SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UCAR INTERNATIONAL INC.
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[UCAR LOGO] UCAR INTERNATIONAL INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1997 AND
PROXY STATEMENT
April 3, 1997
ADMISSION TICKET
UCAR INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1997 AT 10:00 AM
ETHAN ALLEN INN
DANBURY, CONNECTICUT
PRESENT THIS TICKET TO ADMIT ONE STOCKHOLDER AND ONE GUEST
Name of Stockholder:
------------------------------------------------------------
Address:
------------------------------------------------------------------------
(See reverse side for directions)
FROM NEW JERSEY:
Danbury is about one hour from the Tappan Zee Bridge. After crossing the bridge,
follow signs to New England and the Cross Westchester Expressway (I-287). From
I-287 take I-684 North towards Brewster. Take Exit 9E (I-84 East to Danbury).
Get off I-84 at Exit 4 (Lake Avenue). Go to the end of the ramp and turn right.
The Ethan Allen Inn is approximately 1/4 mile on the right. Please use parking
lot and entrance located behind the building.
FROM BOSTON:
Take Massachusetts Turnpike (Route 90) to Sturbridge, Exit 9. Proceed onto I-84
West through Hartford and Waterbury to Danbury. Take Exit 4. Go to the end of
the ramp and turn right. The Ethan Allen Inn is approximately 1/4 mile on the
right. Please use parking lot and entrance located behind the building.
FROM HARTFORD:
Take I-84 West towards Waterbury/Danbury. Take Exit 4. Go to the end of the ramp
and turn right. The Ethan Allen Inn is approximately 1/4 mile on the right.
Please use parking lot and entrance located behind the building.
FROM NEW HAVEN:
Take Route 34 West to Newtown where you pick up I-84 West to Danbury. Take Exit
4. Go to the end of the ramp and turn right. The Ethan Allen Inn is
approximately 1/4 mile on the right. Please use parking lot and entrance located
behind the building.
FROM WHITE PLAINS/WESTCHESTER:
Take I-684 North to Brewster and proceed to Exit 9E (I-84 East to Danbury). Get
off I-84 Exit 4. Go to the end of the ramp and turn right. The Ethan Allen Inn
is approximately 1/4 mile on the right. Please use parking lot and entrance
located behind the building.
FROM NY CITY AIRPORTS & LONG ISLAND:
Follow signs to Whitestone Bridge. Cross over bridge and bear left onto the
Hutchinson River Parkway to White Plains and I-684 North towards Brewster. Take
Exit 9E (I-84 East to Danbury). Get off I-84 at Exit 4. Go to the end of the
ramp and turn right. The Ethan Allen Inn is approximately 1/4 mile on the right.
Please use parking lot and entrance located behind the building.
[UCAR LOGO]
UCAR INTERNATIONAL INC. 39 Old Ridgebury Road, Section J-4, Danbury,
CT 06817-0001
ROBERT P. KRASS
Chairman of the Board,
President and
Chief Executive Officer
April 3, 1997
To Our Stockholders:
It is my pleasure to invite you to our annual meeting. It will be held on
Tuesday, May 13, 1997 at 10:00 a.m., in the New World Ballroom of the Ethan
Allen Inn, 21 Lake Avenue Extension (at Mill Plain Road), Danbury, Connecticut.
On the following pages, you will find the formal notice of the annual
meeting and our proxy statement. When you have finished reading the proxy
statement, please promptly mark, sign and return the enclosed proxy card, to
insure that your shares will be represented.
We hope that many of you will be able to attend our annual meeting in
person. If you intend to do so, please write your name where indicated on the
enclosed ticket and bring it with you to the annual meeting.
We appreciate the continuing interest of our stockholders in the business
of UCAR International Inc., and I look forward to seeing many of you at the
annual meeting.
Sincerely yours,
/s/ Robert P. Krass
Chairman of the Board, Chief Executive
Officer and President
[UCAR LOGO]
UCAR INTERNATIONAL INC. 39 Old Ridgebury Road, Section J-4, Danbury,
CT 06817-0001
PETER B. MANCINO
Vice President,
General Counsel
and Secretary
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1997
April 3, 1997
The annual meeting of stockholders of UCAR International Inc. will be held
at 10:00 a.m. on Tuesday, May 13, 1997, in the New World Ballroom of the Ethan
Allen Inn, 21 Lake Avenue Extension (at Mill Plain Road), Danbury, Connecticut,
for the following purposes:
1. To elect 8 directors or, under the circumstances described in the
proxy statement accompanying this Notice of Annual Meeting of
Stockholders, 4 directors to serve on the Board of Directors until
the annual meeting of stockholders for 1998.
2. To transact such other business as may properly come before the
meeting.
To ensure that your shares will be represented at the annual meeting in the
event that you do not attend, please mark and sign the enclosed proxy card and
return it in the enclosed envelope.
By Order of the Board of Directors
/s/ Peter B. Mancino
Vice President, General Counsel and
Secretary
[UCAR LOGO]
UCAR INTERNATIONAL INC. 39 Old Ridgebury Road, Section J-4, Danbury,
CT 06817-0001
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS FOR 1997
TABLE OF CONTENTS
PAGE
----
General Information for Stockholders....................................................................... 1
Election of Directors...................................................................................... 1
Nominees.............................................................................................. 1
Committees of the Board............................................................................... 3
Compensation of Directors............................................................................. 4
Compensation of Executive Officers.................................................................... 4
Compensation Committee Interlocks and Insider Participation........................................... 10
Report of the Board on Executive Compensation......................................................... 10
Performance Graph..................................................................................... 12
Security Ownership of Management and Certain Beneficial Owners........................................ 13
Section 16(a) Beneficial Ownership Reporting Compliance............................................... 14
Certain Transactions.................................................................................. 15
Stockholder Proposals for the Annual Meeting of Stockholders for 1998...................................... 15
Other Information.......................................................................................... 16
GENERAL INFORMATION FOR STOCKHOLDERS
Proxies are solicited from stockholders by the Board of Directors (the
'Board') of UCAR International Inc. ('UCAR') in order to provide every
stockholder an opportunity to vote on all matters scheduled to come before the
annual meeting of stockholders for 1997, whether or not he or she attends in
person. When the enclosed proxy card is properly signed and returned, the shares
represented will be voted by the proxyholders named on the proxy card in
accordance with the stockholder's directions. Stockholders may vote on a matter
by marking the appropriate box on the proxy card. If the proxy card is signed
and returned and no box is marked for a specified matter, the shares will be
voted as recommended by the Board on that matter. If a stockholder is a
participant in the UCAR Carbon Savings Plan (the 'Savings Plan'), the proxy card
will represent both the number of shares registered in the participant's name
and the number of whole shares credited to the participant's account in the
Savings Plan, and all such shares will be voted in accordance with the
instructions on the proxy card.
Management knows of no matters other than those set forth on the proxy card
that will be presented for action at the meeting. Execution of a proxy card,
however, confers on the proxyholders discretionary authority to vote the shares
represented in accordance with their best judgment on any other business that
may come before the meeting.
This Proxy Statement and the enclosed proxy card (together, the 'Proxy
Materials') are being mailed to stockholders beginning on or about April 3,
1997. Any stockholder executing a proxy may revoke that proxy or submit a
revised one at any time before it is voted. A stockholder may also vote by
ballot at the meeting, thereby canceling any proxy previously returned as to any
matter on which such stockholder votes by ballot. A stockholder wishing to name
as his or her proxy someone other than those designated on the enclosed proxy
card may do so by crossing out the names of the three designated proxyholders
and inserting the name(s) of the person(s) he or she wishes to have act as his
or her proxy. No more than three persons should be so designated. In such a
case, it will be necessary that the proxy be delivered by the stockholder to the
person(s) named and that such person(s) named be present and vote at the
meeting. Proxy cards on which other proxyholders have been named should not be
mailed directly to UCAR.
Stockholders of record at the close of business on March 21, 1997 are
entitled to notice of and to vote the shares held on that date at the meeting.
Each share of common stock, par value $.01 per share, of UCAR (the 'Common
Stock') is entitled to one vote. As of February 28, 1997, 46,797,777 shares of
Common Stock were outstanding. Those shares were held by 66 stockholders of
record.
ELECTION OF DIRECTORS
NOMINEES
Unless a stockholder specifies otherwise and except as otherwise described
in the next paragraph, each returned proxy card will be voted for the election
to the Board of the 8 nominees who are listed below. These nominees were
recommended by the Nominating Committee of the Board and approved by the Board.
Except as otherwise described in the next paragraph, each nominee has consented
to being named as a nominee for election as a director and agreed to serve if
elected. Each nominee who is elected will serve as a director until his
successor is elected at the annual meeting of stockholders for 1998 and
qualified or upon his removal or resignation. Except as otherwise described in
the next paragraph, if any of the nominees is not available for election at the
time of the annual meeting, discretionary authority will be exercised to vote
for substitutes unless the Board chooses to reduce the number of directors.
Except as otherwise described in the next paragraph, UCAR is not aware of any
circumstances that would render any nominee unavailable. All nominees are
currently serving on the Board. The ages of the nominees are given as of
February 28, 1997.
UCAR has filed a registration statement on Form S-3 (the 'Registration
Statement') with the Securities and Exchange Commission (the 'Commission')
relating to a proposed firm commitment underwritten public offering (the
'Offering') of a substantial portion of the shares of Common Stock held by
Blackstone Capital Partners II Merchant Banking Fund L.P. ('BCP'), Blackstone
Offshore Capital Partners II L.P. ('BOCP') and Blackstone Family Investment
Partnership II L.P. ('BFIP' and, together with BCP and BOCP, 'Blackstone'). The
Offering is expected to close in April 1997. UCAR has been informed that Messrs.
Hutchins, Lipson, Peterson and Schwarzman intend to resign from the Board upon
the closing of the Offering. If such directors
1
resign, they will not be nominated for re-election as directors at the Annual
Meeting, the number of directors constituting all of the directors of UCAR will
be reduced to 4 and the Board will instead recommend a vote for the remaining 4
nominees listed below.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED BELOW, EXCEPT
AS OTHERWISE DESCRIBED IN THE PRECEDING PARAGRAPH.
o Robert P. Krass, age 60, was elected director and Chairman of the Board
in connection with the leveraged recapitalization effected by UCAR and
its subsidiaries (collectively, the 'Company') on January 26, 1995 (the
'Recapitalization'). The Company is a successor to the Carbon Products
Division of Union Carbide Corporation ('Union Carbide'). Mr. Krass
joined Union Carbide in 1963 and held various sales and management
positions in the United States and Europe, including Director of
Marketing, Europe, of the Carbon Products Division and Managing Director
of the Division's business in the United Kingdom. He was Vice President,
Marketing, of the Electrode Systems Division from 1983 to 1986. In 1987,
he became President of the Carbon Products Division and Vice President
of Union Carbide. He has been President of the Company since 1989 and
Chief Executive Officer of the Company since 1991. Mr. Krass is a member
of the Nominating Committee of the Board.
o R. Eugene Cartledge, age 67, was elected director of UCAR in February
1996. From 1986 until his retirement in 1994, he was the Chairman of the
Board and Chief Executive Officer of Union Camp Corporation, where he
had served in various sales and management capacities since 1956. Mr.
Cartledge is Chairman of the Board of Savannah Foods & Industries, Inc.
and a director of Union Camp Corporation, Chase Brass Industries, Inc.,
Sun Company, Inc., Delta Air Lines, Inc. and Blount, Inc. Mr. Cartledge
is a member of the Audit and Nominating Committees of the Board.
o John R. Hall, age 64, was elected director of UCAR in November 1995. He
retired as Chairman effective January 31, 1997 and as Chief Executive
Officer effective October 1, 1996 of Ashland Inc., which positions he
held since 1981. Mr. Hall served in various engineering and managerial
capacities at Ashland Inc. since 1957. Mr. Hall is a director of Banc
One Corporation, Canada Life Assurance Company, CSX Corporation, Humana
Inc. and Reynolds Metals Company. Mr. Hall is Chairman of the
Organization and Compensation Committee and a member of the Audit
Committee of the Board.
o Glenn H. Hutchins, age 41, was elected director of UCAR in connection
with the Recapitalization. He is a member of Blackstone Group Holdings
L.L.C. Mr. Hutchins joined The Blackstone Group L.P. in September 1994.
Mr. Hutchins was a Managing Director of Thomas H. Lee Co. from 1987
until 1994 and, while on leave from Thomas H. Lee Co. during parts of
1993 and 1994, was a Special Advisor in the White House. Mr. Hutchins is
a director of Haynes International Inc. Mr. Hutchins is a member of the
Nominating and Organization and Compensation Committees of the Board.
o Robert D. Kennedy, age 64, was elected director of the Company in June
1990. He joined Union Carbide in 1955 and held various marketing and
management positions in the United States and Europe. He was Senior Vice
President of Union Carbide from 1981 to 1985. In 1985, Mr. Kennedy was
elected a director and President of Union Carbide. In 1986, he was
elected Chief Executive Officer and Chairman of the Board of Union
Carbide. Mr. Kennedy retired as Chief Executive Officer and President of
Union Carbide in April 1995 and as Chairman of the Board (but not as a
director) of Union Carbide in December 1995. Mr. Kennedy is also a
director of Union Camp Corporation, Sun Company, Inc., Birmingham Steel
Corp., KMart Corp. and General Signal Corp. Mr. Kennedy is Chairman of
the Audit Committee and a member of the Organization and Compensation
Committee of the Board.
o Howard A. Lipson, age 33, was elected director of UCAR in connection
with the Recapitalization. Mr. Lipson is a member of Blackstone Group
Holdings L.L.C. Mr. Lipson was a Managing Director from 1994 to 1995,
was a Vice President from 1991 to 1994 and joined The Blackstone Group
L.P. in 1988. Mr. Lipson is a director of Volume Services, Inc., Prime
Succession Inc., Ritvik Holdings, Inc., AMF Group, Inc., Rose Hills,
Inc. and Transtar Holdings, L.P. Mr. Lipson is a member of the
Organization and Compensation Committee of the Board.
2
o Peter G. Peterson, age 70, was elected director of UCAR in connection
with the Recapitalization. He is a Co-Founder and has served as Chairman
of The Blackstone Group L.P. since 1985. Mr. Peterson is also a director
of Sony Corporation, Transtar Holdings L.P. and the Federal Reserve Bank
of New York.
o Stephen A. Schwarzman, age 50, was elected director of UCAR in
connection with the Recapitalization. He is a Co-Founder and has served
as President and Chief Executive Officer of The Blackstone Group L.P.
since 1985. Mr. Schwarzman is also a director of Great Lakes Dredge &
Dock Corporation, Transtar, Inc., Collins & Aikman Corporation and
Volume Services, Inc.
The Board met four times in 1996. Each director listed above who was then
serving attended 100% of such meetings and the meetings of all committees of
which he was a member.
COMMITTEES OF THE BOARD
The Board has three standing committees. Their functions are as described
below. If the Offering closes and Messrs. Hutchins and Lipson resign in
connection therewith, the Board will change the composition of its standing
committees to reflect the new composition of the Board.
The Audit Committee was formed in July 1995 and consists of three
directors, none of whom may be an employee of the Company or an employee of
Blackstone. The Audit Committee is responsible for policies, procedures and
other matters relating to accounting, internal financial controls and financial
reporting, including the engagement of independent auditors and the planning,
scope, timing and cost of any audit and any other services they may be asked to
perform, and reviews with the auditors their report on the financial statements
following completion of each such audit. In addition, the Audit Committee is
responsible for policies, procedures and other matters relating to business
integrity, ethics and conflicts of interest. The Audit Committee met three times
in 1996.
The Nominating Committee was formed in July 1995 and consists of three
directors. The Nominating Committee is responsible for nominating individuals
for election as directors of UCAR. The Nominating Committee met one time in
1996.
Candidates for nomination for election as director are considered on the
basis of their broad business, financial and public service experience, their
ability to represent the interests of all stockholders, their professional
reputation and their ability and willingness to devote the time required to
serve effectively as a director and as a member of one or more committees of the
Board, all in light of any conflicts of interest and the composition of the
Board as a whole. Nominees must also be free of any legal impediments or other
considerations that might preclude service as a director. The Nominating
Committee will consider nominees recommended by stockholders in accordance with
UCAR's Certificate of Incorporation and By-Laws and applicable provisions of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and the rules
and regulations promulgated thereunder. The By-Laws provide that notice of
nominations for the election of directors by a stockholder must be received by
the Secretary of UCAR not later than 80 days before the meeting before which
such nominations are to be brought, except in certain circumstances, and must
contain detailed information regarding such nominee and the stockholder making
such nomination.
The Organization and Compensation Committee was formed in May 1996 by the
merger of the former Compensation Committee and the former Stock Compensation
Committee and consists of four directors. The Organization and Compensation
Committee is responsible for policies, procedures and other matters relating to
employee benefit and compensation plans, including compensation of the executive
officers as a group and the chief executive officer individually; policies,
procedures and other matters relating to management development; reviewing,
monitoring and recommending (for approval by the Board) plans with respect to
succession of officers and other key employees; and administering and making
awards under the stock based compensation plans (other than the Savings Plan) of
UCAR. The Compensation Committee met one time in 1996 prior to its merger into
the Organization and Compensation Committee. The Stock Compensation Committee
met one time in 1996 prior to its merger into the Organization and Compensation
Committee. The Organization and Compensation Committee met two times in 1996.
3
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or Blackstone are entitled
to receive an annual retainer of $20,000 (or $22,000, if such director serves as
a chairman of one or more committees of the Board), which retainer is prorated
if a director is not a director on January 1 of the relevant year, a fee of
$1,000 for each meeting of the Board attended and awards of shares of Common
Stock as described under '--1995 Directors Stock Plan.' At the option of the
Board, such retainers and fees may be paid in shares of Common Stock. Directors
who are employees of the Company or Blackstone do not receive any compensation
for rendering services as such. All directors are entitled to reimbursement for
all expenses incurred in connection with rendering services as such.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning compensation
received by the chief executive officer and each of the other five most highly
compensated executive officers who received total salary and bonus compensation
in excess of $100,000 (collectively, the 'Named Executive Officers') for
services rendered in all capacities (including service as a director of UCAR or
an officer or director of one or more of its subsidiaries) during UCAR's last
fiscal year.
4
SUMMARY COMPENSATION TABLE(A)
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------- ----------------------- ----------
OTHER RESTRICTED SECURITIES LONG TERM
NAME AND VARIABLE ANNUAL STOCK UNDERLYING PLAN
PRINCIPAL POSITION YEAR SALARY COMPENSATION(B) COMPENSATION(C) AWARDS(D) OPTIONS PAYOUTS(E)
- ----------------------------------- ---- -------- --------------- --------------- ---------- ---------- ----------
Robert P. Krass ................... 1996 $525,000 $ 1,608,250 $ 232,504 $ -- $ -- $ --
Chairman of the Board, 1995 512,500 1,366,750 223,844 1,032,597 970,385 3,434,086
President and Chief
Executive Officer
Robert J. Hart .................... 1996 300,000 894,000 138,221 -- -- --
Vice President and 1995 292,917 756,000 136,353 628,467 453,777 1,545,339
General Manager (North
and South America)
Peter B. Mancino .................. 1996 180,000 513,000 47,518 -- -- --
Vice President, General 1995 177,500 430,200 43,937 82,604 314,153 858,521
Counsel and Secretary
Maurice Marcellin(g) .............. 1996 266,560 698,000 2,645 -- -- --
Vice President and 1995 261,300 587,600 9,078 -- -- 1,030,226
General Manager (Europe
and South Africa)
William P. Wiemels ................ 1996 200,000 573,000 72,077 -- -- --
Vice President, Chief 1995 195,833 481,000 134,727 183,806 363,022 858,521
Financial Officer and
Treasurer
Fred C. Wolf ...................... 1996 165,000 458,250 45,058 -- -- --
Vice President, 1995 162,333 382,350 41,717 82,604 258,304 858,521
Administration and
Strategic Projects
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION(F)
- ----------------------------------- ---------------
Robert P. Krass ................... $71,934
Chairman of the Board, 75,752
President and Chief
Executive Officer
Robert J. Hart .................... 53,102
Vice President and 50,466
General Manager (North
and South America)
Peter B. Mancino .................. 24,805
Vice President, General 10,028
Counsel and Secretary
Maurice Marcellin(g) .............. 15,282
Vice President and 15,240
General Manager (Europe
and South Africa)
William P. Wiemels ................ 30,361
Vice President, Chief 11,486
Financial Officer and
Treasurer
Fred C. Wolf ...................... 23,188
Vice President, 9,253
Administration and
Strategic Projects
- ------------------
(a) Includes, for each year, compensation earned but deferred under the Deferral
Plan (as defined) or other applicable plans or statutory provisions.
(b) Includes Annual Plan Variable Compensation (as defined) and Supplemental
Plan Variable Compensation (as defined).
(c) Includes, for 1996 and 1995, respectively: for Mr. Krass, $86,100 and
$77,700, for Mr. Hart, $49,200 and $44,400, for Mr. Mancino, $29,520 and
$26,640, for Mr. Wiemels, $32,800 and $29,600, and for Mr. Wolf, $27,060 and
$24,420, of payments under a group profit sharing plan for employees in the
United States; for Mr. Krass, $12,050 and $4,920, for Mr. Hart, $7,250 and
$6,000, for Mr. Mancino, $7,250 and $6,000, for Mr. Wiemels, $7,250 and
$6,000, and for Mr. Wolf, $7,250 and $6,000, of financial planning services
and related tax advice; and for Mr. Krass, $134,354 and $141,224, for Mr.
Hart, $81,771 and $85,953, for Mr. Mancino, $10,748 and $11,297, for Mr.
Wiemels, $23,915 and $25,137, and for Mr. Wolf, $10,748 and $11,297, of
imputed interest income and reimbursement for tax liabilities on loans made
in connection with shares of Common Stock purchased by and granted to such
person in connection with the Recapitalization. Also includes, for Mr.
Wiemels for 1996 and 1995, respectively, $7,758 and $62,182 of reimbursement
of relocation expenses and $354 and $11,808 of reimbursement for tax
liabilities on certain relocation expenses.
(d) Consists of restricted matching stock granted in connection with the
Recapitalization which vested in connection with UCAR'S initial public
offering of shares of Common Stock in August 1995 (the 'Initial Offering').
The value of such stock at December 31 of each of 1996 and 1995,
respectively, was: for Mr. Krass, $5,112,034 and $4,585,545; for Mr. Hart,
$3,111,324 and $2,790,889; for Mr. Mancino, $408,946 and $366,829; for Mr.
Wiemels, $909,961 and $816,244; and for Mr. Wolf, $408,946 and $366,829. Any
dividends payable on the outstanding shares of Common Stock are payable in
the same manner on such restricted matching stock.
(e) Consists of payments under the Company's Long Term Incentive Compensation
Plan (the 'Long Term Plan'). Prior to the Recapitalization, approximately 25
management employees, including the Named Executive Officers, participated
in the Long Term Plan, which provided for cash awards based on the
achievement of annual and cumulative financial performance goals for 1993,
1994 and 1995. The Company substantially exceeded most of the performance
goals for 1993 and 1994. The Long Term Plan provided that, in the event of a
change in control of the Company, the performance goals for the period
following the change in control would be deemed to be 100% achieved and
payment of the awards would be accelerated. The Recapitalization constituted
such a change in control.
(f) Includes, for 1996 and 1995, respectively: for Mr. Krass, $66,309 and
$70,239, for Mr. Hart, $44,540 and $44,677, for Mr. Mancino, $21,955 and
$7,186, for Mr. Wiemels, $23,349 and $7,250, and for Mr. Wolf, $18,925 and
$5,361, for annual life insurance premiums paid on a split dollar life
contract; and for Mr. Krass, $5,625 and $5,513, for Mr. Hart, $8,562 and
$5,789, for Mr. Mancino, $2,850 and $2,842, for Mr. Wiemels, $7,012 and
$4,236, and for Mr. Wolf, $4,262 and $3,892, for employer contributions to
the Savings Plan. The amount of the whole life insurance portion reported as
paid for the Named Executive Officer is the entire premium minus that
portion of the premium actually paid by the Named Executive Officer. The
Company recovers its contributions following the latest of the Named
Executive Officer's retirement, attainment of age 65 or fifteenth year of
participation.
(g) The exchange rate used for Salary, Other Annual Compensation and All Other
Compensation was an average exchange rate for the french franc for each of
1996 and 1995. Other Annual Compensation includes productivity incentives of
$2,645 for 1996 and $9,078 for 1995 under a group incentive program for
employees in France. Productivity incentives can be paid when earned or can
be deferred for five years, at the employee's option. Productivity
incentives plus interest thereon are non-taxable when received more than
five years after earned. All Other Compensation includes profit sharing
(mandated by french law) of $15,282 for 1996 and $15,240 for 1995. Profit
sharing is not paid for five years, although special circumstances, such as
retirement, lay off or death, permit earlier payment.
5
No options to purchase shares of Common Stock were granted to Named
Executive Officers in 1996. The following tables sets forth certain information
relating to the exercise of previously granted options to purchase shares of
Common Stock by the Named Executive Officers during 1996.
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT DECEMBER 31, 1996
WITH RESPECT TO UCAR COMMON STOCK
NUMBER OF
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED UNDERLYING UNEXERCISED MONEY OPTIONS
ON VALUE OPTIONS AT DECEMBER 31, 1996 AT DECEMBER 31, 1996
NAME EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
- ------------------------------ --------- ---------- ---------------------------- ----------------------------
Robert P. Krass............... -- $ -- 808,654/161,731 $24,279,836/$4,855,973
Robert J. Hart................ 65,000 1,805,375 313,147/75,630 9,402,239/2,270,791
Peter B. Mancino.............. 45,000 1,249,875 216,794/52,359 6,509,240/1,572,079
Maurice Marcellin............. -- -- -- --
William P. Wiemels............ 38,000 1,055,450 264,518/60,504 7,942,153/1,816,633
Fred C. Wolf.................. 45,000 1,249,875 170,253/43,051 5,111,846/1,292,606
Prior to the sale of 50% of the equity of the Company by Union Carbide to a
joint venture partner on February 25, 1991, certain executive officers of the
Company were granted options to purchase shares of common stock of Union Carbide
under Union Carbide's incentive compensation plans. No options to purchase
shares of common stock of Union Carbide were granted to officers of the Company
following such sale. The following table sets forth certain information as to
such options.
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT DECEMBER 31, 1996
WITH RESPECT TO UNION CARBIDE COMMON STOCK
NUMBER OF
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED UNDERLYING UNEXERCISED MONEY OPTIONS
ON VALUE OPTIONS AT DECEMBER 31, 1996 AT DECEMBER 31, 1996
NAME EXERCISE REALIZED (EXERCISABLE) (EXERCISABLE)
- ------------------------------ --------- ---------- ---------------------------- ----------------------------
Robert P. Krass............... -- -- 48,000 $1,485,972
Robert J. Hart................ -- -- -- --
Peter B. Mancino.............. -- -- -- --
Maurice Marcellin............. -- -- -- --
William P. Wiemels............ -- -- 2,500 79,730
Fred C. Wolf.................. -- -- -- --
Employment and Other Agreements
In connection with the Recapitalization, UCAR entered into employment
agreements (the 'Employment Agreements') with Messrs. Krass, Hart, Mancino,
Wiemels and Wolf (the 'Senior Executives'). Each of the Employment Agreements
has a three year term which will automatically renew annually for additional one
year terms unless UCAR or the Senior Executive gives written notice of
nonrenewal not less than 90 days prior to the expiration of the then current
term. Each of the Employment Agreements is terminable by UCAR for cause or by
the relevant Senior Executive for good reason and contains a non-competition
covenant which remains in effect for a period of two years beyond the expiration
of the then current term.
Under the Employment Agreements, base salaries are: for Mr. Krass,
$525,000; for Mr. Hart, $300,000; for Mr. Wiemels, $200,000 ($235,000, effective
after March 1997); for Mr. Mancino, $180,000 ($200,000, effective after March
1997); and for Mr. Wolf, $165,000 ($190,000, effective after March 1997). The
Employment Agreements provide the Senior Executives with the opportunity receive
two bonuses, one of which is payable
6
pursuant to the UCAR International Inc. Officers' Incentive Plan ('Annual Plan
Variable Compensation') and the other of which is payable only if actual EBITDA
(as defined in the Employment Agreements) equals or exceeds specified targets
('Supplemental Plan Variable Compensation'). In addition to the Senior
Executives, Mr. Marcellin and certain other management employees of the Company
have been provided with the opportunity to receive such bonuses. The amount of
Annual Plan Variable Compensation for 1996 did not exceed an aggregate of
$690,000 for the Senior Executives and $110,000 for Mr. Marcellin. If UCAR
achieves 100% of the specified target for any year, Supplemental Plan Variable
Compensation will equal 75% of base salary (excluding increases in base salary
subsequent to the Recapitalization), plus an additional 5% of base salary
(excluding such increases) for each percentage point by which actual EBITDA for
such year exceeds such specified target.
The Employment Agreements provide that, if UCAR terminates the employment
of a Senior Executive without cause or a Senior Executive resigns for good
reason, the Senior Executive will be entitled to severance payments and enhanced
pension benefits. Retirement prior to January 26, 1998 is considered resignation
without good reason. If such termination or resignation for good reason occurs
on or prior to January 26, 1998, severance payments will equal 2.99 times the
sum of the Senior Executive's base salary and his prior year's Annual Plan
Variable Compensation. If such termination or resignation for good reason occurs
after January 26, 1998, severance payments will equal two times the sum of the
Senior Executive's base salary and his prior year's Annual Plan Variable
Compensation, reduced by any pension payments paid by the Company under its
qualified and nonqualified pension plans for the two-year period following such
termination (or, if the Senior Executive elects to defer receipt of such
benefits, the amount the Senior Executive would have received). In addition, in
connection with any such termination or resignation for good reason, the Senior
Executive's pension benefits will be calculated as if the Senior Executive had
an additional three years of age and three years of service. These benefits
shall be payable commencing immediately following termination of employment and
shall not be reduced for early commencement of benefits.
Management Stock Option Plan
In connection with the Recapitalization, UCAR adopted the UCAR
International Inc. Management Stock Option Plan (the 'Management Stock Option
Plan'). Certain management employees of the Company (including the Named
Executive Officers) are eligible to participate in the Management Stock Option
Plan. The exercise price per share of an option granted under the Management
Stock Option Plan is the fair market value of a share of Common Stock on the
date of grant. The exercise price of options may, under certain circumstances,
be paid with shares to be issued upon exercise of such options. The shares so
reserved and any shares subject to, and the exercise prices of, options are
subject to adjustment for stock dividends, stock splits, share combinations and
certain other events. All options which have been or may be granted under the
Management Stock Option Plan are non-qualified stock options.
UCAR has the right to cancel options granted under the Management Stock
Option Plan in the event of a change in control, in which event UCAR is required
to pay the participant an amount equal to the difference between the exercise
price of the cancelled options and the fair market value of the underlying
shares. For this purpose, a change in control occurs on (i) the date on which
any person (other than Blackstone) beneficially owns more than 35% of the total
voting power of UCAR and Blackstone beneficially owns a lesser percentage of
such voting power and does not have the right or ability to elect or designate
for election a majority of the Board or (ii) the date, at the end of any two
year period, on which individuals, who at the beginning of such period were
directors of UCAR, or individuals nominated or elected by a vote of 66 2/3% of
such directors or directors previously so elected or nominated ('Incumbent
Directors'), cease to constitute a majority of the Board.
1995 Directors Stock Plan
In connection with the Initial Offering, UCAR adopted the UCAR
International Inc. 1995 Directors Stock Plan (the '1995 Directors Stock Plan').
All directors who are not employees of the Company or Blackstone participate in
the 1995 Directors Stock Plan. The 1995 Directors Stock Plan is administered by
the Organization and Compensation Committee. The 1995 Directors Stock Plan will
expire on January 1, 2000.
The 1995 Directors Stock Plan provides that each director who was a
participant on or before January 1, 1996 would be granted 1,000 shares of Common
Stock, which have and will become non-forfeitable over five years at the rate of
200 shares per year on January 1 of each year commencing January 1, 1996. The
1995
7
Directors Stock Plan further provides that a director who becomes a participant
after January 1, 1996 will be granted that number of shares of Common Stock
equal to 200 times the number of full or partial years between such date and
December 31, 1999, which shares will become non-forfeitable in the same manner.
If a participant ceases to be a director after age 65 or by reason of death or
disability or in the event of a change in control as defined therein, the shares
which have not otherwise become non-forfeitable shall immediately become non-
forfeitable. A change in control has the same meaning as it has under the
Management Stock Option Plan.
Each participant in the 1995 Directors Stock Plan has voting rights with
respect to those shares which are non- forfeitable. On each date on which shares
become non-forfeitable, a cash payment will be made by the Company to the
participant for the purpose of paying any federal, foreign or state income tax
liabilities associated with the award of those shares.
Deferral Plan
The Company maintains a compensation deferral plan (the 'Deferral Plan')
for the benefit of its United States- paid management employees who participate
in variable compensation programs (including the Senior Executives). The
Deferral Plan is effective for compensation that would otherwise be paid on or
after January 1, 1995. Under the Deferral Plan, participants are able to defer
up to 85% of their variable compensation awarded and/or up to 50% of their base
salary. Contributions to the Deferral Plan will mirror the investment experience
of a fixed income fund, a balanced fund or an equity fund (which equity fund
does not relate to the Common Stock), pursuant to the election of the
participant. The Deferral Plan also restores the Savings Plan matching
contribution lost on compensation between $150,000 and $235,840 (as such amounts
may be increased under Section 415(d) of the Internal Revenue Code of 1986, as
amended (the 'Code')) because of the limitations imposed under Section
401(a)(17) of the Code, provided that the employee is participating in the
Savings Plan and the Deferral Plan. Distributions from the Deferral Plan
generally will be made upon retirement or other termination of employment,
unless further deferred by the participant. In addition, a participant may
irrevocably elect to receive interim distributions prior to retirement or other
termination of employment.
Retirement Plan
Prior to February 25, 1991, substantially all of the Company's domestic
employees participated in the Union Carbide retirement program (the 'Union
Carbide Retirement Program'). Effective February 25, 1991, the Company adopted
its own similar retirement program (the 'UCAR Retirement Plan'). The cost of the
UCAR Retirement Plan is borne entirely by the Company. The UCAR Retirement Plan
covers substantially all employees of the Company in the United States,
including the Named Executive Officers (other than Mr. Marcellin) and certain
United States nationals employed by foreign subsidiaries. Retirement and death
benefits related to employee service through February 25, 1991 are covered by
the Union Carbide Retirement Program. Benefits paid by the Union Carbide
Retirement Program are based on final average pay through February 25, 1991 plus
salary increases (not to exceed 6% per year) through January 26, 1995. All
employees of the Company who retired prior to February 25, 1991 are covered
under the Union Carbide Retirement Program. Subject to certain limitations, all
service and earnings recognized under the Union Carbide Retirement Program prior
to February 25, 1991 is recognized under the UCAR Retirement Plan.
The following table sets forth the estimated annual benefits payable, based
on the indicated credited years of service and the indicated average annual
compensation used in calculating benefits, assuming a normal retirement at age
65 in 1996, under the combined qualified and non-qualified pension plans of the
Company and Union Carbide.
RETIREMENT PLAN TABLE
YEARS OF SERVICE
AVERAGE ANNUAL --------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- -------------- -------- -------- -------- -------- -------- --------
$ 100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
150,000 33,750 45,000 56,520 67,500 78,750 90,000
250,000 56,250 75,000 93,750 112,500 131,250 150,000
500,000 112,500 150,000 187,500 225,000 262,500 300,000
750,000 168,750 225,000 281,250 337,500 393,750 450,000
1,000,000 225,000 300,000 375,000 450,000 525,000 600,000
8
Under the UCAR Retirement Plan, the monthly amount of an employee's
retirement benefit upon retirement at age 65 is a percentage of average monthly
compensation received during the three year period preceding retirement, or the
highest average monthly compensation received during any three calendar years in
the 10 calendar years preceding retirement if it would result in a higher
pension benefit, multiplied by the number of years of service credit, less up to
50% of projected primary Social Security benefits and deducting therefrom any
public pension except any military pension or any benefit under the Federal
Social Security Act. An employee who is (i) age 62 or over with ten or more
years of service credit or (ii) whose age and service credit add up to 85 may
voluntarily retire earlier than age 65 with a retirement benefit unreduced
because of early retirement, based on years of service credit at the date of
retirement. The compensation covered by the UCAR Retirement Plan includes salary
and certain variable compensation and includes profit sharing under group plans
for employees in the United States in an amount up to 8% of the employee's base
salary. The benefits payable reflected in the Retirement Plan Table are
calculated on a straight-life annuity basis and are subject to an offset for
such Social Security benefits.
For federal income tax purposes, the amount of benefits that can be paid
from a qualified retirement plan is restricted. The Company has adopted
non-qualified unfunded plans for payment of those benefits at retirement that
cannot be paid from its qualified retirement plan. Employees who retire after
January 1, 1994 may elect to receive the payment of benefits from these
non-qualified unfunded plans monthly, in a lump sum payment or in annual
payments over up to five years. Employees may elect to defer receipt of these
lump sums under the Deferral Plan. The practical effect of these non-qualified
plans is to calculate benefits to all employees on uniform basis, including
those who are officers and directors.
Benefits under these non-qualified plans are generally paid out of the
general assets of the Company, although they may also be paid through a grantor
trust adopted by the Company or by purchase of annuities. If the Company
purchases annuities, this would not increase the after-tax amount of benefits to
which employees are entitled, but would relieve the Company of liability for the
benefits under the non-qualified plans covered by such annuities.
As of February 28, 1997, Mr. Krass, age 60, is credited with 34 years of
service; Mr. Hart, age 60, is credited with 36 years of service; Mr. Mancino,
age 54 is credited with 21 years of service; Mr. Wiemels, age 52, is credited
with 29 years of service; and Mr. Wolf, age 52, is credited with 29 years of
service.
Employees of the Company's French subsidiary, which include Mr. Marcellin,
participate in three contributory retirement plans. Two of these plans are
mandated by French law and one is sponsored by the Company. In addition,
employees hired prior to 1969 and who were age 30 with at least 15 years of
service at December 31, 1989 (as was Mr. Marcellin) are entitled to benefits
under two other pension plans sponsored by the Company. If Mr. Marcellin (age 62
as of February 28, 1997) had retired in 1996, his aggregate annual benefits at
age 65 under these plans would have been approximately $180,000.
Benefit Security
UCAR has adopted a grantor trust to assist it in providing for payment of
certain benefit plan obligations to management of the Company which are
currently paid out of the general assets of the Company. The trust may be used
to set aside compensation which is deferred under the Deferral Plan. The trust
may also be used to set aside accrued benefits under nonqualified retirement
plans and severance obligations under the Employment Agreements. The trust
contains a benefits protection account which makes funds available to the
trustee to assist participants and their beneficiaries in enforcing their claims
with respect to those benefits and obligations upon a change in control. UCAR
may from time to time contribute assets to or, with the approval of a majority
of the Board, withdraw assets from the trust (other than from the benefits
protection account to which $250,000 has been contributed), except that no
withdrawal can be made after a change in control until all such benefits and
obligations are paid or discharged. The Board may amend or terminate the trust
at any time prior to a change in control. Upon a change of control, the trust
becomes irrevocable, UCAR is required to make contributions to the trust
sufficient to discharge such obligations or pay such benefits and the trustee is
required to use the amounts held in the trust for such purposes. Upon a change
in control, no amendment of the trust may be adopted without the written consent
of a majority of the participants and the beneficiaries who are receiving
benefits. Consistent with the requirements of applicable law, the assets of the
trust are subject to the claims of creditors of UCAR in the event of UCAR's
insolvency or bankruptcy. A change in control has the same meaning as it has for
the
9
Management Stock Option Plan, except that any transaction approved by a majority
of the Incumbent Directors shall not constitute a change in control if so
determined by two-thirds of the Incumbent Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert P. Krass, the Chairman of the Board, President and Chief Executive
Officer of UCAR, served on the Compensation Committee since its formation in
December 1993 until its merger into the Organization and Compensation Committee
in May 1996, when he resigned from the Committee.
REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
In accordance with the rules and regulations of the Commission, the
following report of the Board and the Performance Graph appearing immediately
thereafter shall not be deemed to be soliciting material within the meaning of
Regulations 14A and 14C under the Exchange Act filed with the Commission under
the Exchange Act or otherwise subject to such Regulations 14A or 14C or the
liabilities of Section 18 of the Exchange Act and shall not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, notwithstanding any general incorporation by
reference of this Proxy Statement into any other document filed with Commission.
The compensation of executive officers of the Company for 1996 was a
continuation of the compensation philosophy adopted in 1995 in connection with
the Recapitalization and reflects both the long-held philosophy of senior
management regarding compensation and the impact of various transactions that
have affected the Company as well as the impact of changes in the Company's
industry.
Senior management has consistently held a philosophy that the Company's
success is attributable to the efforts of its employees, including its executive
officers and other senior and mid-level executives. As a result, it has sought
to establish base and incentive compensation programs and benefit arrangements
at levels sufficient to retain, attract and motivate qualified personnel. In
addition, senior management has sought to provide incentive compensation
programs which align compensation with performance of the Company and provide
amounts of incentive compensation commensurate with the difficulties and risks
associated with achieving various levels of performance. Finally, it has sought
to make the Company's incentive compensation broad-based, extending to all
senior and mid-level management (and, as appropriate, to other employees) who
may contribute to the performance of the Company.
The Company has been the subject of three major transactions which have
affected executive compensation. On February 25, 1991, Union Carbide, which had
been the parent of the Company for almost 75 years, sold 50% of the common
equity of the Company to a joint venture partner. On January 26, 1995, the
Company consummated the Recapitalization, pursuant to which: (i) UCAR issued
Common Stock representing approximately 75% of the then outstanding Common Stock
to Blackstone and other investors, including certain members of management; (ii)
UCAR refinanced and increased its outstanding debt by approximately $710
million; and (iii) UCAR repurchased all of the common equity then held by the
joint venture partner and paid to Union Carbide a cash dividend on the common
equity then owned by Union Carbide, which equity thereafter represented
approximately 25% of the then outstanding Common Stock. In August 1995, UCAR
completed the Initial Offering and, as part of the Initial Offering, Union
Carbide sold all of the Common Stock then owned by it.
Prior to the Recapitalization, compensation consisted primarily of
salaries, annual bonuses, the Long Term Plan and broad-based group benefit and
profit sharing plans. Since the Company was wholly owned by Union Carbide and
its joint venture partner, management had no equity interest in the Company.
In connection with the Recapitalization, new compensation programs were
adopted by the Board which sought to implement the philosophy described above.
These programs also sought to encourage management to invest in UCAR to provide
for risk-sharing with the new owners of UCAR, to obtain long term commitments
from management to work toward meeting new financial goals for the Company and
to provide potential short term and long term rewards to reflect the Company's
radically different risk and opportunity profile. To achieve these goals, these
programs consisted of several elements. One element was obtaining contractual
commitments, supported by non-competition covenants, from each Senior Executive
to remain with UCAR for at least three years. In addition, UCAR increased
salaries and annual incentive compensation of the Senior Executives to levels
competitive with those of comparable companies. As the second element, UCAR
offered members of
10
management the opportunity to share the risks and rewards of equity ownership by
enabling them to invest their payments under the Long Term Plan in equity of
UCAR. UCAR provided an incentive for such investments with grants of matching
restricted stock and facilitated such investments with tax loans and tax
gross-ups to cover tax consequences arising from such investments. The third
element consisted of grants of options under the Management Stock Option Plan to
provide long term incentives based on the value of the equity of UCAR. Options
were granted to approximately 70 participants. A portion of the options granted
to each participant vested only upon achievement of certain financial targets
('performance options') and the balance vested ratably over five years (the
'time options'), with all such options being forfeited upon termination of
employment under various circumstances not in the best interests of the Company.
The final element consisted of Supplemental Plan Variable Compensation to the
Senior Executives and certain other members of management which was designed to
provide short term performance-based incentives.
The Company's financial performance has improved significantly over the
past five years, as reflected in the appreciation of the value of the equity of
the Company. This improvement has been due in large part to business strategies
developed and implement by management. This improved financial performance made
feasible both the Recapitalization and the Initial Offering. Under the terms of
the Management Stock Option Plan, all time options granted thereunder
automatically vested upon the Initial Offering. In addition, in connection with
the Initial Offering, the Board accelerated the vesting of the performance
options which would otherwise have vested upon achievement of the targets for
1995, 1996 and 1997.
The 1996 compensation of the Chief Executive Officer was based on the
Company's performance and enhanced by his individual performance. Mr. Krass
participated in the same compensation programs and benefit plans as other
members of senior and mid-level management, although at greater levels which
reflect his increased responsibility and contribution to the Company's
performance and long term success. Other than his base salary, which was set by
the term of his Employment Agreement, Mr. Krass' compensation for 1996 consisted
primarily of incentive compensation based on the Company's financial
performance. Mr. Krass' compensation for 1996 (as well as that of the other
executive officers) was determined by the Board as described above.
Section 162(m) of the Code limits the deductibility by public companies of
certain executive compensation in excess of $1 million per executive per year,
but excludes from the calculation of the $1 million limit certain elements of
compensation, including performance-based compensation, provided that certain
requirements are met. While the Board considered the impact of Section 162(m) in
connection with adopting the new compensation programs described above and
certain of the Company's incentive compensation plans in which senior management
may participate have been designed so that, under certain circumstances, awards
thereunder or participation therein may qualify for an exemption to the $1
million limit on tax deductibility under Section 162(m), the Board does not
believe that Section 162(m) is dispositive as to the amount or types of
compensation to be paid to senior management or the conditions to payment of
such compensation.
Robert P. Krass
R. Eugene Cartledge
John R. Hall
Glenn H. Hutchins
Robert D. Kennedy
Howard A. Lipson
Peter G. Peterson
Stephen A. Schwarzman
This report is submitted by the Board which participated as a whole in the
adoption and implementation of the compensation philosophy discussed above,
except that Messrs. Hall and Cartledge, who were not members of the Board at the
time of the initial actions described in the report, participated solely in the
approval of bonuses for 1996.
11
PERFORMANCE GRAPH
The graph set forth below shows cumulative total return to stockholders on
an initial investment of $100 in shares of Common Stock as compared to an
initial investment of $100 in the Standard & Poor's 400 Midcap Index and the
NYSE Industrials Index over the period from August 10, 1995, the first trading
date of the Common Stock in connection with the Initial Offering, through
December 31, 1996. Total return assumes dividend reinvestment. The stock price
performance shown on the graph is not necessarily indicative of future stock
price performance.
[PERFORMANCE GRAPH]
Source: Compustat, Bloomberg
10 AUG 95 31 DEC 95 31 DEC 96
--------- --------- ---------
UCAR INTERNATIONAL INC..................................... 100.00 125.58 140.00
S&P MIDCAP 400 INDEX....................................... 100.00 106.41 126.87
NYSE INDUSTRIALS........................................... 100.00 109.80 133.62
12
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 28, 1997, the number and
percentage of outstanding shares of Common Stock owned beneficially by: (i) each
stockholder known by UCAR to own more than 5% of the outstanding shares of
Common Stock; (ii) each director of UCAR; (iii) each of the Named Executive
Officers; and (iv) all directors and executive officers as a group.
BENEFICIAL OWNERSHIP
---------------------------------------
PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OUTSTANDING SHARES
- ---------------------------------------------------------------- ---------------- ------------------
Blackstone Management Associates II LLC ('BMA II')(a) .......... 9,137,385(b) 19.5%
345 Park Avenue
New York, NY 10154
Chase Equity Associates, L.P.(b) ............................... 24,745 *
270 Park Avenue
New York, NY 10017
American Express Financial Corporation ......................... 2,466,365(c) 5.3%
IDS Tower 10
Minneapolis, MN 55440
FMR Corp ...................................................... 3,604,200(c) 7.8%
82 Devonshire Street
Boston, MA 02109
Neuberger & Berman, LLC ....................................... 6,052,000(c) 13.0%
605 Third Avenue
New York, NY 10158
Oppenheimer Group, Inc. ....................................... 4,435,886(c) 9.5%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Wellington Management Company, LLP ............................ 3,557,033(c) 7.7%
75 State Street
Boston, MA 02109
Robert P. Krass(b)(d)(e)(f)..................................... 1,144,754 2.4%
Robert J. Hart(b)(d)(f)......................................... 499,500 1.1%
Peter B. Mancino(b)(d)(f)....................................... 235,903 *
Maurice Marcellin(g)............................................ 2,000 *
William P. Wiemels(b)(d)(f)..................................... 322,136 *
Fred C. Wolf(b)(d)(f)........................................... 188,695 *
R. Eugene Cartledge(h)(i)....................................... 3,800 *
John R. Hall(i)(j).............................................. 2,000 *
Glenn H. Hutchins(k)............................................ 9,137,385 19.5%
Robert D. Kennedy(d)(i)......................................... 5,000 *
Howard A. Lipson(k)............................................. 9,137,385 19.5%
Peter G. Peterson(k)............................................ 9,137,385 19.5%
Stephen A. Schwarzman(k)........................................ 9,137,385 19.5%
Directors and executive officers as a group(l) (13 persons)..... 11,781,604 25.2%
(Footnotes on next page)
13
(Footnotes from previous page)
- ------------------
* Represents holdings of less than one percent
(a) BMA II, as the general partner of BCP, BOCP and BFIP, exercises voting and dispositive power with respect to
the shares beneficially owned by Blackstone.
(b) 9,137,385 shares, or 19.5%, of the outstanding shares (before the Offering) are held collectively by BCP,
BOCP and BFIP. BCP, BOCP and BFIP may be deemed beneficially to own 9,969,919 shares, or 21.3%, of the
outstanding shares (before the Offering), collectively, due to (i) an agreement between Blackstone and Chase
Equity Associates, L.P. pursuant to which Chase Equity Associates, L.P. has agreed to vote its shares in the
same manner as Blackstone votes its shares and (ii) agreements between Blackstone and certain members of
management pursuant to which they have agreed to vote their shares in the same manner as Blackstone votes its
shares, all of which agreements are expected to terminate upon the closing of the Offering. If the Offering
closes, the over-allotment option granted by Blackstone in connection with the Offering as described in the
Registration Statement is not exercised in full and shares of Common Stock are repurchased by UCAR from
Blackstone upon the closing of the Offering (the 'Blackstone Share Repurchase') as described in the
Registration Statement (and excluding certain shares of Common Stock retained by Blackstone, which shares are
allocable to certain of Blackstone's partners), Blackstone will own approximately 1.3% of the outstanding
shares of Common Stock.
(c) The information provided for such stockholder is based solely upon a Schedule 13-G filed by such stockholder
with the Commission for December 31, 1996 and provided to UCAR. Such stockholder may be part of a group which
filed such Schedule 13-G jointly.
(d) Each such person's business address is 39 Old Ridgebury Road, Danbury, CT 06817.
(e) Includes 214,853 shares held by Krass Family Limited Partnership, a limited partnership of which Mr. Krass is
the general partner. Mr. Krass disclaims beneficial ownership of such shares.
(f) Includes shares subject to vested options under the Management Stock Option Plan as follows: Mr. Krass,
808,654 shares; Mr. Hart, 313,147 shares; Mr. Mancino, 216,794 shares; Mr. Wiemels, 264,518 shares; and Mr.
Wolf, 170,253 shares.
(g) Such person's business address is UCAR S.N.C., 4 Place des Etats-Unis, SILIC 214, F-94518 RUNGIS-CEDEX,
France.
(h) Such person's address is 6 Skidaway Village Walk, Suite 203-B, Savannah, GA 31411.
(i) Includes shares granted under the 1995 Directors Stock Plan.
(j) Such person's business address is 1000 Ashland Drive, Russell, KY 41169.
(k) Each such person's business address is c/o The Blackstone Group L.P., 345 Park Avenue, New York, NY 10154.
Messrs. Peterson, Schwarzman, Hutchins and Lipson are members of BMA II. Beneficial ownership of shares by
such four individuals includes the shares beneficially owned by Blackstone. Each of such persons disclaims
beneficial ownership of such shares.
(l) Includes 1,773,366 shares of Common Stock subject to vested options granted under the Management Stock Option
Plan. Includes the shares of Common Stock beneficially owned by Blackstone as described in note (k) above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires UCAR's directors and officers
and holders of more than 10% of the outstanding shares of Common Stock to file
with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of UCAR. UCAR believes
that, during 1996, its directors and officers and holders of more than 10% of
the outstanding shares of Common Stock complied with all reporting requirements
under Section 16(a).
14
CERTAIN TRANSACTIONS
UCAR, Blackstone and Chase Equity Associates, L.P. are parties to an
Amended and Restated Stockholders' Agreement (the 'Stockholders' Agreement')
which granted certain registration rights, restricted certain transactions
between UCAR and Blackstone, contained certain transfer restrictions, granted
certain'tag-along' and 'drag-along' rights and provided for certain rights and
obligations relating to voting shares of Common Stock held by Chase Equity
Associates, L.P. UCAR currently pays a monitoring fee of approximately $1
million per year to Blackstone as permitted by the Stockholders' Agreement. It
is expected that, in connection with the closing of the Offering and the
Blackstone Share Repurchase, such payments and all provisions of the
Stockholders' Agreement will terminate other than the provisions relating to
certain registration rights and indemnification and reimbursement of expenses in
connection with registration rights and monitoring services.
In connection with the Offering, UCAR has agreed to repurchase from
Blackstone 1,300,000 shares of Common Stock upon the closing of the Offering at
the same price per share at which the shares to be sold in the Offering will be
sold, which repurchase will constitute a part of UCAR's previously announced
stock repurchase program. The obligation to consummate such repurchase is
conditioned on the closing of the Offering.
In connection with the Recapitalization, certain members of management
entered into agreements with UCAR and UCAR adopted a stock option plan (known as
the Management Stock Option Plan) and an equity ownership program structured
with the advice of Blackstone. These agreements, plan and program contained
certain 'holdback' provisions, provided for certain 'drag-along' and 'tag-along'
rights, granted certain registration rights, contained certain transfer
restrictions, provided for certain interest-free tax assistance loans and
related collateralization arrangements and provided for certain rights and
obligations relating to the voting of shares of Common Stock held by certain
members of management. In connection with the closing of the Offering and the
Blackstone Share Repurchase, such provisions will terminate, other than those
related to such loans and loan collateralization which shall be modified to
release UCAR securities constituting such collateral to the extent the value of
such collateral exceeds the principal amounts of such loans, to require the
pledge of additional collateral if at any time the value of the collateral then
pledged to secure such loans is less than the principal amount thereof and to
provide that such loans become due upon retirement, termination of employment or
sale of collateral.
UCAR provided such loans (i) in an aggregate amount of $2 million to
members of management who purchased shares of Common Stock and received
additional restricted matching stock pursuant to such equity ownership program
and (ii) in the aggregate amount of $1 million to those of such persons who
elected to recognize income at the time they received a grant of matching
restricted stock pursuant to Section 83(b) of the Code. In addition, UCAR has
agreed to gross-up the income tax liability on such loans (at such time as such
liability is incurred) by paying the borrowers such additional amounts as are
necessary to compensate them for the incremental income taxes due on the imputed
interest income recognized because of the interest free nature of the loans.
Although the loans generally are non-recourse to the borrowers, UCAR will be
permitted to offset severance payments which are otherwise payable to the
borrowers upon their termination of employment by the amount of any outstanding
loan. The loans are secured by all shares and options issued pursuant to such
purchases and grants and such stock option plan and payment on the loans must be
made upon sales of the shares securing such loans (including shares issued upon
an exercise of options, but excluding the sale of certain shares given or which
may be given to family members or charities) in an amount equal to 20% of the
net pre-tax proceeds of such sales until the loans are paid in full. Upon the
closing of the Offering, such collateralization arrangements and repayment terms
will be changed as described in the preceding paragraph. The outstanding amount
of each such loan to a Named Executive Officer at December 31, 1996 and February
28, 1997, which is also the largest aggregate amount of each such loan
outstanding during 1996, was: $1,281,832 for Mr. Krass; $780,162 for Mr. Hart;
$102,547 for Mr. Mancino; $228,166 for Mr. Wiemels; and $102,547 for Mr. Wolf.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING OF STOCKHOLDERS FOR 1998
Proposals which stockholders wish to have considered for inclusion in the
proxy statement for the annual meeting of stockholders for 1998 must be received
at UCAR's principal executive office on or before December 4, 1997. The By-Laws
provide that notice of a proposal by a stockholder must be received by the
Secretary of UCAR not later than 80 days before the meeting before which such
proposal is to be brought, except in certain circumstances, and must contain
detailed information regarding such proposal and the stockholder making such
proposal.
15
OTHER INFORMATION
The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock entitled to vote at the meeting is
necessary to constitute a quorum for the transaction of business. The nominees
receiving a plurality of the votes cast will be elected as directors. Only those
votes cast for or against a proposal are used in determining the results of a
vote. Abstentions and broker non-votes are each included for purposes of
determining the presence or absence of a sufficient number of shares to
constitute a quorum. With respect to the approval of any particular proposal,
abstentions are considered present at the meeting, but since they are not
affirmative votes for the proposal they will have the same effect as votes
against the proposal. Broker non- votes, on the other hand, are not considered
present at the meeting for the particular proposal for which the broker withheld
authority to vote.
In addition to the solicitation of proxies by mail, officers or other
employees of the Company, without extra remuneration, may solicit proxies by
telephone or personal contact. UCAR will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting material to
beneficial owners of shares of Common Stock and will pay such persons for
forwarding such material. All costs for the solicitation of proxies by the
Board, anticipated to be approximately $10,000, will be borne by UCAR. A list of
stockholders entitled to vote at the meeting will be available for examination
by stockholders during ordinary business hours during the 10 days prior to the
meeting at UCAR's principal executive offices at 39 Old Ridgebury Road, Danbury,
Connecticut 06817.
16
UCAR INTERNATIONAL INC.
PROXY/VOTING INSTRUCTION CARD
This proxy is solicited on behalf of the Board of Directors of UCAR
International Inc. for the Annual Meeting of Stockholders on May 13, 1997
The undersigned appoints Robert P. Krass, William P. Wiemels and Peter B.
Mancino, and each of them, with full power of substitution in each, the proxies
of the undersigned, to represent the undersigned and vote all shares of UCAR
International Inc. Common Stock which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders to be held on May 13, 1997, and at any
adjournment or postponement thereof, as indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR the election of the nominees listed on the reverse side. If you are
a participant in the UCAR Carbon Savings Plan (the "Savings Plan"), the front of
this Proxy Card shows units allocated to you under the Savings Plan. The actual
number of shares allocated to you and which will be voted on your behalf at the
Annual Meeting of Stockholders in respect of such units may vary slightly in
accordance with the provisions of the Savings Plan.
(Continued, and to be dated and signed, on the other side)
UCAR INTERNATIONAL INC.
P.O. BOX 11202
NEW YORK, N.Y. 10203-0202
1. Election of Directors FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
listed below. for all nominees listed below.
Nominees: Robert P. Krass, R. Eugene Cartledge, John R. Hall and Robert D.
Kennedy and, except as otherwise described in the Notice of Annual
Meeting of Stockholders to be held on May 13, 1997 and Proxy
Statement, Glenn H. Hutchins, Howard A. Lipson, Peter G. Peterson and
Stephen A. Schwarzman.
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions ____________________________________________________________________
In their discretion the Proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournment or postponement
thereof.
If you plan to attend the
meeting please check here. / /
Change of Address and
or Comments Mark Here / /
The signature on this Proxy should correspond
exactly with stockholder's name as printed to
the left. In the case of joint tenancies, both
stockholders should sign. Persons signing as
Attorney, Executor, Administrator, Trustee or
Guardian should give their full title.
Dated: _________________________________, 1997
______________________________________________
(Signature)
______________________________________________
(Signature)
Votes must be indicated
(x) in Black or Blue ink. / /
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY