<PAGE>
________________________________________________________________________________
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SEQUA CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
.......................................................................
(2) Aggregate number of securities to which transaction applies:
........................................................................
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on
which the filing fee is calculated and state how it was determined):
.........................................................................
(4) Proposed maximum aggregate value of transaction:
.........................................................................
(5) Total fee paid:
.........................................................................
[ ] Fee paid previously with preliminary materials.
.........................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
........................................................................
(2) Form, Schedule or Registration Statement No.:
........................................................................
(3) Filing Party:
........................................................................
(4) Date Filed:
........................................................................
________________________________________________________________________________
<PAGE>
[Logo]
SEQUA CORPORATION
200 PARK AVENUE
NEW YORK, NEW YORK 10166
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000
-------------------
The annual meeting of stockholders of SEQUA CORPORATION (the 'Company') will
be held in Conference Room A on the 11th floor, 270 Park Avenue, New York, New
York, on Thursday, May 4, 2000, at 11 A.M., for the following purposes:
1. To elect directors;
2. To consider and vote on a proposal to reapprove the Management
Incentive Bonus Program for Corporate Executive Officers;
3. To consider and vote on a proposal to amend and approve the 1998 Key
Employees Stock Option Plan;
4. To ratify the appointment of Arthur Andersen LLP, independent public
accountants; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 15, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof. A
list of stockholders will be available for examination by any stockholder, for
any purpose germane to such meeting, during the ten days prior to the meeting
date at the Company's address set forth above.
By order of the Board of Directors,
Steven R. Lowson
Secretary
New York, N.Y.
April 5, 2000
IMPORTANT
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTPAID WHITE ENVELOPE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON. IF YOU ARE PLANNING TO ATTEND THE MEETING, YOU
MUST RETURN THE ENCLOSED POSTPAID ATTENDANCE CARD AS QUICKLY AS POSSIBLE.
NO ONE WILL BE ADMITTED WITHOUT AN ATTENDANCE CARD.
THANK YOU FOR ACTING PROMPTLY.
<PAGE>
SEQUA CORPORATION
200 PARK AVENUE
NEW YORK, NEW YORK 10166
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000
PROXY STATEMENT
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited by the Board of Directors of Sequa
Corporation (the 'Company') for use at the annual meeting of stockholders to be
held on Thursday, May 4, 2000, or any adjournment thereof. If such proxy is
properly signed and returned prior to the meeting, the shares with respect to
which the proxy is given will be voted as indicated thereon; provided, however,
that a stockholder may revoke his proxy at any time prior to its use at the
meeting, either by giving written notice addressed to the Secretary of the
Company, at its executive offices located at 200 Park Avenue, New York, New York
10166, or by withdrawing his proxy and voting in person at the meeting. The
entire cost of soliciting proxies will be borne by the Company. Proxies will be
solicited principally through the use of the mails but directors, officers and
regular employees of the Company, without additional compensation, may use their
personal efforts by telephone or otherwise to obtain proxies. The Company will
also request banks, brokers and other nominee holders of the Company's shares to
forward proxy materials to their principals or customers who are beneficial
owners of such shares and will reimburse such holders for their reasonable
expenses incurred in doing so. The Company anticipates that mailing of proxy
material to stockholders will commence on or about April 5, 2000.
VOTING SECURITIES AND OWNERSHIP THEREOF
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Only stockholders of record at the close of business on March 15, 2000, the
record date with respect to this solicitation, will be entitled to notice of,
and to vote at, the meeting. On the record date, there were outstanding
7,041,510 shares of the Company's Class A Common Stock, no par value ('Class A
Common Stock'), 3,329,780 shares of the Company's Class B Common Stock, no par
value ('Class B Common Stock'), and 412,815 shares of the Company's $5.00
Cumulative Convertible Preferred Stock, par value $1.00 per share ('Preferred
Stock'), which constitute the only outstanding voting securities. Each share of
Class B Common Stock is convertible at any time into one share of Class A Common
Stock, and each share of Preferred Stock is convertible at any time into 1.322
shares of Class A Common Stock, subject to certain adjustments. Each share of
Class A Common Stock and each share of Preferred Stock have one vote and, with
respect to all matters to come before the meeting, will vote with the Class B
Common Stock, which has ten votes per share. The presence in person or by proxy
of stockholders of record representing in the aggregate a majority of the
combined outstanding voting rights of all classes of stock of the Company
entitled to vote shall constitute a quorum for the transaction of business.
Broker non-votes and abstentions are counted in determining the existence of a
quorum for all proposals except Item 3. Proxies marked (i) as abstentions, or
(ii) to withhold a vote from a nominee as a director in the case of the election
of directors, will have the effect of a negative vote. Broker non-votes (where a
nominee holding shares for a beneficial owner has not received voting
<PAGE>
instructions from the beneficial owner with respect to a particular matter and
such nominee does not possess or choose to exercise his discretionary authority
with respect thereto) will be considered as present at the meeting but not
entitled to vote with respect to the particular matter and will therefore have
no effect on the vote. Directors shall be elected by a plurality of votes cast.
The affirmative vote of the holders of shares of stock representing a majority
of the combined voting rights of all eligible classes of stock present or
represented at the meeting is required for approval of Items 2 and 4. The
affirmative vote of the holders of a majority of the combined vote cast of the
Company's Class A Common Stock, Class B Common Stock, and Preferred Stock issued
and outstanding on the record date is required to approve Item 3, provided that
the total vote cast represents over 50% in interest of all securities entitled
to vote. Votes are counted preliminarily by the Company's transfer agent through
its automated system and, finally, at the Annual Meeting of Stockholders, by the
Inspectors of Election.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The table below sets forth information with respect to any person (other
than the Company's directors) known to the Company to be the beneficial owner of
more than five percent of any class of the Company's outstanding voting
securities as of March 1, 2000. Except to the extent indicated in the footnotes,
sole voting and investment power with respect to the shares shown is held by the
owner named.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
OF CLASS A PERCENT OF AGGREGATE
NAME AND ADDRESS COMMON STOCK CLASS VOTING POWER
- ---------------- ------------ ----- ------------
<S> <C> <C> <C>
Gabelli Funds, Inc............................ 1,407,408(1) 19.99(1) 3.45(1)
(and affiliates)
One Corporate Center
Rye, NY 10580-1434
Sequa Corporation Master Trust................ 544,800(2) 7.73 1.34
(for participating pension plans)
c/o The Bank of New York
(as Master Trustee)
One Wall Street
New York, NY 10286
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
OF CLASS B PERCENT OF AGGREGATE
NAME AND ADDRESS COMMON STOCK CLASS VOTING POWER
- ---------------- ------------ ----- ------------
<S> <C> <C> <C>
Gabelli Funds, Inc............................ 1,014,613(1) 30.47(1) 24.90(1)
(and affiliates)
One Corporate Center
Rye, NY 10580-1434
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF PERCENT OF AGGREGATE
NAME AND ADDRESS PREFERRED STOCK CLASS VOTING POWER
- ---------------- --------------- ----- ------------
<S> <C> <C> <C>
Gabelli Funds, Inc.............................. 162,650(1) 39.40(1) (3)
(and affiliates)
One Corporate Center
Rye, NY 10580-1434
Forest Investment Management LLC................ 122,400 29.65 (3)
(and affiliates)
53 Forest Avenue
Old Greenwich, CT 06870
</TABLE>
(footnotes on next page)
2
<PAGE>
(footnotes from previous page)
(1) Gabelli Funds, Inc. and GAMCO Investors, Inc. (and affiliates)
(collectively, the 'Gabelli Companies') own beneficially all classes of the
Company's stock. Pursuant to Rule 13d-3(d)(1) under the Securities Exchange
Act of 1934, as amended, the total of the Gabelli Companies' Class A Common
Stock, Class B Common Stock (if converted into Class A Common Stock) and
Preferred Stock (if converted into Class A Common Stock) would give the
Gabelli Companies aggregate holdings of 2,637,044 shares of Class A Common
Stock, or 31.88 percent of that class. This would represent 8.33 percent of
the total votes then outstanding (after conversions to Class A of all
Gabelli Companies' stock) in all classes. If no conversions were done, the
total current holdings of all three classes of stock by the Gabelli
Companies gives them 28.75 percent of the aggregate voting power of all
Company stock. Of the Preferred Stock, the Gabelli Companies have no voting
power with respect to 33,400 shares. In connection with their shares of
Class B Common Stock, the Gabelli Companies have no voting power with
respect to 222,500 shares. The data as to holdings of the Gabelli Companies
is based on their most recent filings made with the Securities and Exchange
Commission (April 16, 1999: Class A Common Stock; December 31, 1999:
Class B Common Stock; December 21, 1999: Preferred Stock).
(2) All of the shares of Class A Common Stock held by the Sequa Corporation
Master Trust (the 'Trust') are voted by the Trust's Investment Committee,
composed of certain officers of the Company. Such committee also makes
decisions regarding acquisitions and dispositions of Company stock for the
Trust.
(3) Less than 1%.
SECURITY OWNERSHIP BY MANAGEMENT
The following table provides information as to the Company's voting
securities beneficially owned as of March 1, 2000, by the Company's directors,
the named executive officers of the Company and by all such directors and
executive officers as a group. None of the Company's executive officers or
directors is the beneficial owner of any Preferred Stock (with the exception of
400 shares owned by a trust in which the children of an executive officer have a
partial remainder interest, and as to which the executive officer, who is the
trustee, disclaims beneficial ownership). Except to the extent indicated in the
footnotes, sole voting and investment power with respect to the shares shown is
held by the owner named.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF PERCENT OF
SHARES OF PERCENT SHARES OF PERCENT AGGREGATE
CLASS A OF CLASS B OF VOTING
COMMON STOCK CLASS COMMON STOCK CLASS POWER
------------ ----- ------------ ----- -----
<S> <C> <C> <C> <C> <C>
Norman E. Alexander........ 2,169,101(a)(b)(c)(d) 30.78 1,944,744 58.40 53.04
Leon Black................. 1,346 (e) None -- --
Alvin Dworman.............. 1,991 (e) None -- (e)
David S. Gottesman......... 8,861 (e) None -- (e)
Gerald S. Gutterman........ 19,748(c) (e) 13,585 (e) (e)
Stuart Z. Krinsly.......... 66,351(a)(c)(d) (e) 64,030 1.92 1.73
William P. Ksiazek......... 3,646(d) (e) 24 (e) (e)
</TABLE>
(table continued on next page)
3
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF PERCENT OF
SHARES OF PERCENT SHARES OF PERCENT AGGREGATE
CLASS A OF CLASS B OF VOTING
COMMON STOCK CLASS COMMON STOCK CLASS POWER
------------ ----- ------------ ----- -----
<S> <C> <C> <C> <C> <C>
Donald D. Kummerfeld....... 200 (e) None -- (e)
Richard S. LeFrak.......... 3,361 (e) 500 (e) (e)
John J. Quicke............. 20,167(d)(f) (e) None -- (e)
Michael I. Sovern.......... 1,000 (e) None -- (e)
Fred R. Sullivan........... 3,056(g) (e) 648(g) (e) (e)
Gerald Tsai, Jr............ 500 (e) None -- (e)
Martin Weinstein........... 25,973(d) (e) None -- (e)
All executive officers and
directors as a group
(15 persons consisting of
the above)............... 2,325,301(a)(b)(c)(d) 32.94 2,023,531(d) 60.77 55.34
</TABLE>
- ---------
(a) Includes certain shares held for the benefit of the named executive officer
in the Company's 401-K Plan.
(b) Includes 37,415 shares of Class A Common Stock owned by the Norman and
Marjorie Alexander Foundation, as to which Mr. Alexander disclaims
beneficial ownership.
(c) Does not include shares held by the Sequa Corporation Master Trust (see
'Security Ownership by Certain Beneficial Owners,' above), of which
Messrs. Alexander, Krinsly and Gutterman (through June 1, 1999) are members
of its Investment Committee.
(d) Includes shares of Class A Common Stock which may be obtained upon the
exercise, within sixty days of the date of this Proxy Statement, of stock
options by Mr. Alexander -- 5,000; Mr. Quicke -- 4,000; Mr.
Krinsly -- 4,000; Dr. Weinstein -- 4,000; Mr. Ksiazek -- 1,666; and by all
executive officers as a group -- 18,666.
(e) Less than 1%.
(f) Includes 600 shares of Class A Common Stock owned by minor children of Mr.
Quicke or by trusts for the benefit of the minor children, as to which he
disclaims beneficial ownership.
(g) Includes 1,209 shares of Class A Common Stock and 198 shares of Class B
Common Stock owned by Mrs. Fred R. Sullivan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each director and officer of the Company who is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act') is required to
report to the Securities and Exchange Commission by a specified date his or her
beneficial ownership of, or transactions in, the Company's securities. Reports
received by the Company indicate that all such directors and officers have filed
all requisite reports with the SEC on a timely basis during or with respect to
1999 except for Mr. Kummerfeld who inadvertently failed to report a sale of 100
shares of stock and who intends to make the requisite filing shortly.
4
<PAGE>
ITEM 1.
ELECTION OF DIRECTORS
DIRECTORS
At the meeting, twelve directors are to be elected to hold office until the
next annual meeting and until their successors shall have been elected. If no
other instructions are given, the persons named in the enclosed form of proxy
will vote for the election of the nominees named in the table below. In case any
such nominee should become unavailable for any reason, an event not now
anticipated, the proxy holders reserve the right to substitute another person of
their choice in his place. Each of the nominees has previously been elected by
the stockholders, except for Dr. Weinstein who was elected by the Board of
Directors as a director effective December 16, 1999.
<TABLE>
<CAPTION>
PRESENT OCCUPATION AND
NAME AND AGE OTHER INFORMATION
------------ -----------------
<S> <C>
Norman E. Alexander............... Chairman of the Board and Chief Executive Officer of the
Age 85 Company since 1975. Served as President and Chief
Executive Officer from 1957 to 1975 and as President from
1982 to 1983. Has been a director of the Company since
1957 and is a member of the Executive Committee. May be
deemed to be a control person of the Company (see 'Voting
Securities and Ownership Thereof by Certain Beneficial
Owners and Management'). Also a director of Richton
International Corporation.
Leon Black ....................... Principal and Founding Partner, Apollo Management, L.P. (since
Age 48 1995), Apollo Advisors, L.P. (since 1990) and related entities
(private investment firms). Has been a director of the Company
since December 1997. Also a director of Samsonite Corporation,
Vail Resorts, Inc., United Rentals, Inc., Telemundo Group, Inc.
and Wyndham International, Inc. Is a Trustee of Mt. Sinai
Hospital, the Museum of Modern Art, Lincoln Center for the
Performing Arts, Prep for Prep, The Jewish Museum, Cardozo School
of Law, Asia Society, Spence School and Vail Valley Foundation.
Alvin Dworman .................... Chairman, ADCO Group (a financial services, merchant banking and
Age 74 real estate company) since 1981; also, Chairman, Lee National
Corp. (a financial services, merchant banking and real estate
company) since the late 1960's. Has been a director of the
Company since 1987 and is a member of the Audit Committee.
David S. Gottesman ............... Managing Partner, First Manhattan Co. (an investment management
Age 73 company) since 1964. Has been a director of the Company since
1982 and is Chairman of the Nominating Committee.
Stuart Z. Krinsly ................ Senior Executive Vice President and General Counsel of the Company
Age 82 since 1982; from 1978 to 1982, served as Executive Vice President
and has been the Company's General Counsel since 1965. Has been a
director and officer of the Company since 1957 and is a member of
the Executive Committee.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PRESENT OCCUPATION AND
NAME AND AGE OTHER INFORMATION
------------ -----------------
<S> <C>
Donald D. Kummerfeld ............. Chairman, Kummerfeld Associates (an investment banking and
Age 65 financial advisory firm) since 1985. From 1978 to 1985, was
President and Chief Operating Officer, News America Publishing,
Inc. Has been a director of the Company since 1983 and is a
member of the Compensation Committee. Also a Director of Educap
Inc., Chairman and Director of Qiosk.com Inc. and Vice Chairman
and Director of Ontempo, Inc.
Richard S. LeFrak ................ President, Lefrak Organization, Inc. (a diversified, privately held
Age 54 company active in major residential and commercial real estate
development projects, oil and gas exploration, finance and
entertainment production) since 1975. Also a director of The New
York Restaurant Group, Inc. Has been a director of the Company
since 1986 and is a member of the Nominating Committee.
John J. Quicke ................... President and Chief Operating Officer of the Company since March
Age 50 1993. Served as Senior Executive Vice President, Operations, of
the Company from June 1992 to March 1993; from February 1991 to
June 1992, served as Vice President, Financial Services, of the
Company; from 1987 to February 1991, served as Vice President,
Financial Projects, of the Company. Held various offices and
positions in Chromalloy American Corporation (which became a
subsidiary of the Company in 1986) from 1979 to 1987. Has been a
director of the Company since 1993 and is a member of the
Executive Committee.
Michael I. Sovern ................ Chancellor Kent Professor of Law and President Emeritus of Columbia
Age 66 University since 1993; President of Columbia University from 1980
to 1993; President of the Shubert Foundation since 1996. Served
as Advisor to the Board of Directors of the Company from 1990 to
May 1996, when he was elected to serve as a director, and is a
member of the Nominating Committee. Also a director of AT&T,
Warner-Lambert, the Shubert Organization and Sotheby's Holdings,
Inc.
Fred R. Sullivan ................. Chairman of the Board and Chief Executive Officer, Richton
Age 85 International Corporation (a diversified service company) since
1989. From 1987 to 1990, served as Chairman of the Board and
President, Interim Systems Corporation (a temporary personnel and
health care service company). Prior to 1987, served as Chairman
of the Board and President, Kidde, Inc. (a multi-market
manufacturing and service company). Has been a director of the
Company since 1962 and is a member of the Audit Committee.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PRESENT OCCUPATION AND
NAME AND AGE OTHER INFORMATION
------------ -----------------
<S> <C>
Gerald Tsai, Jr. ................. Private investor. From February 1993 to October 1997, served as
Age 71 Chairman, President and Chief Executive Officer, Delta Life
Corporation (an insurance company); private investor from 1991 to
1993; Chairman of the Executive Committee of the Board of
Directors, Primerica Corporation (a diversified financial
services company) from 1988 to 1991; from 1987 to 1988, was
Chairman and Chief Executive Officer of Primerica; and from 1982
to 1987, held several other offices at Primerica. Has been a
director of the Company since 1976 and is Chairman of the
Compensation Committee and of the Audit Committee. Also a
director of Rite Aid Corporation, Saks Incorporated, Triarc
Companies, Inc., United Rentals, Inc. and Zenith National
Insurance Corp. Also a Trustee of Boston University, Mount
Sinai - NYU Medical Center and NYU School of Medicine Foundation.
Martin Weinstein ................. Executive Vice President, Gas Turbine Operations since
Age 64 December 1999. Served as Senior Vice President, Gas Turbine
Operations of the Company from 1988 to 1999; from 1987 to 1988,
served as Vice President, Gas Turbine Operations of the Company.
Held various offices and positions in Chromalloy American
Corporation (which became a subsidiary of the Company in 1986)
from 1968 to 1987. Has been a director of the Company since 1999.
</TABLE>
During 1999, the Company's Board of Directors held nine regularly scheduled
meetings. All of the directors, except for Mr. Black, attended at least 75% of
the aggregate of regularly scheduled Board meetings and meetings of committees
of which they are members, respectively.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE 'FOR' THE
ELECTION OF THE ABOVE NOMINEES FOR DIRECTOR.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's standing committees are Executive, Audit, Compensation and
Nominating. During 1999, membership on those committees consisted of the
following: Executive Committee: Messrs. Alexander, Dworman, Krinsly, and Quicke;
Audit Committee: Messrs. Dworman, Sullivan and Tsai; Compensation Committee:
Messrs. Kummerfeld, and Tsai; and Nominating Committee: Messrs. Gottesman,
Black, LeFrak and Sovern. The Executive Committee acts in place of the full
Board of Directors between meetings thereof, evaluates a variety of projects of
the Company and makes recommendations to the Board. The Executive Committee held
four meetings during 1999. The activities of the Audit Committee include a
review with the independent auditors of the plans and results of the audit
engagement; conferring with respect to audit activities; consideration of the
independence of the auditors; review of the auditors' fees and the
recommendation to the Board as to the engagement of the auditors. During 1999,
the Audit Committee held three meetings. The Compensation Committee recommends
to the Board the compensation arrangements for directors and officers. During
1999, the Compensation Committee held one meeting. The Nominating Committee
7
<PAGE>
selects candidates for election to the Board of Directors or to fill vacancies
thereon, after consideration of nominees proposed to it in writing, provided
that such nominees have agreed in writing to be candidates for the Board of
Directors. The Nominating Committee did not meet during 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with Mr. Quicke's relocation to New York, the Company made a
$300,000 interest-free loan in 1993, payable on demand, and secured by a second
mortgage on his home. Since 1996, Mr. Quicke has repaid an aggregate of $225,000
of this loan. Mr. Quicke repaid the outstanding balance of the loan in April
2000.
Alex Alexander, brother of Norman E. Alexander (Chairman, Chief Executive
Officer and a director of the Company), performs a variety of real estate and
marketing services for Chromalloy Men's Apparel Group Inc. (a subsidiary of the
Company), including participating in sales force performance and budget reviews
and leasing and acquisition matters. He is compensated at an annual rate of
$82,315 plus certain employee benefits. This arrangement commenced in early
1994, and the aggregate cost to the Company of such payments and benefits in
1999 was $92,674.
The Sequa Corporation Master Trust for participating pension plans (the
'Trust') is a limited partner in Apollo Investment Funds, L.P., in which
Mr. Leon Black, a director of the Company, is a general partner. The Trust has
committed an aggregate of $12.5 million to these funds, approximately two-thirds
of which had been invested by December 31, 1999. The remainder could be called
during 2000 or thereafter. The Trust's capital contributions to date and
unfunded commitments represent approximately 4.5% of the total assets of the
Trust.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company received an annual
retainer of $35,000 for 1999 and $500 for each meeting attended. Non-employee
members of the Executive Committee, Audit Committee, Nominating Committee and
Compensation Committee receive an additional annual fee of $5,000, $3,500,
$2,500 and $3,500, respectively, and $500 for each committee meeting attended.
The Company also reimburses its non-employee directors for travel, lodging and
related expenses they may incur in attending Board and Committee meetings. Each
director who is not an employee of the Company may elect to participate in the
1998 Directors' Stock Compensation Plan, whereby the participating director
receives his annual retainer and meeting fees in the form of restricted shares
of the Company's Class A Common Stock, in lieu of cash.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for services rendered
in all capacities to the Company and its subsidiaries with respect to 1997,
1998, and 1999 to the Chief Executive Officer of the Company and to the next
four most highly compensated executive officers.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS
----------------------------------- -------------
OTHER SECURITIES ALL
NAME AND ANNUAL UNDERLYING OTHER
PRINCIPAL BONUS COMPENSATION OPTIONS/ COMPENSATION
POSITION YEAR SALARY ($)(1) ($) SARS(#) ($)
- ---------------------------- ----------- --------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman E. Alexander ........ 1999 $1,293,776 $ 758,544 -- -- $ 4,800(2)
Chairman and Chief 1998 1,277,610 1,210,209 -- 15,000 4,800(2)
Executive Officer 1997 1,173,581 1,152,563 -- -- 4,750(2)
John J. Quicke ............. 1999 554,630 228,480 -- -- 5,446(2)
President and Chief 1998 513,065 437,325 -- 12,000 5,579(2)
Operating Officer 1997 449,842 250,154 -- -- 6,313(2)
Stuart Z. Krinsly .......... 1999 691,978 374,343 -- -- 4,886(2)
Senior Executive Vice 1998 683,338 597,481 -- 12,000 4,935(2)
President and 1997 627,703 569,041 -- -- 5,034(2)
General Counsel
Gerald S. Gutterman(3) ..... 1999 347,848 0 -- 5,000 110,108(2)
Executive Vice President, 1998 414,651 361,931 -- -- 5,446(2)
Finance and Administration 1997 384,481 347,981 -- -- 6,021(2)
Martin Weinstein ........... 1999 524,397 338,056 -- -- 4,800(2)
Executive Vice President, 1998 465,795 448,110 -- 12,000 4,800(2)
Gas Turbine Operations 1997 425,750 385,650 -- -- 4,750(2)
William P. Ksiazek ......... 1999 228,152 102,893 -- -- 4,800(2)
Vice President and 1998 224,395 163,508 -- 5,000 4,800(2)
Controller 1997 205,885 155,707 -- -- 4,750(2)
- ---------
</TABLE>
(1) Bonuses are paid in the first quarter of the year following the year with
respect to which they have been earned (i.e., bonuses earned with respect
to 1999 are paid in the first quarter of 2000; these bonuses are reported
in the Summary Compensation Table, above, on the 1999 Bonus line).
(2) These amounts consist of a matching contribution by the Company under the
respective 401-K Plan in which each executive officer participates ($4,750
as to each named executive officer in 1997, $4,800 in 1998, and $4,800 in
1999), plus (i) with respect to Mr. Quicke, $1,563, $779 and $646 for
executive term life insurance premiums in 1997, 1998 and 1999,
respectively; (ii) with respect to Mr. Krinsly, $284, $135 and $86 for
executive term life insurance premiums in 1997, 1998 and 1999,
respectively; and (iii) with respect to Mr. Gutterman, $37,123 accrued
vacation payout in connection with his retirement, $67,620 from a
supplemental executive retirement plan, and, $1,271, $646 and $565 for
executive term life insurance premiums in 1997, 1998 and 1999,
respectively.
(3) Mr. Gutterman retired effective June 1, 1999, but remains as a consultant
to the Company, reporting to the Chairman and Chief Executive Officer.
9
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth all stock options (there are no SARs) granted
to each of the named executive officers during 1999. All option grants are for
shares of Class A Common Stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SH) DATE PRESENT VALUE($)(2)
---- ------------- -------------- ------ ---- -------------------
<S> <C> <C> <C> <C> <C>
Norman E. Alexander........ 0 -- % $-- -- $--
John J. Quicke............. 0 -- -- -- --
Stuart Z. Krinsly.......... 0 -- -- -- --
Gerald S. Gutterman........ 5,000 19.42 63.50 6/24/2004 103,879
Martin Weinstein........... 0 -- -- -- --
William B. Ksiazek......... 0 -- -- -- --
</TABLE>
- ---------
(1) No stock appreciation rights ('SARs') were granted during 1999. The option
is a non-qualified option and vests in three equal annual installments,
commencing on the first anniversay of the date of grant.
(2) Grant Date Present Value is determined using the Black-Scholes option
pricing model based on the following assumptions: (a) an expected option
term of four years which reflects a reduction of the actual five year term
of an option based on historical data regarding the average length of time
an optionee holds an option before exercising; (b) a risk-free rate of
return of 6.5%, the yield of a five-year U.S. Government bond; (c) stock
price volatility of 28.16%; and (d) an expected dividend yield of 0%. The
Grant Date Present Value set forth in the table is only a theoretical value
and may not accurately determine present value. The actual value, if any, to
be realized by an optionee will depend on the excess of the market value of
the Class A Common Stock over the exercise price on the date the option is
exercised.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
The following table shows the number of shares of Class A Common Stock
acquired on exercise and the value realized by each of the named executive
officers, and the number of shares of Class A Common Stock represented by
outstanding unexercised stock options (there are no SARs) held by each of the
named executive officers as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Norman E. Alexander........... 0 $ 0 5,000/10,000 -0-/-0-
John J. Quicke................ 8,133 336,085 4,367/ 8,000 $10,712/-0-
Stuart Z. Krinsly............. 0 0 4,000/ 8,000 -0-/-0-
Gerald S. Gutterman........... 0 0 0/ 5,000 -0-/-0-
Martin Weinstein.............. 0 0 4,000/ 8,000 -0-/-0-
William P. Ksiazek............ 0 0 1,666/ 3,334 -0-/-0-
</TABLE>
10
<PAGE>
PENSION PLANS
The following tables show the estimated annual pension benefits payable to
each covered participant at normal retirement age under the Company's qualified
defined benefit pension plans, taking into account any applicable nonqualified
supplemental pension plans that provide benefits that would otherwise be denied
participants by reason of certain Internal Revenue Code limitations on qualified
plan benefits and any existing individual agreements, based on remuneration that
is covered under the plans and agreements and years of service with the Company
and its subsidiaries. There are separate pension plans within the Company for
various subsidiaries.
PENSION PLAN TABLE -- A
<TABLE>
<CAPTION>
YEARS OF SERVICE
PLAN -----------------------------------------------
COMPENSATION 30 35 40 45
------------ -- -- -- --
<S> <C> <C> <C> <C>
$ 400,000...................... $191,660 $ 223,603 $ 255,547 $ 287,490
600,000...................... 291,660 340,270 388,880 437,490
800,000...................... 391,660 456,937 522,213 587,490
1,000,000...................... 491,660 573,603 655,547 737,490
1,200,000...................... 591,660 690,270 788,880 887,490
1,400,000...................... 691,660 806,937 922,213 1,037,490
1,600,000...................... 791,660 923,603 1,055,547 1,187,490
1,800,000...................... 891,660 1,040,270 1,188,880 1,337,490
2,000,000...................... 991,660 1,156,937 1,322,213 1,487,490
</TABLE>
Table A applies to Messrs. Alexander, Krinsly and Gutterman.
Mr. Alexander is required to be paid $243,779 annually from the qualified
defined benefit portion of the aggregate benefit shown in Table A.
Mr. Krinsly's pension benefit was subject to actuarial increases for
commencement after age 65. However, since Mr. Krinsly elected to begin receiving
the qualified defined benefit portion of the aggregate benefit in the amount of
$650,998 annually beginning on January 1, 1998, there are no further actuarial
increases in Mr. Krinsly's total pension benefit after December 31, 1997. Mr.
Krinsly's actuarially increased benefit effective December 31, 1997 in the
amount of $1,219,048 replaces the lower amount shown in Table A.
Mr. Gutterman retired effective June 1, 1999 and began receiving $240,583
annually. Mr. Gutterman's service is limited to 30 years by the terms of the
plan.
PENSION PLAN TABLE -- B
<TABLE>
<CAPTION>
YEARS OF SERVICE
PLAN ----------------------------------------------------
COMPENSATION 20 25 30 35 40
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$200,000.................. $ 55,788 $ 69,735 $ 83,682 $ 97,629 $106,629
300,000.................. 85,788 107,235 128,682 150,129 163,629
400,000.................. 115,788 144,735 173,682 202,629 220,629
500,000.................. 145,788 182,235 218,682 255,129 277,629
600,000.................. 175,788 219,735 263,682 307,629 334,629
</TABLE>
Table B applies to Messrs. Quicke and Ksiazek.
11
<PAGE>
PENSION PLAN TABLE -- C
<TABLE>
<CAPTION>
YEARS OF SERVICE
PLAN ------------------------------
COMPENSATION 30 35 40
------------ -- -- --
<S> <C> <C> <C>
$400,000...................................... $217,057 $237,567 $258,077
500,000...................................... 273,460 299,097 324,735
600,000...................................... 329,862 360,627 391,392
700,000...................................... 386,265 422,157 458,050
</TABLE>
Table C applies to Dr. Weinstein.
Compensation covered by the plans is total pay for services, including
elective deferrals to qualified plans, but excluding severance payments, expense
reimbursements, and other non-wage items. With respect to Messrs. Alexander,
Krinsly and Gutterman, their respective benefits are based on their respective
highest average annual compensation in any five consecutive years of employment
with the Company. With respect to Messrs. Quicke and Ksiazek, their respective
benefits are based on their average compensation for all years after 1992. With
respect to Dr. Weinstein, benefits are based on his average compensation for all
years after 1979.
The credited years of service and plan compensation for the named executive
officers are:
<TABLE>
<CAPTION>
ESTIMATED
CREDITED YEARS PLAN
OF SERVICE* COMPENSATION
----------- ------------
<S> <C> <C>
Alexander......................................... 43 $1,824,514
Krinsly........................................... 43 947,292
Quicke............................................ 34 590,689
Gutterman......................................... 30* 538,271
Weinstein......................................... 32 537,678
Ksiazek........................................... 24 285,364
</TABLE>
Benefits shown are computed as a straight life annuity beginning at age 65*
and are offset by a portion of estimated Social Security benefits, if
applicable.
- ---------
* At normal retirement age or current age if older. With respect to
Mr. Gutterman, service is limited to 30 years by the terms of the plan.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with the named executive
officers listed below (supplementary retirement agreements with any of the named
executive officers are accounted for in the foregoing section, 'Pension Plans').
<TABLE>
<CAPTION>
TERM OF ANNUAL
NAME TITLE AGREEMENT COMPENSATION
---- ----- --------- ------------
<S> <C> <C> <C>
John J. Quicke.......... President and Chief Operating
Officer 1/1/95 - 12/31/2002(1) $590,800(2)
Martin Weinstein........ Senior Vice President, Gas Turbine
Operations 6/1/96 - 12/31/2002(1) $559,900(2)
William P. Ksiazek...... Vice President and Controller 3/1/99 - 2/28/2002(1) $240,400(2)
</TABLE>
(footnotes on next page)
12
<PAGE>
(footnotes from previous page)
(1) The term may be extended or terminated prior to expiration under certain
circumstances (including death, disability and for cause).
(2) These amounts reflect March 1, 2000 salaries and do not include additional
incentive compensation which may be payable.
STOCK PERFORMANCE GRAPH -- 5 YEAR CUMULATIVE INDEX
The graph set forth below compares the annual percentage change in the
cumulative total shareholder return on an investment of $100 in the Company's
Common Stock, on an indexed basis, with the S&P 500 Stock Index and the S&P
Aerospace/Defense Index, for the period of five years ended December 31, 1999.
TOTAL RETURN TO SHAREHOLDERS
REINVESTED DIVIDENDS
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
AEROSPACE/
SEQUA CORP - CL A SEQUA CORP - CL B S&P 500 INDEX DEFENSE - 500
----------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
Dec. 94 100.00 100.00 100.00 100.00
Dec. 95 117.31 148.36 137.58 165.49
Dec. 96 150.96 187.79 169.17 221.36
Dec. 97 250.24 279.81 225.60 227.73
Dec. 98 230.29 276.60 290.08 174.57
Dec. 99 207.45 225.35 351.12 170.07
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD ON EXECUTIVE COMPENSATION
The Company's executive compensation program is developed and implemented by
the Company's Human Resources Department in conjunction with the Compensation
Committee of the Board of Directors. The Compensation Committee, which is
composed of two non-employee directors, reviews and approves all elements of the
program, which is then submitted to the full Board of Directors for
ratification. This program is based upon objectives that seek to attract and
retain key executives critical to the success of the Company, and reward and
motivate executives for performance that maximizes
13
<PAGE>
Company success and shareholder value. In order to accomplish these goals, the
Company has designed a competitive base salary program and annual incentive cash
bonus plans which are predominantly geared toward achievement of stated
financial goals. In addition, stock option grants may be awarded from time to
time in order to emphasize stockholder returns and focus on long-term goals.
Base salaries for executive officers of the Company are intended to maintain
competitive rates of pay for executives in relation to the market. The Company
competes for executive talent across a broad range of industrial and
non-industrial industry segments. The Company's Human Resources Department
collects and analyzes competitive salary data from a comprehensive group of
surveys produced by leading human resource/compensation consulting firms. In
1999, these surveys included those published by Towers Perrin, Hewitt
Associates, the Conference Board, William M. Mercer, Inc. and the American
Compensation Association among others. These surveys disclose compensation
levels for executives at corporations comparable to the Company in size and
industry mix, including firms classified as 'S&P 500.' The Human Resources
Department does not limit its comparative analyses to companies classified as
'Aerospace/Defense,' since it believes that the Company competes for executive
talent beyond these industries.
This analysis is presented to the Compensation Committee in the form of an
'Officer Salary Survey.' In the officers' survey, particular reliance is placed
on the findings of Towers Perrin and Hewitt Associates. Here, definitions of
survey positions, company size and industry mix most closely align with the
actual responsibilities of Sequa's executive officer group. The base salary
levels for certain of Sequa's executive officers fall at the high end of survey
ranges, although these levels are disproportionately affected by salaries paid
to those executives with extensive years of service.
The Compensation Committee's review of the competitive market resulted in
salary increases of 4.0% being awarded to Messrs. Alexander and Krinsly; 5.5% to
Messrs. Quicke and Weinstein; and 4.5% to Mr. Ksiazek in March 2000. The
executive officers were granted the foregoing increases as a result of the
Compensation Committee's determination that these adjustments were required in
order to maintain competitive, yet reasonable, salary levels. In all cases,
there was a desire to maintain the high level of motivation and contribution
associated with these executives. The Compensation Committee's conclusions were
based upon the detailed comparisons described above with respect to Company
size, complexity and industry mix, overlaid by the performance, experience and
tenure of the Company's executive officers.
The Company's annual incentive bonus plans seek to motivate and reward
executives by recognizing the impact their individual accomplishments have had
on the financial performance of the Company or of a particular division during
the previous year. Four of the named executive officers are awarded bonuses
under the Company's Management Incentive Bonus Program for Corporate Executive
Officers (the 'Plan'). Under the Plan, bonuses are earned under a formula
derived from the Company's achieving or exceeding its minimum target of primary
earnings per share before extraordinary items ('EPS') for the year. The target
is determined each year by the Compensation Committee.
For the Chairman/Chief Executive Officer and the Senior Executive Vice
President/ General Counsel, the bonus opportunity is derived entirely from EPS
targets. For the Chairman/Chief Executive Officer, the bonus opportunity is
calculated at 32.5% of his base compensation if the Company achieves its
'Minimum' EPS, up to 65% of base compensation at 'Par' EPS, and up to 97.5% of
base compensation at 'Outstanding' EPS. For the Senior Executive Vice
President/General Counsel, the
14
<PAGE>
bonus opportunity is calculated at 30% of base compensation for 'Minimum', up to
60% for 'Par,' and up to 90% for 'Outstanding' EPS. For the President/Chief
Operating Officer and the Executive Vice President, Gas Turbine Operations, the
bonus opportunity is calculated at 30% of base compensation for 'Minimum', up to
60% for 'Par,' and up to 90% for 'Outstanding' with 33.3% of the total bonus
opportunity based upon Company EPS targets, and 66.6% based on the actual
operating income and return on net assets ('RONA'), as compared against budgeted
targets, for the operations under their respective direction. The Executive Vice
President -- Finance and Administration was not eligible for a bonus in 1999 due
to his retirement on June 1, 1999.
Based on the Company's EPS performance, for 1999 the Chairman/Chief
Executive Officer was awarded a bonus of $758,544; and the Senior Executive Vice
President/General Counsel was awarded a bonus of $374,343. The President/Chief
Operating Officer was awarded a bonus of $228,480 for 1999 based on the
Company's EPS performance results and the operating income and RONA of the
operations under his direction, which results were unfavorably affected by the
operating performance of ARC and MEGTEC. The Executive Vice President, Gas
Turbine Operations was awarded a bonus of $338,056, based on the Company's EPS
performance and the operating income and RONA of the gas turbine operations.
The Vice President and Controller is eligible for a bonus award under the
Company's Management Incentive Bonus Program for Corporate Non-Executive
Officers and Corporate Staff. Bonuses are awarded under this plan according to
the achievement of target EPS and the achievement of personal performance goals,
which are agreed upon each year. For the Vice President and Controller, the
bonus opportunity is calculated at 25% of base compensation for 'Minimum', up to
50% for 'Par,' and up to 75% for 'Outstanding' EPS; provided that personal
performance goals have been fully achieved. The Vice President and Controller
was awarded a bonus of $102,893, based upon the Company's EPS performance and
his attainment of the personal performance goals established for him for 1999.
The Plan was initially approved by shareholders in 1994 to comply with
Section 162(m) of the Internal Revenue Code and certain amendments were approved
by the shareholders in 1995. That section provides that compensation of an
executive officer who is required to be listed in the Summary Compensation Table
of the Proxy Statement is not tax deductible by the Company to the extent that
it exceeds $1.0 million, unless certain criteria (including shareholder
approval) have been met. Thus, bonuses (but not salaries) payable to Corporate
Executive Officers under the Plan (which complies with the requirements of
Section 162(m)) are tax deductible by the Company even if they raise total
compensation of any such officer above $1.0 million. While the terms of the Plan
provide that it cannot be substantively amended without shareholder approval (or
it will no longer be in compliance with Section 162(m)), the Compensation
Committee always retains discretion to impose more restrictive, although not
more generous, criteria under the Plan. The terms of the original 1994 Plan
provided for achievement of budgeted EPS levels of 85% (Minimum), up to 100%
(Par) and up to 115% (Outstanding). The Compensation Committee adjusted these
bonus levels for 1998 and again for 1999 for achievement of budgeted EPS levels
of 85% (Minimum) and up to 100% (Par) and up to 125% (Outstanding). The Plan is
being presented to the shareholders for approval at the 2000 Annual Meeting in
order to comply with the requirement under Section 162(m) that such approval be
obtained every five years.
It is the belief of the Compensation Committee that long-term compensation
awards in the form of stock options remain a significant part of an overall
executive compensation package. Accordingly, approval for the 1998 Key
Employees' Stock Option Plan was obtained at the 1998 Annual Meeting of
15
<PAGE>
Stockholders and approval of certain amendments to the 1998 Key Employees' Stock
Option Plan is being sought at the 2000 Annual Meeting of Stockholders.
Despite the unfavorable effect on performance of several unusual factors in
1999, the major portion of the Company's business base generated good results
for the year. Moreover, the Company strengthened its long-term capital structure
on favorable terms through the public offering of $500 million of Senior Notes
due in 2009. For the current year, the outlook for the aerospace industry and
several other key markets served by Sequa businesses appears favorable,
although, as was the case in 1999, unforeseen events can affect performance. The
Compensation Committee is confident, however, that Sequa's executive officer
group is fully equipped to meet whatever challenges are encountered in the
course of directing the Company's operations. The Compensation Committee
believes that the total compensation packages provided to the Company's
executive officers are competitive without being excessive and are appropriate
to assure the retention and motivation of this highly skilled and experienced
segment of the Sequa workforce.
Compensation Committee
Gerald Tsai, Jr., Chairman
Donald D. Kummerfeld
ITEM 2.
REAPPROVAL OF THE MANAGEMENT INCENTIVE BONUS PROGRAM
FOR CORPORATE EXECUTIVE OFFICERS
The Board of Directors has accepted the recommendation of the Compensation
Committee to present the Management Incentive Bonus Program for corporate
executive officers and corporate staff (the 'Plan') to the shareholders for the
reapproval of the Plan as required by applicable Internal Revenue Code
regulations. The eligible corporate executive officers consist of the
Chairman/Chief Executive Officer, President/Chief Operating Officer, Senior
Executive Vice President/General Counsel, and Executive Vice President/Gas
Turbine Operations.
The Plan is being submitted to the shareholders for reapproval in accordance
with the regulations promulgated by the Internal Revenue Service under
Section 162(m) of the Internal Revenue Code which require that shareholders
reapprove certain compensation arrangements every five years in order for the
Company to be able to continue to deduct certain compensation paid to the named
executive officers. The regulations impose conditions and limitations on the
deductibility of compensation paid to certain executive officers of public
companies. Compensation of an executive officer who is required to be listed in
the Summary Compensation Table (a 'named executive officer') is not deductible
by the Company for tax purposes to the extent that it exceeds $1.0 million,
unless specific criteria have been met. To minimize the adverse consequences of
the regulations, the Company presented the Plan to the shareholders at the
Annual Meeting in 1994 and obtained shareholder approval of the Plan.
Thereafter, the Company presented certain amendments to the Plan to the
shareholders at the Annual Meeting in 1995 and obtained shareholder approval of
the amendments.
The Plan provides for a bonus to be paid to certain corporate executive
officers based solely on the Company's achieving or surpassing certain targets
related to budgeted earnings per share from continuing operations ('EPS') and
for certain other corporate executive officers based on a combination of
budgeted EPS, operating income, and return on net assets ('RONA') for the
operations under that officer's direction. The Plan refers to the attainment of
budgeted EPS as 'par performance',
16
<PAGE>
which for purposes of the Plan is a number agreed to at the beginning of each
year by the Compensation Committee of the Board of Directors of the Company,
taking into account a host of factors including past performance, industry
trends and projected levels of achievement. The actual EPS for the past year is
calculated at the beginning of the next fiscal year in reliance upon the
unaudited financial statements of the Company (which contain all adjustments
necessary to fairly present the Company's results for the year then ended).
Prior to any bonus payments under the Plan, the Compensation Committee must
certify that the required EPS has been achieved. The maximum amount of
compensation that may be paid to any individual under the Plan in any calendar
year may not exceed $2 million. The reapproval of this Plan by the stockholders
constitutes the approval of this limitation. The table set forth below states
the maximum percentages of salary payable to each eligible corporate executive
officer as a bonus under the Plan. The criteria for bonus eligibility for the
President/Chief Operating Officer and the Executive Vice President/Gas Turbine
Operations is calculated in accordance with 33.3% EPS and 66.7% operating income
and RONA for the operations under their respective direction. Thus, the
provisions of the Plan that require the attainment of EPS before any bonus shall
be payable to an eligible corporate executive officer shall apply only with
respect to one-third of the bonus that may be earned by each of the
President/Chief Operating Officer and the Executive Vice President/Gas Turbine
Operations, the remaining two-thirds of their respective bonuses being
determined solely with reference to the performance of those operations of the
Company for which each is responsible. Attainment of individual performance
goals is not calculated into the bonus formula for the eligible corporate
executive officers.
PLAN BENEFITS
<TABLE>
<CAPTION>
POTENTIAL
BONUS
POTENTIAL PAYMENT AS A
BONUS % OF
PAYMENT AS A SALARY AT
% OF SALARY AT POTENTIAL BONUS OUTSTANDING
MINIMUM PAYMENT AS A PERFORMANCE
PERFORMANCE % OF SALARY BY THE
BY THE AT PAR COMPANY
COMPANY PERFORMANCE BY (115% OR
(85% OF THE COMPANY MORE OF
NAME OF INDIVIDUAL POSITION BUDGETED EPS) (BUDGETED EPS) BUDGETED EPS)
------------------ -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Norman E. Alexander... Chairman and Chief Executive
Officer 32.5 65 97.5
John J. Quicke........ President and Chief Operating
Officer 30(1) 60(1) 90(1)
Stuart Z. Krinsly..... Senior Executive Vice
President and General
Counsel 30 60 90
Martin Weinstein...... Executive Vice President, Gas
Turbine Operations 30(1) 60(1) 90(1)
</TABLE>
- ---------
(1) The EPS performance criteria apply only to one-third of the bonus for
Messrs. Quicke and Weinstein; the remaining two-thirds of their respective
bonus potential is exclusively determined by the performance of their
respective operations in accordance with the same percentages.
Note: The percentage of bonus payable increases incrementally as the EPS moves
from 85% up to par performance, and likewise, between par and 115%. The
potential bonus payment shown at 115% of budgeted EPS is the maximum
available regardless of how high the EPS actually goes.
17
<PAGE>
The affirmative vote of the holders of shares of stock representing a
majority of the combined voting rights of all eligible classes of stock present
or represented at the meeting is required to reapprove the Management Incentive
Bonus Plan for Corporate Executive Officers.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE 'FOR'
REAPPROVAL OF THE MANAGEMENT INCENTIVE BONUS PLAN FOR CORPORATE EXECUTIVE
OFFICERS.
ITEM 3.
PROPOSED AMENDMENTS TO AND APPROVAL OF
THE 1998 KEY EMPLOYEES STOCK OPTION PLAN
The Board of Directors has found that the granting of stock options
continues to be an effective method of recruiting and retaining competent
management personnel. Stock options also provide incentive and strengthen the
identity of interests of key employees and the Company. For these reasons, the
Board of Directors originally adopted the 1998 Key Employees Stock Option Plan
(the 'Plan') and it was approved by the stockholders at the 1998 Annual Meeting
of Stockholders. On March 30, 2000, the Board of Directors, subject to approval
of the stockholders, adopted several amendments to the Plan (the Plan, as so
amended is hereafter referred to as the 'Plan'). A copy of the Plan may be
obtained upon written request to the Secretary of the Company, 200 Park Avenue,
New York, New York 10166. The following summary of the principal provisions of
the Plan is qualified in its entirety by reference to the Plan itself.
Administration of the Plan is the responsibility of the Compensation
Committee of the Board of Directors, a committee of two or more persons
appointed by the Company's Board of Directors. Members of the Compensation
Committee are not eligible to receive options and shall at all times be
'Non-Employee Directors', as defined in Rule 16b-3(b)(3) under the Securities
Exchange Act of 1934, as amended. The Compensation Committee may grant to
officers and key employees of the Company and its subsidiaries (which class
currently comprises approximately 115 persons) options to purchase an aggregate
of not more than 950,000 shares of the Company's Class A Common Stock, subject
to anti-dilution provisions. The Plan originally authorized total options
available for grant under the Plan relating to 500,000 shares. As of March 1,
2000, options to purchase 65,083 shares remain authorized for grants under the
Plan. The Board of Directors has approved, and recommends that the stockholders
of the Company approve, a proposal to increase the number of shares of Class A
Common Stock available for issuance under the Plan from 500,000 shares to
950,000 shares. An option may be granted to a director of the Company who is not
a member of the Compensation Committee, provided that the director is also an
officer or key employee. The Plan originally limited the amount of option shares
that may be granted in the aggregate to any one participant in the Plan during
the term of the Plan to 50,000 shares. The Board of Directors has approved, and
recommends that the stockholders of the Company approve, a proposal to increase
the number of option shares that may be granted in the aggregate to any one
participant in the Plan during the term of the Plan to 200,000 shares. Options
may be either 'Incentive Stock Options', as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the 'Code'), or options not intended
to be so qualified ('Non-Qualified Options'). In determining the key employees
who are to receive options and the number of shares to be covered by each
option, the Compensation Committee considers the employee's position and
responsibilities, service and accomplishments, present and future value to the
Company, anticipated length of future service, and other
18
<PAGE>
relevant factors. Accordingly, the number of option shares, or the value
thereof, that may be granted to any participant, including the named executive
officers, during the term of the Plan, is not determinable. If the amendments to
the Plan had been in effect during 1999, no change to the grants to the named
executive officers would have been made. The Compensation Committee may grant
more than one option to a participant during the life of the Plan, and such
option may be in addition to an option or options previously granted; provided,
however, that the aggregate fair market value (determined as of the date of
grant) of shares with respect to which Incentive Stock Options may become
exercisable for the first time by an individual (under all plans of the Company
and any present or future parent or subsidiary) during any calendar year shall
not exceed $100,000. All options (both Incentive Stock Options and Non-Qualified
Options) shall be exercisable at not less than 100% of the fair market value of
the shares on the date of grant, subject to anti-dilution provisions; provided,
however, that if an Incentive Stock Option is granted to an individual who owns
more than 10% of the total combined voting power of all classes of stock of the
Company, actually or constructively under Section 424(d) of the Code (a '10%
Stockholder'), such option shall be exercisable at not less than 110% of the
fair market value of the stock subject to the option. Any Incentive Stock
Options issued to a 10% Stockholder must expire within five years from the date
of grant. Mr. Alexander is currently the only 10% Stockholder eligible to
participate in the Plan. Under the Plan, either treasury or authorized and
previously unissued shares may be issued. If an option expires, is surrendered,
is terminated or otherwise ceases to be exercisable, the shares as to which the
option has not been exercised will continue to be available under the Plan.
Options granted pursuant to the Plan are transferable only by will or by laws
governing descent and distribution, and, during the lifetime of an optionee,
such options are exercisable only by the optionee.
In general, neither the grant nor the exercise of an Incentive Stock Option
will result in taxable income to the employee or a deduction to the Company. The
sale of stock received pursuant to the exercise of an option which satisfies all
of the requirements of an Incentive Stock Option, as well as the holding period
requirement described below, will result in a long-term capital gain or loss to
the employee and will not result in a tax deduction to the Company. The exercise
of an Incentive Stock Option will give rise to an item of adjustment for the
employee for purposes of the alternative minimum tax in an amount equal to the
excess of the fair market value of the stock at the time of exercise over the
option price, unless there is a disposition of the stock in the same taxable
year in which the exercise occurred. To receive Incentive Stock Option
treatment, the optionee must not dispose of the stock within two years after the
option is granted and must hold the stock itself for a least one year after the
transfer of such stock to the optionee. In general, if all requirements for
Incentive Stock Option treatment other than the holding period rules are
satisfied, the recognition of income by the optionee is deferred until
disposition of the stock, but any gain in an amount equal to the lesser of
(a) the fair market value of the stock on the date of exercise minus the option
price, or (b) the amount realized on the disposition minus the option price is
treated as ordinary income; any additional gain is treated as capital gain
(long-term or short-term, depending on the holding period). The Company will be
entitled to a deduction in respect of such ordinary income for its taxable year
in which or with which ends the taxable year of the optionee in which the amount
is included in income.
An optionee will realize no income at the time a Non-Qualified Option is
granted. Such advice is predicated on the assumption that, under existing U.S.
Treasury Department regulations, the options, at the time of their grant, have
no readily ascertainable fair market value. Ordinary income will be realized
19
<PAGE>
by an optionee at the time the non-qualified option is exercised. When such an
option is exercised, the amount of such income will be equal to the excess of
the fair market value on the exercise date of the shares issued to the optionee
over the option price. The optionee's holding period will begin on the date of
exercise. The tax basis of the stock acquired upon the exercise of any option
will be equal to the sum of (a) the exercise price of the option and (b) the
amount included in income. The Company will be entitled, subject to the usual
rules as to reasonableness of compensation, to a deduction for Federal income
tax purposes in the same amount as the optionee is considered to have realized
ordinary income in connection with either the grant or exercise of the
Non-Qualified Option. The deduction will be allowed for the taxable year in
which or with which ends the taxable year of the optionee in which the amount is
included in income.
The foregoing provides only a brief summary of the principal Federal income
tax consequences of awards under the Plan. This summary is not intended to be
exhaustive and does not describe state, local or foreign tax laws.
The Board of Directors may at any time terminate or amend the Plan in any
respect; provided, however, that no such action, without approval of the
stockholders, may (a) increase the total amount of stock which may be granted
under the Plan, except as hereinbefore described, (b) change the manner of
determining the option price, (c) withdraw the administration of the Plan from
the Compensation Committee, (d) permit any person while a member of the
Compensation Committee to be eligible to receive an option under the Plan, or
(e) increase the aggregate options under the Plan that may be granted to any one
participant; provided further, that no amendment, modification or termination of
the Plan shall in any manner adversely affect the right of any optionee or
transferee of any option theretofore granted under the Plan without the consent
of such optionee or transferee. The foregoing authority of the Board of
Directors shall include specific authority to amend the Plan in any respect to
satisfy the requirements of Section 422 of the Code and/or U.S. Treasury
Department regulations promulgated thereunder as to the qualification and/or
continued qualification of stock options granted under the Plan which are
intended to qualify as 'Incentive Stock Options' or in order to comply with any
other applicable laws or regulations currently or hereafter in effect.
The Plan became effective February 26, 1998, the date of its adoption by the
Board of Directors, as it was approved by the stockholders at the 1998 Annual
Meeting of Stockholders held on May 7, 1998. The amendments described above
became effective March 30, 2000, the date of their adoption by the Board of
Directors, subject, however, to approval by the stockholders at the 2000 Annual
Meeting of Stockholders to be held on May 4, 2000. If such approval is not
obtained, the Plan shall continue as in effect prior to the adoption of the
amendments described herein. The Plan shall, in all events, terminate on
February 25, 2008 (or on such earlier date as the Board of Directors may
determine), and no options shall be granted under the Plan after that date. Any
options outstanding at such termination date shall remain outstanding until it
is either exercised in full, expires by reason of lapse of time, or terminates
by its terms. As of March 15, 2000, the closing price of the Class A Common
Stock on the Exchange Composite Tape, as reported by the National Quotation
Bureau Incorporated was $30.75 per share.
The Board of Directors has approved, and recommends that the stockholders of
the Company approve, (i) a proposal to increase the number of shares of Class A
Common Stock available for issuance under the Plan from 500,000 shares to
950,000 shares, (ii) an amendment to increase the number of option shares that
may be granted in the aggregate to any one participant in the Plan during the
term of the Plan to 200,000 shares, and (iii) the Plan as amended.
20
<PAGE>
The affirmative vote of the holders of a majority of the combined vote cast
of the Company's Class A Common Stock, Class B Common Stock, and Preferred Stock
issued and outstanding on March 15, 2000 is required to approve the amendments
to the 1998 Key Employees Stock Option Plan, provided that the total vote cast
represents over 50% in interest of all securities entitled to vote.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE 'FOR' THE
PROPOSAL TO AMEND AND APPROVE THE 1998 KEY EMPLOYEES STOCK OPTION PLAN AS SET
FORTH ABOVE.
ITEM 4.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Arthur Andersen
LLP as independent public accountants of the Company for the fiscal year 2000.
Arthur Andersen LLP has been regularly employed as the independent auditors for
the Company since 1940. Representatives of the firm are expected to be present
at the stockholders' meeting with the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU
VOTE 'FOR' RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT PUBLIC
ACCOUNTANTS.
OTHER MATTERS
The management of the Company knows of no business other than that referred
to herein to be presented for action at the meeting. If, however, any other
business should properly come before the meeting or any adjournment thereof, it
is intended that all proxies will be voted with respect to such business in
accordance with the best judgment of the persons named in said proxies.
PROPOSALS OF STOCKHOLDERS FOR THE 2001 ANNUAL MEETING
Proposals by stockholders intended to be presented for action at the 2000
annual meeting of stockholders must be received by the Company at its principal
executive offices, 200 Park Avenue, New York, New York 10166, not later than
November 30, 2000. It is suggested that such proposals be submitted by Certified
Mail-Return Receipt Requested. The SEC has amended Rule 14a-4(c) under the
Exchange Act which governs the Company's use of discretionary proxy voting
authority with respect to shareholder proposals that are not being included in
the Company's proxy solicitation materials pursuant to Rule 14a-8 of the
Exchange Act. Therefore, in the event a stockholder does not notify the Company
at least 45 days before the date the Company mailed its proxy material for the
prior year's annual meeting of stockholders (which date would be February 14,
2001 for the Company's 2001 Annual Meeting) of an intent to present such a
proposal at the Company's 2001 Annual Meeting, the Company's management proxies
will have the right to exercise their discretionary authority in connection with
the matter submitted by the stockholder, without discussion of the matter in the
Proxy Statement.
April 5, 2000
21
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[Logo]
Printed on Recycled Paper
<PAGE>
APPENDIX 1
SEQUA CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS OF SEQUA CORPORATION -- MAY 4, 2000
The undersigned hereby appoints Norman E. Alexander and Stuart Z.
Krinsly, or either of them, attorneys and proxies, with full power of
substitution and revocation in each, for and on behalf of the undersigned, and
with all the powers the undersigned would possess if personally present, to vote
at the above Annual Meeting to be held at 270 Park Avenue, Conference Room A,
11th Floor, New York, New York at 11:00 AM and any adjournment or postponement
thereof all shares of Common and Preferred Stock of Sequa Corporation that the
undersigned would be entitled to vote at such meeting.
This proxy, when properly executed, will be voted as directed by the
stockholder. If no direction is given, when the duly executed proxy is
returned, the shares represented by this proxy will be voted FOR all nominees in
Item 1 and FOR Items 2, 3 and 4. In their discretion, the proxies are authorized
to vote upon such other matters as may properly come before the meeting or any
adjournment or postponement thereof.
(Continued, and to be signed and dated, on the reverse side.)
SEQUA CORPORATION
P.O. BOX 11180
NEW YORK, N.Y. 10203-0180
<PAGE>
ADMISSION TICKET
SEQUA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 4, 2000 11:00 a.m.
270 Park Avenue
Conference Room A, 11th Floor
New York, New York
If you plan to attend the Annual Meeting, please mark the notification
box on the bottom of this card.
You must present this portion of the card in order to be admitted
to the Sequa Corporation Annual Meeting on May 4, 2000.
Please note: The number(s) specified above refer(s) to
the number of shares. Class A Common Stock and $5.00
Cumulative Convertible Preferred Stock are each entitled
Please Detach Here to one vote per share. Class B Common Stock is entitled
to ten votes per share.
- --------------------------------------------------------------------------------
[ ]
The Board of Directors recommends a vote FOR all nominees
in Item 1 and FOR Items 2, 3 and 4.
1. Election of Director Nominees: Messrs. Alexander, Black, Dworman, Gottesman,
Krinsly, Kummerfeld, LeFrak, Quicke, Sovern, Sullivan Tsal and Weinstein
FOR all nominees WITHHOLD AUTHORITY *EXCEPTIONS
listed above [ ] to vote for all [ ] [ ]
nominees listed above
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions --------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Reapproval of the [ ] [ ] [ ]
Management Incentive
Bonus Plan for Corporate
Executive Officers
3. Approve amendments to [ ] [ ] [ ]
1998 Key Employees Stock
Option Plan
4. Appointment of Arthur [ ] [ ] [ ]
Andersen LLP as independent
auditors for 2000.
I plan to attend [ ]
the Annual Meeting.
Address Change and/or [ ]
Comments Mark Here x
NOTE: Please sign as name appears hereon. When signing as attorney,
executor, administrator, trustee, guardian, please give full title as such.
If the signer is a corporation, please sign the full corporate name, by duly
authorized officer. If shares are held jointly, each stockholder named
should sign.
Dated: __________________________________________, 2000
________________________________________________________
Signature(s)
________________________________________________________
Votes MUST be indicated [ ]
(X) in black or blue ink.
(Please sign, date and return this proxy card in the enclosed envelope.)
PLEASE DETACH HERE
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
- -------------------------------------------------------------------------------
<PAGE>
APPENDIX 2
ATTENDANCE CARD
SEQUA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 4, 2000 11:00 a.m.
270 Park Avenue
Conference Room A, 11th Floor
New York, New York
If you plan to attend the Annual Meeting, please sign and return the
self-addressed, postage paid portion of this card.
You will need to present this portion of the card in order to be admitted to the
Sequa Annual Meeting on May 4, 2000.
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I plan to attend the Annual Meeting of Stockholders of
Sequa Corporation on May 4, 2000.
- --------------------------------------------------------
Signature
- --------------------------------------------------------
Please print/type full name as it appears on proxy card
Address:
- --------------------------------------------------------
- --------------------------------------------------------
Stock Ownership: Class A ___ Class B ___ Preferred ___
- --------------------------------------------------------
Please check all that apply
<PAGE>
ATTENDANCE CARD
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<TABLE>
<S> <C>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
</TABLE>
<TABLE>
<S> <C>
BUSINESS REPLY MAIL
FIRST CLASS PERMIT NO. 2596 NEW YORK, N.Y.
POSTAGE WILL BE PAID BY ADDRESSEE
SEQUA CORPORATION
ATTN: CORPORATE SECRETARY
200 PARK AVENUE
NEW YORK, NY 10164-1882
</TABLE>
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