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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 sec.240.14a-11(c) or sec.240.14a-12
HERCULES, INC.
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(Name of Registrant as Specified In Its Charter)
HERCULES, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or
14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule
14A.
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) 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:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
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the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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HERCULES INCORPORATED
The Modern Art of Shareholder Value
1996 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
[Photo to come]
[HERCULES LOGO]
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[HERCULES LOGO]
March 14, 1996
Dear Stockholder:
On behalf of your Board of Directors and your management, I cordially
invite you to attend the 1996 Annual Meeting of Stockholders which will be held
on THURSDAY, APRIL 25, 1996, at 11 a.m., local time, at the Delaware Art Museum,
2301 Kentmere Parkway, Wilmington, Delaware. DUE TO THE SEATING CAPACITY AT THE
DELAWARE ART MUSEUM, ADMITTANCE TO THE ANNUAL MEETING WILL BE BY TICKET ONLY ON
A FIRST COME, FIRST SERVED BASIS. You may request a ticket by checking off the
appropriate box on your Proxy Card. If you arrive at the Annual Meeting without
a ticket, you will be seated if space is available.
The enclosed Notice of Meeting and Proxy Statement describe the
business to be transacted at the Annual Meeting. This year you are being asked
to (i) re-elect three incumbent directors (R. Keith Elliott, Thomas L. Gossage
and Gaynor N. Kelley) and (ii) ratify the appointment of Coopers & Lybrand
L.L.P. as independent accountants.
I plan, as is our custom at the Annual Meeting, to give a brief report
on the affairs of Hercules. You will have the opportunity to comment on and ask
questions about the affairs of Hercules that may be of interest to stockholders
generally. Your input is important to us; therefore, whether or not you plan to
attend the Annual Meeting, PLEASE VOTE, SIGN, DATE AND RETURN YOUR PROXY CARD AS
SOON AS PRACTICABLE. This will not prevent you from voting your shares in person
if you do attend the Annual Meeting.
Thank you for your interest in Hercules.
Sincerely,
/s/ Thomas L. Gossage
Thomas L. Gossage
Chairman of the Board and
Chief Executive Officer
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[HERCULES LOGO]
HERCULES INCORPORATED
Hercules Plaza
Wilmington, DE 19894-0001
NOTICE of the 1996
Annual Meeting of Stockholders
The 1996 Annual Meeting of Stockholders of Hercules
Incorporated will be held on THURSDAY, APRIL 25, 1996, at 11
a.m., local time, at the Delaware Art Museum, 2301 Kentmere
Parkway, Wilmington, Delaware, for the following purposes:
1) To consider and take action upon the following
matters described in the Proxy Statement:
a) Election of three directors (nominees are R.
Keith Elliott, Thomas L. Gossage and Gaynor N.
Kelley), each for a term of three years;
b) Ratification of the appointment of Coopers &
Lybrand L.L.P. as independent accountants for
1996; and
2) To transact such other business as may properly come
before the Annual meeting.
Stockholders of record at the close of business on
February 26, 1996, (the "Record Date") will be entitled to
vote at the Annual Meeting or any adjournments thereof. Please
note that seating is limited and admission to the Annual
Meeting is by ticket only on a first come, first served basis.
If you are a stockholder as of the Record Date and would like
to attend the Annual Meeting, PLEASE MARK THE APPROPRIATE BOX
ON YOUR PROXY CARD AND A TICKET WILL BE EITHER MAILED TO YOU
OR WAITING FOR YOU AT THE RECEPTION DESK OF THE ANNUAL
MEETING.
If your shares are held in the name of a broker or other
nominee and you plan to attend the Annual Meeting, please
notify the Corporate Secretary and bring with you a proxy or
letter from that firm confirming your ownership of shares.
By order of the Board of Directors,
Wilmington, Delaware
March 14, 1996
[SIGNATURE]
Israel J. Floyd, Esq.
Corporate Secretary
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TABLE OF CONTENTS
Page
----
I. GENERAL INFORMATION............................................... 1
Proxy Statement................................................... 1
Annual Meeting Information........................................ 1
II. MATTERS TO BE VOTED AT THE ANNUAL MEETING......................... 2
1. Election of Three Directors (Nominees are R. Keith Elliott,
Thomas L. Gossage and Gaynor N. Kelley)........................ 2
2. Ratification of Coopers & Lybrand L.L.P. as Independent
Accountants.................................................... 3
III. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS................... 4
Principal Stockholders............................................ 4
Directors and Officers............................................ 4
IV. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 6
V. CORPORATE GOVERNANCE -- DIRECTORS AND OFFICERS.................... 6
Board and Board Committees........................................ 6
Board and Board Committee Membership Roster....................... 7
Employee Director Compensation.................................... 7
Non-employee Director Compensation................................ 7
Named Executives.................................................. 8
Compliance with Section 16(a) of the Securities Exchange Act of
1934.............................................................. 9
VI. EXECUTIVE COMPENSATION............................................ 9
Report of the Compensation Committee.............................. 9
Additional Compensation Information............................... 14
VII. PROXY SOLICITATION COSTS.......................................... 15
VIII. 1997 STOCKHOLDER PROPOSALS........................................ 15
IX. APPENDICES........................................................ 16
Appendix 1: Biographies of Directors............................ 17
Appendix 2: Summary Compensation Table.......................... 20
Appendix 3: Option Grants Table................................. 22
Appendix 4: Option Exercises and Year-End Value Table........... 23
Appendix 5: Long-Term Incentive Plan Awards Table............... 23
Appendix 6: Pension Plans Table................................. 24
Appendix 7: Employment Contracts and Termination of Employment
And Change-in-Control Arrangements.............. 26
Appendix 8: Annual Meeting Information and Proxy Procedures..... 27
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HERCULES INCORPORATED
Hercules Plaza
[HERCULES LOGO] Wilmington, DE 19894-0001
PROXY STATEMENT
Annual Meeting of Stockholders
Thursday, April 25, 1996
I. GENERAL INFORMATION
This Proxy Statement, the accompanying proxy/voting
instruction card (the "Proxy Card") and Hercules' 1995 Annual
Report to Stockholders (the "Annual Report"), containing
financial statements reflecting the financial position and
results of Hercules for 1995, are being distributed to
Stockholders on or about March 14, 1996. Whether or not you
expect to attend Hercules' 1996 Annual Meeting of Stockholders
(the "Annual Meeting") in person, the Board of Directors of
Hercules Incorporated (the "Board") requests that you
complete, sign and return your Proxy Card for use at the
Annual Meeting, and any adjournments thereof.
PROXY STATEMENT. This Proxy Statement consists of
Sections I through IX hereof. Such Sections are intended to be
read and construed together and when taken together they
constitute one and the same instrument. YOU ARE ENCOURAGED TO
CAREFULLY REVIEW EACH SECTION INCLUDING EACH APPENDIX.
ANNUAL MEETING INFORMATION. For detailed information
concerning the following items, you are referred to the
appropriate parts of Section II and/or Appendix 8:
- RECORD DATE: Only Stockholders at the close of
business on February 26, 1996 ("Record Date") may vote
at the Annual Meeting. Each share of Common Stock is
entitled to one vote.
- QUORUM AT THE ANNUAL MEETING: As of Record Date,
Hercules had 108,501,417 shares of issued and
outstanding Common Stock. The holders of a majority of
the outstanding shares, present in person or
represented by proxy, will constitute a quorum.
- VOTING BY PROXY CARD: Sign, date and return each
Proxy Card you receive. If a Proxy Card is returned
signed but unmarked, it will be voted FOR the
Re-election of Messrs. Elliott, Gossage and Kelley and
FOR the ratification of Coopers & Lybrand L.L.P. as
independent accountants.
- VOTING WHILE ATTENDING THE ANNUAL MEETING: You may
attend the Annual Meeting and vote in person. Such
vote will revoke and supersede any Proxy Cards you
previously sent in.
The Modern Art of Shareholder Value 1
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[HERCULES LOGO]
- ITEMS BEFORE THE ANNUAL MEETING: Re-election of
Messrs. Elliott, Gossage and Kelley. Ratification
of the appointment of Coopers & Lybrand L.L.P. as
Hercules' independent accountants for 1996. No
other items are expected to be presented at the
Annual Meeting.
- AUTOMATIC DIVIDEND REINVESTMENT SHARES: May be
voted only by a properly signed and returned Proxy
Card or by attending the Annual Meeting and voting
in person.
- SHARES HELD IN EMPLOYEE BENEFIT PLANS: Will be
voted by the appropriate Trustee in accordance
with your properly indicated voting preferences.
If you do not properly indicate a voting
preference, the Trustee will vote the shares in
proportion to the way the other participants have
voted.
- CONFIDENTIALITY: Proxy Cards, ballots and voting
tabulations that identify individual participants
are kept confidential.
- DIRECTORS NOMINATIONS BY STOCKHOLDERS: Must be
received in writing by Hercules not later than
April 5, 1996.
- COUNTING OF VOTES: Votes cast will be counted by
Chemical Mellon Shareholders Services L.L.C. and
independently audited by The Corporation Trust
Company.
II. MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
ELECTION OF THREE DIRECTORS (PROXY STATEMENT
ITEM NO. 1)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE RE-ELECTION
OF EACH OF
R. KEITH ELLIOTT, THOMAS L. GOSSAGE AND GAYNOR N.
KELLEY AS A DIRECTOR, ALL OF WHOM CURRENTLY SERVE
AS DIRECTORS, FOR ELECTION AT THE ANNUAL MEETING
FOR A TERM EXPIRING AT THE 1999 ANNUAL MEETING OF
STOCKHOLDERS, AND UNTIL THEIR RESPECTIVE
SUCCESSORS ARE ELECTED AND QUALIFIED. EACH NOMINEE
HAS CONSENTED TO BEING NAMED IN THIS PROXY
STATEMENT AND TO SERVE IF ELECTED.
The affirmative vote of a majority of the
outstanding shares of Common Stock entitled to vote at the
Annual Meeting is required in order to elect each nominee.
SEE APPENDIX 1 FOR BIOGRAPHICAL INFORMATION FOR EACH
NOMINEE AND EACH OF THE DIRECTORS NOT STANDING FOR
ELECTION.
In the event some unexpected occurrence results in
any designated nominee becoming unavailable for election
as a director, or otherwise unable or unwilling to serve,
the Board, at its discretion, may by resolution either
provide for a lesser number of directors or designate a
substitute nominee. In the latter event, shares
represented by proxies may be voted for such substitute
nominee.
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RATIFICATION OF INDEPENDENT ACCOUNTANTS
(PROXY STATEMENT ITEM NO. 2)
YOUR BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS.
The affirmative vote of the majority of the shares
of Common Stock present in person or by proxy and entitled
to vote at the Annual Meeting is required in order to
ratify Coopers & Lybrand L.L.P. as the independent
accountant for Hercules for 1996.
Coopers & Lybrand L.L.P., which has offices or
affiliates convenient to most of the localities in which
Hercules and its affiliates operate worldwide, has been
the independent public accountant for Hercules and most of
its affiliates for many years. The Audit Committee and the
Board believe that Coopers & Lybrand L.L.P.'s long-term
knowledge of Hercules' business is most valuable, enabling
it to carry out its assignments and responsibilities with
effectiveness and efficiency. In keeping with the
established policy of Coopers & Lybrand L.L.P., partners
and employees of the firm engaged in auditing Hercules are
periodically changed. Among other benefits, this practice
gives Hercules the advantage of new expertise and
experience. Coopers & Lybrand L.L.P. representatives have
direct access to members of the Audit Committee and
regularly attend the Audit Committee's meetings.
The Audit Committee reviewed all services provided
by Coopers & Lybrand L.L.P. in 1995 to ensure that the
services provided were within the scope previously
approved by the Audit Committee. Also, the Audit Committee
reviewed and concluded that the non-audit services
performed by Coopers & Lybrand L.L.P. did not impair its
independence as accountants for Hercules.
Representatives of Coopers & Lybrand L.L.P. will be
present at the Annual Meeting to respond to appropriate
stockholder questions and, if they so desire, to make a
statement.
The Modern Art of Shareholder Value 3
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[HERCULES LOGO]
III. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
PRINCIPAL STOCKHOLDERS: Oppenheimer Group, Inc.,
Oppenheimer Tower, World Financial Center, New York, NY,
has reported holdings, as of February 1, 1996, of
14,706,019 shares of Common Stock. This amount represents
12.9% of all shares of Common Stock outstanding. Apart
from these holdings, Hercules knows of no other beneficial
owner of, or group that owns, five percent or more of the
Common Stock.
DIRECTORS AND OFFICERS: The following table sets
forth information regarding beneficial ownership as of
February 26, 1996, of Common Stock of each director,
Hercules' five most highly compensated executive officers
(the "Named Executives") and the directors and officers as
a group.
------------------------------------------------------------------------------------
Amount and Nature of Shares
Beneficially Owned
as of February 26, 1996
------------------------------------------------------------------------------------
Aggregate Number Right to Percent
of Shares Acquire(2) of
Name Beneficially Shares
Owned(1)
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V. J. Corbo, Officer 55,376 106,500 *
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R. K. Elliott, Director and 159,106 167,400 *
Officer
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R. M. Fairbanks, III, Director 5,195 6,000 *
------------------------------------------------------------------------------------
R. J. A. Fraser, Officer 61,083 101,100 *
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T. L. Gossage, Director and 886,163 723,000 1.5%
Officer
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E. E. Holiday, Director 2,437 3,000 *
------------------------------------------------------------------------------------
R. G. Jahn, Director 7,094 12,000 *
------------------------------------------------------------------------------------
G. N. Kelley, Director 5,801 12,000 *
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R. L. MacDonald, Jr., Director 9,092 12,000 *
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H. E. McBrayer, Director 75,072 9,000 *
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C. D. Miller, Officer 52,466 77,400 *
------------------------------------------------------------------------------------
P. A. Sneed, Director 4,867 3,000 *
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L. M. Thomas, Director 6,110 12,000 *
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Directors and Officers as a 1,462,866 1,392,680 2.6%
Group (19)
------------------------------------------------------------------------------------
* Less than 1% of Hercules' outstanding shares of Common
Stock.
(1) Reported in this column are shares held individually
in the named individual's name, held by the Named
Individual jointly with others, or held in the name of
a bank, broker or nominee for the individual's
account. Also included in this column are:
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a. Shares credited, as of January 31, 1996, to
individual accounts under the Hercules Incorporated
Savings and Investment Plan ("S&I Plan"): V. J. Corbo,
2,175 shares; R. K. Elliott, 6,482 shares; R. J. A.
Fraser, 3,941 shares; T. L. Gossage, 1,928 shares; and
C. D. Miller, 5,659 shares; and all directors and
officers as a group, 28,792 shares. As long as such
shares remain in the S&I Plan trust, the named
individuals have no power to direct disposition
(except for changes in investment medium within the
S&I Plan), but do have a right to indicate their
voting preference and to receive dividends (although
held in trust until withdrawal as permitted by the S&I
Plan).
b. Shares subject to restrictions and forfeiture
risks during specified restriction periods under
either the Hercules Incorporated Long Term Incentive
Compensation Plan or the Hercules Incorporated
Restricted Stock Plan of 1986: V. J. Corbo, 36,313
shares; R. K. Elliott, 116,515 shares; R. J. A.
Fraser, 37,105 shares; T. L. Gossage, 884,235 shares;
and C. D. Miller, 32,859 shares; and all directors and
officers as a group, 1,222,844 shares. As long as
restricted stock awards are subject to restrictions
under one of the Plans, holders of such awards have
the same rights, including voting and dividend rights,
with respect to the shares covered by the award, as do
other stockholders of Hercules, except for the right
to sell or transfer those shares.
c. Mr. Gossage purchased 45,000 shares in 1991
that are subject to restrictions and risks of
forfeiture similar to those under the Hercules
Incorporated Restricted Stock Plan of 1986.
d. Shares awarded (1,500) to and shares purchased
(750) by each non-employee director under the initial,
one-time equity award opportunity described on page 8
of this Proxy Statement. These shares, owned by Ms.
Holiday, Ms. Sneed, and Messrs. Fairbanks, Jahn,
Kelley, MacDonald, McBrayer, and Thomas, are subject
to restrictions on transfer until retirement or
resignation.
e. Shares shown for Mr. Fraser include 20,037
shares held in a revocable trust in his name.
f. Shares shown for Mr. Kelley also include 1,492
shares in which he shares voting and investment power
with his spouse.
(2) Included in this column are shares of Common Stock
with respect to which the officers and directors have
a right to acquire beneficial ownership upon exercise
of stock options within 60 days after February 26,
1996.
The Modern Art of Shareholder Value 5
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[HERCULES LOGO]
IV. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of business, Hercules and its
affiliated entities from time to time engage in
transactions with other entities whose officers or
directors are also directors of Hercules. Hercules
believes that all transactions of this nature are on terms
that are reasonable and competitive.
Additional transactions of this nature are expected
to take place in the ordinary course of business in the
future. In 1995, no director or officer had an involvement
in such transactions of a nature or magnitude to require
disclosure under the applicable SEC thresholds.
V. CORPORATE GOVERNANCE -- DIRECTORS AND EXECUTIVES
BOARD AND BOARD COMMITTEES
Board of Directors Size: Hercules' Restated
Certificate of Incorporation provides that the number of
directors, as determined from time to time by the Board,
shall be not less than seven nor more than eighteen. It
further provides that directors shall be divided into
three classes serving staggered three-year terms, with
each class to be as nearly equal in number as possible.
The Board currently consists of ten directors. The Board
previously consisted of eleven directors; however, Manfred
Caspari retired in December, 1995.
Board of Directors: The business and affairs of
Hercules are managed under the direction of the Board.
Board members are kept informed of Hercules' business and
affairs primarily through discussions with Hercules'
senior management; materials provided to Board members
each month; and participation in Board and Board Committee
meetings. The Board has established the following standing
committees: Audit, Compensation, Executive, Finance,
Nominating, Technology, and Social Responsibility. The
Board met 10 times in 1995. Each director attended at
least 90% of the aggregate of all meetings of the Board
and of all Board Committees of which he/she was a member
during 1995. BIOGRAPHICAL INFORMATION ON EACH BOARD MEMBER
IS SET FORTH IN APPENDIX 1.
Audit Committee: Provides oversight and
reviews of Hercules' auditing, accounting, financial
reporting and internal accounting control functions.
Recommends the independent accountant. All members of
the Audit Committee are non-employee directors. Audit
Committee met 4 times in 1995.
Compensation Committee: Provides oversight and
reviews of Hercules' executive compensation and employee
benefit plans and programs, including the establishment,
modification, and administration thereof. All members of
the Compensation Committee are non-employee directors.
Compensation Committee met 7 times in 1995.
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Executive Committee: Has limited powers to act
on behalf of the Board whenever the Board is not in
session and it would be impractical to call a meeting of
the Board. Meets only as needed and acts only by unanimous
vote. Executive Committee did not meet in 1995.
Finance Committee: Provides oversight of and
reviews financial affairs. Has been granted by the Board
full and final authority on certain financial matters
designated by the Board. Serves as the named fiduciary for
all of Hercules' qualified pension and savings plans.
Finance Committee met 5 times in 1995.
Nominating Committee: Considers and recommends
nominees for election as directors. Reviews and evaluates
the effectiveness, procedures and practices of the Board,
Standing Committees, and Board members. All members of the
Nominating Committee are non-employee directors.
Nominating Committee met 1 time in 1995.
Social Responsibility Committee: Reviews
Hercules' policies, programs and practices on social
issues of significance including equal employment
opportunity; environmental, safety and health matters; and
community affairs and relations. Social Responsibility
Committee met 4 times in 1995.
Technology Committee: Reviews the adequacy of
Hercules' technology directions and resources (including
intellectual property estate and research and development
effort and new or emerging technologies) to support
Hercules' strategic and business goals. Technology
Committee met 5 times in 1995.
Board and Board Committee Membership Roster:
-----------------------------------------------------------------------------------------------
Social
Name Board Audit Compensation Nominating Finance Technology Executive Respon.
-----------------------------------------------------------------------------------------------
R. M.
Fairbanks,
III X X X X
R. K.
Elliott X X X X
T. L.
Gossage X* X X X*
E. E.
Holiday X X X*
R. G. Jahn X X X* X X
G. N. Kelley X X X X*
H. E.
McBrayer X X X* X
R. L.
MacDonald,
Jr. X X* X X
P. A. Sneed X X X
L. M. Thomas X X* X
-----------------------------------------------------------------------------------------------
[* Denotes chairperson.]
EMPLOYEE DIRECTOR COMPENSATION: Employee Directors
receive no fee or extra compensation for service on
Board or Board Committees.
NON-EMPLOYEE DIRECTOR COMPENSATION:
Retainer and Fees: Annual fee of $20,000. Meeting
fee of $1,000. Annual fee of $3,000 for Chairmanship of a
Board Committee. Fee of $1,000 per day for special
assignments. Reimbursement of expenses (e.g., travel, food
and lodging).
The Modern Art of Shareholder Value 7
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[HERCULES LOGO]
1995 Group Compensation: Aggregate amount paid
in 1995 (including expenses reimbursed) to Non-employee
Directors as a group was $502,291.
Stock Accumulation Plan: The stockholders
approved the Hercules Incorporated Non-employee Director
Stock Accumulation Plan ("NEDSAP") in 1991 and certain
amendments in 1993. Under NEDSAP, a Non-employee Director
may elect to defer all or part of his or her retainer and
fees and/or to exchange such deferred amount into Common
Stock at 85% of the fair market value of Common Stock on
the date of exchange.
Stock Options: Under NEDSAP each Non-employee
Director receives annually an automatic grant of a
nonqualified stock option (exercisable after a one-year
holding period) to purchase 3,000 shares of Common Stock.
The option price is set at the fair market value of the
Common Stock on the date of grant.
Initial Equity Award: Under NEDSAP, when a
Non-employee director is first elected to the Board, he or
she receives a one-time equity award opportunity of 1,500
shares of Common Stock, without payment to Hercules and
subject to and upon the purchase of 750 shares.
Retirement Policy: A director who has reached
age 70 may not stand for re-election. Under the retirement
income plan for Non-employee Directors, a Non-employee
Director with at least five years of Board service will
receive an annual retirement benefit for ten years in the
amount of 60% of the annual Board retainer in effect at
the time the director retires from the Board or reaches
age 70, whichever is earlier.
NAMED EXECUTIVES
1995 Compensation highlights for the Named
Executives:
Thomas L. Gossage, Chairman & Chief Executive
Officer. 1995 Compensation Highlights: $837,508 salary;
$1,020,000 bonus; $208,956 other compensation; $0 from
stock option exercises; and $0 current income realized
from previous long-term incentive plan awards. Prior to
October 1, 1995, Mr. Gossage held the position of
Chairman, President and Chief Executive Officer.
R. Keith Elliott, President & Chief Operating
Officer. 1995 Compensation Highlights: $450,833 salary;
$500,000 bonus; $69,719 other compensation;$0 from stock
option exercises; and $1,266,435 current income realized
from previous long-term incentive plan awards. Prior to
October 1, 1995, Mr. Elliott held the position of
Executive Vice President & Chief Financial Officer.
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Vincent J. Corbo, Senior Vice President,
Technology. 1995 Compensation Highlights: $264,334 salary;
$290,000 bonus; $84,087 other compensation; $0 from stock
option exercises; and $675,773 current income realized
from previous long-term incentive plan awards.
Robert J. A. Fraser, Group Vice President &
President, Hercules Food and Functional Products Company.
1995 Compensation Highlights: $247,662 salary; $255,000
bonus; $68,901 other compensation; $0 from stock option
exercises; and $675,773 current income realized from
previous long-term incentive plan awards.
C. Doyle Miller, Group Vice President &
President, Hercules Chemical Specialties Company. 1995
Compensation Highlights: $251,666 salary; $240,000 bonus;
$89,298 other compensation; $0 from stock option
exercises; and $675,773 current income realized from
previous long-term incentive plan awards.
See appendices ii through vii for additional information
on compensation for the named executives.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Based solely on review of the copies of forms
furnished to Hercules, or written representations that no
annual forms (SEC Form 5) were required, Hercules believes
that during 1995 all filing requirements of its officers,
directors and 10-percent shareholders for reporting to the
Securities and Exchange Commission their ownership and
changes in ownership of Common Stock (as required pursuant
to Section 16(a) of the Securities Exchange Act of 1934)
were complied with.
VI. EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY
The objectives of Hercules' executive compensation
program are to motivate management to create shareholder
value by linking executive compensation with the returns
realized by shareholders and to ensure the continued
growth and performance of Hercules by attracting,
retaining, and motivating talented executives through
competitive compensation.
The Compensation Committee, composed of three
independent non-employee directors, has the responsibility
to administer executive compensation programs, policy and
practice.
The Modern Art of Shareholder Value 9
16
[HERCULES LOGO]
There are three elements which constitute Hercules'
executive compensation program: base pay, an annual
incentive program, and a long-term incentive compensation
program. In addition, the Compensation Committee may make
special awards in recognition of extraordinary
achievements or significant appointments.
BASE PAY
Hercules' executive base pay program is based on
individual performance and comparing Hercules' executive
compensation to the compensation for executives in
comparable positions in chemical and general industry
companies, including many of the companies designated in
the Standard & Poors Chemical Index.
The Compensation Committee determined Mr. Gossage's
1995 base pay by considering, without specific weighting,
(i) an analysis of competitive CEO compensation in general
industry and diversified chemical companies; (ii) input
from outside consulting firms, which reviewed competitive
data and estimated a competitive level of base pay for Mr.
Gossage, (iii) achievement of 28% ROE compared to 21% for
1994; (iv) Hercules' improvement in shareholder value
during the previous year; (v) Hercules' sale of the
Aerospace business; (vi) the achievement of Mr. Gossage's
accountabilities for capital expansion, management
development and succession planning, cost improvement and
technology programs; and (vii) the implementation of
Hercules strategic plans. Pursuant to such considerations,
the Compensation Committee determined that a base pay of
$850,000 for Mr. Gossage in 1995 was appropriate.
In the case of the other Named Executives, their
respective base pay was determined, without specific
weighting, upon consideration of competitive compensation
data as obtained from analysis of chemical company
salaries, published industry surveys for comparable
positions and individual performance. In addition, for Mr.
Elliott and Dr. Corbo, consideration was given to their
increased and specialized roles within Hercules.
ANNUAL INCENTIVE COMPENSATION (I. E., BONUS)
Under the Hercules Incorporated Annual Management
Incentive Compensation Plan (MICP), bonuses up to target
level are paid in cash with above-target levels paid in
restricted stock, in the year following performance, based
on the achievement of predetermined corporate, business
unit or corporate staff unit, and individual goals. The
MICP provides that no payouts will occur unless the
minimum level of performance as established by the
Compensation Committee is exceeded. A maximum of 200% of
target may be paid upon achievement of outstanding
performance. Once established, the Compensation Committee
may adjust the performance level expected for minimum,
10
17
target or maximum payouts only upon the occurrence of
extraordinary event(s). In the last three years, the
Compensation Committee has not waived The minimum level of
performance nor adjusted the target or maximum goals
required for payout. For 1995, notwithstanding the maximum
stated in the MICP, the Compensation Committee, in
accordance with its authority, determined that certain
individuals warranted payouts in excess of such maximum.
The Compensation Committee approved the 1995 MICP
pool at 200% of the target level. In its measurement of
Hercules corporate results for 1995, the Compensation
Committee used the 1995 corporate goal of earnings per
share (EPS). EPS was chosen because it is an indicator of
the consistency of company performance. In 1995, Hercules
achieved an EPS of $2.93, up from $2.29 in 1994. In
addition to this goal of EPS, the 1995 pool reflected,
without specific weighting, (i) Hercules performance on
major strategic and tactical initiatives, including the
sale of the Aerospace business, the sale of the
Electronics and Printing Division, the revitalization of
the technology function, safety performance, continued
improvement in shareholder value from Alliant Techsystems,
key business units' performance, management development
and succession issues, implementation of new information
systems, foreign growth initiatives, and major business
alliances; (ii) Hercules' performance, as compared to peer
companies; improvement in return on equity to 28% from 21%
in 1994; the before-mentioned improvement in EPS; and 22%
increase in net income; (iii) strong cash flow (before
financing activities and after dividends) of $495 million;
and (iv) market value added of $1.9 billion.
Eighty percent of Mr. Gossage's MICP payout is
attributable to corporate performance. With respect to the
remaining 20%, the Compensation Committee considered Mr.
Gossage's individual accountabilities, including, without
specific weighting, (i) Hercules shareholder value
improvement; (ii) the continued restructuring of Hercules
assets, including the sale of the Aerospace business and
the Electronics and Printing Division business; (iii)
progress on capital expansion projects; (iv) business
development in emerging economies; (v) Hercules
performance relative to peer companies; and (vi) continued
enhancement of Hercules' credibility with local
communities and financial markets. In light of such
considerations, a final 1995 MICP payout to Mr. Gossage of
$1,020,000 was approved by the Compensation Committee. The
final 1995 MICP payouts as approved by the Compensation
Committee for the other four Named Executives as a group
were an aggregate of $1,285,000. In the approval of the
1995 MICP payouts to such individuals, the Compensation
Committee considered, without specific weighting,
Hercules' corporate performance, business unit
performance, and the individuals' contributions to
Hercules' success.
The Modern Art of Shareholder Value 11
18
[HERCULES
LOGO]
LONG-TERM INCENTIVE COMPENSATION
In 1995, Hercules management delivered additional
market value of $1.9 billion. To continue to influence
this directional improvement of shareholder value,
Hercules refocused its Long-Term Incentive Compensation
Plan (LTIC Plan). Since many of the internal financial
goals had been met or exceeded through the existing LTIC
Plan, Hercules decided to emphasize shareholder value
creation as its primary driver of long-term incentive
compensation. Hercules implemented this new direction by
changing the form and goals of the LTIC Plan. Under the
new LTIC Plan, all executive management received stock
options and performance accelerated stock options (PASOs).
The goals for the 1995 PASO awards are certain stock price
goals and above average total shareholder return
performance as compared to other chemical companies.
Under the LTIC Plan, the Compensation Committee
approves pools of regular stock options and PASOs, and a
pool of Cash Value Awards which are generally granted to
management employees other than Named Executives. The
Compensation Committee also approves the specific awards
for officers and other key employees. In accordance with
the provisions of the LTIC Plan, the Chief Executive
Officer approves all awards for other eligible employees.
Performance Accelerated Stock Options are
nonqualified stock options that "normally" vest six months
prior to the expiration of the option. Option vesting can
be accelerated upon the achievement of certain three-year
goals. Once established, the Compensation Committee will
consider changes to such goals only in the event of a
major restructuring of the corporate entity.
In 1995, the Compensation Committee granted Mr.
Gossage 87,000 PASOs and 132,000 stock options. In making
this grant, the Compensation Committee considered, without
specific weighting, the compensation value of such awards
granted to other CEOs, the ratio of performance shares
granted in 1994 to PASOs, and the number of stock options
granted in the prior year.
In 1995, the Compensation Committee also approved
grants to the other four Named Executives, as a group,
which aggregated 121,500 PASOs and 126,000 stock options.
In approving these grants, the Compensation Committee
considered, without specific weighting, the same factors
as for Mr. Gossage.
As part of its administrative responsibilities, the
Compensation Committee periodically tracks performance
against outstanding performance share award goals. In
1995, taking into account the emphasis on the long-term
creation of shareholder value, the Compensation Committee,
in accordance with its authority, determined that the
payout level for the 1993 and 1994
12
19
performance share grants would be at the target level and
vested such awards. Separately, the Compensation Committee
granted an award of restricted stock and restricted stock
units in such amounts as it deemed appropriate. For Mr.
Gossage, the Compensation Committee granted a supplemental
restricted stock award of 34,800 shares. For the other
Named Executives, the Compensation Committee granted
supplemental restricted stock awards of 48,600 shares in
the aggregate.
SPECIAL AWARDS
In addition to normal awards under the LTIC Plan,
the Compensation Committee made special awards to certain
executives, including two Named Executives, in recognition
of the immediate and future potential results achieved in
the sale of the Hercules Aerospace Company business. Mr.
Gossage was granted 50,000 phantom Alliant performance
units and Mr. Elliott was granted 20,000 units. If the
price of Alliant Techsystems common stock ("Alliant Stock
Price") increases to a specified level, the award level
will be doubled, reflecting the additional shareholder
value delivered to Hercules shareholders, while if the
Alliant Stock Price drops below a specified price at the
end of the Performance Period, the awards are forfeited.
These non-dividend bearing units track the Alliant Stock
Price and, if the Alliant Stock Price equals or exceeds a
specified level at the end of the three-year performance
period, the total unit value is payable in equivalent
Restricted Stock Units of Hercules Common Stock.
Separately, in recognition of his appointment to the
position of President and Chief Operating Officer, the
Compensation Committee awarded a performance accelerated
stock option grant of 100,000 options to Mr. Elliott. The
performance measure for the acceleration of vesting of
these options is a specified percent increase in Hercules
stock price during the option period.
DEDUCTIBILITY OF COMPENSATION
Under Section 162(m) of the Internal Revenue Code,
the Company may not deduct certain forms of compensation
in excess of $1,000,000 paid to a Named Executive. The
Compensation Committee undertook a review of Hercules'
current compensation plans and practices and concluded
that no action would be taken at this time and that
further review would be made during 1996.
COMPENSATION COMMITTEE
R. L. MacDonald, Jr., Chairperson
G. N. Kelley
H. E. McBrayer
The Modern Art of Shareholder Value 13
20
[HERCULES
LOGO]
PERFORMANCE CHART
The Performance Chart below illustrates a five-year
comparison of cumulative total returns based on an initial
investment of $100 in Hercules Common Stock as compared
with the S&P 500 (Broad Market Index) and the S&P Chemical
Index.
HERCULES INCORPORATED
COMPARISON OF FIVE YEAR CUMULATIVE RETURN*
HERCULES INCORPORATED, S&P 500, & S&P CHEMICAL INDEX
Measurement Period S&P Chemical
(Fiscal Year Covered) HPC S&P 500 Index
1990 100 100 100
1991 158 130 130
1992 208 140 143
1993 382 155 160
1994 396 157 185
1995 590 215 241
ADDITIONAL COMPENSATION INFORMATION
Set forth in Appendix 2 is the "Summary Compensation
Table," which shows, for the last three fiscal years, cash
and other compensation paid or accrued for those years to
each of the Named Executives.
Set forth in Appendix 3 is the "Options Grant
Table," which contains information regarding the grant of
stock options in 1995 to the Named Executives.
Set forth in Appendix 4 is the "Option Exercise and
Year-End Value Table" which shows information with respect
to the Named Executives regarding the exercise of options
during the last fiscal year and unexercised options held
by them as of December 31, 1995.
Set forth in Appendix 5 is the "Long Term Incentive
Plan Awards Table," which contains information regarding
awards made to the Named Executives under the Hercules
Long Term Incentive Compensation Plan.
14
21
Set forth in Appendix 6 is the "Pension Plans Table" which shows the
estimated annual pension benefits payable to a covered participant (e.g., a
Named Executive) at normal retirement age under Hercules' qualified benefits
pension plan, as well as non-qualified supplemental benefits, based on the
stated remuneration and years of service with Hercules and its subsidiaries.
Set forth in Appendix 7 is a description titled "Employment Contracts and
Termination of Employment And Change-in-Control Arrangements" which contains
information regarding the same.
Set forth in Appendix 8 is a description titled "Annual Meeting Information
and Proxy Procedures."
VII. PROXY SOLICITATION COSTS
The entire cost of soliciting proxies will be borne by Hercules. Hercules
has engaged Morrow & Co., Inc. to assist in the distribution of proxy materials
and with the solicitation of proxies for a fee of $9,000 plus out-of-pocket
expenses. Proxies may be solicited through the mail and personally by telephone
or telegram by the directors, officers and regular employees of Hercules without
additional compensation for such services.
Hercules will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding soliciting material to the beneficial owners of Common Stock.
VIII. 1997 STOCKHOLDER PROPOSALS
Stockholders of Hercules wishing to include proposals in Hercules' proxy
materials to be distributed in connection with the 1997 annual meeting of
stockholders must submit the same in writing so as to be received by Hercules at
its principal office at Hercules Plaza, Wilmington, DE 19894-0001, on or before
November 14, 1996. Such proposals must also meet the other requirements of the
rules of the Securities and Exchange Commission relating to stockholders'
proposals.
By Authority of the Board of Directors,
[SIGNATURE]
ISRAEL J. FLOYD, ESQ.
Corporate Secretary
Wilmington, Delaware
March 14, 1996
The Modern Art of Shareholder Value 15
22
IX. APPENDICES
PAGE
----
Appendix 1: Board of Directors........................................ 17
Appendix 2: Summary Compensation Table (with Footnotes)............... 20
Appendix 3: Option Grants Table (with Footnotes)...................... 22
Appendix 4: Option Exercises and Year-End Value Table................. 23
Appendix 5: Long-Term Incentive Plan Awards Table..................... 23
Appendix 6: Pension Plans Table....................................... 24
Appendix 7: Employment Contracts and Termination of Employment and
Change-in-Control Arrangements............................ 26
Appendix 8: Annual Meeting Information and Proxy Procedures........... 27
16
23
APPENDIX 1
BOARD OF DIRECTORS
NOMINEES FOR ELECTION FOR TERM EXPIRING IN 1999
R. KEITH ELLIOTT DIRECTOR SINCE 1991
PRESIDENT AND CHIEF OPERATING OFFICER
[PICTURE] MEMBER, EXECUTIVE, FINANCE AND TECHNOLOGY COMMITTEES
R. Keith Elliott, age 54, has been Hercules' president and chief
operating officer since October, 1995, and prior thereto, he had been
executive vice president and chief financial officer since January,
1995, and senior vice president and chief financial officer since 1991.
Before joining Hercules in 1991, he had been senior vice president and
chief financial officer of Engelhard Corporation, a producer of
catalysts, engineered materials, precious metals and derivative
products. He joined Engelhard in 1981. Mr. Elliott is the Chairman of
the Board of Directors of Alliant Techsystems and a member of the
Partnership Committee of Tastemaker.
THOMAS L. GOSSAGE DIRECTOR SINCE 1989
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
CHAIRPERSON, EXECUTIVE COMMITTEE
[PICTURE] MEMBER, FINANCE AND TECHNOLOGY COMMITTEES
Thomas L. Gossage, age 61, has been Hercules' chairman of the board and
chief executive officer since January 1991 and president from 1992 to
1995. He had been a senior vice president of Hercules since September
1989 and president and chief executive officer of The Aqualon Group, a
group of entities wholly owned by Hercules, since October 1989. Before
joining Hercules in 1988 as president, Hercules Specialty Chemicals Com-
pany, he had been a group vice president at Monsanto Company, a chemical
producer. Mr. Gossage is a director of Wilmington Trust Corporation, The
Dial Corp., and Alliant Techsystems. He is a member of the Executive
Committee of The Delaware Roundtable, and a regular member of the
corporation of The Conference Board. Mr. Gossage is a member of the
Advisory Boards of the Georgia Institute of Technology and the Center
for Strategic & International Studies.
GAYNOR N. KELLEY DIRECTOR SINCE 1989
CHAIRPERSON, NOMINATING COMMITTEE
[PICTURE] MEMBER, AUDIT AND COMPENSATION COMMITTEES
Gaynor N. Kelley, age 64, is the retired chairman and chief executive
officer and a director of The Perkin-Elmer Corporation, a manufacturer
of analytical instrumentation. Mr. Kelley is a member of the Board of
Trustees of Northeast Utilities System and is a member of the board of
directors of Alliant Techsystems. He is on the Advisory Board of the
Center for Management Development at Northeastern University, and is a
director of Southwestern Area Commerce & Industry Association of
Connecticut, Inc. (SACIA).
The Modern Art of Shareholder Value 17
24
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1997
RICHARD M. FAIRBANKS, III DIRECTOR SINCE OCTOBER 1993
MEMBER, AUDIT, FINANCE AND NOMINATING COMMITTEES
[PICTURE] Mr. Fairbanks, age 55, is managing director, Domestic and International
Issues at the Center for Strategic & International Studies. He was
Ambassador-at-Large under President Reagan. He is a member of the board
of directors of SEACOR Holdings, Inc.; vice chairman of the United
States National Committee of the Pacific Economic Cooperation Council;
member, Council on Foreign Relations, Council of American Ambassadors;
and founder, The American Refugee Committee of Washington.
EDITH E. HOLIDAY DIRECTOR SINCE MARCH 1993
CHAIRPERSON, SOCIAL RESPONSIBILITY COMMITTEE
[PICTURE] MEMBER, FINANCE COMMITTEE
Edith E. Holiday, an attorney, age 44, was Assistant to the President of
the United States and Secretary of the Cabinet from 1990 until early
1993. Prior to her White House experience, Ms. Holiday was the General
Counsel, United States Treasury Department from 1989 to 1990 and served
as Counselor to the Secretary of the Treasury and Assistant Secretary
for Public Affairs and Public Liaison, United States Treasury Department
from 1988 to 1989. Ms. Holiday is a director of Amerada Hess
Corporation, Bessimer Trust Company, N.A., Bessimer Trust Company of New
Jersey, The H. J. Heinz Company and Beverly Enterprises, Inc.
H. EUGENE MCBRAYER DIRECTOR SINCE APRIL 1992
CHAIRPERSON, FINANCE COMMITTEE
MEMBER, COMPENSATION AND TECHNOLOGY COMMITTEES
[PICTURE] H. Eugene McBrayer, age 64, retired as president of Exxon Chemical
Company, in January 1992, after 37 years with Exxon. Mr. McBrayer is a
former chairman of the Board of the Chemical Manufacturers Association
and is currently a director of American Air Liquide, Inc. and Air
Liquide International. He is also a member of the Advisory Committee for
the Pacific Northwest National Laboratory.
LEE M. THOMAS DIRECTOR SINCE 1991
CHAIRPERSON, AUDIT COMMITTEE
[PICTURE] MEMBER, SOCIAL RESPONSIBILITY COMMITTEE
Lee Thomas, age 51, is senior vice-president, Paper, of Georgia-Pacific
Corporation, a forest products company. Prior to joining
Georgia-Pacific, he was chairman and chief executive officer of Law
Companies Environmental Group, Inc., an environmental services firm.
From January 1985 to January 1989, he was administrator, United States
Environmental Protection Agency.
18
25
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1998
ROBERT G. JAHN DIRECTOR SINCE 1985
CHAIRPERSON, TECHNOLOGY COMMITTEE
[PICTURE] MEMBER, EXECUTIVE, NOMINATING AND
SOCIAL RESPONSIBILITY COMMITTEES
Robert G. Jahn, age 65, assumed his present position as professor,
Aerospace Sciences, Princeton University, in 1967. He served as Dean of
the School of Engineering/Applied Science at Princeton from 1971 to
1986. Professor Jahn has been a member of the Board of Trustees of
Associated Universities, Inc. since 1971; a fellow of the American
Physical Society; and a member of the American Association of University
Professors, the American Institute of Physics, and the American Society
for Engineering Education. He is vice president and a founding member of
the Society for Scientific Exploration, and has served as chairman of
the Steering Committee of the Symposia on Engineering Aspects of
Magnetohydrodynamics, and as a member of the Commission on Higher
Education of the Middle States Association of Colleges and Schools. He
also is a director of Roy F. Weston, Incorporated, an environmental
services firm.
RALPH MACDONALD, JR. DIRECTOR SINCE 1989
CHAIRPERSON, COMPENSATION COMMITTEE
MEMBER, EXECUTIVE AND FINANCE COMMITTEES
[PICTURE] Ralph L. MacDonald, age 54, is a principal in Island Capital
Corporation, a private investment firm dedicated to the acquisition and
development of small to medium-sized industrial manufacturing and
distribution companies. Mr. MacDonald was formerly managing director,
Global Corporate Finance, of Bankers Trust Company, a banking
institution. Mr. MacDonald is also a director of Gaylord Container
Corporation.
PAULA A. SNEED DIRECTOR SINCE 1994
MEMBER OF THE AUDIT AND TECHNOLOGY COMMITTEES
[PICTURE] Paula A. Sneed, age 48, joined General Foods in 1977. During her career
at General Foods, she has held numerous management positions, including
vice president, Consumer Affairs; vice president and president,
Foodservice Division; executive vice president and general manager,
Desserts Division; and executive vice president, Dinner and Enhancers
Division. Currently she is Senior Vice President, Marketing Services,
Kraft Foods, Inc. Ms. Sneed was cited by Black Enterprise Magazine as
one of the 40 most influential African Americans in Corporate America in
1993.
The Modern Art of Shareholder Value 19
26
APPENDIX 2
SUMMARY COMPENSATION TABLE
The following table shows, for the last three fiscal years, cash and other
compensation paid or accrued for those years, to each of the Named Executives.
- ------------------------------------------------------------------------------------------------------------
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options Payouts Compensation
Position Year ($) ($) ($) ($)(1) (#) ($)(2) ($)(3)
- ------------------------------------------------------------------------------------------------------------
T.L. Gossage 1995 837,508 1,020,000 119,300 5,351,622 219,000 0 89,656
Chm. and 1994 768,340 734,000 57,269 226,753 132,000 564,113 119,611
CEO 1993 725,834 924,000 18,209 1,870,939 132,000 0 131,516
- ------------------------------------------------------------------------------------------------------------
R.K. Elliott 1995 450,833 500,000 34,878 1,340,131 194,500 1,266,435 34,841
Pres. & 1994 375,826 369,000 30,212 67,679 54,000 306,233 49,742
COO 1993 350,830 426,000 6,962 164,459 54,000 0 42,028
- ------------------------------------------------------------------------------------------------------------
V.J. Corbo 1995 264,334 290,000 28,867 1,579,358 51,000 675,773 55,221
Sr. VP, 1994 233,754 269,000 16,094 21,873 24,000 210,458 64,906
Technology 1993 220,420 248,000 5,444 9,220 24,000 0 52,860
- ------------------------------------------------------------------------------------------------------------
R.J.A. Fraser 1995 247,662 255,000 17,428 1,104,984 51,000 675,773 51,474
Grp. VP & 1994 234,326 200,000 22,938 40,606 24,000 185,351 79,996
Pres., 1993 223,330 229,000 5,418 12,789 24,000 0 48,051
HF&FPC
- ------------------------------------------------------------------------------------------------------------
C.D. Miller 1995 251,666 240,000 28,724 1,100,266 51,000 675,773 60,575
Group VP & 1994 233,496 237,000 25,210 16,405 24,000 210,220 56,657
Pres., 1993 223,330 217,000 4,162 9,668 24,000 0 24,184
HCSC
- ------------------------------------------------------------------------------------------------------------
20
27
Footnotes to Summary Compensation Table:
(1) The amounts appearing in this column are the dollar values of restricted
stock awards granted during each reporting year. Each value is determined by
multiplying the number of shares in each award by the closing market price
of Common Stock on the date of grant and subtracting the consideration, if
any, paid by the Named Executive. Dividends, as and when payable to
stockholders of Common Stock, will be paid on the restricted stock.
In 1995 the Compensation Committee made a grant of restricted stock under
the LTIC Plan, the vesting of which was accelerated in accordance with
their authority.
The aggregate number of restricted stock holdings of each Named Executive
as of December 31, 1995, and the value of such holdings (determined by
taking the number of shares multiplied by the closing market price of
Common Stock on December 31, 1995, net of any consideration paid by the
Named Executive) are: T. L. Gossage, 835,580 shares, valued at $33,622,537;
R. K. Elliott, 133,734 shares, valued at $5,729,663; V. J. Corbo, 33,107
shares, valued at $1,526,881; R. J. A. Fraser, 34,468 shares, valued at
$1,605,097; and C. D. Miller, 30,532 shares, valued at $1,464,008. Included
in the above totals are restricted shares that each Named Executive
purchased under the terms of the LTIC Plan. The aggregate amount paid for
these shares by the Named Executives was $16,227,672. The total for Mr.
Gossage also includes 45,000 shares that he purchased in 1991.
(2) Amounts shown in this column are the payout on performance shares first
granted in 1992, 1993 and 1994. The amounts shown reflect the value of the
award on the date the payout was determined. The 1992 payout was made within
the normal three-year period. Vesting of the 1993 and 1994 awards was
accelerated in accordance with Compensation Committee authority.
In addition, a payout on 1,200 phantom units that vested from a 1990 award
were made to V. J. Corbo, R. J. A. Fraser and C. D. Miller valued at
$68,273 each.
(3) The components of the amounts shown in this column consist of (i) matching
contributions made by Hercules on behalf of each of the Named Executives
under the Hercules' Savings and Investment Plan and the Hercules
Nonqualified Savings Plan (T. L. Gossage, $48,616; R. K. Elliott, $23,672;
V. J. Corbo, $15,474; R. J. A. Fraser, $15,989; and C. D. Miller, $20,947);
(ii) dividend credits accrued in 1995 on stock options under the LTIC Plan
(T. L. Gossage, $0; R. K. Elliott, $0; V. J. Corbo, $32,876; R. J. A.
Fraser, $32,876; and C. D. Miller, $32,876); and (iii) the dollar value of
premiums for life insurance under Hercules Executive Survivor Benefit Plan
(T. L. Gossage, $41,040; R. K. Elliott, $11,169; V. J. Corbo, $6,871; R. J.
A. Fraser, $2,609; and C. D. Miller, $6,752).
The Modern Art of Shareholder Value 21
28
APPENDIX 3
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information regarding the grant of stock
options in 1995 to the Named executives. All grants were made in the form of
non-qualified stock options.
----------------------------------------------------------------------------------------------------------------
Options Granted in Last Fiscal Year
----------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
----------------------------------------------------------------------------------------------------------------
% of
Total
Number of Options
Securities Granted
Underlying to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#)(1) Year ($/Sh) Date 0%(2) 5%($)(2) 10%($)(2)
----------------------------------------------------------------------------------------------------------------
T. L. Gossage 132,000(a) $47.250 3/30/05 0 $3,922,416 $ 9,940,172
87,000(b) 15.1% 47.250 3/30/05 0 2,585,229 6,551,476
- --------------------------------------------------------------------------------------------------------------------
R. K. Elliott 54,000(a) $47.250 3/30/05 0 1,604,625 4,066,434
40,500(b) 47.250 3/30/05 0 1,203,469 3,049,825
100,000(c) 13.5% 57.375 10/2/05 0 3,608,283 9,144,097
- --------------------------------------------------------------------------------------------------------------------
V. J. Corbo 24,000(a) $47.250 3/30/05 0 713,167 1,807,304
27,000(b) 3.5% 47.250 3/30/05 0 802,312 2,033,217
- --------------------------------------------------------------------------------------------------------------------
R. J. A. Fraser 24,000(a) $47.250 3/30/05 0 713,167 1,807,304
27,000(b) 3.5% 47.250 3/30/05 0 802,312 2,033,217
- --------------------------------------------------------------------------------------------------------------------
C. D. Miller 24,000(a) $47.250 3/30/05 0 713,167 1,807,304
27,000(b) 3.5% 47.250 3/30/05 0 802,312 2,033,217
- --------------------------------------------------------------------------------------------------------------------
Footnotes to Option Grants Table:
(1) (a) Grants to Named Executives were made with the following exercise dates:
40% may be exercised on 3/30/96; 40% on 3/30/97; and the remaining 20%
on 3/30/98.
(b) Grants to Named Executives of Performance Accelerated Stock Options
(PASOs) that normally vest 9 1/2 years after the date of grant. If the
company meets predetermined performance goals, the vesting of the
options may be accelerated.
(c) A special PASO award was made to Mr. Elliott upon his appointment as
president and chief operating officer in October, 1995. The performance
measure for the acceleration of vesting of these options is a certain
percent increase in Hercules stock price during the option period.
(2) The dollar amounts illustrate value that might be realized upon exercise of
the options immediately prior to the expiration of their term, covering the
specific compounded rates of appreciation set by the Securities and Exchange
Commission (5% and 10%) and are not, therefore, intended to be forecasts by
Hercules of possible future appreciation of the stock price of Hercules. The
0% column illustrates that value of the options to the optionees are
dependent on stock price appreciation.
22
29
APPENDIX 4
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table shows information with respect to the Named Executives
regarding the exercise of options during the last fiscal year and unexercised
options held by them as of December 31, 1995.
- --------------------------------------------------------------------------------
Shares
Acquired Value Number of Securities Value of Unexercised
on Exercise Realized Underlying Unexercised In-the-Money Options
Name (#) ($) Options at FY-End (#) at FY-End ($)(1)
- -------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
T.L. Gossage 0 0 670,200 324,600 $26,306,504 $ 4,337,697
R.K. Elliott 0 0 145,800 237,700 5,078,900 1,884,262
V.J. Corbo 0 0 96,900 100,200 3,619,921 2,120,835
R.J.A. Fraser 0 0 96,900 100,200 3,619,921 2,120,835
C.D. Miller 0 0 67,800 100,200 2,389,674 2,120,835
- -------------------------------------------------------------------------------------------------------
(1) The closing price for Common Stock as reported by the New York Stock
Exchange on December 31, 1995 was $56.375. Value is calculated on the basis
of the difference between the option exercise price and $56.375, multiplied
by the number of shares of Common Stock underlying the option.
APPENDIX 5
LONG-TERM INCENTIVE PLAN AWARDS TABLE
Under the Hercules Long-Term Incentive Compensation Plan, awards were made
to the Named Executives in the form of stock options as listed in Appendix 3. In
addition, a special long-term incentive award was granted to certain Named
Executives as outlined in the Compensation Committee report. The following table
provides information with respect to this special long-term incentive award made
to Named Executives.
- -------------------------------------------------------------------------------------------------
Estimated Future Payouts under
Non-Stock Price Based Plans
Number of Performance or --------------------------------
Shares, Units Other Period Threshold Target Maximum
or Other Until Maturation (#) (#) (#)
Name Rights (#)(1) or Payment(2) (3)(6) (4)(6) (5)(6)
- -------------------------------------------------------------------------------------------------
T.L. Gossage 50,000 3/30/95-3/30/98 0 50,000 100,000
R.K. Elliott 20,000 3/30/95-3/30/98 0 20,000 40,000
V.J. Corbo -- -- -- -- --
R.J.A. Fraser -- -- -- -- --
C.D. Miller -- -- -- -- --
- -------------------------------------------------------------------------------------------------
(1) The totals in this column reflect the number of performance-based phantom
Alliant units.
(2) In certain circumstances, these awards could vest earlier than the end of
the three-year performance period.
(3) The totals in this column represent the award level that could be received
by the Named Executive if the Alliant Stock Price fails to reach a
predetermined price.
(4) This column represents the Phantom Alliant Unit award level that could be
received by the Named Executive if the Alliant Stock Price at the end of the
performance period was essentially the same as that on the date that
Hercules valued the sale of Hercules Aerospace Company.
(5) This column reflects the Phantom Alliant Unit award level that could be
received by the Named Executive if the Alliant Stock Price at the end of the
performance period is equal to or higher than a predetermined price.
The Modern Art of Shareholder Value 23
30
(6) Attainment of a performance level between the predetermined minimum, target,
and maximum goals would yield a payout based on the proportional amount of
the target goal achieved or surpassed.
APPENDIX 6
PENSION PLANS TABLE
The following table shows the estimated annual pension benefits payable to
a covered participant at normal retirement age under Hercules' qualified
benefits pension plan (the "Pension Plan"), as well as nonqualified supplemental
benefits under the Hercules Pension Restoration Plan, based on the stated
remuneration and years of service with Hercules and its subsidiaries.
- ----------------------------------------------------------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
- ----------------------------------------------------------------------------------------------
$ 125,000 28,164.00 37,552.00 46,940.00 56,328.00 65,716.00
150,000 34,164.00 45,552.00 56,940.00 68,328.00 79,716.00
175,000 40,164.00 53,552.00 66,940.00 80,328.00 93,716.00
200,000 46,146.00 61,552.00 76,940.00 92,328.00 107,716.00
225,000 52,164.00 69,552.00 86,940.00 104,328.00 121,716.00
250,000 58,164.00 77,552.00 96,940.00 116,328.00 135,716.00
300,000 70,164.00 93,552.00 116,940.00 140,328.00 163,716.00
400,000 94,164.00 125,552.00 156,940.00 188,328.00 219,716.00
450,000 106,164.00 141,552.00 176,940.00 212,328.00 247,716.00
500,000 118,164.00 157,552.00 196,940.00 236,328.00 275,716.00
600,000 142,164.00 189,552.00 236,940.00 284,328.00 331,716.00
700,000 166,164.00 221,552.00 276,940.00 332,328.00 387,716.00
750,000 178,164.00 237,552.00 296,940.00 356,328.00 415,716.00
800,000 190,164.00 253,552.00 316,940.00 380,328.00 443,716.00
900,000 214,164.00 285,552.00 356,940.00 428,328.00 499,716.00
1,000,000 238,164.00 317,552.00 396,940.00 476,328.00 555,716.00
1,500,000 358,164.00 477,552.00 596,940.00 716,328.00 835,716.00
1,750,000 418,164.00 557,552.00 696,940.00 836,328.00 975,716.00
2,000,000 478,164.00 637,552.00 796,940.00 956,328.00 1,115,716.00
- ----------------------------------------------------------------------------------------------
Annual contributions by Hercules to its qualified pension plan, if any are
required, are determined actuarially by an independent actuary, and no amount is
attributed to an individual employee. Due to the funded status of the Pension
Plan, there was no Hercules contribution to the Pension Plan in 1995.
Except in special cases (e.g., see Appendix 7), the aggregate retirement
benefit, under both the qualified and nonqualified plans, is a monthly amount
determined by taking the sum of (i) 1.2% of the employee's average monthly
earnings (based on the highest five consecutive calendar years during the last
10 calendar years of employment) up to one-half the Social Security Tax Base
($61,200 in 1995), and (ii) 1.6% of the employee's average monthly earnings (as
determined above) in excess of one-half of the Social Security Tax Base,
multiplied by the employee's total years and months of credited service. For
this purpose, "average monthly earnings" consist of salary plus annual incentive
or bonus compensation.
For Messrs. Gossage, Elliott, Corbo, Fraser and Miller, compensation used
for calculating retirement income benefits consists of the highest five
consecutive years of average monthly earnings. These amounts for 1995 are shown
under the "Salary" and "Bonus" columns of the Summary Compensation Table. The
estimated credited years of service used to calculate benefits under the
Hercules Qualified Pension Plan and the Hercules Pension Restoration Plan for
Messrs. Gossage, Elliott, Corbo, Fraser and Miller are 34, 14, 26, 22 and 28,
respectively.
Mr. Gossage has an arrangement with Hercules whereby he is entitled to
receive pension benefits calculated as though his service with Monsanto Company
had been spent with Hercules, offset by the actual deferred vested pension to
which he is entitled from Monsanto.
24
31
Mr. Elliott has an arrangement with Hercules whereby he is entitled to
receive two years credited service for each year of Hercules service to the
point the total of his additional credited service equals the service of his
previous employer, Englehard. Mr. Elliott's resulting benefit under the Hercules
Pension Restoration Plan will be offset by the pension benefit received from
the Englehard pension plan attributable to the service provided under his
arrangement. In the event Mr. Elliott's employment ends with Hercules for
reasons other than cause or voluntary resignation, his benefit eligibility
will be determined as if he were age 55. Following February 1997, Mr. Elliott
will be eligible for a pension without respect to this provision.
Under the Hercules Incorporated Long-Term incentive Compensation
Plan -- Exchange Awards Provision, participants within five years of retirement
may elect to exchange the present value of their accrued and projected pension
under the Hercules Incorporated Pension Restoration Plan for Restricted Stock.
An individual who elects an exchange irrevocably forfeits all rights to the
pension benefit exchanged. Mr. Gossage and Mr. Elliott have elected to forfeit
their entire accrued and projected, to date, pension payable under the Hercules
Pension Restoration Plan and, therefore, Mr. Gossage's and Mr. Elliott's pension
benefit entitlement based on the above table will be reduced in accordance with
the amount of pension benefit forfeited.
The Modern Art of Shareholder Value 25
32
APPENDIX 7
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
It is and has been for many years Hercules' policy to indemnify its
officers and directors against any costs, expenses and other liabilities to
which they may become subject by reason of their service to Hercules, and to
insure its directors and officers against such liabilities to the extent
permitted by applicable law and in accordance with the principles of good
corporate governance. In this regard, Hercules' By-Laws require that Hercules
indemnify and advance costs and expenses to its directors and officers as
permitted by the law of the State of Delaware.
In furtherance to the above indemnification policy, Hercules has purchased
directors and officers liability insurance, and has entered into employment and
indemnification agreements with certain employee directors, officers and other
key management personnel. This insurance, together with the indemnification
agreements, and the employment agreements described in the next succeeding
paragraphs, supplement the provisions in Hercules' Restated Certificate of
Incorporation -- which eliminates the potential monetary liability of directors
to Hercules or its stockholders in certain situations as permitted by law. The
cost for such insurance was $1,161,790 in 1993; $995,080 in 1994; and $720,626
in 1995.
Since 1986, Hercules has also entered into separate agreements with certain
employee directors, officers (including the Named Executives) and a limited
number of other key management personnel that become operative only upon a
change of control of Hercules or other specified event.
For purposes of these agreements, a "Change in Control" shall be deemed to
have occurred if any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such term is modified
in Sections 13(d) and 14(d) of the Exchange Act), other than (1) any employee
plan established by Hercules, (2) Hercules or any of Hercules' affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act), or (3) a corporation
owned, directly or indirectly, by stockholders of Hercules in substantially the
same proportions as their ownership of Hercules, becomes the beneficial owner
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of Hercules (not including in the securities
beneficially owned by such person or any securities acquired directly from
Hercules or its affiliates) representing 20% or more of either the then
outstanding shares of stock of Hercules or the combined voting power of
Hercules' then outstanding voting securities.
These agreements provide for the continuation of salary and certain
benefits for a maximum period of three years after a change in control but may
terminate sooner under certain circumstances. the agreements also provide that,
for as long as they are operative, the contracting executive shall also be given
three additional years of service for purposes of calculating pension benefits
and, to the extent needed for taking an unreduced early retirement, the
contracting executive shall have up to five years added to his actual age
(provided no credit shall accrue to the executive beyond his 65th birthday).
This additional benefit is provided on a nonqualified, unfunded basis.
26
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APPENDIX 8
ANNUAL MEETING INFORMATION AND PROXY PROCEDURES
WHO CAN ATTEND THE ANNUAL MEETING. Only stockholders of record of common
stock issued by Hercules at the close of business on February 26, 1996, the
Record Date for the Annual Meeting, are entitled to notice of and to vote at the
Annual Meeting. Stockholders are entitled to one vote for each share on each
matter to be voted upon at the Annual Meeting.
QUORUM AT THE ANNUAL MEETING. As of the Record Date, Hercules had issued
and outstanding 108,501,417 shares of Common Stock. The holders of a majority of
the outstanding shares of Common Stock, present in person or represented by
proxy, will constitute a quorum for the transaction of business at the Annual
Meeting. The specific vote requirements for the matters being submitted to a
stockholders' vote at the Annual Meeting are provided under Section II titled
"Approval of Proxy Statement Items."
SUBMISSION OF PROXY CARD. You are urged to sign and date each Proxy Card
you receive and return it in the prepaid reply envelope provided for such
purpose; however, this will not in any way affect your right to attend the
Annual Meeting and vote in person. A stockholder returning a proxy has the right
to revoke such proxy at any time before it is voted by giving notice of such
revocation to the Secretary of Hercules, by attending the meeting and voting in
person, or by returning a later dated proxy.
The number of shares designated on the Proxy Card represents the total
number of shares held in your name on the Record Date (February 26, 1996),
including any shares held in Hercules' automatic dividend reinvestment service
and/or one or more of its executive compensation plans or employee benefit
plans. The total number also includes shares for which you have voting power
that are credited to your savings plan account held in custody by the trustee.
MULTIPLE PROXY CARDS. If you receive in separate mailings more than one
Proxy Card, it is an indication that your shares are registered differently in
more than one account. All Proxy Cards received by you should be signed and
mailed by you to ensure that all your shares are voted.
To help us provide better shareholder services to you, we encourage you to
have all of your shares registered the same way (name and address) in all
accounts. You may do this by contacting Chemical Mellon Shareholders Services
L.L.C. at (800) 237-9980.
VOTING BY PROXY CARD. Except as noted herein with respect to
participation in Hercules' automatic dividend reinvestment plan or savings
plans, the following proxy procedure will apply. When your Proxy Card is
returned properly marked and signed, the shares represented will be voted in
accordance with your directions. IT IS NOT NECESSARY TO MARK ANY BOXES ON THE
PROXY CARD IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS;
MERELY SIGN, DATE AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED, POSTAGE
FOR WHICH HAS BEEN PREPAID. If you return your Proxy Card properly signed, but
do not indicate your voting preferences, Hercules has been informed by the
proxyholders named on the front of your Proxy Card that they will vote your
shares FOR:
1. Re-election of R. Keith Elliott, Thomas L. Gossage and Gaynor N.
Kelley as directors, each for a term of three years; and
2. Ratification of the appointment of Coopers & Lybrand L.L.P. as
Hercules' independent accountants for 1996.
As of the date of this Proxy Statement, the Board does not intend to
present any matter for action at the Annual Meeting other than the above items.
However, please note
The Modern Art of Shareholder Value 27
34
that except as to shares, if any, credited to your account under the Hercules
Incorporated Employee Savings Plan or the Hercules Incorporated Savings and
Investment Plan, your Proxy Card, when properly executed, confers discretionary
authority on the proxyholders named on the face of your Proxy Card to vote in
accordance with their judgment the shares represented thereby on any matter that
was not known on the date of this Proxy Statement but that may properly be
presented for action at the Annual Meeting.
AUTOMATIC DIVIDEND REINVESTMENT AND SAVINGS PLAN SHARES: If you
participate in Hercules' automatic dividend reinvestment plan, the number of
uncertificated, whole shares credited to your account on the Record Date are
included in the total number of shares shown on the Proxy Card. If you
participate in any of the savings plans sponsored by Hercules or any of its
subsidiaries, the number of uncertificated, whole shares credited to your
account on the savings plans record date, which is January 31, 1996, are also
included in the total number of shares shown on the Proxy Card. The shares in
both the dividend reinvestment plan and the savings plans will be voted in
accordance with your voting instructions, if any, indicated on the properly
signed and returned Proxy Card. If your Proxy Card is returned properly signed,
but does not indicate your voting preferences, Hercules has been advised by the
administrator of the automatic dividend reinvestment plan and the trustee of
each of the savings plans that shares represented by your Proxy Card will be
voted in favor of each of the items in the Proxy Statement. IF A PROPERLY SIGNED
PROXY CARD IS NOT RECEIVED, THE SHARES HELD IN YOUR ACCOUNT IN THE AUTOMATIC
DIVIDEND REINVESTMENT PLAN WILL NOT BE VOTED; HOWEVER, THE SHARES HELD BY THE
TRUSTEE FOR THE SAVINGS PLANS WILL BE VOTED IN PROPORTION TO THE WAY THAT THE
OTHER PARTICIPANTS HAVE VOTED THEIR PROXIES.
CONFIDENTIALITY: Proxy Cards, ballots and voting tabulations that
identify individual participants are kept confidential. Such items are available
for examination only by the inspectors of election and certain employees
associated with processing proxy cards and tabulating the vote. Your vote is not
disclosed except as may be necessary to meet legal requirements. Additionally,
all your comments directed to management, whether written on the Proxy Card or
elsewhere, will be forwarded to management in a form that does not permit
identification of you unless expressly stated otherwise.
PROCEDURE FOR DIRECTOR NOMINATIONS BY STOCKHOLDERS: Any stockholder may
recommend any person as a nominee for director of Hercules by writing to the
Chairman of the Nominating Committee, c/o Hercules Incorporated, Hercules Plaza,
Wilmington, DE 19894-0001. Recommendations must be received by April 5, 1996,
and must be accompanied by a statement from the nominee indicating his or her
willingness to serve if elected and disclosing his or her principal occupations
or employments over the past five years.
APPROVAL OF PROXY STATEMENT ITEMS: Votes cast at the Annual Meeting will
be counted by Chemical Mellon Shareholder Services L.L.C. They will also act as
inspector of election. In addition, The Corporation Trust Company will conduct
an independent audit of the vote. The inspector of election will treat shares of
Common Stock represented by a properly executed and returned Proxy Card as
present at the Annual Meeting for purposes of determining a quorum. Directors
will be elected by the majority vote of the shares of Common Stock then issued
and outstanding and entitled to vote at the Annual Meeting. Accordingly, votes
withheld as to the election of directors will have the same effect as votes
against each election. All other matters to come before the Annual Meeting
require the approval of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote thereat; therefore, abstentions as to
particular proposals will have the same effect as votes against such proposals.
Broker non-votes as to particular proposals will not, however, be deemed to be
part of the voting power present with respect to such proposals and will not
therefore count as votes for or against such proposals and will not be included
in calculating the number of votes necessary for approval of such proposals.
28
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[CENTER MAP ART]
[HERCULES
LOGO]
Hercules Incorporated
Hercules Plaza
Wilmington, DE 19894-0001
36
PROXY/VOTING INSTRUCTION CARD
HERCULES INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas L. Gossage and Michael B. Keehan, and
each of them, acting jointly or severally and with full power of substitution,
for and in the name of the undersigned to vote, as specified on the reverse
side, all shares of common stock of Hercules Incorporated ("Hercules") that the
undersigned is entitled to vote at Hercules' Annual Meeting of Stockholders to
be held on Thursday, April 25, 1996, at 11:00 A.M. at The Delaware Art Museum,
2301 Kentmere Parkway, Wilmington, DE, or at any adjournment thereof. The
undersigned also hereby revokes previous proxies and acknowledges receipt of
Hercules' Notice of the Annual Meeting and Proxy Statement. This card further
provides voting instructions for shares held for the undersigned in the
Hercules' Dividend Reinvestment Plan and the employee savings plans sponsored
by Hercules or any of its subsidiaries.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
37
Please mark
your votes as
indicated in /X/
this example
THE BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2
1. Election of Directors for a three-year term NOMINEES ARE (IN ALPHABETICAL ORDER): R. Keith Elliott, Thomas L. Gossage
and Gaynor N. Kelley
FOR WITHHOLD
/ / / / Withhold vote only from _________________________________________________
2. Ratification of Coopers & Lybrand L.L.P. Unless otherwise specified, this proxy will be voted FOR Items 1 and 2,
as Independent Accountants and will be voted in the discretion of the proxies on such other matters
as may properly come before the meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
/ / / / / / AS SEATING IS LIMITED TO A FIRST COME, FIRST SERVED BASIS, PLEASE CHECK
THIS BOX IF YOU WOULD LIKE AN ADMISSION TICKET TO ATTEND THE MEETING. / /
Signature________________________________________________ Signature_________________________________________ Date__________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- FOLD AND DETACH HERE -
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders,
to be held at 11:00 a.m. on Thursday, April 26, 1996, at the Delaware Art
Museum, 2301 Kentmere Parkway, Wilmington, DE.
At the Annual Meeting, we will review the performance of Hercules and
answer any questions you may have. The enclosed Proxy Statement will
provide you with more details about items that will be addressed at the Annual
Meeting. After reviewing the Proxy Statement, please take a moment to sign, date
and mark your vote on the Proxy Card above and return it in the enclosed
postage-paid envelope. YOUR VOTE IS IMPORTANT TO US, AND WE ASK THAT YOU VOTE
YOUR SHARES WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
Since seating is limited at the Annual Meeting, please check the box on
the Proxy Card if you would like to attend. Tickets will be issued on a first
come, first served basis. If you arrive without an admission ticket, you will
be seated if space is available.
Sincerely,
Thomas L. Gossage
Chairman of the Board
and Chief Executive Officer