SCHEDULE 14A INFORMATION
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Securities Exchange Act of 1934
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NCH Corporation
(Name of Registrant as Specified in Its Charter)
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[LOGO]
2727 Chemsearch Boulevard
Irving, Texas 75062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 26, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NCH
Corporation will be held in the Gourmet Room II of the Crescent Club, 17th
Floor, 200 Crescent Court (at the corner of Pearl and Cedar Springs Streets),
Dallas, Texas, on Thursday, the 26th day of July, 2001, at 10:00 a.m., Central
Daylight Time, for the following purposes:
1. To elect three Class I directors of NCH to hold office until the next
annual election of Class I directors by stockholders or until their respective
successors are duly elected and qualified.
2. To ratify the appointment of KPMG LLP, Certified Public Accountants, to
be the independent auditors of NCH for the fiscal year ending April 30, 2002.
3. To transact such other business as may properly come before the
meeting or any adjournments of the meeting.
The Board of Directors has fixed the close of business on Friday, June 1,
2001, as the record date for determining stockholders entitled to vote at and to
receive notice of the annual meeting.
Whether or not you expect to attend the meeting in person, you are urged
to complete, sign, and date the enclosed form of proxy and return it promptly so
that your shares of stock may be represented and voted at the meeting. If you
are present at the meeting, your proxy will be returned to you if you so
request.
Joe Cleveland,
Secretary
Dated: June 27, 2001
1
[LOGO]
2727 Chemsearch Boulevard
Irving, Texas 75062
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on July 26, 2001
Dated: June 27, 2001
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the management of, and on behalf
of, NCH Corporation, a Delaware corporation ("NCH"), to be voted at the Annual
Meeting of the Stockholders of NCH, to be held Thursday, July 26, 2001 (the
"Meeting"), at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting. When properly executed proxies in the
accompanying form are received, the shares represented thereby will be voted at
the Meeting in accordance with the directions noted on the proxies; if no
direction is indicated, then such shares will be voted for the election of the
directors and in favor of the second proposal set forth in the Notice of Annual
Meeting attached to this Proxy Statement.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the Meeting: (1)
matters that NCH's Board of Directors does not know a reasonable time before the
Meeting are to be presented at the Meeting; and (2) matters incidental to the
conduct of the Meeting. Management does not intend to present any business for a
vote at the Meeting other than the matters set forth in the accompanying Notice
of Annual Meeting, and it has no information that others will do so. If other
matters requiring the vote of the stockholders properly come before the Meeting,
then, subject to the limitations set forth in the applicable regulations under
the Securities Exchange Act of 1934, as amended, it is the intention of the
persons named in the attached form of proxy to vote the proxies held by them in
accordance with their judgment on such matters.
Any stockholder giving a proxy has the power to revoke that proxy at any
time before it is voted. A proxy may be revoked by filing with the Secretary of
NCH either a written revocation or a duly executed proxy bearing a date
subsequent to the date of the proxy being revoked. Any stockholder may attend
the Meeting and vote in person, whether or not such stockholder has previously
submitted a proxy.
In addition to soliciting proxies by mail, officers and regular employees
of NCH may solicit the return of proxies. Brokerage houses and other custodians,
nominees, and fiduciaries may be requested to forward solicitation material to
the beneficial owners of stock.
This Proxy Statement and the accompanying proxy are first being sent or
given to NCH's stockholders on or about June 27, 2001.
NCH will bear the cost of preparing, printing, assembling, and mailing the
Notice of Annual Meeting, this Proxy Statement, the enclosed proxy, and any
additional material, as well as the cost of forwarding solicitation material to
the beneficial owners of stock.
VOTING RIGHTS
The record date for determining stockholders entitled to notice of and to
vote at the Meeting is the close of business on June 1, 2001. On that date there
were 5,307,330 shares issued and outstanding of NCH's $1.00 par value common
stock ("Common Stock"), which is NCH's only class of voting securities
outstanding. Each share of NCH's Common Stock is entitled to one vote in the
matter of election of directors and in any other matter that may be acted upon
at the Meeting. Neither NCH's certificate of incorporation nor its bylaws
permits cumulative voting. The presence, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum at the Meeting, but in no event will
a quorum consist of less than one-third of the shares entitled to vote at the
Meeting. The affirmative vote of a plurality of the shares of Common Stock
represented at the Meeting and entitled to vote is required to elect directors.
All other matters to be voted on will be decided by a majority of the shares of
Common Stock represented at the meeting and entitled to vote. Abstentions and
broker nonvotes are each included in determining the number of shares present at
the meeting for purposes of determining a quorum. Abstentions and broker
nonvotes have no effect on determining plurality, except to the extent that they
affect the total votes received by any particular candidate.
ELECTION OF DIRECTORS
NCH's Board consists of ten members, divided into three classes: Class I
(three directors), Class II (three directors), and Class III (four directors).
Only the Class I positions are due for nomination and election at the Meeting.
The Class II and Class III positions will be due for nomination and election at
the annual meetings of stockholders to be held in 2002 and 2003, respectively.
The intention of the persons named in the enclosed proxy, unless such
proxy specifies otherwise, is to vote the shares represented by such proxy
for the election of Rawles Fulgham, Robert M. Levy, and Lester A. Levy, Jr.
as the Class I directors. Rawles Fulgham, Robert M. Levy, and Lester A.
Levy, Jr. have been nominated to stand for election by the Board of Directors
until their terms expire or until their respective successors are duly
elected and qualified. All of the aforementioned nominees are presently
directors of NCH.
Walter M. Levy and Lester A. Levy, Jr. are brothers. Robert M. Levy
and John I. Levy are brothers and Irvin L. Levy is their father. Walter M.
Levy and Lester A. Levy, Jr. are first cousins of Robert M. Levy and John I.
Levy. Irvin L. Levy is an uncle of Walter M. Levy and Lester A. Levy, Jr.
Mr. Blumenthal is a first cousin of Irvin L. Levy. Certain information
regarding each nominee and director is set forth below. The number of shares
beneficially owned by each nominee is listed under "Security Ownership of
Principal Stockholders and Management."
Class I Directors and Nominees
Rawles Fulgham, 73, has been a director of NCH since 1981. Mr. Fulgham
was an executive director of Merrill Lynch Private Capital Inc. from 1982
until 1989, and served as a Senior Advisor to Merrill Lynch & Co., Inc. from
1989 until 1998. He was also a director, the Chairman of the Board and Chief
Executive Officer of Global Industrial Technologies, Inc., located in Dallas,
Texas, until it was acquired by RHI-AG, located in Vienna, Austria, on
December 31, 1999. Mr. Fulgham also served on the Board of Directors of
BancTec, Inc. and currently serves on the Audit and Advisory Committees of
Dorchester Hugoton, Ltd. From 1975 through October 1998, he served on the
Board of Directors of Dresser Industries, Inc. until it was merged with
Halliburton Company. Mr. Fulgham is a member of the Audit Committee and the
Compensation Committee.
Robert M. Levy, 42, has been a director of NCH since July 2000. He joined
NCH in 1985 after attending business school at the University of Texas at
Austin. His initial responsibility was in domestic chemical marketing, after
which he served in management positions with increasing responsibility in Europe
and the United States. Mr. Levy is an Executive Vice President of NCH and an
officer and/or director of several of NCH's subsidiaries. He is a member of the
Executive Committee.
Lester A. Levy, Jr., 40, has been a director of NCH since July 2000.
He joined NCH in 1985 after attending business school at Northwestern
University. His initial responsibility was in domestic chemical sales, after
which he served in management positions with increasing responsibility in
Europe and the United States. Mr. Levy is an Executive Vice President of NCH
and an officer and/or director of several of NCH's subsidiaries. He is a
member of the Executive Committee.
If any of the above nominees for Class I directors should become
unavailable to serve as a director, then the shares represented by proxy will be
voted for such substitute nominees as may be nominated by the Board of
Directors. NCH has no reason to believe that any of the above nominees are, or
will be, unavailable to serve as a director.
Class II Directors
Robert L. Blumenthal, 70, has engaged in the practice of law since 1957.
He is a partner at the Dallas law firm of Carrington, Coleman, Sloman &
Blumenthal, L.L.P., which serves as NCH's legal counsel.
Thomas B. Walker, Jr., 77, has been a director of NCH since 1987. Mr.
Walker was a general partner of Goldman, Sachs & Co. from 1968 until 1984 and
a limited partner of The Goldman Sachs Group, L.P. ("Goldman Sachs") from
1984 through May 1999, when he assumed his current position as a Senior
Director to Goldman Sachs. Mr. Walker is also a director of Riviana Foods,
Inc. He is a member of the Audit Committee and the Compensation Committee.
John I. Levy, 39, has been a director of NCH since July 2000. He joined
NCH in 1985 after attending business school at Southern Methodist University.
His initial responsibility was in corporate planning, after which he served in
management positions with increasing responsibility in Europe and the United
States. Mr. Levy is an Executive Vice President of NCH and an officer and/or
director of several of NCH's subsidiaries. He is a member of the Executive
Committee.
Class III Directors
Jerrold M. Trim, 64, has been a director of NCH since 1980 and is the
President and majority shareholder of Windsor Association, Inc., which is
engaged primarily in investment consulting services. He is a member of the Audit
Committee and the Compensation Committee.
Irvin L. Levy, 72, has been a director and an officer of NCH since 1950,
and has served as NCH's President since 1965. He is either president or a vice
president of substantially all of NCH's subsidiaries. Mr. Levy is a member of
the Stock Option Committee and the Executive Committee. Mr. Levy also serves as
Chairman of the Board of Directors of NCH.
Walter M. Levy, 46, has been a director of NCH since July 2000. He joined
NCH in 1980 after attending business school at the University of Virginia. His
initial responsibility was in field sales, after which he served in management
positions with increasing responsibility in Europe, Asia and the United States.
Mr. Levy is an Executive Vice President of NCH and an officer and/or director of
several of NCH's subsidiaries. He is a member of the Executive Committee.
Ronald G. Steinhart, 61, has been a director of NCH since July 2000. He
has held several executive level positions with various business organizations,
including Interfirst Corporation, Team Bancshares, Inc. and Bank One
Corporation. From 1995 through 1996, he served as Chairman and Chief Executive
Officer of Bank One, Texas. In December 1996, he was elected Chairman and Chief
Executive Officer, Commercial Banking Group, of Bank One Corporation, in which
capacity he served until his retirement in January 2000. Mr. Steinhart also
serves as a trustee of Prentiss Properties Trust, a publicly traded real estate
investment trust, and MFS/Sun Life Series Trust, a group of mutual funds. He
also serves on the Board of Managers of Compass Variable Accounts, a group of
mutual funds. Mr. Steinhart is a director of United Auto Group, Inc. and
Carriker Corporation. He is a member of the Audit Committee and the Compensation
Committee.
Meeting Attendance and Committees of the Board
NCH has audit, compensation, and executive committees of the Board,
whose members are noted above. NCH also has a stock option committee, the
members of which are Lester A. Levy, Milton P. Levy, Jr., and Irvin L. Levy.
During the last fiscal year, the Board of Directors met on five occasions,
the Compensation Committee met once, the Audit Committee met once, the
Executive Committee met at least 30 times, and the Stock Option Committee met
once. NCH does not have a standing nominating committee of the Board.
Nominees to the Board are selected by the entire Board.
The Audit Committee of the Board reviews the scope of the independent
auditors' examinations and the scope of activities of NCH's internal auditors.
Additionally, it receives and reviews reports of NCH's independent auditors and
internal auditors. The Audit Committee also meets (without management's
presence, if the Audit Committee so desires) with the independent auditors and
members of the internal auditing staff, receives recommendations or suggestions
for change, and may initiate or supervise any special investigations it may
choose to undertake. See "Audit Committee Report" on page 12.
The Compensation Committee recommends to the Board of Directors the
salaries of the members of the Executive Committee.
The Executive Committee possesses all of the powers of the Board of
Directors between meetings of the Board.
The Stock Option Committee of the Board determines those employees of NCH
and its subsidiaries who will receive stock options and the amount of such
options.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Directors who are not executive officers of NCH receive compensation of
$25,000 per annum and $1,000 for each meeting of the Board of Directors or Board
committee attended. All other directors receive $1,000 for each such meeting
attended. Members of the Stock Option Committee and Executive Committee are not
compensated separately for their services on such committees.
Report on Executive Compensation
Responsibility for Executive Compensation
The Compensation Committee of NCH has the primary responsibility for
recommending to the Board the executive compensation program for the members of
the Executive Committee. The Compensation Committee recommends to the Board
annual base compensation for the members of the Executive Committee and is
responsible for administering and approving incentive compensation for the
members of the Executive Committee. The Executive Committee is responsible for
setting the compensation for all other officers of NCH.
Executive Compensation Strategy
With respect to compensation of all key executives other than those
executives whose compensation is determined by the Compensation Committee, NCH's
strategy is generally as follows:
* Attract and retain key executives by delivering a market
competitive rate of base pay. Market competitive rates of pay
are determined by reviewing compensation data from other
companies that resemble NCH in terms of lines of business,
size, scope, and complexity.
* Provide salary increases to key executives based on their
individual effort and performance. In addition to the
individual's experience, job duties, and performance, annual
increases are influenced by NCH's overall performance.
* Provide annual incentive opportunities based on objectives
that NCH feels are critical to its success during the year.
Target incentive levels are set on an individual basis and
actual awards are made at the Executive Committee's
discretion.
* Provide long-term incentives to key employees so that
employees are focused on activities and decisions that promote
NCH's long-term financial and operational success. To meet
this objective, NCH offers stock options to certain key
employees. Options are generally granted for a period of
five years at a price that is at least equal to the fair
market value of the Common Stock at the time of grant.
Options vest in equal increments over a three-year period
from the time of grant.
Report of the Compensation Committee on Compensation for the Members of the
Executive Committee
As stated above, the Compensation Committee is responsible for
recommending to the Board of Directors the compensation program for the members
of the Executive Committee. NCH's current compensation program for the members
of the Executive Committee consists of base salary determined by the
Compensation Committee and stock option grants determined by the Stock Option
Committee.
The Compensation Committee's determinations for fiscal 2001 regarding the
appropriate level of base salary were guided by the contributions of the
individual members of the Executive Committee, as well as the Compensation
Committee's assessment of the increasingly competitive demand for executive
talent, the Company's overall performance, and the Company's future objectives
and challenges. Although no formula or preset goal was used in setting the base
salary, performance in sales and earnings was considered, in addition to the
foregoing factors. The Compensation Committee also considered the compensation
practices and performance of other companies that resemble NCH in terms of lines
of business, size, scope, and complexity.
Base salary payments for 2001 were made to compensate ongoing performance
throughout the year. The Compensation Committee's decisions concerning the
specific 2001 compensation for individual members of the Executive Committee
were made within this broad framework and in light of each member's level of
responsibility, performance, prior salary and other compensation awards. In all
cases the Compensation Committee's specific decisions involving 2001
compensation were ultimately based upon the Compensation Committee's judgment
about the individual's performance and potential future contributions, and about
whether each particular payment would provide an appropriate reward and
incentive for the executive to sustain and enhance the Company's long term
performance.
On April 28, 1994, the Compensation Committee of the Board of Directors
adopted an incentive bonus plan (the "Bonus Plan"), for the Office of the
Executive Committee, which was approved by the stockholders at the 1994 Annual
Meeting. The Bonus Plan provided a formula for determining the amounts of annual
bonuses to be paid to each member of the Executive Committee. Bonus amounts
depended on the amount by which NCH's net income after taxes, but before accrual
for any bonus under the Bonus Plan, for a particular fiscal year increased over
its net income before accrual for any bonus for the preceding fiscal year. The
Bonus Plan was eliminated effective as of October 30, 2000; therefore, no bonus
was payable for fiscal 2001. Although no bonus plan was in place for fiscal
2001, the Compensation Committee may decide to implement a bonus plan or other
incentive compensation for the Office of the Executive Committee for future
fiscal years.
Conclusion
The Compensation Committee believes that current compensation arrangements
in place at NCH are reasonable and competitive given NCH's size and status and
the current regulatory environment surrounding executive compensation. The base
salary program allows NCH to attract and retain management talent. In addition,
for those employees who are incentive eligible, such systems continue to provide
the necessary link between the attainment of NCH's performance objectives and
the compensation received by executives.
Compensation Committee Stock Option Committee
Rawles Fulgham Irvin L. Levy
Jerrold M. Trim Lester A. Levy
Thomas B. Walker, Jr. Milton P. Levy, Jr.
Ronald Steinhart
Executive Committee
Irvin L. Levy
Lester A. Levy, Jr.
Robert M. Levy
Walter M. Levy
John I. Levy
The report on executive compensation will not be deemed to be incorporated
by reference into any filing by NCH under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that NCH specifically
incorporates the above report by reference.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Irvin L. Levy, Lester A. Levy, Jr., Robert M. Levy, John I. Levy, and
Walter M. Levy are members of the Executive Committee of NCH's Board of
Directors, which committee determines most salaries and promotions with
respect to officers of NCH and its subsidiaries. Irvin L. Levy, Milton P.
Levy, Jr., and Lester A. Levy are members of the Stock Option Committee,
which determines those employees of NCH and its subsidiaries who will receive
stock options and the amount of such options. All of the aforementioned
persons, with the exception of Milton P. Levy, Jr. and Lester A. Levy, are
executive officers and employees of NCH. Milton P. Levy, Jr. and Lester A.
Levy were executive officers and employees of NCH prior to July 27, 2000.
NCH's Board of Directors (with the subject members abstaining)
determines the salaries of the members of the Executive Committee after
recommendation of the Compensation Committee, whose members are Rawles
Fulgham, Jerrold M. Trim, Thomas B. Walker, Jr., and Ronald Steinhart.
Executive Compensation
The following table summarizes the compensation paid to Mr. Irvin L. Levy,
who, as President and Chairman of the Board, acts in a capacity similar to the
chief executive officer of NCH, and to Lester A. Levy, Jr., Robert M. Levy,
Walter M. Levy, and John I. Levy, NCH's four most highly compensated executive
officers other than Irvin L. Levy, for services rendered in their capacities as
executive officers of NCH during the fiscal years ended April 30, 2001, 2000 and
1999.
SUMMARY COMPENSATION TABLE
Name and Fiscal Annual Compensation(1) All Other
Principal Positions Year Salary(2) Bonus Compensation (3)
Irvin L. Levy, President and 2001 $935,328 -- $4,400
Chairman of the Board 2000 916,505 -- 4,200
1999 913,106 -- 4,000
Robert M. Levy (4), 2001 $421,825 -- $3,400
Executive Vice President 2000 -- -- --
1999 -- -- --
Lester A. Levy, Jr. (4), 2001 $422,616 -- $4,400
Executive Vice President 2000 -- -- --
1999 -- -- --
John I. Levy (4), 2001 $424,778 -- $4,400
Executive Vice President 2000 -- -- --
1999 -- -- --
Walter M. Levy (4), 2001 $427,908 -- $4,400
Executive Vice President 2000 -- -- --
1999 -- -- --
- --------------------
(1) Certain of NCH's executive officers receive personal benefits in addition to
annual salary and bonus. The aggregate amounts of the personal benefits,
however, do not exceed the lesser of $50,000 or 10% of the total of the annual
salary and bonus reported for the named executive officer.
(2) Includes compensation for services as a director.
(3) The amounts included in this column were contributed to the accounts of the
executives included in the table under NCH's qualified profit sharing and
savings plan.
(4) Robert M. Levy, Lester A. Levy, Jr., John I. Levy and Walter M. Levy each
became an executive officer of NCH effective May 1, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
-----------------------------------------------------------
Potential Realizable Value
at Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options/ Appreciation for
Underlying SARs Granted to Exercise or Option Term ($) (3)
Options Employees in Base Price Expiration --------------------------
Name Granted (#)(1) Fiscal Year (2) ($/Share) Date 5% 10%
- ------------------ -------------- ---------------- ----------- ---------- ----------- ------------
Irvin L. Levy n/a n/a n/a n/a n/a n/a
Lester A. Levy, Jr. 13,158 8.8 38 12/18/05 48.50 61.20
Robert Levy 13,158 8.8 38 12/18/05 48.50 61.20
John Levy 13,158 8.8 38 12/18/05 48.50 61.20
Walter Levy 13,158 8.8 38 12/18/05 48.50 61.20
- ------------------
(1) These options are first exercisable on 12/18/01.
(2) Based upon a total of 150,000 shares subject to options granted to employees
under NCH's Stock Option Plan.
(3) In accordance with Securities and Exchange Commission Rules, these columns
show gains that could accrue for the respective options, assuming that the
market price of NCH Common Stock appreciates from the date of grant over a
period of 5 years at an annualized rate of 5% and 10%, respectively. If the
stock price does not increase above the exercise price at the time of
exercise, realized value to the named executives from these options will be
zero.
Retirement Agreements
NCH has entered into retirement agreements allowing retirement at any
time after age 59-1/2 with each of Irvin L. Levy, Lester A. Levy, Jr., Robert
M. Levy, Walter M. Levy and John I. Levy that provide for lifetime monthly
payments and guarantee 120 monthly payments beginning at death, retirement,
or disability. Payment under these agreements is $550,000 per year for Irvin
L. Levy and $200,000 per year for each of the other Levys, subject to
adjustment each year for increases in the United States Consumer Price Index
for the preceding year.
FIVE YEAR COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph presents NCH's cumulative stockholder return during
the period beginning April 30, 1996, and ending April 30, 2001. NCH is compared
to the S&P 500 and a peer group consisting of companies that collectively
represent lines of business in which NCH competes. The companies included in the
peer group index are Betz Laboratories, Inc. (Betz), The Dexter Corporation
(Dexter), Ecolab Inc., H.B Fuller Company (Fuller), International Specialty
Products, Inc. (International Specialty), Lawson Products, Inc., Lilly
Industries (Lilly), Lubrizol Corporation, Nalco Chemical Company (Nalco),
National Service Industries, Inc., Petrolite Corporation (Petrolite), Premier
Industrial Corporation (Premier), Quaker Chemical Corporation, Safety-Kleen
Corporation, Snap-On Tools Corporation and Strategic Distribution Inc.
(Strategic Distribution). During fiscal year 1997, Premier was acquired by
another corporation. Since Premier's shareholder return is no longer available,
they were excluded from the peer group for performance after 1996. During fiscal
year 1998, Petrolite was acquired by another corporation, and was excluded from
the peer group for performance after 1997. During fiscal year 1999, Betz was
acquired by another corporation, and was excluded from the peer group for
performance after 1998. During fiscal year 2000, Nalco was acquired by another
corporation, and was excluded from the peer group for performance after 1999.
During fiscal year 2001, Lilly and Dexter were each acquired by another
corporation, and were excluded from the peer group for performance after 2000.
Due to these acquisitions, Fuller, International Specialty, and Strategic
Distribution were added to the peer group. The index that includes Fuller,
International Specialty, and Strategic Distribution is designated below as "New
Peer Group". For comparison purposes, the former index, without these additions,
is included as "Former Peer Group". Each index assumes $100 invested at the
close of trading on April 30, 1996, and is calculated assuming quarterly
reinvestment of dividends and quarterly weighting by market capitalization.
Data for Fiscal Year Ending April 30,
- ------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- ------------------------------------------------------------------------------
NCH Corp 100 113 116 102 84 112
S&P 500 Index 100 125 177 215 237 206
Former Peer Group 100 125 153 150 123 131
New Peer Group 100 124 155 142 114 124
- ------------------------------------------------------------------------------
Data source: S&P Compustat, a division of McGraw-Hill, Inc.
The stock price performance depicted in the graph above is not necessarily
indicative of future price performance. The graph will not be deemed to be
incorporated by reference in any filing by NCH under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that NCH
specifically incorporates the graph by reference.
SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of NCH's Common Stock as of June 1, 2001, by: (i) persons
known to management to beneficially own more than 5% of NCH's Common Stock; (ii)
each director and nominee for director; (iii) NCH's five most highly compensated
executive officers (whose compensation exceeded $100,000 in fiscal 2001); and
(iv) all directors and executive officers of NCH as a group. Except as noted
below, each person included in the table has sole voting and investment power
with respect to the shares that the person beneficially owns.
Name of Amount & Nature
Beneficial Owner of Beneficial Ownership Percent of Class
------------------------- ----------------------- ----------------
Robert L. Blumenthal 2,683 *
Rawles Fulgham (1) 2,000 *
Thomas F. Hetzer 0 -
Irvin L. Levy (2)(3) 1,443,857 27.2%
Lester A. Levy (2)(4) 1,437,362 27.2%
John I. Levy (2)(5) 85,397 1.6%
Lester A. Levy, Jr. (2)(6) 39,044 *
Robert M. Levy (2)(7) 70,160 1.3%
Walter M. Levy (2)(8) 41,331 *
Ronald G. Steinhart 2,500 *
Jerrold M. Trim (9) 0 -
Thomas B. Walker, Jr. 10,000 *
All directors and executive 1,697,035 32.0%
officers as a group (13 people)
Dimensional Fund Advisors, Inc. (10) 337,600 6.4%
- --------------------
* Less than 1% of class.
(1) Of these shares, 700 are held by a Dallas bank in trust for the
retirement plan and benefit of Mr. Fulgham.
(2) The address of Irvin L. Levy, Lester A. Levy, Lester A. Levy,
Jr., Robert M. Levy, Walter M. Levy and John I. Levy is P.O. Box
152170, Irving, Texas 75015. The definition of beneficial
ownership under the rules and regulations of the Securities and
Exchange Commission requires inclusion of the same 29,000 shares
held as cotrustees by Messrs. Irvin and Lester Levy for a family
trust in the totals listed above for each of Messrs. Irvin and
Lester Levy.
(3) Irvin L. Levy owns a life estate interest in 1,000,000 shares
included in the table over which he has sole voting and investment
power, and his children own a remainder interest in such 1,000,000
shares. The table includes 29,000 shares held as cotrustee with his
brothers for a family trust over which he shares voting and
investment power, the beneficial ownership of which Mr. Levy
disclaims.
(4) Lester A. Levy owns a life estate interest in 685,194 shares
included in the table over which he has sole voting and investment
power, and his children own a remainder interest in such 685,194
shares. The table includes 29,000 shares held as cotrustee with his
brothers for a family trust over which he shares voting and
investment power, the beneficial ownership of which Mr. Levy
disclaims.
(5) The table includes 1,576 shares held by the wife of John I. Levy,
the beneficial ownership of which Mr. Levy disclaims, and 1,798
shares held by the children of John I. Levy, the beneficial
ownership of which Mr. Levy disclaims. The table also includes
options held by John I. Levy exercisable within 60 days to acquire
15,102 shares. John I. Levy and a trust for the benefit of Mr.
Levy's family additionally hold, in the aggregate, a remainder
interest in 500,000 shares held by his father, Irvin L. Levy (see
footnote (3) above).
(6) The table includes options held by Lester A. Levy, Jr.
exercisable within 60 days to acquire 15,102 shares. Lester A.
Levy, Jr. additionally holds a remainder interest in 228,398
shares held by his father, Lester A. Levy (see footnote (4)
above).
(7) The table includes options held by Robert M. Levy exercisable within
60 days to acquire 15,102 shares. Robert M. Levy and a trust for the
benefit of Mr. Levy's family additionally hold, in the aggregate, a
remainder interest in 500,000 shares held by his father, Irvin L.
Levy (see footnote (3) above).
(8) The table includes 1,135 shares held by the wife of Walter M. Levy,
the beneficial ownership of which Mr. Levy disclaims, and 6,315
shares held by Walter M. Levy as trustee for family trusts for the
benefit of his children, the beneficial ownership of which Mr. Levy
disclaims. The table also includes options held by Walter M. Levy
exercisable within 60 days to acquire 15,102 shares. Walter M. Levy
(and entities controlled by Walter M. Levy) additionally holds a
remainder interest in 228,398 shares held by his father, Lester A.
Levy (see footnote (4) above).
(9) Windsor Association, Inc., of which Mr. Trim is President, has a
corporate policy against its employees owning any publicly traded
securities.
(10) The table sets forth Dimensional Fund Advisors, Inc.'s stockholding
based on its latest Schedule 13G filed with the SEC as of February
2, 2001. Dimensional Fund Advisors, Inc. reports its address as 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401. It has
sole dispositive power over 337,600 shares, shared dispositive power
over 0 shares, sole voting power over 337,600 shares, and shared
voting power over 0 shares.
AUDIT COMMITTEE REPORT
The Securities and Exchange Commission rules now require the Company to
include in its proxy statement a report of the Audit Committee. The following
report concerns the Committee's activities regarding oversight of the Company's
financial reporting and auditing process.
The Audit Committee is comprised solely of independent directors, as
defined in the New York Stock Exchange rules, and it operates under a written
charter adopted by the Board of Directors, a copy of which is attached to this
proxy statement as Exhibit A. The composition of the Audit Committee, the
attributes of its members and the responsibilities of the Committee, as
reflected in its charter, are intended to be in accordance with applicable
requirements for corporate audit committees. The Committee reviews and assesses
the adequacy of its charter on an annual basis.
As described more fully in its charter, the purpose of the Audit Committee
is to assist the Board of Directors in its general oversight of the Company's
financial reporting, internal control and audit functions. The Committee has
reviewed and discussed the Company's audited financial statements with
management, which has primary responsibility for the financial statements. KPMG
LLP ("KPMG"), the Company's independent auditing firm, is responsible for
performing an independent audit of the consolidated financial statements of the
Company in accordance with accounting principles generally accepted in the
United States. The Committee has discussed with KPMG the matters that are
required to be discussed with the independent auditor by Statement on Auditing
Standards No. 61, as amended, "Communication with Audit Committees." KPMG has
provided the Committee with the written disclosures required by Independent
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and the Committee discussed with KPMG that firm's independence. The
Committee also considered whether KPMG's provision of non-audit services to NCH
is compatible with KPMG's independence.
Following the Committee's discussions with management and the independent
auditor, the Committee recommended that the Board of Directors include the
audited consolidated financial statements in the Company's annual report on Form
10-K for the year ended April 30, 2001 and that KPMG be appointed independent
auditors for the Company for fiscal 2002. The foregoing report is provided by
the following independent directors, who constitute the Audit Committee.
Audit Committee:
Rawles Fulgham, Chairman
Thomas B. Walker, Jr.
Jerrold Trim
Ronald Steinhart
SELECTION OF AUDITORS
The Board of Directors has appointed KPMG to continue to be the principal
independent auditor of NCH, subject to stockholder ratification at the Meeting.
A representative of that firm has been requested to be present at the Meeting
and will have an opportunity to make a statement if the representative desires
to do so and to respond to appropriate questions.
Fees Paid to KPMG LLP
The following table shows the fees paid or accrued by the Company for the
audit and other services provided by KPMG for fiscal year 2001.
Audit Fees(1) $ 698,105
Financial Information Systems Design $ 0
and Implementation Plan
All Other Fees(2) $ 38,000
Total $ 736,105
(1) Audit services of KPMG LLP for 2001 consisted of the examination of the
consolidated financial statements of the Company and quarterly review of the
financial statements.
(2) "All Other Fees" includes fees for internal audit outsourcing services
provided in international locations.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During fiscal 2001, Robert M. Levy and John I. Levy each transferred 5,000
shares of Common Stock to a newly formed family limited partnership. Robert M.
Levy's transfer occurred in August and John I. Levy's transfer occurred in
December. Messrs. Robert and John Levy failed to report such transfers on Form
4's in September 2000 and January 2001, respectively. The failure to report was
inadvertent and was corrected on a subsequently filed Form 4 with respect to
Robert M. Levy and Form 5 for John I. Levy. Also, during fiscal 2001, Ronald
Steinhart failed to timely file a Form 3 reporting his initial ownership of
Common Stock upon becoming a director of NCH. This failure to file was also
inadvertent and was corrected on a subsequently filed Form 5.
PROPOSALS OF STOCKHOLDERS
Stockholders of NCH who intend to present a proposal for action at the
2002 Annual Meeting of Stockholders of NCH must notify NCH's management of such
intention by notice received at NCH's principal executive offices not less than
120 days in advance of June 27, 2002, for such proposal to be included in NCH's
proxy statement and form of proxy relating to such meeting.
ANNUAL REPORT
The Annual Report for the year ended April 30, 2001, is being mailed to
stockholders with this Proxy Statement. The Annual Report is not to be regarded
as proxy soliciting material. NCH will provide without charge to each
stockholder to whom this Proxy Statement and the accompanying form of proxy are
sent, on the written request of such person, a copy of NCH's annual report on
Form 10-K for the fiscal year ended April 30, 2001, including the financial
statements and the financial statement schedules, required to be filed with the
Securities and Exchange Commission. Requests should be directed to NCH
Corporation, Attention: Secretary, P. O. Box 152170, Irving, Texas 75015.
Irvin L. Levy,
President
Irving, Texas
Dated: June 27, 2001
EXHIBIT A
NCH CORPORATION
Charter of the Audit Committee of the Board of Directors
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting, and legal compliance.
o Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
o Provide an avenue of communication among the independent
auditors, management, the internal auditing department, and the
Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other consultants
or experts it deems necessary in the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall be appointed by the Board on
recommendation of the Nominating Committee and shall meet the
requirements of the New York Stock Exchange. The Audit Committee
shall be comprised of three or more independent non-executive
directors who are free of any relationship that would interfere with
the exercise of his or her independent judgment. All members of the
Committee shall have a basic understanding of finance and accounting
and at least one member of the Committee shall have accounting or
related financial management expertise.
The Committee shall meet as frequently as circumstances dictate but
at least annually. The Committee should meet privately in executive
session at least annually with management, the director of the
internal auditing department, the independent auditors, and as a
committee to discuss any matters that the Committee or each of these
groups believe should be discussed.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for
approval and have the document published at least every three
years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior
to filing or distribution, to include discussion with management
and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management, the independent auditors,
and the internal auditors, consider the integrity of the
Company's financial reporting processes and controls. Review
significant findings prepared by the independent auditors and
the internal auditing department.
4. Review as deemed necessary, with financial management and the
independent auditors, the company's quarterly financial results
prior to the release of earnings and/or the company's quarterly
financial statements prior to filing or distribution. The Chair
of the Committee may represent the entire Audit Committee for
purposes of any quarterly review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and
recommend to the Board of Directors the appointment of the
independent auditors or approve any discharge of auditors when
circumstances warrant.
6. Approve the fees and other significant compensation to be paid to
the independent auditors.
7. On an annual basis, the Committee should review and discuss with
the independent auditors their formal written statement
delineating all significant relationships they have with and
services they performed for the Company that could impair the
auditors' objectivity and independence.
Internal Audit Department and Legal Compliance
8. Review the qualifications and activities of the internal audit
department, as needed.
9. Review the appointment and replacement of the senior internal
audit executive.
10. Review significant reports prepared by the internal audit
department.
11. On at least an annual basis, review with the Company's counsel,
any legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance
with the applicable laws and regulations, and inquiries received
from regulators or governmental agencies.
Other Audit Committee Responsibilities
12. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be
included in the Company's annual proxy statement.
13. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the
Board deems necessary or appropriate.
14. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.
PROXY CARD
NCH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS-JULY 26, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Tom Hetzer and
Joe Cleveland, and any one or more of them, proxy or proxies, with full power
of substitution in each, and hereby authorizes them to vote for the
undersigned and in the undersigned's name, all shares of common stock of NCH
Corporation (the "Company") standing in the name of the undersigned on June
1, 2001, as if the undersigned were personally present and voting at the
Company's annual meeting of stockholders to be held on July 26, 2001, in
Dallas, Texas, and at any adjournment thereof, upon the matters set forth on
the reverse side hereof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THEN THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2, AND IN THE PROXIES' DISCRETION ON ALL OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING, INCLUDING MATTERS
INCIDENT TO THE CONDUCT OF SUCH MEETING.
(Continued and to be signed on reverse side)
FOR WITHHOLD AUTHORITY
1. Election of Directors / / / /
Nominees: 01 RAWLES FULGHAM, 02 ROBERT M. LEVY AND 03 LESTER A. LEVY, JR.
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Instruction: To withhold authority to vote for all nominees, mark the
Withhold Authority box. To withhold authority to vote for any individual
nominees, write the nominee's name on the line above.
2. Proposal to ratify the appointment of KPMG LLP as independent auditors
of NCH Corporation.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, the proxies are authorized to vote upon any other
matters that may properly come before the meeting or any adjournment
thereof, subject to the limitations set forth in the applicable regulations
under the Securities Exchange Act of 1934.
Dated: , 2001
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Signature
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Signature if held jointly
NOTE: Please sign exactly as name appears hereon. Joint owner should each sign.
When signing as attorney, executor, administrator, trustee, guardian, officer or
partner, please indicate full title and capacity.