CHASE CORPORATION
26 Summer Street
Bridgewater, Massachusetts 02324
Telephone (508) 279-1789
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the annual meeting of shareholders of
Chase Corporation will be held at 9:30 a.m., Tuesday, January 26, 1999 at the
Sheraton Tara Hotel, 37 Forbes Road, Braintree, Massachusetts 02184 for the
following purposes:
(1) To elect the members of the Board of Directors of the corporation;
and
(2)To transact such other business as may properly come before the
meeting.
Only shareholders of record on the books of the corporation at the
close of business on December 1, 1998 are entitled to notice of and to vote
at the meeting.
The Board of Directors hopes that all shareholders who can
conveniently do so will personally attend the meeting.
By order of the Board of Directors,
GEORGE M. HUGHES
Clerk
December 16, 1998
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ACCOMPANYING
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CHASE CORPORATION
26 Summer Street
Bridgewater, Massachusetts 02324
Telephone (508) 279-1789
PROXY STATEMENT
December 16, 1998
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Chase Corporation (the "Company") for the annual meeting of
the Company's shareholders to be held on January 26, l999. The cost of
solicitation will be borne by the Company. In addition to solicitation by
mail, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with the Clerk of the Company a written
revocation or a duly executed proxy bearing a later date or by voting in
person at the meeting. Unless the proxy is revoked, the shares represented
thereby will be voted as directed. If no specifications are made, proxies
will be voted to elect the directors nominated by the Board of Directors.
On December 1, 1998, the Company had outstanding 3,906,181 shares of
Common Stock, $0.10 par value (the "Common Stock"), which is its only class
of voting stock. Shareholders of record at the close of business on December
1, 1998 are entitled to vote at the meeting. With respect to all matters that
will come before the meeting, each shareholder may cast one vote for each
share registered in his or her name on the record date. A
majority in interest of the Company's Common Stock outstanding and entitled
to vote represented at the meeting in person or by proxy constitutes a
quorum for the transaction of business.
The approximate date on which this proxy statement and form of proxy
will be first sent or given to shareholders is December 16, l998. The
Company's annual report for fiscal l998 will be sent to shareholders on the
same date.
Principal Holders of Voting Securities
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of December 1, 1998, by (i) all persons
known to the Company to be beneficial owners of more than 5% of the
Company's outstanding Common Stock and (ii) all officers and directors of
the Company as a group.
Number of Shares Percent of
Beneficial Owner(a) Beneficially Owned(b) Class
__________________ ____________________ _______
Edward L. Chase 1,527,272(c) 39.1%
39 Nichols Rd.
Cohasset, MA 02025
Peter R. Chase 412,197 10.6%
305 Grange Park
Bridgewater, MA 02324
All current officers and
directors as a group 2,085,739 53.4%
(8 persons)
_____________
(a) Information regarding ownership of the Company's Common Stock by
the directors of the Company is set forth on pages 2 and 3 under the
heading "Election of Directors."
(b) Includes shares subject to stock options exercisable within the
60-day period following December 1, 1998. See "Election of Directors."
(c) Includes 1,614 shares owned of record by Mr. Chase's spouse. Mr.
Chase has shared power to direct voting or disposition, or both, of such
shares. As to balance of the shares, Mr. Chase has sole voting and
investment power.
Arrangements Regarding the Election of Directors
The Company's by-laws provide that for so long as 10% of the Company's
outstanding voting stock is owned by Edward L. Chase or his spouse, issue,
or estate, or a trust for the benefit of his spouse and/or issue, then the
Nominating Committee will recommend to the Board of Directors that such
person or a lineal descendant of such person be elected to the Board of
Directors.
Election of Directors
Seven directors are to be elected at the annual meeting. The Board of
Directors recommends that the seven nominees named below be elected as
directors. The directors elected at the meeting will hold office until the
next annual meeting and until their successors are elected and qualified.
It is intended that proxies in the accompanying forms be voted in favor of
electing as directors the persons named in the table below. If any nominee
should become unavailable for election, the persons voting the accompanying
proxy may in their discretion vote for a substitute. The Board of Directors
is not presently aware of any reason that would prevent any nominee from
serving as a director if elected.
The affirmative vote by the holders of a majority of the securities
present, or represented, and entitled to vote at the meeting is necessary
to elect the nominees for election as directors. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the
effect of negative votes. Broker non-votes will not be counted as present
or represented for this purpose. A "broker non-vote" occurs when a
registered broker holding a customer's shares in the name of the broker has
not received voting instructions on a matter from the customer, is barred
by applicable rules from exercising discretionary authority to vote on the
matter and so indicates on the proxy.
No. of Common
Shares Owned
Business Experience Has Been Beneficially on Percent
During Past Five Years a Director December 1, of
Name Age and other Directorships Since 1998 (a) Class
Edward L. Chase(c) 77 President Emeritus of the 1971 1,527,272(b) 39.1
Company since 1988;
President,Chief Operating
Officer, and Chief
Financial Officer of
the Company from 1971 to
September 1988; Treasurer
of the Company from 1984
to September 1988; from
1947 to September 1988,
Director and Treasurer
of Chase & Sons, Inc.
Peter R. Chase(c) 50 Chief Executive Officer 1993 412,197(g) 10.6
of the company since
September 1993 and
President of the Comp-
any since April 1992;
Chief Operating Officer of
the Company since September
1988.
Sarah Chase(c) 40 Partner, Ley & Young, P.C. 1997 9,370(d) 0.2
since 1993; Associate
Attorney, Ley & Young, P.C.
1990 - 1993
William H. Dykstra 70 Director of Reed and 1988 19,831(h) 0.5
Barton Corporation
From 1977 to April 1998;
Senior Vice President of
Finance from 1977
to January 1993.
Serves as an active member
on several boards.
George M. Hughes(e) 59 Through April 1996 Partner 1984 49,726(f) 1.3
at Palmer & Dodge. As of
May 1996 Founder and
Principal of Hughes &
Associates.
Ronald Levy 60 Vice President of Arthur 1994 12,000(h) 0.3
D. Little, Inc., a
management and technology
consulting company, since
1987 and a Director of its
Technology and Innovation
Management Practice.
Ernest E. Siegfriedt,Jr.67 Independent business 1990 9,716(h) 0.2
consultant since 1988;
Vice President and
General Manager of the
Fasteners Division of
T.R.W., Inc., a
manufacturing company,
from 1976 to 1988.
(a) The beneficial owners of these shares have sole voting power and
sole investment power over such shares, except as otherwise indicated. On
December 1, 1998, the officers and directors of the Company as a group
owned beneficially 2,085,739 shares (53.4%)of the Company's outstanding
Common Stock.
(b) Includes 10,000 shares that may be acquired within 60 days of
December 1, 1998 pursuant to the exercise of stock options.
(c) Peter R. Chase, President and Chief Executive Officer of the
Company, is the son, and Sarah Chase is the daughter of Edward L. Chase.
(d) Includes 7,500 shares that may be acquired within 60 days of
December 1, l998 pursuant to the exercise of stock options.
(e) Mr. Hughes is general counsel to the Company.
(f) Includes 30,500 shares that may be acquired within 60 days of
December 1, 1998 pursuant to the exercise of stock options.
(g) Includes 62,639 shares that may be acquired within 60 days of
December 1, l998 pursuant to the exercise of stock options.
(h) Includes 2,500 shares that may be acquired within 60 days of
December 1, 1998 pursuant to the exercise of stock options.
Meetings of the Board of Directors
The Company's Board of Directors held six meetings during the fiscal
year ended August 31, 1998 and each director attended at least 75% of the
aggregate of all meetings of the Board of Directors and all meetings held
by committees of the Board on which they served.
Committees of the Board of Directors
The Board has standing audit, compensation and nominating committees.
All members of the committees serve at the pleasure of the Board of
Directors. The functions and current membership of each committee are as
follows:
Audit Committee. The Audit Committee recommends to the Board of
Directors the engagement of the Company's independent accountants, reviews
the scope and extent of their audit of the Company's financial statements,
and reviews the annual financial statements with the independent
accountants and with management, and makes recommendations to the Board of
Directors regarding the Company's policies and procedures as to internal
accounting and financial controls. The members of the Audit Committee are
Messrs. Dykstra, Siegfriedt and Ms. Sarah Chase. The Audit Committee held two
meetings during the fiscal year ended August 31, 1998.
Compensation Committee. The Compensation Committee advises the Board
of Directors on matters of management, organization, and succession,
recommends persons for appointments to key employee positions, and makes
recommendations to the Board of Directors regarding compensation for
officers and key employees. The members of the Compensation Committee are
Messrs. Levy, Edward L. Chase, Siegfriedt and Hughes. The Compensation Committee
held six
meetings during the fiscal year ended August 31, 1998.
Nominating Committee. The Nominating Committee recommends persons for
election as directors of the Company, and makes recommendations to the
Board of Directors regarding the structure and membership of the various
committees of the Board of Directors, including the Nominating Committee
itself. The Nominating Committee will consider nominees recommended by
shareholders if such recommendations are made in writing to the Nominating
Committee. The members of the Nominating Committee are Messrs. Hughes, Levy
and Dykstra. The Nominating Committee held one meeting during the fiscal
year ended August 31, 1998.
Executive Compensation
Summary Compensation Table
Annual Compensation(l) Long Term Compensation
______________________________ ______________________________
(a) (b) (c) (d) (e) (f) (g)
Restricted Securities
Stock Underlying LTIP All
Fiscal Award(s) Warrants/ Payout Other
Name & Principal Position Year Salary Bonus ($)(2) Options (#) ($) Comp(3)
________________________ ______ ______ ______ ______ ___________ ______ ______
Peter R. Chase 1998 $298,350 $257,700 $ - - - $8,950
President and 1997 255,120 236,800 337,500 - - 7,654
Chief Executive Officer 1996 245,200 184,500 506,250 - - 7,240
Everett Chadwick, Jr 1998 139,240 120,260 - - - 4,177
Treasurer and 1997 119,580 110,000 - - - 3,587
Chief Financial Officer 1996 114,600 86,250 - - - 3,399
_____________
(1) Annual compensation includes amounts earned in each fiscal year,
whether or not deferred. Compensation is deferred pursuant to the
provisions of the Chase Corporation Retirement Savings Plan. Aggregate
perquisite values do not exceed the lesser of $50,000 or 10% of the
reported base salary and bonus for each year. The Company does not have a
Long Term Incentive Plan (LTIP)or have a program to grant Stock Appreciation
Rights.
(2) As of August 31, 1998, Peter R. Chase, the Company's Chief Executive
Officer, held 250,000 shares of restricted stock having a value as of that date
of $2,219,000. The shares vest on the earlier to occur of September 6, 2004 or
the occurrence of a change in control as defined in the agreement between the
Company and Mr. Chase with respect to the shares. Dividends are payable upon
the shares when and as declared.
(3) The amounts represent the contribution by the Company on behalf of
the employees to the Chase Corporation Retirement Savings Plan.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Number of Value of
Unexercised Options Unexercised Options
@ fiscal year end @ fiscal year end
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable (1)
_____ ______________ __________ __________________ _______________
Peter R. Chase 76,527 $1,022,600 45,973/277,500 $247,735/$513,463
Everett Chadwick, Jr. 10,000 $ 127,500 7,600/ 22,400 $141,800/$123,200
(1) Market value of securities at August 31, 1998 close minus the
exercise price.
Compensation Committee Report on Executive Compensation
Recommendations on compensation for the Company's executive officers are
made by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed entirely of a majority independent
non-employee directors who have no interlocking directorships as defined by
the Securities and Exchange Commission. Committee decisions are reviewed
and approved by the full Board of Directors.
The Company's executive compensation program is designed to accomplish
the following objectives:
- Reward key executives at levels which are competitive with those of
similar comparative companies.
- Provide incentives which are directly linked to the achievement of
Company strategies, profits and enhanced shareholder values.
- Assure that the objectives for corporate and business unit performance
are established and measured.
- Attract and retain executives who have the capabilities needed to assure
proper growth and profitability.
For the fiscal year ended August 31, 1998, the Company, acting through
the Committee, employed three programs to compensate its senior management.
These included an annual base salary program, a stock option plan and a
contingent compensation program based on selected financial performance
measures. Following is a description of the manner in which each program
was administered during the year. It includes an explanation of the
rationale for the compensation paid to the Chief Executive Officer.
Annual Base Salary Program
Salary ranges are established for executive positions, including the
named executive officers, with range mid-points equal to the median salary
determined from appropriate comparative survey data provided by an
independent consultant prior to the beginning of each fiscal year. The
actual salary of each individual holding an executive position is
determined using the Company's salary administration program as a basis and
by taking into consideration the individual's qualifications, sustained
performance and level of responsibility, as evaluated by the Committee.
Annual adjustments in base salary are made after an analysis of the
foregoing factors and aforementioned survey data showing compensation
trends externally.
The base salary for Peter R. Chase was set by the Committee using the
same policies and criteria used for other executive officers of the
Company. His base salary for the fiscal year ended 1998 was set at the
median salary reflected in the aforementioned comparative survey data and
adjusted based on the Committee's evaluation of the criteria discussed
above. Corporate performance measures are used in determining bonuses
rather than base salary and accordingly were not considered by the
Committee in determining Mr. Chase's base salary.
Contingent Compensation Program
Each executive officer, including the named executive officers, was
eligible to earn additional contingent compensation under the Company's
management incentive plan equal to a designated percentage of annual base
salary. In the 1998 fiscal year, the target percentage was 30% of annual
base salary for each executive officer for achieving targeted operating
profit set with reference to the three prior years. Potential incentive
earnings could range from 0% to 100% of annual base salary, depending upon
the Company's actual performance during the year. The Company exceeded the
operating profit threshold established for payment of the targeted
incentive compensation in fiscal year 1998; therefore, in accordance with
the plan, incentive earnings for executive officers averaged 86% of annual
base salary in the last fiscal year.
Stock Options
The Company has in effect a Plan which is designed in part to retain and
provide incentives to the Company's Chief Executive and Chief Financial
Officers. The Committee believes that these executives are in a position to
make the most significant contribution to the Company's future success. The
program is designed to recognize significant contributions and provide
longer-term incentives to increase shareholder value. Under the 1995 Stock
Option Plan options for 400,000 shares were granted to Peter R. Chase and
50,000 shares to Everett Chadwick. The size and structure of the awards were
determined by the Committee in conjunction with advice from William H.
Mercer, Incorporated acting as consultants to the Committee and advising it
as to industry norms and the accomplishment of the objectives of the
Company's compensation program's goals. To ensure that high levels of
performance occur over the long term, the options granted vest over a period
of 10 years. All of the options have been granted with an exercise price
equal to 100% of the fair market value of the Company's common stock on the
grant date. Any value received from a stock option grant depends entirely on
increases in the price of the Company's common stock.
Stock Awards
The Committee considered the amount of stock and options owned by the
Company's Chief Executive Officer and concluded that the ownership of additional
equity in the Company by the Executive would provide a longer term incentive to
add value for the Company's shareholders. The target amount of additional stock
was set at 250,000 shares of restricted stock of which 150,000 shares were
issued on September 7, 1995, 100,000 shares were issued September 30, 1996.
The size and structure of the award were determined in conjunction with
advice from William H. Mercer, Incorporated acting as consultants to the
Committee.
The Committee, in carrying out its responsibilities, met several times in
the fiscal year and reviewed performance progress during the years as well as
information provided by independent compensation consultants.
By the Chase Corporation Compensation Committee,
Ronald Levy (Chairman)
Edward L. Chase
George M. Hughes
Ernest E. Siegfriedt, Jr.
401(k) Plan. The Company has a deferred compensation plan and an excess
plan adopted pursuant to Section 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"). Any qualified employee who has attained age 21 and
has been employed by the Company for at least six months may contribute a
portion of their salary to the plan and the Company will match, at the rate
of 50% on the dollar, such contribution up to an amount equal to three
percent of such employee's yearly salary. Amounts contributed to the plan are
invested and income taxes on the amounts contributed and on the investment
yield are deferred until such amounts are paid to the employee upon their
departure from the Company. Both the 401(k) plan and the pension plan
described below were amended, effective January 1, 1989, to comply with
pertinent legislation.
Deferred Compensation; Termination of Employment Arrangements and
Amendment to Certain Arrangements.
The Company entered into an agreement with Peter R. Chase
pursuant to which the Company will continue to pay Mr. Chase the equivalent
of his annual compensation for two years following the termination of his
employment if such termination arises in connection with a change in
control of the Company. Any payments made to Mr. Chase after the first year
following his termination will be offset to the extent that he receives any
other compensation, through new employment or otherwise.
Pension Plan. The Company has a defined benefit Pension Plan that
covers substantially all of its employees who have attained the age of 21
and have completed six months of service. Benefits are determined based on
final average base earnings (excluding bonuses, overtime, and other
extraordinary amounts), covered compensation, and total years of service
with the Company (up to a maximum of forty years). Compensation covered by
the plan is annual compensation, less payments on account of overtime,
bonuses, or commissions, to a maximum of $160,000. Benefits are payable
upon the retirement of a participant at age 65, or upon the fifth
anniversary of employment, if later, or earlier if the participant is at
least 55 years old and has completed at least five years of service. The
plan offers the option for a participant to receive a lump sum distribution
upon attainment of age 65 and five years of employment even if the employee
elects to remain actively employed. Benefits may be paid in a variety of
forms, including a lump sum, at the election of the participant. The
following tables show estimates of annual benefits payable under the qualified
plan and non-qualified excess plan upon retirement at age 65 or upon the fifth
anniversary of employment, if later.
Table 1 relates to those participants who were employed prior to May 1,
1995 or are covered by a collective bargaining agreement and are in the
specified compensation and years-of-service classifications before an offset
of .6% of covered compensation at the time of retirement times the number of
years-of-service (up to a max of 35 years).
Table 1:
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
$ 50,000 $ 7,500 $15,000 $22,500 $28,250
100,000 15,000 30,000 45,000 56,500
160,000 24,000 48,000 72,000 90,400
200,000 * 30,000 60,000 90,000 113,000
250,000 * 37,500 75,000 112,500 141,250
300,000 * 45,000 90,000 135,000 169,500
350,000 * 52,500 105,000 157,500 197,750
400,000 * 60,000 120,000 180,000 226,000
Table 2 relates to those participants who became employed on or after May
1, 1995 and are not covered by a collective bargaining agreement and are in the
specified compensation and years-of-service classifications before any offset of
.3% of covered compensation at the time of retirement times the number of years-
of-service (up to a max of 35 years).
Table 2:
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
$ 50,000 $ 3,750 $ 7,500 $11,250 $14,125
100,000 7,500 15,000 22,500 28,250
160,000 12,000 24,000 36,000 45,200
200,000 * 15,000 30,000 45,000 56,500
250,000 * 18,750 37,500 56,250 70,625
300,000 * 22,500 45,000 67,500 84,750
350,000 * 26,250 52,500 78,750 98,875
400,000 * 30,000 60,000 90,000 113,000
*As required by Section 415 of the IRC, qualified plan payments may not provide
annual benefits exceeding a maximum amount, currently $130,000. For the
associate who is covered under the excess plans, amounts above this maximum will
be paid under the terms of the excess plans up to the amounts shown in the
table above. Pursuant to Section 401(a)(17) of the IRC, annual compensation
in excess of $160,000 (for 1998) cannot be taken into account in determining
qualified plan benefits.
Mr. Chase and Mr. Chadwick have approximately 27 and 10 years of service,
respectively.
Compensation of Directors. Directors who are not employees of the Company
are paid an annual retainer of $6,000 plus a fee of $750 for each Board
meeting they attend ($1,250 if they attend a committee meeting on the same
day). Non-employee directors who are committee members receive a fee of
$750 per committee meeting they attend that is not held on the same day as
a directors meeting, with the Chairman receiving a fee of $1,000. Non-employee
directors also are eligible to receive stock options. As authorized under the
terms and provision of the company's 1995 Stock Option Plan, each director,
exclusive of the Chief Executive Officer has received an option to purchase
12,500 shares which would be fully vested by January 15, 2000.
Performance Graph
The following line graph compares the yearly percentage change in the
Corporation's cumulative total shareholder return on the Common Stock for
the last five fiscal years with the cumulative total return on the Standard
& Poor's 500 Stock Index ("the S&P 500 Index"), and a composite peer index,
weighted by market equity capitalization on companies with the Chase
Corporation Standard Industrial Classification (S.I.C.) code (the "Peer
Group Index"). The companies included in the Peer Group Index are American
Biltrite, Inc., Lamson & Sessions Co., Plymouth Rubber Company Inc.,
MacDermid Inc., Bairnco Corp., and Flamemaster Corp. Cumulative total
returns are calculated assuming that $100 was invested 8/31/91 in each of
the Common Stock, the S&P 500 and the Peer Group Index, and that all
dividends were reinvested.
Chase Corporation
Comparison of 1993/1998 Cumulative Total Return Performance(a)
1993 1994 1995 1996 1997 1998
Chase 100.0 164.3 254.6 325.9 712.4 545.0
S&P 500 100.0 121.8 162.1 237.8 716.5 761.6
Peer Group 100.0 105.5 128.1 152.1 213.9 231.3
(a) Cumulative total returns are calculated assuming dividend reinvestment at
August 31.
Auditors
The Board of Directors has selected the firm of Livingston & Haynes, P.C. which
served as auditors for the Company for the most recently completed fiscal
year of the Company, to serve as auditors for the Company for the fiscal year
ending August 31, 1999. Representatives of Livingston & Haynes, P.C. are
expected to be present at the meeting of shareholders with an opportunity to
make a statement if they desire to do so. Such representatives will be
available to respond to appropriate questions.
Proposals of Security Holders for 1999 Annual meeting
Proposals of security holders intended to be present at the 2000 annual
meeting of the Company's shareholders must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting
not later than August 13,1999.
Miscellaneous
The management does not know of any business that will come before the meeting
except the matters described in the notice. If other business is properly
presented for consideration at the meeting, it is intended that the proxies
will be voted by the persons named therein in accordance with their judgement
on such matters.
In the event that a quorum is not present when the meeting is convened, it is
intended to vote the proxies in favor of adjourning from time to time until a
quorum is obtained.
By order of the Board of Directors
George M. Hughes
Clerk