Arch Chemicals (ARJ) DEF 14A Definitive proxy

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

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ARCH CHEMICALS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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501 MERRITT 7, NORWALK, CONNECTICUT 06851

March 13, 2003

Dear Fellow Shareholder:

You are cordially invited to attend our 2003 Annual Meeting of Shareholders at 10:15 a.m., local time, on Thursday, April 24th. The meeting will be held at The Prudential Center for Learning and Innovation, 32 Weed Avenue, Norwalk, Connecticut.

You will find information about the meeting in the enclosed Notice and Proxy Statement.

Mr. Jack Kuehler, who is age 70, is retiring from the Board of Directors on April 24, 2003.  Mr. Kuehler has served on the Board since 1999 and served on the Board of Directors of Olin Corporation, our former parent company, since 1986. We are grateful for Jack’s steadfast service and extraordinary support over these many years. We will miss his wise counsel and good humor.

Please be advised that we have not planned a communications segment or any multimedia presentations for the 2003 Annual Meeting. The only items of business on the agenda are the election of one director and the ratification of our independent auditors.

Whether or not you plan to attend and regardless of how many shares you own, please vote your shares by using the telephone or the Internet or by signing and dating the enclosed proxy card and mailing the lower half of it in the enclosed envelope as soon as possible. If you do plan to attend, please so indicate by checking the appropriate box on the proxy card. Keep the upper half to be used as your admission card to the meeting.

Sincerely,

MICHAEL E. CAMPBELL

Chairman, President and Chief Executive Officer

YOUR VOTE IS IMPORTANT

You are urged to vote by telephone, via the Internet or by signing, dating and promptly mailing your proxy card in the enclosed envelope.

ARCH CHEMICALS, INC.

Notice of Annual Meeting of Shareholders

Norwalk, Connecticut

March 13, 2003

The Annual Meeting of Shareholders of Arch Chemicals, Inc. will be held at The Prudential Center for Learning and Innovation, 32 Weed Avenue, Norwalk, Connecticut, on Thursday, April 24, 2003, at 10:15 a.m., local time, to consider and act upon the following:

(1)  The election of one director.

(2)  Ratification of the appointment of independent auditors for 2003.

(3)  Such other business as may properly come before the meeting or any adjournment.

The Board of Directors has fixed March 3, 2003 as the record date for determining shareholders entitled to notice of and to vote at the meeting.

By order of the Board of Directors,

SARAH A. O’CONNOR

Secretary

ARCH CHEMICALS, INC.

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

To be Held April 24, 2003

Who is Arch Chemicals?

Arch Chemicals, Inc. (“Arch” or the “Company”) is a NYSE-listed, specialty chemicals manufacturer. The mailing address of the Company’s principal executive office is 501 Merritt 7, P.O. Box 5204, Norwalk,  CT 06856-5204.

When and where will the Annual Meeting be held?

The Annual Meeting of Shareholders of the Company (“Annual Meeting”) will be held at The Prudential Center for Learning and Innovation, 32 Weed Avenue, Norwalk, Connecticut, on Thursday, April 24, 2003, at 10:15 a.m., local time.

Who is asking for my vote and why are you sending me this document?

The Board of Directors of the Company (the “Board”) asks that you vote on the matters listed in the Notice of Annual Meeting of Shareholders. The votes will be formally counted at the Annual Meeting on Thursday, April 24, 2003, or if the Annual Meeting is adjourned or postponed, at any later meeting.

We are providing this Proxy Statement and related proxy card to the shareholders of the Company in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting. Shares represented by duly executed proxies in the accompanying form received by the Company prior to the meeting will be voted at the meeting. We are mailing this Proxy Statement and the related proxy card to shareholders beginning on or about March 13, 2003.

What am I being asked to vote on?

(1)  The election of one director.

(2)  Ratification of the appointment of the independent auditors for 2003.

(3)  Such other business as may properly come before the meeting or any adjournment.

How does the Board recommend I vote on the proposals?

The Board recommends a vote FOR the nominee for director identified in Item 1 and FOR Item 2.

Who is eligible to vote?

All shareholders of record at the close of business on March 3, 2003 (the “Record Date”) are entitled to vote at the Annual Meeting.

How many shares can vote?

At the close of business on the Record Date, the Company had outstanding 22,404,404 shares of common stock, par value $1 per share (the “Common Stock”). Each shareholder on the Record Date is entitled to one vote for each full share owned by such shareholder on each of the matters voted on at the Annual Meeting. Of those shares of Common Stock outstanding, approximately 1,489,636 shares (or approximately 6.65%) were held in the Arch Common Stock Fund of the Arch Chemicals, Inc. Contributing Employee Ownership Plan (“CEOP”), all of which are held by JPMorgan Chase Bank as the trustee of the CEOP (“CEOP Trustee”).

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How do I vote?

You may vote in person at the Annual Meeting or by returning your completed proxy card in the enclosed postage-paid envelope. In addition, shareholders of record, participants in the CEOP and participants in the Olin Corporation Contributing Employee Ownership Plan (“Olin CEOP”) also have a choice of voting over the Internet or by using a U.S. toll-free telephone number. Please refer to the proxy card for further information on how to vote electronically. However, please note that Internet and telephone voting facilities for shares held of record will close at 11:59 p.m., U.S. Eastern time, on April 23, 2003 and for shares held through the CEOP or Olin CEOP will close at 9:00 a.m., U.S. Eastern time, on April 23, 2003. If you do vote by telephone or the Internet, it is not necessary to return your proxy card. Please note that participants in the CEOP and in the Olin CEOP who do not vote by telephone or Internet must return their proxy card in the accompanying envelope so that it is received no later than Noon, U.S. Eastern Time, on April 21, 2003 for their voting instructions to be followed.

Please be aware that if you vote over the Internet, you may incur costs, such as telephone and Internet access charges, for which you will be responsible.

The Internet and telephone voting procedures are designed to authenticate shareholders and CEOP and Olin CEOP participants by use of a control number, which appears on the proxy card, and to allow you to confirm that your instructions have been properly recorded.

The method by which you vote will in no way limit your right to vote at the meeting if you later decide to attend in person. However, please note that if your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the shareholder of record, to be able to vote in person at the meeting. CEOP participants must vote through the CEOP Trustee, and participants in the Olin CEOP must vote through the trustee of the Olin CEOP and may not vote their shares held in the CEOP or Olin CEOP in person at the Annual Meeting.

To what shares does the proxy card apply?

The proxy card supplied by the Company will apply to the number of shares of Common Stock that you hold of record and, if you are a participant in the CEOP or a participant in the Olin CEOP, the number of shares held for your account under the CEOP or Olin CEOP, as the case may be. CEOP participants and Olin CEOP participants will not receive a separate voting instruction card. If you do not execute and return this proxy card or vote electronically, your shares held of record will not be voted and your shares held in the CEOP will be voted by the CEOP Trustee in the same proportion as shares of Common Stock for which the CEOP Trustee has received instructions from other CEOP participants. Olin CEOP participants should consult with their plan administrator on how their shares held in the Olin CEOP will or will not be voted if they do not return a proxy card or otherwise give voting instructions to the trustee of the Olin CEOP.

Am I a shareholder of record?

If your shares are represented by a stock certificate registered in your name or if the Company’s stock transfer agent (The Bank of New York) is holding your shares in a “book entry” account under your name, you are a shareholder of record with respect to those shares so held. If your shares are otherwise owned directly by a bank, broker, or other holder of record, you are not a shareholder of record with respect to the shares so held by such bank, broker or other holder of record.

If I return the proxy card or vote electronically, how will my shares be voted?

Where a shareholder of record or CEOP participant timely directs in the proxy (including an electronic vote) a choice regarding any matter that is to be voted on, that direction will be followed. If no direction is made, returned proxies of shareholders of record and CEOP participants will have their registered shares and shares held in the CEOP voted for the election of the nominee-director as set forth below and in favor of the ratification of the appointment of independent auditors.

As of the date hereof, the Company does not know of any matters other than those referred to in the accompanying Notice which are to come before the meeting. If any other matters are properly presented for action, the persons named in the accompanying form of proxy will vote the proxy in accordance with their best judgment.

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If I do not return the enclosed proxy card and do not vote electronically, how will the shares I own of record and through the CEOP or Olin CEOP be voted?

If you do not vote by returning the enclosed proxy card, do not vote electronically and do not vote at the meeting in person or other proxy, your shares held of record by you will not be voted at the Annual Meeting. CEOP participants who do not return the proxy card or vote electronically in a timely manner will have their shares of Common Stock held in the CEOP voted by the CEOP Trustee in the same proportion as shares of Common Stock for which the CEOP Trustee has received instructions from other CEOP participants. Olin CEOP participants should consult with their plan administrator on how their shares held in the Olin CEOP will or will not be voted if they do not return their proxy card or otherwise give voting instructions to the trustee of the Olin CEOP.

What if I own shares of the Company through a bank, broker or other holder of record or in another company’s employee savings plan (other than the CEOP or Olin CEOP)?

If you hold Common Stock through a bank, broker or other holder of record or through another company’s stock savings plan (other than the CEOP or Olin CEOP), you will most likely receive voting instructions from such bank, broker or other holder or from that plan’s administrator or trustee. In any case, please follow those instructions to assure that your shares are voted and represented at the meeting.

If your shares are owned directly in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the shareholder of record, to be able to vote in person at the meeting. CEOP participants must vote the shares held in the CEOP through the CEOP Trustee.

How are the shares held in the BuyDIRECT^SM Investment Program voted?

The Bank of New York (“BNY”), is the Company’s registrar and stock transfer agent. For holders of Common Stock who participate in the BuyDIRECT^SM program offered by BNY, BNY will vote any shares of Common Stock that it holds for the participant’s account in accordance with the participant’s electronic vote or with the proxy returned by the participant covering his or her shares of record. If a BuyDIRECT^SM participant does not send in a proxy for shares held of record or otherwise vote electronically, BNY will not vote the shares of such participant held in such program.

Can I change my vote after I have returned my proxy card or voted over the telephone or via the Internet?

Yes. Any person who has returned a proxy or voted electronically has the power to revoke it at any time before it is exercised by submitting a subsequently dated proxy, by voting again via the Internet or by telephone, by giving notice in writing to the Company’s Corporate Secretary or by voting in person at the meeting. Please note however that telephone and Internet voting ends for shares held of record at 11:59 p.m., U.S. Eastern time, on April 23, 2003 and for shares held through the CEOP and Olin CEOP at 9:00 a.m., U.S. Eastern time, on April 23, 2003. Please note that participants in the CEOP and in the Olin CEOP who do not vote by telephone or Internet must return their proxy card in the accompanying envelope so that BNY receives it no later than Noon, U.S. Eastern time, on April 22, 2003 if their voting instructions are to be followed. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the shareholder of record to be able to vote in person at the meeting.

What does it mean if I get more than one proxy or voting instruction card?

You will receive one proxy card for each way in which your shares are registered. If you receive more than one proxy card (other than because you are a participant in a savings plan of another company), it is because your shares are registered in different names or with different addresses or are held in different accounts. Please sign and return each proxy card that you receive to ensure that all your shares are voted. To enable us to provide better shareholder service, we encourage shareholders to have all their shares registered in the same name with the same address. You should contact BNY at (866) 857-2223 (U.S. toll free) for instructions on how to change the way your shares are held if you receive more than one mailing.

BuyDIRECT^SM is a service mark of BNY.

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CERTAIN BENEFICIAL OWNERS

Except as indicated below, the Company knows of no person who was the beneficial owner of more than five percent of Common Stock as of December 31, 2002.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
T. Rowe Price Associates, Inc.(a)	2,703,600	12.07
100 East Pratt Street
Baltimore, MD 21202
FMR Corp.(b)	2,414,411	10.78
82 Devonshire Street
Boston, MA 02109
Snyder Capital Management, L.P.(c)	1,829,200	8.17
350 California Street, Suite 1460
San Francisco, CA 94104
Dimensional Fund Advisors Inc.(d)	1,518,915	6.78
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Dalton, Greiner, Hartman, Maher & Co.(e)	1,173,996	5.24
565 Fifth Avenue, Suite 2101
New York, NY 10017

(a) T. Rowe Price Associates, Inc. (“Price Associates”), a registered investment adviser, has advised the Company in an amended Schedule 13G filing that the securities are owned by various individual and institutional investors, including the T. Rowe Price Small-Cap Stock Fund, Inc. (“Price Fund”) (which owns 1,198,100 of the shares). Price Associates has sole voting power with respect to 805,150 of such shares, and Price Fund has sole voting power with respect to 1,198,000 shares. Price Associates has sole dispositive power with respect to all the shares. Price Associates expressly disclaims that it is, in fact, the beneficial owner of the shares.

(b) The Company has been advised in an amended Schedule 13G filing as follows with respect to these shares: Fidelity Management & Research Company (“Fidelity”) beneficially owns 1,562,000 shares and Fidelity Management Trust Company (“FMTC”) beneficially owns 785,950 shares. Both are subsidiaries of FMR Corp. (“FMR”). Edward C. Johnson 3rd (“Johnson”), who is the Chairman of FMR, FMR, through its control of Fidelity, and its Funds each has sole dispositive power with respect to the 1,562,000 shares owned by such Funds. Neither Johnson nor FMR has sole voting power with respect to the shares owned by the Funds, which power rests with the Funds’ Board of Trustees. Johnson and FMR, through its control of FMTC, each has sole dispositive power over 785,950 shares and sole voting power over 785,950 shares. Geode Capital Management, LLC (“Geode LLC”), a registered investment adviser, is the beneficial owner of 161 shares. Geode LLC is wholly-owned by Fidelity Investors III L.P. (“FILP III”). Fidelity Investors Management, LLC (“FIML”), a registered investment manager, is the general partner and investment manager of FILP III. The managers of Geode LLC, the members of FIML and the limited partners of FILP III are certain shareholders and employees of FMR Corp. Fidelity International Limited (“FI”) and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. FI is the beneficial owner of 66,300 shares. FI has sole voting and sole dispositive power with respect to these 66,300 shares.

(c) Snyder Capital Management, L.P., a registered investment adviser, has advised the Company in an amended Schedule 13G filing that it has shared voting power with respect to 1,663,500 of the shares and shared dispositive power with respect to 1,829,200 of the shares.

(d) Dimensional Fund Advisors Inc., a registered investment adviser, has advised the Company in an amended Schedule 13G filing that it has sole voting power and sole dispositive power with respect to the shares. Dimensional Fund Advisors Inc. states it furnishes investment advice to four investment companies and serves as investment manager to certain other commingled group trusts and separate accounts. It expressly disclaims that it is, in fact, the beneficial owner of the shares.

(e) Dalton, Greiner, Hartman, Maher & Co., an investment adviser, has advised the Company in a Schedule 13G filing that it has sole power to vote 991,496 of the shares and sole dispositive power with respect to all the shares.

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ITEM 1—ELECTION OF DIRECTORS

Who are the persons nominated by the Board in this election to serve as directors?

The Board of Directors is divided into three classes with the term of office of each class being three years, ending in different years. Mr. John W. Johnstone, Jr., whose biography is shown below, has been nominated by the Board for election as Class I Director to serve until the 2006 Annual Meeting of Shareholders and until his successor has been elected. Mr. Jack Kuehler, who is also a Class I director whose term is expiring at the Annual Meeting, has decided to retire from the Board. The Board has voted to reduce the Board’s size from seven directors to six effective at the time of the expiration of Mr. Kuehler’s term.

CLASS I

NOMINEE FOR A THREE YEAR TERM EXPIRING AT THE 2006 ANNUAL MEETING

JOHN W. JOHNSTONE, JR., 70, retired in April 1996 as Chairman of the Board of Olin. In 1954, he joined Hooker Chemicals and Plastics Corporation, where he spent 22 years in various sales, marketing and management positions of increasing responsibility, leaving in 1975 to become President of the Airco Alloys division of Airco, Inc. He joined Olin in 1979 as Vice President and General Manager of the Chemicals Group’s Industrial Products department. Mr. Johnstone became a corporate Vice President and President of the Chemicals Group in 1980, and an Executive Vice President of Olin in 1983. He was named President of Olin in 1985, Chief Operating Officer in 1986, Chief Executive Officer in 1987 and Chairman of the Board in 1988. He is a graduate of Hartwick College, where he received a BA degree in chemistry and physics and a Doctor of Science (Hon.). He has attended the Harvard Business School’s Advanced Management Program. He is former Chairman of the Soap and Detergent Association and the Chemical Manufacturers Association (currently known as the American Chemistry Council). He is a director of The Phoenix Companies, Inc., McDermott International, Inc., Fortune Brands, Inc. and Research Corporation Technologies Inc. Director since 1999.

Who are the other remaining directors and when are their terms scheduled to end?

CLASS II

DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2004 ANNUAL MEETING

RICHARD E. CAVANAGH, 56, is President and Chief Executive Officer and a Trustee of The Conference Board, Inc., a leading research and business membership organization. He has held this position since November 1995. Previously, he was Executive Dean of the John F. Kennedy School of Government at Harvard University for eight years. Prior to the position with Harvard, he spent 17 years with McKinsey & Company, Inc., the international management consulting firm, where he led the firm’s public issues consulting practice. Mr. Cavanagh is a Trustee of the BlackRock Mutual Funds, Airplanes Group and Aircraft Finance Trust (AFT), and The Educational Testing Service; and a director of The Fremont Group and The Guardian Life Insurance Company. He holds a BA degree from Wesleyan University and an MBA degree from the Harvard Business School. Director since 1999.

MICHAEL O. MAGDOL, 65, is Vice Chairman of the Board of Fiduciary Trust Company International (“FTCI”), a global investment manager for families and institutions and a subsidiary of Franklin Resources, Inc. (“FRI”), and has held this position since 1987. From 1987 to 2002, he also served as FTCI’s Chief Financial Officer. He currently serves as Chair of the Enterprise Risk Management Committee of FRI and is the Chief Anti-Money Laundering (“AML”) Compliance Officer for FRI and the AML Compliance Officer for FRI’s mutual funds. Prior to 1987, he was Executive Vice President and Director of J. Henry Schroder Bank. He is a Trustee of The Lingnan Foundation. He holds a BSE degree from the University of Pennsylvania. Director since 1999.

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CLASS III

DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2005 ANNUAL MEETING

	MICHAEL E. CAMPBELL, 55, is Chairman of the Board, President and Chief Executive Officer of the Company. Previously, he was Executive Vice President of Olin and had global management responsibility for all of Olin’s businesses. Prior to his election as Executive Vice President, Mr. Campbell served as President of the Microelectronic Materials Division. Mr. Campbell is a graduate of the University of New Hampshire and received a J.D. degree from George Washington University. He is a director of MeadWestvaco Corporation. Mr. Campbell is also a member of the Board of Directors of the American Chemistry Council, and serves as Chairman of its Responsible Care® Committee. In addition, he is a member of the Society of Chemical Industry’s Executive Committee. Director since 1999.
	H. WILLIAM LICHTENBERGER, 67, retired in 2000 as Chairman and Chief Executive Officer of Praxair, Inc., an industrial gases company, a position he assumed in 1992 when Praxair was spun off from Union Carbide Corporation. In 1986, Mr. Lichtenberger was elected a Vice President of Union Carbide Corporation and was appointed President of the Union Carbide Chemicals and Plastics Company, Inc. He was elected President and Chief Operating Officer and a director of Union Carbide Corporation in 1990. He resigned as an officer and director of Union Carbide Corporation upon Praxair’s spin-off. Mr. Lichtenberger is a graduate of the University of Iowa where he majored in chemical engineering and has a masters degree in business administration from the State University of New York, Buffalo. He is a director of Ingersoll-Rand Company and of Noveon, Inc. He was formerly a director of the National Association of Manufacturers, a director of the Chemical Manufacturers Association (currently known as the American Chemistry Council) and a member of The Business Roundtable. Director since 1999.
	JOHN P. SCHAEFER, 68, is President of the Research Corporation, a foundation, and Chairman of Research Corporation Technologies, Inc. Previously, he was President of the University of Arizona (1971-1982) and Professor of Chemistry at the University, where he had been a member of the faculty since 1960. Before his appointment as President of the University, he served as head of its Department of Chemistry and Dean of its College of Liberal Arts. Dr. Schaefer received his BS degree in chemistry from the Polytechnic Institute of Brooklyn in 1955 and his Ph.D. degree from the University of Illinois in 1958. After postdoctoral studies at the California Institute of Technology, he taught chemistry at the University of California (Berkeley). Dr. Schaefer’s research interests have been in the area of synthetic and structural chemistry. He served on the Board of Governors of the U.S.-Israeli Binational Science Foundation (1973-1978). He is a director of Research Corporation and Research Corporation Technologies, Inc. He is also a trustee of the Polytechnic Institute of New York. Director since 1999.

How will the returned proxies be voted for directors?

If the proxy card is returned and marked with a direction on how to vote with respect to directors or if a person directs a vote electronically as provided on the proxy card, that direction will be followed. If an individual returns a proxy card without a direction on how to vote marked thereon, such individual’s shares of record and shares held in the CEOP, if any, will be voted for the election of Mr. Johnstone. The nominee is a director at the present time. It is not expected that the nominee will be unable to serve as a director, but if he is unable to accept election, it is intended that shares represented by proxies in the accompanying form or voted electronically will be voted for the election of a substitute nominee selected by the Board, unless the number of directors is reduced.

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What vote is required to elect the directors?

The election of the nominee as a director requires the affirmative vote of a plurality of the votes cast in the election. Votes withheld and shares held in street name (“Broker Shares”) that are not voted in the election of directors will not be included in determining the number of votes cast.

ADDITIONAL INFORMATION REGARDING THE BOARD OF DIRECTORS

What are the committees of the Board? How often did the Board and each committee meet in 2002?

During 2002, the Board held four meetings. The average attendance by directors at meetings of the Board and committees of the Board on which they served was 98%. Each director attended at least 92% of such meetings. At the end of each Board meeting, the Board meets in executive session without the Chief Executive Officer (“CEO”).

The current standing committees of the Board are an Audit Committee, a Compensation Committee and a Corporate Governance Committee.

The Audit Committee advises the Board on internal and external audit matters affecting the Company, including recommending the appointment of internal financial, auditing and regulatory personnel and independent auditors of the Company; reviews with such auditors the scope and results of their examination of the financial statements of the Company; reviews the Company’s financial, regulatory and computer annual audit plans; reviews reports and audits of the Company’s internal audit service provider; discusses with independent auditors matters required to be discussed by Independent Standards Board No. 1 and Statement on Auditing Standards No. 61; reviews and approves the Audit Committee Report that appears in the Company’s Proxy Statement; and reviews the presentation of the Company’s financial results and monitors the adequacy of the Company’s internal financial controls. This committee also advises the Board on compliance with the Company’s Standards of Ethical Business Practices, on government and other compliance programs, on corporate and governmental security matters, monitors major litigation and pending internal or external special investigations, with a particular interest in the event there are claims that the Company has acted unethically or unlawfully and reviews the Company’s insurance and risk management process. This committee also reviews audits of expenses of the Company’s senior executives and Directors. This committee also has oversight responsibility for the implementation of the Company’s Responsible Care^® Codes and for compliance with legal mandates in the environmental, health, safety and other regulatory areas. This committee also reviews and evaluates the investment and financial performance of the Company’s pension plans, voluntary employee benefit associations (“VEBAs”) and any thrift plan investment funds, reviews and approves investment policies with respect to the pension plans, VEBAs and any thrift plan funds, approves the selection of thrift plan investment options, approves the appointment of pension plan, VEBA and thrift plan trustees and investment managers and their respective agreements, consults with, and obtains reports from, the pension plan, VEBA and thrift plan trustees and other fiduciaries, approves the charitable contributions budget and program and those other charitable contributions in excess of the CEO’s authority, annually reviews the contributions, financial condition and administration of the Arch Chemicals Government Participation Fund, and reviews, provides advice, and recommends changes, as appropriate, to Management’s programs to maintain and improve shareholder relations. The Board has adopted a written charter for the Audit Committee, and the Board determined in 2002 that the members of the Audit Committee meet applicable New York Stock Exchange standards for independence and financial literacy. The Audit Committee currently consists of Messrs. Johnstone, Magdol and Schaefer (chair). During 2002, four meetings of this committee were held.

The Compensation Committee sets policy, develops and monitors strategies for, and administers the programs which compensate the CEO and other senior executives. This committee approves the salary plans for the CEO and certain other senior executives including total direct compensation opportunity, and the mix of base salary, annual incentive standard and long term incentive guideline awards. It approves the measures, goals,

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objectives, weighting, payout matrices and actual payouts and certifies performance for and administers the incentive compensation plans for such persons. This committee also administers the 1999 Long Term Incentive Plan, issues an annual Report on Executive Compensation that appears in the Proxy Statement, approves Executive and Change in Control Agreements, approves and adopts new qualified and non-qualified pension plans, adopts amendments thereto, approves terminations of qualified and non-qualified pension plans, administers the Senior Executive Pension Plan, makes recommendations to the Board on any other matters pertaining to the pension, CEOP and other plans which this committee deems appropriate and reviews plans for management development and succession. This committee also advises the Board on the remuneration for members of the Board. The Compensation Committee currently consists of Messrs. Cavanagh, Kuehler and Lichtenberger (chair). During 2002, two meetings of this committee were held.

The Corporate Governance Committee assists the Board in fulfilling its responsibility to the Company’s shareholders relating to the selection and nomination of Directors, makes recommendations to the Board regarding the selection of the CEO, reviews the nominees for other offices of the Company, periodically reviews corporate governance trends, issues and best practices and makes recommendations to the Board regarding the adoption of best practices most appropriate for the governance of the affairs of the Board, recommends to the Board a slate of nominees to be proposed for election to the Board by shareholders at annual meetings and at other appropriate times, recommends individuals to fill any vacancies created on the Board, makes recommendations to the Board regarding the size and composition of the Board, the particular qualifications and experience that might be sought in Board nominees, assesses whether the qualifications and experience of candidates for nomination and renomination to the Board meet the then current needs of the Board, seeks out possible candidates for nomination and considers suggestions by shareholders, Management, employees and others for candidates for nomination and renomination as Directors, reviews and makes recommendations to the Board regarding the composition, duties and responsibilities of various Board committees from time to time as may be appropriate, reviews and advises the Board on such matters as protection against liability and indemnification, and assesses and reports annually to the Board on the performance of the Board itself as a whole. The Corporate Governance Committee currently consists of Messrs. Cavanagh, Johnstone (chair), Kuehler, Lichtenberger, Magdol and Schaefer. During 2002, one meeting of this committee was held.

The Corporate Governance Committee will consider candidates recommended by shareholders for election as directors at future annual meetings. Recommendations must be in writing and submitted to the Corporate Secretary of the Company by December 1, accompanied by the written consent of the candidate along with the information required for director nominations as set forth in the Company’s Bylaws.

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Report of the Audit Committee

The Audit Committee is established by the Board of Directors. The Board has adopted a written charter for this committee setting out the functions it is to perform. Management has primary responsibility for the Company’s financial statements and the overall reporting process, including the Company’s system of internal controls. The Directors who serve on this committee are all “Independent” for purposes of the New York Stock Exchange listing standards. Thus, the Board of Directors has determined that no Audit Committee member has a relationship to the Company that may interfere with our independence from the Company and its Management.

The Audit Committee reviewed the Company’s audited financial statements for the year ended December 31, 2002 and met with both Management and KPMG LLP (“KPMG”), the Company’s independent auditors, to discuss those financial statements. Management has represented to this committee that the financial statements were prepared in accordance with accounting principles generally accepted in the United States of America.

The Audit Committee has received from and discussed with KPMG the written disclosure and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). These items relate to that firm’s independence from the Company. We also discussed with KPMG any matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees).

Based on these reviews and discussions, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

John P. Schaefer, Chair

John W. Johnstone, Jr

Michael O. Magdol

9

What are the directors paid for their services?

Generally speaking, the Stock Plan for Nonemployee Directors (the “Directors Plan”) (i) provides for the granting annually, at the election of the Board, of a number of shares of Common Stock, options to purchase shares of Common Stock, performance shares or a combination of the foregoing (as determined by the Board) to each nonemployee director and, in the case of a grant of shares of Common Stock, the deferral of the payment of such shares until after such director ceases to be a member of the Board, (ii) permits the Board to determine if all or part of the annual retainer shall be paid in shares of Common Stock, (iii) permits such director, subject to the approval of the Board, to elect to receive his or her meeting fees in the form of shares of Common Stock in lieu of cash, (iv) permits such director, subject to the approval of the Board, to elect to receive in the form of shares of Common Stock the amount by which the annual retainer exceeds the amount payable in shares of Common Stock (“Excess Retainer”) in lieu of cash for such excess and (v) permits such director to elect to defer any meeting fees and Excess Retainer paid in cash and any shares to be delivered under the Directors Plan. Interest on deferred cash and dividends on deferred shares are paid to the nonemployee director unless the director elects to defer such amounts in which case interest is credited quarterly and dividend equivalents are reinvested in phantom shares of Common Stock on the dividend payment date. Deferred shares are paid out in shares of Common Stock unless the Board decides otherwise. Performance shares vest and are paid out, unless deferred by the director, upon the satisfaction of performance goals established by the Compensation Committee. Deferred accounts under the Directors Plan are paid out if there is a “Change in Control” as defined in such plan.

In 2002, each nonemployee director’s deferred stock account under the Directors Plan was credited with 2,500 phantom shares of Common Stock. Such shares will be paid out to a director in cash when he ceases to be a director. In addition for 2002, each nonemployee director received $20,000 in cash and was granted 2,000 stock options on January 2, 2002 with an exercise price of $23.00 per share, which was the fair market value of the Common Stock on the grant date. Such options are currently exercisable and expire on December 31, 2011.

In 2003, each nonemployee director’s deferred stock account under the Directors Plan was credited with 2,500 phantom shares of Common Stock. Such shares will be paid out to a director in cash when he ceases to be a director. In addition for 2003, each nonemployee director received $20,000 in cash and was granted 2,000 stock options on January 2, 2003 with an exercise price of $18.56 per share, which was the fair market value of the Common Stock on the grant date. Such options are currently exercisable and expire on December 31, 2012.

If director meetings exceed eight meetings in a calendar year, each nonemployee director will receive a $1,500 meeting fee for each Board meeting attended in excess of eight meetings. In 2002, there were less than nine Board meetings. Each Board committee chair received a $5,000 annual committee meeting fee in 2002 and will receive such fee in 2003. The shares, cash retainer and fees may be deferred by the director as provided in the Directors Plan.

Directors participate in the Arch charitable giving program with a 100% match for gifts up to $2,500 to eligible charities. Directors who are not officers or employees of the Company or one of its subsidiaries are covered while on Company business under the Company’s business travel accident insurance policy which covers employees of the Company generally. Directors also are reimbursed during the year for expenses incurred in the performance of their duties as directors, such as travel expenses. The Company also provided Mr. Johnstone with an off-site office, use of the Company’s car service and reimbursement of his income tax preparation costs during 2002. The off-site office space arrangement was terminated at the end of 2002. In 2003, the Board decided as part of the director compensation package to offer all directors the use of office space at the Company’s Norwalk headquarters, Company car service and reimbursement for income tax preparation costs.

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SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS

How much stock is beneficially owned by directors and the individuals named in the Summary Compensation Table?

The following table sets forth the number of shares of Common Stock beneficially owned by each director and nominee for director, by the individuals named in the summary compensation table on page 14, and by all directors and current executive officers of the Company as a group, as reported to the Company by such persons as of January 15, 2003. Unless otherwise indicated in the footnotes below, the officers, directors, nominees and individuals had sole voting and investment power over such shares. Also included in the table are shares of Common Stock which may be acquired within 60 days.

Name of Beneficial Owner	No. of Common Shares Beneficially Owned(a,b)	Percent of Class of Common Stock(c)
Hayes Anderson	24,301	—
Michael E. Campbell	333,028	1.47
Richard E. Cavanagh	18,905	—
Paul J. Craney	57,764	—
John W. Johnstone, Jr	112,624	—
Jack D. Kuehler	23,402	—
H. William Lichtenberger	21,748	—
Michael O. Magdol	20,134	—
Louis S. Massimo	81,441	—
Sarah A. O’Connor	50,896	—
John P. Schaefer	23,959	—
Directors and executive officers as a group, including those named above (15 persons)	865,179	3.74

(a) Included in this table with respect to officers are shares credited under the CEOP. Also included in the case of the incumbent directors (other than Mr. Campbell) are certain shares of Common Stock credited to a deferred account for such directors pursuant to the arrangements described above under “What are the directors paid for their services?” in the amounts of 7,582 for Mr. Cavanagh; 5,585 for Mr. Johnstone; 12,202 for Mr. Kuehler; 10,348 for Mr. Lichtenberger; 8,934 for Mr. Magdol; and 10,070 for Mr. Schaefer. Such shares so credited to these directors have no voting power and are paid out in shares of Common Stock at the end of the deferral period.

(b) The amounts shown include shares that may be acquired within 60 days following January 15, 2003 through the exercise of stock options as follows: Mr. Anderson, 18,305; Mr. Campbell, 314,706; Mr. Cavanagh, 11,200; Mr. Craney, 51,578; Mr. Johnstone, 65,941; Mr. Kuehler, 11,200; Mr. Lichtenberger, 11,200; Mr. Magdol, 11,200; Mr. Massimo, 77,358; Ms. O’Connor, 47,500; Mr. Schaefer, 11,200; and all directors and executive officers as a group, including the named individuals, 714,686.

(c) Unless otherwise indicated, beneficial ownership of any named individual does not exceed 1% of the outstanding shares of Common Stock.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than ten percent of a registered class of Arch’s equity securities, to file reports of ownership and changes in ownership with the SEC and the New York Stock Exchange. Officers, directors and greater than ten-percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such forms furnished to the Company, or written representations that no Forms 5 were required, the Company believes that during the period January 1, 2002 to December 31, 2002, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten-percent beneficial owners were complied with.

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EXECUTIVE COMPENSATION

Report of the Compensation Committee on Executive Compensation

Compensation Philosophy

It is the philosophy of the Company to incent and compensate its executives to maximize shareholder value. This philosophy incorporates the following principles:

1. Compensation should attract and retain qualified employees and stimulate their profitable efforts on behalf of the Company;

2. Compensation should be internally equitable and externally competitive; and

3. Performance metrics should be directly linked to profitability and shareholder value creation of the Company.

Executive Compensation Program as Administered in 2002

Generally speaking, in 2002, the Compensation Committee established competitive total compensation opportunities for the CEO and other executive officers that are targeted to the median of a group of 22 specialty chemical companies (the “comparator group”) that are similar to Arch in terms of size and scope of operations. An independent consultant provides the Compensation Committee with an annual assessment of Arch’s relative position within this comparator group with respect to operating performance and total compensation including each of the following components:

• Annual Base Salary

• Annual Incentive Bonus

• Long Term Incentive Award

Together, these three components comprise the total targeted compensation opportunity determined by targeting the median of the group cited above. Once the total targeted compensation opportunity is determined for the CEO and other named executive officers, the Compensation Committee, also with the advice of an independent outside consultant, determines the appropriate mix of these three components, again using the competitive analysis. With the focus on creating alignment between the compensation program and shareholders’ interest, the emphasis of the Company’s executive compensation is on variable compensation that is at risk for performance.

The objectives of the Company’s executive compensation policies are to:

• Unite the Company’s management as a team.

• Reward enhancement of earnings per share (“EPS”) growth and shareholder value.

• Stress at risk variable pay programs with an emphasis on the long-term financial performance.

• Insure “line of sight” strategic objectives are clearly articulated and their achievement appropriately rewarded.

Under Section 162(m) of the Internal Revenue Code, publicly traded corporations generally are not permitted to deduct compensation in excess of $1 million paid to certain top executives unless the compensation qualifies as “performance-based compensation.” The Company will weigh the benefits of compliance with Section 162(m) against the potential burdens, and reserves the right to pay compensation that may not be fully deductible if it determines, in good faith, that it is in the Company’s best interest to do so.

Annual Base Salary

As it has annually, the Compensation Committee reviewed the base salaries of each of the senior executives in relation to comparable jobs in the comparator group. It approved salary adjustments for these individuals effective January 1, 2002, based on their individual performance and their salaries relative to the market. The salary increases effective January 1, 2002 represented the first increase in 24 months for Messrs. Campbell, Craney, Massimo and Ms. O’Connor.

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Annual Incentive Bonus

Incentive bonuses for Arch named executive officers were determined by a comparison of pre-established 2002 targets for EPS, cash flow and, if applicable, business unit profitability and business unit cash flow with actual 2002 financial performance for these measures. The financial measures were weighted 70% with the remaining 30% applied to achieving personal strategic objectives. In addition, change in the price of the Company’s common stock from January 24, 2002 to December 31, 2002 was also set as a measure for 2002. As a result of the decrease in the stock price during 2002, the bonuses paid to the named executive officers, including the CEO, were reduced.

The CEO’s bonus was determined under the Senior Management Incentive Compensation Plan in accordance with the specified financial performance metrics. By a comparison of pre-established EPS and cash flow targets with actual 2002 performance, reduced by the decrease in the price of the common stock in 2002, the Compensation Committee determined the CEO’s bonus under this plan was $518,659, which represented a 137% payout. In addition, the CEO was awarded a bonus of $231,341 as a result of his accomplishment of strategic and personal objectives that were established earlier in the year. These objectives included health, safety and environmental performance, improvements in business processes, and human resource development, among others.

Long Term Incentive Award

As indicated earlier, the Compensation Committee, with the advice of its independent consultant, established target values for all three components of compensation, including the Long Term Incentive Plan award. It granted options, phantom share units and restricted stock units to the named executives on January 24, 2002. With a view consistent with aligning Arch’s senior executives with the interests of shareholders, the award of phantom shares was designed to recognize and reward return on equity (ROE) over a three-year performance period ending December 31, 2004. The phantom share units are earned at the end of the three-year performance cycle provided the ROE target is achieved during that period. There is an opportunity for accelerated payout of the phantom share units if the ROE target is met or exceeded by December 31, 2003. If the ROE target is not achieved, 50% of the phantom share units will be forfeited and 50% of the phantom share units will be paid out in cash as soon as administratively feasible at the end of calendar year 2007 if the executive is still employed at the Company (subject to certain departures with the Compensation Committee’s consent). The restricted stock unit grant has a three-year vesting period ending at the close of business January 24, 2005 (subject again to continued employment) and is payable in cash. In 2002, stock options were also awarded that will be of value only through share price appreciation. The stock options were granted at the fair market value of Arch shares on January 24, 2002, became exercisable on January 24, 2003 and have a ten-year term.

H. William Lichtenberger, Chair

Richard E. Cavanagh

Jack D. Kuehler

March 5, 2003

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The following table shows for the Chief Executive Officer and the other four most highly compensated executive officers of Arch (collectively, the “named executive officers”) cash compensation for the fiscal years 2000-2002.

Summary Compensation Table

	Annual Compensation							Long Term Compensation
Name and Principal Position as of December 31, 2002	Year	Salary		Bonus		Other Annual Compen- sation(a)		Awards			Payouts		All Other Compen- sation(c)
								Restricted Stock Awards(b)		Securities Underlying Options	LTIP Payouts
Michael E. Campbell Chairman, President & Chief Executive Officer	2002 2001 2000	$	660,000 600,000 600,000	$	750,000 302,412 150,000	$	46,510 28,449 28,616	$	887,825 0 0	35,000 0 0	$	0 0 0	$	42,736 42,444 41,575
Hayes Anderson Vice President, Human Resources	2002 2001 2000		250,008 210,000 180,000		197,892 31,250 100,000		2,400 0 0		229,790 0 0	5,000 0 0		0 0 0		53,073 69,257 7,361
Paul J. Craney Vice President and General Manager Treatment	2002 2001 2000		280,008 235,008 235,008		168,912 253,488 99,448		4,000 0 0		313,350 0 0	7,000 0 0		0 0 0		13,630 12,581 12,550
Louis S. Massimo Vice President & Chief Financial Officer	2002 2001 2000		340,008 300,000 300,000		280,416 127,639 60,000		6,314 0 0		334,240 0 0	10,000 0 0		0 0 0		15,770 14,870 14,849
Sarah A. O’Connor Vice President, General Counsel & Secretary	2002 2001 2000		275,004 250,008 250,008		210,202 64,579 50,000		2,800 0 0		240,235 0 0	7,000 0 0		0 0 0		10,835 10,193 10,061

(a) For Mr. Campbell, figures include an annual automobile allowance and related tax grossup. For Messrs. Campbell and Massimo, figures also include tax gross-ups paid as a result of imputed income for the use of an outside personal financial advisor. For all the named individuals, 2002 figures include dividend equivalents paid on performance share units held by such individual.

(b) Values shown in the table were determined by multiplying the total number of restricted stock units and performance retention units granted on the date of grant by the closing price of a share of Common Stock on such date. The total number of restricted stock units and performance retention share units outstanding at December 31, 2002 and their corresponding value based on the closing price of a share of Common Stock on such date are: for Mr. Campbell, 42,500 units ($775,625); for Mr. Anderson, 11,000 units ($200,750); for Mr. Craney, 15,000 units ($273,750); for Mr. Massimo, 16,000 units ($292,000); and for Ms. O’Connor, 11,500 units ($209,875). Dividend equivalents are paid in cash on all such units.

(c) Amounts reported in this column for 2002 consist of the following items:

	CEOP Match		Supplemental CEOP(1)		Term Life Insurance(2)		Value of Split-Dollar Life Insurance Premiums(3)
M. E. Campbell	$	3,338	$	16,638	$	3,145	$	19,615
H. Anderson		3,888		3,788		—		2,150
P. J. Craney		5,625		2,950		—		5,055
L. S. Massimo		5,600		4,775		1,370		4,025
S. A. O’Connor		5,625		2,800		—		2,410

(1) The Supplemental CEOP permits participants in the CEOP to make contributions, and the Company to match the same, in amounts permitted by the CEOP but which would otherwise be in excess of those permitted by certain Internal Revenue Service limitations. The 2002 contributions and Company matching amounts made were invested in an Arch phantom stock account under this plan.

(2) Under Arch’s key executive insurance program, executives may elect additional life insurance which provides for monthly payments to be made to the spouse and dependent children of deceased participants.

(3) The amount of the premium shown represents the full dollar amount of the premium the Company paid in 2002 for the whole life insurance and to fund the retiree death benefit.

The figure for Mr. Anderson also includes relocation payments in the amount of $43,247 in 2002 and $60,939 in 2001 made under a relocation policy in connection with Mr. Anderson’s relocation from Arizona to the Company’s Connecticut headquarters.

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How many 1999 Long Term Incentive Plan (“Long Term Plan”) awards were granted in 2002 as part of 2002 compensation to the individuals named in the Summary Compensation Table?

The following table sets forth as to the individuals named in the summary compensation table on page 14, information relating to options granted by the Company from January 1, 2002 through December 31, 2002.

Option Grants of Common Stock in Last Fiscal Year Made Under the 1999 Long Term Incentive Plan

	Individual Grants(a)
Name	Number of Securities Underlying Options Granted(a)	% of Total Options Granted to All Employees in Fiscal Year	Exercise Price(b)		Expiration Date	Potential Realizable Value at Assumed Rates of Stock Price Appreciation for Option Term(c)(d)
						0%	5%		10%
M.E. Campbell	35,000	26.1	$	20.85	01/23/12	0	$	458,936	$	1,163,034
H. Anderson	5,000	3.7	$	20.85	01/23/12	0	$	65,562	$	166,148
P. J. Craney	7,000	5.2	$	20.85	01/23/12	0	$	91,787	$	232,607
L.S. Massimo	10,000	7.5	$	20.85	01/23/12	0	$	131,125	$	332,295
S.A. O’Connor	7,000	5.2	$	20.85	01/23/12	0	$	91,787	$	232,607
All Optionees	134,000	100.0	$	20.86	(e)	0	$	1,757,911	$	4,454,893
All Stockholders	N/A	N/A		N/A	N/A	0	$	293,871,521	$	744,728,132

(a) Options were awarded to the named officers on January 24, 2002. This grant became exercisable on January 24, 2003. Upon a Change in Control (as defined in the Long Term Plan), all options become exercisable. Options may become exercisable on earlier dates in the event of death, disability, retirement or termination of employment with the Company’s consent.

(b) The exercise price of the options reflects the fair market value of Common Stock on the date of grant. For all optionees, the exercise price is expressed as a weighted average.

(c) No gain to the optionees is possible without appreciation in the stock price which will benefit all shareholders commensurately. The dollar amounts under these columns are the result of calculations at the 5% and 10% assumption rates set by the SEC and therefore are not intended to forecast possible future appreciation of Arch’s stock price or to establish any present value of the options.

(d) Realizable values are computed based on the number of options which were granted in 2002 and which were still outstanding at year-end.

(e) Options granted during 2002 have various expiration dates of either January 23, 2012 or July 17, 2012.

In addition, performance share unit, performance retention share unit and restricted stock unit awards were granted under the Long Term Plan to key employees selected by the Compensation Committee during 2002. The performance retention share unit and restrictive stock unit awards are shown in the summary compensation table on page 14.

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The following table sets forth as to the individuals named in the summary compensation table on page 14, information relating to the performance share units granted by the Company from January 1, 2002 through December 31, 2002.

1999 Long Term Incentive Plan—Awards In Last Fiscal Year

Name	Number of Performance Share Units (#)(a)	Performance Or Other Period Until Maturation Or Payout	Estimated Future Payouts Under Non-Stock Price-Based Plans
			Threshold (#)	Target (#)	Maximum (#)
M.E. Campbell	22,500	3 yrs.	22,500	22,500	22,500
H. Anderson	3,000	3 yrs.	3,000	3,000	3,000
P.J. Craney	5,000	3 yrs.	5,000	5,000	5,000
L.S. Massimo	6,000	3 yrs.	6,000	6,000	6,000
S.A. O’Connor	3,500	3 yrs.	3,500	3,500	3,500

(a) Each performance share unit consists of a phantom share of Common Stock that is payable in cash if the performance goal is achieved. Performance share units granted have a three-year performance cycle ending December 31, 2004. The Compensation Committee has established a payment schedule if the Company achieves a certain return on equity (“ROE”) target at the end of 2003 or 2004. If the ROE goal is achieved, 100% of the units will be paid out in cash at the then current market value of the Common Stock. If the performance goal is not achieved by the end of 2004, the units will be forfeited. In certain circumstances, such as retirement and disability, units may be prorated and paid out to the extent earned. In the event of a change in control, units are paid out. Dividend equivalents on the units are paid in cash to the award recipient periodically during the time the units are outstanding.

How many Arch stock options were exercised in 2002 by the individuals named in the Summary Compensation Table and what is the value of the unexercised ones?

The following table sets forth as to the individuals named in the summary compensation table on page 14, information regarding options exercised during 2002 and the value of in-the-money outstanding options at the end of 2002.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values

Name	Shares Acquired on Exercise	Value Realized		Number of Securities Underlying Unexercised Options at 12/31/02		Aggregate Value of Unexercised, In-the-Money Options at 12/31/02(a)
				Exercisable	Unexercisable	Exercisable		Unexercisable
M.E. Campbell	2,432	$	8,084	279,706	35,000	$	7,062	$	—
H. Anderson	0		0	13,305	5,000		—		—
P.J. Craney	455		1,119	44,578	7,000		—		—
L.S. Massimo	0		—	67,358	10,000		—		—
S.A. O’Connor	0		—	40,500	7,000		—		—

(a) Value was computed as the difference between the exercise price and the $18.25 per share closing price of Arch Common Stock on December 31, 2002, as reported on the consolidated transaction reporting system relating to New York Stock Exchange issues.

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Comparison of 47 Month Cumulative Total Return Among Arch Chemicals, Inc.,

the S & P 500 Index and the S & P Chemicals (Specialty) Index

The graph below compares the cumulative total shareholder return of the Common Stock to the Standard & Poor’s 500 Index and to the Standard & Poor’s Chemicals (Specialty) Index for the period from February 9, 1999, the day shares of Common Stock began “regular way” trading on the New York Stock Exchange, to December 31, 2002, the last trading day of the Company’s fiscal year. The graph assumes that the value of the investment in the Common Stock and each index was $100 at February 9, 1999 and that all dividends were reinvested.

Do the named executive officers have employment or change-in-control agreements?

Each of the executive officers named in the summary compensation table has an Executive Agreement with the Company which provides, among other things, that in the event of a covered termination of employment (which could include, among other things, termination of employment by the Company (other than for cause) and termination at the election of the individual to leave the Company under certain circumstances), the individual will receive a lump sum severance payment from the Company equal to 12 months’ base pay plus the greater of (a) the average incentive compensation award paid by the Company during the three years preceding the termination or (b) the then standard annual incentive compensation award, less any amounts payable under existing severance or disability plans of the Company. In the event that a “Change in Control” of the Company occurs, and there is a covered termination, the individual will receive (i) three times the severance payment and (ii) another payment equal to three times the higher of the individual’s long term incentive target at the time of termination or immediately prior to the Change in Control. Pension credit and insurance coverage would be afforded for the period reflected in the severance payment, and in certain cases, insurance coverage will be extended beyond such period. The agreements also provide for certain outplacement services. A “Change in Control” would occur if the Company ceases to be publicly owned; 20% or more of its voting stock is acquired by others (other than the Company, a Subsidiary or a Company employee benefit plan); the incumbent Directors and their designated successors cease over a two-year period to constitute a majority of the Board; all or substantially all of the Company’s business is disposed of in a transaction in which the Company is not the surviving corporation or the Company combines with another company and is the surviving corporation (unless

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the Company’s shareholders following the transaction own more than 50% of the voting stock or other ownership interest of the surviving entity or combined company); or the shareholders of the Company approve a sale of all or substantially all the Company’s assets or a liquidation or dissolution of the Company. Each agreement provides that the individual agrees to remain in the Company’s employ for six months after a “Potential Change in Control” of the Company has occurred. The agreements provide that payments made thereunder or under any change in control provision of the Company’s compensation or benefit plan which are subject to “excess parachute payment” tax will be increased so that the individual will receive a net payment equal to that which would have been received if such tax did not apply. Certain of the Company’s benefit and compensation plans also contain “change-in-control” provisions.

What are the retirement income benefits provided to the named executive officers?

The Company has a tax-qualified, defined benefit pension plan for the Company’s U.S.-based employees (“Tax Qualified Pension Plan”) that provides benefits based on service with the Company and with Olin Corporation (“Olin”) for the period prior to the spinoff of the Company from Olin. The Company became liable for the payment of all pension plan benefits accrued by Company employees prior to and following such spinoff who ceased to be Company employees after the spinoff. Olin transferred assets to the Company’s pension plan and the amount of the assets were sufficient to comply with Section 414(l) of the Internal Revenue Code of 1986, as amended.

The Tax Qualified Pension Plan, together with a supplementary nonqualified plan (collectively, the “Company Pension Plan”), provide for fixed benefits upon retirement. The normal retirement age is 65, but early retirement is available after attainment of age 55 with at least 10 years of service at a reduced percentage of the normal retirement allowance (100% is payable if early retirement is at age 62 or older). Directors who are not also employees of the Company are not eligible to participate in the Company Pension Plan. The Tax Qualified Pension Plan is a tax-qualified plan, and benefits are payable only with respect to compensation that is not deferred under a nonqualified plan and that does not exceed certain annual IRS imposed limits. Under the supplementary plan mentioned above, the Company pays a supplemental pension, based on the formula described below, on compensation deferred to nonqualified plans (including deferred incentive compensation). Also under the supplementary plan, the Company will pay employees affected by the limitations imposed by the Internal Revenue Code on qualified plans a supplemental pension in an annual amount equal to the reduction in pensions resulting from such limitations.

“Compensation” for purposes of the Company Pension Plan represents average cash compensation per year (salary and bonus shown in the summary compensation table on page 14), including deferred compensation, received for the highest three years during the ten years up to and including the year in which an employee retires, including compensation with Olin. The normal retirement allowance is 1.5% of “Compensation” as so defined, multiplied by the number of years of benefit service, reduced by an amount of the employee’s primary Social Security benefit not to exceed 50% of such Social Security benefit. Years of benefit service shall also include benefit service with Olin.

Under the Company’s Senior Executive Pension Plan (the “Senior Plan”), which is a second nonqualified pension plan for certain U.S. senior executives, the Company pays retirement benefits to such executives upon their retirement after age 55, which benefits are reduced if retirement is prior to age 62. Under the Senior Plan, the maximum benefit will be 50% of “Compensation” (as defined above), reduced by payments from the Company Pension Plan, any other Olin or Company pension, pension benefits from other employers, and certain Social Security benefits. Subject to the above limitations, benefits under the Senior Plan will accrue at the rate of 3% for each year of service that a senior executive is eligible to participate in the Senior Plan. In all cases, benefits payable under the Senior Plan are reduced by (i) annual retirement benefits payable under the Company Pension Plan, (ii) all qualified and nonqualified deferred compensation plans of previous and subsequent employers and (iii) 50% of the employee’s primary Social Security benefit. The Senior Plan also provides benefits to the executive’s surviving spouse generally equal to 50% of the executive’s benefits. The

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Compensation Committee may remove a participant from the Senior Plan for cause as defined in such plan, and no payments will be made if the participant voluntarily terminates employment without such committee’s consent.

The Tax Qualified Pension Plan provides that if, within three years following a “Change in Control” of the Company, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger or other event thereafter takes place, plan benefits would automatically be increased for affected non-collectively bargained participants (and retired participants) to absorb any plan surplus.

Each of the Senior Plan and the supplementary plan mentioned above provides that in the event of a “Change in Control,” the Company will pay each participant a lump-sum amount sufficient to purchase an annuity which (together with any monthly payment provided under trust arrangements or other annuities established or purchased by the Company to make payments under such plan) will provide the participant with the same monthly after-tax benefit as the participant would have received under the plan, based on benefits accrued thereunder to the date of the “Change in Control.” The Executive Agreements described above provide that an executive officer who is less than age 55 at the time of a “Change in Control” will, for purposes of calculating the above lump-sum payment under the Senior Plan, be treated as if he had retired at age 55, with the lump-sum payment being calculated on the basis of service to the date of the “Change in Control.”

The following table shows the maximum combined amounts payable annually on normal retirement under the Company Pension Plan and Senior Plan. Such amounts will be reduced by Social Security benefits and the other offsets described above.

Pension Plan Table

	Years of Service
Remuneration	5 Years		10 Years		15 Years		20 Years		25 Years		30 Years		35 Years		40 Years
$    200,000	$	30,000	$	60,000	$	90,000	$	100,000	$	100,000	$	100,000	$	105,000	$	120,000
300,000		45,000		90,000		135,000		150,000		150,000		150,000		157,500		180,000
400,000		60,000		120,000		180,000		200,000		200,000		200,000		210,000		240,000
500,000		75,000		150,000		225,000		250,000		250,000		250,000		262,500		300,000
600,000		90,000		180,000		270,000		300,000		300,000		300,000		315,000		360,000
700,000		105,000		210,000		315,000		350,000		350,000		350,000		367,500		420,000
800,000		120,000		240,000		360,000		400,000		400,000		400,000		420,000		480,000
900,000		135,000		270,000		405,000		450,000		450,000		450,000		472,500		540,000
1,000,000		150,000		300,000		450,000		500,000		500,000		500,000		525,000		600,000
1,100,000		165,000		330,000		495,000		550,000		550,000		550,000		577,500		660,000
1,200,000		180,000		360,000		540,000		600,000		600,000		600,000		630,000		720,000

Credited years of service for the executive officers named in the summary compensation table on page 14 as of December 31, 2002 are as follows: Mr. Anderson, 20.6 years (0 years under the Senior Plan); Mr. Campbell, 24.6 years (15.3 years under the Senior Plan); Mr. Craney, 32.6 years (3.3 years under the Senior Plan); Mr. Massimo, 8.1 years (6.0 years under the Senior Plan) and Ms. O’Connor, 13.3 years (3.9 years under the Senior Plan).

Does the Company have a compensation deferral program?

Under the Company’s compensation plans and arrangements, all participants therein, including directors, may defer payment of salaries, director compensation and incentive compensation to cash and Arch phantom stock accounts.

19

ITEM 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board has appointed the firm of KPMG LLP (“KPMG”) as independent auditors of the Company for the year 2003. The appointment of this firm was recommended to the Board by its Audit Committee.

Why are you asking for the shareholders to ratify the auditors?

The submission of this matter to shareholders at the Annual Meeting is not required by law or by the Bylaws. The Board is, nevertheless, submitting it to the shareholders to ascertain their views. If this appointment is not ratified at the Annual Meeting, the Board intends to reconsider its appointment of KPMG as independent auditors.

A representative of KPMG is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so, and to respond to appropriate questions.

What were 2002 KPMG audit fees?

Audit Fees

Fees for the fiscal year 2002 audit, including review of SEC quarterly and annual report filings, were $957,000.

Financial Information Systems Design and Implementation Fees

No fees were incurred with KPMG for financial information systems design and implementation in 2002.

All Other Fees

Aggregate fees for all other services rendered by KPMG for the 2002 fiscal year were $783,000. These fees included tax services, accounting advice, customs fees, certain statutory audits and other consulting and due diligence assistance.

The Audit Committee has considered whether the provision of services described under All Other Fees is compatible with maintaining KPMG’s independence.

What vote is required to ratify the auditors?

The ratification of the appointment of independent auditors for 2003 requires that the votes cast in favor of the ratification exceed the votes cast opposing such ratification. Abstentions and Broker Shares that are not voted will not be included in determining the number of votes cast.

The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP as the Company’s independent auditors for 2003.

20

MISCELLANEOUS

Who will pay for this solicitation of proxies?

The Company will pay the entire expense of this solicitation of proxies.

Georgeson Shareholder Communications Inc., New York, New York, will solicit proxies by personal interview, mail, telephone and telegram, and will request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of the Common Stock held of record by such persons. The Company will pay Georgeson Shareholder Communications Inc. a fee of $9,500 covering its services and will reimburse Georgeson Shareholder Communications Inc. for payments made to brokers and other nominees for their expenses in forwarding soliciting material. In addition, proxies may be solicited by personal interview, telephone, mail and telegram by directors, officers and employees of the Company.

When must a shareholder submit a proposal for the next annual meeting?

Shareholders who intend to present proposals for consideration at the 2004 Annual Meeting of Shareholders and who wish to have their proposals included in the Company’s proxy statement and proxy card for that meeting must be certain that their proposals are received by the Company at its principal executive offices on or before November 14, 2003. Proposals should be sent to the Corporate Secretary, Arch Chemicals, Inc., 501 Merritt 7, Norwalk, Connecticut 06851. All proposals must also comply with the applicable requirements of the Federal securities laws in order to be included in the Company’s proxy statement and proxy card for the 2004 Annual Meeting. In addition, in order for any shareholder proposal to be presented during next year’s annual meeting, written notice must be received by the Company at its headquarters on or after November 14, 2003 and on or before December 14, 2003 as provided in the Company’s Bylaws, and shall contain such information as required under such Bylaws. You may contact the Company’s Corporate Secretary at the address mentioned above for a copy of the relevant Bylaw provisions regarding the requirements for making shareholder proposals, including nominations for directors.

By order of the Board of Directors,

SARAH A. O’CONNOR

          Secretary

Dated: March 13, 2003

21

PRINTED ON RECYCLED PAPER

Three Alternate Ways to Vote Your Proxy VOTE BY TELEPHONE OR INTERNET 24 Hours a Day - 7 Days a Week Save Your Company Money - It’s Fast and Convenient

TELEPHONE 866-214-3767   ŸUse any touch-tone telephone. ŸHave your Proxy Form in hand. ŸEnter the Control Number located in the box below. ŸFollow the simple recorded instructions. OR


INTERNET https://www.proxyvotenow.com/arj ŸGo to the website address listed above. ŸHave your Proxy Form in hand. ŸEnter the Control Number located in the box below. ŸFollow the simple instructions. OR

MAIL   ŸMark, sign and date your Proxy Card. ŸDetach card from Proxy Form. ŸReturn the card in the postage-paid envelope provided.

Your telephone or internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned the proxy card.If you have submitted your proxy by telephone or the Internet there is no need for you to mail back your proxy.

CONTROL NUMBER FOR

TELEPHONE OR INTERNET VOTING

866-214-3767 CALL TOLL-FREE TO VOTE Internet or Telephone vote before 11:59 p.m., New York time, on April 23, 2003; however for Arch CEOP and Olin CEOP participants, the deadline for Internet and Telephone voting of shares held in those plans is 9:00 a.m., New York time, on April 23, 2003.

^Ú  DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET  ^Ú

Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. X Votes must be indicated (x) in Black or Blue ink.

The Board of Directors recommends a vote for all proposals below:

1. Election of Directors					If you plan to attend the meeting, please mark this box.
FORthe nominee listed below	WITHHOLD AUTHORITYto vote for the nominee listed below				To change your address, please mark this box and provide new address in comments on back. To include any comments, please mark this box. If you agree to access future Proxy Statements and Annual Reports electronically, please mark this box.
Nominee: 01- John W. Johnstone, Jr.
		FOR	AGAINST	ABSTAIN
2. Ratification of the appointment of KPMG LLP as Independent auditors

S C A N  L I N E
		Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
	Date	Share Owner sign here	-	Co-Owner sign here

ADMISSION TICKET

It is important that your shares are represented at this meeting, whether or not you attend the meeting in person. To make sure your shares are represented, we urge you to complete and mail the proxy card on the reverse side or to use our telephone or 

Internet voting system.

(Bring this admission ticket with you if attending the meeting)

FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS, SEE REVERSE SIDE

Directions to The Prudential Center for Learning and Innovation

via the New England Thruway/Connecticut Turnpike or Merritt Parkway

New England Thruway/Interstate 95/

Connecticut Turnpike – Exit 13

From New York

1. Turn right onto the Boston Post Road/Connecticut Avenue (U.S.1).

2. Proceed .3 mile to Richards Avenue.

3. At the traffic light turn left onto Richards Avenue and continue 1.5 miles to Fillow Street.

4. At stop sign turn left onto Fillow Street, driving .2 mile to stop sign at Weed Avenue.

5. Turn right onto Weed Avenue, continue .3 mile to entrance of The Prudential Center for Learning and Innovation.

6. The entrance is on the right side of Weed Avenue.

From New Haven – Exit 13

1. Turn right onto the Boston Post Road/Connecticut Avenue (U.S.1).

2. Proceed .5 mile to Richards Avenue.

3. Follow directions 3-6 above.

Hutchinson River Parkway/

Merritt Parkway – Exit 38

From New York

1. Turn right onto New Canaan Avenue/Route 123 and almost immediately, at traffic light turn left onto Nursery Street.

2. Continue on Nursery Street for .8 mile, bearing right, until it ends at Marvin Ridge Road.

3. Turn left onto Marvin Ridge Road, which becomes Weed Avenue.

4. Drive for .7 mile to the entrance of the Prudential Center for Learning and Innovation.

5. The entrance is on the left side of Weed Avenue.

From New Haven – Exit 38

1. Turn right onto New Canaan Avenue/Route 123.

2. Proceed .2 mile to traffic light and take right onto Nursery Street.

3. Follow directions 2-5 above.

Arch Chemicals, Inc.

This Proxy is Solicited on Behalf of the Board of Directors

of Arch Chemicals, Inc.

The undersigned, having received the Notice of Annual Meeting and Proxy Statement, hereby (i) appoints John P. Schaefer, Richard E. Cavanagh and Michael O. Magdol, and each of them, proxies with full power of substitution, for and in the name of the undersigned, to vote all shares of Common Stock of Arch Chemicals, Inc. owned of record by the undersigned, and (ii) directs JPMorgan Chase Bank, Trustee under the Olin Corporation Contributing Employee Ownership Plan and Trustee under the Arch Chemicals, Inc. Contributing Employee Ownership Plan (such plans collectively referred to as the “CEOP”) to vote in person or by proxy all shares of Common Stock of Arch Chemicals, Inc. allocated to any accounts of the undersigned under such Plans, and which the undersigned is entitled to vote, in each case of clause (i) and (ii), on all matters which may come before the 2003 Annual Meeting of Shareholders to be held at The Prudential Center for Learning and Innovation, 32 Weed Avenue, Norwalk, Connecticut, on April 24, 2003, at 10:15 a.m., local time, and any adjournments or postponements thereof. The proxies will vote using the directions on the reverse side of this card.If no direction is provided, this proxy will be voted as recommended by the Board of Directors.The proxies, in their discretion, are further authorized to vote on other matters which may properly come before the 2003 Annual Meeting of Shareholders and any adjournments or postponements thereof.

(Continued, and to be signed and dated on the reverse side.)

Address Change	Arch Chemicals, Inc.
Comments	P.O. BOX 11008
	NEW YORK, N.Y. 10203-0008