UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
QUAKER CHEMICAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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QUAKER CHEMICAL CORPORATION
Elm and Lee Streets
Conshohocken, Pennsylvania 19428
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Notice of Annual Meeting of Shareholders
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TIME: 10:00 A.M., Philadelphia time, on Wednesday, May
8, 2002
PLACE: Philadelphia Marriott West
Matsonford at Front Street
111 Crawford Avenue
West Conshohocken, Pennsylvania 19428
ITEMS OF BUSINESS: . To elect three directors.
. To ratify the appointment of
PricewaterhouseCoopers LLP as independent
accountants to examine and report on our
financial statements for the year 2002.
. To transact any other business properly
brought before the meeting.
WHO MAY VOTE: You can vote at the meeting or any adjournment(s)
of the meeting if you were a shareholder of
record at the close of business on March 8, 2002.
ANNUAL REPORT: A copy of our Summary Annual Report and our
Annual Report on Form 10-K for the year ended
December 31, 2001 is enclosed.
It is important that your shares be represented at the meeting. You are
cordially invited to attend the meeting in person. Whether or not you expect to
attend in person, you are urged to complete, sign, date, and return the
enclosed proxy in the envelope we have enclosed for your convenience; no
postage is required if mailed in the United States.
By Order of the Board of Directors
/s/ D. Jeffry Benoliel
D. Jeffry Benoliel
Vice President, Secretary
and General Counsel
Conshohocken, Pennsylvania
March 28, 2002
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QUAKER CHEMICAL CORPORATION
Elm and Lee Streets
Conshohocken, Pennsylvania 19428
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PROXY STATEMENT
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This proxy statement is being furnished to our shareholders in connection
with the solicitation of proxies on behalf of our Board of Directors for use at
our Annual Meeting of Shareholders, and at any and all adjournments of the
meeting, for the purpose of considering and acting upon the matters referred to
in the accompanying Notice of Annual Meeting of Shareholders and which are
discussed below. The Annual Meeting of Shareholders will be held at the
Philadelphia Marriott West, Matsonford at Front Street, 111 Crawford Avenue,
West Conshohocken, Pennsylvania 19428, at 10:00 A.M., Philadelphia time, on May
8, 2002. The terms "we," "our," "us," and "Quaker," as used in this proxy
statement, refer to Quaker Chemical Corporation.
This proxy statement and the accompanying form of proxy are first being
mailed to shareholders on or about April 2, 2002.
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Information Concerning the Annual Meeting
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What matters will be voted on at the meeting?
At the meeting shareholders will vote on two matters:
. Election of nominees to serve on our Board of Directors; and
. Ratification of the appointment of PricewaterhouseCoopers LLP as our
independent accountants for the year 2002.
How does the Board recommend I vote on the proposals?
The Board recommends that you vote:
. FOR each of the three nominees named in this proxy statement; and
. FOR ratification of the appointment of PricewaterhouseCoopers LLP as
our independent accountants for the year 2002.
Who is entitled to vote?
Our shareholders of record as of the close of business on March 8, 2002,
the record date for the meeting, are entitled to notice of and to vote at
the meeting or any adjournments of the meeting.
How do I cast my vote?
There are two different ways you can cast your vote. You can cast your
vote by:
. marking, signing, and dating a proxy card and returning it in the
envelope provided; or
. attending the meeting and voting in person if you are the registered
owner of your shares.
If I have given a proxy, how do I revoke that proxy?
Your presence at the meeting will not revoke any proxy you may have given.
However, you may revoke your proxy at any time (to the extent it has not
already been voted at the meeting), but a revocation will not be effective
until it is received. Your proxy will be revoked (to the extent it has not
already been voted at the meeting) if you:
. give written notice of the revocation to Quaker's Corporate
Secretary, D. Jeffry Benoliel, at Elm and Lee Streets, Conshohocken,
Pennsylvania 19428, or electronic notice to Mr. Benoliel at
jeffry_benoliel@quakerchem.com;
. submit a properly signed proxy with a later date; or
. vote in person at the meeting (if your shares are registered
directly on Quaker's books and not held through a broker, bank or
other nominee).
How will my proxy be voted?
If your proxy in the accompanying form is properly executed, returned to
and received by us prior to the meeting and is not revoked, it will be
voted in accordance with your instructions. If you return your signed
proxy but do not mark the boxes to show how you wish to vote on one or
both of the proposals, the shares for which you have given your proxy
will, in the absence of your instructions to the contrary, be voted "FOR"
each of the nominees named in the proxy and "FOR" ratification of the
appointment of PricewaterhouseCoopers LLP as our independent accountants
for the year 2002.
Will my shares be voted if I do not provide my proxy?
Your shares may be voted under certain circumstances if they are held in
the name of a brokerage firm or nominee. Brokerage firms and nominees that
are members of the New York Stock Exchange have the authority under the
exchange's rules to vote their customers' unvoted shares on certain
"routine" matters if the customers have not furnished voting instructions
within a specified period prior to the meeting. Under these rules, the
election of directors and ratification of the appointment of
PricewaterhouseCoopers LLP as our independent accountants are considered
to be "routine" matters. If you hold your shares directly in your own
name, they will not be voted if you do not provide a proxy or attend the
meeting and vote the shares yourself.
What does it mean if I get more than one proxy card?
If you have your shares registered in multiple accounts with one or more
brokers and/or our transfer agent, you will receive more than one card.
Please complete and return each of the proxy cards you receive to ensure
that all of your shares are voted.
How many votes are needed to elect directors?
The three nominees receiving the highest number of "FOR" votes will be
elected as directors. This is referred to as a plurality.
What if a nominee is unwilling or unable to serve?
We do not expect that to occur. If it does, proxies will be voted for a
substitute nominee designated by our Board of Directors.
2
How many votes are needed to ratify the selection of PricewaterhouseCoopers LLP
to examine and report on our financial statements for the year 2002?
Approval of this proposal requires that the number of shares voted "FOR"
the proposal exceed the number of shares voted "AGAINST" the proposal.
How will abstentions and broker non-votes affect the voting?
Abstentions and broker non-votes will have no effect on the outcome of the
voting on either matter because they will not represent votes cast.
Are dissenters' rights applicable to either of the matters to be voted on at
the meeting?
No. Dissenters' rights do not apply to either matter.
Who will count the vote?
The Judge of Election appointed at the meeting together with
representatives of American Stock Transfer & Trust Company, our transfer
agent, will tabulate the votes cast at the meeting.
How many shares can be voted at the meeting?
As of March 8, 2002, the record date for the meeting, 9,164,385 shares of
Quaker common stock were issued and outstanding. Every holder of Quaker
common stock is entitled to one vote or ten votes for each share held of
record on the record date.
How many votes will I be entitled to cast at the meeting?
You will be entitled to cast one vote or ten votes for each share of
common stock you held on March 8, 2002, the record date for the meeting,
depending upon how long you had held the shares as of the record date. As
more specifically provided in Article 5 of Quaker's Articles of
Incorporation, the number of votes you are entitled to cast at the meeting
will be determined as follows:
Each share which, as of the record date, you had beneficially owned
since March 1, 1999 will entitle you to ten votes.
Each share you acquired after March 1, 1999 will entitle you to one
vote, with some exceptions. These exceptions are explained in Appendix
A.
We presume that shares you hold in "street" or "nominee" name, or that are
held for your account by a broker, clearing agency, voting trustee, bank,
trust company, or other nominee, were acquired by you after March 1, 1999
and, accordingly, entitle you to one vote for each of these shares. You
may, however, rebut this "one-vote" presumption by presenting written
evidence to us in accordance with the procedures we describe in Appendix A.
What is the total number of votes that may be cast at the meeting?
Based on the information available to us on March 8, 2002, the holders of
2,219,618 shares of Quaker common stock will be entitled to cast ten votes
for each share held and the holders of 6,944,767 shares of Quaker common
stock will be entitled to cast one vote for each share held, for a total
of 29,140,947 votes. The number of shares that we have indicated are
entitled to one vote includes those shares presumed to be entitled to only
one vote. Because the holders of these shares may rebut this presumption,
the total number of votes that may be cast at the meeting may increase to
as many as 91,643,850.
3
Where can I find more information on the voting procedures for the meeting?
For additional information on our voting procedures, including the
procedures for determining whether a share entitles its holder to one vote
or ten votes, and how to rebut the "one-vote" presumption, please refer to
Appendix A.
What is a "quorum?"
The presence of shareholders entitled to cast at least a majority of the
votes entitled to be cast on a particular matter will constitute a
"quorum" for the purpose of considering that matter. For purposes of
determining the presence of a quorum, the votes of a shareholder will be
counted if the shareholder is present in person or by proxy. Shares which
are the subject of abstentions or broker non-votes will be counted for
purposes of determining a quorum.
Who can attend the Annual Meeting?
All shareholders of Quaker who owned shares of record on March 8, 2002 can
attend the meeting.
How will voting on any other business be conducted?
We do not know of any business to be considered at the meeting other than
the proposals described in this proxy statement. However, if any other
business is presented at the meeting, a proxy in the accompanying form
will give authority to Peter A. Benoliel and Ronald J. Naples to vote on
such matters at their discretion and they intend to do so in accordance
with their best judgment.
Who will pay the cost of this proxy solicitation and how will the solicitation
be conducted?
We will pay the expenses of soliciting proxies in the form included with
this proxy statement, including the cost of preparing, assembling, and
mailing material in connection with the solicitation. In addition to the
use of the mail, our directors, executive officers, and employees may
solicit proxies personally or by telephone, facsimile, electronic mail,
and personal contact. We will also reimburse brokerage houses and other
custodians, nominees, and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy materials and Quaker's summary annual report
and annual report on Form 10-K to any beneficial holder of Quaker common
stock they hold of record.
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Item 1--Election of Directors and Nominee Biographies
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What is the makeup of the Board of Directors?
The Quaker Articles of Incorporation provide that our Board of Directors
is divided into three classes, each consisting, as nearly as possible, of
one-third of the total number of directors. The shareholders elect the
members of one of the three classes each year to serve for a term of three
years. Directors elected to fill vacancies and newly created directorships
serve for the balance of the term of the class to which they are elected.
Presently, there are ten directors, including three Class I directors,
four Class II directors, and three Class III directors. This year
shareholders will elect the members of Class I.
Are there any family relationships within Quaker's management?
Other than D. Jeffry Benoliel, Vice President, Secretary and General
Counsel of Quaker, who is the son of Peter A. Benoliel, a director of
Quaker, there is no family relationship between any of Quaker's directors,
executive officers or nominees for election as directors.
4
Are there any members of the class of directors to be elected at the meeting
who are not standing for re-election?
No. Each incumbent director whose term expires this year has been
nominated for election to serve for an additional three-year term and has
agreed to serve if elected.
Who are the Board's nominees this year?
Peter A. Benoliel, Ronald J. Naples, and Robert H. Rock are the Board's
nominees for election to the Board of Directors. Each nominee, if elected,
would hold office until our 2005 annual meeting of shareholders and until
his successor is elected and qualified.
What is the background of this year's nominees?
Our nominees for election to the Board as Class I members are:
PETER A. BENOLIEL
Director since 1961
Age 70
. Former Chairman of the Board and Chief Executive Officer of Quaker.
RONALD J. NAPLES
Director since 1988
Age 56
. Quaker's Chairman of the Board since May 1997.
. Quaker's Chief Executive Officer since October 1995.
. Quaker's President from October 1995 until March 1998.
. Member of the Board of Directors:
. P.H. Glatfelter Company
ROBERT H. ROCK
Director since 1996
Age 51
. President of MLR Holdings, LLC, an investment company with holdings in the
publishing and information business, for more than five years.
. Former Chairman and majority owner of IDD Enterprises, a publisher of
magazines, newsletters, and a provider of on-line data for financial
executives.
. Member of the Board of Directors:
. Advanta Corp.
. Alberto-Culver Company
. Hunt Corporation
. The Penn Mutual Life Insurance Company
The Board of Directors recommends that you vote "FOR" the election to our
Board of Peter A. Benoliel, Ronald J. Naples, and Robert H. Rock, the nominees
listed above.
5
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Biographies of Directors Not Standing For Election This Year
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Our incumbent directors who were elected as Class II members of the Board in
2000 and whose terms expire in 2003 are:
DONALD R. CALDWELL
Director since 1997
Age 55
. Chief Executive Officer and Founder of Cross Atlantic Capital Partners,
Inc., a venture capital fund with offices in the United States, Ireland,
and England, since March 1999.
. President and Chief Operating Officer of Safeguard Scientifics, Inc. from
February 1996 until March 1999.
. Member of the Board of Directors:
. DiamondCluster International, Inc.
. Nutri/System, Inc.
ROBERT E. CHAPPELL
Director since 1997
Age 57
. Chairman and Chief Executive Officer of The Penn Mutual Life Insurance
Company since January 1997 and April 1995, respectively.
. Member of the Board of Directors:
. P.H. Glatfelter Company
WILLIAM R. COOK
Director since 2000
Age 58
. President and Chief Executive Officer of Severn Trent Services, Inc., a
water purification products and laboratory and operating services company,
since August 1999.
. Vice Chairman and Co-Chief Executive Officer of Hercules, Incorporated
from October 1998 until January 1999.
. Chairman of BetzDearborn, Inc. from 1996 until October 1998 and its
President and Chief Executive Officer from 1993 until October 1998.
. Member of the Board of Directors:
. Envirogen, Inc.
. Teleflex Incorporated
ROBERT P. HAUPTFUHRER
Director since 1977
Age 70
. Former Chairman of the Board and Chief Executive Officer of Oryx Energy
Company.
. Trustee of the 1838 Investment Advisors Fund.
6
Our incumbent directors who were elected as Class III members of the Board in
2001 and whose terms expire in 2004 are:
JOSEPH B. ANDERSON, JR.
Director since 1992
Age 59
. Chairman and Chief Executive Officer of Chivas Industries LLC, an interior
trim automotive supplier and manufacturer, for more than five years.
. Member of the Board of Directors:
. ArvinMeritor Inc.
. R.R. Donnelley & Sons Company
PATRICIA C. BARRON
Director since 1989
Age 59
. Clinical Associate Professor and Senior Fellow at the Stern School of
Business, New York University since September 1999.
. Executive-in-Residence and Senior Fellow at the Stern School of Business,
New York University from November 1998 until September 1999.
. Corporate Vice President of Business Operations Support of Xerox
Corporation from 1997 until June 1998.
. Vice President of Xerox Corporation and President of the Engineering
Systems Division of Xerox Corporation from 1993 until June 1998.
. Member of the Board of Directors:
. ARAMARK Corporation
. Teleflex Incorporated
. Ultralife Batteries Corporation
. USAA
EDWIN J. DELATTRE
Director since 1984
Age 60
. Resident Scholar, Center for School Improvement, School of Education,
Boston University since July 2001.
. Professor of Philosophy, College of Arts and Sciences and Professor of
Education, School of Education, Boston University since 1993.
. Dean, School of Education, Boston University from 1992 to August 2001.
. President Emeritus, St. John's College, Annapolis, Maryland and Santa Fe,
New Mexico.
7
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Compensation of Directors
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Any director who is also an employee of Quaker is not separately
compensated for his or her service as a director.
Each director who is not an employee of Quaker receives $18,000 each year
for his or her services as a director. Each nonemployee director also receives
$1,000 for each Board and Board committee meeting he or she attends. The
Chairperson of each Board committee also receives the following additional
compensation each year: Audit Committee, $2,000; Nominating Committee, $1,500;
Compensation/Management Development Committee, $1,500; and Executive Committee,
$48,000.
Each director is required to hold at least 5,000 shares of Quaker's common
stock. Until a director accumulates 5,000 shares, 75% of the annual Board
retainer is paid in shares of Quaker's common stock.
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Board Committees and Meeting Attendance
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Our Board of Directors has four committees. They are the Executive, Audit,
Compensation/Management Development, and Nominating Committees. The Board of
Directors has adopted a charter for the Audit Committee, a copy of which is
included as Appendix B to this proxy statement. Each committee reports it
actions to the full Board at the Board's next regular meeting. A description of
the duties of each committee follows the table below.
Committee Membership and Meetings Held in 2001
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Compensation/
Management
Name Executive Audit* Development Nominating
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Joseph B. Anderson, Jr. X
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Patricia C. Barron X X
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Peter A. Benoliel X** X
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Donald R. Caldwell X X
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Robert E. Chappell X X
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William R. Cook X
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Edwin J. Delattre X**
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Robert P. Hauptfuhrer X X** X
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Ronald J. Naples X X
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Robert H. Rock X X**
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Number of Meetings
in 2002*** 1 3 4 1
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X Member
* Each member of the Audit Committee is "independent" as the term
"independence" is defined in Section 303.01(B)(2)(a) and (3) of the
New York Stock Exchange listing standards.
** Chairperson
*** The Board of Directors held 6 meetings in 2002. Each director
attended, in person or by teleconference, at least 75% of the
meetings of the Board and its committees of which he or she was a
member held in 2001.
8
The Executive Committee:
. Acts for the Board in situations requiring prompt action when a meeting of
the full Board is not feasible.
. Makes recommendations to the Board about external corporate development
programs.
. Establishes guidelines regarding our capital structure and deployment of
our capital resources.
The Audit Committee:
. Examines the activities of our independent accountants and internal audit
function to determine whether these activities are reasonably designed to
assure the soundness of accounting and financial procedures and compliance
with applicable law.
. Assists the Board in fulfilling its responsibility to oversee management's
conduct of our financial reporting process.
. Provides a channel of communication between the Board and our independent
accountants.
. Makes recommendations to the Board as to the selection of our independent
accountants.
. Approves the scope of our independent accountant's audit, the
specification of any non-audit services our independent accountants
provide to us and the fees we pay our independent accountants.
The Compensation/Management Development Committee:
. Reviews on a periodic basis, and makes recommendations regarding, the
compensation of our officers.
. Reviews on a periodic basis compensation levels throughout Quaker.
. Reviews the performance of officers and management development and
succession.
. Administers Quaker's Global Annual Incentive Plan and Long-Term
Performance Incentive Plan.
The Nominating Committee:
. Evaluates the depth and range of relevant experience of the Board's
members and the experience required to provide optimal governance of
Quaker and growth in shareholder value.
. Evaluates and presents to the Board for its consideration candidates to
fill positions on the Board.
. Considers individuals recommended by shareholders. Any shareholder who
wishes to recommend to the committee for its consideration a prospective
nominee for election to the Board may write to D. Jeffry Benoliel, Vice
President, Secretary and General Counsel, Quaker Chemical Corporation, Elm
and Lee Streets, Conshohocken, Pennsylvania 19428. Any request for
consideration at next year's annual meeting must be submitted no later
than December 3, 2002 and contain a statement of the proposed candidate's
business experience, business affiliations, and a confirmation of his or
her willingness to be a nominee.
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Item 2--Ratification of Selection of Independent Accountants
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The Board of Directors has selected PricewaterhouseCoopers LLP as our
independent accountants for the year ending December 31, 2002. There is no
requirement that the Board's selection of PricewaterhouseCoopers LLP be
submitted to our shareholders for ratification or approval. The Board, however,
believes that Quaker's shareholders should be given an opportunity to express
their views on the selection. While the Board is not bound by a vote against
ratifying PricewaterhouseCoopers LLP, the Board may take a vote against
PricewaterhouseCoopers LLP into consideration in future years when selecting
our independent accountants. PricewaterhouseCoopers LLP, an international firm
of certified public accountants, has audited our financial statements since
1968.
9
We anticipate that representatives of PricewaterhouseCoopers LLP will be
present at the meeting and, if present, we will give them the opportunity to
make a statement if they desire to do so. We also anticipate that the
representatives will be available to respond to appropriate questions from
shareholders.
Audit Fees
Audit fees billed to us by PricewaterhouseCoopers LLP for services
rendered during the year ended December 31, 2001 for the audit of our annual
financial statements on Form 10-K and the review of the financial statements
included in our quarterly reports on Form 10-Q totaled $443,000.
Financial Information Systems Design and Implementation Fees
We did not engage PricewaterhouseCoopers LLP to provide advice regarding
financial information systems design and implementation during the year ended
December 31, 2001.
All Other Fees
Fees billed to us by PricewaterhouseCoopers LLP for services rendered
during the year ended December 31, 2001 for all non-audit services, which
included benefit plan audits, due diligence assistance related to acquisitions,
audit of intellectual asset management policies, tax related services, and
process improvement studies, totaled $138,000. The Audit Committee of the Board
of Directors has considered whether the provision of these services by
PricewaterhouseCoopers LLP is compatible with maintaining that firm's
independence.
The Board of Directors recommends that you vote "FOR" ratification of the
selection of PricewaterhouseCoopers LLP as our independent auditors for the
year ending December 31, 2002.
10
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Executive Compensation
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Summary Compensation Table
This table shows, for each of our last three fiscal years, the cash and
other compensation paid or accrued to our executive officers who are named in
the table. In this proxy statement, we sometimes refer to this group of
individuals as our "Named Executive Officers."
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Long-Term Compensation
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Annual Compensation (1) Awards Payouts
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(a) (b) (c) (d) (e) (f) (g) (h) (i)
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Other Restricted Securities
Annual Stock Underlying All Other
Name and Compensation Awards Options/SARs LTIP Compensation
Principal Position Year Salary ($) Bonus ($) ($) ($)(2) (3)(#) Payouts($) ($)(4)
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Ronald J. Naples 2001 495,827 306,000(5) 0 1,721,900(6) 80,000 241,290(7) 4,569
Chairman of the 2000 480,000 349,440 0 128,054 40,700 554,704 7,514
Board and Chief 1999 425,000 340,000 0 114,750 35,000 0 14,400
Executive Officer
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Joseph W. Bauer 2001 302,582 40,260 0 61,238 27,000 149,468(7) 4,755
President and 2000 273,190 150,696 0 38,269 14,400 244,069 7,514
Chief Operating 1999 260,428 138,000 0 37,294 17,500 0 54,044
Officer
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Michael F. Barry 2001 214,333 23,760 0 28,400 13,000 86,797(7) 5,019
Vice President and 2000 212,500 94,640 0 25,022 8,500 150,000 5,714
Chief Financial 1999 190,000 95,000 0 24,384 11,500 0 1,425
Officer
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Ian F. Clark 2001 230,000 27,830 0 28,400 28,000 59,283(7) 4,612
Vice President and 2000 202,719 106,531 0 25,022 8,500 48,815 6,787
Global Industry 1999 155,125 97,500 0 22,950 10,000 0 42,000
Leader--
Metalworking/
CMS
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Daniel S. Ma 2001 183,413(8) 20,191 110,805(9) 15,975 4,800 81,621(7) 0
Vice President and 2000 176,094(8) 78,593 118,243(9) 13,247 4,800 221,881 0
Managing 1999 171,038(8) 84,895 112,550(9) 12,909 10,000 0 0
Director--Asia/
Pacific
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(1) Certain of our Named Executive Officers received personal benefits not
reflected in their salary, bonus or other annual compensation amounts
(Columns (c), (d) and (e)). The dollar value of these personal benefits
received by each of the Named Executive Officers did not, in any of our
last three fiscal years, exceed $50,000 or 10% of the Named Executive
Officer's total of annual salary and bonus for that fiscal year.
(2) Messrs. Naples, Bauer, Barry, Clark and Ma each were granted target
stock awards of 10,000, 3,450, 1,600, 1,600, and 900 shares,
respectively, in 2001; 8,700, 2,600, 1,700, 1,700, and 900 shares
respectively, in 2000; and 8,000, 2,600, 1,700, 1,600, and 900 shares,
respectively, in 1999. Payment of each of the awards is contingent upon
meeting the same performance targets set for the performance incentive
units for the 1999-2001, 2000-2002 and 2001-2003 performance periods
(see Note 2 to the Long-Term Incentive Plan Award table on page 14). The
number of shares each of the Named Executive Officers receives with
respect to each target award is determined based upon performance and
ranges from 0% to 200% of the target award. At target, the CEO and other
Named Executive Officers will receive stock in the respective amounts
stated above. The restricted stock awards (Column (f)) reflect the value
of the target stock awards at target based on $17.75 per share, $14.7188
per share, and $14.3438 per share, the average of the lowest and highest
sale price for Quaker common stock on the New York Stock Exchange on
January 23, 2001, January 18, 2000 and March 17, 1999, the respective
dates the awards were granted.
11
(3) Options to purchase shares of Quaker common stock. We have not granted
any stock appreciation rights ("SARs").
(4) The amount listed for 2001 for each Named Executive Officer represents a
matching contribution made by Quaker pursuant to its Retirement Savings
Plan. Not included is any discount on any Quaker common stock purchased
by officers pursuant to Quaker's Employee Stock Purchase Plan.
(5) Includes the fair market value (based on the last reported sale price
for the Common Stock on the New York Stock Exchange on December 31, 2001
of $20.60 per share) of 10,000 shares of restricted Common Stock
($206,000) which Mr. Naples was eligible to receive under the Company's
2001 Global Annual Incentive Plan, upon achievement of a pre-established
target level of earnings per share for 2001.
(6) Mr. Naples was granted an award of 100,000 shares of restricted stock
pursuant to the 2001 Global Annual Incentive Plan, subject to approval
of the plan by Quaker's shareholders, which was obtained at the 2001
annual meeting. This restricted stock award was issued to Mr. Naples on
April 12, 2001 and he is receiving dividends on the shares awarded. Of
the awarded shares, 10,000 vested upon the achievement of a target level
of earnings per share for 2001, and the value of these shares is
included in the Summary Compensation Table under Column (d). The balance
of the award will vest in three separate installments of 20,000, 35,000,
and 35,000 shares on January 23, 2003, 2004, and 2005,
respectively, subject to Mr. Naples' continued employment with the
Company. Included in Column (f) is the fair market value of 90,000
shares relative to this grant based on the last reported sale price for
the Common Stock on the New York Stock Exchange on March 21, 2001 of
$17.16 per share. On December 31, 2001, the fair market value of this
restricted stock holding was $1,854,000 (based on the last reported sale
price for the Common Stock on the New York Stock Exchange of $20.60).
(7) Includes the fair market value (based on the last reported sale price
for the Common Stock on the New York Stock Exchange on December 31, 2001
of $20.60) of the stock award earned by Messrs. Naples, Bauer, Barry,
Clark and Ma of 8,400, 2,730, 1,785, 1,680, and 945 shares, respectively.
(8) Mr. Ma's compensation was paid in Hong Kong dollars. His salary and
bonus for each year has been translated into U.S. dollars using the
applicable exchange rates for the conversion of currencies into U.S.
dollars on December 31 of the year for which the information is reported.
(9) Represents housing benefits, vehicle expenses, and other benefits paid
to Mr. Ma in connection with his assignment for the Company in Hong Kong.
Option Grants in Last Fiscal Year
This table shows the number, value and expiration dates of the stock
options we granted to our Named Executive Officers in 2001. We did not grant
any SARs in 2001.
--------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term(4)
- ------------------------------------------------------------------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expiration
Name Granted(1) in Fiscal Year ($/Sh)(2) Date(3) 5%($) 10%($)
- ------------------------------------------------------------------------------------
Ronald J. Naples 80,000 37.3 17.75 1/23/08 578,083 1,347,178
- ------------------------------------------------------------------------------------
Joseph W. Bauer 27,000 12.6 17.75 1/23/08 195,103 454,678
- ------------------------------------------------------------------------------------
Michael F. Barry 13,000 6.1 17.75 1/23/08 93,938 218,916
- ------------------------------------------------------------------------------------
Ian F. Clark 15,000 7.0 18.75 1/02/08 114,497 266,827
13,000 6.8 17.75 1/23/08 93,938 218,916
- ------------------------------------------------------------------------------------
Daniel S. Ma 4,800 2.2 17.75 1/23/08 34,685 80,831
- ------------------------------------------------------------------------------------
12
(1) All of the options granted to the Named Executive Officers during 2001
are non-qualified stock options. Each of the options granted to Messrs.
Naples, Bauer, Barry and Ma, and 13,000 of the options granted to Mr.
Clark, became exercisable on January 23, 2002 as to 50% of the shares
covered thereby, becomes exercisable as to an additional 25% of such
shares on January 23, 2003, and becomes exercisable as to the remaining
25% on January 23, 2004. The other 15,000 options granted to Mr. Clark
become exercisable as to 5,000 shares on January 1, 2003, become
exercisable as to 5,000 shares on January 1, 2004, and become
exercisable as to 5,000 shares on January 1, 2005.
(2) The per share exercise price of each option is the fair market value of
a share of Quaker common stock on the date the option was granted.
(3) The options may terminate prior to their stated expiration date in
certain instances relating to termination of the Named Executive
Officer's employment.
(4) These amounts represent assumed rates of appreciation and are not
intended to forecast future appreciation in the price of Quaker's common
stock. Actual gains, if any, on stock option exercises are dependent on
the future performance of Quaker's common stock. There can be no
assurance that the amounts reflected in these columns will be achieved
or, if achieved, that they will exist at the time of any option exercise.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
This table shows the number and value of stock options exercised during
2001, and the value of unexercised options as of the end of 2001, for each of
our Named Executive Officers. No stock appreciation rights were exercised
during 2001 or held as of December 31, 2001.
- ---------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year End (#) Fiscal Year End ($)(1)
Acquired On Value ---------------------------------------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------
Ronald J. Naples 0 0 371,600 109,100 1,763,583 402,424
- --------------------------------------------------------------------------------------------------
Joseph W. Bauer 0 0 50,325 38,575 179,957 127,388
- --------------------------------------------------------------------------------------------------
Michael F. Barry 0 0 24,875 23,125 119,905 90,269
- --------------------------------------------------------------------------------------------------
Ian F. Clark 0 0 11,750 34,750 74,026 106,139
- --------------------------------------------------------------------------------------------------
Daniel S. Ma 0 0 49,900 9,700 200,911 43,435
- --------------------------------------------------------------------------------------------------
(1) Represents, with respect to each share, the last sale price for Quaker's
common stock on the New York Stock Exchange on December 31, 2001, less
the exercise price payable for the share. An option is "in-the-money"
when the fair market value of the shares underlying the option exceeds
the exercise or base price.
13
Long-Term Incentive Plan Awards in Last Fiscal Year
This table shows the number of performance incentive units awarded to our
Named Executive Officers in 2001 as well as information regarding performance
periods and estimated future payouts.
- ----------------------------------------------------------------------------------
Number of Estimated Future Payouts Under
Shares, Non-Stock Price-Based Plan
Units or Performance or -------------------------------
Other Other Period Until Threshold Target Maximum
Name Rights(#)(1) Maturation or Payout ($)(2) ($)(2) ($)(2)
- ---------------------------------------------------------------------------------
Ronald J. Naples 180,000 2001 through 2003 9,000 180,000 360,000
- ---------------------------------------------------------------------------------
Joseph W. Bauer 62,100 2001 through 2003 3,105 62,100 124,200
- ---------------------------------------------------------------------------------
Michael F. Barry 30,000 2001 through 2003 1,500 30,000 60,000
- ---------------------------------------------------------------------------------
Ian F. Clark 30,000 2001 through 2003 1,500 30,000 60,000
- ---------------------------------------------------------------------------------
Daniel S. Ma 14,000 2001 through 2003 700 14,000 28,000
- ---------------------------------------------------------------------------------
(1) Performance incentive units. Stock awards were issued in tandem with the
performance incentive units, and payment of the stock awards is
contingent upon meeting the same performance targets established for the
performance incentive units. (See Note 2 to the Summary Compensation
Table.)
(2) The value on maturation of a performance incentive unit is determined by
performance over a time period as plotted on a grid defined by two axes;
one axis sets forth average return on assets, and one axis sets forth
average earnings per share for the period January 1, 2001 through
December 31, 2003. Each performance incentive unit has a stated value of
$1.00 and the 2001 performance incentive unit grid results in a zero
payout for performance of less than 11.5% average pre-tax return on
assets or an average earnings per share of less than $2.00 over the
performance period. A payout of $1.00 per unit will be made if
performance reaches the target, and a payout of $2.00 per unit will be
made if performance reaches the maximum of the measurement scale.
Employment Agreements
Ronald J. Naples
We employ Mr. Naples pursuant to a five-year employment agreement with a
current expiration date of December 31, 2003. After December 31, 2003, the
employment agreement automatically renews for one year renewal terms unless
Quaker or Mr. Naples gives timely notice of non-renewal. Our Board's
Compensation/Management Development Committee reviews Mr. Naples' annual base
salary in the beginning of each year. His base salary for 2002 is $500,000. Mr.
Naples is eligible to participate in our Global Annual Incentive Plan and
Long-Term Performance Incentive Plan.
Mr. Naples' Employment Agreement provides that upon the termination of his
employment for reasons other than his death or disability or by us for "cause"
or by Mr. Naples for other than "good reason" (each as defined in the
Employment Agreement), we will pay Mr. Naples a termination benefit of three
times the sum of his base salary and annual bonus depending upon when such
termination occurs. Further, if Mr. Naples resigns for any reason between 9 and
18 months following a Significant Transaction, (as defined in the Employment
Agreement), we will pay Mr. Naples a termination benefit of three times the sum
of his base salary and annual bonus. In addition, subject to certain
conditions, if Mr. Naples' employment is terminated, his right to exercise his
stock options may be accelerated.
Under Mr. Naples' prior employment agreement with us, we made loans to him
in the aggregate principal amount of $828,570 to cover withholding and
additional taxes on stock awards previously earned in 1995, 1997, and 1998.
Each of these loans has either a 9 or 10-year term and bears interest ranging
from 5.28% to 6.4%, depending on the date the loan was made. The aggregate
principal balance owed by Mr. Naples as of December 31, 2001 under these loans
was $828,570, exclusive of accrued interest in the amount of $46,457 which was
paid after December 31, 2001.
14
Other Executive Officers
Each of our other executive officers is employed pursuant to an employment
agreement which provides for compensation and benefits. Salary is adjusted
annually by the Compensation/Management Development Committee. Each officer
participates in our Global Annual Incentive Plan and Long-Term Performance
Incentive Plan at levels and subject to conditions determined by the
Compensation/Management Development Committee. Each employment agreement is for
a term of one year and is renewable automatically for successive one-year terms
unless either the executive officer or Quaker gives notice of termination at
least 90 days prior to the expiration of the then current term.
In addition to the terms common to their employment agreements explained
above, the employment agreements of Messrs. Bauer, Barry, Clark, and Ma have
the following respective terms:
. Mr. Bauer
. is entitled to 24 months of salary and bonus if he is terminated
other than for "cause" (as defined in his employment agreement)
within three years after a change in control;
. is entitled to 12 months of salary if he is terminated by Quaker
for any reason other than "cause" (as defined in his employment
agreement) unless the termination occurs within three years after a
change in control.
. Messrs. Barry and Clark
. are each entitled to 18 months of salary and bonus if terminated
other than for "cause" (as defined in their respective employment
agreements) within three years after a change in control;
. are each entitled to 12 months of salary if terminated for any
reason other than "cause" (as defined in their respective
employment agreements) unless the termination occurs within three
years after a change in control.
. Mr. Ma
. is entitled to 18 months of salary and bonus if he is terminated
within three years after a change in control other than for "cause"
(as defined in his employment agreement).
Pension and Death Benefits
Nearly all of Quaker's U.S. employees are covered by a noncontributory
qualified defined benefit retirement plan. We cannot readily calculate the
required contributions, payment or accrual for any individual employee covered
by this plan. For the period through December 31, 2000, the annual pension
benefit was determined based on a past service formula for service up to
December 1, 1996 and a future service formula for service beginning December 1,
1996, as follows:
Past Service Formula--for services up to December 1, 1996:
1.1% of the employee's Highest Average Earnings*
plus
.5% of the employee's Highest Average Earnings over his or her
Covered Compensation**
all multiplied by
the employee's years of service up to December 1, 1996.
Future Service Formula--for services after December 1, 1996:
Until past and future service totals 35 years:
1.15% of the employee's annual pay
plus
.6% of the employee's annual pay over his or her Covered Compensation.
15
For service after December 1, 1996 beyond 35 years:
1.3% of the employee's annual pay.
* Highest Average Earnings means the average of the employee's
three highest consecutive years (before December 1, 1996) of pay,
including overtime, shift differential, bonuses and commissions.
** Covered Compensation, as defined by the plan, depends on the
employee's birth date and is determined from an IRS table which
is updated each year.
As of January 1, 2001, a new formula was adopted. It is an accrual-based
formula providing for annual credits of approximately 3% to 7% of an employee's
salary depending on age and service, with interest on the balance accruing
based on the average rate of interest on 30-year treasury bonds. The pension
benefit is now calculated based on the benefit accrued under the old formula as
of December 31, 2000 and then under the new formulae commencing January 1, 2001.
Listed below for each Named Executive Officer is the estimated annual
pension benefit payable by Quaker and the years of credited service under the
plan. The estimate of the annual pension benefit for each Named Executive
Officer represents the accrued benefit as of November 30, 2001 plus an estimate
of the additional benefit that will accrue from December 1, 2001 to age 65,
based upon W-2 or other information.
Estimated Annual Pension Benefit
Years of Credited
Estimated Annual Service as of
Name Pension Benefit 12/31/01
-----------------------------------------------------------------------------
Ronald J. Naples $19,800 5
-----------------------------------------------------------------------------
Joseph W. Bauer 13,100 3
-----------------------------------------------------------------------------
Michael F. Barry 42,700 2
-----------------------------------------------------------------------------
Ian F. Clark 14,200 2
-----------------------------------------------------------------------------
Daniel S. Ma 21,800 8
We also provide supplemental retirement income to some of our executive
officers under our Supplemental Retirement Income Program. Executive officers
elected to their position by the Board of Directors are eligible to receive
benefits under the plan. Generally, an eligible officer who, as of age 65, has
completed at least 30 years of employment with Quaker and/or its affiliates
will qualify for the maximum benefit payable under the plan. An officer
receiving the maximum benefit payable would receive annually from the date of
the executive's retirement until death, payments necessary to maintain the
executive officer's "net post-retirement income" at 80% of his "net
pre-retirement income," each as defined by the plan. For an officer who
otherwise qualified to participate in the program but, as of age 65, has
completed less than 30 years of employment (15 years in the case of
Mr. Naples), the maximum benefit is reduced by 2% (2.667% in the case of Mr.
Naples) for each full year of employment less than 30 (15 in the case of Mr.
Naples). Under certain circumstances, Mr. Naples' benefit commencement date may
be reduced to age 60. The benefits payable under the supplemental income
program depend on various post-retirement factors Quaker cannot presently
determine (e.g., defined benefit pension calculation, number of years employed
less than 30 (15 in the case of Mr. Naples), social security benefit at age 65,
Federal, state, and local income taxes on pension and social security
benefits). Therefore, it is impossible to determine in advance which officers
might be eligible to receive payments under the program or the amount payable
to any participant. Payments were made pursuant to the program during the year
ended December 31, 2001 in the aggregate amount of $284,412.
16
Listed below for each Named Executive Officer is the estimated annual
payment to be made under the supplemental income program assuming that (a) he
retires at age 65; (b) his compensation (salary plus incentive) remains at its
current level; (c) the estimated pension benefit is as set forth above; (d)
social security benefits remain unchanged and at the current level; and (e)
there is no change to the current Federal, state, and local income tax rates
applicable to pension and social security benefits.
Estimated Annual Supplemental Income Payment
Estimated Payment
Name Under the Program
------------------------------------------
Ronald J. Naples $377,200
------------------------------------------
Joseph W. Bauer 102,300
------------------------------------------
Michael F. Barry 77,900
------------------------------------------
Ian F. Clark 82,900
------------------------------------------
Daniel S. Ma 62,500
Some of our executive officers, including Messrs. Naples and Bauer, are
entitled to a death benefit if employed by us at the time of death. The
benefit, equal to 1 1/3 times the deceased officer's then current annual salary
plus $30,000, is payable in installments at various times over a 40-month
period after death. Quaker does not currently provide for this contingent
future liability.
- --------------------------------------------------------------------------------
Report of the Compensation/Management Development Committee on Executive
Compensation
- --------------------------------------------------------------------------------
Introduction
The Compensation/Management Development Committee (the "Committee") of the
Board is comprised of four independent non-employee directors. The Committee is
responsible for establishing and maintaining Quaker's executive compensation
and management development programs which have been designed to attract and
retain performance-oriented key executives who are committed to the long-term
success of Quaker and the enhancement of shareholder value.
The purpose of Quaker's executive compensation program is to provide an
opportunity for highly competitive levels of total compensation if merited by
performance over time; to create a strong incentive to perform over a
multiple-year period; to develop a tangible alignment between the interests of
executives and those of shareholders; and to attract and retain talented
executives. Accordingly, a considerable portion of an executive officer's total
compensation is incentive-based and tied directly to the achievement of
pre-established financial goals that relate directly to the creation of
shareholder value. By relating executive compensation to the results achieved,
compensation is linked to the interests of all shareholders. The program has
three components: a base salary; an annual incentive cash payment; and
long-term compensation comprised of options, common stock, and cash payments.
Competitive Reward Systems
Quaker positions its executive officer base pay levels at the median of a
broad cross section of both chemical and general industry companies, using a
database available through a human resources consulting company. With respect
to our executive officers who reside in other countries, the base pay is also
evaluated against data from the regions where those officers are located.
Quaker targets total compensation for executives so that in times of excellent
performance it can be in excess of the 75/th/ percentile of the comparative
group. Because base salaries are targeted at the median, the compensation focus
for executives is on the incentive component.
17
Compensation Components
Base salary is reviewed annually and increases are based primarily on
performance against pre-established goals with major emphasis on the attainment
of financial objectives and the extent of the individual's penetration of his
or her salary range. Increases in salary in 2001 were determined by considering
market data, responsibilities of the position, job performance, and Quaker's
overall financial results. In the case of some foreign-based executive
officers, salary increases may be mandated by the laws in the particular
country or region even when similar increases are not granted to officers
residing in the United States.
The annual incentive compensation component is paid pursuant to the Quaker
Global Annual Incentive Plan (the "Annual Incentive Plan") usually in the form
of cash and, in certain limited circumstances, in stock. The incentive is
designed to be a short-term award for specific results and performance in a
given year and to be competitive within the marketplace. In 2001, payment of
the major portion of the incentive opportunity was dependent on achieving a
previously established consolidated corporate Profit-Before-Tax ("PBT") target.
In the case of the business unit heads, a portion of their incentive award was
based on attainment of previously established global business unit
responsibility margin targets and/or objectives.
At the beginning of the year, the Chief Executive Officer ("CEO")
recommends bonus gates at three levels of consolidated corporate PBT
performance and business unit goals. As to corporate PBT, the bonus gates are
as follows: (1) Threshold--the PBT level at which an entry bonus is earned;
(2) Mid--the PBT level at which a mid-level bonus is earned; and (3)
Maximum--the PBT level at which the maximum bonus is earned. The business unit
goals vary from year to year. The maximum financial bonus amount is determined
by multiplying the base salary of the applicable position by a previously
established incentive award percentage. The greater the weight of the position
and resultant impact on profitability of Quaker, the greater the percentage. In
the case of the CEO, the maximum financial award that might be paid is 80% of
his salary. The applicable maximum percentage for our other executive officers
is lower and can range from 45% to 60% of base salary. Depending upon the
performance level achieved, the bonus amount can be as high as the Maximum, or
if performance is below the Threshold level, no bonus will be paid.
In 2001 the PBT level was marginally below the Threshold level, and,
accordingly, neither the CEO nor any of the other executive officers earned an
annual cash bonus under the Annual Incentive Plan. However, the Board, based on
this Committee's recommendation, approved a discretionary cash bonus for 2001
performance at less than entry level for all participants in the Annual
Incentive Plan. This decision was made for the following reasons: (i) Quaker's
financial results for 2001 as measured by return on capital and total
shareholder returns were among the highest when compared to other specialty
chemical companies; (ii) the extraordinary events of September 11/th/ had an
incremental adverse effect on Quaker's fourth quarter results (pre-tax profits
excluding special items for the nine-month period ended September 30, if
annualized, would have been at the Threshold level); and (iii) retention of key
executives and other associates.
The final component is compensation realized from Quaker's Long-Term
Performance Incentive Plan ("LTIP") comprised of grants of incentive stock
options, non-qualified options, Quaker's common stock, and cash issued under
the LTIP. Awards under the LTIP play an important role in Quaker's executive
compensation structure thereby making compensation more dependent upon the
long-term performance of Quaker. With stock options, once exercisable, Quaker's
executive officers have the potential to benefit only if the stock price
exceeds the fair market value of Quaker's common stock at the date of the
grant. The payment of the common stock and performance incentive cash awards is
dependent upon meeting certain predetermined performance targets which, for the
2001-2003 performance period, relate to average earnings per share and average
pre-tax return on assets. The purpose of issuing stock options, stock, and
performance incentive cash awards is to motivate executive officers to take
action to optimize Quaker's long-term performance. The amounts of the awards
are based on the relative position of each executive officer within the
organizational structure of Quaker, past practice, and performance factors
independent of the terms and amounts of awards previously granted.
18
Quaker's practice is to grant stock options combined with Quaker's common
stock and performance incentive cash awards to executive officers every year
for rolling three-year performance periods. On January 23, 2001, the Committee
granted options, stock awards, and performance incentive cash awards for the
2001-2003 period to the CEO and all of the other Named Executive Officers.
Consistent with this philosophy, Quaker encourages and in some cases
requires its executives to hold Quaker stock. In 1999, the Committee
established stock ownership guidelines for officers and key employees of
Quaker. The guidelines for stock ownership range from stock worth 25% to 300%
of base salary depending on job level. Penalties may be applied to those who do
not meet the guidelines within four years of becoming covered by the guidelines.
Compensation of Chief Executive Officer
The compensation paid to Quaker's CEO, Ronald J. Naples, for his services
during the year 2001, consisted of a base salary, an annual bonus, and a
long-term incentive award for the 1999-2001 performance period. During the year
2001, the Committee also awarded stock options, performance incentive units,
and a restricted stock award to Mr. Naples that may be earned over the
2001-2003 performance period and restricted stock under the Annual Incentive
Plan. The Committee believes that compensation earned by or awarded to Mr.
Naples in the year 2001 was reasonable and appropriate. In determining Mr.
Naples' compensation for 2001, (i) the Committee first compared Mr. Naples'
total compensation and the individual components thereof (base salary, annual
bonus, and long-term incentives) against the compensation (including components
thereof) paid to other CEOs within industries against which all Quaker
positions are compared; (ii) the Committee then set Mr. Naples' base salary,
based on performance in the prior year, and then set incentive opportunities to
assure that his total compensation ranged between the 50/th/ percentile and, in
times of excellent performance, in excess of the 75th percentile of the
comparative group; and (iii) amounts paid in annual and long-term incentive
compensation were made dependent on meeting the same performance criteria
applicable, as appropriate, to all other bonus participants.
Mr. Naples' base salary for 2001 was fixed at $500,000 in January 2001.
For the year 2001, the Committee established a maximum annual bonus amount for
Mr. Naples equal to 80% of his base salary for 2001, based on the Committee's
subjective evaluation of Mr. Naples' position within Quaker and his potential
impact on the profitability of Quaker. In 2001, the PBT level was marginally
below the Threshold level and, therefore, Mr. Naples did not earn an annual
cash bonus for 2001 under the Annual Incentive Plan. Mr. Naples, however, like
other Quaker executives and associates, did receive a discretionary cash bonus
calculated at less than an entry level bonus for the same reasons discussed
above.
In March 2001, the Committee approved a grant to Mr. Naples of 100,000
restricted shares of Quaker's common stock under the Annual Incentive Plan. The
shares were issued to Mr. Naples in Apri1 2001. The award was made for the
following reasons: to bring Mr. Naples' total compensation closer to a
competitive level consistent with the applicable comparable group; in
recognition of Quaker's excellent performance over the prior five years; and as
a further inducement for Mr. Naples to continue as CEO of Quaker. When the
award was initially granted, 40,000 shares were to vest following the
Committee's certification of the achievement of a 2001 earnings per share
target established as of the date of grant with the balance to vest in
installments of 20,000 shares on January 23, 2003, 2004, and 2005, subject to
Mr. Naples continued employment with Quaker on such dates. During the fourth
quarter of this past year, Mr. Naples made a request in response to the
difficult financial conditions being experienced by Quaker that the Committee
restructure the vesting schedule to reduce the number of shares that would
otherwise vest in 2002 (assuming the previously established earnings per share
target was met) from 40,000 shares to 10,000 shares with the balance to vest on
January 23, 2003, 2004, and 2005, subject to Mr. Naples continued employment
with Quaker on such dates in installments of 20,000, 35,000, and 35,000 shares,
respectively. The first 10,000 shares vested as of January 23, 2002, the date
the Committee certified that the pre-established earnings per share target was
met.
19
In 2001, Mr. Naples also received a cash payment in the amount of $68,250
and 8,400 shares of Quaker common stock (having a fair market value as of the
end of the year of $173,040) representing his award for the 1999-2001
performance period under the LTIP in effect in 1999 when the performance goals
applicable to the 1999-2001 performance period were established. The amount of
this payment was determined based on Quaker's performance over the three-year
performance period compared with performance goals established at the beginning
of the performance period.
It is Quaker's current practice to grant stock options combined with
restricted stock awards and performance incentive cash awards to its
executives, including the CEO, every year for a rolling three-year performance
period. The purpose of issuing stock options, restricted stock awards, and
performance incentive cash awards is to motivate long-term contributions to
Quaker that will improve the long-term total return to shareholders. On January
23, 2001, Mr. Naples was granted for the 2001-2003 performance period under
Quaker's 1999 LTIP 80,000 non-qualified stock options, 10,000 shares of
restricted stock, and 180,000 performance units which will be payable in cash.
The options became exercisable as to 40,000 shares on January 23, 2002, and,
subject to Mr. Naples' continued employment with Quaker, become exercisable as
to 20,000 shares on January 23, 2003, and become exercisable as to the
remaining 20,000 shares on January 23, 2004. The potential benefit Mr. Naples
can realize from his stock options is dependent on whether the price of
Quaker's common stock when the options are exercised exceeds the option
exercise price of $17.75 per share, representing the fair market value of the
common stock on the date the options were awarded. The payment of common stock
and the performance incentive cash award is dependent upon Quaker's meeting
predetermined performance targets which, for the 2001-2003 performance period,
relate to average earnings per share and average pre-tax return on assets.
Deductibility of Compensation for Tax Purposes
Section 162(m) of the Internal Revenue Code (the "Code"), enacted in 1993,
generally imposes a $1,000,000 limit on the amount of compensation deductible
by Quaker in regard to compensation paid to its CEO and its other four most
highly compensated executive officers. Although the reported compensation of
Quaker's CEO for the year 2001 was in excess of $1,000,000, the $1,000,000
threshold for Section 162(m) purposes was not exceeded. Accordingly, all of the
compensation paid in 2001 to Quaker's CEO and the other four most highly
compensated executive officers is expected to be fully deductible by Quaker for
tax purposes. To the extent possible, the Committee intends to continue to
structure the compensation of Quaker's executives to permit the compensation
paid to these individuals to be allowed as a deduction for Federal income tax
purposes. But, the Committee may choose to provide compensation that is not
deductible in order to retain or to secure the services of key executives when
it determines that it is in Quaker's best interest to do so.
Compensation/Management Development Committee
Robert H. Rock, Chairman
Patricia C. Barron
Donald R. Caldwell
Robert E. Chappell
20
- --------------------------------------------------------------------------------
Compensation Committee Interlocks and Insider Participation
- --------------------------------------------------------------------------------
The individuals who served as members of the Compensation/Management
Development Committee during the year ended December 31, 2001 are Robert H.
Rock, Chairman, Patricia C. Barron, Donald R. Caldwell, and Robert E. Chappell.
No member of the Compensation/Management Development Committee is an officer or
employee, or former employee, of Quaker or any subsidiary of Quaker.
The Chief Executive Officer makes recommendations to the
Compensation/Management Development Committee concerning the compensation of
Quaker's senior officers other than the Chief Executive Officer. These
recommendations are acted upon by the Compensation/Management Development
Committee, which has the ultimate authority for determining the compensation of
all Quaker's officers.
- --------------------------------------------------------------------------------
Report of the Audit Committee
- --------------------------------------------------------------------------------
The Audit Committee of the Board oversees Quaker's financial reporting
process on behalf of the Board of Directors and acts pursuant to the Audit
Committee Charter, a copy of which is attached as Appendix B. Our Board has
appointed an Audit Committee of four members, each of whom qualifies as an
"independent" director under the current listing standards of the New York
Stock Exchange.
As stated in the Charter, the Audit Committee's job is one of oversight.
It is not the duty of the Audit Committee to prepare Quaker's financial
statements, plan or conduct audits or determine that Quaker's financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. Financial management (including the internal
auditing function) of Quaker is responsible for preparing the financial
statements and maintaining internal controls and the independent auditor is
responsible for the audit of the annual financial statements and rendering an
opinion as to whether those statements were prepared in conformity with
generally accepted accounting principles. In carrying out its oversight
responsibilities, the Audit Committee is not providing any expert or special
assurance as to Quaker's financial statements or any professional certification
as to the outside auditor's work.
The Audit Committee did review and discuss with management Quaker's
audited financial statements for the year ended December 31, 2001. The Audit
Committee has discussed with PricewaterhouseCoopers LLP, Quaker's independent
accountants, the matters required to be discussed by Statement of Auditing
Standards No. 61, Communication with Audit Committees, which includes, among
other items, matters related to the conduct of the audit of Quaker's financial
statements. The Audit Committee has also received written disclosures and the
letter from PricewaterhouseCoopers LLP required by Independence Board Standard
No. 1, which relates to the accountant's independence from Quaker and its
related entities, and has discussed with PricewaterhouseCoopers LLP their
independence from Quaker.
Based on the review and discussions referred to above, the Audit Committee
recommended to Quaker's Board of Directors that Quaker's audited financial
statements be included in Quaker's Annual Report on Form 10-K for the year
ended December 31, 2001.
Audit Committee
Robert P. Hauptfuhrer, Chairman
Joseph B. Anderson, Jr.
Donald R. Caldwell
William R. Cook
21
- --------------------------------------------------------------------------------
Comparative Stock Price Performance Graph
- --------------------------------------------------------------------------------
The following graph compares the cumulative total return (assuming
reinvestment of dividends) from December 31, 1996 to December 31, 2001 for (i)
Quaker's common stock, (ii) the S&P SmallCap 600 Stock Index (the "SmallCap
Index"), and (iii) the S&P Chemicals (Specialty) Index-SmallCap (the "Chemicals
Index"). The graph assumes the investment of $100 on December 31, 1996 in each
of Quaker's common stock, the stocks comprising the SmallCap Index, and the
stocks comprising the Chemicals Index.
[CHART]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
QUAKER SMALLCAP INDEX CHEMICALS INDEX
------- -------------- ---------------
Dec 96 $100.00 $100.00 $100.00
Dec 97 120.55 125.58 126.74
Dec 98 119.62 123.95 134.23
Dec 99 99.31 139.32 133.52
Dec 00 137.58 155.76 142.49
Dec 01 157.60 165.94 168.35
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-----------------------------------------------------
Quaker $100 $120.55 $119.62 $ 99.31 $137.58 $157.60
---------------------------------------------------------------------
SmallCap Index 100 125.58 123.95 139.32 155.76 165.94
---------------------------------------------------------------------
Chemicals Index 100 126.74 134.23 133.52 142.49 168.35
22
- --------------------------------------------------------------------------------
Stock Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------------------------
Certain Beneficial Owners
The following table shows how much of Quaker's common stock is
beneficially owned by each person known to us to be the beneficial owner of
more than 5% of Quaker's common stock. This information is as of March 8, 2002,
unless we have indicated otherwise. Each beneficial owner has sole voting and
dispositive power for the shares listed, unless we have indicated otherwise.
Approximate
Number of Shares Percent of Number
Name and Address Beneficially Owned Class (1) of Votes
------------------------------------------------------------------------------
Ronald J. Naples 675,774/(2)/ 7.0 1,752,948
Quaker Chemical Corporation
Elm & Lee Streets
Conshohocken, PA 19428
------------------------------------------------------------------------------
DePrince, Race & Zollo, Inc. 620,050/(3)/ 6.8 620,050/(4)/
201 South Orange Street
Suite 850
Orlando, FL 32801
------------------------------------------------------------------------------
Royce & Associates, Inc. 505,300/(5)/ 5.5 505,300/(4)/
1414 Avenue of the Americas
New York, NY 10019
(1) Based upon 9,164,385 shares outstanding, adjusted to reflect options
currently exercisable or exercisable within 60 days of the record date by
the named person.
(2) Includes (i) 430,525 shares subject to options that are currently
exercisable or will become exercisable within 60 days of the record date
and (ii) 2,186 shares held jointly by Mr. Naples and his wife who share
voting and dispositive power with respect thereto.
(3) As reported in the Schedule 13G/A dated February 7, 2002 filed by DePrince,
Race & Zollo, Inc. with the Securities and Exchange Commission.
(4) These shares, which are held in street name, are presumed under Article 5
of the Company's Articles of Incorporation to be entitled to one vote per
share.
(5) As reported in the Schedule 13G/A dated February 7, 2002 filed by Royce &
Associates, Inc. with the Securities and Exchange Commission.
23
Management
The following table shows how much of Quaker's common stock is
beneficially owned by each of our directors, the executive officers named in
the Summary Compensation Table on page 11, and by all of our directors and
executive officers as a group. The information in the table is as of March 8,
2002. Each director and executive officer has sole voting and dispositive power
over the common stock listed opposite his or her name, unless we have indicated
otherwise.
Aggregate Number Approximate
of Shares Percent of Number
Name Beneficially Owned Class (1) of Votes
- -------------------------------------------------------------------------------
Joseph B. Anderson, Jr. 5,000/(2)/ * 50,000
- -------------------------------------------------------------------------------
Patricia C. Barron 12,565 * 115,858
- -------------------------------------------------------------------------------
Peter A. Benoliel 419,784 4.6 4,197,840
- -------------------------------------------------------------------------------
Donald R. Caldwell 2,986 * 16,324
- -------------------------------------------------------------------------------
Robert E. Chappell 4,740 * 27,078
- -------------------------------------------------------------------------------
William R. Cook 6,988 * 6,988
- -------------------------------------------------------------------------------
Edwin J. Delattre 4,578/(2)/ * 23,406
- -------------------------------------------------------------------------------
Robert P. Hauptfuhrer 10,000 * 80,722
- -------------------------------------------------------------------------------
Ronald J. Naples 675,774/(2)(3)/ 7.0 1,752,948
- -------------------------------------------------------------------------------
Robert H. Rock 4,740 * 27,078
- -------------------------------------------------------------------------------
Joseph W. Bauer 79,575/(3)/ * 82,275
- -------------------------------------------------------------------------------
Michael F. Barry 42,193/(3)/ * 73,693
- -------------------------------------------------------------------------------
Ian F. Clark 25,707/(3)/ * 25,707
- -------------------------------------------------------------------------------
Daniel S. Ma 59,977/(3)/ * 69,184
- -------------------------------------------------------------------------------
All directors and officers as a
group (20 persons) 1,591,047/(3)/ 16.0 7,370,397/(4)/
* Less than 1%.
(1) Based upon 9,164,385 shares outstanding, adjusted to reflect options
currently exercisable or exercisable within 60 days of the record date by
the named person or the group, as applicable.
(2) Includes 500 shares in the case of Mr. Anderson; 4,578 shares in the case
of Dr. Delattre; and 2,186 shares in the case of Mr. Naples held jointly
with their spouses.
(3) Includes 430,525 shares in the case of Mr. Naples; 71,800 shares in the
case of Mr. Bauer; 36,375 shares in the case of Mr. Barry; 22,875 shares in
the case of Mr. Clark; 56,000 shares in the case of Mr. Ma; and 779,462
shares in the case of all directors and officers as a group subject to
options that are currently exercisable or exercisable within 60 days of the
record date.
(4) Represents 25.3% of all votes entitled to be cast at the meeting, based on
information available on March 8, 2002.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on (i) our review of reports submitted to us during and with
respect to the year ended December 31, 2001, filed with the Securities Exchange
Commission ("SEC") pursuant to Section 16(a) of the Securities Exchange Act of
1934 (the "1934 Act"), and (ii) written representations of Quaker's directors
and officers, Quaker believes that, with one exception, all reports required to
be filed under Section 16(a) of the 1934 Act with respect to transactions in
Quaker's common stock through December 31, 2001 were filed on a timely basis.
Mark A. Featherstone filed his initial statement on Form 3 (which disclosed one
grant of stock options) after the required filing date.
24
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
Availability of Form 10-K and Annual Report to Shareholders
Rules of the Securities and Exchange Commission require us to provide our
annual report to shareholders for fiscal 2001 to each shareholder who receives
this proxy statement. We provide a Summary Annual Report, as well as our Annual
Report on Form 10-K for the fiscal year ended December 31, 2001. We will also
provide copies of the same material to brokers, dealers, banks, voting
trustees, and their nominees for the benefit of their beneficial owners of
record. Additional copies of the Summary Annual Report, along with copies of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (not
including documents incorporated by reference), are available without charge to
shareholders upon written request to Quaker Chemical Corporation, Elm and Lee
Streets, Conshohocken, Pennsylvania 19428, Attention: Irene M. Kisleiko,
Assistant Secretary.
Shareholder Proposals
To be considered for inclusion in next year's proxy statement, a
shareholder proposal must be in writing and received by us no later than
December 3, 2002. If a shareholder proposal to be considered at next year's
meeting, but not included in the proxy statement, is not received by us on or
before February 16, 2003, the persons appointed as proxies may exercise their
discretionary voting authority with respect to the proposal. All proposals
should be submitted in writing to Quaker Chemical Corporation, Elm and Lee
Streets, Conshohocken, Pennsylvania 19428, Attention: General Counsel.
A form proxy is enclosed for your use. Please complete, date, sign, and
return the proxy at your earliest convenience in the enclosed envelope, which
requires no postage if mailed in the United States. A prompt return of your
proxy will be appreciated.
By Order of the Board of Directors
/s/ D. Jeffry Benoliel
D. Jeffry Benoliel
Vice President, Secretary
and General Counsel
Conshohocken, Pennsylvania
March 28, 2002
25
APPENDIX A
SHAREHOLDER VOTING ADMINISTRATIVE PROCEDURES
Voting Rights
At the Annual Meeting of Shareholders held May 6, 1987, shareholders
approved an amendment to the Articles of Incorporation, pursuant to which the
holders of the Company's $1.00 par value Common Stock on May 7, 1987 (the
"Effective Date") became entitled to 10 votes per share of Common Stock with
respect to such shares, and any shares of Common Stock acquired after the
Effective Date, subject to certain exceptions, shall only be entitled to 1 vote
per share until such shares have been owned beneficially for a period of at
least 36 consecutive calendar months, dating from the first day of the first
full calendar month on or after the date the holder acquires beneficial
ownership of such shares (the "Holding Period"). Each change in beneficial
ownership with respect to a particular share will begin a new "1 vote" Holding
Period for such share. A change in beneficial ownership will occur whenever any
change occurs in the person or group of persons having or sharing the voting
and/or investment power with respect to such shares within the meaning of Rule
13d-3 of the General Rules and Regulations under the Securities Exchange Act of
1934. Under the amendment, a share of Common Stock held of record on a record
date shall be presumed to be owned beneficially by the record holder and for
the period shown by the shareholder records of the Company. A share of Common
Stock held of record in "street" or "nominee" name by a broker, clearing
agency, voting trustee, bank, trust company, or other nominee shall be presumed
to have been held for a period of less than the required 36-month Holding
Period. The foregoing presumptions are rebuttable upon presentation to the
Company of satisfactory evidence to the contrary. Such evidence can include
trade confirmations and account statements indicating ownership through the
required Holding Period. Nevertheless, the Company, at its sole discretion,
will determine the adequacy of the evidence presented. The amendment also
provides that no change in beneficial ownership will be deemed to have occurred
solely as a result of any of the following:
(1) a transfer by any gift, devise, bequest, or otherwise through the laws of
inheritance or descent;
(2) a transfer by a trustee to a trust beneficiary under the terms of the trust;
(3) the appointment of a successor trustee, guardian, or custodian with respect
to a share; or
(4) a transfer of record or a transfer of a beneficial interest in a share
where the circumstances surrounding such transfer clearly demonstrate that
no material change in beneficial ownership has occurred.
Maintaining Records
The Company's registrar and transfer agent, American Stock Transfer &
Trust Company, maintains the Company's register of shareholders. A single
register is maintained, but individual holdings are coded to indicate
automatically the number of votes that each shareholder is entitled to cast.
Internal mechanisms automatically convert the voting rights by a 10-to-1 ratio
for those shareholders who have held their shares for the required Holding
Period. Additionally, the register can be adjusted manually, in order to
respond to shareholders whose shares were held in "street" or "nominee" name if
shares acquired were held by the same party for the required Holding Period.
Proxy Administration
As indicated above, record ownership proxy administration is relatively
simple. The transfer agent will mail proxy cards to all shareholders, and each
proxy card will reflect the number of votes that the shareholder is entitled to
cast, not the number of shares held. If shareholders have deposited shares with
brokers, clearing agencies, voting trusts, banks, and other nominees, such
shareholders will normally be entitled to one vote per share. If they can
provide evidence that they have held their shares for the Holding Period, they
can increase the number of votes that may be cast to 10 votes per share by
proper notification to the Company. Equally, if a shareholder believes that he
or she is entitled to 10 votes per share by virtue of falling within one of the
A-1
exceptions set forth above, that can be accomplished through proper
notification to the Company. Acceptable substantiation will in most cases be a
letter from the shareholder explaining the circumstances and stating why he or
she feels that the common shares held by such shareholder are entitled to 10
votes per share, either because the shares have been held for the required
Holding Period or because the shareholder falls within one of the exceptions
set forth above. The Company reserves the right to change what it deems to be
acceptable substantiation at any time if it appears from experience that the
present definition is inadequate or is being abused, and further reserves the
right at any time to require that a particular shareholder provide additional
evidence that one of the exceptions is applicable.
Where evidence is presented that is satisfactory, the shareholder records
will be manually adjusted as appropriate. The shareholder submitting the
evidence will be advised as to any action taken or not taken, which will be
posted by ordinary mail to the shareholder's registered address.
Special proxy cards are not used, and no special or unusual procedures are
required in order properly to execute and deliver the proxy card for tabulation
by the transfer agent.
Summary
The procedures set forth above have been reviewed with representatives of
various brokers and banks, as well as counsel to the Company. Those
representatives have made helpful and valuable suggestions, which have been
incorporated in the procedures.
The Company is confident that these procedures are efficient in addressing
the complications of multi-vote casting and tabulating, but the Company is
prepared to revise them if experience dictates the need for revision.
If a Shareholder has questions concerning the Shareholder Voting
Procedures or would like to present evidence of ownership through the required
36-month Holding Period, please contact Irene Kisleiko, the Company's Assistant
Secretary, at (610) 832-4119.
A-2
APPENDIX B
QUAKER CHEMICAL CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
Purpose
The primary purpose of the Audit Committee is to assist the Board of
Directors ("Board") of Quaker Chemical Corporation ("Corporation") in
fulfilling its responsibility to oversee Management's conduct of the
Corporation's financial reporting process and to provide a channel of
communication between the Board and the Corporation's outside auditor.
Composition and Operations
The Audit Committee shall be comprised of not less than three members of
the Board, who shall meet the independence and experience requirements of the
New York Stock Exchange. Accordingly, all of the members of the Audit Committee
will be directors who have no relationship to the Corporation that may
interfere with the exercise of their independence from Management and the
Corporation and who are financially literate or become financially literate
within a reasonable period of time after their appointment to the Audit
Committee. In addition, at least one member of the Audit Committee shall have
accounting or related financial management expertise.
The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board and shall serve until their
respective successors shall have been duly elected and qualified. Unless a
Chair is designated by the Board, the members of the Audit Committee may elect
a Chair by majority vote.
The Audit Committee shall meet at least three times annually or more
frequently as circumstances dictate. The Audit Committee may invite Management,
the outside auditor, and others to attend meetings.
The Audit Committee shall review and assess the adequacy of this Charter
on an annual basis and recommend proposed changes to the Board for approval.
Responsibilities and Duties
The Audit Committee's job is one of oversight, and it recognizes that the
Corporation's Management is responsible for preparing the Corporation's
financial statements and that the outside auditor is responsible for auditing
those financial statements. The Audit Committee recognizes that the
Corporation's financial management (including the internal auditing staff) and
the outside auditor have more time, knowledge, and detailed information on the
Corporation than do the Audit Committee members. Consequently, in carrying out
its oversight responsibilities, the Audit Committee is not providing any expert
or special assurance as to the Corporation's financial statements or any
professional certification as to the outside auditor's work.
The Audit Committee further recognizes that the outside auditor is
accountable to the Board and to the Audit Committee.
The following functions shall be the common recurring activities of the
Audit Committee in carrying out its oversight responsibilities. These functions
are set forth as a guide with the understanding that the Audit Committee may
diverge from this guide as appropriate given the circumstances and that the
Audit Committee may be directed from time to time by the Board to undertake
additional functions:
. The Audit Committee shall review and discuss with Management and the
outside auditor the audited financial statements to be included in the
Corporation's Annual Report on Form 10-K (or the Annual
B-1
Report to Shareholders if distributed prior to the filing of Form 10-K)
and review and consider with the outside auditor the matters required to
be discussed by Statement of Auditing Standards ("SAS") No. 61, as
amended.
. As a whole, or through the Audit Committee Chair, the Audit Committee
shall review and discuss with Management and the outside auditor the
Corporation's interim financial results to be included in the
Corporation's quarterly reports to be filed with the Securities and
Exchange Commission; this review will occur prior to the Corporation's
filing of the Form 10-Q.
. The Audit Committee shall:
. request from the outside auditor a formal written statement
delineating all relationships between the outside auditor and the
Corporation consistent with Independence Standards Board Standard No.
1;
. discuss with the outside auditor any such disclosed relationships and
their impact on the outside auditor's independence; and
. recommend that the Board take appropriate action in response to the
outside auditor's report to satisfy itself of the outside auditor's
independence.
. The Audit Committee, subject to any action that may be taken by the
Board, shall have the ultimate authority and responsibility to select
(or nominate for shareholder approval), evaluate, and, where
appropriate, replace the outside auditor.
. The Audit Committee shall report to the Board on the results of the
Audit Committee's activities. The Audit Committee shall annually prepare
a report to shareholders as required by the Securities and Exchange
Commission.
B-2
QUAKER CHEMICAL CORPORATION
Elm and Lee Streets, Conshohocken, PA 19428
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter A. Benoliel and Ronald J. Naples, and
each of them, proxies of the undersigned, to attend the Annual Meeting of
Shareholders of Quaker Chemical Corporation, a Pennsylvania corporation (the
"Company"), to be held at the Philadelphia Marriott West, West Conshohocken,
Pennsylvania, on May 8, 2002, at 10:00 A.M., or any adjournment thereof, and
with all powers the undersigned would possess if present, to vote:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE)
SEE REVERSE
SIDE
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
QUAKER CHEMICAL CORPORATION
May 8, 2002
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
FOR all nominees WITHHOLD
listed at right (except AUTHORITY to vote
as marked to the for all nominees
contrary below) listed at right
1.ELECTION OF Nominees:
DIRECTORS [_] [_] Peter A. Benoliel
(Instruction: to withhold authority to vote for any Ronald J. Naples
individual nominee write that nominee's name on Robert H. Rock
the space provided below.)
_____________________________________________________
FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS
THE COMPANY'S INDEPENDENT ACCOUNTANTS
FOR 2002. [_] [_] [_]
3.IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF FOR WHICH NOTICE HAS NOT BEEN RECEIVED BY COMPANY ON
OR BEFORE FEBRUARY 13, 2002.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby also acknowledges receipt of the Notice of Annual Meeting
of Shareholders, the Proxy Statement with respect to said Meeting, the Company's
Summary Annual Report, and the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.
PLEASE DATE, SIGN, AND RETURN PROMPTLY
Signature____________________________________ DATED: __________________, 2002
NOTE: (Signature should be exactly as name or names appear on this Proxy)