UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[X] Definitive Proxy Statement Rule
[_] Definitive Additional Materials 14A-6(e)(2))
[_] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
CFC INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
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[LOGO]
March 20, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
CFC International, Inc. to be held at the University of Chicago, Graduate School
of Business, The Conference Center, 450 North Cityfront Plaza Drive, Chicago,
Illinois on Friday, April 20, 2001 at 1:30 p.m. Central Time.
We remain very optimistic about our business. I remain hopeful about and
dedicated to growth through acquisition, without dilution. These are, indeed,
exciting times at CFC International.
The election of directors and related matters are more fully described in
the enclosed Proxy Statement. Please read the Proxy Statement closely and mark,
date, and sign the enclosed proxy and return it in the enclosed envelope, which
does not require postage if mailed in the United States.
Sincerely,
/s/ Roger F. Hruby
Roger F. Hruby
Chairman of the Board,
Chief Executive Officer
YOUR VOTE IS IMPORTANT
Please Sign, Date, and Return Your Proxy Card
[LOGO]
500 State Street, Chicago Heights, Illinois 60411
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 20, 2001
You are cordially invited to attend the annual meeting of stockholders of
CFC International, Inc., which will be held at the University of Chicago,
Graduate School of Business, The Conference Center, 450 North Cityfront Plaza
Drive, Chicago, Illinois on April 20, 2001 at 1:30 p.m. Central Time, for the
following purposes:
1. To elect directors; and
2. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 12, 2001
are entitled to vote at the meeting. A list of such stockholders will be
available for examination by any stockholder for any purpose germane to the
meeting, during normal business hours, at Computershare Investor Services, 2
North LaSalle Street, Chicago, Illinois for a period of ten days prior to the
meeting.
A proxy statement and a proxy card solicited by the Board of Directors
are enclosed. It is important that your shares be represented at the meeting
regardless of the size of your holdings. Whether or not you intend to be present
at the meeting in person, we urge you to mark, date and sign the enclosed proxy
card and return it in the envelope provided for that purpose, which does not
require postage if mailed in the United States. If you attend the meeting, you
may, if you wish, withdraw your proxy and vote in person.
/s/ Dennis W. Lakomy
Dennis W. Lakomy
Executive Vice President,
Chief Financial Officer,
Treasurer, and Secretary
Chicago Heights, Illinois
March 20, 2001
================================================================================
YOU ARE URGED TO MARK, DATE, AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
================================================================================
CFC INTERNATIONAL, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 20, 2001
We are sending you this Proxy Statement in connection with the solicitation
by the Board of Directors of CFC International, Inc. of proxies for use at the
annual meeting of stockholders of the Company to be held at the University of
Chicago, Graduate School of Business, The Conference Center, 450 North Cityfront
Plaza Drive, Chicago, Illinois at 1:30 p.m. Central Time, on Friday, April 20,
2001, and at any postponement or adjournment of the annual meeting. If your
proxy is properly executed and returned in a timely manner, it will be voted at
the meeting in accordance with the directions you provide. If you do not
provide any direction, your proxy will be voted for the election of the nominees
named as directors, and on other matters presented for a vote in accordance with
the judgment of the persons acting under the proxies. You may revoke your proxy
at any time before it is voted, either in person at the meeting, by written
notice to the Secretary of the Company, or by delivery of a later-dated proxy.
Our principal executive offices are located at 500 State Street, Chicago
Heights, Illinois 60411 (telephone: 708/891-3456). This Proxy Statement is
dated March 20, 2001 and we expect to mail proxy materials to you beginning on
or about that date. In this Proxy Statement, the words "CFC International,"
"Company," "we," "our," "ours," and "us" refer to CFC International, Inc.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on March 12, 2001 are
entitled to vote at the annual meeting of stockholders. The only outstanding
voting stock is our common stock, par value $.01 per share (the "Common Stock"),
of which 4,053,193 shares were outstanding as of the close of business on March
12, 2001. Each share of Common Stock is entitled to one vote.
The seven nominees who receive the highest number of affirmative votes will
be elected as directors. For this purpose, only the affirmative votes from the
holders of the shares of the Common Stock that are present in person or
represented by proxy and entitled to vote at the meeting will be counted. An
abstention, direction to withhold authority, or broker non-vote will have no
effect on the election of directors. In general, approval of any other matter
submitted to the stockholders for their consideration requires the affirmative
vote of the holders of a majority of the shares of the Common Stock present in
person or represented by proxy and entitled to vote at the meeting.
Abstentions, directions to withhold authority, and broker non-votes are counted
as shares present in the determination of whether the shares of stock
represented at the meeting constitute a quorum. Abstentions, directions to
withhold authority, and broker non-votes are not counted in tabulations of the
votes cast on proposals presented to stockholders. An automated system
administered by our transfer agent will tabulate the votes.
1
PROPOSAL I
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting. The Board of Directors
has designated the persons named below as nominees for election as directors for
a term expiring at the annual meeting of stockholders in 2002. All of the
nominees are serving as directors as of the date of this Proxy Statement.
Unless you instruct us otherwise, your properly executed proxy, that is
returned in a timely manner, will be voted for election of the seven nominees.
If, however, any of the nominees should be unable or should fail to act as a
nominee because of an unexpected occurrence, the proxies will be voted for such
other person as the holders of your proxy, acting in their discretion, may
determine. In the alternative, the Board of Directors may reduce the number of
directors to be elected.
Biographical information as of March 20, 2001 concerning the seven nominees
is presented below:
Roger F. Hruby, age 66, has been a director of the Company since its
formation. Currently, Mr. Hruby also serves as the Company's Chairman of the
Board and Chief Executive Officer. Prior thereto, Mr. Hruby was the President
and Chief Operating Officer of the Company's predecessor, Bee Chemical, from
1977 until the sale of that company to Morton Thiokol, Inc. in 1985, at which
time Mr. Hruby also became its Chief Executive Officer. Mr. Hruby also
organized the formation of Bee Chemical's Japanese joint venture in 1970 and
supervised its growth from a start-up venture to a significant manufacturing
company with annual sales in excess of $40 million. In 1986, Mr. Hruby formed
the Company, which purchased Bee Chemical's specialty transferable solid
coatings division from Morton Thiokol, and has been Chairman of the Board and
Chief Executive Officer since the date of its incorporation. He was also
President of the Company from its incorporation until June 1995, and from
January 1998 to January 1999. Mr. Hruby has been involved in the specialty
chemical industry since 1958. Mr. Hruby earned a bachelor degree in chemistry
from North Central College and a Masters of Business Administration from the
University of Chicago.
William G. Brown, age 57, has been a director of the Company since August
1995. Mr. Brown currently is a member of Bell, Boyd & Lloyd LLC, Chicago,
Illinois, counsel to the Company. He is also a director of Dovenmuehle
Mortgage, Inc.
Robert B. Covalt, age 69, became a director of the Company in August 1997.
Mr. Covalt has been Chief Executive Officer of Sovereign Specialty Chemicals,
Inc. since 1996. Prior thereto, he served in several capacities with Morton
International, Inc., a salt and specialty chemicals company, most recently as
Executive Vice President and President of the Specialty Chemicals Group.
Richard L. Garthwaite, age 50, was named director of the Company on March
26, 1999. Currently, Mr. Garthwaite also serves as the Company's President and
Chief Operating Officer. Prior thereto, Mr. Garthwaite was President and Chief
Executive Officer of A.L. Hyde Company, which is a manufacturer of plastic
products and a division of Danaher Corporation, from 1990.
Dennis W. Lakomy, age 56, has been a director of the Company since August
1995. Mr. Lakomy also is Executive Vice President, Chief Financial Officer,
Secretary, and Treasurer of the Company. He joined Bee Chemical in 1975 and
served as Vice President and Controller of that company from 1982 until co-
founding the Company with Mr. Hruby in 1986. Mr. Lakomy earned a bachelors
degree in accounting from Loyola University of Chicago and a Masters of Business
Administration from the University of Chicago.
2
Richard Pierce, age 62, became a director of the Company in August 1995.
Before becoming a director, Mr. Pierce served as an Advisory Director of the
Company since 1991. He currently is the Managing Director of the Chicago office
of Russell Reynolds Associates, Inc., an executive recruiting firm, which he
joined in 1976.
David D. Wesselink, age 58, became a director of the Company in August
1995. Before becoming a director, Mr. Wesselink served as an Advisory Director
of the Company since 1992. He currently is the Vice Chairman of Metris
Companies Inc., a direct marketer of consumer credit products and fee-based
services, which he joined in 1998. He was previously Chief Financial Officer of
Advanta Corporation, a consumer credit company, from 1993 until March 1998.
Prior thereto, he served in several capacities with Household International, a
consumer and commercial financial services company, including Chief Financial
Officer, Treasurer and Vice President, Research.
The Board of Directors unanimously recommends that you vote
"FOR" the election of each of the nominees for director.
Meetings and Committees of the Board
The three standing committees of the Board of Directors are the Audit
Committee, the Stock Option Committee, and the Compensation Committee, the
functions and membership of which are described below. The Board of Directors
does not have a standing nominating committee. The Board of Directors held four
meetings in 2000.
The Audit Committee's functions include making recommendations to the Board
of Directors on the selection of the Company's independent auditors, reviewing
the overall scope of the independent auditors' examination, reviewing the
proposed annual financial statements of the Company with the independent
auditors and reporting a summary of the Audit Committee's conclusions to the
Board of Directors; and reviewing the Company's internal controls and accounting
policies with the independent auditors and certain officers of the Company. The
Audit Committee currently consists of Messrs. Covalt, Pierce, and Wesselink.
The Stock Option Committee is responsible for the administration and
interpretation of, and the granting of options under the CFC International, Inc.
Stock Option Plan (the "Stock Option Plan"), the CFC International, Inc.
Directors' Stock Option Plan (the "Directors' Stock Option Plan") and the CFC
International, Inc. Stock Purchase Plan (the "Stock Purchase Plan"), the CFC
International, Inc. 2000 Stock Option Plan ("2000 Stock Option Plan") and the
CFC International, Inc. 2000 Directors' Stock Option Plan ("2000 Directors'
Stock Option Plan" and together with the Stock Option Plan, Directors' Stock
Option Plan and the 2000 Stock Option Plan, referred to as the "Employee
Plans"). Messrs. Covalt, Pierce and Wesselink currently are the members of the
Stock Option Committee.
The Compensation Committee is responsible for approving all employment
contracts, if any, and salaries of officers of the Company. The Compensation
Committee also is responsible for all bonuses, other payments, plans (other than
the Employee Plans), programs, and benefits for the Company's officers. Messrs.
Hruby and Pierce currently comprise the Compensation Committee.
Nominations for election of directors are made by the Board of Directors
and, pursuant to the Company's bylaws, may be made by a committee appointed by
the Board or by any stockholder entitled to vote in the election of directors.
See "Submission of Stockholder Proposals for the 2002 Annual Meeting" for
procedures with respect to nominations by stockholders.
During 2000, the Stock Option Committee held four meetings; the Audit
Committee held two meetings and the Compensation Committee met once. In 2000,
during the time each director served
3
During 2000, the Stock Option Committee held four meetings; the Audit Committee
held two meetings and the Compensation Committee met once. In 2000, during the
time each director served in such capacity, no director attended less than 75%
of the aggregate of all meetings of the Board and all meetings held by
committees of the Board on which such director served.
Other Matters
Management knows of no other matters to be brought before the annual
meeting other than those described above. If any other business should come
before the meeting, we expect that the persons named in the enclosed proxy will
vote your shares in accordance with their best judgment on that matter.
4
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 12, 2001, certain information
regarding the beneficial ownership of the Common Stock by each person known by
the Company to be the beneficial owner of 5% or more of the outstanding Common
Stock, by each director, nominee for director, and Named Executive Officer (as
defined below under "Management Compensation"), and by all directors and
executive officers as a group. As of such date, there were 147 record holders
and approximately 700 beneficial holders of Common Stock and 4,053,193 shares of
Common Stock outstanding.
Shares Beneficially
Owned
---------------------
Name(1) Number(2) Percent
------- ------------ -------
Roger F. Hruby (3)............................... 2,445,021 60.3
Dennis W. Lakomy................................. 322,495 8.0
William G. Brown (4)............................. 169,394 4.2
Richard L. Garthwaite............................ 58,616 1.4
Robert B. Covalt................................. 8,125 0.2
Richard Pierce................................... 11,625 0.3
David D. Wesselink............................... 13,625 0.3
RFH Investments, LP (5).......................... 930,044 22.9
Royce & Associates, Inc.(6)...................... 455,600 11.2
Artisan Partners Limited Partnership (7)......... 349,100 8.6
Wellington Management Company, LLP (8)........... 227,000 5.6
All directors and executive officers as a group
(7 persons) (3)(4)............................. 2,577,493 63.6
___________
* Represents less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, the address of all of the persons named or
identified above is c/o CFC International, Inc., 500 State Street, Chicago
Heights, Illinois 60411.
(2) The numbers and percentages of shares shown above as owned by the directors,
Named Executive Officers, and by all directors and executive officers as a
group include in each case all outstanding stock options covering shares of
Common Stock that were exercisable within 60 days of March 12, 2001 by that
person or group as follows: (i) Dennis W. Lakomy - 4,958; (ii) William G.
Brown - 10,625; (iii) Robert B. Covalt - 8,125; (iv) Richard Pierce -
10,625; (v) David D. Wesselink - 10,625; (vi) Richard L. Garthwaite - 8,616;
and all directors and executive officers as a group (including such
individuals) - 53,574.
(3) Includes 930,044 shares of Common Stock owned by RFH Investments, LP, a
limited partnership of which Mr. Hruby is the managing general partner (and
of which all of the partners are members of Mr. Hruby's immediate family or
trusts for the benefit of such family members), but does not include 512,989
shares of Class B Common Stock owned by RFH Investments, LP. The shares of
Common Stock shown above as beneficially owned by Mr. Hruby also include
471,200 shares of Common Stock which Mr. Lakomy and members of Mr. Brown's
family beneficially owned immediately after the Company's initial public
offering of Common Stock in November 1995, which they still hold, and for
which Mr. Hruby holds an irrevocable voting proxy. Mr. Hruby also holds an
irrevocable voting proxy on Mr. Garthwaite's 50,000 shares, which are also
included above. In addition to the Common Stock set forth in the table
above, Mr. Hruby owns an option to purchase 534 shares of the Company's
Voting Preferred Stock with an exercise price of $500 per share. The Voting
Preferred Stock is entitled to 1,000 votes per share on all matters to be
voted upon by the Company's stockholders. These shares are not included in
the above table.
(4) Includes 157,067 shares of Common Stock which are owned by the William
Gardner Brown 1993 GST Trust, a trust for the benefit of Mr. Brown's family
and of which Mr. Brown is not a beneficiary nor is he, or a member of his
immediate family, a trustee.
(5) RFH Investments, LP also owns 512,989 shares of Class B Common Stock, which
is substantially equivalent to the Common Stock in all respects except that
the Class B Common Stock generally is not entitled to vote on any matters
submitted to a vote of the Company's stockholders and not included in shares
owned.
(6) The number of shares of Common Stock shown as beneficially owned is derived
from a Schedule 13G dated February 7, 2001 filed with the Securities and
Exchange Commission by the listed stockholder. Such stockholder's address is
1414 Avenue of the Americas, New York, New York 10019.
(7) The number of shares of Common Stock shown as beneficially owned is derived
from a Schedule 13G dated February 9, 2001 filed with the Securities and
Exchange Commission by the listed stockholder. Such stockholder's address is
1000 North Water Street, #1770, Milwaukee, WI 53202.
(8) The number of shares of Common Stock shown as beneficially owned is derived
from a Schedule 13G dated February 14, 2001 filed with the Securities and
Exchange Commission by the listed stockholder. Such stockholder's address is
75 State Street, Boston, MA 02109.
5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that our directors and executive
officers, and any person who own more than 10% of the Common Stock, to report
their transactions in the Common Stock to the Securities and Exchange Commission
and the Company within a specified period following a transaction. Based solely
on our review of copies of the forms that we have received, we believe that
during 2000, our executive officers, directors, and greater than 10%
stockholders complied with their reporting obligations.
MANAGEMENT COMPENSATION
The following table provides certain summary information concerning the
compensation paid or accrued during the year ended December 31, 2000 to our
Chief Executive Officer and to each of the other executive officers who received
compensation in excess of $100,000 during the last fiscal year (the "Named
Executive Officers"). The Company does not have a restricted stock award
program or a long-term incentive plan. No options to purchase Common Stock were
granted to the Named Executive Officers during 2000.
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
--------------------------------------- --------------------------
Other Securities
Annual Restricted Underlying All Other
Name and Principal Salary Bonus Compensation Stock Options/SARs Compensation
Position Year ($) ($) ($) ($) (#) ($)*
-------- ---- --- --- --- --- --- ----
Roger F. Hrubyl................ 2000 421,599 19,210 - - - 3,200
Chairman of the Board 1999 385,000 59,460 - - - 5,000
Chief Executive Officer 1998 350,000 - - - - 5,000
Richard L. Garthwaite.......... 2000 233,758 5,300 - - - 3,200
President, Chief Operating 1999 188,194 30,000 - 493,750 (1) 16,674 -
Officer - - - - - - -
Dennis W. Lakomy............... 2000 189,240 4,554 - - - 3,200
Executive Vice President, 1999 181,912 18,027 - - - 3,643
Chief Financial Officer, 1998 175,665 - - - - 3,568
Treasurer, and Secretary
___________
* Reflects matching contributions made by the Company pursuant to the
Company's contributory retirement savings plan, which covers eligible
employees who qualify as to age and length of service. Under the plan, the
Company makes matching contributions equal to 50% of the first 4% of the
employee's income that the employee contributes.
(1) Mr. Garthwaite was awarded 50,000 restricted shares of the Company's common
stock on January 18, 1999, having an aggregate fair market value of the
amount shown in the table on that date. The award vests 25% on the date of
the grant, with the remainder vesting equally over the first three
anniversary dates.
6
Option Exercises and Year-End Valuation
The following table provides certain information with respect to the Named
Executive Officers concerning the exercise of options and/or stock appreciation
rights ("SARs") during 2000 and unexercised options and SARs held on December
31, 2000:
Aggregate 2000 Option/SAR Exercises And Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Options/SARs at 12/31/00 SARs at 12/31/00*
Shares Acquired Value ------------------------------ ---------------------------
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ---- --------------- ----------- ------------- ------------- ----------- -------------
Roger F. Hruby......... - - - - - -
Richard L. Garthwaite.. - - 8,616 16,674 - -
Dennis W. Lakomy....... - - 4,958 5,316 - -
__________
* This column indicates the aggregate amount, if any, by which the market value
of the Common Stock on December 31, 2000 exceeded the options' exercise price
and is based on the closing per share sale price of the Common Stock on such
date of $4.625 as quoted on the Nasdaq National Market.
Directors' Compensation
We pay our directors who are not employees $1,500 for each board meeting
attended and $750 for each board committee meeting attended that is not held on
the same day as a board meeting. We do not pay our directors an annual
retainer. We do not pay our directors who are also our employees any
compensation for serving as directors.
Under the 2000 Directors' Stock Option Plan, approved by the stockholders
of the Company at last year's meeting, one-time options were granted to each of
the Company's non-employee directors, Messrs. Brown, Covalt, Pierce and
Wesselink, on November 12, 1999, each covering 2,500 shares of Common Stock.
Each of the options has a term of ten years and a per share exercise price of
$5.81. The options become exercisable as to one-fourth of the grant on each of
the first, second, third, and fourth anniversary of the date of grant.
Employment Contracts
We have an employment agreement with Mr. Garthwaite under which he is
entitled to receive an annual base salary and bonus. In addition, the agreement
provides for the payment of compensation and benefits if Mr. Garthwaite's
employment is terminated following a change in control of the Company. If Mr.
Garthwaite is terminated following a change in control, he will receive a
payment equal to 24 months of his base salary plus a prorated bonus.
Compensation Committee Interlocks and Insider Participation
Mr. Hruby, the Company's Chief Executive Officer, together with Mr. Pierce,
comprise the Compensation Committee of the Board of Directors, which determines
the compensation of the Company's executive officers in the future.
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Report of the Audit
Committee", "Report of the Compensation Committee" and "Performance Graph" will
not be deemed to be filed or to be proxy soliciting material or incorporated by
reference in any prior or future filings by the Company under the Securities Act
of 1933 as amended, or the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
7
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is comprised of three
independent members, each of whom is able to read and understand fundamental
financial statements and at least one of whom has past experience in accounting
or related financial management experience.
The primary function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities by reviewing the financial information
which will be provided to the stockholders and others, the systems of internal
controls which management has established, and the audit process. In doing so,
it is the responsibility of the Audit Committee to provide an open avenue of
communication between the Board of Directors, management, the internal auditors
and the independent accountants.
The written charter of the Audit Committee, which was approved by the full
Board of Directors of the Company on May 29, 2000, is included in Appendix A to
this proxy statement. The charter specifies the scope of the Audit Committee's
responsibilities and how it should carry out those responsibilities.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2000, with the
Company's management. The Audit Committee has discussed with
PricewaterhouseCoopers LLP, the Company's independent public accountants, the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee has also received
the written disclosures and the letter from PricewaterhouseCoopers LLP, required
by Independence Standards Board Standard No. 1 (Independence Discussion with
Audit Committees), has discussed the independence of PricewaterhouseCoopers LLP,
with that firm, and has considered the compatibility to those non-audit services
provided by PricewaterhouseCoopers LLP described below with the auditors'
independence.
Based on the review and discussions with the Company's independent auditors
for the fiscal year ended December 31, 2000, the Audit Committee recommended to
the Board of Directors that the financial statements be included in the
Company's Annual Report on Form 10-K.
Beginning June 14, 2001, each member of the Audit Committee will be
required to meet the independence and experience requirements of Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards. As of this date of this proxy statement, each member of the
committee meets these standards.
Audit Committee Members
Robert B. Covalt
Richard Pierce
David D. Wesselink
8
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors generally determines
the compensation of our executive officers. The Compensation Committee
currently consists of two directors of the Company. The following report with
respect to certain compensation paid or awarded to the Company's executive
officers during 2000 is furnished by the directors who then comprised the
Compensation Committee.
General Policies
Our compensation program is intended to enable us to attract, motivate,
reward, and retain the management talent required to achieve corporate
objectives in a highly competitive industry, and thereby increase stockholder
value. It is our policy to provide incentives to our senior management to
achieve both short-term and long-term objectives. To attain these objectives,
the executive compensation program is composed primarily of a base salary,
bonuses, and stock option grants.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
annual deduction for federal income tax purposes of certain compensation paid by
any publicly held corporation to its chief executive officer and its four other
highest compensated officers to $1 million per each such executive (the "$1
million cap"). We do not expect the compensation currently paid to the
Company's executive officers, including pursuant to the Employee Plans, to
exceed the $1 million cap.
Cash Compensation
We determine base salaries for executive officers by subjectively assessing
the executive officer's responsibilities and position within the Company, and
the performance of the executive officer. Base salaries are reviewed annually,
and from time to time, by the Compensation Committee and adjusted appropriately.
We exceeded our minimum targeted Company performance expectations during 1999.
As a result, our executive officers will receive a bonus for 2000 in 2001.
Stock Options
We may grant options to executive officers, as well as other employees of
the Company, upon joining the Company and each year thereafter under the
Employee Plans. The Stock Option Committee takes into account factors including
salary, position and responsibilities when granting options to executive
officers. In 2000, the Stock Option Committee granted options to purchase
92,000 shares of Common Stock pursuant to the Stock Option Plan and 10,565
shares of Common Stock pursuant to the Stock Purchase Plan were issued.
9
Chief Executive Officer Compensation
During 2000, our most highly compensated executive officer was Roger F.
Hruby, Chairman and Chief Executive Officer since the date of our incorporation.
The Compensation Committee reviews Mr. Hruby's compensation using the same
criteria that it uses to determine compensation levels for other corporate
officers and based its compensation decisions on its assessment of Mr. Hruby's
overall performance and on information regarding awards made by similar
companies. No specific weighting was assigned to these factors. Based on its
review, the Compensation Committee believes that Mr. Hruby's experience,
dedication, and knowledge have been of vital importance to the successful and
ongoing growth of the administration and operations of the Company. In the
Compensation Committee's view, Mr. Hruby's fiscal 2000 compensation package
reflects an appropriate balance of (i) the Company's performance in fiscal 2000,
(ii) Mr. Hruby's own performance level, and (iii) competitive standards. Mr.
Hruby's compensation typically consists of a base salary and bonus.
Compensation Committee Members
Richard Pierce
Roger F. Hruby
10
PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
returns of the Company's Common Stock, the Nasdaq Composite Index, and the S&P
Chemical Composite Index (assuming reinvestment of any dividends) for the period
beginning on November 16, 1995, the effective date of the registration of the
Common Stock under Section 12 of the Exchange Act, and ending on December 31,
2000, the last day of the Company's 2000 fiscal year.
Comparison of Cumulative Return
vs. Nasdaq Composite and S&P Chemical Composite Indices*
[GRAPHIC]
Company/Index Name 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ------------------ --------- --------- --------- --------- --------- ---------
CFC International, Inc. $ 90.79 $ 118.42 $ 123.68 $ 84.21 $ 64.47 $ 48.68
Nasdaq Composite Index 100.73 123.61 150.35 209.93 389.60 236.53
S&P Chemical Composite Index 104.49 127.89 152.50 141.21 161.06 139.42
_____________
* Assumes $100 invested on November 16, 1995 in the Company's Common Stock, the
Nasdaq Composite Index, and the S&P Chemical Composite Index. Historical
results are not necessarily indicative of future performance.
11
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of the Audit
Committee, has selected the accounting firm of PricewaterhouseCoopers LLP to
serve as our independent accountants for our current fiscal year ending December
31, 2001. PricewaterhouseCoopers LLP has served as our independent auditors
since 1986. We expect that representatives of PricewaterhouseCoopers LLP will
be present at the annual meeting, and they will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions from you.
The fees paid by the Company to PricewaterhouseCoopers LLP for the fiscal
year ended December 31, 2000 were as follows:
Audit Fees
The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2000 and the reviews of the
financial statements included in the Company's Forms 10-Q for the fiscal year
ended December 31, 2000 were $155,500, of which $140,500 have been billed.
Financial Information Systems Design and Implementation Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for financial
information systems design and implementation services were $0.
All Other Fees
The aggregate fees billed for services rendered by PricewaterhouseCoopers
LLP, other than the fees discussed in the foregoing paragraphs, were $75,000.
SOLICITATION OF PROXIES
The Board of Directors will solicit proxies through the use of the mail.
Proxies may also be solicited by directors, officers, and a small number of
other employees of the Company personally, or by mail, telephone, facsimile, or
otherwise, but we will not compensate these persons for these services. We will
request brokerage firms, banks, fiduciaries, voting trustees, or other nominees
to forward the soliciting material to the beneficial owners of stock held of
record by them, and we have hired Proxy Services Corporation to coordinate the
solicitation of proxies by and through such holders for a fee of approximately
$1,000 plus expenses. We will bear the entire cost of the Board of Directors'
solicitation.
12
SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
In accordance with rules promulgated by the Securities and Exchange
Commission, if you wish to submit a proposal for inclusion in the proxy material
to be distributed by us in connection with the 2002 Annual Meeting, you must do
so no later than November 19, 2001. Any such proposal should be submitted in
writing to the Secretary of the Company at our principal executive offices.
Upon submitting a proposal, you must provide us with a written notice that
includes your name and address, the number of shares of Common Stock that you
hold of record or beneficially, the dates upon which you acquired your shares,
and documentary support for your claim of beneficial ownership.
GENERAL
It is important that proxies be returned promptly. If you are unable to
attend the meeting, you are urged, regardless of the number of shares owned, to
date, sign, and return without delay your proxy card in the enclosed addressed
envelope.
By Order of the Board of Directors
Dennis W. Lakomy
Executive Vice President, Chief Financial Officer,
Treasurer, and Secretary
13
Appendix A
CFC INTERNATIONAL, INC.
Audit Committee Charter
I. Organization
------------
The Audit Committee of the Board of Directors shall be comprised of at
least three directors who are independent of management and the Company.
Members of the Audit Committee shall be considered independent if they have no
relationship to the Company that may interfere with the exercise of their
independence from management and the Company, and shall otherwise satisfy the
applicable membership requirements under the rules of the National Association
of Securities Dealers, Inc. If it is determined that the Board does not have
three members that meet the definition of independence, the Board may choose to
elect no more than one Board member to the Audit Committee that does not meet
the definition. Each Audit Committee member shall be financially literate or
become financially literate within a reasonable period of time after his or her
appointment to the Audit Committee, and at least one member shall have
accounting or related financial management expertise.
II. Statement of Policy
-------------------
The primary function of the Audit Committee is oversight. The Audit
Committee shall provide assistance to the Board of Directors in fulfilling the
Board's responsibility to the Company's shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the Company, and the quality and integrity of financial reports regarding the
Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open communication between the directors, the independent
auditors, and the senior management of the Company.
III. Meetings
--------
The Audit Committee shall meet at least two times annually, or more
frequently as circumstances dictate. As part of its oversight function, the
Audit Committee should meet at least annually with management and the
independent auditors in separate executive sessions to discuss any matters that
the Audit Committee or each of these groups believe should be discussed. In
addition, the Audit Committee shall meet at least semi-annually with the
independent auditors and management to review the Company's financial
statements.
IV. Responsibilities and Duties
---------------------------
In carrying out its responsibilities and duties, the Audit Committee
believes its policies and procedures should remain flexible, to best react to
changing conditions and to reasonably ensure to the directors and shareholders
that the corporate accounting and reporting practices of the Company are in
accordance with all requirements and are of the highest quality.
A-1
In carrying out these responsibilities and duties, the Audit Committee shall:
Documents/Reports Review
- ------------------------
. Obtain the full Board of Directors' approval of this Charter and review and
reassess this Charter as conditions dictate, but no less frequently than
annually.
. Review the organization's annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by
the independent auditors.
. The Audit Committee Chairman will review with financial management and the
independent auditors the 10-Q prior to its filing or prior to the release of
earnings.
Independent Auditors
- --------------------
. Recommend to the Board of Directors the selection of the independent
auditors, considering independence and effectiveness and approve the fees and
other compensation to be paid to the independent auditors. On an annual
basis, the Audit Committee shall review and discuss with the auditors all
significant relationships the auditors have with the Company to determine the
auditors' independence. In so doing, the Audit Committee shall require a
report from the independent auditors delineating all relationships between
the auditors and the Company, consistent with Independence Standards Board
Standard No. 1.
. Establish a clear understanding that independent auditors are ultimately
accountable to the Board of Directors and the Audit Committee, as
representatives of shareholders, and that these shareholder representatives
have the ultimate authority and responsibility to select, evaluate, and,
where appropriate, replace the independent auditor.
. Review the performance of the independent auditors and approve any proposed
discharge of the independent auditors when circumstances warrant.
. Periodically consult with the independent auditors regarding internal
controls and the fullness and accuracy of the organization's financial
statements.
Financial Reporting Processes
- -----------------------------
. In consultation with the independent auditors, review the integrity of the
organization's financial reporting processes, both internal and external.
. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
. Consider and approve, if appropriate, major changes to the Company's auditing
and accounting principles and practices as suggested by the independent
auditors and management.
A-2
Process Improvement
- -------------------
. Establish regular and separate systems of reporting to the Audit Committee by
each of management and the independent auditors regarding any significant
judgments made in management's preparation of the financial statements and the
view of each as to appropriateness of such judgments.
. Following completion of the annual audit, review separately with each of
management and the independent auditors any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.
. Review any significant disagreement among management and the independent
auditors in connection with the preparation of the financial statements.
. Review with the independent auditors and management the extent to which
changes or improvements in financial or accounting practices, as approved by
the Audit Committee, have been implemented.
Ethical and Legal Compliance
- ----------------------------
. Ensure that management has the proper review system in place to ensure that
the Company's financial statements, reports and other financial information
disseminated to governmental organizations and the public satisfy legal
requirements.
. Perform any other activities consistent with this Charter, the Company's
Bylaws and governing law, as the Audit Committee or the Board of Directors
deems necessary or appropriate.
A-3
- --------------------------------------------------------------------------------
PROXY PROXY
CFC INTERNATIONAL, INC.
This Proxy is Solicited by the Board of Directors
for The Annual Meeting of Stockholders on April 20, 2001 - 1:30 p.m.
The undersigned hereby appoints Roger F. Hruby and Dennis W. Lakomy, and
each of them, each will full power of substitution, to act as proxies for the
undersigned, and to vote all shares of Common Stock of CFC International, Inc.
(the "Company") which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held on April
20, 2001, at 1:30 p.m., at the University of Chicago, Graduate School of
Business, The Conference Center, 450 North Cityfront Plaza Drive, Chicago,
Illinois, and at any and all postponements and adjournments thereof, as follows:
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR each of the Nominees
listed. If any other business is presented at the Annual Meeting, this proxy
will be voted by those named in this proxy in their best judgment. At the
present time, the Board of Directors knows of no other business to be presented
at the Annual Meeting.
PLEASE MARK, SIGN, DATE, AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
CFC INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
The Board of Directors recommends a vote FOR each For Withhold For All
nominee. All All Except*
1. Election of Directors - [_] [_] [_] In their discretion, on such other business as
Nominee(s): may properly come before the meeting.
01 Roger F Hruby 02 William G. Browm
03 Robert B. Covalt 04 Richard L. Garthwaite
05 Dennis W. Lakomy 06 Richard Pierce
07 David D. Wesselink Check here if you plan to attend the Annual
Meeting. [_]
The undersigned acknowledges receipt from
_________________________________________________________ the Company prior to the execution of this
*Nominee Exception proxy of a Notice of Annual Meeting of
- --------------------------------------------------------------------------------------- Stockholders, a Proxy Statement dated
March 20, 2001, and the Annual Report to
Stockholders.
Dated:________________,2001
THIS SPACE RESERVED FOR ADDRESSING Signature(s)___________________________
(key lines do not print) _______________________________________
Please sign, exactly as name appears on
the card. When signing as attorney,
executor, administrator, trustee,
guardian, corporate officer, or general
partner, please give your full title. If
- --------------------------------------------------------------------------------------- shares are held jointly, each holder may
sign but only one signature is required.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.