SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BALCHEM CORPORATION
(Name of Registrant as Specified In Its Charter)
- - - - - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
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):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
N/A
[ ] 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
[BALCHEM LETTERHEAD]
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 2000
----------------------------------------
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
BALCHEM CORPORATION will be held in the Board of Governors Room, 13th floor, the
American Stock Exchange, 86 Trinity Place, New York, New York, on Friday, June
23, 2000 at 11:00 a.m. for the following purposes:
1. To elect two Class 2 directors to the Board of Directors to serve
until the annual meeting of Stockholders in 2003 and until their
respective successors are elected and qualify.
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Information with respect to the above matters is set forth in the
Proxy Statement which accompanies this Notice.
Only stockholders of record on April 13, 2000 are entitled to notice
of and to vote at the Meeting or any adjournment thereof.
We hope that all stockholders who can conveniently do so will attend
the Meeting. Stockholders who do not expect to be able to attend the Meeting are
requested to fill in, date and sign the enclosed proxy and promptly return the
same in the stamped, self-addressed envelope enclosed for your convenience.
Stockholders who are present at the Meeting may withdraw their proxies and vote
in person, if they so desire.
BY ORDER OF THE BOARD OF DIRECTORS
Dino A. Rossi, President
Dated: April 28, 2000
P.O. Box 175, Slate Hill, New York 10973 Tel: 914.355.5300
Fax: 914.355.6528 www.balchem.com
<PAGE>
PROXY STATEMENT
BALCHEM CORPORATION
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Balchem
Corporation (the "Company") for the 2000 Annual Meeting of Stockholders
(sometimes referred to herein as the "Annual Meeting" or as the "Meeting"). This
Proxy Statement and a proxy card are expected to be mailed to stockholders
beginning on or about April 28, 2000.
You can ensure that your shares are voted at the Annual Meeting by
completing, signing, dating and returning the enclosed proxy form in the
envelope provided. Sending in a signed proxy will not affect your right to
attend the Meeting and vote. A stockholder who gives a proxy may revoke it at
any time before it is exercised by voting in person at the Annual Meeting, by
submitting another proxy bearing a later date or by notifying the Inspectors of
Election or the Secretary of the Company in writing prior to the Annual Meeting
of such revocation. Proxies may be solicited, without additional compensation,
by directors, officers and other regular employees of the Company by telephone,
telecopy or in person. All expenses incurred in connection with this
solicitation will be borne by the Company.
ELECTION OF DIRECTORS
The Company's By-laws provide effective with the annual meeting for
a staggered term Board of Directors consisting of seven (7) members, with the
classification of the Board of Directors into three classes (Class 1, Class 2
and Class 3). The term of the three current incumbent Class 2 directors will
expire at the Annual Meeting. The Class 1 and 3 directors will remain in office
until their terms expire, at the annual meetings of stockholders to be held in
the years 2001 and 2002, respectively. One current Class 2 director, Donald
Alguire, will retire effective on the date of the Annual Meeting and the number
of Class 2 directors authorized by the Company's by-laws has, as noted above,
been reduced to two.
Accordingly, at the 2000 Annual Meeting, two Class 2 directors are
to be elected to hold office until the annual meeting of stockholders to be held
in 2003 and until their successors have been elected and qualify. The nominees,
listed below with brief biographies, are all currently directors of the Company.
The Board is not aware of any reason why any nominee may be unable to serve as a
director. If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such other person as the Board may
recommend.
Recommendation of the Board of Directors Concerning the Election of Directors
The Board of Directors of the Company recommends a vote For the
election of Kenneth P. Mitchell and Israel Sheinberg as Class 2 directors to
hold office until the Annual Meeting of Stockholders for the Year 2003 and until
their successors are elected and qualify. Proxies received by the Company will
be so voted unless such proxies withhold authority to vote for one or both of
such nominees.
2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Information Relating to Nominees for Election as Directors
Kenneth P. Mitchell, age 60, has been a director of the Company since
1993. Mr. Mitchell is retired. He was Chief Executive Officer of Oakite Products
Inc. from 1986 to 1993. Since February 1997, he has been a director of Tetra
Technologies, Inc., a publicly-traded company.
Israel Sheinberg, age 67, has been a director of the Company since
1991. Since 1991, Mr. Sheinberg has been the principal of Sheinberg Associates,
an independent technical and management consultant.
Directors
In addition to Messrs. Mitchell and Sheinberg, the Company's Board
of Directors includes the following members:
Donald E. Alguire, age 72, has been a director of the Company since
1988. Mr. Alguire is retired. Mr. Alguire was a management, financial and
technical consultant from 1987 through 1998. He was formerly President of
Griffith Microsciences, Inc., a privately-owned company. Mr. Alguire will retire
effective on the date of the Annual Meeting.
John E. Beebe, age 77, has been a director of the Company since 1986.
Mr. Beebe is retired. Mr. Beebe was Chairman Emeritus of Scott Macon, Ltd. from
August 1990 to June 1991 and was Chairman of Scott Macon Ltd. from September 1,
1985 to August 1990.
Francis X. McDermott, age 66, has been a director of the Company since
1992. Mr. McDermott is retired. He was President of the Specialty Chemicals
Group of Merck & Co., Inc. from 1985 through 1992.
Carl R. Pacifico, age 78, has been a director of the Company since
1966. Mr. Pacifico has been an independent management consultant for more than
the past five years.
Dino A. Rossi, age 45, has been a director of the Company since 1997.
Mr. Rossi has been President and Chief Executive Officer of the Company since
October 1997, Chief Financial Officer of the Company since April 1996 and
Treasurer of the Company since June 1996. He was Vice President, Finance and
Administration of Norit Americas Inc., a wholly-owned subsidiary of Norit N.V.,
a chemicals company, from January 1994 to February 1996, and Vice President,
Finance and Administration of Oakite Products Inc., a specialty chemicals
company, from 1987 to 1993.
Dr. Leonard J. Zweifler, age 71, has been a director of the Company
since 1969. Dr. Zweifler is a dentist and Senior Partner of Kings Dental Group,
New York, New York.
Messrs. Mitchell and Sheinberg are Class 2 Directors whose current
terms expire in connection with the 2000 Annual Meeting and who are nominees for
election for a term expiring in connection with the year 2003 annual meeting.
Messrs. Pacifico and Rossi are Class 1 Directors whose terms expire in
connection with the year 2001 annual meeting and Messrs. Beebe, McDermott and
Zweifler are Class 3 directors whose terms expire in connection with the year
2002 annual meeting. There are no family relationships between any of the
directors or executive officers of the Company.
3
<PAGE>
Executive Officers
Set forth below is certain information concerning the executive
officers of the Company (other than Mr. Rossi, whose background is described
above under the caption "Directors"), which officers serve at the discretion of
the Board of Directors:
Anthony J. Nocera, age 48, has been Vice President-Operations of the
Company since April 1998 and an executive officer of the Company since June
1998. He was Manager of Process Technology of Great Lakes Chemical Corp., a
diversified chemicals company, from January 1993 through March 1998 and
Technical Manager of that company from April 1990 through December 1992.
Winston A. Samuels, Ph.D., age 48, has been Vice President and
General Manager of Encapsulated Products since September 1998 and an executive
officer of the Company since June 1999. He was Growth and Commercial Development
Director for Solutia Inc. (a spin-off of Monsanto Co.), a manufacturer of
ingredients for food, pharmaceutical and nutritional products from 1997 to 1998.
From 1986 to 1997 he was involved in key new product introductions, business
management and global business growth for Monsanto Co.
Francis J. Fitzpatrick, CPA, age 39, has been Controller of the
Company since April 1997, and an executive officer and Assistant Secretary of
the Company since June 1998. He was Director of Financial Operations/Controller
of Alliance Pharmaceutical Corp., a pharmaceuticals company, from September 1989
through March 1997.
Meetings and Compensation of Directors
During fiscal 1999, the Board of Directors met six times. Each
director attended at least 75% of the meetings of the Board held when he was a
director and of all Committees of the Board on which he served. The Company pays
each of its directors, other than Mr. Rossi, an annual fee of $5,000, and $2,000
for each Board Meeting and $500 for each Committee meeting attended,
respectively, plus expenses. Each director also received non-qualified stock
options to purchase 2,550 shares of the Company's Common Stock (at an exercise
price of $8.00 per share), which number of shares was determined in accordance
with an earnings-based formula consistent with that originally set forth in the
Company's 1994 Stock Option Plan for Directors. See "Stock Option Plans" below.
The Company does not pay any other direct or indirect compensation to directors
in their capacity as such.
The Board of Directors conducts continuing analysis of director
compensation. Based on such analysis and the recommendation of the Compensation
Committee of the Board of Directors, and by action of the entire Board of
Directors, a decision was made to terminate a practice of compensating retired
directors by continuing to pay to the retiree an amount equal to the annual
retainer paid to such retiree prior to his retirement for a period after such
retirement equal to the time the retiree had served on the Board, with such
payments ending upon the death of the retiree. In lieu of such payments, the
directors of the Company as a group were granted in February 2000 payments
aggregating $199,353. The payments granted to the directors were based on an
actuarial determination of expected life span and a corresponding present value
computation of what would have been paid under the above described practice,
subject to the corresponding actuarial determination.
4
<PAGE>
Committees of the Board of Directors
The Company's Board of Directors has a standing Audit Committee and
a standing Compensation Committee, as well as an Executive Committee, Finance
and Stockholder Relations Committee and Directors Planning Committee. The
members of each Committee are appointed by the Board of Directors. In 1999, the
Director Planning and Audit Committees each held two meetings and the
Compensation Committee held three. Mr. Rossi is an ex-officio, nonvoting, member
of all Committees.
Audit Committee. The duties of the Audit Committee are to (i)
recommend to the full Board the auditing firm to be selected each year as the
Company's independent auditors, (ii) consult with the firm so chosen to be the
independent auditors with regard to the plan of audit, (iii) review, in
consultation with the independent auditors, their report of audit, or proposed
report of audit, and the accompanying management letter, if any, and such
auditors' recommendations, (iv) consult with the independent auditors (at least
annually, as appropriate) with regard to the adequacy of the Company's internal
accounting and control procedures, and (v) review any non-audit services and
special engagements to be performed by the independent auditors and consider the
effect of such performance on the auditors' independence. The Audit Committee
reports to the full Board regarding the foregoing matters.
The current members of the Audit Committee are Donald E. Alguire, John
E. Beebe and Leonard J. Zweifler. Mr. Alguire will retire from the Board
effective June 23, 2000, at which time another Director will be appointed to
this Committee.
Compensation Committee. The duties of the Compensation Committee are
to (i) recommend to the Board of Directors a compensation program, including
incentives, for the Chief Executive Officer and other senior officers of the
Company, for approval by the full Board of Directors, (ii) prepare an Annual
Report of the Compensation Committee for inclusion in the Company's Proxy
Statement as contemplated by the requirements of Schedule 14A of the Securities
Exchange Act of 1934, as amended, (iii) propose to the full Board of Directors
the compensation of directors, a significant part of which compensation is to be
in the form of stock or stock options, and (iv) to administer the Company's 1999
Stock Plan.
The current members of the Compensation Committee are Messrs.
McDermott, Mitchell and Sheinberg. See "Report of the Compensation Committee of
the Board of Directors" below.
Executive Committee. This Committee is authorized to exercise all
the powers of the Board of Directors in the interim between meetings of the
Board, subject to the limitations imposed by Maryland law. The Executive
Committee is also responsible for the recruitment, evaluation and selection of
suitable candidates for the position of Chief Executive Officer ("CEO"), for
approval by the full Board, for the preparation, together with the Compensation
Committee, of objective criteria for the evaluation of the performance of the
CEO, and for reviewing the CEO's plan of succession for officers of the Company.
Messrs. Beebe, McDermott, Mitchell, and Pacifico are currently members of this
Committee.
Finance and Stockholder Relations Committee. The duties of this
Committee are long-term planning and review of the implementation of the
Company's financial requirements, and review of broad-based contact with the
Company's stockholders, including the review of annual and any quarterly reports
and special announcements. Messrs. Alguire, Beebe and Dr. Zweifler are currently
members of this Committee. Mr. Alguire will retire from the Board effective June
23, 2000, at which time another Director will be appointed to this Committee.
5
<PAGE>
Directors Planning Committee. The duties of this Committee include to
(i) recruit and evaluate new candidates for possible nomination by the full
Board for election as directors, (ii) prepare and update an orientation program
for new directors, (iii) evaluate the performance of current directors in
connection with the expiration of their term in office, (iv) to provide advice
to the full Board in its determination of whether to nominate any such director
for reelection, and (v) review and recommend policies on director retirement
age. This Committee does not act as a nominating committee with respect to the
Board of Directors or the Committees thereof. Messrs. McDermott, Pacifico and
Sheinberg are currently members of this Committee.
Compensation of Executive Officers
The following table sets forth information concerning the
compensation for services to the Company during each of the fiscal years ended
December 31, 1999, 1998, and 1997 for Dino A. Rossi, the Company's President and
Chief Executive Officer, and each other executive officer of the Company whose
annual salary and bonus compensation with respect to the 1999 calendar year
exceeded $100,000 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------------- --------------
Other Annual No. of All Other
Name Year Salary Bonus Compensation Options Compensation
- - - - - - ---- ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dino A. Rossi* 1999 $171,392 $73,838 $ 2,803 (1) 5,000 $10,729 (4)
CEO 1998 $150,000 $32,250 $ 1,821 (2) 4,000 $ 9,970 (5)
1997 $123,235 $31,500 $ 3,297 (3) 75,000 $ 8,993 (6)
Anthony Nocera** 1999 $134,875 $26,715 $ 3,157 (7) 1,800 $ 8,743 (8)
Vice President 1998 $ 96,500 $12,829 $50,085 (9) 46,500 $ 7,695 (10)
-Operations 1997 $ -- $ -- $ -- -- $ --
Winston A. Samuels*** 1999 $138,269 $35,090 $29,337 (11) 3,000 $ 5,370 (12)
Vice President and 1998 $ 43,615 $13,000 $28,285 (13) 31,500 $ --
General Manager of 1997 $ -- $ -- $ -- -- $ --
Encapsulated Products
</TABLE>
- - - - - - -------------------------
* Mr. Rossi became the Company's President and Chief Executive Officer in
October 1997.
** Mr. Nocera commenced employment with the Company as its Vice President-
Operations in April 1998 at an annual salary of $130,000.
*** Dr. Samuels commenced employment with the Company as Vice President and
General Manager, Encapsulated Products, in September 1998 at an annual
salary of $135,000.
(1) Includes $2,803 in automobile lease payments by the Company.
(2) Includes $1,821 in automobile lease payments by the Company.
(3) Includes $3,297 in automobile lease payments by the Company.
(4) Includes $3,500 in 401(k) and $7,229 in profit sharing contributions
made by the Company to Mr. Rossi's account under the Company's combined
401(k)/profit sharing plan.
(5) Includes $3,500 in 401(k) and $6,470 in profit sharing contributions
made by the Company to Mr. Rossi's account under the Company's combined
401(k)/profit sharing plan.
6
<PAGE>
(6) Includes $3,500 in 401(k) and $5,493 in profit sharing contributions
made by the Company to Mr. Rossi's account under the Company's 401(k)
and profit sharing plans.
(7) Includes $3,157 in automobile lease payments by the Company.
(8) Includes $3,500 in 401(k) and $5,243 in profit sharing contributions
made by the Company to Mr. Nocera's account under the Company's
combined 401(k)/profit sharing plan.
(9) Includes $50,085 in moving expenses.
(10) Includes $2,625 in 401(k) and $5,070 in profit sharing contributions
made by the Company to Mr. Nocera's account under the Company's
combined 401(k)/profit sharing plan.
(11) Includes $3,552 in automobile lease payments by the Company and $25,785
in moving expenses.
(12) Includes $5,370 in profit sharing contributions made by the Company to
Dr. Samuels' account under the Company's combined 401(k)/profit sharing
plan.
(13) Includes $28,285 in moving expenses.
Stock Option Plans
In 1999, the Company adopted the Balchem Corporation 1999 Stock Plan
(the "1999 Stock Plan") for officers, directors, directors emeritus and
employees of and consultants to the Company and its subsidiaries. Under the 1999
Stock Plan, the officers and other employees of the Company and any present or
future parent or subsidiaries of the Company (collectively, "Related Companies")
may be granted options to purchase Common Stock of the Company which qualify as
"incentive stock options" ("ISO" or "ISOs") under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code"); directors, officers, employees,
and directors emeritus of and consultants to the Company and Related Companies
may be granted options to purchase Common Stock which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); and directors, officers,
employees, and directors emeritus of and consultants to the Company and Related
Companies may be granted the right to make direct purchases of Common Stock from
the Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereinafter individually as an "Option" and collectively as "Options." Options
and Purchases are referred to hereinafter collectively as "Stock Rights." The
1999 Stock Plan reserves an aggregate of 600,000 shares of the Company's Common
Stock ("Common Stock") for issuance under the plan.
The 1999 Stock Plan is administered by the Board of Directors of the
Company or, if the Board of Directors so determines, the Compensation Committee
thereof. Subject to the terms of the 1999 Stock Plan, the Board (or the
Committee, as the case may be), has the authority to determine to whom Stock
Rights shall be granted (subject to certain eligibility requirements for grants
of ISOs), the number of shares covered by each such grant, the exercise or
purchase price per share, the time or times at which Stock Rights shall be
granted, and other terms and provisions governing the Stock Rights, as well as
the restrictions, if any, applicable to shares of Common Stock issuable upon
exercise of Stock Rights. The exercise price per share specified in the
agreement relating to each ISO granted under the 1999 Stock Plan may not be less
than the fair market value per share of Common Stock on the date of such grant.
In the case of an ISO to be granted to an employee owning stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any Related Company, the price per share specified in the agreement
relating to such ISO may not be less than 110% of the fair market value per
share of Common Stock on the date of grant. In addition, each eligible employee
may be granted ISOs only to the extent that, in the aggregate under the 1999
<PAGE>
Stock Plan and all incentive stock option plans of the Company and any Related
Company, such ISOs do not become exercisable for the first time by such employee
during any calendar year in a manner which would entitle the employee to
purchase, pursuant to the exercise of ISOs (whether under the 1999 Stock Plan or
any other plan), more than $100,000 in fair market value (determined at the time
the ISOs were granted) of Common Stock in that year. The 1999 Stock Plan
requires that each Option shall expire on the date specified by the Compensation
Committee or
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<PAGE>
the Board, but not more than ten years from its date of grant. However, in the
case of any ISO granted to an employee or officer owning more than 10% of the
total combined voting power of all classes of stock of the Company or any
Related Company, the ISO will expire no more than five years from its date of
grant. In 1999, options to purchase an aggregate of 73,600 shares at a weighted
average exercise price of $6.90 per share were granted under the 1999 Stock
Plan. At December 31, 1999, options to purchase an aggregate of 73,600 shares
were outstanding pursuant to the 1999 Stock Plan, of which options for an
aggregate of 20,400 shares were then exercisable.
The 1999 Stock Plan replaced the Company's 1994 Incentive Stock
Option Plan, as amended (the "ISO Plan"), and its non-qualified 1994 Stock
Option Plan for Directors, as amended (the "Non-Qualified Plan"), both of which
expired on June 24, 1999. Unexercised options granted under the ISO Plan and the
Non-Qualified Plan prior to such termination are exercisable in accordance with
their respective terms until their respective expiration dates.
The ISO Plan provided for the grant of ISO's to officers and other
key employees. Such options are exercisable at a price equal to the fair market
value of the Common Stock on the date of grant. An aggregate of 581,250 shares
of Common Stock had been reserved for issuance upon exercise of options granted
under the ISO Plan. In 1999, options to purchase an aggregate of 15,500 shares
at a weighted average exercise price of $6.29 per share were granted under the
ISO Plan. At December 31, 1999, options to purchase an aggregate of 235,555
shares were outstanding pursuant to the ISO Plan, of which options for an
aggregate of 137,435 shares were then exercisable. Options granted under the ISO
Plan may be exercised, upon and subject to the vesting thereof, in whole or
part, at any time and from time to time, between the first and tenth anniversary
of the date of grant.
The ISO Plan also provided that if options granted to an employee
permit the employee to purchase shares having an aggregate market value
(determined at the time of grant) in excess of $100,000 in any year in which the
option as it applies to such shares first becomes exercisable, then the portion
of such options in excess of such $100,000 limitation will not be incentive
stock options and will not be entitled to the favorable income tax treatment
afforded to grantees of incentive stock options.
The Non-Qualified Plan provided for the grant of stock options to
directors, directors emeritus and other employees and consultants of the
Company, which options do not qualify as incentive stock options. The
Non-Qualified Plan provided that, on each December 31, each director and
director emeritus shall, subject to the limitations set forth therein, be
granted options thereunder to purchase that number of shares of Common Stock
which is equal to the maximum number of shares for which options were granted in
1996 (i.e., 1,059) multiplied by the quotient obtained by dividing (i) the net
earnings after taxes of the Company for the year then ended by (ii) the net
earnings after taxes of the Company for 1996, rounded to the nearest whole
number of shares. The option exercise price is the reported closing price per
share of the Common Stock on the last trading date of the year in which such
December 31 falls. Such options are exercisable for a ten-year period from the
date of grant. Employees and consultants of the Company were also granted
non-qualified stock options under the Non-Qualified Plan in an amount and on
such other terms and conditions as the Board of Directors determined, provided
that the exercise price of such options was equal to the reported closing price
of the Common Stock on the date of grant of the options. Any such options expire
no later than ten years from the date of grant. An aggregate of 678,000 shares
of Common Stock had been reserved for issuance upon exercise of options granted
under the Non-Qualified Plan. In 1999, no options were granted under the
Non-Qualified Plan. At December 31, 1999, options to purchase an aggregate of
118,167 shares were outstanding under the Non-Qualified Plan, of which options
to purchase an aggregate of 110,667 shares were then exercisable.
8
<PAGE>
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth certain information concerning
options granted to the Named Executive Officers during 1999:
<TABLE>
<CAPTION>
Number
of
Shares % of Total
Under- Options
lying Granted To Exercise Market
Options Employees Price Price On Expiration Grant Date
Name Granted In 1999 ($/Share) Grant Date Date Value(1)
- - - - - - ---- ------- ------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Dino A.Rossi 5,000(2) 7.3% $ 6.35 $ 6.35 10/21/09 $ 16,689
Anthony J. Nocera 1,800(3) 2.6% $ 6.35 $ 6.35 10/21/09 $ 6,008
Winston A. Samuels 3,000(4) 4.4% $ 6.35 $ 6.35 10/21/09 $ 10,013
</TABLE>
- - - - - - ---------
(1) The value of options granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants: dividend yield of 0.46%; expected
volatility of 48%; risk-free rate of return of 6.3% and expected life
of six years.
(2) Of such options, options for 1,000 shares (20%), 2,000 shares (40%),
and 2,000 shares (40%) vest on October 21,2000, 2001 and 2002,
respectively.
(3) Of such options, options for 360 shares (20%), 720 shares (40%), and
720 shares (40%) vest on October 21, 2000, 2001 and 2002, respectively.
(4) Of such options, options for 600 shares (20%), 1,200 shares (40%), and
1,200 shares (40%) vest on October 21, 2000, 2001 and 2002,
respectively.
AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to option
exercises during the year ended December 31, 1999 and the number and value of
options outstanding at December 31, 1999 held by the Named Executive Officers:
<TABLE>
<CAPTION>
Number of Shares
Underlying
Unexercised
Shares Options at
Acquired December 31,1999 Value of Unexercised
On Value Exercisable("E")/ In the Money Options at
Name Exercise Realized Unexcercisable("U") December 31, 1999(1)
- - - - - - ---- -------- -------- ------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Dino A. Rossi 0 0 81,200(E)/ 8,200(U) $13,382(E)/$13,850(U)
Anthony J. Nocera 0 0 9,300(E)/39,000(U) $ 525(E)/$ 5,070(U)
Winston A. Samuels 0 0 10,300(E)/24,200(U) $ 525(E)/$ 7,050(U)
</TABLE>
<PAGE>
- - - - - - --------------
(1) Value as of December 31, 1999 is based upon the closing price on that
date as reported on the American Stock Exchange minus the exercise
price, multiplied by the number of shares underlying the option.
401(k)/Profit Sharing Plan
Effective January 1, 1998, the Company terminated its defined
contribution pension plan and amended its 401(k) savings plan. Assets of the
terminated defined contribution pension plan were merged into an enhanced
401(k)/profit sharing plan (the "New Plan"), intended to be a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986, as amended, and
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Employees of the Company are eligible to participate in the New Plan
once they attain age 18 and complete 60 days of continuous service with the
Company. The New Plan provides that participating employees may make elective
contributions of up to 15% of pre-tax salary, subject to ERISA limitations, and
9
<PAGE>
for the Company to make matching contributions on a monthly basis equal in value
to 35% of each participant's elective contributions. Such matching contributions
are made in shares of the Company's Common Stock. The profit-sharing portion of
the New Plan is discretionary and non-contributory. Profit sharing contributions
are restricted to employees who have completed 1,000 hours of service and are
employed on the last day of a plan year. The Company contributes a minimum of
3.55% of an eligible participant's taxable compensation (subject to certain
exclusions) unless the Company announces a different rate. Amounts in each
participant's matching contribution and profit sharing accounts are not vested
until such participant has two years of service, at which time 100% of such
amounts vest. All amounts contributed to the New Plan are deposited into a trust
fund administered by the plan trustee. Participants have the right to direct how
their accounts are invested among a selection of mutual funds and/or selected
trustee portfolios, and may transfer any portion of the matching contribution to
other available investment choices. Up to 10% of participant elective
contributions and Company profit sharing contributions may be invested at the
participant's election in the Company's Common Stock. On retirement or
termination of employment, participants are entitled to a distribution of all
vested amounts and accrued income in their accounts.
The Company provided for profit sharing and matching 401(k) savings
plan contributions to the New Plan of $186,000 and $156,000 in 1999 and $178,000
and $172,000 in 1998, respectively. Prior to 1998, the Company had separate
defined contribution pension and 401(k) savings plans that covered substantially
all employees. Pension plan contributions for 1997 were $149,000, and 401(k)
savings plan contributions were $95,000.
Employment Agreement
As of October 1, 1997, the Company entered into an Employment
Agreement with Dino A. Rossi, which provides for Mr. Rossi to serve as the
Company's President and Chief Executive Officer. The Agreement expires on
September 30, 2000. The Agreement provides for a base salary of $150,000, which
is subject to annual increase if approved by the Board of Directors. Mr. Rossi
is also eligible to receive a discretionary performance bonus (as determined by
the Board of Directors) based on a target of 50% of annual salary for each year
during the term of the Agreement. Mr. Rossi is entitled to the use of a car
leased by the Company. During the term of his employment with the Company and
for a period of one year thereafter, the Agreement provides that Mr. Rossi will
be subject to certain restrictive covenants relating to non-competition and
non-solicitation of the Company's customers and employees. The Agreement
provides that, if, under certain circumstances, the Company elects not to
continue to employ Mr. Rossi at his then applicable salary at least one year
following expiration of the initial term thereof, Mr. Rossi will be entitled to
receive an amount equal to his previous year's annual salary, and all options to
purchase Common Stock of the Company previously granted to him will immediately
vest and become exercisable.
Security Ownership of Certain Beneficial Owners and of Management
The table below sets forth as of April 1, 2000 the number of shares
of Common Stock beneficially owned by each director, each of the Named Executive
Officers, each beneficial owner of, or institutional investment manager
exercising investment discretion with respect to, 5% or more of the outstanding
shares of Common Stock, and all directors and executive officers of the Company
as a group, and the percentage ownership of the outstanding Common Stock as of
such date held by each such holder and group:
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Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership (1) Class (2)
- - - - - - ------------------- --------------------------- -----------
Laifer Capital Management, Inc.(3) 356,600 7.3%
Leonard J. Zweifler (4)* 321,424 6.5%
Carl R. Pacifico (5)* 100,792 2.1%
Dino A Rossi (6)* 89,343 1.8%
John E. Beebe (7)* 37,894 **
Donald E. Alguire (8)* 28,192 **
Kenneth P. Mitchell (9)* 29,625 **
Francis X. McDermott (10)* 22,242 **
Israel Sheinberg (11)* 21,010 **
Anthony J. Nocera (12)* 28,206 **
Winston A. Samuels (13)* 10,800 **
All directors and executive officers
as a group (11 persons)(14) 691,172 13.5%
- - - - - - ------------------------
* Such person's address is c/o the Company, P.O. Box
175, Slate Hill, N.Y. 10973.
** Indicates less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes
voting or investment power with respect to securities. In accordance
with SEC rules, shares which may be acquired upon exercise of stock
options which are currently exercisable or which become exercisable
within 60 days after the date of the information in the table are
deemed to be beneficially owned by the optionee. Except as indicated by
footnote, and subject to community property laws where applicable, to
the Company's knowledge, the persons or entities named in the table
above are believed to have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by
them.
(2) For purposes of calculating the percentage of outstanding shares held
by each person named above, any shares which such person has the right
to acquire within 60 days after the date of the information in the
table are deemed to be outstanding, but not for the purpose of
calculating the percentage ownership of any other person.
(3) Number of shares based on such entity's Report on Schedule 13G for
December 31,1999. The address of such entity is 45 West 45th Street,
New York, New York 10036. Such entity has the sole voting and
dispositive power as to 223,925 of such shares and shared dispositive
power as to 132,675 of such shares.
(4) Includes options to purchase 15,218 shares, and 8,000 shares owned by
such person's spouse as to which such person disclaims beneficial
ownership.
(5) Includes options to purchase 15,218 shares.
(6) Includes options to purchase 81,200 shares, and 1,509 shares held in
such person's Company 401(k)/profit sharing plan account.
(7) Includes options to purchase 15,218 shares, and 3,748 shares owned by
such person's spouse, as to which such person disclaims beneficial
ownership.
(8) Includes options to purchase 15,014 shares.
<PAGE>
(9) Includes options to purchase 12,125 shares.
(10) Includes options to purchase 4,986 shares. Such person beneficially
owns the remaining reported shares jointly with his spouse.
(11) Includes options to purchase 14,720 shares. 4,000 and 2,290 of the
remaining shares are held by such person's IRA and Keogh Plan,
respectively.
(12) Includes options to purchase 27,300 shares, and 906 shares held in such
person's Company 401(k)/profit sharing plan account.
(13) Includes options to purchase 10,300 shares.
(14) Includes options to purchase 194,049 shares and 2,843 shares in the
accounts of three executive officers under the Company's 401(k)/profit
sharing plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and holders of more than
10% of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of any subsequent changes in
ownership of Common Stock and other equity securities of the Company. Specific
due dates for these reports have been established and the Company is required to
disclose any failure to file by these dates. Based upon a review of such reports
11
<PAGE>
furnished to the Company, or written representations that no reports were
required, the Company believes that during the fiscal year ended December 31,
1999, its officers and directors and holders of more than 10% of the Company's
Common Stock complied with Section 16(a) filing date requirements with respect
to transactions during such year, except that a Form 4 for Dr. Zweifler
reporting a purchase of shares in December, 1999 was inadvertently filed on
January 15, 2000.
Report of the Compensation Committee of the Board of Directors
This Report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
The Compensation Committee is currently comprised of three
directors, Francis X. McDermott, Kenneth P. Mitchell and Israel Sheinberg. It is
the responsibility of the Compensation Committee to recommend an effective total
compensation program for the Company's Chief Executive Officer and other senior
officers based on the Company's business and consistent with stockholders'
interests. The Committee's duties entail reviewing the Company's compensation
practices and recommending compensation for such executives.
Compensation Philosophy
The Company's overall compensation philosophy is to offer
competitive salaries, cash incentives, stock options and benefit plans
consistent with the Company's financial position. Rewarding capable employees
who contribute to the continued success of the Company plus equity participation
are key elements of the Company's compensation policy. The Company's executive
compensation policy is to attract and retain key executives necessary for the
Company's short and long-term success by establishing a direct link between
executive compensation and the performance of the Company, by rewarding
individual initiative and the achievement of annual corporate goals through
salary and cash bonus awards, and by providing equity awards to allow executives
to participate in enhanced stockholder value.
12
<PAGE>
In awarding salary increases and bonuses, the Compensation Committee
relates various elements of corporate performance to the elements of executive
compensation. The Compensation Committee considered whether the compensation
package as a whole adequately compensated the applicable executive for the
Company's performance during the past year and the executive's contribution to
such performance.
Base Salary
Base salary represents the fixed component of the executive
compensation program. The Company's philosophy regarding base salaries is
conservative, maintaining salaries at approximately competitive industry levels.
Determinations of base salary levels are established on an annual review of
marketplace competitiveness and on the Company's existing compensation
structure. Periodic increases in base salary relate to individual contributions
to the Company's overall performance, length of service and industry competitive
pay practice movement. Performance targets were established for fiscal year
1997, which was the base year for determining the salaries awarded during 1999.
In determining appropriate levels of base salary, the Compensation Committee
relied in part on industry compensation surveys.
Bonus
Bonuses represent the variable component of the executive
compensation program that is tied to individual achievement and the Company's
performance. The Company's policy is to base a meaningful portion of its senior
executives' cash compensation on bonus. In determining bonuses, the Company
considers factors such as the individual's contribution to the Company's
performance and the relative performance of the Company during the year.
Stock Options
The Compensation Committee believes that one important goal of the
executive compensation program should be to provide executives and key employees
- - - - - - -- who have significant responsibility for the management, growth and future
success of the Company -- with an opportunity to increase their ownership and
potentially gain financially from the Company's stock price increases. The goal
of this approach is that the interests of the stockholders, executives and
employees will be closely aligned. Therefore, executive officers and other key
employees of the Company are granted stock options from time to time, giving
them a right to purchase shares of the Company's Common Stock at a specified
price in the future. The grant of options is based primarily on an employee's
potential contribution to the Company's growth and financial results. Options
generally have been granted at the prevailing market value of the Company's
Common Stock and accordingly will only have value if the Company's stock price
increases. Generally, grants of options to employees have provided for vesting
over three years and the individual must be employed by the Company for such
options to vest.
1999 Compensation to Chief Executive Officer
In reviewing and recommending Mr. Rossi's salary and bonus and in awarding him
stock options for fiscal year 1999 and for his future services, the Compensation
Committee followed its compensation philosophy. Mr. Rossi's annual salary was
increased to $177,000 in October 1999. For the 1999 fiscal year, Mr. Rossi was
paid a cash bonus of $73,838. In 1999, Mr. Rossi was granted options under the
Company's 1999 Stock Plan to purchase 5,000 shares of the Company's Common Stock
at an exercise price of $6.35, the fair market value per share on the date of
grant. The options will be exercisable in installments of 20%, 40% and 40% over
three years on the first three anniversaries of the date of grant. The
13
<PAGE>
Compensation Committee recommended this option grant to secure the long-term
services of the Company's Chief Executive Officer and to further align the Chief
Executive Officer's compensation with stockholder interests.
Francis X. McDermott
Kenneth P. Mitchell
Israel Sheinberg
Compensation Committee Interlocks and Insider Participation
Messrs. McDermott, Mitchell and Sheinberg, each of whom is a
director of the Company, served as the members of the Compensation Committee
during 1999. None of Mr. McDermott, Mr. Mitchell or Mr. Sheinberg (i) was,
during the last completed fiscal year, an officer or employee of the Company,
(ii) was formerly an officer of the Company or (iii) had any relationship
requiring disclosure by the Company under Item 404 of Regulation S-K under the
Securities Act of 1933, as amended, which has not been disclosed.
Certain Relationships and Related Transactions
Carl J. Pacifico is employed by the Company as New Ventures Development
Leader. His annual salary and bonus for 1999 was $92,210. Carl J. Pacifico is
the son of Carl R. Pacifico, a director of the Company.
STOCK PERFORMANCE GRAPH
The graph below sets forth the cumulative total stockholder return
on the Company's Common Stock (referred to in the table as "BCP") for the five
years ended December 31, 1999, the overall stock market return during such
period for shares comprising the Russell 2000(R) Index (which the Company
believes includes companies with market capitalization similar to that of the
Company), and the overall stock market return during such period for shares
comprising the Standard & Poor's 500 Food Group Index, in each case assuming a
comparable initial investment of $100 on December 31, 1994 and the subsequent
reinvestment of dividends. The Russell 2000(R) Index measures the performance of
the shares of the 2000 smallest companies included in the Russell 3000(R) Index.
In light of the Company's industry segments, the Company does not believe that
published industry-specific indices are necessarily representative of stocks
comparable to the Company. Nevertheless, the Company considers the Standard &
Poor's 500 Food Group Index to be potentially useful as a peer group index with
respect to the Company in light of the Company's encapsulated products segment.
The performance of the Company's Common Stock shown on the graph below is
historical only and not indicative of future performance.
The graph below shall not be deemed incorporated by reference in any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
<PAGE>
[GRAPHIC-PERFORMANCE GRAPH DATA POINTS LISTED BELOW]
Balchem Corporation
Proxy Graph Data
12/31/1999
BCP Russell 2000(R)Index S&P Food Group Index
---------------------------------------------------------------
12/31/94 $100.00 $100.00 $100.00
12/31/95 $149.90 $128.45 $145.40
12/31/96 $141.78 $149.64 $172.27
12/31/97 $293.26 $183.10 $246.90
12/31/98 $134.59 $178.44 $267.19
12/31/99 $199.10 $216.37 $210.20
14
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG LLP to serve as
the independent auditors of the Company for the year ending December 31, 2000.
Representatives of KPMG LLP are expected to be present at the 2000 Annual
Meeting. They will have an opportunity to make a statement to the stockholders
if they desire to do so and are expected to be available to respond to
stockholder questions raised orally at the Meeting.
OTHER MATTERS
Vote Required for Approval
Under the rules of the Securities and Exchange Commission, boxes and
a designated blank space are provided on the form of proxy for stockholders to
mark if they wish to vote in favor of or withhold authority to vote for one or
more of the Company's nominees for director. Maryland law and the Company's
By-laws require the presence of a quorum for the Meeting, defined as the
presence of stockholders entitled to cast at least a majority of the votes that
all stockholders are entitled to cast at the Meeting. Votes withheld from
director nominees and abstentions will be counted in determining whether a
quorum has been reached.
Assuming a quorum has been reached, a determination must be made as
to the results of the vote on each matter submitted for stockholder approval.
Director nominees must receive a plurality of the votes cast at the Meeting,
which means that a broker non-vote or a vote withheld from a particular nominee
or nominees will not affect the outcome of the election of directors.
All shares represented by duly executed proxies will be voted For
the election of the nominees named above as directors unless authority to vote
For the proposed slate of directors or any individual nominee(s) has been
withheld. If for any reason any of such nominees should not be available as a
candidate for director, the proxies will be voted in accordance with the
authority conferred in the proxy for such other candidate or candidates as may
be nominated by the Company's Board of Directors.
Voting Securities
Stockholders of record on April 13, 2000 (the "Record Date"), will
be eligible to vote at the Meeting. The voting securities of the Company consist
of its Common Stock, $.06-2/3 par value, of which 4,903,240 shares were
outstanding on the Record Date. Each share of Common Stock outstanding on the
Record Date will be entitled to one vote.
Stockholder Proposals for 2001 Annual Meeting
From time to time the stockholders of the Company may wish to submit
proposals which they believe should be voted upon by the stockholders. The
Securities and Exchange Commission has adopted regulations which govern the
inclusion of such proposals in the Company's annual meeting proxy materials. All
such proposals must be submitted to the Secretary of the Company no later than
December 31, 2000 in order to be considered for inclusion in the Company's year
2001 proxy materials.
15
<PAGE>
Matters Not Determined at the Time of Solicitation
The Board of Directors is not aware of any matters to come before
the Meeting other than as described above. If any matter other than as described
above should come before the Meeting, then the persons named in the enclosed
form of proxy will have discretionary authority to vote all proxies with respect
thereto in accordance with their judgment.
Slate Hill, New York
April 28, 2000
The Annual Report to Stockholders of the Company for the fiscal year
ended December 31, 1999 is being mailed to stockholders. The Annual Report does
not form part of these proxy materials for the solicitation of proxies.
<PAGE>
REVOCABLE PROXY
BALCHEM CORPORATION
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
For the annual Meeting to be held June 23, 2000
The undersigned hereby appoints Dino A. Rossi, Francis J. Fitzpatrick and
Winston A. Samuels, and each of them, individually, as attorneys and proxies of
the undersigned, with full power of substitution, at the Annual Meeting of
Stockholders of Balchem Corporation scheduled to be held on June 23, 2000, and
at any adjournments thereof, and to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote on all matters coming before
said meeting.
The undersigned hereby revokes all proxies heretofore given by the undersigned
to vote at said meeting or any adjournment thereof.
Please be sure to sign and date
this Proxy in the box below.
---------------------------------
Date
---------------------------------
Stockholder sign above
---------------------------------
Co-holder (if any) sign above
Election of two (2)
Class 2 Directors
With- For All
[ ] For [ ] hold [ ] Except
Nominees for Election as Class 2 Directors
Kenneth P. Mitchell, Israel Sheinberg
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- - - - - - --------------------------------------------------------------------------------
PLEASE CHECK BOX IF YOU PLAN TO ATTEND [ ]
THE MEETING.
The proxies are directed to vote as specified and in their discretion on
all other matters coming before the Annual Meeting. If no direction is made, the
proxies will vote FOR the nominees for election as Directors listed above.
The Board of Directors recommends a vote FOR each of the listed nominees
for election as Directors.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign. If the signer is a
corporation, please sign full corporate name by duly authorized officer. If a
partnership, please sign in partnership name by authorized persons.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
