
made feasible both the Recapitalization and the IPO. Under the terms of the
Management Stock Option Plan, all time options granted thereunder automatically
vested upon the IPO. In addition, in connection with the IPO, the Board
accelerated the vesting of the performance options which would otherwise have
vested upon achievement of the targets for 1995, 1996 and 1997.
The 1995 compensation of the Chief Executive Officer was based on the
Company's performance and enhanced by his individual performance. Mr. Krass
participated in the same compensation programs and benefit plans as other
members of senior and mid-level management, although at greater levels which
reflect his increased responsibility and contribution to the Company's
performance and long term success. Other than his base salary, which was set by
the terms of his Employment Agreement, Mr. Krass' compensation for 1995
consisted primarily of incentive compensation based on the Company's financial
performance. Mr. Krass' compensation for 1995 (as well as that of the other
executive officers) was determined by the Board as described above.
The Board has considered the potential future effects on executive
compensation of Section 162(m) of the Code. Section 162(m) limits the
deductibility by public companies of certain executive compensation in excess of
$1 million per executive per year, but excludes from the calculation of the $1
million limit certain elements of compensation, including performance-based
compensation, provided that certain requirements are met. The 1995 Equity
Incentive Plan, the Management Stock Option Plan and the Equity Ownership
Program are designed so that awards thereunder or participation therein should
qualify for an exemption to the $1 million limit on tax deductibility under
Section 162(m).
Robert P. Krass
Glenn H. Hutchins
Robert D. Kennedy
Howard A. Lipson
Peter G. Peterson
Stephen A. Schwarzman
This report is submitted by the Board which participated as a whole in the
adoption and implementation of the compensation philosophy discussed above.
Messrs. Hall and Cartledge are not listed under the report set forth above
because they were not members of the Board at the time of the actions described
in the report.
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<PAGE>19
PERFORMANCE GRAPH
The graph set forth below shows cumulative total return to stockholders on
an initial investment of $100 in shares of Common Stock as compared to an
initial investment of $100 in the Standard & Poor's 400 Midcap Index and the
NYSE Industrials Index over the period from August 10, 1995, the first trading
date of the Common Stock in connection with the IPO, through December 31, 1995.
Total return assumes dividend reinvestment. The stock price performance shown on
the graph is not necessarily indicative of future stock price performance.
- -------------------------------------------------------------------------------
[GRAPH]:
PLOT POINTS: (1)
10-Aug95 Aug95 Sep95 Oct95 Nov95 Dec95
-------- ------ ------ ------ ------ ------
UCAR INTERNATIONAL INC. 100.00 115.79 114.74 120.00 134.21 142.11
NY STOCK EXCHANGE-INDUSTRIALS 100.00 99.91 103.47 102.35 107.50 109.46
S&P MIDCAP 400 INDEX 100.00 102.35 104.84 102.14 106.58 106.31
- -------------------------------------------------------------------------------
SOURCES: S&P COMPUSTAT AND BLOOMBERG
____________
(1) The initial price used for the Common Stock for purpose of the graph is
$23.75, the initial public offering price established on August 9, 1995 in
connection with the IPO, the last day before the beginning of the period
shown in the graph.
15
<PAGE>20
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 13, 1996, the number and
percentage of outstanding shares of Common Stock owned beneficially by: (i) each
stockholder known by UCAR to own more than 5% of the outstanding shares of
Common Stock; (ii) each director of UCAR; (iii) each of the Named Executive
Officers; and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------------------------
PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OUTSTANDING SHARES
- ----------------------------------------------------------------- ---------------- ------------------
<S> <C> <C>
Blackstone entities(a) .......................................... 10,480,968 22.7%
345 Park Avenue
New York, NY 10154
Chemical Equity Associates(a) ................................... 488,745 1.1%
270 Park Avenue
New York, NY 10017
Robert P. Krass(a)(b)(c)(d)...................................... 1,158,958 2.5%
Robert J. Hart(a)(b)(d)(e)....................................... 531,355 1.1%
Peter B. Mancino(a)(b)(d)........................................ 235,874 *
Maurice Marcellin(f)............................................. 2,000 *
William P. Wiemels(a)(b)(d)...................................... 321,265 *
Fred C. Wolf(a)(b)(d)............................................ 188,679 *
R. Eugene Cartledge(g)(h)........................................ 1,800 *
John R. Hall(h)(i)............................................... 2,000 *
Glenn H. Hutchins(j)............................................. 10,480,968 22.7%
Robert D. Kennedy(b)(h).......................................... 5,000 *
Howard A. Lipson(j).............................................. 10,480,968 22.7%
Peter G. Peterson(j)............................................. 10,480,968 22.7%
Stephen A. Schwarzman(j)......................................... 10,480,968 22.7%
Directors and executive officers as a group(k) (13 persons)...... 12,265,400 25.6%
</TABLE>
- ------------------
* Represents holdings of less than one percent.
(a) 9,137,385 shares, or 19.8%, of the outstanding shares are held collectively
by Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
Offshore Capital Partners II L.P. and Blackstone Family Investment
Partnership II L.P. Such Blackstone entities beneficially own 10,480,968
shares, or 22.7%, of the outstanding shares, collectively, due to (i) an
agreement between the Blackstone entities and Chemical Equity Associates
pursuant to which Chemical Equity Associates has agreed to vote its shares
in the same manner as the Blackstone entities vote their shares and (ii)
agreements between the Blackstone entities and certain members of
management as a group pursuant to which they have agreed to vote their
shares in the same manner as the Blackstone entities vote their shares.
(b) Each such person's business address is 39 Old Ridgebury Road, Danbury, CT
06817.
(c) Includes 214,853 shares held by Krass Family Limited Partnership, a limited
partnership of which Mr. Krass is the general partner, and 14,204 shares
held by Mr. Krass' family members. Mr. Krass disclaims beneficial ownership
of such shares.
(d) Includes shares subject to vested options under the Management Stock Option
Plan as follows: Mr. Krass, 808,654 shares; Mr. Hart, 313,147 shares; Mr.
Mancino, 216,794 shares; Mr. Wiemels, 264,518 shares; and Mr. Wolf, 170,253
shares.
(e) Includes 32,845 shares held by Mr. Hart's family members. Mr. Hart
disclaims beneficial ownership of such shares.
(Footnotes continued on next page)
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<PAGE>21
(Footnotes continued from previous page)
(f) Such person's business address is UCAR S.N.C., 4 Place des Etats-Unis,
SILIC 2144, F94518 RUNGIS-CEDEX, France.
(g) Such person's address is 6 Skidaway Village Walk, Suite 203-B, Savannah, GA
31411.
(h) Includes shares granted under the 1995 Directors Stock Plan.
(i) Such person's business address is 1000 Ashland Drive, Russell, KY 41169.
(j) Each such person's business address is c/o The Blackstone Group L.P., 345
Park Avenue, New York, NY 10154. Messrs. Peterson, Schwarzman, Hutchins and
Lipson are members of the general partner of each of the Blackstone
entities that has investment and voting control over the shares held or
controlled by the Blackstone entities. Beneficial ownership of shares by
such four individuals includes the shares beneficially owned by the
Blackstone entities. Each of such persons disclaims beneficial ownership of
such shares.
(k) Includes 1,773,366 shares of Common Stock subject to vested options granted
under the Management Stock Option Plan. Includes the shares of Common Stock
beneficially owned by the Blackstone entities, as described in note (j)
above.
Section 16(a) of the Exchange Act requires UCAR's directors and officers
and holders of more than 10% of the outstanding shares of Common Stock to file
with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of UCAR. UCAR believes
that, during 1995, its directors and officers and holders of more than 10% of
the outstanding shares of Common Stock complied with all reporting requirements
under Section 16(a).
CERTAIN TRANSACTIONS
In connection with the Recapitalization, UCAR, Blackstone and Union Carbide
entered into a Stockholders' Agreement (as subsequently amended, the
'Stockholders' Agreement'). All of the rights and obligations of Union Carbide
thereunder were terminated upon the sale by Union Carbide in the IPO of all of
the shares of Common Stock then held by it. The Stockholders' Agreement granted
'piggy-back' registration rights to Blackstone, subject to certain limitations,
each time UCAR filed a registration statement in connection with the sale of
shares of Common Stock by UCAR. The Stockholders' Agreement also granted
'demand' registration rights to Blackstone, subject to certain limitations. In
addition, the Stockholders' Agreement provided that UCAR would not, and would
cause its subsidiaries not to, enter into any transaction with Blackstone unless
such transaction (i) was contemplated by a written agreement of the relevant
parties at the time of the Recapitalization or the Stockholders' Agreement or
(ii) was reasonable and customary in light of industry practice with regard to
portfolio companies owned by persons such as Blackstone. UCAR currently pays a
monitoring fee of approximately $1 million per year to Blackstone which was
expressly permitted by the Stockholders' Agreement. Subject to certain
exceptions, the Stockholders' Agreement restricted transfers of shares of Common
Stock by the parties thereto unless the transferee agreed to become a party to,
and be bound by, the Stockholders' Agreement.
In connection with the Recapitalization, UCAR also entered into an
agreement with Blackstone and Chemical Equity Associates (the 'Chemical
Agreement') which contained transfer restrictions, 'tag-along' and 'drag-along'
rights and registration rights relating to shares of Common Stock held by
Chemical Equity Associates. The Chemical Agreement also obligated Chemical
Equity Associates to vote its shares of Common Stock in the same manner as
Blackstone voted its shares of Common Stock.
On February 29, 1996, UCAR, Blackstone and Chemical Equity Associates
entered into an Amended and Restated Stockholders' Agreement which combines the
provisions of the Stockholders' Agreement and the Chemical Agreement into one
agreement and adds certain indemnification and other provisions relating to
registration rights.
Upon consummation of the Recapitalization, UCAR paid to Blackstone an
investment banking fee of approximately $12 million.
17
<PAGE>22
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING OF STOCKHOLDERS FOR 1997
Stockholder proposals for the proxy statement for the annual meeting of
stockholders for 1997 must be received at UCAR's principal executive office on
or before November 24, 1996.
OTHER INFORMATION
The presence, in person or by proxy, of stockholders holding a majority of
the issued and outstanding shares of Common Stock entitled to vote at the annual
meeting is necessary to constitute a quorum for the transaction of business. The
nominees receiving a plurality of the votes cast will be elected as directors.
Only those votes cast for or against a proposal are used in determining the
results of a vote. Abstentions and broker non-votes are each included for
purposes of determining the presence or absence of a sufficient number of shares
to constitute a quorum. With respect to the approval of any particular proposal,
abstentions are considered present at the meeting, but since they are not
affirmative votes for the proposal they will have the same effect as votes
against the proposal. Broker non-votes, on the other hand, are not considered
present at the meeting for the particular proposal for which the broker withheld
authority to vote.
In addition to the solicitation of proxies by mail, officers or other
employees of the Company, without extra remuneration, may solicit proxies by
telephone or personal contact. UCAR will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting material to
beneficial owners of shares of Common Stock held of record and will pay such
persons for forwarding the material. All costs for the solicitation of proxies
by the Board, anticipated to be approximately $10,000, will be borne by UCAR.
18
<PAGE>23
