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:
[LOGO]
UCAR INTERNATIONAL INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1998 AND
PROXY STATEMENT
April 30, 1998
ADMISSION TICKET
UCAR INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 4, 1998 AT 10:30 AM
DANBURY HILTON & TOWERS
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. Proceed on I-684 North to exit 9E (I-84
East Danbury, CT). Proceed on I-84 East to exit 2 (Mill Plain Road). Go to the
bottom of the ramp and turn left. Go to the second light and turn right. Go to
the next light and turn right again. Proceed over the highway and up the hill,
and the Hilton will be on the left.
FROM BOSTON:
Take Massachusetts Turnpike (Route 90) to Sturbridge, Exit 9. Proceed onto I-84
West. Proceed on I-84 West to exit 2A in Danbury (Old Ridgebury Road). Circle
over the highway and the Hilton will be on the left.
FROM HARTFORD:
Take I-84 West to exit 2A in Danbury (Old Ridgebury Road). Circle over the
highway and the Hilton will be on your left.
FROM NEW HAVEN:
Take Route 34 West to Newtown, CT to junction I-84 west to Danbury. Proceed to
exit 2A (Old Ridgebury Road). Circle over the highway and the Hilton will be on
your left.
FROM WHITE PLAINS/WESTCHESTER:
Take I-684 North to Brewster and proceed to Exit 9E (I-84 East to Danbury).
Proceed on I-84 East to exit 2 (Mill Plain Road). Go to the bottom of the ramp
and turn left. Go to the second light and turn right. Go to the next light and
turn right again. Proceed over the highway and up the hill and the Hilton will
be on the left.
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 proceed north. Parkway will end and
merge with I-684 North. Proceed on I-684 North to exit 9E (I-84 East Danbury,
CT). Proceed on I-84 East to exit 2 (Mill Plain Road). Go to the bottom of the
ramp and turn left. Go to the second light and turn right. Go to the next light
and turn right again. Proceed over the highway and up the hill and the Hilton
will be on your left.
[LOGO]
UCAR INTERNATIONAL INC.
39 Old Ridgebury Road, Section J-4, Danbury, CT 06817-0001
ROBERT D. KENNEDY
Chairman and
Chief Executive Officer
April 30, 1998
Fellow Stockholders:
It is my pleasure to invite you to our annual meeting which will be held on
Thursday, June 4, 1998 at 10:30 a.m., at the Danbury Hilton & Towers, 18 Old
Ridgebury Road, Danbury, Connecticut.
In the following pages, you will find the formal notice of the annual
meeting and our proxy statement. After reading the proxy statement, please mark,
sign and promptly return the enclosed proxy card to ensure that your shares will
be represented. We hope that many of you will be able to attend our annual
meeting in person. Should you wish to do so, please write your name, where
indicated, on the enclosed ticket and bring it with you to the annual meeting.
For those of you who will be unable to attend, as well as those of you who
plan to join us at the annual meeting, it is also my pleasure to introduce you
to the new UCAR management team. William P. Wiemels is Vice President and Chief
Operating Officer, Fred C. Wolf is Vice President and Chief Financial Officer
and Peter B. Mancino continues as Vice President, General Counsel and Secretary.
All of these individuals have long histories with the Company and have
demonstrated their dedication to UCAR and its businesses. Please join me in
welcoming them to their new positions. Additionally, an Office of the Chairman
has been created, consisting of Messrs. Wiemels, Wolf, Mancino and myself, which
will be responsible for managing day-to-day operations. Also, Alec Flamm joined
the Board in April 1998 and we look forward to his business experience and
leadership skills.
Our revenues have grown from $758 million in 1994 to almost $1.1 billion in
1997, a 45% increase in four years, including $140 million of revenues
contributed from our recently acquired businesses. During the past four years,
gross profits grew from $243 million to $411 million, a 69% increase, and cash
flow from operations totaled $648 million, an average of $162 million per year.
We believe that the drivers of our business, as a supplier of graphite and
carbon products to basic industries around the world, are still strong. Electric
arc furnaces need to have graphite electrodes in order to make steel; there are
no known substitutes. Electric arc furnace steel production has grown at a
compounded annual growth rate of 4% per year since the early 1970s, and growth
is expected to continue, at least at the historic rate, through the year 2000.
UCAR employees around the world are implementing programs to maintain the
Company's leading position in its industry and markets.
UCAR is a company with more than 110 years of history. During that time, we
have experienced many different challenges, each of which has been met and
overcome. Recently, UCAR accrued $340 million for potential liabilities and
expenses in connection with antitrust investigations and related lawsuits and
claims and pled guilty to a one-count charge of violating federal antitrust laws
in connection with the sale of graphite electrodes. Obviously, as previously
announced, these actions raise a host of concerns regarding various aspects of
UCAR's business and affairs. While the ultimate resolution of these concerns
cannot be predicted at this time, the entire management team continues to
believe in the long-term fundamentals of UCAR's business and its long-term
strategy of being a low-cost producer of high quality products and provider of
superior services to customers.
All this could not have been done without the help and support of our
customers, suppliers, employees and stockholders. For this we are thankful. We
look forward to seeing you at the annual meeting.
Sincerely,
/s/ Robert D. Kennedy
Chairman of the Board and
Chief Executive Officer
[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 JUNE 4, 1998
April 30, 1998
The annual meeting of stockholders of UCAR International Inc. will be held
at 10:30 a.m. on Thursday, June 4, 1998, at the Danbury Hilton & Towers, 18 Old
Ridgebury Road, Danbury, Connecticut, for the following purposes:
1. To elect 4 directors to serve on the Board of Directors until the
annual meeting of stockholders for 1999.
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
[LOGO]
UCAR INTERNATIONAL INC.
39 Old Ridgebury Road, Section J-4, Danbury, CT 06817-0001
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS FOR 1998
TABLE OF CONTENTS
PAGE
----
General Information for Stockholders....................................................................... 1
Election of Directors...................................................................................... 1
Nominees.............................................................................................. 1
Committees of the Board............................................................................... 2
Director Compensation................................................................................. 3
Executive Officer Compensation........................................................................ 3
Report on Executive Compensation...................................................................... 8
Performance Graph..................................................................................... 11
Security Ownership of Management and Certain Beneficial Owners........................................ 12
Section 16(a) Beneficial Ownership Reporting Compliance............................................... 13
Certain Transactions.................................................................................. 13
Stockholder Proposals for the Annual Meeting of Stockholders for 1999...................................... 14
Independent Public Accountants............................................................................. 14
Other Information.......................................................................................... 14
GENERAL INFORMATION FOR STOCKHOLDERS
Proxies are solicited from stockholders by the Board of Directors (the
'Board') of UCAR International Inc., a Delaware corporation ('UCAR'), in order
to provide every stockholder an opportunity to vote on all matters scheduled to
come before the annual meeting of stockholders for 1998, whether or not he or
she attends in person. When the enclosed proxy card is properly signed and
returned, the shares represented thereby 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 thereby 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 30,
1998. 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 April 27, 1998 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 April 1, 1998, 44,956,725 shares of
Common Stock were outstanding. Those shares were held by 65 stockholders of
record.
ELECTION OF DIRECTORS
NOMINEES
Unless a stockholder specifies otherwise, each returned proxy card will be
voted for the election to the Board of the 4 nominees who are listed below.
These nominees were unaminously nominated by the Board. 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 1999 and
qualified or until his removal or resignation. If any of the nominees are 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. UCAR is not aware of any circumstances that
would render any nominee unavailable. The ages of the nominees are given as of
April 1, 1998.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
o Robert D. Kennedy, age 65, was elected a director of UCAR (together with
its subsidiaries, the 'Company') in June 1990 and Chairman of the Board
and Chief Executive Officer on March 18, 1998. The Company is a
successor to the Carbon Products Division of Union Carbide Corporation
('Union Carbide'). Mr. Kennedy 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
1
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., K-Mart Corp., LionOre Mining International Ltd. and
General Signal Corporation. Mr. Kennedy has been Chairman of the Audit
Committee and a member of the Organization and Compensation Committee.
o R. Eugene Cartledge, age 68, was elected a 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. Mr.
Cartledge retired as Chairman of the Board of Savannah Foods &
Industries, Inc. in December 1997. He is a director of Union Camp
Corporation, Chase Brass Industries, Inc., Sun Company, Inc., Delta Air
Lines, Inc. and Blount, Inc. Mr. Cartledge has been Chairman of the
Nominating Committee and a member of the Audit Committee.
o Alec Flamm, age 71, was elected a director of UCAR in April 1998. From
January 1982 to August 1985, Mr. Flamm served as President and Chief
Operating Officer of Union Carbide. Mr. Flamm joined Union Carbide in
1949 and held various marketing and management positions. He retired as
a Vice Chairman and a director of Union Carbide in March 1986. Mr. Flamm
served Union Carbide as Vice Chairman from August 1985 and as a director
from 1981.
o John R. Hall, age 65, was elected a director of UCAR in November 1995.
Since July 1997, he has been the non-employee Chairman of Arch Coal,
Inc. 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 has been Chairman of
the Organization and Compensation Committee and a member of the Audit
Committee.
The Board met four times in 1997. 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 described
below.
The Audit Committee consists of three directors, none of whom may be an
employee of the Company. 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 1997.
The Nominating Committee consists of two directors. The Nominating
Committee is responsible for nominating individuals for election as directors of
UCAR. The Nominating Committee met two times in 1997.
The Organization and Compensation Committee consists of two 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). The Organization and Compensation Committee met
three times in 1997.
In light of previously announced recent changes in the membership on the
Board, the membership of committees of the Board is expected to change.
2
DIRECTOR COMPENSATION
Directors who are not employees of the Company 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, awards of shares of Common Stock as described
under '--1995 Directors Stock Plan' and options to purchase shares of Common
Stock as described under 'Executive Officer Compensation--Management Stock
Option 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 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.
1995 Directors Stock Plan
In connection with the initial public offering of Common Stock in August
1995 (the 'Initial Offering'), UCAR adopted the 1995 Directors Stock Plan (the
'1995 Directors Stock Plan'). All directors who are not employees of the Company
participate in the 1995 Directors Stock Plan. The 1995 Directors Stock Plan
expires 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 nonforfeitable over five years at the rate of
200 shares per year on January 1 of each year commencing January 1, 1996. The
1995 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 nonforfeitable 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, the shares that have
not otherwise become nonforfeitable shall immediately become nonforfeitable. A
change in control has the same meaning as it has under the Management Stock
Option Plan (as defined below). The 1995 Directors Stock Plan was amended in
1997 to eliminate certain holding requirements relating to shares that are or
become non-forfeitable.
Each participant in the 1995 Directors Stock Plan has voting rights with
respect to those shares which are nonforfeitable. On each date on which shares
become nonforfeitable, a cash payment is made by the Company to the relevant
participant for the purpose of paying any federal, foreign or state income tax
liabilities associated with the award of those shares.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information concerning compensation
received by the chief executive officer and each of the other four 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. Although Messrs. Hart and Krass have retired, they have been
included as Named Executive Officers because they held their positions for all
of 1997. In addition, effective March 18, 1998, Mr. Wiemels became Vice
President and Chief Operating Officer and Mr. Wolf became Vice President and
Chief Financial Officer. The following table sets forth their titles for the
positions they held during 1997.
3
SUMMARY COMPENSATION TABLE(A)
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------------- ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
OTHER RESTRICTED SECURITIES LONG TERM
NAME AND VARIABLE ANNUAL STOCK UNDERLYING PLAN
PRINCIPAL POSITIONS YEAR SALARY COMPENSATION(B) COMPENSATION(C) AWARDS(D) OPTIONS PAYOUTS(E)
- ----------------------------------- ---- -------- --------------- --------------- ---------- ---------- ----------
Robert P. Krass ................... 1997 $525,000 $ 1,540,875 $ 227,866 $ -- $ -- $ --
Chairman of the Board, 1996 525,000 1,608,250 232,504 -- -- --
President and Chief 1995 512,500 1,366,750 223,844 1,032,597 970,385 3,434,086
Executive Officer
Robert J. Hart(g) ................. 1997 300,000 805,500 131,850 -- -- --
Senior Vice President and 1996 300,000 894,000 138,221 -- -- --
Chief Operating Officer 1995 292,917 756,000 136,353 628,467 453,777 1,545,339
Peter B. Mancino .................. 1997 196,667 425,800 45,242 -- -- --
Vice President, General 1996 180,000 513,000 47,518 -- -- --
Counsel and Secretary 1995 177,500 430,200 43,937 82,604 314,153 858,521
William P. Wiemels ................ 1997 229,167 508,875 69,291 -- -- --
Vice President, Chief 1996 200,000 573,000 72,077 -- -- --
Financial Officer and 1995 195,833 481,000 134,727 183,806 363,022 858,521
Treasurer
Fred C. Wolf ...................... 1997 185,833 393,650 43,782 -- -- --
Vice President, 1996 165,000 458,250 45,058 -- -- --
Administration and 1995 162,333 382,350 41,717 82,604 258,304 858,521
Strategic Projects
NAME AND ALL OTHER
PRINCIPAL POSITIONS COMPENSATION(F)
- ----------------------------------- ---------------
Robert P. Krass ................... $69,318
Chairman of the Board, 71,934
President and Chief 75,752
Executive Officer
Robert J. Hart(g) ................. 53,234
Senior Vice President and 53,102
Chief Operating Officer 50,466
Peter B. Mancino .................. 27,710
Vice President, General 24,805
Counsel and Secretary 10,028
William P. Wiemels ................ 35,850
Vice President, Chief 30,361
Financial Officer and 11,486
Treasurer
Fred C. Wolf ...................... 26,402
Vice President, 23,188
Administration and 9,253
Strategic Projects
- ------------------
(a) Includes, for each year, compensation earned but deferred under the Deferral
Plan (as defined below) or other applicable plans or statutory provisions.
(b) Includes Annual Plan Variable Compensation (as defined below) and
Supplemental Plan Variable Compensation (as defined below).
(c) Includes, for 1997, 1996 and 1995, respectively: for Mr. Krass, $76,650,
$86,100 and $77,700, for Mr. Hart, $43,800, $49,200 and $44,400, for Mr.
Mancino, $29,200, $29,520 and $26,640, for Mr. Wiemels, $34,310, $32,800 and
$29,600, and for Mr. Wolf, $27,740, $27,060 and $24,420, of payments under a
group profit sharing plan for employees in the United States; for Mr. Krass,
$15,000, $12,050 and $4,920, for Mr. Hart, $5,145, $7,250 and $6,000, for
Mr. Mancino, $5,145, $7,250 and $6,000, for Mr. Wiemels, $5,145, $7,250 and
$6,000, and for Mr. Wolf, $5,145, $7,250 and $6,000, of financial planning
services and related tax advice; and for Mr. Krass, $136,216, $134,354 and
$141,224, for Mr. Hart, $82,905, $81,771 and $85,953, for Mr. Mancino,
$10,897, $10,748 and $11,297, for Mr. Wiemels, $24,247, $23,915 and $25,137,
and for Mr. Wolf, $10,897, $10,748 and $11,297, of imputed interest income
and reimbursement for tax liabilities on loans made in connection with
Common Stock purchased by and granted to such person in connection with the
leveraged recapitalization effected by the Company on January 26, 1995 (the
'Recapitalization'). Also includes, for Mr. Wiemels for 1997, 1996 and 1995,
respectively, $5,322, $7,758 and $62,182 of reimbursement of relocation
expenses and $267, $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 stock vested in connection with the Initial
Offering. The value of such stock at December 31 of each of 1997, 1996 and
1995, respectively, was: for Mr. Krass, $5,426,228, $5,112,034 and
$4,585,545, for Mr. Hart, $3,302,552, $3,111,324 and $2,790,889, for Mr.
Mancino, $434,081, $408,946 and $366,829, for Mr. Wiemels, $965,888,
$909,961 and $816,244, and for Mr. Wolf, $434,081, $408,946 and $366,829.
(e) Consists of payments under the 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 1997, 1996 and 1995, respectively: for Mr. Krass, $63,433,
$66,309 and $70,239, for Mr. Hart, $44,549, $44,540 and $44,677, for Mr.
Mancino, $24,110, $21,955 and $7,186, for Mr. Wiemels, $27,387, $23,349 and
$7,250, and for Mr. Wolf, $21,687, $18,925 and $5,361, for annual life
insurance premiums paid on a split dollar life contract; and for Mr. Krass,
$5,885, $5,625 and $5,513, for Mr. Hart, $8,685, $8,562 and $5,789, for Mr.
Mancino, $3,600, $2,850 and $2,842, for Mr. Wiemels, $8,463, $7,012 and
$4,236, and for Mr. Wolf, $4,715, $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) Mr. Hart was Senior Vice President and Chief Operating Officer from May 1997
until March 13, 1998. Prior thereto, he served as Vice President and General
Manager (North and South America).
4
No options to purchase shares of Common Stock were granted to Named
Executive Officers in 1997. The following table sets forth certain information
relating to the exercise of previously granted options to purchase Common Stock
by the Named Executive Officers during 1997.
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AT DECEMBER 31, 1997
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, 1997 AT DECEMBER 31, 1997
NAME EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
- ------------------------------ --------- ---------- ---------------------------- ----------------------------
Robert P. Krass............... -- $ -- 889,520/80,865 $28,764,853/$2,614,972
Robert J. Hart................ 57,000 2,059,675 293,962/37,815 9,505,996/1,222,843
Peter B. Mancino.............. 45,000 1,744,524 197,974/26,179 6,401,984/846,563
William P. Wiemels............ 30,000 1,197,624 264,770/30,252 8,562,000/978,274
Fred C. Wolf.................. 75,000 2,873,750 116,779/21,525 3,776,341/696,065
Prior to the sale of 50% of the equity of the Company by Union Carbide to
Mitsubishi Corporation ('Mitsubishi') on February 25, 1991, certain executive
officers of the Company were granted options to purchase common stock of Union
Carbide under Union Carbide's incentive compensation plans. No options to
purchase 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 1997
AND OPTION VALUES AT DECEMBER 31, 1997
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, 1997 AT DECEMBER 31, 1997
NAME EXERCISE REALIZED (EXERCISABLE) (EXERCISABLE)
- ------------------------------ --------- ---------- ---------------------------- ----------------------------
Robert P. Krass............... 33,000 $1,208,231 15,000 $510,848
Robert J. Hart................ -- -- -- --
Peter B. Mancino.............. -- -- -- --
William P. Wiemels............ -- -- 2,500 84,886
Fred C. Wolf.................. -- -- -- --
Employment and Other Agreements
In connection with the Recapitalization, UCAR entered into employment
agreements (the 'Employment Agreements') with each of the Named Executive
Officers. Each of the Employment Agreements had a three-year initial term, which
expired on January 26, 1998, and provides for automatic successive annual
renewals for additional one-year terms unless UCAR or the relevant Named
Executive Officer gives written notice of nonrenewal not less than 90 days prior
to the expiration of the then current term or the relevant Named Executive
Officer retires in accordance with the applicable retirement plan. At January
26, 1998, all of the Named Executive Officers were eligible to so retire.
Messrs. Krass and Hart so retired on March 13, 1998. Each of the Employment
Agreements provides for termination (subject to certain notice and other
procedural provisions) by UCAR for cause or by the relevant Named Executive
Officer for good reason and contains a noncompetition covenant which remains in
effect for a period of two years beyond the expiration of the then current term.
Under the Employment Agreements, current base salaries (which may be
increased by the Board) are: for Mr. Wiemels, $250,000; for Mr. Mancino,
$215,000; and for Mr. Wolf, $205,000. Under the Employment Agreements, base
salaries at the time of their retirement were: for Mr. Krass, $540,000; and for
Mr. Hart, $315,000. The Employment Agreements provide the Named Executive
Officers with the opportunity to receive
5
two bonuses, one of which is payable pursuant to the 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 Named Executive Officers, certain other management employees of the Company
are provided with the opportunity to receive such bonuses. The amount of
Supplemental Plan Variable Compensation equals 75% of base salary (excluding
increases in base salary subsequent to the Recapitalization) for achieving 100%
of the specified target, plus an additional 5% of base salary (excluding such
increases) for each percentage point by which actual EBITDA exceeds such
specified target.
The Employment Agreements provide that, if UCAR terminates the employment
of a Named Executive Officer without cause or a Named Executive Officer resigns
for good reason, the Named Executive Officer will be entitled to severance
payments and enhanced pension benefits. Severance payments upon termination
without cause or resignation for good reason will equal two times the sum of the
Named Executive Officer'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 Named Executive Officer elects to defer receipt of such
benefits, the amount the Named Executive Officer would have so received). In
addition, in connection with any such termination or resignation for good
reason, the Named Executive Officer's pension benefits will be calculated as if
the Named Executive Officer had an additional three years of age and three years
of service. These benefits are payable commencing immediately following
termination of employment and are not reduced for early commencement of
benefits.
On March 18, 1998, Robert D. Kennedy was elected by the Board as Chairman
of the Board and Chief Executive Officer. In connection therewith, Mr. Kennedy
receives an annual base salary of $525,000, as well as such annual bonuses as
other members of senior management may receive (but at a level commensurate with
his position as Chief Executive Officer). In addition, the Company has granted
to Mr. Kennedy ten-year options to purchase up to 300,000 shares of Common Stock
at an exercise price per share of $34.36. The options will vest in full on March
18, 1999, so long as Mr. Kennedy is the Chairman of the Board on such date.
Management Stock Option Plan
In connection with the Recapitalization, UCAR adopted the Management Stock
Option Plan (the 'Management Stock Option Plan'). The Management Stock Option
Plan was amended in March 1998 to increase the aggregate number of shares of
Common Stock subject thereto to 6,000,000 and to permit grants of options to
non-employee directors. Management employees of the Company (including the Named
Executive Officers) are also eligible to participate in the Management Stock
Option Plan. Each non-employee director serving on March 30, 1998 was granted a
vested ten-year option to purchase 5,000 shares of Common Stock at an exercise
price equal to the fair market value (as defined in the Management Stock Option
Plan) of a share of Common Stock on the date of grant. Each person who,
subsequent to March 30, 1998, became or becomes a non-employee director has been
or will be granted a ten-year option to purchase 5,000 shares of Common Stock at
an exercise price per share equal to such fair market value, which option will
vest in full one year after the date of grant so long as the director is then
serving as such. Management employees have been and may be awarded vested or
unvested options at the discretion of the Board or the Organization and
Compensation Committee. Unvested options have vested or may vest on satisfaction
of such employment or performance conditions as may have been provided in the
Management Stock Option Plan or as may be imposed by the Board or the
Organization and Compensation Committee at the time of grant. The exercise price
per share of options granted under the Management Stock Option Plan equals the
fair market value at the date of grant. Fair market value is defined (except in
the case of options granted in connection with the Recapitalization) as the
average of the high and low trading prices of the 20 business days immediately
preceding the relevant date. Accordingly, the exercise price per share of
options granted to Messrs. Cartledge and Hall was $32.53 and to Mr. Flamm was
$32.85. The exercise price of options may, under certain circumstances, be paid
with shares to be issued upon exercise of such options. 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 nonqualified stock options. Options awarded to employees expire on the date
fixed by Board or the Organization and Compensation Committee at the time the
options are granted, but must expire within 12 years after the date of grant.
6
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 participants an amount equal to the difference between the exercise price
of the canceled 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
beneficially owns more than 35% of the total voting power of UCAR 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.
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. 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, up to 50% of their base salary and up to 100% of their lump sum
payments from certain of the Company's other non-qualified plans. A portion of
these deferrals may be subject to a matching employer contribution.
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 Carbon Retirement Plan'). The cost
of the UCAR Carbon Retirement Plan is borne entirely by the Company. The UCAR
Carbon Retirement Plan covers substantially all employees of the Company in the
United States 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 are recognized under
the UCAR Carbon 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 1997, under the Union Carbide Retirement Program and the UCAR Carbon
Retirement Plan on a combined basis.
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
Under the UCAR Carbon 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
7
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 Carbon 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
nonqualified 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
nonqualified 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. Benefits under certain of these plans, under certain
circumstances, may be terminated if the Board determines that an employee has
engaged in activities which are detrimental to the interests of, or are in
competition with, the Company. Except as described in the preceding sentence,
the practical effect of these non-qualified plans is to calculate benefits to
all employees, including those who are officers and directors, on a uniform
basis.
Benefits under these nonqualified 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 nonqualified plans covered by such annuities.
As of February 28, 1998: Mr. Krass, age 61, was credited with 35 years of
service; Mr. Hart, age 61, was credited with 37 years of service; Mr. Mancino,
age 55, was credited with 22 years of service; Mr. Wiemels, age 53, was with 30
years of service; and Mr. Wolf, age 53, was credited with 30 years of service.
Benefit Security
The Company 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. The
Company 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 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.
REPORT ON EXECUTIVE COMPENSATION
In accordance with the rules and regulations of the Securities and Exchange
Commission (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
Securities Exchange Act of 1934, as amended (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
8
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 for 1997 was a continuation of the
compensation program adopted in 1995 in connection with the Recapitalization and
reflects both the long-held philosophy of the Company regarding compensation and
the impact of various transactions that have affected the Company.
The Company has consistently sought to establish base and incentive
compensation programs and benefit arrangements at levels sufficient to retain,
attract and motivate qualified personnel. In addition, the Company has sought to
provide incentive compensation programs that 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, the Company has sought to make its incentive compensation
broad based, extending to 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 Mitsubishi. On January 26, 1995, the Company
consummated the Recapitalization. In August 1995, UCAR completed the Initial
Offering.
Prior to the Recapitalization, compensation consisted primarily of
salaries, annual bonuses, the Long Term Plan and broad-based group benefit and
profit sharing plans. Because the Company was wholly owned by Union Carbide and
Mitsubishi, management had no equity interest in the Company.
In connection with the Recapitalization, which was led by Blackstone
Capital Partners II Merchant Banking Fund L.P. and its affiliates (collectively,
'Blackstone'), new compensation programs were adopted by the Board which sought
to continue 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 then 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 Named Executive Officer to remain with UCAR
for at least three years. In addition, UCAR increased salaries and annual
incentive compensation of the senior executives to levels more competitive with
those of comparable companies. As the second element, UCAR offered members of
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 ('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 certain members
of senior 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 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. In December
1997, the Board approved the vesting of performance options that would otherwise
have vested upon the achievement of targets for 1998. The Board took such action
to minimize the earnings charge from the vesting of the performance options in
the future because it believed that under the then current conditions the
Company would exceed those targets.
9
The 1997 compensation of Robert P. Krass, the then chief executive of the
Company, was based primarily on contractual arrangements under the programs
described above and the Company's financial performance.
Section 162(m) of the Internal Revenue Code of 1986, as amended, 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 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 D. Kennedy
R. Eugene Cartledge
John R. Hall
This report is submitted by Mr. Kennedy on behalf of the members of the
Board in office at the time of the Recapitalization, which Board participated as
a whole in the adoption and implementation of the compensation programs
discussed above. Messrs. Hall and Cartledge, who were not members of the Board
at such time, participated solely in the approval of bonuses for 1996 and 1997
and vesting of performance options for 1998.
10
PERFORMANCE GRAPH
The graph set forth below shows cumulative total return to stockholders on
an initial investment of $100 in 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, 1997. Total return assumes dividend reinvestment. The stock price
performance shown on the graph is not necessarily indicative of future stock
price performance.
[PERFORMANCE GRAPH]
Sources: Compustat, Bloomberg L.P.
10 AUG 95 31 DEC 95 31 DEC 96 31 DEC 97
--------- --------- --------- ---------
UCAR INTERNATIONAL INC.......................... $100.00 $125.58 $140.00 $148.61
S&P MIDCAP 400 INDEX............................ 100.00 106.41 126.87 167.76
NYSE INDUSTRIALS................................ 100.00 109.80 133.62 173.34
11
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 1, 1998, 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
- ---------------------------------------------------------------- ---------------- ------------------
FMR Corp.(a) .................................................. 3,029,600 6.7%
82 Devonshire Street
Boston, MA 02109
Neuberger & Berman, LLC(a) .................................... 6,428,850 14.3%
605 Third Avenue
New York, NY 10158
Oppenheimer Group, Inc.(a) .................................... 4,435,886 9.9%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Southeastern Asset Management, Inc.(a) ......................... 8,014,700 17.8%
6410 Poplar Avenue, Suite 900
Memphis, TN 38119
Robert P. Krass(b)(c)........................................... 1,009,767 2.2%
Robert J. Hart(b)(c)............................................ 468,166 *
Peter B. Mancino(c)(d).......................................... 217,083 *
William P. Wiemels(c)(d)........................................ 322,871 *
Fred C. Wolf(c)(d).............................................. 135,221 *
R. Eugene Cartledge(e)(f)....................................... 8,800 *
John R. Hall(f)(g).............................................. 12,000 *
Robert D. Kennedy(d)(f)......................................... 5,000 *
Directors and executive officers as a group(h) (10 persons) .... 2,437,862 5.2%
- ------------------
* Represents holdings of less than one percent
(a) The information provided for such stockholder is based solely upon a Schedule 13-G most recently filed by
such stockholder with the Commission and provided to UCAR. Such stockholder may be part of a group which
filed such Schedule 13-G jointly.
(b) Such person's business address during 1997 was 39 Old Ridgebury Road, Danbury, CT 06817.
(c) Includes shares subject to vested options granted under the Management Stock Option Plan as follows: Mr.
Krass, 889,520 shares; Mr. Hart, 293,962 shares; Mr. Mancino, 197,974 shares; Mr. Wiemels, 264,770 shares;
and Mr. Wolf, 116,779 shares.
(d) Such person's business address is 39 Old Ridgebury Road, Danbury, CT 06817.
(e) Such person's address is 6 Skidaway Village Walk, Suite 203-B, Savannah, GA 31411.
(f) Includes shares granted under the 1995 Directors Stock Plan.
(g) Such person's business address is 1000 Ashland Drive, Russell, KY 41169.
(h) Includes 1,989,581 shares of Common Stock subject to vested options granted under the Management Stock Option
Plan and the 1996 Mid-Management Equity Incentive Plan.
12
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 1997, 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), with the exception of the initial reports of Petrus J.
Barnard and William D. Cate with respect to their becoming subject to such
requirements, which reports were not filed on a timely basis.
CERTAIN TRANSACTIONS
UCAR, Blackstone and Chase Equity Associates, L.P. were parties to an
Amended and Restated Stockholders' Agreement (the 'Stockholders' Agreement')
which was originally entered into in connection with the Recapitalization and
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. Through April 1997, UCAR paid a monitoring fee of approximately
$1 million per year to Blackstone as permitted by the Stockholders' Agreement.
In connection with a secondary offering in April 1997 in which Blackstone sold a
majority of its then remaining shares of Common Stock and concurrently with
which UCAR consummated the repurchase of shares of Common Stock described below
(the 'Blackstone Share Repurchase'), such payments and all provisions of the
Stockholders' Agreement terminated other than certain provisions relating to
indemnification and reimbursement of expenses.
Concurrently with such secondary offering, UCAR repurchased from Blackstone
1,300,000 shares of Common Stock at the same price per share at which the shares
were sold to the public in such secondary offering, or an aggregate of $48
million. Such repurchase constituted a part of UCAR's previously announced stock
repurchase program.
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 tax assistance loans described below and
related collateralization arrangements and provided for certain rights and
obligations relating to voting shares of Common Stock held by certain members of
management. In connection with the closing of such secondary offering and the
repurchase of shares of Common Stock described above, such provisions
terminated, other than those related to such loans and loan collateralization
which were modified to release 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.
In connection with the Recapitalization, UCAR provided interest free loans
(i) in an aggregate amount of $2 million to members of management who purchased
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 pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, at the time they received a grant of
matching restricted stock pursuant to such equity ownership program. In
addition, UCAR 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 nonrecourse 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 outstanding amount of each such loan to a Named Executive
Officer at December 31, 1997, which is also the largest aggregate amount of each
such loan outstanding during 1997, was
13
$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 1999
Proposals which stockholders wish to have considered for inclusion in the
proxy statement for the annual meeting of stockholders for 1999 must be received
at UCAR's principal executive office on or before December 31, 1998. The
Company's Amended and Restated 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.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ('KPMG') has been recommended by the Audit Committee
and selected by the Board to audit the books and accounts of the Company for
1998. Representatives of KPMG will be present at the meeting, will be given the
opportunity to make a statement if they desire to do so and will respond to
appropriate questions of stockholders. KPMG has advised UCAR that neither it nor
any of its members has any direct financial interest in the Company as a
promoter, underwriter, voting trustee, director, officer or employee. All
professional services rendered by KPMG during 1997 were furnished at customary
rates.
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 nonvotes 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 nonvotes, 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.
14
CORPORATE AND INVESTOR INFORMATION
CORPORATE HEADQUARTERS
UCAR International Inc.
39 Old Ridgebury Road
Section J-4
Danbury, CT 06817-0001
U.S.A.
Tel: 203-207-7700
LOCATION OF FACILITIES & SALES OFFICES
UNITED STATES
Irvine, California
Danbury, Connecticut
Niagara Falls, New York
Lakewood, Ohio
Parma, Ohio
Clarksville, Tennessee
Columbia, Tennessee
Lawrenceburg, Tennessee
Clarksburg, West Virginia
INTERNATIONAL
Salvador Bahia, Brazil
Sao Paulo, Brazil
Welland, Canada
Beijing, China
Hong Kong, China
Calais, France
Notre Dame, France
Rungis, France
Venissieux, France
Berlin, Germany
Caserta, Italy
Malonno, Italy
Milano, Italy
Monterrey, Mexico
Moscow, Russia
Vyazma, Russia
Singapore
Meyerton, South Africa
Pamploma, Spain
Gland, Switzerland
Sheffield, United Kingdom
STOCK EXCHANGE LISTING
The common stock of UCAR International Inc. is listed on the New York Stock
Exchange, trading symbol UCR.
COMMON STOCK PRICE INFORMATION
UCAR's common stock closed at $39 15/16 on December 31, 1997. The quarterly
high and low closing prices of the common stock in 1997 were as follows:
Quarter
Ended High Low
March 31 $45 $36 7/8
June 30 49 1/18 38
September 30 48 11/16 42 1/2
December 31 50 1/4 36 13/16
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Stamford, Connecticut
STOCKHOLDER CONTACT
Stockholders and prospective investors are welcome to call or write with
questions or requests for additional information. Inquiries should be directed
to Juna I. Rowland, Manager of Investor Relations, or Michael T. Norton,
Director of Investor Relations and Risk Management, at corporate headquarters.
Additional information may also be obtained by visiting the Company's website
at http://www.ucar.com.
TRANSFER AGENT
The Bank of New York
1-800-524-4458
Address Shareholder Inquiries to:
Shareholder Relations
Department-11E
P.O. Box 11258
Church Street Station
New York, NY 10286
E-Mail Address:
Shareowner-svcs@bankofny.com
Stock transfer website:
http://stock.bankofny.com
SEND CERTIFICATES FOR TRANSFER AND ADDRESS CHANGES TO:
Receive and Deliver
Department-IIW
P.O. Box 11002
Church Street Station
New York, NY 10286
RISKS AND UNCERTAINTIES
This document contains forward-looking statements within the Private Securities
Litigation Reform Act. These include statements about such matters as electric
arc furnace ('EAF') steel production, product prices, sales and demand, future
operational and financial performance of pre-existing and recently acquired
businesses, fees, costs, projects, liabilities, margins and earnings. Except as
otherwise required to be disclosed in periodic reports required to be filed by
public companies, the Company has no duty to update such statements. Actual
future events and circumstances (including future performance, results and
trends) could differ materially from those set forth in such statements due to
various factors. Such factors include the possibility that announced additions
to EAF steel production capacity may not occur or that increased EAF steel
production may not result in increased demand or prices for graphite electrodes,
the occurrence of unanticipated events or circumstances relating to antitrust
investigations or related antitrust, shareholder derivative or securities
lawsuits, the assertion of other claims relating to such investigations or
lawsuits or the subject matter thereof, the occurence of unanticipated events or
circumstances relating to recently acquired businesses or global integration and
other projects, changes in currency exchange rates, changes in economic and
competitive conditions, technological developments, and other risks and
uncertainties, including those set forth in the Company's filings with the
Securities and Exchange Commission.
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 June 4, 1998
The undersigned appoints William P. Wiemels, Fred C. Wolf 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
June 4, 1998, 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 listed below / / WITHHOLD / / *EXCEPTIONS / /
AUTHORITY to vote
for all nominees
listed below
Nominees: Robert D. Kennedy, R. Eugene Cartledge, John R. Hall and Alec Flamm.
(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:
-----------------------------, 1998
-----------------------------------------
(SIGNATURE)
-----------------------------------------
(SIGNATURE)
Votes must be indicated
(x) in Black or Blue ink.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY