<Page>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<Table>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
</Table>
<Table>
ENGELHARD CORPORATION
------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</Table>
Payment of Filing Fee (Check the appropriate box):
<Table>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / 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 which
the offsetting fee was paid previously. Identify 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.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</Table>
<Page>
[LOGO]
100 WOOD AVENUE, ISELIN, NEW JERSEY 08830
BARRY W. PERRY
Chairman and
Chief Executive Officer
March 29, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders,
which will be held at 10 a.m., Eastern Daylight Savings Time, on Thursday,
May 3, 2001, at The Sheraton Edison Hotel at Raritan Center, 125 Raritan Center
Parkway, Edison, N.J. 08837.
The enclosed Notice and Proxy Statement contain complete information about
matters to be considered at the Annual Meeting, at which the business and
operations of Engelhard will also be reviewed. Discussions at our Annual Meeting
have generally been interesting and useful, and we hope that you will be able to
attend. If you plan to attend, please check the box provided on the proxy card
and an admission ticket will be sent to you. Only shareholders and their proxies
will be permitted to attend the Annual Meeting.
Whether or not you plan to attend, we urge you to complete, sign and return
the enclosed proxy card or to vote over the Internet or by telephone, so that
your shares will be represented and voted at the Annual Meeting.
Sincerely yours,
/s/ Barry W. Perry
<Page>
ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
------------------------
NOTICE OF THE 2001 ANNUAL MEETING OF SHAREHOLDERS
------------------------
To our Shareholders: March 29, 2001
The Annual Meeting of Shareholders of Engelhard Corporation, a Delaware
corporation, will be held on Thursday, May 3, 2001 at 10 a.m., Eastern Daylight
Savings Time, at The Sheraton Edison Hotel at Raritan Center, 125 Raritan Center
Parkway, Edison, New Jersey 08837, for the following purposes:
(1) To elect two Directors;
(2) To ratify the appointment of Arthur Andersen LLP as independent
public accountants; and
(3) To transact such other business as may properly come before the
meeting.
The record date for the determination of the shareholders entitled to vote
at the meeting or at any adjournment thereof is close of business on March 15,
2001.
A list of shareholders entitled to vote at the Annual Meeting will be open
to the examination of any shareholder, for any purpose germane to the meeting,
at the offices of our Transfer Agent and Registrar, Mellon Investor Services
LLC, 120 Broadway, New York, New York 10271, during ordinary business hours for
ten days prior to the meeting.
<Table>
By Order of the Board of Directors
Arthur A. Dornbusch, II
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
</Table>
SHAREHOLDERS ARE URGED TO MARK, SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY
IN THE ENCLOSED RETURN ENVELOPE OR TO VOTE OVER THE INTERNET OR BY TELEPHONE
<Page>
ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
------------------------
PROXY STATEMENT FOR THE 2001
ANNUAL MEETING OF SHAREHOLDERS
------------------------
ABOUT THE MEETING
WHY AM I RECEIVING THESE MATERIALS?
The Board of Directors of Engelhard Corporation (sometimes referred to as
"Engelhard" or "we" or "our") is providing these proxy materials for you in
connection with our Annual Meeting of Shareholders which will take place on
Thursday, May 3, 2001. You are invited to attend the Annual Meeting and are
requested to vote on the proposals described in this proxy statement.
WHO IS ENTITLED TO VOTE?
Holders of Common Stock as of the close of business on March 15, 2001 will
be entitled to vote. On such date there were outstanding and entitled to vote
130,052,708 shares of Common Stock of Engelhard, each of which is entitled to
one vote with respect to each matter to be voted on at the Meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the Annual Meeting in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock entitled to vote shall
constitute a quorum for the transaction of business. Proxies marked as
abstaining on any matter to be acted upon by shareholders will be treated as
present at the meeting for purposes of determining a quorum. If you hold your
shares in "street name" through a broker or other nominee, shares represented by
"broker non-votes" will be counted in determining whether there is a quorum.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to Engelhard, it will be voted as you direct. If you are a registered
shareholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" shareholders who wish to vote at the meeting will need to
obtain a proxy form from the institution that holds their shares.
1
<Page>
If you are a record holder of Common Stock (that is, if you hold Common
Stock in your own name in Engelhard's stock records maintained by our transfer
agent, Mellon Investor Services LLC), you may vote through the Internet or by
using a toll-free telephone number by following the instructions included with
your proxy card. If you are not a record holder of Common Stock (that is, if you
hold Common Stock in "street name" through a broker or other nominee), you may
vote your shares by following the instructions included with your proxy card.
Please be aware that if you vote over the Internet, you may incur costs such as
telephone and Internet access charges for which you will be responsible. The
Internet and telephone voting facilities for shareholders of record will close
at 5 p.m. Eastern Daylight Savings Time on May 2, 2001.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD OR AFTER I VOTE ELECTRONICALLY
OR BY TELEPHONE?
Yes. After you have submitted a traditional proxy card, you may change your
vote at any time before the proxy is exercised by submitting either a notice of
revocation or a duly executed proxy bearing a later date. If you previously
submitted your proxy through the Internet or by telephone, you may revoke that
proxy simply by voting again prior to the time at which such facilities close,
by following the same procedures used in casting your prior vote; in that event
the later submitted vote will be recorded and the earlier vote revoked.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the Board
recommends a vote:
- for election of the nominated slate of directors (see page 5); and
- for ratification of the appointment of Arthur Andersen LLP as Engelhard's
independent auditors (see page 28).
With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
Each item to be voted on at the Annual Meeting requires the affirmative vote
of the holders of a majority of the votes cast with respect to such item. A
properly executed proxy marked "ABSTAIN" with respect to any such matter will
not be voted, although it will be counted for purposes of determining whether
there is a quorum.
2
<Page>
WHO WILL BEAR THE EXPENSE OF SOLICITING PROXIES?
The cost of soliciting proxies in the form enclosed will be borne by
Engelhard. In addition to the solicitation by mail, proxies may be solicited
personally or by telephone, by our employees. We have also engaged D.F. King &
Co., Inc., 77 Water Street, New York, New York, 10005 to assist in such
solicitation at an estimated fee of $14,000 plus disbursements. Engelhard may
reimburse brokers holding Common Stock in their names or in the names of their
nominees for their expenses in sending proxy material to the beneficial owners
of such Common Stock.
3
<Page>
INFORMATION AS TO CERTAIN SHAREHOLDERS
WHO ARE THE LARGEST OWNERS OF ENGELHARD'S COMMON STOCK?
Set forth below is certain information with respect to the only persons
known to us who owned beneficially more than five percent of our voting
securities as of March 1, 2001.
<Table>
<Caption>
AMOUNT
BENEFICIALLY PERCENT OF
OWNED CLASS
------------ ----------
Wellington Management Company, LLP (1)(4)................... 17,016,585 13.18%
75 State Street
Boston, Massachusetts 02109
Vanguard Windsor Funds--Vanguard Windsor Fund (2)(4)........ 11,454,200 8.87%
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
PRIMECAP Management Company (3)............................. 8,366,050 6.48%
225 South Lake Avenue #400
Pasadena, California 91101-3005
Dodge & Cox (5)............................................. 7,572,200 5.87%
One Sansome Street
35th Floor
San Francisco, California 94104
Citigroup Inc. (6).......................................... 6,585,047 5.10%
399 Park Avenue
New York, New York 10043
</Table>
------------------------
(1) As reported by Wellington Management Company, LLP on Schedule 13G filed with
the Securities and Exchange Commission on February 13, 2001.
(2) As reported by Vanguard Windsor Funds--Vanguard Windsor Fund on
Schedule 13G filed with the Securities and Exchange Commission on
February 8, 2001.
(3) As reported by PRIMECAP Management Company on Schedule 13G filed with the
Securities and Exchange Commission on March 2, 2001.
(4) Wellington Management Company, LLP reports that, as investment adviser, it
shares beneficial ownership with one of its clients, Vanguard Windsor Funds.
Consequently, the same shares may be shown as beneficially owned by both
Wellington Management Company, LLP and Vanguard Windsor Funds.
(5) As reported by Dodge & Cox on schedule 13G filed with the Securities and
Exchange Commission on February 14, 2001.
(6) As reported by Citigroup Inc. and its wholly-owned subsidiary Salomon Smith
Barney Holdings Inc. on Schedule 13G filed with the Securities and Exchange
Commission on February 20, 2001.
4
<Page>
1. ELECTION OF DIRECTORS
Our Board of Directors consists of three classes, Class I, Class II and
Class III, each class serving for a full three-year term. Mr. Napier and
Mrs. Pace, both of whom are Class II Directors, are nominees for reelection as
Class II Directors at the Annual Meeting. If elected, they will serve until
2004. The Class III Directors will be considered for reelection at our 2002
Annual Meeting. The Class I Directors will be considered for reelection at our
2003 Annual Meeting. Linda G. Alvarado and William R. Loomis, formerly Class II
Directors, resigned from the Board of Directors and the Board of Directors has
reduced the number of seats on the Board from ten to eight.
Mr. Smith has been a member of the Board of Directors since 1981,
Mr. Richards since 1983, Mr. Antonini since 1985, Mr. Napier since 1986,
Mrs. Pace since 1987, Mr. Watson since 1991, Mr. Perry since 1997. Mr. Slack
joined the Board of Directors in 1981, resigned on May 21, 1999 and was
re-elected to the Board of Directors as a Class I Director on June 3, 1999.
Directors will be elected by the affirmative vote of a majority of the votes
cast at the Meeting.
The persons named as proxies in the accompanying proxy intend to vote,
unless you instruct otherwise in your proxy, FOR the election of Mr. Napier and
Mrs. Pace as Class II Directors.
INFORMATION WITH RESPECT TO NOMINEES AND
DIRECTORS WHOSE TERMS CONTINUE
The following table sets forth the name and age of each nominee and
Director; all other positions and offices, if any, now held by him or her with
Engelhard and his or her principal occupation during the last five years.
5
<Page>
NOMINEES FOR REELECTION AT THIS MEETING,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE
PAST FIVE YEARS, BOARD MEMBERSHIPS (CLASS II)
JAMES V. NAPIER
Age 64. Chairman of Scientific-Atlanta, Inc., a communications manufacturing
company, from prior to 1996 to November 2000.
Mr. Napier is also a director of Intelligent Systems Corporation, Vulcan
Materials Company, McKesson HBOC, Inc., Personnel Group of America, Inc. and
Wabtec Corporation.
NORMA T. PACE
Age 79. Partner, Paper Analytics Associates, a planning and consulting
company, from prior to 1996.
Mrs. Pace is also a director of Hasbro, Inc.
6
<Page>
DIRECTORS WITH TERMS EXPIRING MAY 2002,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE
PAST FIVE YEARS, BOARD MEMBERSHIPS (CLASS III)
BARRY W. PERRY
Age 54. Chairman and Chief Executive Officer of Engelhard since January 2001;
President and Chief Operating Officer from 1997 until 2001; previously Group
Vice President and General Manager of the Appearance and Performance
Technologies Group (formerly the Pigments and Additives Group) from prior to
1996 to 1997.
Mr. Perry is also a director of Arrow Electronics, Inc.
REUBEN F. RICHARDS
Age 71. Retired Chairman of the Board of Terra Industries Inc.; Retired
Chairman of the Board of Minorco (U.S.A.); Retired Non-Executive Chairman of
the Board of Engelhard.
Mr. Richards is also a director of Santa Fe Energy Resources, Inc., Ecolab,
Grupo Financiero Banorte and Potlatch Corporation.
ORIN R. SMITH
Age 65. Chairman and Chief Executive Officer of Engelhard from prior to 1996
to December 2000.
Mr. Smith is also a director of Ingersoll-Rand Company, Applera Corporation
and Vulcan Materials Company.
7
<Page>
DIRECTORS WITH TERMS EXPIRING MAY 2003,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE
PAST FIVE YEARS, BOARD MEMBERSHIPS (CLASS I)
MARION H. ANTONINI
Age 70. Principal of Kohlberg & Co., a private merchant banking firm, since
March 1998. Chairman and Chief Executive Officer of Welbilt Corporation from
prior to 1996 to 1998.
Mr. Antonini is also a director of Vulcan Materials Company,
Scientific-Atlanta, Inc., Color Spot Nurseries, Inc. and Holley Performance
Products, Inc.
HENRY R. SLACK
Age 51. Chairman of Task (USA) Inc., a private investment company, since
June 1999. Chief Executive of Minorco, an international national resources
company, from prior to 1996 to June 1999.
Mr. Slack is also a director of Terra Industries Inc. and South African
Breweries PlC.
DOUGLAS G. WATSON
Age 56. President, Chief Executive Officer and Director of ValiGen N.V., a
biotechnology company, since June 2000. Chief Executive Officer of
Pittencrieff Glen Associates, a management consulting firm, since
June 1999. President, Chief Executive Officer and Director of Novartis
Corporation, a life sciences company, from January 1997 to May 1999.
President of the Pharmaceuticals Division of CIBA-GEIGY Corporation from
prior to 1996 to January 1997.
Mr. Watson is also a director of Dendreon Corporation.
8
<Page>
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
HOW MUCH COMMON STOCK DO ENGELHARD'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
Set forth in the following table is the beneficial ownership of Common Stock
as of March 1, 2001 for all nominees, Directors, each of the Executive Officers
listed on the Summary Compensation Table and all Directors and Executive
Officers as a group. No Director or Executive officer owns more than 1% of the
total outstanding shares (including exercisable options) other than Mr. Smith,
who owns 2.1%. All Directors and Executive Officers as a group own approximately
3.7% of the total outstanding shares (including exercisable options).
<Table>
<Caption>
NAME SHARES
---- ---------
Marion H. Antonini.......................................... 81,430(1)(3)(4)
Arthur A. Dornbusch, II..................................... 500,998(2)
John C. Hess................................................ 136,763(2)
Peter B. Martin............................................. 67,041(2)
James V. Napier............................................. 46,619(1)(3)(4)
Norma T. Pace............................................... 54,590(1)(3)(4)
Barry W. Perry.............................................. 708,192(2)
Reuben F. Richards.......................................... 55,832(1)(3)
Henry R. Slack.............................................. 11,738(1)(3)
Orin R. Smith............................................... 2,724,132(2)(5)
Douglas G. Watson........................................... 61,275(1)(3)(4)
All Directors and Executive Officers as a group............. 4,743,135(2)
</Table>
------------------------
(1) Includes 10,500 shares of Common Stock subject to options granted to
Messrs. Antonini, Napier, Richards and Watson and Mrs. Pace and 750 shares
of Common Stock subject to options granted to Mr. Slack under our Directors
Stock Option Plan, which options may be exercised within 60 days from
March 1, 2001.
(2) Includes 2,715,866, 623,428, 358,734, 111,974, 46,003 and 4,095,218 shares
of Common Stock subject to options granted to Messrs. Smith, Perry,
Dornbusch, Hess, Martin and all Directors and Executive Officers as a group,
respectively, under our Stock Option Plan of 1991 (the "Stock Option Plan")
and the Directors Stock Option Plan, which options may be exercised within
60 days from March 1, 2001, and also includes 1,157 shares owned by family
members in which persons in the group disclaim any beneficial interest.
(3) Includes 18,827, 14,290, 20,209, 865, 7,004, and 17,247 non-voting deferred
stock units earned by Messrs. Antonini, Napier, Richards, Slack and Watson
and Mrs. Pace under the Deferred Stock Plan for Non-Employee Directors. Each
deferred stock unit will be converted into a share of Common Stock upon
termination of service.
9
<Page>
(4) Includes 38,508, 11,306, 15,040 and 18,238 non-voting deferred stock units
held by Messrs. Antonini, Napier and Watson and Mrs. Pace under the Deferred
Compensation Plan for Directors of Engelhard. Each deferred stock unit will
be converted into a share of Common Stock at a future date based on the
prior written request of each respective Director as prescribed by the plan.
(5) Certain of Mr. Smith's option grants were amended or were accelerated during
2000. See "Employment Contracts, Termination of Employment and Change in
Control Arrangements" on page 18 for more information.
BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES
HOW OFTEN DID THE BOARD OF DIRECTORS MEET DURING 2000?
Our Board of Directors held a total of 13 meetings during 2000. During 2000
all of our Directors attended more than 75% of the meetings of the Board and
meetings of committees of the Board on which they served.
WHAT COMMITTEES DOES THE BOARD OF DIRECTORS HAVE?
Among the standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee and the Stock Option/Stock Bonus
Committee. The Board does not have a nominating committee.
AUDIT COMMITTEE
The members of the Audit Committee are Mr. Watson (Chairman), Mrs. Pace and
Mr. Richards, all of whom are Nonemployee Directors. The Audit Committee
periodically reviews our accounting policies, internal accounting controls and
the scope and results of the independent accountants' audit of our financial
statements. The Audit Committee held 6 meetings during 2000. See "Report of
Audit Committee" on page 27 for more information.
COMPENSATION COMMITTEE
The members of the Compensation Committee are Messrs. Antonini (Chairman),
Napier and Slack, all of whom are Nonemployee Directors. The Compensation
Committee determines the appropriate level of compensation for the Officers and
employees of Engelhard. The Compensation Committee held 2 meetings during 2000.
10
<Page>
STOCK OPTION/STOCK BONUS COMMITTEE
The members of the Stock Option/Stock Bonus Committee are Messrs. Antonini
(Chairman), Napier and Slack, all of whom are Nonemployee Directors. The Stock
Option/Stock Bonus Committee administers our stock option and stock bonus plans
and determines the terms and conditions for the issuance of stock options and
stock bonus awards to our Officers and employees. The members of the Committee
are not eligible to participate in such plans. The Stock Option/Stock Bonus
Committee held 3 meetings during 2000.
HOW ARE DIRECTORS COMPENSATED?
Directors who are not our employees each received a retainer at the annual
rate of $35,000 in 2000. In addition, Nonemployee Directors received a $1,350
fee for each Board meeting attended in 2000. During 2000, Nonemployee Directors
also received a $1,350 fee for each committee meeting attended; a $5,000 annual
retainer for each committee on which they served; and the chairman of each
committee received an additional $5,000 annual retainer. Directors who are
employed by us do not receive any Directors' fees or retainers.
Pursuant to our Deferred Stock Plan For Nonemployee Directors (the "Deferred
Stock Plan") each Nonemployee Director is credited with deferred stock units,
each of which evidences the right to receive a share of Common Stock of
Engelhard upon the Director's termination of service. Deferred stock units were
credited to the accounts of the Nonemployee Directors on May 6, 1999 and will be
credited annually on each May 31 with an amount of deferred stock units
calculated by dividing an amount equal to 40% of the annual retainer payable to
such Nonemployee Director then in effect by the average daily closing price per
share of Common Stock of Engelhard for the 20 trading days prior to such date.
When a regular cash dividend is paid on the Common Stock, the account of each
eligible Nonemployee Director will be credited with additional deferred stock
units corresponding to the cash dividend paid on the number of shares of Common
Stock evidenced by the deferred stock units credited to the account of such
Nonemployee Director. The entire balance of a Nonemployee Director's account
under the Deferred Stock Plan will be paid to the Nonemployee Director, in
either a lump sum or installments at the election of such Nonemployee Director,
in shares of our Common Stock upon the Nonemployee Director's termination of
service. If a "change in control" occurs and the Nonemployee Director ceases to
be a Director or the Deferred Stock Plan is terminated, the entire balance of
the account will be payable in a lump sum within 30 days.
Pursuant to our Stock Bonus Plan for Nonemployee Directors (the "Directors
Stock Bonus Plan"), each person who becomes a Nonemployee Director prior to
June 30, 2006 shall be awarded 7,593 shares of our Common Stock effective as of
such person's election to our Board of Directors. Such shares will tentatively
vest in equal increments over a ten-year period. Directors are entitled to
receive cash dividends on and to vote shares which are the subject of an award
prior to
11
<Page>
their distribution or forfeiture. Upon termination of the Director's service as
a Nonemployee Director, the Director (or, in the event of his or her death, his
or her beneficiary) shall be entitled, in the discretion of the committee formed
to administer the Directors Stock Bonus Plan, to receive the shares awarded to
such Director which have tentatively vested up to the date of such termination
of service. Shares may be received prior to such date if there has been a
"change in control." If receipt of shares is accelerated due to a change in
control, an additional payment will be made to compensate for the loss of the
tax deferral.
Pursuant to our Directors Stock Option Plan each Nonemployee Director in
office on the date of the regular meeting of the Board in December of each year
will automatically be granted an option to purchase 3,000 shares of Common Stock
with an exercise price equal to the fair market value of such shares at the date
of grant. Each option becomes exercisable in four equal installments, commencing
on the first anniversary of the date of grant and annually thereafter. Each
option terminates on the tenth anniversary of the date of grant. Each option
held by a director which was granted more than one year before his or her
termination of service as a director shall become fully exercisable upon
termination if such termination is a result of disability, death or retirement
after attaining age 65; options may become exercisable prior to such date if
there has been an "acquisition of a control interest."
Pursuant to our Deferred Compensation Plan for Directors, Nonemployee
Directors may elect to defer payment of all or a designated portion of their
compensation for services as a Director. Under our Deferred Compensation Plan
for Directors, deferred amounts will be paid at time of a "change in control" if
the participant has made an advance election to that effect. In the event
distribution of deferred amounts is so accelerated, an additional payment will
be made in order to compensate for the loss of tax deferral resulting from the
accelerated payment.
CERTAIN TRANSACTIONS
Please see "Employment Contracts, Termination of Employment and Change in
Control Arrangements" on page 18 with respect to consulting and other
arrangements with Mr. Smith in connection with his retirement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our Executive
Officers and Directors and persons who own more than 10% of a registered class
of Engelhard's equity securities to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange. Such Executive Officers, Directors and shareholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to us
and written representations from our Executive Officers and Directors, all
persons subject to the reporting requirements of Section 16(a) filed the
required reports on a timely basis for 2000.
12
<Page>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the compensation paid by us for services
rendered in all capacities during each of the last three fiscal years to our
Chief Executive Officer and our other four most highly compensated Executive
Officers.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS(3)(4)
------------------------------------------------- ----------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
COMPENSATION STOCK COMPENSATION
YEAR SALARY($) BONUS($) ($)(5) AWARD(S)($)(6) OPTIONS(#) ($)
-------- --------- --------- -------------- -------------- ----------- --------------
Orin R. Smith,
Director,.............. 2000 1,000,000 2,000,000 -- -- -- $4,062,500(7)
Chairman and Chief 1999 950,000 1,852,500 -- 609,496 715,920 --
Executive Officer (1) 1998 864,996 1,750,000 -- 554,093 608,279 --
Barry W. Perry,
Director,.............. 2000 500,000 790,000 -- 507,247 67,184 --
President and Chief 1999 428,660 687,600 -- 289,716 334,236 --
Operating Officer(2) 1998 372,744 630,000 -- 250,380 279,519 --
Arthur A. Dornbusch,
II,.................... 2000 297,000 290,000 7,731 240,090 31,796 --
Vice President, General 1999 284,936 277,100 6,624 149,812 127,822 --
Counsel and Secretary 1998 276,636 275,000 5,656 141,668 106,351 --
John C. Hess,............ 2000 224,000 182,750 -- 134,881 17,860 --
Vice President, 1999 205,878 168,300 -- 84,857 66,894 --
Human Resources 1998 194,350 165,000 -- 80,048 58,057 --
Peter B. Martin,......... 2000 210,000 120,000 -- 79,841 10,564 --
Vice President, 1999 199,157 117,000 -- 52,951 39,683 --
Investor Relations 1998 190,928 117,000 -- 50,115 33,237 --
</Table>
------------------------------
(1) Mr. Smith retired as Chairman and Chief Executive Officer on December 31,
2000.
(2) Mr. Perry was elected Chairman and Chief Executive Officer effective
January 1, 2001.
(3) Our Key Employees Stock Bonus Plan, our Stock Option Plan and our Annual
Restricted Cash Incentive Compensation Plan provide for acceleration of
vesting in the event of a "change in control." For information on what
constitutes a "change in control," see "Employment Contracts, Termination of
Employment and Change in Control Arrangements" on page 18.
13
<Page>
(4) In December 2000, pursuant to Engelhard's Annual Restricted Cash Incentive
Compensation Plan, restricted cash awards were made as follows:
<Table>
<Caption>
VESTING PERIOD FROM MAXIMUM FUTURE
NAME DATE OF GRANT ESTIMATED PAYOUTS
---- ------------------- ------------------
Barry W. Perry............................................ 4 years $1,250,000
Arthur A. Dornbusch, II................................... 4 years $ 335,000
John C. Hess.............................................. 4 years $ 182,000
Peter B. Martin........................................... 4 years $ 105,000
Awards vest in equal annual increments, subject to continued employment.
</Table>
(5) Represents interest accrued during 1998, 1999 and 2000 in excess of 120% of
the applicable federal interest rate with respect to salary deferrals.
(6) As of December 31, 2000, Messrs. Smith, Perry, Dornbusch, Hess and Martin
held 81,098, 36,238, 19,721, 10,723 and 6,264 unvested shares, respectively,
of stock which were awarded pursuant to our Key Employees Stock Bonus Plan
having a market value of $1,652,368, $738,353, $401,807, $218,485 and
$127,625, respectively. The foregoing amounts do not include the reported
grants, which were made in February 2001 for services rendered during 2000.
Restricted stock awards of Engelhard's Common Stock granted under the Key
Employees Stock Bonus Plan vest in five equal annual installments commencing
on February 1 in the year following the grant. Vesting will be accelerated
upon the occurrence of a "change in control." We pay dividends on restricted
stock, if and to the extent paid on Common Stock generally, but pay no
dividends on stock options. For information on what constitutes a "change in
control," see "Employment Contracts, Termination of Employment and Change in
Control Arrangements" on page 18.
(7) Represents cash payments of $1,562,500 and $2,500,000 made to Mr. Smith in
lieu of the equity and restricted cash awards which were given to the other
Executive Officers.
14
<Page>
The following table sets forth information concerning individual grants of
stock options made under the Stock Option Plan in February 2001 for services
rendered during 2000 by each of the named Executive Officers.
OPTION GRANTS FOR SERVICES RENDERED DURING 2000
<Table>
<Caption>
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------------------------------------------------- -------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES FOR EXERCISE OR GRANT DATE
OPTIONS SERVICES RENDERED BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#)(1) DURING 2000 ($/SH) DATE ($)(2)
-------------------------- -------------- ----------------- -------------- ---------- -------------
Orin R. Smith............. -- -- -- -- --
Barry W. Perry............ 67,184 9% 22.75 02/01/11 511,270
Arthur A. Dornbusch, II... 31,796 4% 22.75 02/01/11 241,968
John C. Hess.............. 17,860 2% 22.75 02/01/11 135,915
Peter B. Martin........... 10,564 1% 22.75 02/01/11 80,392
</Table>
------------------------
(1) Options have a ten-year term and vest in four equal annual installments
beginning on the first anniversary of the date of grant. Vesting will be
accelerated upon the occurrence of a "change in control." For information as
to what constitutes a "change in control," see "Employment Contracts,
Termination of Employment and Change in Control Arrangements" on page 18.
(2) The Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. Our use of this model
should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
The real value of the options in this table depends upon the actual changes
in the market price of the Common Shares during the applicable period. The
model assumes:
(a) an option term of 5 years, which represents anticipated exercise trends
for the named Executive Officers;
(b) an interest rate of 5.1% that represents the current yield curves as of
the grant dates;
(c) an average volatility of approximately 35% calculated using average
weekly stock prices for the five years prior to the grant date; and
(d) a dividend yield of approximately 1.8% (the current dividend yield).
15
<Page>
The following table sets forth information concerning each exercise of stock
options during 2000 by each of the named Executive Officers and the value of
unexercised options at December 31, 2000.
AGGREGATE OPTION EXERCISES IN 2000 AND VALUES AT DECEMBER 31, 2000
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 2000 (#) DECEMBER 31, 2000 ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- -------- ----------- ------------- ----------- -------------
Orin R. Smith............ 0 0 3,627,116 0 8,841,384 0
Barry W. Perry........... 0 0 556,522 515,181 965,001 1,057,911
Arthur A. Dornbusch,
II..................... 0 0 321,505 208,791 703,455 436,979
John C. Hess............. 0 0 92,095 111,149 176,448 238,468
Peter B. Martin.......... 0 0 34,741 64,134 62,873 141,481
</Table>
16
<Page>
PENSION PLANS
The following table shows estimated annual pension benefits payable to a
covered participant at normal retirement age under our qualified defined benefit
pension plan, as well as the non-qualified supplemental pension plan. This
non-qualified plan provides benefits that would otherwise be denied participants
by reason of certain Internal Revenue Code limitations on qualified plan
benefits and provides enhanced benefits for certain named key executives,
including the individuals named in the Summary Compensation Table, based on
remuneration that is covered under the plans and years of service with Engelhard
and its subsidiaries.
PENSION PLAN TABLE
<Table>
<Caption>
YEARS OF SERVICE
---------------------------------------------------------
FINAL AVERAGE PAY 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------------------------------- --------- --------- --------- --------- ---------
$ 200,000..................... 63,402 87,402 111,402 135,402 135,402
400,000...................... 135,402 183,402 231,402 279,402 279,402
600,000...................... 207,402 279,402 351,402 423,402 423,402
800,000...................... 279,402 375,402 471,402 567,402 567,402
1,000,000..................... 351,402 471,402 591,402 711,402 711,402
1,200,000..................... 423,402 567,402 711,402 855,402 855,402
1,400,000..................... 495,402 663,402 831,402 999,402 999,402
1,600,000..................... 567,402 759,402 951,402 1,143,402 1,143,402
1,800,000..................... 639,402 855,402 1,071,402 1,287,402 1,287,402
2,000,000..................... 711,402 951,402 1,191,402 1,431,402 1,431,402
2,200,000..................... 783,402 1,047,402 1,311,402 1,575,402 1,575,402
2,400,000..................... 855,402 1,143,402 1,431,402 1,719,402 1,719,402
2,600,000..................... 927,402 1,239,402 1,551,402 1,863,402 1,863,402
2,800,000..................... 999,402 1,335,402 1,671,402 2,007,402 2,007,402
3,000,000..................... 1,071,402 1,431,402 1,791,402 2,151,402 2,151,402
3,200,000..................... 1,143,402 1,527,402 1,911,402 2,295,402 2,295,402
3,400,000..................... 1,215,402 1,623,402 2,031,402 2,436,402 2,436,402
3,600,000..................... 1,287,402 1,719,402 2,151,402 2,577,402 2,577,402
</Table>
A participant's remuneration covered by our pension plans is his or her
average monthly earnings, consisting of base salary and regular cash bonuses, if
any (as reported in the Summary Compensation Table), for the highest 60
consecutive calendar months out of the 120 completed calendar months next
preceding termination of employment. With respect to each of the individuals
named in the Summary Compensation Table on page 13, credited years of service
under the plans as of December 31, 2000 are as follows: Mr. Smith, 29 years;
Mr. Perry, 12 years; Mr. Dornbusch, 24 years; Mr. Hess, 16 years; and
Mr. Martin, 4 years. Benefits shown are computed as a straight line single life
annuity beginning at age 65 and the benefits listed in the Pension Plan Table
are not subject to any deduction for Social Security or other offset amounts.
17
<Page>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
Mr. Smith retired as Chairman and Chief Executive Officer on December 31,
2000. Pursuant to the terms of Engelhard's stock option plans, all options
previously granted to Mr. Smith that were not already exercisable became
exercisable on his retirement. Option grants to Mr. Smith prior to 1995
originally provided that such options would expire 90 days after his retirement.
On March 2, 2000, the Board of Directors elected to amend those option grants to
eliminate that 90 day rule to permit such options to expire at their original
expiration dates (i.e., as if Mr. Smith had not retired). In connection with his
retirement, Mr. Smith will receive certain benefits, including but not limited
to, title to his company car, access to secretarial services for a one year
period, medical and dental coverage through December 31, 2005 for himself and
his wife and the forgiveness of his obligation to repay Engelhard for a bond
posted for membership dues payable to John's Island Club Incorporated. Under a
proposed consulting arrangement, Mr. Smith receives $150,000 per annum to
provide up to thirty days of consulting services during 2001, and, if neither
party terminates the arrangement, during 2002. If Mr. Smith performs more than
thirty days of consulting services in either year at Engelhard's request, then
Mr. Smith will receive $5,000 per day for each day of services in excess of
thirty days for such year.
Pursuant to our Change in Control Agreements, we will provide severance
benefits in the event of a termination of an Executive (as defined), except a
termination:
(1) because of death,
(2) because of "Disability,"
(3) by Engelhard for "Cause," or
(4) by the Executive other than for "Good Reason,"
within the period beginning on the date of a "Potential Change in Control" (as
such terms are defined in the Change In Control Agreement) or "change in
control" (as defined below) and ending on the third anniversary of the date on
which a "change in control" occurs. The severance benefits include:
(1) the payment of salary to the Executive through the date of termination
of employment together with salary in lieu of vacation accrued;
(2) an amount equal to a pro-rated incentive pool award under our Incentive
Compensation Plan, determined as set forth in the Agreement;
(3) an amount equal to two times the sum of the highest annual salary and
incentive pool award in effect during any of the preceding 36 months,
determined as set forth in the Agreement;
18
<Page>
(4) continued coverage under our life, disability, health, dental and other
employee welfare benefit plans for up to two years;
(5) continued participation and benefit accruals under our Supplemental
Retirement Program for two years following the date of termination; and
(6) an amount sufficient, after taxes, to reimburse the Executive for any
excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended.
Each of Messrs. Perry, Dornbusch, Hess and Martin is defined as an
Executive.
For purposes of our Change In Control Agreement, a "change in control" is
triggered if one of the following occurs:
(1) twenty-five percent or more of our outstanding securities entitled to
vote in the election of directors shall be beneficially owned, directly
or indirectly, by any person or group of persons, other than the groups
presently owning the same, or
(2) a majority of our Board of Directors ceases to consist of the existing
membership or successors approved by the existing membership or their
similar successors, or
(3) shareholders approve a reorganization or merger with respect to which
the persons who were the beneficial owners of our outstanding voting
securities immediately prior thereto do not, following the reorganization
or merger, beneficially own more than 60% of the outstanding voting
securities of the corporation resulting from the reorganization or merger
in substantially the same proportions as their ownership of our voting
securities immediately prior thereto, or
(4) shareholder approval of either:
(a) a complete liquidation or dissolution of Engelhard or
(b) a sale or other disposition of all or substantially all of the assets
of Engelhard, other than to a corporation, with respect to which
following such sale or other disposition, more than 60% of
Engelhard's outstanding securities entitled to vote generally in the
election of directors are thereafter beneficially owned, in
substantially the same proportions, by all or substantially all of
the individuals and entities who were the beneficial owners of such
securities prior to such sale or other disposition.
Our Key Employees Stock Bonus Plan and our Stock Option Plans, in which all
of the Executive Officers participate, provide for the acceleration of vesting
of awards granted in the event of an acquisition of a control interest. If
vesting of awards under the Key Employees Stock Bonus Plan is accelerated, an
additional payment will be made to compensate for the loss of tax deferral. For
purposes of the stock option and stock bonus awards granted before March 7, 1996
under these Stock Option Plans and the Key Employees Stock Bonus Plan, an
accelerated vesting is
19
<Page>
triggered if either (1) or (2) in the above definition of "change in control"
occurs. For awards made on or after March 7, 1996, a participant under these
plans will, subject to such other conditions, if any, as the Committee may
impose, receive accelerated vesting of awards granted in the event of a "change
in control," as defined above, except that a "change in control" is triggered by
twenty percent, rather than twenty-five percent, beneficial ownership of
Engelhard's outstanding securities entitled to vote in the election of
directors, directly or indirectly, by any person or group of persons, other than
the groups presently owning the same.
Unless a contrary advance election is made, amounts deferred under our
Deferred Compensation Plan for Key Employees will be paid in a lump sum upon an
"acquisition of a control interest" (defined as described above for purposes of
awards made prior to March 7, 1996 under our Key Employees Stock Bonus Plan). if
payments are so accelerated, an additional payment will be made in order to
compensate for the loss of tax deferral. Under our Directors and Executives
Deferred Compensation Plans, which provided for elective deferrals of
compensation earned for years from 1986 through 1993, deferred amounts will be
paid at the time of an "acquisition of a control interest" if the participant
has made an advance election to that effect. In the event distribution of
deferred amounts is so accelerated, an additional payment will be made in order
to compensate for the loss of tax deferral resulting from the accelerated
payment. In addition, certain supplemental retirement benefits under our
Supplemental Retirement Program will vest upon a "change in control" (defined as
described above in the case of the Change in Control Agreements).
We have entered into a Supplemental Retirement Trust Agreement in order to
assist us in paying benefits under the Supplemental Retirement Program, each of
our deferred compensation plans and our Retirement Plan for Directors. We are
required to deposit funds in the trust sufficient to fund unpaid benefits under
each of such plans at the time of a "change in control" (defined as described
above for purposes of the Change in Control Agreements). The assets of the trust
will be subject to the claims of our creditors in the event of our bankruptcy or
insolvency.
Our Annual Restricted Cash Incentive Compensation Plan, which is provided to
all of the Executive Officers, provides for the acceleration of vesting of
awards granted in the event of the occurrence of a change in control. A
participant under this plan will, subject to such other conditions, if any, as
the Compensation Committee may impose, receive accelerated vesting of awards in
the event of a "change in control," as defined above, except that a "change in
control" is triggered by twenty percent, rather than twenty-five percent,
beneficial ownership of Engelhard's outstanding securities entitled to vote in
the election of directors, directly or indirectly, by any person or group of
persons, other than the persons presently owning the same.
20
<Page>
REPORT ON EXECUTIVE COMPENSATION
Under the overall direction of the Compensation Committee and the Stock
Option/Stock Bonus Committee of the Board of Directors and in accordance with
our Stock Option Plans and Stock Bonus Plan approved by our shareholders, we
have developed and implemented compensation programs designed to:
- Attract and retain key employees who can build and continue to grow a
successful company;
- Provide incentive to achieve high levels of company, business, and
individual performance; and
- Maintain and enhance alignment of employee and shareholder interests.
The Compensation and Stock Option Plan/Stock Bonus Committees are composed
entirely of Nonemployee Directors individually noted as signatories to this
report.
The Compensation Committee is responsible for overseeing the development and
for review and approval of:
- Overall compensation policy;
- Salaries for the Chief Executive Officer and for approximately 19 other
senior managers worldwide; and
- Aggregate cash incentive awards for Engelhard and specific individual cash
awards under the annual plan for the Chief Executive Officer and
approximately 19 other senior managers worldwide.
The Stock Option/Stock Bonus Committee is responsible for overseeing the
development and for review and approval of:
- Plan design and policies related to senior management and employee awards
of options and restricted stock; and
- Individual grants under the Stock Option Plans and restricted stock awards
under the Key Employees Stock Bonus Plan to the Chief Executive Officer
and approximately 366 employees worldwide.
21
<Page>
In exercising those responsibilities and in determining the compensation in
particular of Mr. Smith and in general of other senior managers individually
reviewed, the Committees examine and set:
1. BASE SALARY
The Compensation Committee reviews salaries annually against industry
practices as determined by professional outside consultants who conduct
annual surveys. Our current competitive target is to pay somewhat above the
median for positions of comparable level. This target is being achieved on
average for the professional, technical, and managerial salaried work force.
Salary structures are set each year based on our target and its actual
competitive position. There was no structure increase for 2000 for the U.S.
professional, technical and managerial group because of the implementation
of a new compensation system. The structure was adjusted upward by 2% for
2001. Likewise merit budgets are established based on a competitive target,
actual competitive position, and our desire to recognize and reward
individual contribution. For international employees and non-exempt salaried
employees in the United States, structure adjustments and merit budgets are
determined based on local market conditions.
Individual merit adjustments are based upon the managers' quantitative
and qualitative evaluation of individual performance, including feedback
from customers served, against business objectives such as earnings, return
on capital, market share, new customers, and development of new commercial
products. Performance is also considered in the context of expectations for
behavior and the individuals' positions in their respective salary-ranges.
The better the performance and the lower the position in range, the greater
the percentage base salary increase. Conversely, the lower the performance
is evaluated and the higher the position in range, the lower the percentage
base salary increase.
Mr. Perry's salary was increased 50% for 2001 in view of his additional
responsibilities as Chairman and Chief Executive Officer and based on
competitive practice and business results, which included earnings results
while funding investments in capital expansion, research and development,
joint ventures, and acquisitions. Base salary continues to be less than
one-fourth of total compensation for Mr. Perry and generally less than
one-half of total compensation for other senior management. This reflects
our emphasis on non-fixed compensation which varies with Engelhard
performance and on other equity vehicles which are closely aligned with
shareholder interests.
2. ANNUAL CASH AND LONG TERM EQUITY INCENTIVE COMPENSATION
Our Management Incentive Plan integrates all incentive compensation
vehicles (including cash bonus award, restricted stock and stock options) to
link total compensation for the participant with both competitive practice
and the performance of Engelhard and/or the
22
<Page>
applicable business unit and the individual. The plan facilitates clarity of
performance expectations and encourages the identification and commitment to
"breakthrough" results. Overall incentive pools are established for cash,
restricted stock equity, and stock options. The pools are determined by a
formula based on competitive total compensation for comparable performance;
desired compensation mix among cash, restricted stock and options; and on
the actual performance of Engelhard and its business units against specific
predetermined levels of earnings targets. A threshold level is established
below which incentives will not normally be paid. The Committees may adjust
these pools up or down based on the economic climate or other special
circumstances, but did not factor any pools up or down for 2000. Individual
awards are determined based on performance against specific objectives
within the limits of the pools.
Our overall results (excluding special charges) increased, against the
results which served as the basis for 1999's incentive awards, by 27.5%. As
provided under the plan, the level of the pool generated for Engelhard
overall and each business group depends upon that group's actual performance
against targets established at the beginning of 2000. Once each group's pool
has been established, individual performance based awards were made as
described below.
a. ANNUAL CASH INCENTIVE PROGRAM
This program is designed to provide focus on expected annual results and
recognition of accomplishment for the year. Approximately 311 employees
worldwide received awards under our program.
For 2000, actual cash payouts were 100% of the competitively defined
pool as factored for performance.
For the year 2000, Mr. Smith received a cash incentive award of
$2,000,000 compared with $1,852,500 for 1999. This was consistent with the
plan design considering performance and targets and the payout for Engelhard
overall.
Total cash compensation paid to eligible participants reflects
competitive practice for results achieved and is projected to be around the
75th percentile of competitive practice--higher in lower level positions and
lower in higher level positions.
b. RESTRICTED STOCK
Providing for vesting of shares in equal amounts over a period of five
years, the Key Employees Stock Bonus Plan is designed to align key employee
and shareholder long-term interests by providing designated employees an
equity interest in Engelhard. Approximately 366 employees are eligible to
participate in our plan worldwide. Eligible employees are reviewed annually
for award grants determined in the manner previously described.
23
<Page>
The total equity shares awarded for 2000 was slightly under the plan
generated pool. The Committee grants a number of equity shares which are
then converted to a combination of restricted stock and stock options.
Approximately one-half of the value of the equity shares, using present
value methodologies, awarded for 2000 were in the form of stock options.
This resulted in 249,795 restricted shares awarded compared with 233,890 for
1999.
For the year 2000, Mr. Smith was awarded a $1,562,500 cash payment in
lieu of an equity award. He received a grant of 35,985 shares in 1999 and
28,415 shares in 1998.
c. STOCK OPTIONS
Our Stock Option Plans have been designed to link employee compensation
growth directly to growth in share price. In conjunction with restricted
stock, options are the major driver of senior management compensation
aligning their reward with shareholder interests. As noted above,
approximately one-half of the compensation value of equity shares was paid
in the form of options. Utilizing actuarial and financial Black-Scholes
models, the value of an option was calculated to be approximately one-third
of the value of a restricted share award.
In addition, approximately 366 senior managers worldwide are reviewed
for annual stock option grants determined in the manner previously
described. Options vest in equal increments over four years and normally
have a ten-year life.
Options granted for 2000 totaled 746,628 which was within the pool
generated. This compares with 3,195,003 granted for 1999.
d. RESTRICTED CASH PERFORMANCE AWARDS
In the year 2000, Engelhard provided restricted cash performance awards
to 60 executives under its Annual Restricted Cash Incentive Compensation
Plan. These awards, which vest in equal amounts over a period of four years
and accrue interest at a rate of 120% of the long-term federal rate,
compounded monthly, aggregated $4,673,775 and replaced the value of grants
which would otherwise have been made to these executives under the Stock
Option Plans, with the objective of incenting performance and continued
employment with Engelhard while limiting the increase in the number of
outstanding options.
Mr. Smith received a $2,500,000 cash payment in lieu of any restricted
cash performance award.
The Committees direct the purchase of compensation survey information from
several independent professional consultants in order to review the base, annual
cash incentive, and total compensation of Mr. Perry and other individual senior
managers and employee groups.
The Committees are satisfied that relevant competitive data and achievements
of Engelhard against its targets in the context of the economic and competitive
environment in which Engelhard has operated, support the objectives of
attracting and retaining key talent, providing incentives for
24
<Page>
superior performance, and aligning employee and shareholder interests.
Nevertheless, the Committees may reevaluate the current compensation program
design as part of their ongoing process of oversight on such matters.
Section 162(m) of the Internal Revenue Code generally limits the deductible
amount of annual compensation paid to certain individual executive officers
(i.e., the chief executive officer and the four other most highly compensated
executive officers of Engelhard) to no more than $1 million. Considering the
current structure of executive officer compensation and the availability of
deferral opportunities, the Committee believes that we will not be denied any
significant tax deductions for 2000. The Committee will continue to review tax
consequences as well as other relevant considerations in connection with
compensation decisions.
25
<Page>
COMPENSATION COMMITTEE
Marion H. Antonini Henry R. Slack James V. Napier
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG ENGELHARD CORPORATION, S&P 500 INDEX
AND ALL S&P CHEMICALS
[LOGO]
<Table>
<Caption>
DECEMBER 31,
---------------------------------------------------------------
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- --------
Engelhard Corporation...................... 100.00 89.38 82.75 94.84 93.75 103.60
S&P 500.................................... 100.00 122.96 163.98 210.85 255.21 231.98
All S&P Chemicals.......................... 100.00 118.37 142.83 128.77 153.96 133.95
</Table>
------------------------
* Assumes $100 invested on December 31, 1995 in each referenced group with
reinvestment of dividends.
26
<Page>
REPORT OF AUDIT COMMITTEE
GENERAL
The Audit Committee acts under a written charter adopted and approved by the
Board of Directors on June 1, 2000. A copy of the Audit Committee Charter is
attached to this Proxy Statement as Appendix A. Each of the members of the Audit
Committee is "independent" as defined by the New York Stock Exchange listing
standards.
Based on the Audit Committee's review of the audited financial statements as
of and for the fiscal year ended December 31, 2000 and its discussions with
management regarding such audited financial statements, its receipt of written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES), its discussions with the independent auditors regarding such
auditor's independence, the matters required to be discussed by the Statement on
Auditing Standards 61 (COMMUNICATION WITH AUDIT COMMITTEES) and other matters
the Audit Committee deemed relevant and appropriate, the Audit Committee
recommended to the Board of Directors that the audited financial statements as
of and for the fiscal year ended December 31, 2000 be included in the Company's
Annual Report on Form 10-K for such fiscal year. In addition, the Audit
Committee considered whether the provision of non-audit services by Arthur
Andersen LLP ("AA") is compatible with maintaining auditor independence.
FEES BILLED TO ENGELHARD BY ARTHUR ANDERSEN LLP DURING FISCAL YEAR ENDED
DECEMBER 31, 2000
AUDIT FEES
The aggregate fees billed to Engelhard by AA for professional services
rendered in connection with the audit of Engelhard's financial statements
included in Engelhard's Annual Report on Form 10-K for Fiscal Year 2000, as well
as for the review of Engelhard's financial statements included in Engelhard's
Quarterly Reports on Form 10-Q during the fiscal year ended December 31, 2000
totaled $1,833,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees other than those described above under the caption "Audit Fees" and
those described below under the caption "All Other Fees" were billed to
Engelhard by AA for professional services in the fiscal year ended December 31,
2000.
27
<Page>
ALL OTHER FEES
The aggregate fees billed to Engelhard by AA during the fiscal year ended
December 31, 2000, other than those described above, related to tax, employee
benefit plan and merger and acquisition advisory services, and totaled $568,000.
AUDIT COMMITTEE
Douglas G. Watson Norma T. Pace Reuben F. Richards
2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
On February 14, 2000, the Audit Committee and the Board of Directors
determined that PricewaterhouseCoopers LLP ("PWC") should be dismissed as our
independent accountants as soon as a new accounting firm was engaged.
The report of PWC on our financial statements for the fiscal year ended
December 31, 1998 contained no adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope or accounting
principle. During our fiscal years ended December 31, 1998 and December 31,
1999, and during the subsequent interim period, there were no disagreements with
PWC on matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of PWC, would have caused PWC to make reference to the matter in
their report. During our fiscal years ended December 31, 1998 and 1999, and
during the subsequent interim period, there have been no reportable events (as
defined in Regulation S-K Item 304(a)(1)(v)) except for the following:
Our former Chief Financial Officer (the "CFO"), who retired from
Engelhard on February 18, 2000, was formerly a partner in the firm of
Coopers & Lybrand, LLP ("Coopers") and served in a number of senior
positions within Coopers, including as a member of its Executive Committee.
The CFO retired from Coopers on April 30, 1997, prior to Coopers' merger
with Price Waterhouse, LLP, and, as a result of his service at Coopers, was
entitled to certain retirement benefits from PWC. The CFO joined Engelhard
as our chief financial officer on May 1, 1997.
On February 3, 2000, PWC advised the Audit Committee that issues existed
which PWC believed affected PWC's independence. The issues related to the
structure of the CFO's retirement benefits from PWC and a disagreement
between PWC and the CFO relating to whether the CFO was entitled to certain
additional retirement payments pursuant to a 1998 program of PWC to benefit
certain Coopers' partners who had retired prior to the merger of Coopers and
Price Waterhouse, LLP.
On February 9, 2000, PWC advised us that, as a result of discussions
between the CFO and representatives of PWC regarding the CFO's entitlement
to the additional retirement
28
<Page>
benefits, PWC believed that, in addition to the issues concerning the
independence of PWC, information had come to its attention which had led PWC
to no longer be able to rely on the representations of the CFO.
On February 14, 2000, the Audit Committee and the Board of Directors
determined that, in order to address any potential independence or other
concerns resulting from or arising out of the structure and amount of the
CFO's retirement benefits from PWC and related communications between PWC
and the CFO, and to avoid the delay and uncertainty which PWC advised would
be involved in seeking to resolve the issues in order to enable PWC to
continue as our independent auditors, PWC should be dismissed as our
certifying accountant as soon as a new accounting firm was engaged to audit
our financial statements for the fiscal year ended December 31, 1999. We
have authorized PWC to respond fully to the new accountant regarding any
matters relating to PWC's audit of our financial statements, the
disagreement and communications with the CFO, or any other matter.
The Board of Directors, based on the recommendation of the Audit Committee,
voted to engage AA as our new independent accountants on February 22, 2000.
During the two most recent fiscal years and the subsequent interim period
preceding the engagement of AA, neither we nor anyone on our behalf has
consulted AA regarding: (i) the application of accounting principles to a
specific completed or proposed transaction, or the type of audit opinion that
might be rendered on our financial statements, which consultation resulted in
the providing of a written report or oral advice concerning the same to us that
AA concluded was an important factor considered by us in reaching a decision as
to the accounting, auditing or financial reporting issue; or (ii) any matter
that was either the subject of a disagreement (as defined in
Rule 304(a)(1)(iv) of Regulation S-K promulgated under the Securities Act of
1933, as amended) or a reportable event (as defined in Rule 304(a)(1)(v) of
Regulation S-K).
The Board of Directors, based on the recommendation of the Audit Committee,
voted to retain AA to serve as independent public accountants for the year 2001.
AA expects to have a representative at the meeting who will have the opportunity
to make a statement and who will be available to answer appropriate questions.
It is understood that even if the appointment is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board of Directors believes
that such a change would be in the best interests of Engelhard and its
shareholders.
The Board of Directors recommends that you vote FOR the ratification of the
appointment of Arthur Andersen LLP as our independent public accountants for the
year 2001.
29
<Page>
FUTURE SHAREHOLDER PROPOSALS
HOW DO I MAKE A PROPOSAL FOR THE 2002 ANNUAL MEETING?
The deadline for you to submit a proposal pursuant to Rule 14a-8 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") for inclusion
in our proxy statement and form of proxy for the 2002 Annual Meeting of
Shareholders (the "2002 Annual Meeting") is November 29, 2001. The date after
which notice of a shareholder proposal submitted outside of the processes of
Rule 14a-8 of the Exchange Act is considered untimely is November 29, 2002. If
notice of a shareholder proposal submitted outside of the processes of
Rule 14a-8 of the Exchange Act is received by us after February 12, 2002, then
our proxy for the 2002 Annual Meeting may confer discretionary authority to vote
on such matter without any discussion of such matter in the proxy statement for
the 2002 Annual Meeting.
OTHER MATTERS
At the date of this proxy statement, the Board of Directors has no knowledge
of any business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, the persons named in the enclosed proxy will vote such proxy
thereon in accordance with their judgment in the best interests of Engelhard.
<Table>
By Order of the Board of Directors
ARTHUR A. DORNBUSCH, II
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
</Table>
March 29, 2001
30
<Page>
APPENDIX A
ENGELHARD CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of Directors
to assist the Board in fulfilling its responsibilities by overseeing that:
- Management has maintained the integrity of the accounting policies,
financial reporting and disclosure practices of the Company.
- Management has established and maintained an adequate system of internal
controls within the Company to support the financial and business
environment.
- Management has established and maintained processes to assure compliance
by the Corporation with all applicable laws, regulations and corporate
policies.
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 are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
The Audit Committee shall be comprised of three or more directors appointed
by the Board, each of whom shall be independent of Management and the
Company and free from any relationship that would in the opinion of the
Board of Directors interfere with the exercise of his or her independent
judgment as a member of the Committee. If an Audit Committee Chair is not
designated or present, the members of the Committee may designate a Chair by
majority vote of the Committee membership.
All members of the Committee shall be financially literate and, in addition,
at least one member of the Committee shall have accounting or related
financial management expertise as determined by the Board of Directors in
its business judgment.
The Committee shall meet at stated times on notice to all by the Chief
Executive Officer of the Corporation or by the Audit Committee Chair, or
more frequently as circumstances dictate. At each of the regularly scheduled
meetings, and at other meetings as necessary, the Committee
A-1
<Page>
shall meet with the director or senior representative of internal audit and
the independent accountants in separate sessions to discuss any matters that
the Committee or any of the aforementioned believes should be discussed.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually or more often
as conditions dictate, and recommend proposed changes to the Board.
2. Review the annual financial statements with management and the
independent accountants, including a discussion of significant issues
regarding the accounting and auditing principles and practices as well as
the adequacy of internal controls and financial internal and external
reporting processes.
3. Review the activities of the Company's internal audit department,
including the proposed annual audit plan, periodic reports on the status
of the plan, and summaries of any significant issues raised during the
performance of internal audits.
4. Discuss with the independent accountants any matters required to be
discussed in accordance with SAS 61 relating to the audit and review with
financial management and the independent accountants the quarterly
financial statements as included in the form 10-Q. The Chair of the
Committee may represent the entire Committee for purposes of this review.
5. Review, as appropriate, significant changes to the Company's accounting
principles and practices.
6. Review and obtain an understanding how the Company is addressing
significant accounting and reporting issues, including recent
professional and regulatory pronouncements that may impact the Company.
7. Recommend to the Board of Directors the selection, evaluation and, where
appropriate the replacement of the independent accountants, who are
ultimately accountable to the Committee and the Board.
8. Review and discuss with the independent accountants, in order to satisfy
itself as to their independence, all relationships that the independent
accountants have with the Company that may reasonably be thought to bear
on the objectivity and independence of the independent accountants.
Ensure the receipt of the independent accountants' annual independence
statement.
9. Review with the independent accountants and financial management of the
Company the scope and staffing of the proposed audit for the current year
and, at the conclusion
A-2
<Page>
thereof, review such audit including any comments or recommendations of
the independent accountants.
10. Review management's monitoring of compliance with the Company's Code of
Conduct.
11. Review the appointment, performance and replacement of the senior
internal auditing executive and the performance of the internal audit
group.
12. Prepare a report to shareholders as required by the Securities and
Exchange Commission. The report should be included in the Company's
annual proxy statements.
13. Report to the Board of Directors all significant issues discussed and
make recommendations to be acted upon by the Board.
14. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary
or appropriate.
A-3
<Page>
[LOGO]
NOTICE OF
ANNUAL MEETING
OF
SHAREHOLDERS
AND PROXY
STATEMENT
May 3, 2001
ENGELHARD CORPORATION
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF SHAREHOLDERS-MAY 3, 2001
P
R
O
X
Y
The undersigned hereby constitutes and appoints Barry W. Perry, Reuben
F. Richards and Arthur A. Dombusch, II, and each of them, his true and
lawful agents and proxies with full power of substitution in each, to
represent the undersigned at the Annual Meeting of Shareholders of
ENGELHARD CORPORATION to be held at The Sheraton Edison Hotel at
Raritan Center, 125 Raritan Center Parkway, Edison, NJ 08837 on
Thursday, May 3, 2001 at 10 00 A.M. Eastern Daylight Savings Time and
at any adjournments thereof, on all matters coming before said meeting.
ELECTION OF DIRECTORS. NOMINEES: (Change of Address/Comments)
James V. Napier
Norma T. Pace --------------------------------
--------------------------------
--------------------------------
--------------------------------
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES. SEE REVERSE SIDE, BUT YOU NEED NOT MARK --------------
ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD SEE REVERSE
OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE CANNOT SIDE
VOTE YOUR SHARE. UNLESS YOU SIGN AND RETURN THIS CARD --------------
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Dear Shareholder(s)
Enclosed you will find material relative to the Company's 2001 Annual Meeting of
Shareholders. The notice of the annual meeting and proxy statement describe the
formal business to be transacted at the meeting, as summarized on the attached
proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly on the reverse side the attached proxy card in the accompanying
envelope, which requires no postage if mailed in the United States. Please
remember that your vote is important to us
ENGELHARD CORPORATION
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
Please mark
your vote as |X|
indicated in
this example
1. Election of Directors; (To withhold vote for any individual nominee write
01 James V. Napier that name below.)
02 Norma T. Pace
--------------------------------------------------
FOR WITHHELD
|_| |_|
2. Ratification of appointment of Arthur Andersen LLP as independent public
accountants.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion, upon other matters as they may properly come before the
meeting.
I PLAN TO ATTEND |_|
THE MEETING.
Please mark, sign and return promptly using
the enclosed envelope. Executors,
administrators, trustees, etc. should give
full title as such. If the signer is a
corporation, please sign full corporate name
by duly authorized officer.
-------------------------------------------
, 2001
--------------------------------------
SIGNATURES) DATED
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
----------------------------------- ------------------------------------ -------------------------
INTERNET TELEPHONE MAIL
http://www.proxyvoting.com/ee 1-800-040-1208
Use the Internet to vote your Use any touch-tone telephone to Mark, sign and date
proxy. Have your proxy card in vote your proxy. Have your proxy your proxy card
hand when you access the web OR card in hand when you call. You will OR and
site. You will be prompted to enter be prompted to enter your control return it in the
your control number, located in number, located in the box below, enclosed postage-paid
the box below, to create and sub- and then follow the directions given. envelope.
mit an electronic ballot.
----------------------------------- ------------------------------------ -------------------------
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.