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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
DETREX CORPORATION
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(Name of Registrant as Specified in Its Charter)
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0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
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DETREX CORPORATION
24901 NORTHWESTERN HIGHWAY
SUITE 500
SOUTHFIELD, MICHIGAN 48075
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1997
PLEASE TAKE NOTICE that the annual meeting of shareholders of DETREX
CORPORATION will be held on Thursday, the 24th day of April, 1997 at 11:00 a.m.,
local time, at the Radisson Plaza Hotel, 1500 Town Center, Southfield, Michigan,
for the purposes of considering and acting upon the following:
(1) the election of three directors; and
(2) the transaction of such other business as may properly come before the
meeting and any adjournments or postponements of the meeting.
The Board of Directors knows of no other business which will be presented
to the shareholders at this meeting.
The Board of Directors has fixed February 28, 1997 as the record date for
the determination of the shareholders entitled to receive notice of and to vote
at the annual meeting of shareholders and any adjournments or postponements of
the meeting.
It is important that proxies be returned promptly. Therefore, shareholders
who do not expect to attend the meeting in person are requested to vote, sign,
date and return the enclosed proxy, which is solicited by the Board of
Directors, in the enclosed prepaid envelope.
By Order of the Board of Directors
ROBERT M. CURRIE
Secretary
Dated: March 18, 1997
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DETREX CORPORATION
24901 NORTHWESTERN HIGHWAY
SUITE 500
SOUTHFIELD, MICHIGAN 48075
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors of DETREX CORPORATION (the "Corporation" or
"Detrex") requests all shareholders who do not expect to be present at the
annual meeting to be held April 24, 1997 (the "Annual Meeting"), and who wish
their stock to be voted upon the business to be transacted there, to vote, sign,
date and return the enclosed form of proxy. At any time before it is voted, each
granted proxy may be revoked by the shareholder by a later-dated proxy, by
written revocation addressed to the Secretary of the Corporation at the address
listed below, or by voting by ballot at the Annual Meeting. The cost of
solicitation is being borne by the Corporation. This solicitation is made by and
on behalf of the Board of Directors of the Corporation. Proxies received by the
Board of Directors from shareholders will be voted at the Annual Meeting in the
manner specified or, if not specified, as determined by the proxies. It is
anticipated that this Proxy Statement and the enclosed Proxy will be mailed to
the shareholders of the Corporation on or about March 18, 1997. The
Corporation's principal offices are located at 24901 Northwestern Highway, Suite
500, Southfield, Michigan 48075.
Only shareholders of record at the close of business on February 28, 1997
are entitled to vote at the Annual Meeting. As of that date, there were
1,583,414 shares of common stock, $2 par value per share ("Common Stock"),
outstanding and entitled to vote. They were the only outstanding shares of the
Corporation. Every holder of outstanding shares of Common Stock entitled to be
voted at the Annual Meeting is entitled to one vote for each share held.
Presence in person or by proxy of holders of a majority of the outstanding
shares of Common Stock will constitute a quorum at the Annual Meeting. Assuming
a quorum is present, directors are elected by a plurality vote of all votes
cast. In accordance with applicable law, abstentions and broker non-votes will
not have the effect of votes in opposition to a director nominee.
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ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide for the
classification of directors into three classes as nearly equal in number as
possible, with three-year terms expiring on successive annual meeting dates. The
Corporation's By-Laws currently provide that the Board of Directors shall
consist of not less than eight nor more than twelve persons as shall be fixed
from time to time by the Board.
At the Annual Meeting three Directors of the Second Class will be elected
to serve for a term of three years and until their successors have been elected
and have qualified. The terms of the three present Directors of the Second
Class, Robert A. Emmett, III, Benjamin W. McCleary and Arbie R. Thalacker,
expire at the Annual Meeting. Messrs. Emmett, McCleary and Thalacker have served
as Directors of Detrex Corporation since 1984, 1990 and 1980, respectively.
It is the intention of the persons named in the accompanying form of proxy
to vote such proxies for the nominees named below. The Board of Directors has no
reason to believe that any nominee will be unable to serve. In the event that
any nominee should not be available, the persons named in the proxy will vote
for the election of such substitute nominee as may be selected by the Board of
Directors of the Corporation.
NOMINEES for Directors of the Second Class:
Robert A. Emmett, III
Benjamin W. McCleary
Arbie R. Thalacker
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED ABOVE AS DIRECTORS OF THE SECOND CLASS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 7, 1997, the amount of Common
Stock beneficially owned by each director and nominee for director, each
executive officer named in the Summary Compensation Table, all directors,
nominees for director and executive officers as a group and certain other
beneficial owners:
TOTAL SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1) CLASS
---- --------------------- ----------
John D. Withrow........................................... 7,000(2) *
Bruce W. Cox.............................................. 66,290(2) 4.2%
John F. Mangold........................................... 6,600(2) *
William C. King........................................... 11,000(2)(3) *
Robert A. Emmett, III..................................... 37,816(2)(4)(5) 2.4%
Benjamin W. McCleary...................................... 6,500(2) *
Arbie R. Thalacker........................................ 35,500(2)(4) 2.2%
Thomas E. Mark............................................ 39,200(2)(6) 2.5%
Gerald J. Israel.......................................... 8,000(2) *
Robert M. Currie.......................................... 3,000(2) *
All Executive Officers, Directors and Nominees
for Director as a Group................................. 220,906(2) 14.0%
Summit Capital Management, LLC............................ 235,950(7) 14.9%
601 Union Street, Suite 3900
Seattle, Washington 98101
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* Represents less than 1% of Class
(1) Ownership is direct with sole voting power and sole investment power unless
otherwise indicated by footnote.
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(2) Totals include shares underlying options exercisable within 60 days of March
7, 1997, as follows: Mr. King, 7,000 shares; Mr. Mark, 37,500 shares;
Messrs. Cox, Emmett, Mangold, McCleary, Thalacker and Withrow, 6,000 shares
each; Mr. Israel, 8,000 shares; and Mr. Currie, 3,000 shares.
(3) Included in the shares reported for Mr. King are 4,000 shares held by his
wife as trustee of her trust.
(4) Messrs. Thalacker and Emmett are first cousins.
(5) Included in the shares reported for Mr. Emmett are 1,000 shares owned
jointly with his wife, 12,522 shares owned by his wife, 100 shares owned by
his minor son, and 2,372 shares held by Mr. Emmett as trustee.
(6) Included in the shares reported for Mr. Mark are 1,700 shares owned by his
wife.
(7) Based on information obtained from Schedule 13G dated February 13, 1997
filed by Summit Capital Management, LLC ("SCM") in which SCM indicated it
had sole voting power with respect to 50,400 shares, shared voting power
with respect to 185,550 shares and sole dispositive power with respect to
235,950 shares.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following information is furnished with respect to each person
nominated for election as a director and each other person whose term of office
as a director will continue after the Annual Meeting:
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION DURING LAST 5 YEARS
---- --- -------- ----------------------------------------
NOMINEES FOR DIRECTOR OF THE SECOND CLASS
WHOSE TERMS OF OFFICE WILL EXPIRE IN 2000
ROBERT A. EMMETT, 53 1984
III................. Partner, Reed Smith Shaw & McClay, attorneys,
Washington, D.C.
BENJAMIN W. 52 1990
MCCLEARY............ Partner, McFarland Dewey & Co., investment bankers, New
York, New York.
ARBIE R. THALACKER.... 61 1980 Partner, Shearman & Sterling, attorneys, New York, New
York; Chairman of the Board of the Corporation from
April 1993 to January 1996.
DIRECTORS OF THE FIRST CLASS
WHOSE TERMS OF OFFICE WILL EXPIRE IN 1999
JOHN F. MANGOLD....... 70 1993 Independent consultant; President and Chief Executive
Officer of the Corporation from September 1992 to
January 1993; Vice President of Utility Steam
Generators, a division of ABB Combustion Engineering
from July 1990 to January 1991; Consultant to ABB
Combustion Engineering from March to June 1990 and June
to September 1991.
WILLIAM C. KING....... 52 1995 Chairman of the Board and Chief Executive Officer of the
Corporation since January 1996; President and Chief
Executive Officer of the Corporation from April 1995 to
January 1996; President and Chief Operating Officer of
Masland Industries from 1992 to 1994; Vice President and
Group Executive of Allied Signal prior to 1992.
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DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION DURING LAST 5 YEARS
---- --- -------- ----------------------------------------
DIRECTORS OF THE THIRD CLASS
WHOSE TERMS OF OFFICE WILL EXPIRE IN 1998
JOHN D. WITHROW....... 64 1993 Retired; Member of the Board of Directors of A.P. Parts
International; Consultant to Eaton Corporation since
1995; President of Lectron Products, Inc. from August
1989 to December 1994; Formerly Executive Vice President
of Chrysler Corporation.
BRUCE W. COX.......... 68 1968 President of B. W. Cox Company, manufacturers
representative, N. Canton, Ohio.
THOMAS E. MARK........ 44 1996 President and Chief Operating Officer of the Corporation
since January 1996; President and General Manager of ABB
Paint Finishing, Inc. from 1990 to January 1996.
The information as to securities owned, business interests and other events
and transactions of the directors and nominees, insofar as it was not within the
knowledge of the Corporation, has been furnished by such persons.
CERTAIN BUSINESS RELATIONSHIPS
Mr. Arbie R. Thalacker, a director of the Corporation, is a member of the
firm of Shearman & Sterling, attorneys, New York, New York. Shearman & Sterling
rendered legal services to the Corporation during 1996 and it is anticipated
that the firm will render legal services to the Corporation during 1997.
Mr. Robert A. Emmett, III, a director of the Corporation, is a member of
the firm of Reed Smith Shaw & McClay, attorneys, Washington, D.C. Reed Smith
Shaw & McClay rendered legal services to the Corporation during 1996 and it is
anticipated that the firm will render legal services to the Corporation during
1997.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation has an Audit Committee of
non-employee directors, the members of which from August 8, 1996 were John F.
Mangold (chairman), Robert A. Emmett, III and Arbie R. Thalacker. Prior to
August 8, 1996, the members were John F. Mangold (chairman), John D. Withrow and
Arbie R. Thalacker. The Audit Committee held three meetings during the last
fiscal year. The Audit Committee, as the representative of the Board of
Directors, meets with the independent auditors of the Corporation to review the
manner of the auditing of the Corporation's accounts. The committee reviews with
the auditors the methods of accounting, the internal accounting controls and
procedures and the reports submitted by the auditors. The Audit Committee
reviews the audit scope and the estimated audit fee. The Audit Committee also
recommends to the Board of Directors the selection of the Corporation's
independent public accountants.
The Board of Directors also has a Compensation Committee of non-employee
directors. From August 8, 1996, the members of the Compensation Committee were
Benjamin W. McCleary (chairman), Bruce W. Cox and John D. Withrow. Prior to
August 8, 1996, the members of the Compensation Committee were Benjamin W.
McCleary (chairman), Arbie R. Thalacker and Robert A. Emmett, III. The
Compensation Committee held four meetings during the last fiscal year. The
committee reviews and recommends to the Board of Directors the salaries and
other compensation of all officers of the Corporation. The committee also
administers and grants options under the 1993 Stock Option Plan and 1994
Stock-Based Cash Incentive Plan.
In January 1996, the Board of Directors formed a Finance Committee. Its
members are Benjamin W. McCleary (chairman), William C. King, Arbie R. Thalacker
and Thomas E. Mark. The Finance Committee held one meeting during the last
fiscal year. The primary function of the Finance Committee is to review and
approve the Corporation's financing arrangements.
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The Board of Directors does not have a Nominating Committee.
During the fiscal year ended December 31, 1996, the Board of Directors held
10 regular meetings and no special meetings. Each incumbent director attended at
least 75% of the aggregate of all meetings of the Board of Directors and all
meetings held by all committees of the Board on which he served.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee")
consists of three members of the Board, none of whom are present officers or
employees of the Corporation, or former officers of the Corporation. The
Committee is responsible for reviewing and making recommendations to the Board
with respect to compensation paid to all officers of the Corporation (the
"Officers"). In addition, the Committee has been charged with the responsibility
of administering and granting options under the 1993 Stock Option Plan and the
1994 Stock-Based Cash Incentive Plan.
Detrex engaged one of the nationally recognized compensation consulting
firms (the "Consultant") to review the market competitiveness of the
compensation provided to the Corporation's top twelve executives. National data
was gathered for comparably-sized organizations in the chemical industry. The
Consultant's report to Detrex indicated the base salary level of the
Corporation's Officers approximated the market median base salary levels, but
that several of the base salaries for executives with operational responsibility
were below the median. In addition, the Consultant's report indicated the target
compensation from performance based incentive plans was below the median. The
Chief Executive Officer recommended to the Committee that the Officers' base
compensation be adjusted to reflect their current responsibilities in the case
of the executives responsible for managing the Corporation's three largest
operations (excluding Harvel) and that all Officers receive a cost of living
adjustment of approximately 4%. The Committee reviewed the Chief Executive
Officer's assessments of each Officer, concurred with those recommendations and,
in turn, recommended them to the Board of Directors for implementation during
1997.
In 1996 the Committee implemented a Variable Compensation Plan ("VCP"). The
VCP would pay a cash bonus to an executive, depending on the financial
performance of the Corporation and its divisions. The bonus opportunity would
range from 10% to 30% of salary. No bonus would be paid if the financial results
were below 90% of the 1996 budget and the maximum would be paid if the financial
results were at 110% of the 1996 budget. Corporate Officers' bonuses would be
based entirely on the performance of the Corporation. Managers with divisional
responsibilities would have 50% of their bonus dependent on the division's
performance and 50% on corporate performance. Based on the 1996 financial
results, Detrex will pay a total of $155,000 in VCP to 16 executives in two of
its divisions. The Consultant's report indicated that the bonus opportunity for
certain senior executives should be increased in 1997 in order for the
Corporation to be competitive. The Committee recommended to the Board that the
VCP be modified to reflect the foregoing and the Board approved the Committee's
recommendation.
The Chief Executive Officer recommended that additional grants be made
under the 1993 Stock Option Plan to certain key executives with operating
responsibility. The Committee concurred with the Chief Executive Officer's
recommendation and awarded grants totalling 16,000 shares at $9.00 per share to
4 executives.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. King currently serves as Chairman and Chief Executive Officer. Under
his contract (see p. 9) Mr. King receives a salary of $100,000 per year for
spending approximately 25% of his normal working days on Corporation matters,
plus performance based compensation and stock options appropriate to his
contribution. In light of Mr. King's contribution to the Corporation during
1996, the Committee granted Mr. King options for 2,000 shares of Common Stock at
an exercise price of $9.00 per share under the 1993 Stock Option Plan. The
options are not exercisable until the first anniversary of the date of grant.
The Committee recommended
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to the Board that his salary remain at its current level and the Board of
Directors approved the Committee's recommendation.
Benjamin W. McCleary, Chairman
Bruce W. Cox
John D. Withrow
Members of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION FROM JANUARY 1 TO
AUGUST 8, 1996
Arbie R. Thalacker is a member of the law firm of Shearman & Sterling, New
York, New York, which rendered legal services to the Corporation during 1996 as
described under "Certain Business Relationships". Robert A. Emmett, III is a
member of the law firm of Reed Smith Shaw & McClay, Washington, D.C., which
rendered legal services to the Corporation during 1996 as described under
"Certain Business Relationships". Messrs. Thalacker and Emmett both served on
the Compensation Committee until August 8, 1996.
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EXECUTIVE COMPENSATION
AND OTHER TRANSACTIONS
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation earned in each of the
last three years by the Corporation's Chief Executive Officer and the other most
highly compensated executive officers who earned more than $100,000 in total
annual salary and bonus.
LONG TERM COMPENSATION
----------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION --------------------- ---------
-------------------------- RESTRICTED LONG TERM ALL
NAME AND PRINCIPAL SALARY BONUS OTHER STOCK OPTIONS INCENTIVE OTHER
POSITION YEAR ($) ($) ($) ($) (#) PLAN COMPENSATION
------------------ ---- ------ ----- ----- ---------- ------- --------- ------------
W.C. King............. 1996 114,600 10,000(2)
Chairman and 1995(3) 179,267 3,000(4)
CEO(1)
T.E. Mark............. 1996 215,155 40,000(6) 75,000(7)
President and
COO(5)
G.J. Israel........... 1996 142,692
Vice President- 1995 135,000
Finance, Treasurer 1994 129,615
and CFO(8)
R.M. Currie........... 1996 129,808
General Counsel 1995 125,000
and Secretary(8) 1994 125,000
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(1) In January 1996, Mr. King was named Chairman and Chief Executive Officer.
(2) On January 25, 1996, Mr. King was awarded 8,000 non-qualified stock options
at a price of $5.00 per share. 2,000 of the options were exercisable
immediately, an additional 2,000 became exercisable on January 25, 1997, and
an additional 2,000 each become exercisable on January 25, 1998 and January
25, 1999. The options expire on January 25, 2006. On December 12, 1996, Mr.
King was awarded an additional 2,000 stock options at a price of $9.00 per
share. These options become exercisable on December 12, 1997 and expire on
December 12, 2006.
(3) In April 1995, Mr. King was hired as President and Chief Executive Officer.
(4) On May 22, 1995 in connection with his election as a director, Mr. King
received options to purchase 3,000 shares of Common Stock at the then market
price of $8.00 per share. The options became exercisable on May 22, 1996.
(5) Effective January 22, 1996, Mr. Mark became President and Chief Operating
Officer.
(6) This amount was paid to Mr. Mark as a signing bonus pursuant to his
employment agreement.
(7) On January 22, 1996, Mr. Mark was awarded 75,000 non-qualified stock options
at a price of $5.75 per share. 18,750 of the options were exercisable
immediately, an additional 18,750 became exercisable on January 22, 1997,
and an additional 18,750 each become exercisable on January 22, 1998 and
January 22, 1999. The options expire on January 22, 2006.
(8) On December 20, 1993, Messrs. Israel and Currie were each awarded 4,000
Share Units under the Corporation's 1994 Stock-Based Cash Incentive Plan.
The fair market value of the Common Stock of the Corporation at December 31,
1996 did not exceed the initial value of the Share Units.
The Corporation has a defined benefit plan (the "Retirement Plan") which is
qualified under the Internal Revenue Code. The participants are all salaried and
all non-union employees of the Corporation. Benefits are,
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in general, based upon annual salary and length of service. The amount of the
Corporation's annual contribution to the Retirement Plan is determined for the
total of all participants covered by the plan, and the amount of payment in
respect of a specified person is not and cannot readily be separated or
individually calculated by the regular actuaries for the plan. Of the current
annual compensation reported in the Summary Compensation Table above for all
participants, approximately 89% is covered by the Retirement Plan. The table
below illustrates the amount of annual pension benefits payable to a person in
specified average annual compensation and years of service classifications,
assuming retirement in 1997. The Retirement Plan is integrated with Social
Security benefits and the amounts payable upon retirement shown in the table are
net of Social Security benefits offsets.
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BENEFIT EXAMPLES -- ANNUAL BENEFIT AT AGE 65 IN 1997(1)(2)
YEARS OF SERVICE
AVERAGE ANNUAL -----------------------------------------
COMPENSATION 10 YEARS 20 YEARS 30 YEARS 40 YEARS
-------------- -------- -------- -------- --------
$75,000................................................ 8,862 17,724 26,586 37,040
$100,000............................................... 12,612 25,224 37,836 52,040
$125,000............................................... 16,362 32,724 49,086 67,040
$160,000............................................... 21,612 43,224 64,836 88,040
$220,000(3)............................................ 21,612 43,224 64,836 88,040
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(1) Based on the Social Security law in effect on January 1, 1997 and the
Retirement Plan formula in effect on January 1, 1997.
(2) Internal Revenue Code Section 415 limit is $120,000.
(3) Compensation in excess of $160,000 is not recognized.
The years of credited service and average annual compensation covered by
the Retirement Plan for the current employees named in the Summary Compensation
Table were respectively as follows: W.C. King 2 years and $132,300; G.J. Israel
4 years and $132,692; R.M. Currie 4 years and $121,875; and T.E. Mark 1 year and
$150,000.
EMPLOYMENT AND OTHER AGREEMENTS
On October 1, 1995, the Corporation and William C. King entered into an
employment agreement which replaced a temporary agreement executed in April of
1995. Under the October agreement, Mr. King was to serve as President and Chief
Executive Officer with the understanding that, upon the hiring of a chief
operating officer, he would continue as Chief Executive Officer. The agreement
has a five year term and provides for a salary of $100,000 per year plus $200
per hour to a maximum of $1,350 per day for days in excess of five days of
service per month. The agreement also provides that Mr. King will participate in
the Corporation's medical and life insurance plans (and be entitled, in certain
circumstances, to retiree medical coverage) and be eligible for option grants
and annual bonuses. Under the terms of the employment agreement, Mr. King will
also be entitled to a supplemental pension upon his termination of employment
with the Corporation based upon the formula in the Retirement Plan, but
increased for additional credited service in accordance with the terms of the
agreement. The agreement includes severance terms providing two years' salary
and two years' medical benefits if Mr. King is terminated before expiration of
the agreement's term for a reason other than Cause or Disability or if he
resigns for Good Reason (as such terms are defined in the agreement).
On January 22, 1996, the Corporation and Thomas E. Mark entered into an
employment agreement naming Mr. Mark President and Chief Operating Officer. The
agreement has a three year term but extends on each anniversary date for an
additional year unless either party declines the extension. It provides for an
initial base salary of $238,000 per year and a signing bonus of $40,000. The
agreement provides that Mr. Mark will participate in the Corporation's medical
and life insurance plans and be eligible for option grants and annual bonuses.
The agreement also provides for a supplemental pension upon his termination of
employment, subject to certain vesting and other conditions set forth in the
agreement. The full amount of the pension will equal 50% of his final salary and
will be earned if Mr. Mark completes five (5) years of employment with the
Corporation. The agreement includes severance terms providing six months' salary
and six months' medical benefits if Mr. Mark is terminated before the expiration
of the agreement's term for a reason other than Cause or Disability or if he
resigns for Good Reason (as such terms are defined in the agreement). Under the
agreement, he is also entitled to receive his salary and medical benefits for an
additional period, up to 18 months, during which he is seeking new employment.
On February 22, 1993, the Corporation and Gerald J. Israel entered into an
employment agreement naming Mr. Israel Chief Financial Officer and Vice
President-Finance, effective February 23, 1993. Mr. Israel was named Treasurer
in 1994. The agreement provides for an initial base salary of $125,000 and the
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opportunity to earn an annual bonus. It provides medical benefits, life
insurance and full vesting in the Retirement Plan after five full years of
employment. The agreement further provides for a severance payment of three
months' salary if the Corporation terminates Mr. Israel's employment in the
first year of service, to be increased by one month per each year of service
thereafter to a maximum of twelve months' salary.
On June 23, 1993, the Corporation and Robert M. Currie entered into an
employment agreement naming Mr. Currie General Counsel of the Corporation,
effective as of July 16, 1993. Mr. Currie was named Secretary of the Corporation
in 1994. The agreement has a three year term and will automatically be extended
for additional one year periods unless earlier terminated. It provides for an
initial base salary of $125,000 and the opportunity to earn an annual bonus. It
provides medical benefits, life insurance and full vesting in the Retirement
Plan after five full years of employment. The agreement further provides for a
severance payment of 18 months' salary in the event the Corporation terminates
Mr. Currie's employment for a reason other than Cause (as defined in the
agreement).
Each of the named executive officers has received various option grants
under the Corporation's 1993 Stock Option Plan. The Corporation also maintains
the 1993 Stock Option Plan For Outside Directors. Both plans provide for the
immediate vesting and acceleration of options upon a Change in Control (as
defined in the plans) of the Corporation.
1994 STOCK-BASED CASH INCENTIVE PLAN
On December 15, 1993, the Board of Directors adopted the 1994 Stock-Based
Cash Incentive Plan of Detrex Corporation (the "Incentive Plan"). The Incentive
Plan provides for grants of "Share Units", the value of which are determined by
reference to the increase in the fair market value of the Common Stock over a
"Performance Cycle" beginning January 1, 1994 and ending March 31, 1997. Subject
to certain limits set forth in the Incentive Plan, the value of the Share Units
will be paid in cash to participants following the end of the Performance Cycle.
The initial value of the Share Units under the Incentive Plan is $12.75 per unit
for senior executives designated as such in the plan and $11.75 per unit for all
other participants.
The Incentive Plan is administered, and Share Units are granted under the
plan, by the Compensation Committee. The Chief Executive Officer and Chief
Operating Officer do not participate in the Incentive Plan. As of March 7, 1997,
42 employees of the Corporation held 26,700 Share Units.
A participant who ceases to be employed by the Corporation prior to the end
of the Performance Cycle will forfeit all Share Units granted to such
participant; provided, however, that if termination is due to death or
disability of the participant, then the participant will receive an award based
upon the "Appreciation Value" of the Share Units calculated using the value of
the Common Stock as of the date of termination of employment unless, in the
event of disability, the Compensation Committee decides to permit the
participant to hold the Share Units for a longer period as provided in the
Incentive Plan. In the event of a Change in Control (as defined in the Incentive
Plan) of the Corporation prior to the end of the Performance Cycle, each
participant who is in the employ of the Corporation on or immediately prior to
the date of such Change in Control will receive a payment with respect to his or
her Share Units based upon the higher of the value of the Common Stock at the
time or the highest price paid per share in connection with the Change in
Control. The rights of a participant with respect to Share Units may not be
assigned or transferred except by will or by the laws of descent and
distribution. Neither the Incentive Plan nor any action taken thereunder may be
construed as giving any employee any right to be retained in the employ of the
Corporation.
10
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DIRECTOR COMPENSATION
A director of the Corporation who is not an employee of the Corporation or
its subsidiaries is paid $675 per month plus $405 and reasonable expenses for
each Board of Directors meeting attended, and $135 and reasonable expenses for
each committee meeting attended.
A Stock Option Plan for Outside Directors was approved by the shareholders
at the 1993 Annual Meeting. In 1996, options to purchase 1,000 shares (with an
exercise price of $7.31) were granted on May 1 to John F. Mangold, Robert A.
Emmett, III, Benjamin W. McCleary, Arbie R. Thalacker, Bruce W. Cox, and John D.
Withrow. The options are exercisable as of May 1, 1997. The options will
terminate at the earliest of the tenth anniversary of the date of grant, the
first anniversary of the director's resignation, removal or termination as a
member of the Board, or the date of the director's removal from the Board for
Cause (as defined in the plan).
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PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock for the last five fiscal years with the cumulative total return on
the NASDAQ Index and the Chemicals-Specialty Index over the same period
(assuming an investment of $100 in the Common Stock, NASDAQ Index and the
Chemicals-Specialty Index on December 31, 1991, and reinvestment of all
dividends). The common stock of each of the following companies is included in
the Chemicals-Specialty Index: Air Products, Betzdearborn, Cabot Corporation,
Ethyl Corporation, Grace (WR) and Company, Great Lakes Chemical, Lubrizol
Corporation, Morton International, Nalco Chemical, Praxair, Inc. and Sigma
Aldrich Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG DETREX CORPORATION, THE NASDAQ STOCK MARKET -- US INDEX
AND A PEER GROUP
MEASUREMENT PERIOD CHEMICALS- NASDAQ
(FISCAL YEAR COVERED) DETREX CORP. SPECIALTY INDEX
1991 100 100 100
1992 107 110 116
1993 155 113 134
1994 137 107 131
1995 70 139 185
1996 93 162 227
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OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information about option grants in the last
fiscal year for each of the executive officers included in the Summary
Compensation Table. In 1996, no other executive officer of the Corporation
received stock options. The Corporation did not grant any stock appreciation
rights.
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR GRANT DATE
OPTIONS IN FISCAL BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#) YEAR ($/SH) DATE VALUE($)(1)
---- ---------- ---------- ----------- ---------- -----------
T.E. Mark................. 75,000 74% 5.75 January 22, 2006 $256,100
W.C. King................. 8,000 8% 5.00 January 25, 2006 $ 25,480
W.C. King................. 2,000 2% 9.00 December 12, 2006 $ 7,576
- -------------------------
(1) Based on the Black-Scholes option valuation model. The actual value, if any,
an executive may realize will depend on the excess of the stock price over
the exercise price on the date the option is exercised so that there is no
assurance the value realized will be at or near the value estimated by the
Black-Scholes model. The assumptions underlying the Black-Scholes model
include (i) an expected volatility of .36 based upon the prior ten years of
month-end closing stock prices of the Common Stock, (ii) a risk-free rate of
return of 5.90%, which approximates the 10-year Treasury Bond rate, and
(iii) a ten year period from time of grant until exercise.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
The following table shows aggregate option exercises in the last fiscal
year and fiscal year-end option values for the executive officers included in
the Summary Compensation Table who were executive officers during the last
completed fiscal year. In 1996, no other executive officer of the Corporation
who was such at the end of the year earned more than $100,000 in total 1996
annual salary and bonus and also received stock options.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE YEAR-END(#) YEAR-END(#)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
W.C. King.............................. 0 0 5,000/8,000 $ 4,000/12,000
T.E. Mark.............................. 0 0 18,750/56,250 $23,437/70,313
R. M. Currie........................... 0 0 3,000/2,000 0/0
G. J. Israel........................... 0 0 6,000/4,000 0/0
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RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, certified public accountants, have audited the
accounts of the Corporation for over 37 years and have been selected by the
Corporation to continue in that capacity during 1997. This selection was
approved by the Audit Committee and by the Board of Directors.
Deloitte & Touche LLP plan to have a representative attend the Annual
Meeting who will be available to respond to appropriate questions and who will
have the opportunity to make a statement if the representative desires to do so.
SOLICITATION OF PROXIES
The expenses in connection with the solicitation of the enclosed form of
proxy, including clerical work, printing and postage, will be borne by the
Corporation. In addition to the use of the mails, directors, officers, or
employees of the Corporation or its subsidiaries may make solicitation in person
or by telephone without special compensation. The Corporation has retained
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
at an estimated cost of $1,500 plus reimbursement of reasonable expenses. The
Corporation will reimburse custodians, nominees or other persons for their
out-of-pocket expenses in sending proxy material to beneficial owners.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1998 Annual
Meeting must be received by the Secretary, Detrex Corporation, P.O. Box 5111,
Southfield, Michigan 48086-5111 no later than November 24, 1997.
AS TO OTHER MATTERS WHICH
MAY COME BEFORE THE MEETING
The Board of Directors does not intend to bring any other matters before
the meeting and has not been informed of such an intention by any other person.
However, if any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of proxy to vote said
proxies in accordance with their judgment on such matters.
It is important that the proxies be returned promptly. Therefore,
shareholders are requested to execute and return the enclosed proxy to which no
postage need be affixed if mailed in the United States.
By Order of the Board of Directors
ROBERT M. CURRIE
Secretary
Dated: March 18, 1997
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[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
UNLESS OTHERWISE SPECIFIED HEREON, THE SHARES REPRESENTED With- For All
BY THIS PROXY SHALL BE VOTED FOR ITEM 1. THIS PROXY WILL 1. Election of Directors For hold Except
BE VOTED IN THE DISCRETION OF THE PROXIES NAMED ON THE
REVERSE SIDE WITH RESPECT TO ANY OTHER MATTERS WHICH MAY [ ] [ ] [ ]
PROPERLY COME BEFORE THE MEETING AND ANY POSTPONEMENTS
OR ADJOURNMENTS THEREOF.
Directors of The Second Class
RECORD DATE SHARES:
Robert A. Emmett, III
Benjamin W. McCleary
Arbie R. Thalacker
To withhold authority for an individual nominee, check the box
entitled "For All Except" and write that nominee's name in the
space below.
_____________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR ITEM 1.
Mark box at right if comments or address change have been
noted on the reverse side of this card. [ ]
Please be sure to sign and date this Proxy. PLEASE VOTE, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
Date
____________________ Note: Please sign exactly as name appears hereon. If the
stock is held in the name of two or more persons, each should
________________________________________________________________ sign. Executors, administrators, trustees, guardians,
Shareholder sign here Co-owner sign here attorneys, and corporate officers should add their titles.
If a corporation, sign in full corporate name by president
or other authorized officer. If a partnership, sign in
partnership name by authorized person.
18
REVOCABLE PROXY
DETREX CORPORATION
24901 NORTHWESTERN HIGHWAY, SUITE 500, SOUTHFIELD, MICHIGAN 48075
ANNUAL MEETING APRIL 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The shareholder(s) signing the reverse side of this card (the
"Shareholder") hereby appoints BRUCE W. COX, JOHN F. MANGOLD and JOHN D.
WITHROW, and each of them, with power of substitution to each, proxies of the
Shareholder, to vote at the Annual Meeting of Shareholders of Detrex Corporation
(the "Corporation") to be held on the 24th day of April, 1997 and at any and all
postponements or adjournments of said meeting, all of the shares of stock of the
Corporation which the Shareholder may be entitled to vote, with all the powers
the Shareholder would possess, if then and there personally present.
The Shareholder hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such shares and hereby ratifies and confirms
all that said proxies, their substitutes or any of them may lawfully do by
virtue hereof.
This proxy may be revoked at any time prior to said meeting and the
Shareholder reserves the right to attend such meeting and vote said stock in
person.
The Shareholder hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, dated March 18, 1997, the Proxy Statement furnished herewith
and the Annual Report of the Corporation for 1996.
Comments/Address Changes:_________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________