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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Rule 14a-11(c) or Rule 14a-12
DETREX CORPORATION
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(Name of Registrant as Specified in Its Charter)
DETREX CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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 is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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 previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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DETREX CORPORATION
24901 NORTHWESTERN HIGHWAY
SUITE 500
SOUTHFIELD, MICHIGAN 48075
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
PLEASE TAKE NOTICE that the annual meeting of shareholders of DETREX
CORPORATION will be held on Thursday, the 23rd day of April, 1998 at 11:00 a.m.,
local time, at The Westin 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 27, 1998 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 20, 1998
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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 23, 1998 (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 20, 1998. 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 27, 1998
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 Third 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 Third Class,
Bruce W. Cox, Thomas E. Mark and John D. Withrow, expire at the Annual Meeting.
Messrs. Cox, Mark and Withrow have served as Directors of Detrex since 1968,
1996 and 1993, 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 Third Class:
Bruce W. Cox
Thomas E. Mark
John D. Withrow
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED ABOVE AS DIRECTORS OF THE THIRD CLASS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 1998, 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
---- --------------------- ----------
Bruce W. Cox................................................ 68,290(2) 4.3%
Robert M. Currie............................................ 4,333(2) *
Robert A. Emmett, III....................................... 48,012(2)(3)(4) 3.0%
Gerald J. Israel............................................ 10,333(2) *
William C. King............................................. 15,000(2)(5) *
John F. Mangold............................................. 7,600(2) *
Thomas E. Mark.............................................. 60,250(2)(6) 3.8%
Benjamin W. McCleary........................................ 7,500(2) *
Edward R. Rondeau........................................... 342(7) *
Arbie R. Thalacker.......................................... 36,500(2)(3) 2.3%
John D. Withrow............................................. 8,000(2) *
All Executive Officers, Directors and Nominees for Director
as a Group................................................ 266,160(2) 16.8%
Summit Capital Management, LLC.............................. 232,250(8) 14.7%
601 Union Street, Suite 3900
Seattle, Washington 98101
Rivlin Family Partnership................................... 114,600(9) 7.2%
1404 Blackheath
Riverwoods, Illinois 60015
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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
15, 1998, as follows: Messrs. Cox, Emmett, Mangold, McCleary, Thalacker and
Withrow, 7,000 shares each; Mr. Currie, 4,333 shares; Mr. Israel, 10,333
shares; Mr. King, 11,000 shares; Mr. Mark, 56,250 shares.
(3) Messrs. Emmett and Thalacker are first cousins.
(4) Included in the shares reported for Mr. Emmett are 1,000 shares owned
jointly with his wife, 15,247 shares owned by his wife, 100 shares owned by
his son, and 2,372 shares held by Mr. Emmett as trustee.
(5) Included in the shares reported for Mr. King are 4,000 shares held by his
wife as trustee of her trust.
(6) Included in the shares reported for Mr. Mark are 4,000 shares owned by his
wife.
(7) Mr. Rondeau's 342 shares are owned jointly with his wife.
(8) Based on information obtained from Schedule 13G dated February 18, 1998
filed by Summit Capital Management, LLC ("SCM") in which SCM indicated it
had sole voting power and sole dispositive power with respect to 232,250
shares.
(9) Based on information obtained from Schedule 13D dated January 15, 1998 filed
by the Rivlin Family Partnership ("Rivlin") in which Rivlin indicated it had
sole voting power and sole dispositive power with respect to 67,800 shares.
The aggregate number of shares reported as beneficially owned by Rivlin
includes 46,800 shares owned by other individuals.
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 THIRD CLASS
WHOSE TERMS OF OFFICE WILL EXPIRE IN 2001
BRUCE W. COX................ 69 1968 President of B. W. Cox Company, manufacturer's
representative, N. Canton, Ohio.
THOMAS E. MARK.............. 45 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.
JOHN D. WITHROW............. 65 1993 Retired; President of Lectron Products, Inc. from
August 1989 to December 1994.
DIRECTORS OF THE FIRST CLASS
WHOSE TERMS OF OFFICE WILL EXPIRE IN 1999
WILLIAM C. KING............. 53 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.
JOHN F. MANGOLD............. 71 1993 Independent consultant; President and Chief Executive
Officer of the Corporation from September 1992 to
January 1993.
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DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION DURING LAST 5 YEARS
---- --- -------- ----------------------------------------
DIRECTORS OF THE SECOND CLASS
WHOSE TERMS OF OFFICE WILL EXPIRE IN 2000
ROBERT A. EMMETT, III....... 54 1984 Partner, Reed Smith Shaw & McClay, attorneys,
Washington, D.C.
BENJAMIN W. MCCLEARY........ 53 1990 Partner, McFarland Dewey & Co., investment bankers,
New York, New York.
ARBIE R. THALACKER.......... 62 1980 Partner, Shearman & Sterling, attorneys, New York,
New York; Chairman of the Board of the Corporation
from April 1993 to January 1996.
The Corporation may not have knowledge of all of the information provided
above regarding securities ownership, business interests and other events and
transactions of the directors and nominees. To the extent that the Corporation
does not have actual knowledge of such information, such information has been
furnished by such persons.
CERTAIN BUSINESS RELATIONSHIPS
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 1997 and it is
anticipated that the firm will render legal services to the Corporation during
1998.
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 1997 and it is anticipated
that the firm will render legal services to the Corporation during 1998.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation has an Audit Committee of
non-employee directors. Its members are John F. Mangold (chairman), Robert A.
Emmett, III and Arbie R. Thalacker. The Audit Committee held two 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. Its members are Benjamin W. McCleary (chairman), Bruce W. Cox and
John D. Withrow. 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 and senior management of the
Corporation. The committee also administers and grants options under the 1993
Stock Option Plan and the 1994 Stock-Based Cash Incentive Plan. The 1994
Stock-Based Cash Incentive Plan expired on March 31, 1997.
The Board of Directors also has a Finance Committee. Its members are
Benjamin W. McCleary (chairman), William C. King, Thomas E. Mark and Arbie R.
Thalacker. The Finance Committee did not meet during the last fiscal year. The
primary function of the Finance Committee is to review and approve the
Corporation's financing arrangements.
The Board of Directors does not have a Nominating Committee.
During the fiscal year ended December 31, 1997, the Board of Directors held
six 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.
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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 or former
officers or employees of the Corporation. The Committee is responsible for
reviewing and making recommendations to the Board of Directors 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. The
Consultant's report also 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 1998.
In 1997 the Committee continued a Variable Compensation Plan ("VCP") first
implemented in 1996. The VCP would pay a cash bonus to an executive, depending
on the financial performance of the Corporation and its divisions. The bonus
opportunity for the year ending December 31, 1997 would range from 10% to 40% of
salary and in the case of Mr. Mark 40% to 60%. No bonus would be paid if the
financial results were below 90% of the 1997 budget and the maximum would be
paid if the financial results were at 110% of the 1997 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.
The Chief Executive Officer recommended that additional grants be made
under the 1993 Stock Option Plan to certain key executives. The Committee
concurred with the Chief Executive Officer's recommendation and awarded grants
totaling 2,000 shares at $9.00 per share to two executives.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. King currently serves as Chairman and Chief Executive Officer. Under
his contract (see p. 8) Mr. King receives a base 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. Mr. King's VCP bonus is shown in the Summary Compensation Table.
In light of Mr. King's contribution to the Corporation during 1997, the
Committee recommended to the Board that his base salary for 1998 be increased to
$110,000 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
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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............ 1997 120,900 36,270
Chairman and 1996(1) 114,600 10,000(2)
CEO 1995(3) 179,267 3,000(4)
T.E. Mark............ 1997 247,154 123,577
President and...... 1996(5) 215,155 40,000(6) 75,000(7)
COO
G.J. Israel.......... 1997 148,769 44,631 1,000(9)
Vice President- 1996 142,692
Finance, Treasurer 1995 135,000
and CFO(8)
R.M. Currie.......... 1997 135,000 40,500 1,000(9)
General Counsel 1996 129,808
and Secretary(8) 1995 125,000
E.R. Rondeau......... 1997 84,841 16,968
Controller 1996 81,793
1995 77,000
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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 non-qualified stock options to
purchase 8,000 shares of Common Stock at a price of $5.00 per share. Options
to purchase 2,000 shares were exercisable immediately. Options to purchase
2,000 shares are exercisable as of January 25, 1997, January 25, 1998, and
January 25, 1999. The options expire on January 25, 2006. On December 12,
1996, Mr. King was awarded additional stock options to purchase 2,000 shares
of Common Stock at a price of $9.00 per share. These options became
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 was
awarded non-qualified stock options to purchase 3,000 shares of Common Stock
at a 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 non-qualified stock options to
purchase 75,000 shares of Common Stock at a price of $5.75 per share.
Options to purchase 18,750 shares were exercisable immediately. Options to
purchase 18,750 shares are exercisable as of January 22, 1997, January 22,
1998, and January 22, 1999. The options expire on January 22, 2006.
(8) On December 20, 1993, Messrs. Currie and Israel 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 on March 31,
1997 did not exceed the initial value of the Share Units. The 1994 Stock-
Based Cash Incentive Plan terminated March 31, 1997.
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(9) On July 24, 1997, Messrs. Currie and Israel were each awarded options to
purchase 1,000 shares of Common Stock at a price of $9.00 per share. For
each individual, options to purchase 333 shares became exercisable on
January 1, 1998. Options to purchase 333 shares become exercisable on
January 1, 1999, and options to purchase 334 shares become exercisable on
January 1, 2000. The options expire on July 24, 2003.
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, 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 65% is covered for purposes of 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 1998.
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................................................ 8,833 17,666 26,499 36,943
$100,000............................................... 12,583 25,166 37,749 51,943
$125,000............................................... 16,333 32,666 48,999 66,943
$160,000............................................... 20,683 41,366 62,049 84,343
$220,000(3)............................................ 20,683 41,366 62,049 84,343
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(1) Based on the Social Security law in effect on January 1, 1998 and the
Retirement Plan formula in effect on January 1, 1998.
(2) Internal Revenue Code Section 415 limit is $130,000.
(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 are respectively as follows: W.C. King 3 years and $128,155; T.E. Mark 2
years and $155,000; G.J. Israel 5 years and $136,336; R.M. Currie 5 years and
$126,367; and E.R. Rondeau 33 years and $78,223.
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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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 an initial 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 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
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.
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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 terminated on March 31, 1997. The Incentive Plan provided for grants of
"Share Units", the value of which were 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 would have been
paid in cash to participants following the end of the Performance Cycle. The
initial value of the Share Units under the Incentive Plan was $12.75 per unit
for senior executives designated as such in the plan and $11.75 per unit for all
other participants. At the end of the Performance Cycle, the fair market value
of the Common Stock was $8.25. As a result, no payments were made to the
participants in the Incentive Plan.
The Incentive Plan was administered, and Share Units were granted under the
plan, by the Compensation Committee. The Chief Executive Officer and Chief
Operating Officer did not participate in the Incentive Plan. Immediately prior
to the termination of the Performance Cycle on March 31, 1997, 42 employees of
the Corporation held 26,700 Share Units.
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 1997, options to purchase 1,000 shares (with an
exercise price of $8.13) were granted on May 1 to Bruce W. Cox, Robert A.
Emmett, III, John F. Mangold, Benjamin W. McCleary, Arbie R. Thalacker and John
D. Withrow. The options are exercisable as of May 1, 1998. 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 $100 in the Common Stock, NASDAQ Index and the
Chemicals-Specialty Index on December 31, 1992, and reinvestment of all
dividends). The common stock of each of the following companies is included in
the Chemicals-Specialty Index: Air Products and Chemicals, Betzdearborn, Cabot
Corporation, Ethyl Corporation, Grace (WR) and Company, Great Lakes Chemical,
Lubrizol Corporation, Morton International, Nalco Chemical, Praxair, Inc. and
Sigma Aldrich Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG DETREX CORPORATION, THE NASDAQ STOCK MARKET -- US INDEX
AND A PEER GROUP
NASDAQ
STOCK
MEASUREMENT PERIOD DETREX PEER MARKET
(FISCAL YEAR COVERED) CORPORATION GROUP (U.S.)
12/92 100.00 100.00 100.00
12/93 145.00 103.00 115.00
12/94 128.00 97.00 112.00
12/95 66.00 126.00 159.00
12/96 88.00 147.00 195.00
12/97 122.00 171.00 240.00
10
13
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information about option grants in the last
fiscal year for each of the executive officers included in the Summary
Compensation Table. In 1997, no other executive officer of the Corporation
received stock options. The Corporation did not grant any stock appreciation
rights.
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR GRANT DATE
OPTIONS IN FISCAL BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#) YEAR ($/SH) DATE VALUE($)(1)
---- ---------- ---------- ----------- ---------- -----------
R.M. Currie.................... 1,000 50% 9.00 July 24, 2003 $ 3,393
G.J. Israel.................... 1,000 50% 9.00 July 24, 2003 $ 3,393
- -------------------------
(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 .37 based upon the prior thirty (30)
month-end closing stock prices of the Common Stock, (ii) a risk-free rate of
return of 6.06%, which approximates the 5-year Treasury Bond rate, and (iii)
a six 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 1997, no other executive officer of the Corporation
who was such at the end of the year earned more than $100,000 in total 1997
annual salary and bonus and also received stock options.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE YEAR-END(#) YEAR-END($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
W.C. King................................ 0 0 9,000/4,000 $ 25,750/19,000
T.E. Mark................................ 0 0 37,500/37,500 $150,000/150,000
G.J. Israel.............................. 0 0 8,000/3,000 $ 6,000/2,250
R.M. Currie.............................. 0 0 4,000/2,000 $ 1,000/1,000
E.R. Rondeau............................. 0 0 0/0 0/0
11
14
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, certified public accountants, have audited the
accounts of the Corporation for over 38 years and have been selected by the
Corporation to continue in that capacity during 1998. 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 solicitations 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 1999 Annual
Meeting must be received by the Secretary, Detrex Corporation, P.O. Box 5111,
Southfield, Michigan 48086-5111 no later than November 23, 1998.
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 20, 1998
12
15
DETREX CORPORATION
24901 NORTHWESTERN HIGHWAY, SUITE 500, SOUTHFIELD, MICHIGAN 48075
ANNUAL MEETING APRIL 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The shareholder signing the reverse side of this card (the "Shareholder")
hereby appoint John F. Mangold, Benjamin W. McCleary and Arbie R. Thalacker, 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 23rd day of April, 1998 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 20, 1998, the Proxy Statement furnished herewith and
the Annual Report of the Corporation for 1997.
- --------------------------------------------------------------------------------
PLEASE VOTE, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: Please sign exactly as name(s) appear(s) hereon. If the stock is held
in the name of two or more persons, each should sign. Executors,
administrators, trustees, guardians, 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.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
16
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
1. Election of Directors.
- ------------------------------------------------------------ For All With- For All
DETREX CORPORATION Directors of The Third Class Nominees held Except
- ------------------------------------------------------------
Bruce W. Cox / / / / / /
Thomas E. Mark
John D. Withrow
NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line
through the name(s) of the nominee(s). Your shares will be
voted for the remaining nominee(s).
RECORD DATE SHARES:
UNLESS OTHERWISE SPECIFIED HEREON, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR ITEM 1. THIS PROXY WILL 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.
----------------
Please be sure to sign and date this Proxy. Date Mark box at right if an address change or comment has / /
- ------------------------------------------------------------------ been noted on the reverse side of this card.
- --------Shareholder sign here-------Co-owner sign here------------
DETACH CARD DETACH CARD