AMCOL INTERNATIONAL CORPORATION
One North Arlington
1500 West Shure Drive, Suite 500
Arlington Heights, Illinois 60004-7803
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 13, 2004
To Our Shareholders:
The annual meeting of shareholders of AMCOL International Corporation, or
AMCOL, will take place on Thursday, May 13, 2004, at 11:00 AM, local time, at
the Hilton Hotel Northbrook, 2855 North Milwaukee Avenue, Northbrook, Illinois,
for the following purposes:
1. To elect three (3) directors for a three-year term or until their
successors are elected and qualified; and
2. To transact any other business which properly comes before the
annual meeting.
Only shareholders of record of AMCOL's common stock as of the close of
business on March 19, 2004 will be entitled to notice of and to vote at the
annual meeting and at any adjournments of the annual meeting.
The Board of Directors recommends that you vote "FOR" each of AMCOL's
nominees for director.
Whether or not you plan to attend the annual meeting, please complete,
sign, date and mail the proxy card in the enclosed self-addressed, postage-paid
envelope, or vote by telephone or the Internet in accordance with the
instructions provided. Please do not submit a proxy card if you have voted by
telephone or the Internet. If you attend the annual meeting, you may revoke your
proxy and, if you wish, vote your shares in person. Thank you for your interest
and cooperation.
By Order of the Board of Directors,
Clarence O. Redman
Secretary
Arlington Heights, Illinois
April 2, 2004
AMCOL INTERNATIONAL CORPORATION
One North Arlington
1500 West Shure Drive, Suite 500
Arlington Heights, Illinois 60004-7803
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 13, 2004
INTRODUCTION
We are furnishing this proxy statement to you in connection with the
solicitation of proxies by the Board of Directors of AMCOL International
Corporation, or AMCOL, for use at our annual meeting of shareholders to be held
on Thursday, May 13, 2004, at 11:00 AM, local time, at the Hilton Hotel
Northbrook, 2855 North Milwaukee Avenue, Northbrook, Illinois, and at any
adjournment of the annual meeting. This proxy statement and the accompanying
proxy card are first being mailed or delivered to shareholders of AMCOL on or
about April 2, 2004.
At the annual meeting, you will be asked to consider and vote upon the
following matters:
1. The election of three (3) directors for a three-year term or until
their successors are elected and qualified; and
2. Any other business which properly comes before the annual meeting.
The Board of Directors recommends that you vote "FOR" each of AMCOL's
nominees for director.
Whether or not you plan to attend the annual meeting, please complete,
sign, date and mail the proxy card in the enclosed self-addressed, postage-paid
envelope, or vote by telephone or the Internet in accordance with the
instructions provided. Please do not submit a proxy card if you have voted by
telephone or the Internet. If you attend the annual meeting, you may revoke your
proxy and, if you wish, vote your shares in person.
The date of this proxy statement is April 2, 2004.
1
THE ANNUAL MEETING
General
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of AMCOL for use at the annual
meeting to be held on Thursday, May 13, 2004, at 11:00 AM, local time, at the
Hilton Hotel Northbrook, 2855 North Milwaukee Avenue, Northbrook, Illinois, and
at any adjournment of the annual meeting.
Record Date
The Board of Directors has fixed the close of business on March 19, 2004,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the annual meeting or any adjournment. Accordingly, only holders
of record of AMCOL's common stock at the close of business on the record date
will be entitled to vote at the annual meeting, either by proxy or in person. As
of the record date, there were 29,289,008 shares of AMCOL's common stock issued
and outstanding. Each share of AMCOL's common stock entitles the holder to one
vote.
Purpose of the Annual Meeting; Recommendation of the Board of Directors
At the annual meeting, AMCOL's shareholders will be asked to consider and
vote upon the following matters:
o the election of three directors; and
o any other business which properly comes before the annual meeting.
The Board of Directors recommends that you vote "FOR" each of AMCOL's
nominees for director.
Proxies; Vote Required
Under Delaware law, the election of the three directors must be approved
by the holders of a majority of the shares of AMCOL's common stock represented
by proxy and in person at the annual meeting.
All properly delivered proxies received by AMCOL prior to the annual
meeting and not revoked will be voted in accordance with the instructions
provided. Unless contrary instructions are marked, proxies will be voted "FOR"
each of AMCOL's nominees for director. The Board of Directors knows of no other
business that will be presented for consideration at the annual meeting. If any
other matter is properly presented, it is the intention of the persons named in
the enclosed proxy to vote in accordance with their best judgment.
Any shareholder may revoke his or her proxy at any time prior to or at the
annual meeting by doing any of the following:
o giving written notice to the Secretary of AMCOL at One North
Arlington, 1500 West Shure Drive, Suite 500, Arlington Heights,
Illinois, 60004-7803;
o submitting a duly executed proxy bearing a later date;
o voting by telephone or the Internet on a later date; or
o attending the annual meeting and voting in person.
Attendance at the annual meeting will not, in itself, constitute
revocation of a proxy.
In deciding all questions, a holder of AMCOL's common stock is entitled to
one vote, in person or by proxy, for each share held in such holder's name on
the record date. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of AMCOL's common stock is necessary to
constitute a quorum at
2
the annual meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business
but are not counted for purposes of determining whether a proposal has been
approved. Thus, abstentions and broker non-votes will have the same effect as a
vote against AMCOL's nominees for director.
Proxy Solicitation and Expenses
The accompanying proxy is being solicited on behalf of the Board of
Directors of AMCOL. All expenses of this solicitation, including the cost of
preparing and mailing this proxy statement, will be paid by AMCOL. Solicitation
of holders of AMCOL's common stock by mail, telephone, facsimile, e-mail or by
personal solicitation may be done by directors, officers and regular employees
of AMCOL, for which they will receive no additional compensation. Brokerage
houses and other nominees, fiduciaries and custodians nominally holding shares
of AMCOL's common stock as of the record date will be requested to forward proxy
soliciting material to the beneficial owners of such shares, and will be
reimbursed by AMCOL for their reasonable out-of-pocket expenses.
3
ELECTION OF DIRECTORS
AMCOL's Board of Directors consists of 10 directors. AMCOL's Certificate
of Incorporation divides the Board of Directors into three classes, with the
members of one class elected each year for a three-year term. The terms of the
Class III directors will expire at the annual meeting. The following tables set
forth certain information regarding the director nominees and the continuing
members of the Board:
Information Concerning Nominees
CLASS III
(Term to expire in 2007)
- --------------------------------------------------------------------------------
Name Director Principal Occupation for
Age Since Last Five Years
- --------------------------------------------------------------------------------
Arthur Brown 63 1990 Chairman and retired Chief Executive
Officer (since May 2003) of Hecla
Mining Company, a producer of
precious metals.
- --------------------------------------------------------------------------------
Jay D. Proops 62 1995 Private investor since 1995; prior
thereto, Vice Chairman and
co-founder of The Vigoro
Corporation, a manufacturer and
distributor of fertilizers and
related products. Also a director of
Great Lakes Chemical Corporation, a
producer of specialty chemicals.
- --------------------------------------------------------------------------------
Paul C. Weaver* 41 1995 Vice President of Information
Resources, Inc. since 2002; prior
thereto Managing Partner of Consumer
Aptitudes, Inc. since July 1997
(both companies engage in marketing
research); prior thereto, various
sales and account management
positions for AC Nielsen Company, a
provider of marketing information
services.
- --------------------------------------------------------------------------------
* Paul C. Weaver and Audrey L. Weaver are first cousins.
Each nominee must receive the favorable vote of the holders of a majority
of the shares of AMCOL's common stock represented at the annual meeting in
person or by proxy, assuming a quorum is present.
The Board of Directors recommends that AMCOL's shareholders vote "FOR"
each of the nominees named above.
4
Information Concerning Continuing Members of the Board
Class I
(Term expiring in 2005)
- --------------------------------------------------------------------------------
Director Principal Occupation for
Name Age Since Last Five Years
- --------------------------------------------------------------------------------
John Hughes 61 1984 Chairman of the Board; Chief
Executive Officer of AMCOL from 1985
until May 2000.
- --------------------------------------------------------------------------------
Clarence O. Redman 61 1989 Secretary of AMCOL. Also, of counsel
to Lord, Bissell & Brook LLP since
October 1997, the law firm that
serves as corporate counsel to
AMCOL.
- --------------------------------------------------------------------------------
Lawrence E. Washow 50 1998 President and Chief Executive
Officer of AMCOL since May 2000 and
Chief Operating Officer of AMCOL
since August 1997; prior thereto,
Senior Vice President of AMCOL and
President of Chemdal International
Corporation (unit sold to BASF AG in
June 2000).
- --------------------------------------------------------------------------------
Audrey L. Weaver* 49 1997 Private investor.
- --------------------------------------------------------------------------------
* Paul C. Weaver and Audrey L. Weaver are first cousins.
CLASS II
(Term expiring in 2006)
- --------------------------------------------------------------------------------
Director Principal Occupation for
Name Age Since Last Five Years
- --------------------------------------------------------------------------------
Robert E. Driscoll, III 65 1985 Retired Dean and Professor of Law,
University of South Dakota.
- --------------------------------------------------------------------------------
Daniel P. Casey 61 2002 Retired Chief Financial Officer and
Vice Chairman of the Board of
Gaylord Container Corporation, a
manufacturer and distributor of
brown paper and packaging products.
Also a director of Caraustar
Industries, Inc., a recycled
packaging company.
- --------------------------------------------------------------------------------
Dale E. Stahl 56 1995 Retired from Inland Paperboard and
Packaging, Inc., a manufacturer of
containerboard and corrugated boxes,
where Mr. Stahl served as President,
Chief Executive Officer and Chief
Operating Officer from June 2000
until September 2003. Prior thereto,
President and Chief Operating
Officer of Gaylord Container
Corporation, a manufacturer and
distributor of brown paper and
packaging products.
- --------------------------------------------------------------------------------
5
SECURITY OWNERSHIP
Security Ownership of Five Percent Beneficial Owners
The following table sets forth all persons known to be the beneficial
owner of more than five percent of AMCOL's common stock as of February 25, 2004.
----------------------------------------------------------------------------------------------------
Name and Address of Beneficial Owner Number of Shares and Percent
Nature of Beneficial of Class
Ownership (1)
----------------------------------------------------------------------------------------------------
Bankmont Financial Corp.
111 West Monroe Street 3,171,498 10.8%
Chicago, Illinois 60690 (2)
----------------------------------------------------------------------------------------------------
Barclays Global Investors, NA
45 Fremont Street 1,494,076 5.1%
San Francisco, California 94105 (3)
----------------------------------------------------------------------------------------------------
Everett P. Weaver
c/o AMCOL International Corporation 3,166,751 10.8%
1500 West Shure Drive, Suite 500 (4) (5)
Arlington Heights, Illinois 60004-7803
----------------------------------------------------------------------------------------------------
William D. Weaver
c/o AMCOL International Corporation 3,945,572 13.5%
1500 West Shure Drive, Suite 500 (4) (6)
Arlington Heights, Illinois 60004-7803
----------------------------------------------------------------------------------------------------
(1) Nature of beneficial ownership is direct unless otherwise indicated by
footnote. Beneficial ownership as shown in the table arises from sole
voting and investment power unless otherwise indicated by footnote.
(2) Based on an amendment to Schedule 13G filed with the Securities and
Exchange Commission on February 17, 2004. Includes 3,151,751 shares held
in the Paul Bechtner Trust as to which Bankmont Financial Corp. and
Messrs. Everett P. Weaver and William D. Weaver are co-trustees and share
voting and investment power. Also includes 19,747 shares as to which
Bankmont Financial Corp. has sole voting power and 19,097 shares as to
which it has sole dispositive power.
(3) Based solely on a Schedule 13G filed with the Securities and Exchange
Commission on February 17, 2004. Includes 1,315,392 shares held by
Barclays Global Investors, NA, which has sole voting and dispositive power
with respect to 1,265,384 of those shares; and 178,684 shares held by
Barclays Global Fund Advisors, an investment adviser.
(4) Includes 3,151,751 shares held in the Paul Bechtner Trust as to which
Messrs. Everett P. Weaver, William D. Weaver and Bankmont Financial Corp.
are co-trustees and share voting and investment power.
(5) Includes 15,000 shares held by a charitable foundation as to which voting
and investment power are shared with Mr. Weaver's wife.
(6) Includes 282,021 shares held in a living trust, 200,000 shares in a
charitable remainder trust, 56,800 shares in a family charitable remainder
unitrust, and 30,000 shares in a charitable foundation; also includes
225,000 shares held in Mr. Weaver's wife's living trust, as to which Mr.
Weaver may be deemed to have voting and investment power.
6
Security Ownership of Directors and Executive Officers
The following table sets forth, as of February 25, 2004, shares of AMCOL
common stock beneficially owned by: (i) each director and nominee, (ii) the
Chief Executive Officer, (iii) the named officers, and (iv) such persons as a
group, representing all of AMCOL's directors and executive officers.
------------------------------------------------------------------------------
Number of Shares and Percent of
Beneficial Owner Nature of Beneficial Class
Ownership (1)
------------------------------------------------------------------------------
Arthur Brown 51,966 *
------------------------------------------------------------------------------
Daniel P. Casey 11,000 *
------------------------------------------------------------------------------
Robert E. Driscoll, III 310,265 1.1%
------------------------------------------------------------------------------
John Hughes 757,439 2.6%
------------------------------------------------------------------------------
Jay D. Proops 106,722 *
------------------------------------------------------------------------------
Clarence O. Redman 65,879 *
------------------------------------------------------------------------------
Dale E. Stahl 33,800 *
------------------------------------------------------------------------------
Lawrence E. Washow 846,573 2.9%
------------------------------------------------------------------------------
Audrey L. Weaver 799,468 2.7%
------------------------------------------------------------------------------
Paul C. Weaver 415,631 1.4%
------------------------------------------------------------------------------
Gary L. Castagna 160,417 *
------------------------------------------------------------------------------
Ryan McKendrick 97,500 *
------------------------------------------------------------------------------
Gary Morrison 287,008 1.0%
------------------------------------------------------------------------------
Peter L. Maul 156,223 *
------------------------------------------------------------------------------
All of the above as a group 3,899,891 13.0%
------------------------------------------------------------------------------
* Percentage represents less than 1% of the total shares of common stock
outstanding as of February 25, 2004.
(1) Nature of beneficial ownership is set forth on the next page.
7
- ------------------------------------------------------------------------------------------------------------------------------------
Nature of Beneficial Ownership as of February 25, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
As Trustee
In In of Subject to
Directly or AMCOL's Limited As By AMCOL's Options
Beneficial Owner as Joint Savings Partnership Trustee or Family Pension Exercisable
Tenants (1) Plan (2) (3) Co-Trustee Members Plan (4) in 60 Days
- ------------------------------------------------------------------------------------------------------------------------------------
Arthur Brown 27,505 -- -- -- -- -- 24,461
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel P. Casey 10,000 -- -- -- -- -- 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
Robert E. Driscoll, III 7,000 -- 265,895 4,300 -- -- 33,070
- ------------------------------------------------------------------------------------------------------------------------------------
John Hughes -- -- 55,711 530,113 55,838 100,000 15,777
- ------------------------------------------------------------------------------------------------------------------------------------
Jay D. Proops 12,000 -- 10,000 -- -- -- 84,722
- ------------------------------------------------------------------------------------------------------------------------------------
Clarence O. Redman 15,670 25,748 -- -- -- -- 24,461
- ------------------------------------------------------------------------------------------------------------------------------------
Dale E. Stahl 30,000 -- -- -- -- -- 3,800
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence E. Washow 532,614 18,028 -- -- -- 100,000 195,931
- ------------------------------------------------------------------------------------------------------------------------------------
Audrey L. Weaver 705,367 -- -- 56,800 29,711 -- 7,590
- ------------------------------------------------------------------------------------------------------------------------------------
Paul C. Weaver 303,876 -- -- 30,637 30,830 -- 50,288
- ------------------------------------------------------------------------------------------------------------------------------------
Gary L. Castagna 35,100 4,317 -- -- -- 100,000 21,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ryan F. McKendrick 57,298 15,530 -- -- -- -- 24,672
- ------------------------------------------------------------------------------------------------------------------------------------
Gary D. Morrison 25,966 77,842 -- -- -- -- 183,200
- ------------------------------------------------------------------------------------------------------------------------------------
Peter L. Maul 18,000 3,797 -- 49,786 -- -- 84,640
- ------------------------------------------------------------------------------------------------------------------------------------
All Directors and
Executive Officers 1,780,396 145,202 331,606 671,636 116,379 100,000 754,612
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Includes shares held in joint tenancy with spouses for which voting rights
may be shared.
(2) Shares are held in AMCOL's Savings Plan, with the exception of Mr.
Redman's shares, which are held as follows: 5,000 in the Clarence O.
Redman PC Savings Plan, 15,748 in AMCOL's Dividend Reinvestment Plan
account on behalf of the Clarence O. Redman PC Savings Plan, and 5,000 in
an Individual Retirement Account.
(3) The named director is a general partner.
(4) Messrs. Castagna, Hughes and Washow share voting rights.
8
NAMED OFFICERS' COMPENSATION
Summary Compensation Table
The Summary Compensation Table below includes, for each of the fiscal
years ended December 31, 2003, 2002 and 2001, individual compensation for
services to AMCOL and its subsidiaries of those persons who were at December 31,
2003: (i) the Chief Executive Officer; and (ii) the four other most highly
compensated executive officers of AMCOL, or collectively, the named officers.
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation (1)(2) Compensation Awards
- ---------------------------------------------------------------------------------------------------------------------------------
Restricted
Stock Securities All Other
Salary Bonus Awards Underlying Compensation
Name and Principal Position Year ($) ($) ($)(3) Options ($)(7)
- ---------------------------------------------------------------------------------------------------------------------------------
Lawrence E. Washow 2003 450,000 675,000 261,200(4) 30,000 27,940
President and Chief 2002 432,000 108,000 -- 30,000 35,451
Executive Officer 2001 400,000 394,801 -- 31,500 25,585
- ---------------------------------------------------------------------------------------------------------------------------------
Gary L. Castagna 2003 246,000 246,000 163,250(5) 18,000 14,220
Senior Vice President, Chief 2002 238,000 59,500 -- 18,000 14,939
Financial Officer and Treasurer 2001 220,000 115,464 -- 27,000 7,962
- ---------------------------------------------------------------------------------------------------------------------------------
Ryan F. McKendrick 2003 233,000 233,000 163,250(5) 17,000 8,000
Vice President; President of Colloid 2002 218,000 91,432 -- 17,000 21,573
Environmental Technologies Company 2001 200,000 195,552 -- 14,000 7,998
and Volclay International Corp.
- ---------------------------------------------------------------------------------------------------------------------------------
Gary Morrison 2003 200,000 200,000 117,540(6) 12,000 8,000
Vice President; President of 2002 196,000 19,600 -- 12,000 8,000
American Colloid Company 2001 190,000 76,380 -- 14,000 7,600
- ---------------------------------------------------------------------------------------------------------------------------------
Peter L. Maul 2003 183,000 100,000 117,540(6) 10,000 9,057
Vice President; President of 2002 176,000 44,000 -- 10,000 10,430
Nanocor, Inc. 2001 160,979 35,802 -- 10,000 8,559
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Includes deferred compensation under AMCOL's Savings Plan and AMCOL's
Deferred Compensation Plan.
(2) The incremental cost of non-cash compensation and other personal benefits
during any year presented did not exceed the lesser of $50,000 or 10
percent of the total of annual salary and bonus reported for any of the
named officers.
(3) The timing of the vesting of these shares of restricted stock depends on
whether AMCOL achieves certain target returns on capital in 2003, 2004 and
2005. With respect to each of 2003, 2004 and 2005, if the target is
achieved, one-third of the restricted stock award will vest on February
28, 2006, provided the executive is still employed by AMCOL. If any of
these targets are not achieved, the unvested shares will vest on May 22,
2009, provided the officer is still employed by AMCOL. The named officers
are entitled to receive dividends on these shares of restricted stock.
(4) Represents the value of 40,000 shares of restricted stock on May 22, 2003,
the grant date. On December 31, 2003, Mr. Washow held 40,000 restricted
shares in the aggregate at a value of $812,000.
(5) Represents the value of 25,000 shares of restricted stock on May 22, 2003,
the grant date. On December 31, 2003, the named officer held 25,000
restricted shares in the aggregate at a value of $507,500.
(6) Represents the value of 18,000 shares of restricted stock on May 22, 2003,
the grant date. On December 31, 2003, the named officer held 18,000
restricted shares in the aggregate at a value of $365,400.
(7) The figures in this column include AMCOL matching contributions under
AMCOL's Savings Plan and the 401(k) restoration plan whereby the matching
contributions for salary deferrals in excess of ERISA limits to AMCOL's
Savings Plan were credited to AMCOL's Deferred Compensation Plan.
9
Option Grants in Last Fiscal Year
Shown below is information on grants of stock options during the fiscal
year ended December 31, 2003 to the named officers, which are reflected in the
Summary Compensation Table.
-----------------------------------------------------------------------------------------------------------------
Grant
Date
Individual Grants in 2003 Value
-----------------------------------------------------------------------------------------------------------------
Number of
Securities % of Total Grant
Underlying Options Date
Options Granted to Exercise Expiration Present
Name Granted (1) Employees (2) Price (3) Date Value (4)
-----------------------------------------------------------------------------------------------------------------
Lawrence E. Washow 30,000 9.65% $5.67 2/3/09 $72,836
-----------------------------------------------------------------------------------------------------------------
Gary L. Castagna 18,000 5.79% $5.67 2/3/09 $43,702
-----------------------------------------------------------------------------------------------------------------
Ryan F. McKendrick 17,000 5.47% $5.67 2/3/09 $41,274
-----------------------------------------------------------------------------------------------------------------
Gary D. Morrison 12,000 3.86% $5.67 2/3/09 $29,134
-----------------------------------------------------------------------------------------------------------------
Peter L. Maul 10,000 3.22% $5.67 2/3/09 $24,278
-----------------------------------------------------------------------------------------------------------------
(1) These Non-Qualified Stock Options ("NSOs") were issued pursuant to AMCOL's
1998 Long-Term Incentive Plan (the "1998 Plan") and may not be exercised
until they vest. These NSOs vest 33% after one year, 66% after two years,
and 100% after three years, provided that on death or retirement under
specified conditions, these NSOs become fully vested. The exercise price
may not be less than the fair market value of the shares subject to the
option on the date of grant.
(2) Based on 310,950 options granted to all employees.
(3) Fair market value on the date of grant.
(4) The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the
value of the options reflected in the above table include the following:
an exercise price on the option of $5.67; an option term of 5.1 years; an
interest rate of 3.00% representing the interest rates on U.S. Treasury
securities on the date of grant with maturity dates corresponding to the
vesting of the options; volatility of 54.90%; and dividends at the rate of
$0.12 per share representing the annualized dividends paid with respect to
a share of common stock at the date of grant. There have been no
reductions to reflect the probability of forfeiture due to termination
prior to vesting, or to reflect the probability of a shortened option term
due to termination of employment prior to the option expiration date. The
ultimate values of the options will depend on the future market price of
AMCOL's stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option
will depend on the excess of the market value of AMCOL's common stock over
the exercise price on the date the option is exercised.
10
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Shown below is information with respect to options exercised by the named
officers during 2003 and unexercised options held by the named officers at
December 31, 2003.
---------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying In-the-Money
Acquired Value Unexercised Options Options at 12/31/03
Name on Realized at 12/31/03 ($)
Exercise ($) Exercisable/ Exercisable/
Unexercisable Unexercisable (1)
---------------------------------------------------------------------------------------------------------------
Lawrence E. Washow 392,433 4,590,517 149,540/111,891 2,709,129/1,735,713
---------------------------------------------------------------------------------------------------------------
Gary L. Castagna -- -- 10,800/52,200 169,120/762,720
---------------------------------------------------------------------------------------------------------------
Ryan F. McKendrick 70,000 634,299 91,416/57,989 1,651,076/890,218
---------------------------------------------------------------------------------------------------------------
Gary D. Morrison 10,896 59,022 167,399/44,201 3,060,954/677,861
---------------------------------------------------------------------------------------------------------------
Peter L. Maul 89,425 1,093,857 68,583/39,923 1,220,054/622,058
---------------------------------------------------------------------------------------------------------------
(1) Based on the closing sale price as quoted on the New York Stock Exchange
on that date.
Equity Compensation Plan Information
This table shows information about our common stock that may be issued
upon the exercise of options, warrants and rights as of December 31, 2003 under
all of our equity compensation plans.
---------------------------------------------------------------------------------------------------------------------
Number of Securities
Remaining Available for
Number of Securities to be Future Issuance Under
Issued Upon Exercise of Weighted-Average Exercise Equity Compensation Plans
Outstanding Options, Price of Outstanding (Excluding Securities
Warrants and Rights Options, Warrants and Rights Reflected in Column (a)
Plan Category (a) (b) (c)
---------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Approved by Security 2,320,597 $3.49 1,450,625
Holders (1)
---------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Not Approved by Security -- -- --
Holders
---------------------------------------------------------------------------------------------------------------------
Total 2,320,597 $3.49 1,450,625
---------------------------------------------------------------------------------------------------------------------
(1) The equity compensation plans approved by AMCOL's shareholders are the
1987 Nonqualified Stock Option Plan, the 1993 Stock Plan and the 1998
Long-Term Incentive Plan.
11
Pension Plans
- ------------------------------------------------------------------------------------------------------------------
Estimated Annual Retirement Benefits Based on Years of Service
-----------------------------------------------------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- ------------------------------------------------------------------------------------------------------------------
$150,000 $33,750 $45,000 $56,250 $67,500 $78,750 $84,375
- ------------------------------------------------------------------------------------------------------------------
200,000 45,000 60,000 75,000 90,000 105,000 112,500
- ------------------------------------------------------------------------------------------------------------------
250,000 56,250 75,000 93,750 112,500 131,250 140,625
- ------------------------------------------------------------------------------------------------------------------
300,000 67,500 90,000 112,500 135,000 157,500 168,750
- ------------------------------------------------------------------------------------------------------------------
350,000 78,750 105,000 131,250 157,500 183,750 196,875
- ------------------------------------------------------------------------------------------------------------------
400,000 90,000 120,000 150,000 180,000 210,000 225,000
- ------------------------------------------------------------------------------------------------------------------
450,000 101,250 135,000 168,750 202,500 236,250 253,125
- ------------------------------------------------------------------------------------------------------------------
500,000 112,500 150,000 187,500 225,000 262,500 281,250
- ------------------------------------------------------------------------------------------------------------------
550,000 123,750 165,000 206,250 247,500 288,750 309,375
- ------------------------------------------------------------------------------------------------------------------
The above table shows the estimated annual retirement benefits payable on
a straight life annuity basis to participating employees, including officers, in
the earnings and years of service classifications indicated under AMCOL's
retirement plans, which cover substantially all of its domestic employees hired
on or before December 31, 2003 on a non-contributory basis. The estimated
benefits assume (i) that the plans will be continued and (ii) that the employee
will elect to receive his pension at normal retirement age. The table above and
the estimates do not reflect the reduction in an individual's final monthly
compensation due to social security monthly covered compensation. This reduction
is based upon the retirement year for a particular individual.
------------------------------------------------------------------------------
Name Years of Average Pension
Service Compensation Benefit
------------------------------------------------------------------------------
Lawrence E. Washow 25 $648,414 $230,020
------------------------------------------------------------------------------
Gary L. Castagna 3 $302,668 --
------------------------------------------------------------------------------
Ryan F. McKendrick 20 $302,234 $83,591
------------------------------------------------------------------------------
Gary D. Morrison 23 $281,693 $82,765
------------------------------------------------------------------------------
Peter L. Maul 20 $208,065 $59,038
------------------------------------------------------------------------------
The above table indicates the average earnings for the highest five
consecutive calendar years and the number of years of credited service under the
pension plans as of December 31, 2003 for each of the named officers. Covered
compensation includes a participant's base salary, commissions, bonuses and
salary reductions under AMCOL's Savings Plan and Deferred Compensation Plan. Mr.
Castagna left the employ of AMCOL in 2000 and received his full pension payout
in the form of a lump-sum payment during 2000 in connection with the sale of the
absorbent polymers business, of which he was President. Mr. Castagna was rehired
by AMCOL in 2001.
Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as
amended, limit the annual benefits that may be paid from a tax-qualified
retirement plan. As permitted by the Employee Retirement Income Security Act of
1974, AMCOL has a supplemental plan that authorizes the payment out of general
funds of AMCOL any benefits calculated under provisions of AMCOL's pension plan
that may be above the limits under these sections. The accrued, unfunded
liability of the supplemental plan at September 30, 2003 was $2,417,027.
Employment Agreements
Each of Messrs. Castagna, Maul, McKendrick, Morrison and Washow are
parties to employment agreements with AMCOL. The initial employment term under
each agreement is three years (expiring in March 2005), with a rolling six-month
extension (unless either party gives notice of expiration six months prior to
the extension). Each agreement provides for an annual salary, a target annual
bonus and a non-competition / non-solicitation covenant effective during
employment and for one year thereafter.
12
Prior to a Change of Control, if AMCOL terminates an officer without cause
or the officer terminates his employment for Good Reason, the officer is
entitled to receive: (1) his accrued salary and bonus; (2) a pro-rata annualized
bonus; (3) his base salary for 18 months (in the case of Messrs. Castagna, Maul,
McKendrick and Morrison) and 24 months (in the case of Mr. Washow); (4) a lump
sum of any amount then payable to him pursuant to the tax gross-up payment; and
(5) continued employee benefits during a transition period.
After a Change of Control, if an officer is terminated without cause or
the officer terminates his employment for Good Reason, the officer is entitled
to receive: (1) his accrued salary and bonus; (2) a pro-rata annualized bonus;
(3) a lump sum equal to three times (in the case of Messrs. Castagna and Washow)
or two times (in the case of Messrs. Maul, McKendrick and Morrison) the sum of
his salary and annualized bonus; (4) continued employee benefits for three years
(in the case of Messrs. Castagna and Washow) or two years (in the case of
Messrs. Maul, McKendrick and Morrison) or cash in lieu thereof; and (5) a lump
sum of any amount then payable to him pursuant to the tax gross-up payment. If a
Change in Control occurs, all outstanding stock options, restricted stock and
other equity compensation awards granted to the officer become fully vested and
exercisable.
If the officer's employment terminates due to his death or disability
prior to a Change of Control or more than seven months after a Change of
Control, the officer or his beneficiaries are entitled to the officer's accrued
salary and bonus and the officer's pro-rata annualized bonus. If the officer's
employment terminates due to his death or disability within seven months after a
Change of Control, the officer or his beneficiaries are entitled to receive the
compensation and benefits described above with respect to termination without
cause after a Change of Control, except that the employee benefits are limited
to welfare benefits.
If, at any time, AMCOL terminates an officer for cause or the officer
terminates his employment without Good Reason, the officer is entitled to his
accrued salary and bonus, but shall not be entitled to any severance pay.
A Change of Control is defined as any one or more of the following: (1)
any person (other than certain AMCOL affiliates, an AMCOL subsidiary or an AMCOL
employee benefit plan) acquires 50.1% or more of AMCOL's common stock; (2) the
incumbent directors cease to constitute at least one-half of the AMCOL
directors; (3) all or substantially all of AMCOL's assets are sold (in the case
of Messrs. Maul, McKendrick and Morrison) or 50.1% of AMCOL's assets are sold
(in the case of Messrs. Castagna and Washow); (4) the shareholders approve a
plan of liquidation; and (5) all of the stock or assets of a subsidiary are sold
and the officer serves as president of the subsidiary.
Good Reason is defined as the occurrence of any one of the following
events: (1) any material breach of the employment agreement by AMCOL which has
not been cured as required; (2) AMCOL's failure to assign the employment
agreement to a successor or the successor's failure to expressly assume and
agree to be bound by the employment agreement; or (3) termination of employment
by the officer for any reason or for no reason during the 30-day period
commencing six months after a Change of Control.
13
CORPORATE GOVERNANCE MATTERS
Board Committee Membership and Meetings
---------------------------------------------------------------------------
Nominating
Name Audit Compensation Executive and
Governance
---------------------------------------------------------------------------
Arthur Brown X* X
---------------------------------------------------------------------------
Daniel P. Casey X X X
---------------------------------------------------------------------------
Robert E. Driscoll, III X X
---------------------------------------------------------------------------
John Hughes X X
---------------------------------------------------------------------------
Jay D. Proops X X X*
---------------------------------------------------------------------------
Clarence O. Redman X
---------------------------------------------------------------------------
Dale E. Stahl X* X X
---------------------------------------------------------------------------
Lawrence E. Washow X
---------------------------------------------------------------------------
Audrey L. Weaver X
---------------------------------------------------------------------------
Paul C. Weaver X* X
---------------------------------------------------------------------------
Number of Meetings in 2003 2 3 3 1
---------------------------------------------------------------------------
* Chairperson.
During 2003, the Board of Directors held six meetings. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings held by all committees of
the Board on which such director served. Pursuant to our Corporate Governance
Guidelines, which may be found on our website at www.amcol.com, directors are
expected to resign from the Board effective as of the annual shareholders
meeting following the date on which they reach the age of 70.
Director Independence
AMCOL's Board of Directors has determined that the following directors are
independent as defined in the applicable standards of the New York Stock
Exchange: Messrs. Brown, Casey, Driscoll, Proops, Stahl and Weaver and Ms.
Weaver. These independent directors constitute a majority of the directors of
AMCOL. The Board has also determined that each member of the Audit Committee,
the Compensation Committee and the Nominating and Governance Committee is
independent as defined in the applicable standards of the New York Stock
Exchange, except Mr. Hughes, who serves on the Nominating and Governance
Committee. Mr. Hughes has notified AMCOL that he does not intend to stand for
reappointment to the Nominating and Governance Committee at the 2004 annual
board meeting. In addition, the Board has determined that each member of the
Audit Committee is independent as defined in the applicable rules and
regulations of the Securities and Exchange Commission.
The Audit Committee
The Audit Committee is responsible for providing assistance to the Board
of Directors in fulfilling the Board's oversight responsibility by monitoring
the integrity of the financial statements of AMCOL, the independent auditor's
qualifications and independence, AMCOL's compliance with legal and regulatory
requirements pertaining to the financial statements, and the performance of
AMCOL's internal audit function and independent auditors. The Committee is also
responsible for appointing the independent auditors for each fiscal year. Due to
changes in the corporate governance rules and guidelines governing the
responsibilities and obligations of the Audit Committee, the Board has elected
not to submit the selection of the independent auditors to AMCOL's shareholders
for approval.
The Audit Committee is responsible for reviewing and pre-approving all
audit and non-audit services provided by the independent auditor and shall not
engage the independent auditor to perform non-audit services proscribed by law
or regulation. The Committee may delegate pre-approval authority to a member of
the Audit Committee. The decisions of any Audit Committee member to whom
pre-approval authority is delegated must be
14
presented to the full Audit Committee at its next scheduled meeting. In fiscal
2003, 100% of non-audit services were approved by the Audit Committee.
The Board of Directors has determined that each member of the Audit
Committee is an "audit committee financial expert" as defined in the
Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the
Securities and Exchange Commission. The Audit Committee operates pursuant to a
charter adopted by the Board, which may be found on our website at www.amcol.com
and is attached to this Proxy Statement as Appendix 1.
The Compensation Committee
The Compensation Committee assists the Board of Directors in fulfilling
its responsibilities in connection with the compensation of company directors,
officers and employees. Specifically, the Committee is responsible for annually
reviewing and approving corporate goals and objectives relevant to the
compensation of the Chief Executive Officer, evaluating the Chief Executive
Officer's performance in light of those goals and objectives, and as a committee
determining and approving the Chief Executive Officer's compensation level based
on this evaluation. In determining the long-term incentive component of the
Chief Executive Officer's compensation, the Committee considers, among other
things, AMCOL's performance and relative shareholder return, the value of
similar incentive awards to chief executive officers at comparable companies and
awards given to the Chief Executive Officer in past years. This review and
evaluation may involve consultations from time to time with the other
independent directors.
The Committee is also responsible for reviewing and making recommendations
to the Board with respect to the compensation of officers other than the Chief
Executive Officer, including the annual base salary level; incentive
compensation plans; equity-based plans and retirement plans; employment
agreements, severance arrangements and change in control agreements/provisions,
in each case, as, when and if appropriate; and any special or supplemental
benefits. In carrying out its responsibilities, the Committee has sole authority
to retain and terminate any compensation consultant to be used to assist the
Committee in fulfilling its responsibilities. The Compensation Committee is also
responsible for making recommendations to the Board regarding director
compensation and succession planning. The Compensation Committee operates
pursuant to a charter adopted by the Board, which may be found on our website at
www.amcol.com.
The Nominating and Governance Committee
The Nominating and Governance Committee is responsible for identifying,
seeking and recommending to the Board of Directors individuals qualified to
become directors consistent with criteria approved by the Board. In considering
potential candidates for the Board, including with respect to incumbent
directors, the Committee considers the potential candidate's integrity and
business ethics; strength of character, judgment and experience, consistent with
the needs of AMCOL; specific areas of expertise and leadership roles; and the
ability to bring diversity to the Board, including whether the potential
candidate brings complementary skills and viewpoints. The Committee also
considers the ability of the individual to allocate the time necessary to carry
out the tasks of board membership including membership on appropriate
committees.
The Committee identifies potential nominees by asking current directors
and others to notify the Committee if they become aware of persons, meeting the
criteria described above, who may be available to serve on the Board. The
Committee has sole authority to retain and terminate any search firm to be used
to identify director candidates and has sole authority to approve the search
firm's fees and other retention terms. Historically, AMCOL has not engaged third
parties to assist in identifying and evaluating potential nominees, but would do
so in those situations where particular qualifications are required to fill a
vacancy and the Board's contacts are not sufficient to identify an appropriate
candidate. Pursuant to its charter, the Nominating and Governance Committee's
policy is to not consider nominees recommended by shareholders of AMCOL.
Other responsibilities of the Committee include developing and
recommending to the Board the Corporate Governance Guidelines applicable to
AMCOL, overseeing the evaluations of the Board and management, recommending to
the Board director nominees for each committee, and recommending to the Board
15
the size of the Board and its committee structure. The Nominating and Governance
Committee operates pursuant to a charter adopted by the Board, which may be
found on our website at www.amcol.com.
Director Compensation
------------------------------------------------------------------------------
Type of Compensation Cash Stock Options
------------------------------------------------------------------------------
Annual Retainer $18,000 3,000
------------------------------------------------------------------------------
Board Meeting Attendance Fee $1,500
------------------------------------------------------------------------------
Supplemental Annual Retainer for the
Chairman of the Board $15,000
------------------------------------------------------------------------------
Annual Retainer for the Chairs of the
Executive, Compensation and Nominating and
Governance Committees $2,000
------------------------------------------------------------------------------
Annual Retainer for the Chair of the
Audit Committee $3,000
------------------------------------------------------------------------------
Attendance Fee for Meetings of the
Executive, Compensation and Nominating and
Governance Committees $1,000
------------------------------------------------------------------------------
Attendance Fee for Meetings of the Audit Committee $1,500
------------------------------------------------------------------------------
Directors who are also full-time employees of AMCOL are not paid for their
services as directors or for attendance at meetings.
AMCOL provides excess personal liability insurance coverage for its
non-employee directors. The premium paid per non-employee director for such
insurance was approximately $632 for 2003. As of May 15, 2003, non-employee
directors were able to participate in AMCOL's health insurance plan at the
directors' cost.
In 2003, each of the non-employee directors was granted 3,000 options, as
noted in the above table, at an exercise price of $5.67 per share, the fair
market value on the date of the grant.
Shareholder Communications with the Board of Directors
AMCOL's annual meeting of shareholders provides an opportunity each year
for shareholders to ask questions of or otherwise communicate directly with
members of our Board of Directors on appropriate matters. Our directors are
expected to attend shareholders meetings pursuant to our Corporate Governance
Guidelines. All of our directors attended the 2003 annual meeting and we
anticipate that all of our directors will attend the 2004 annual meeting.
In addition, shareholders may, at any time, communicate in writing with
the Audit Committee, any particular director, or the independent directors as a
group, by sending such written communication to AMCOL International Corporation,
Attention: Audit Committee, Presiding Non-Management Director of the Board of
Directors, or the name of a particular board member, as applicable, One North
Arlington, 1500 West Shure Drive, Suite 500, Arlington Heights, Illinois
60004-7803. Copies of written communications received at such address will be
provided to the named addressee. Shareholders may also reach the Audit Committee
by calling AMCOL's alert line at (877) 862-6265. Shareholders may report their
concerns anonymously or confidentially.
16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
AMCOL's mission is to supply high-quality performance products and
innovative technologies for mineral and environmental markets worldwide. To
accomplish this objective, AMCOL has developed comprehensive compensation
strategies that emphasize maximizing shareholder value and growth in sales and
earnings. The compensation program has been designed to reinforce and support
AMCOL's business goals and to help the organization both attract and retain high
quality executive talent.
The Compensation Committee is responsible for annually reviewing and
approving corporate goals and objectives relevant to the compensation of the
Chief Executive Officer, evaluating the Chief Executive Officer's performance in
light of those goals and objectives, and determining and approving the Chief
Executive Officer's compensation level based on this evaluation. This review and
evaluation may involve consultations from time to time with the other
independent directors.
The Compensation Committee is also responsible for reviewing and making
recommendations to the Board with respect to the compensation of officers other
than the Chief Executive Officer, including the annual base salary level;
incentive compensation plans; equity-based plans and retirement plans;
employment agreements, severance arrangements and change in control
agreements/provisions, in each case, as, when and if appropriate; and any
special or supplemental benefits.
Compensation Committee Philosophy
The Compensation Committee is committed to implementing and administering
a compensation program that supports and underscores AMCOL's mission and values.
The policies underlying the Compensation Committee's compensation decisions are
enumerated more fully below:
Compensation opportunities should strengthen AMCOL's ability to attract,
retain, and encourage the growth and development of the highest caliber
executive talent upon whose efforts the success of AMCOL largely depends.
A substantial portion of pay for senior executives should be comprised of
at-risk, variable compensation whose payout is dependent on the
achievement of specific corporate and individual performance objectives.
In addition, the at-risk components of pay will have a significant
equity-based element to ensure appropriate linkage between executive
behavior and shareholder interests.
The Committee considers stock ownership by management to be an important
means of linking management's interests with those of shareholders. AMCOL
maintains stock ownership guidelines for its corporate and subsidiary
officers. The amount of stock required to be owned increases with the
level of responsibility of each executive, with the Chief Executive
Officer expected to own stock with a value at least equal to four times
base salary. Shares that the executives have the right to acquire through
the exercise of stock options are not included in the calculation of stock
ownership for purposes of these guidelines. Executives are expected to
reach their respective stock ownership goals over a three-year period.
Base and equity compensation components target pay opportunities at the
median of compensation paid to executives included in AMCOL's comparative
compensation peer group, while incentive compensation is a function of
company performance. AMCOL's comparative compensation group is not the
same as the companies that make up the peer group in the stock price
performance graph included in this proxy statement. In order to provide an
appropriate basis for compensation analysis, a group larger than the stock
price graph's peer group was used; note, however, that a significant
number of the peer group companies are included in the comparative
compensation group.
17
Components of Compensation
AMCOL's executive compensation program consists of several components,
each of which plays a role in supporting overall business goals and pay
philosophy. In assessing the competitiveness of AMCOL's senior executive
compensation programs, available salary data consisting of peer group and other
general manufacturing companies is used for comparison purposes. Compensation
program design is based in part on the pay data for comparable positions at
these companies as well as AMCOL's financial performance. The executive
compensation program consists of base salary, annual incentives and long-term
incentives.
Base Pay
The initial base salaries for Mr. Washow, the Chief Executive Officer, and
AMCOL's other executive officers were established in their respective employment
agreements. The Compensation Committee annually reviews each executive's base
salary and may grant increases based upon levels of responsibility, breadth of
knowledge, internal equity issues and market pay practices. Salary increases are
based primarily upon individual performance, which is evaluated based on
individual contributions to AMCOL.
Pursuant to his employment agreement, Mr. Washow's base salary is
$432,000. In arriving at the increase in Mr. Washow's base salary to $450,000
for 2003, the Compensation Committee considered his individual performance and
his long-term contributions to the financial success of AMCOL. The Committee
also compared Mr. Washow's base salary with the base salaries of chief executive
officers from appropriate salary surveys.
Annual Incentives
Pursuant to the terms of their respective employment agreements, Mr.
Washow and each of the other executive officers are eligible for an annual cash
bonus based on the achievement of target performance goals established annually
by the Compensation Committee. Upon the achievement of the target performance
goals, each executive shall be paid a bonus at least equal to a predetermined
percentage of his base salary. If Mr. Washow achieves the target performance
goal, he is entitled to a bonus at least equal to 100% of his base salary.
The target performance goals for the Chief Executive Officer and Chief
Financial Officer are based upon AMCOL's return on capital and earnings per
share. Mr. Washow was paid a bonus of $675,000 for the 2003 fiscal year
financial performance of AMCOL. In the case of the other executives, their
target performance goals are tailored for each business segment with an emphasis
on the return on capital and earnings of the particular business segment to
which the executive devotes the majority of his time.
Long-Term Incentives
Long-term incentives are provided annually in the form of stock options
and/or restricted stock awards. The long-term incentive program serves to focus
executives on long-term shareholder value creation and foster an ownership
mentality among the executive management team. The Compensation Committee
believes the equity incentive program provides a strong link between management
behavior and shareholder interests. The Compensation Committee believes that the
aggregate annual incentive awards granted to all employees should equal between
one and one and a half percent of AMCOL's outstanding common stock. In keeping
with AMCOL's commitment to provide a total compensation package that focuses on
at-risk pay components, long-term incentives will continue to comprise a
meaningful portion of the value of an executive's total compensation package.
In 2003, the named officers were granted stock option and restricted stock
awards under AMCOL's 1998 Long-Term Incentive Plan. The stock options granted to
the named officers vest 33% after one year, 66% after two years, and 100% after
three years, provided that on death or retirement under specified conditions,
the stock options become fully vested. The timing of the vesting of the
restricted stock awards granted to the named officers depends on whether AMCOL
achieves certain target returns on capital in 2003, 2004 and 2005. With respect
to each of 2003, 2004 and 2005, if the target is achieved, one-third of the
restricted stock award will vest
18
on February 28, 2006, provided the executive is still employed by AMCOL. If any
of these targets are not achieved, the unvested shares will vest on May 22,
2009, provided the officer is still employed by AMCOL.
In determining the long-term incentive component of Mr. Washow's
compensation, the Compensation Committee considers, among other things, AMCOL's
performance and relative shareholder return, the value of similar incentive
awards to chief executive officers at comparable companies and awards given to
Mr. Washow in prior years. In 2003, Mr. Washow received an option to purchase
30,000 shares of common stock at an exercise price of $5.67 per share and an
award of 40,000 shares of restricted stock, with a total value of $261,200 as of
May 22, 2003, the grant date.
Limitations on Payments
Code Section 162(m) denies a deduction to any publicly held corporation
for compensation paid to certain "covered employees" in a taxable year to the
extent that such compensation exceeds $1,000,000. "Covered employees" are a
corporation's chief executive officer on the last day of the taxable year and
any other individuals whose compensation is required to be reported to
shareholders under the Securities Exchange Act of 1934 by reason of being among
the four most highly compensated officers (other than the chief executive
officer) for the taxable year and who are employed on the last day of the
taxable year. Compensation paid under some qualified performance-based
compensation arrangements, which (among other things) provide for compensation
based on pre-established performance goals established by a compensation
committee that is composed solely of two or more "outside directors," is not
considered in determining whether a "covered employee's" compensation exceeds
$1,000,000. To the extent that any bonus payments cause the executive's total
compensation to exceed $1,000,000 in any given year, the excess will be deferred
until a year when such amount can be deducted by AMCOL.
Compensation Committee
----------------------
Dale E. Stahl, Chairman
Arthur Brown
Daniel P. Casey
Robert E. Driscoll, III
Audrey L. Weaver
19
REPORT OF THE AUDIT COMMITTEE
Management is responsible for AMCOL's financial reporting process
including its system of internal control, and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. AMCOL's independent auditors are responsible for auditing
those financial statements. The Audit Committee's responsibility is to monitor
and review these processes. It is not our duty or our responsibility to conduct
auditing or accounting reviews or procedures. Therefore, we have relied, without
independent verification, on management's representation that the financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States of America
and on the representations of the independent auditors included in their report
on AMCOL's financial statements. Our oversight does not provide us with an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies, or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, our considerations
and discussions with management and the independent auditors do not assure that
AMCOL's financial statements are presented in accordance with generally accepted
accounting principles, that the audit of AMCOL's financial statements has been
carried out in accordance with generally accepted auditing standards.
Review with Management
The Audit Committee has reviewed and discussed AMCOL's audited financial
statements for the year ended December 31, 2003 with management.
Review and Discussions with Independent Auditors
The Audit Committee has discussed with KPMG LLP, AMCOL's independent
auditors, the matters required to be discussed by Statement on Auditing
Standards No. 61, "Communication with Audit Committees," which include, among
other items, matters related to the conduct of the audit of AMCOL's financial
statements.
The Audit Committee has also received the written disclosures from KPMG
LLP required by Independence Standards Board Standard No. 1, which relates to
the accountants' independence from AMCOL and its related entities, and has
discussed with KPMG LLP their independence from AMCOL.
Conclusion
Based on the review and discussions referred to above, the Audit Committee
recommended to AMCOL's Board of Directors that AMCOL's audited financial
statements be included in AMCOL's Annual Report on Form 10-K for the year ended
December 31, 2003 filed with the Securities and Exchange Commission.
Audit Committee
---------------
Arthur Brown, Chairman
Daniel P. Casey
Robert E. Driscoll, III
Jay D. Proops
20
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG LLP served as AMCOL's independent auditors for the fiscal
year ended December 31, 2003. During 2003, the Audit Committee appointed KPMG
LLP to audit AMCOL's consolidated financial statements and benefit plans and to
perform certain other auditing and tax services. Fees paid to KPMG LLP for these
services were as follows:
2002 Actual 2003 Actual
Audit Fees (1) $197,580 $317,132
Audit-Related Fees (2) $175,816 $ 30,881
Tax Fees (3) $246,304 $276,182
All Other Fees (4) $ 36,111 $ 55,544
-------- --------
$655,812 $679,739
======== ========
(1) Audit fees represent fees for professional services provided in connection
with the audit of our financial statements and review of our quarterly
financial statements and audit services provided in connection with other
statutory or regulatory filings.
(2) Audit-Related fees consist primarily of accounting consultations, employee
benefit plan audits, services related to business acquisitions and
divestitures and other attestation services.
(3) For 2003 and 2002, respectively, tax fees principally included tax
compliance fees of $32,748 and $19,673, tax advice and planning fees of
$111,426 and $78,745, and tax fees in relation to acquisitions of $1,073
and $35,834.
(4) All other fees principally includes preparation of expatriate employee tax
returns, and pension plan administration.
The Audit Committee has considered whether the provision of these
non-audit services by KPMG LLP is compatible with maintaining auditor
independence.
A representative of KPMG LLP will be present at the annual meeting, will
be afforded the opportunity to make a statement, and will be available to
respond to appropriate questions.
21
STOCK PERFORMANCE GRAPH
The following graph sets forth a five-year comparison of cumulative total
shareholder returns for: (i) AMCOL (which trades on the New York Stock
Exchange); (ii) the S&P SmallCap 600 Index; (iii) a new custom peer group of
publicly traded companies; and (iv) the old custom peer group of publicly traded
companies.
AMCOL chose to replace the old peer group with the new peer group due to
the acquisition of two of the old peer group companies in 2002 and 2003. Using
the assistance of consultants, AMCOL selected the new peer group, which consists
of companies whose businesses, sales sizes, market capitalization and stock
trading volumes were similar to that of AMCOL. The new peer group consists of
the following companies: Calgon Carbon Corporation, Compass Minerals
International, Inc., Martin Marietta Materials, Inc., Minerals Technologies
Inc., Oil-Dri Corporation of America and RPM International Inc. The old peer
group consists of the following companies: Calgon Carbon Corporation,
Mississippi Chemical Corporation and Oil-Dri Corporation of America.
All returns were calculated assuming dividend reinvestment on a quarterly
basis. Returns were adjusted for spin-offs and other special dividends for both
AMCOL and the peer group companies. Further, the tax-effectiveness of any
distributions to shareholders was not taken into account. The returns of each
company in the peer group have been weighted according to market capitalization.
[The following information was depicted as a line chart in the printed material]
---------------------------------------------------------------------------------------------------
S&P Small New Peer Group Old Peer Group*
Date AMCOL Cap 600
---------------------------------------------------------------------------------------------------
12/31/98 $ 100.00 $ 100.00 $ 100.00 $ 100.00
12/31/99 $ 166.57 $ 112.38 $ 72.22 $ 65.30
12/31/00 $ 192.16 $ 125.62 $ 68.89 $ 49.12
12/31/01 $ 294.12 $ 133.84 $ 91.71 $ 65.04
12/31/02 $ 240.73 $ 114.28 $ 77.52 $ 36.39
12/31/03 $ 856.10 $ 158.56 $ 103.69 $ 49.19
---------------------------------------------------------------------------------------------------
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Clarence O. Redman, Secretary and a director, is of counsel to Lord,
Bissell & Brook LLP, the principal law firm engaged by AMCOL.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, AMCOL's directors, its
executive officers and any persons holding more than 10% of AMCOL's common stock
are required to report their initial ownership of AMCOL's common stock and any
subsequent changes in that ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established and AMCOL is required
to disclose in this proxy statement if a director or executive officer filed a
late report. During 2003, Mr. P. Weaver and Mr. Maul each failed to file on a
timely basis a Form 4 reporting one sale transaction. In addition, Mr.
McKendrick failed to file on a timely basis a Form 4 reporting a stock option
exercise and a sale. In making these disclosures, AMCOL has relied solely on
written representations of its directors and executive officers and copies of
the reports filed with the Securities and Exchange Commission.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be included in AMCOL's proxy statement
and form of proxy relating to, and to be presented at, the annual meeting of
shareholders of AMCOL to be held in 2005 must be received by AMCOL on or before
December 3, 2004.
If a shareholder intends to present a proposal at the 2005 annual meeting
of shareholders but does not seek inclusion of that proposal in AMCOL's proxy
statement for that meeting, such shareholder must deliver written notice of the
proposal to AMCOL in accordance with the requirements of AMCOL's By-Laws.
Generally, such proposals must be delivered to AMCOL between February 14, 2005
and March 14, 2005. All proposals or notices should be directed to the Secretary
of AMCOL at One North Arlington, 1500 West Shure Drive, Suite 500, Arlington
Heights, Illinois 60004-7803.
OTHER MATTERS
As of the date of this proxy statement, AMCOL's management knows of no
matter not specifically referred to above as to which any action is expected to
be taken at the annual meeting. It is intended, however, that the persons named
as proxies will vote the proxies regarding such other matters and the
transaction of such other business as may be properly brought before the meeting
in accordance with their best judgment.
By Order of the Board of Directors,
Clarence O. Redman
Secretary
Arlington Heights, Illinois
April 2, 2004
23
Appendix 1
AMCOL INTERNATIONAL CORPORATION
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be an Audit Committee of the Board of Directors, consisting of
no less than three members, whose members shall meet the independence and
experience requirements of any applicable laws and regulations. The Board of
Directors shall appoint and replace the members on recommendation of the
Nominating and Governance Committee. Each member will be "financially literate"
(or will become so within a reasonable time after his or her appointment to the
Audit Committee), and at least one member of the Audit Committee shall have
accounting or related financial management expertise as determined by the Board
in its business judgment.
No Director may serve as a member of the Audit Committee if such Director
serves on the audit committees of more than two other public companies unless
the Board of Directors determines that such simultaneous service would not
impair the ability of such Director to effectively serve on the Audit Committee.
No member of the Audit Committee may receive any compensation from the
Company other than: (i) director's fees (including an equity based component, if
any), and (ii) a pension or other deferred compensation for prior service that
is not contingent on future service.
STATEMENT OF PURPOSE
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling the Board's oversight responsibility by monitoring: (1) the integrity
of the financial statements of the Company, (2) the independent auditor's
qualifications and independence, (3) the compliance by the Company with legal
and regulatory requirements pertaining to the financial statements, and (4) the
performance of the Company's internal audit function and independent auditors.
DUTIES AND RESPONSIBILITIES
The Audit Committee has the authority to engage independent legal,
accounting or other advisors as it deems necessary to carry out its duties. The
Company shall provide funding for any advisor employed by the Committee as well
as for administrative expenses that are necessary or appropriate in carrying out
the Committee's duties.
The Audit Committee shall make regular reports to the Board. The Committee
shall review and assess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval. The Committee shall annually review
the Committee's own performance.
The Audit Committee shall be directly responsible for the appointment,
compensation, retention and oversight of the outside auditors, which outside
auditors shall report directly to the Committee. The Audit Committee may consult
with Management, but shall not delegate these responsibilities.
The Audit Committee shall prepare an Audit Committee Report required by
the rules of the Securities and Exchange Commission to be included in the
Company's annual proxy statement.
The Audit Committee shall have direct responsibility to review and approve
waivers of the Company's Code of Business Conduct and Ethics for directors,
officers, and "affiliates" of the Company (as that term is defined in Rule 144
of the Securities Act of 1933).
Meetings
The Audit Committee shall meet as often as it determines, but not less
frequently than quarterly. The Audit Committee shall meet periodically with
Management, the internal auditors and the independent auditors in separate
executive sessions. The Audit Committee may request any officer or employee of
the Company, or the Company's outside counsel or independent auditor, to attend
a meeting of the Committee, or to meet with any member of or consultants to the
Committee.
In addition to the foregoing responsibilities, the Audit Committee will:
Financial Statement and Disclosure Matters
1. Review and discuss annual audited financial statements and quarterly
financial statements, prior to filing, with Management and the
independent auditor, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations." With respect to the annual audited financial
statements, the Committee shall also recommend whether such audited
financial statements should be included in the Company's Form 10-K.
2. Review with management: (i) major issues regarding accounting
principles and financial statement presentations, including any
significant changes in the Company's selection or application of
accounting principles, (ii) any major issues as to the adequacy of
the Company's internal controls and any special audit steps which
should be adopted in light of material control deficiencies, and
(iii) analyses prepared by Management and/or the independent auditor
setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the
Company's financial statements.
3. Discuss, generally, the Company's earnings press releases, as well
as financial information and earnings guidance provided to analysts
and rating agencies. The Committee need not discuss each earnings
release in advance of release. The Committee shall discuss the type
of information to be disclosed and the type of presentation to be
made in the Company's earnings press releases (determine the
advisability of the use of "pro forma" or "adjusted" non-GAAP
information).
4. Discuss with the independent auditor the effect of regulatory and
accounting initiatives, as well as the advisability of the use of
off-balance sheet structures, on the Company's financial statements.
5. Discuss with Management the Company's major financial risk exposures
and the steps Management has taken to monitor and control such
exposures, including the Company's risk assessment and risk
management policies.
6. Review with the independent auditor any difficulties encountered in
the course of the audit work, including any restrictions on the
scope of activities or on access to requested information, and any
material disagreements with Management.
7. Review disclosure made to the Audit Committee and independent
auditor by the Company's CEO and CFO during their certification
process on Form 10-K and Form 10-Q about any significant
deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving Management or
other employees who have a significant role in the Company's
internal controls.
Oversight of the Company's Relationship with the Independent Auditor
1. Evaluate the independent auditor's qualifications, performance and
independence, including a review of the lead audit partner. In
making its evaluation, the Audit Committee will take into account
opinions of Management and the Company's internal auditors (or other
personnel responsible for the internal audit function). The
Committee should present its conclusions with respect to the
independent auditor to the full board.
2. Obtain and review a report from the independent auditor at least
annually describing: the auditing firm's internal quality-control
procedures; any material issues raised by the most recent internal
quality-control review or peer review of the auditing firm, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
independent audits carried out by the auditing firm, and any steps
taken to deal with any such issues; and all relationships between
the independent auditor and the Company (to assess the auditor's
independence).
3. Assure that any required rotation of the lead audit partner is
implemented and consider whether, in order to assure continuing
auditor independence, it is appropriate to adopt a policy of
rotating the independent auditing firm itself on a regular basis.
Conclusions concerning such rotation will be presented to the full
board.
4. Recommend to the Board policies for the Company's hiring of
employees or former employees of the independent auditor who were
engaged on the Company's account.
5. Pre-approve all audit and non-audit services performed by the
independent auditors. For purposes of disclosure in the Company's
annual report and proxy statement, the Committee will communicate
its pre-approval policies and procedures and any pre-approved
services to Management.
Oversight of the Company's Internal Audit Function
1. Ascertain that the internal audit function is carried out
effectively.
2. Discuss with the independent auditor the internal audit function
including the responsibilities, budget and staffing of the Company's
internal audit function.
Compliance Oversight Responsibilities
1. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
2. Discuss with Management and the independent auditor any
correspondence with regulators or governmental agencies and any
published reports which raise material issues regarding the
Company's financial statements or accounting policies.
3. Discuss with the Company's legal counsel any legal matters that may
have a material impact on the financial statements or the Company's
compliance policies.
LIMITATION OF AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of Management and the independent auditor.
AMCOL INTERNATIONAL CORPORATION
Annual Meeting of Shareholders to be held on May 13, 2004
As a shareholder of AMCOL International Corporation (the "Company"), I
acknowledge receipt of Notice of Annual Meeting and accompanying Proxy Statement
and appoint John Hughes, Lawrence E. Washow and Paul C. Weaver, or any one of
them, with full power of substitution as proxies, to vote all shares of stock of
the Company that I am entitled to vote, at the annual meeting of shareholders to
be held on Thursday, May 13, 2004, at 11:00 a.m., local time, and at any
adjournment thereof, at the Hilton Hotel Northbrook, 2855 North Milwaukee
Avenue, Northbrook, Illinois.
The election of Arthur Brown, Jay D. Proops and Paul C. Weaver to three-year
terms as Class III directors.
[_] FOR ALL NOMINEES EXCEPT [_] WITHHOLD AUTHORITY TO
NOMINEES WRITTEN BY THE VOTE FOR ALL NOMINEES
UNDERSIGNED BELOW
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THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN, AND IN THE
ABSENCE OF SUCH INSTRUCTIONS, SHALL BE VOTED FOR ALL OF THE NOMINEES FOR
DIRECTOR. IF OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXIES ON THOSE MATTERS.
This Proxy Is Solicited on Behalf of the Board of Directors
You are urged to mark, sign and return your proxy promptly in the enclosed
self-addressed, postage-paid (if mailed in the United States) envelope.
Dated ________________, 2004
____________________________________________
SIGNATURE OF SHAREHOLDER
____________________________________________
SIGNATURE OF SHAREHOLDER
When signing the proxy, please date it and take care
to have the signature agree to the shareholder's name
as it appears on this side of the proxy. If shares
are registered in the names of two or more persons,
each person should sign. Executors, administrators,
trustees and guardians should so indicate when
signing.
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the envelope provided as soon as
possible.
-OR-
TELEPHONE - Call toll-free 1-800-PROXIES from any touch-tone telephone and
follow the instructions. Have your control number and proxy card available when
you call.
-OR-
INTERNET - Access www.voteproxy.com and follow the on-screen instructions. Have
your control number available when you access the web page.
COMPANY NUMBER
ACCOUNT NUMBER
CONTROL NUMBER