UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CALGON CARBON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO OF CALGON CARBON CORPORATION]
CALGON CARBON CORPORATION
CALGON CARBON CORPORATION P.O. BOX 717 PITTSBURGH, PA 15230-0717 TELEX671 1837 CCC PGH
PANAFAX: 412-787-6713
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Calgon Carbon Corporation at 1:00 p.m., Eastern Daylight Saving Time, on
Tuesday, April 18, 2000 at the principal executive office of the Company, 400
Calgon Carbon Drive, Pittsburgh, Pennsylvania.
Information about the business of the meeting and the nominees for election as
Directors is set forth in the notice of the meeting and the Proxy Statement,
which are attached. This year you are asked to elect three Directors for the
Class of 2003.
It is important that your shares be represented at the meeting. Even if you
plan to attend the meeting in person, we hope that you will send a proxy voting
on the matters to be considered. Please sign, date and return your proxy in the
enclosed envelope as promptly as possible.
Very truly yours,
/s/ James A. Cederna
James A. Cederna
President
March 17, 2000
CALGON CARBON CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Calgon Carbon Corporation will be held
at the principal executive office of the Company, 400 Calgon Carbon Drive,
Pittsburgh, Pennsylvania, on Tuesday, April 18, 2000 at 1:00 p.m., Eastern
Daylight Saving Time, for the following purposes:
(1) To elect three Directors for the Class of 2003; and
(2) To transact such other business as may properly come before the
meeting.
Please refer to the accompanying Proxy Statement for a description of the
matters to be considered at the meeting.
Holders of record of the Company's Common Stock as of the close of business on
March 10, 2000 are entitled to notice of and to vote at the meeting.
Please sign, date and return the enclosed proxy promptly in the envelope
provided, which requires no United States postage.
Joseph A. Fischette
Secretary
March 17, 2000
CALGON CARBON CORPORATION
PROXY STATEMENT
Table of Contents
Page
----
Voting Securities and Record Date.......................................... 1
Security Ownership of Management and Certain Beneficial Owners............. 1
Board of Directors and Committees of the Board............................. 3
Election of Directors ..................................................... 5
Executive Compensation..................................................... 6
Independent Auditors....................................................... 13
Vote Required.............................................................. 13
Other Business............................................................. 14
Stockholder Proposals...................................................... 14
CALGON CARBON CORPORATION
PROXY STATEMENT
Annual Meeting of Stockholders
April 18, 2000
The enclosed proxy is solicited on behalf of the Board of Directors of Calgon
Carbon Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held at 1:00 p.m., Eastern Daylight Saving Time, on
Tuesday, April 18, 2000 at the principal executive office of the Company, 400
Calgon Carbon Drive, Pittsburgh Pennsylvania. The accompanying Notice of
Annual Meeting of Stockholders sets forth the purposes of the meeting.
The enclosed proxy may be revoked at any time before its exercise by giving
written notice of revocation to the Secretary of the Company. The shares
represented by proxies in the form solicited by the Board of Directors will be
voted at the meeting. If a choice is specified on the proxy with respect to a
matter to be voted upon, the shares represented by the proxy will be voted in
accordance with that specification. If no choice is specified, the shares will
be voted as stated below in this Proxy Statement.
It is expected that this Proxy Statement and the accompanying form of proxy
will first be mailed to stockholders on or about March 17, 2000. The Company's
Annual Report to Stockholders for 1999 is enclosed with this Proxy Statement
but does not form a part of the proxy soliciting material. The cost of
soliciting proxies will be borne by the Company. Following the original
mailing of the proxy soliciting material, regular employees of the Company may
solicit proxies by mail, telephone, telecopy, telegraph and personal
interview. The Company may also hire a proxy solicitation firm or may request
brokerage houses and other nominees or fiduciaries to forward copies of the
proxy soliciting material and 1999 Annual Report to beneficial owners of the
stock held in their names, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred in doing so.
VOTING SECURITIES AND RECORD DATE
Holders of the Company's Common Stock of record as of the close of business on
March 10, 2000 are entitled to receive notice of and to vote at the meeting.
At the record date, the Company had outstanding 38,802,132 shares of Common
Stock, the holders of which are entitled to one vote per share. The Company
does not have cumulative voting.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Management
The following table shows the number of shares of Common Stock beneficially
owned by each Director of the Company, by James A. Cederna, Joseph A.
Fischette, Benjamin F. Ward, Jr. and Jonathan H. Maurer, executive officers of
the Company, by John M. MacCrum, who is no longer an executive officer of the
Company but who is named in the summary compensation table, and by all
Directors and executive officers of the Company as a group, as of the record
date. Unless otherwise indicated in the footnotes to the table, each person
named and all Directors and executive officers as a group have sole voting
power and sole investment power with respect to the shares. As used herein,
"beneficial ownership" means the sole or shared power to vote, or to direct
the voting of, a security, or the sole or shared investment power with respect
to a security (i.e., the power to dispose of, or to direct the disposition of,
the security). A person is deemed to have "beneficial ownership" of any
security that the person has the right to acquire within 60 days after the
record date.
1
Number Percent
Name of Beneficial Owner of Shares of Class
- ------------------------ --------- --------
Robert W. Cruickshank(1) 24,272 *
Arthur L. Goeschel(1) 95,100 *
Thomas A. McConomy(1) 4,646,880 12.0%
Nick H. Prater(1) 14,600 *
Seth E. Schofield 14,100 *
Harry H. Weil(1)(2) 18,200 *
Robert L. Yohe 24,600 *
James A. Cederna 294,415 *
Joseph A. Fischette(1)(3) 163,658 *
Benjamin F. Ward, Jr.(1) 53,500 *
Jonathan H. Maurer(1) 31,600 *
John M. MacCrum(1)(2)(3) 135,466 *
All directors and executive officers
as a group (13 persons)(1)(2)(3) 5,471,460 13.9%
- --------
*Less than 1%
(1) Includes (i) 14,600 shares in the case of each of Messrs. Cruickshank,
Goeschel and Weil, 13,600 shares in the case of Mr. Prater, 12,600 shares
in the case of Mr. McConomy and 12,100 shares in the case of each of
Messrs. Schofield and Yohe, granted under the Company's 1993 Non-Employee
Directors' Stock Option Plan, (ii) 225,000 shares in the case of Mr.
Cederna, 51,500 shares in the case of Mr. Fischette, 50,000 shares in the
case of Mr. MacCrum, 41,500 shares in the case of Mr. Ward and 31,500
shares in the case of Mr. Mauer granted under the Company's Stock Option
Plan and (iii) 480,200 shares in the case of all Directors and executive
officers as a group, in each case covered by options granted under the
aforementioned plans. The "percent of class" set forth above for any
individual and the group (but not for the other individuals listed above)
is computed as though such shares optioned to such individual or the
group, as the case may be, were outstanding.
(2) Includes 200 shares held by Mr. Weil's wife and 400 shares held by Mr.
MacCrum's wife, as to which beneficial ownership is disclaimed by Mr. Weil
and Mr. MacCrum and, as to Mr. MacCrum, includes 2,300 shares held by the
children of Mr. MacCrum.
(3) Includes 9,708, 7,366 and 24,004 shares in the case of Messrs. Fischette
and MacCrum, and all Directors and executive officers as a group,
respectively, held under the Company's Employees Growth Participation Plan
and allocated to the accounts of such executive officers. That plan was
terminated in 1990.
Other Beneficial Owners
Information as of December 31, 1999 with respect to the only persons not
otherwise disclosed in the Management table and known by the Company to be the
beneficial owner of more than 5% of the Company's Stock as of the record date
is as follows:
Beneficial Ownership
of Common Stock
----------------------
Number Percent
Name and Address of Shares of Class
- ---------------- ------------ ---------
ICM Asset Management, Inc. 3,638,288 9.4%
601 W. Main Avenue
Suite 600
Spokane, WA 99201
2
ICM Asset Management, Inc. has sole investment power over all shares. Voting
authority has been granted to it by clients owning 2,168,088 shares.
Beneficial Ownership
of Common Stock
----------------------
Number Percent
Name and Address of Shares of Class
- ---------------- ------------ ---------
Dimensional Fund Advisors, Inc. 1,981,700 5.11%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940, furnishes
investment advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other
commingled group trusts and separate accounts. These investment companies,
trusts and accounts are the "Funds." In its role as investment adviser or
manager, Dimensional possesses voting and/or investment power over the
securities of the Company that are owned by the Funds. Dimensional has sole
voting and investment power over all shares. Dimensional disclaims beneficial
ownership of such securities.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The business of the Company is under general supervision of a Board of
Directors as provided by the laws of Delaware, the Company's state of
incorporation. The Board of Directors has established committees to assist it,
consisting of the Executive Committee, the Compensation Committee, the Audit
Committee and the Corporate Governance Committee. The Board of Directors also
had a Pension Committee and Environmental Committee during 1999 which prior to
year end became the responsibility of the Compensation Committee and Audit
Committee, respectively.
Executive Committee. The Executive Committee consists of Messrs. McConomy
(Chairman), Cederna, Goeschel and Weil. The Executive Committee, during the
intervals between meetings of the Board, when prompt action is needed and it
is impossible or inconvenient to convene a full meeting of the Board, may
exercise limited powers granted by the Board of Directors in the management of
the business and affairs of the Company.
Compensation Committee. The Compensation Committee consists of Messrs.
Cruickshank (Chairman), Prater and Schofield. The Compensation Committee's
overall responsibility is to determine and implement the Company's general
policies with respect to the compensation of its executive officers. The
Compensation Committee determines the base salary payable to each executive
officer, as well as the bonus, if any, payable to each executive officer, and
to certain key employees, pursuant to the Company's Incentive Plan or
otherwise. The Committee also administers the Company's Stock Option Plan and
has the authority to grant options thereunder. Other matters related to the
compensation of executive officers and key employees, such as the terms of
employment contracts and certain employee benefits, are also reviewed by the
Compensation Committee.
Audit Committee. The Audit Committee consists of Messrs. Weil (Chairman),
Goeschel and Schofield. It is the responsibility of the Audit Committee to
review and approve the Company's consolidated financial statements each year
prior to their announcement to the public and their distribution to the
stockholders in the Annual Report. Among other things, the Audit Committee
consults separately with the Company's chief financial officer and his staff,
and with the Company's independent external auditors, as to the proposed audit
plan, any difficulties encountered in carrying out the audit plan, significant
decisions made in preparing the financial statements, any disagreements
between management and the independent auditors as to the application of
accounting principles or other matters, and the form and content of the notes
to the financial statements and Management's Discussion and Analysis of the
financial statements. In 2000 the Audit Committee will also review the
Company's quarterly financial statements but does not customarily perform
similar functions with respect to other financial statements which cover less
than a full fiscal year. The Audit Committee reviews other
3
financial reporting and accounting matters when requested to do so by
management or the independent auditors, and satisfies itself that the
Company's system of internal controls is functioning adequately and reliably.
The Audit Committee believes that the independent auditors are ultimately
accountable to the Board of Directors and the Audit Committee. In this
connection the Audit Committee discusses with the independent auditors the
quality, as well as the acceptability, of the Company's accounting principles
as applied in its financial reporting. The Audit Committee periodically
reviews all relationships between the Company and the independent auditors
which might impact the objectivity and independence of the independent
auditors. Each year the Audit Committee evaluates the performance of the
independent auditors and recommends to the Board of Directors the retention
or, if appropriate, replacement of the independent auditors. The Audit
Committee also investigates and reports to the Board as to any alleged breach
of law or of the Company's internal policies which is brought to its
attention.
Corporate Governance Committee. The Corporate Governance Committee consists of
Messrs. Yohe (Chairman), Cruickshank and McConomy. The Corporate Governance
Committee is responsible for the functioning of the Board and its committees,
with the goal of causing the Board and its committees to satisfactorily
address the major issues related to the performance and well-being of the
Company. Among the duties of the Corporate Governance Committee is to review
the size and composition of the Board of Directors and to make recommendations
with respect to nominations for election or appointment of Directors. The
Corporate Governance Committee will consider nominees recommended by
stockholders provided that stockholders submit the names of nominees and the
other information required by Section 1.08 of the By-Laws of the Company in
writing to the Secretary of the Company. Such information should be received
no later than January 15, 2001 with respect to nominations for election at the
2001 Annual Meeting of Stockholders.
During 1999, the Compensation Committee held two meetings, the Corporate
Governance Committee held one meeting, the Audit Committee held three
meetings, and the Executive Committee did not meet. The Board of Directors
held nine meetings during 1999.
Compensation of Directors
Board and Committee Fees. Directors who are full-time employees of the Company
or a subsidiary receive no additional compensation for services as a member of
the Board or any committee of the Board. Directors who are not employees of
the Company receive an annual retainer of $18,000 for Board service. The
retainer fees are payable in cash or Common Stock of the Company as described
below. Non-employee Directors also receive a fee of $1,500 for each Board and
committee meeting attended, and the Chairmen of each committee receive an
additional annual retainer of $3,000. No committee meeting fees are paid for
committee meetings held by telephone or on the same day as a Board meeting.
1999 Phantom Stock Plan. The 1999 Phantom Stock Plan provides each non-
employee director with phantom stock with a value upon issuance of $7,000 each
year. No actual stock of the Company is issued under this plan. Instead, each
director is credited on the day following the Annual Meeting of Stockholders,
in an account maintained for the purpose, with the fair market value of shares
of the Company's Common Stock equal to $7,000. Directors are also credited
with the fair market value of shares equal to the amount of the cash dividends
which would have been paid if the phantom stock were actual Common Stock. As
the actual fair market value of the Company's Common Stock changes, the
credited value of the director's phantom stock will change accordingly. When
the director leaves the Board for any reason, including death or disability,
the director will be entitled to be paid, in cash, the entire amount then
credited in the account.
1997 Directors' Fee Plan. The 1997 Directors' Fee Plan provides Directors with
payment alternatives for retainer (but not meeting) fees payable as a member
of the Board or as the Chairman of any committee. Pursuant to the Plan,
Directors are permitted to receive their retainer fees in a current payment of
cash or in a current payment of shares of Common Stock of the Company based
upon the fair market value of the Common Stock
4
upon the date of payment of the fee, or to defer payment of the retainer fees
for subsequent payment of shares of Common Stock pursuant to a stock deferral
election. Payment of Common Stock placed in a deferred stock account will be
made in the calendar year following the calendar year during which a Director
ceases to be a Director of the Company, including by reason of death or
disability.
1993 Non-Employee Directors' Stock Option Plan. The 1993 Non-Employee
Directors' Stock Option Plan, as amended in 1997, provides for an annual grant
on the day following the Annual Meeting of Stockholders of option shares equal
to a number of shares which will result in a Black-Scholes calculated value of
$25,000 on the date of grant. The options vest and become exercisable six
months after the date of grant and, in general, expire ten years after the
date of grant. There are previously issued options outstanding under the pre-
1997 Plan, all of which have option prices in excess of the fair market value
of the Common Stock on December 31, 1999.
ELECTION OF DIRECTORS
The Board of Directors, acting pursuant to the bylaws of the Company, has
determined that the number of Directors constituting the full Board of
Directors shall be eight at the present time. The Board is to be divided into
three classes of nearly equal size. One such class is elected every year at
the Annual Meeting for a term of three years.
The Board of Directors has, upon recommendation of the Corporate Governance
Committee, nominated James A. Cederna, Harry H. Weil and Robert L. Yohe for
reelection as Directors in the Class of 2003, and each of them has agreed to
serve if elected. Messrs. Cederna, Weil and Yohe will hold office until the
2003 Annual Meeting of Stockholders, or in any case until the Director's prior
death, disability, resignation or removal. Proxies are solicited in favor of
these nominees and will be voted for them unless otherwise specified.
If any nominee becomes unable or unwilling to serve as a Director, it is
intended that the proxies will be voted for the election of such other person,
if any, as shall be designated by the Board of Directors.
Information concerning the nominees for Director and the other Directors who
will continue in office after the meeting is set forth below, together with
information concerning the Company's executive officers who are not Directors.
Name Age Position with the Company
- ---- --- -------------------------
Class of 2003
James A. Cederna 49 Director and President and CEO
Harry H. Weil 66 Director
Robert L. Yohe 63 Director
Class of 2002
Nick H. Prater 71 Director
Seth E. Schofield 60 Director
Class of 2001
Robert W. Cruickshank 54 Director
Arthur L. Goeschel 78 Director
Thomas A. McConomy 66 Director
Executive Officers
William E. Cann 44 Senior Vice President--
Chief Financial Officer
Joseph A. Fischette 53 Senior Vice President, General Counsel
and Secretary
Jonathan H. Maurer 44 Senior Vice President
Robert P. O'Brien 49 Senior Vice President
Benjamin F. Ward, Jr. 56 Senior Vice President
5
Mr. Cederna has been President and Chief Executive Officer of the Company
since April 1999. Mr. Cederna was President of Arizona Chemical Co., a
manufacturer of specialty chemicals derived from wood and a company of
International Paper Corp., from September 1996 until April 1999, President of
Columbian Chemical Co., a manufacturer of carbon black and an affiliate of
Phelps Dodge Corp., from July 1995 until September 1996, and prior thereto he
was Global Business Manager of Dow Chemical Co., a chemicals manufacturer. Mr.
Cann has been the Senior Vice President and Chief Financial Officer of the
Company since October 1999. Mr. Cann was the Vice President and Treasurer of
Reichhold Inc., a chemical manufacturer, from November 1996 until September
1999 and prior thereto he was the Director, International Finance at
Reichhold. Mr. Fischette has been an executive officer of the Company since
1985. Mr. O'Brien has been the Senior Vice President--Engineered Solutions of
the Company since January 2000. Mr. O'Brien was President of the Company's
Advanced Separation Technologies subsidiary from January 1999 until January
2000, Vice President of the Company's affiliate Chemviron Carbon from January
1997 until January 1999 and prior thereto he was Vice President--Commercial
and Industrial Business Units of the Company. Mr. Ward has been Senior Vice
President--Technology since August 1997. Prior thereto Mr. Ward was Research
Director of Westvaco Corp., a pulp, paper and chemical manufacturer. Mr.
Maurer has been Senior Vice President--Manufacturing since March 1998. Prior
thereto, he was Vice President--Manufacturing of the Company.
Mr. McConomy has been a Director of the Company since its formation in 1985.
Mr. McConomy is a private investor. He also served as Chairman of the Board,
President and Chief Executive Officer of the Company. Mr. McConomy is also a
director of Equitable Resources, Inc.
Mr. Cruickshank has been a Director of the Company since November 1985. Mr.
Cruickshank is President of R.W. Cruickshank & Co. He is also a director of
Friedmans, Inc.
Mr. Goeschel has been a Director of the Company since its formation in 1985.
Mr. Goeschel is a retired president of Calgon Corporation, formerly a
subsidiary of Merck & Co., Inc. Mr. Goeschel is a director of the Dreyfus-
Laurel Mutual Funds.
Mr. Prater has been a Director of the Company since August 1990. Until June
1990, when he retired, Mr. Prater was President and Chief Executive Officer of
Mobay Corporation (now called Bayer Corporation), a chemical producer. He is
also a director of Koppers Industries, Inc.
Mr. Schofield has been a Director of the Company since December 1995. Since
February 1996, Mr. Schofield has been the Chairman of Base International, a
provider of corporate protection and security. From June 1992 until January
1996, when he retired, Mr. Schofield was Chairman and Chief Executive Officer
of USAir Group, a major air carrier. Mr. Schofield is also a director of USX
Corporation.
Mr. Weil has been a Director of the Company since its formation in 1985. Mr.
Weil is a retired partner of the law firm of Reed Smith Shaw & McClay, which
provides legal services to the Company. Mr. Weil is also a director of Erie
Indemnity Company and Erie Family Life Insurance Company.
Mr. Yohe has been a Director of the Company since December 1995. Until March
1994, when he retired, Mr. Yohe was Vice Chairman of Olin Corporation, a
producer of chemicals, microelectronic materials, metals, sporting ammunition
and defense and aerospace products. Mr. Yohe is also a director of Airgas,
Inc., Marsulex, Inc., LaRoche Industries, Inc. and The Middleby Corporation.
EXECUTIVE COMPENSATION
In 1985 the Board of Directors created a Compensation Committee, consisting of
at least three Directors who are not employees of the Company. One of the
functions of the Compensation Committee is to review the compensation of the
Company's executive officers and methodology from which such compensation is
derived. The Compensation Committee then makes recommendations to the Board of
Directors on such matters, except
6
for the granting of stock options, which is done by the Committee alone. In
order to permit grants under the Stock Option Plan to satisfy Rule 16b-3, Mr.
Weil did not participate in stock compensation decisions by the Committee.
The following is the report of the members of the 1999 Compensation Committee,
Messrs. Cruickshank (Chairman), Goeschel, Prater, Schofield, Weil and Yohe,
concerning 1999 compensation of the Company's executive officers. In January
2000, the Compensation Committee was reorganized to include only Messrs.
Cruickshank (Chairman), Prater and Schofield.
Compensation Committee Report on Executive Compensation
General policies with respect to executive compensation
--------------------------------------------------------
The Compensation Committee's policies with respect to executive compensation
are intended to achieve three principal goals.
First, they are intended to create base compensation levels sufficient to
attract and retain talented and dedicated executive officers. To accomplish
this, the Committee periodically compares the Company's base salaries with
those currently paid for similar positions by other companies. The Committee
also reviews the total compensation package available to executive officers to
ensure it remains competitive.
Second, the compensation policies are intended to provide a direct link
between both individual performance and performance of the Company as a whole,
with the officer's compensation. This is done through bonuses available to
executive officers.
Third, the compensation policies are intended to provide executive officers
with the opportunity to acquire an equity stake in the Company through the
granting of stock options. These options are granted at full market prices and
with delayed vesting provisions.
The Committee's general philosophy is that salaries for the Company's
executive officers should be somewhat less than the median salaries paid by
other companies for comparable positions, so that the potential compensation
of an executive officer in a particular year will be more heavily weighted
toward incentive compensation such as bonus and stock options.
Compensation in 1999
--------------------
Salary. Base salaries are designed to be at levels at or slightly below those
of executive officers of comparable companies. The Committee considers a
number of factors in its discretion and does not determine base salaries by
any formula or objective basis. The Committee also uses outside consultants
from time to time in this area.
In 1999, the Committee concluded that the salaries of Messrs. Fischette,
Maurer, MacCrum and Ward merited adjustment, and recommended increases ranging
from 4% to 10%.
Bonus. In late 1999, the incentive system was modified to attempt to provide a
more direct link between the employees and performance. The new compensation
system is based on both economic profit and individual performance. In this
context, economic profit is defined as "Net Operating Profit After Taxes"
(NOPAT) compared to the "Cost of Capital Employed". Economic profit is
measured at various levels in the corporation and the objective is to link
changes in economic profit with executive bonuses. In addition, individuals
also have specific performance objectives that influence their bonus. The
interaction of economic profit and individual performance determines an
employee's bonus. Each participating employee has a target bonus which can
range from 20% to 75% of base salary. Individual performance can alter these
target ranges moderately. The bonuses are paid 33% in Common Stock and 67% in
cash. Approximately 50 employees are currently eligible for participation in
the bonus plan.
Based on the Company's performance, the Committee did not grant any bonuses
for 1999.
7
Stock options. Under the terms of the Company's Stock Option Plan adopted in
1985, the Committee (excluding Mr. Weil) determines which employees will be
granted stock options, the number of options granted, the rate and period of
vesting, and other relevant terms.
In determining whether to grant options, the Committee takes into account the
number of outstanding options, the market price of the Company's Common Stock,
the performance of the Company and its prospects, potential dilution which
could result from exercise of options and the benefits of linking the
employees' incentive to the market price of the stock. These matters are at
the discretion of the Committee, and are not determined by any formula or
weighting of particular factors.
In determining whether to grant options to a particular individual, the
Committee considers the individual's level of responsibility, the relationship
between successful individual effort and Company results, incentive
compensation available from other companies, the number of unexercised options
held by the individual, and other relevant factors.
In July 1999, the Committee granted 197,250 options to employees, subject to
the achievement of specific goals for the second half of 1999. Executive
officers (other than Mr. Cederna) each received 5,000 options. Approximately
30% of the goals were achieved and the same percentage of such options vested.
In October 1999, William E. Cann was hired as Senior Vice President and Chief
Financial Officer. As part of his compensation package, Mr. Cann was granted
60,000 options at the market price of $7.00 per share. The options vest in
three annual installments commencing October 1, 1999.
The Stock Option Plan makes stock appreciation rights, payable in cash, and
restricted shares available for grant, but the Committee has not granted any.
Compensation of the chief executive in 1999
-------------------------------------------
In April 1999, the Company hired James A. Cederna as President and Chief
Executive Officer. Under the terms of his employment agreement, Mr. Cederna
receives a base pay of $500,000 and a guaranteed first year bonus of $250,000.
Mr. Cederna received a stock grant of 75,000 shares upon his hiring. Mr.
Cederna also received 400,000 stock options exercisable at $6.53 per share,
one fourth of which vested immediately and the remainder which vest over a
three-year period. These options reflect the Committee's desire to link a
major portion of Mr. Cederna's future compensation to increases in the market
price of the Company's Common Stock and thus directly benefit stockholders.
Mr. Cederna also received relocation expenses and other benefits commensurate
with his position as the new President of the Company.
Tax policy
----------
If an executive officer's compensation from the Company were to exceed $1
million in any taxable year (which the Committee does not now expect), the
excess over $1 million, with certain exceptions, would not be deductible by
the Company, under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Committee is aware of this rule, and will take it into account if
the $1 million limit is ever applicable. One exception to the disallowance of
such deductions under Section 162(m) involves compensation paid pursuant to
stockholder-approved compensation plans that are performance-based. The
Company's Stock Option Plan contains provisions which are intended to cause
grants of stock options under such plan (after April 1999) to be eligible for
this performance-based exception (so that compensation upon exercise of such
options should be deductible under the Code). Payments of cash compensation to
executives (and certain other benefits which could be awarded under the plan,
such as restricted stock) are not at present eligible for this performance-
based exception.
ROBERT W. CRUICKSHANK SETH E. SCHOFIELD
ARTHUR L. GOESCHEL HARRY H. WEIL
NICK H. PRATER ROBERT L.YOHE
8
Summary Compensation Table
Annual Compensation
------------------------- All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($)(1)
- --------------------------- ---- ---------- --------- -------------------
James A. Cederna 1999 352,566 732,813(3) 141,659
President and
Chief Executive Officer(2)
John M. MacCrum 1999 240,718 0 0
Senior Vice President(4) 1998 220,500 35,000 423
1997 214,375 29,911 423
Benjamin F. Ward, Jr. 1999 215,258 0 0
Senior Vice President(5) 1998 205,008 30,000 1,395
1997 79,375 24,401 85,967
Joseph A. Fischette 1999 213,637 0 0
Senior Vice President, 1998 195,696 25,000 348
General Counsel and Secretary 1997 192,378 26,533 348
Jonathan H. Maurer 1999 193,797 0 0
Senior Vice President 1998 178,710 35,000 290
1997 144,852 41,002 197
- --------
(1) Consists only of premiums paid by the Company on term life insurance
policies on the lives of the named individuals, except for (i) Mr.
Cederna, which includes taxable reimbursed relocation expenses of $141,659
and (ii) Mr. Ward, which includes in 1997 taxable reimbursed relocation
expenses of $85,967.
(2) Mr. Cederna became employed as President and Chief Executive Officer in
April 1999.
(3) Includes a cash bonus of $250,000 and Common Stock issued to Mr. Cederna
upon his employment at the Company then valued at $482,813.
(4) Mr. MacCrum left the employ of the Company effective December 31, 1999.
(5) Mr. Ward became employed in August 1997.
Option/SAR Grants in Last Fiscal Year
Individual Grants
------------------------------------------------ Potential Realizable
Value at Assumed
Number of % of Total Annual Rate of Stock
Securities Options/SARs Price Appreciation
Underlying Granted to Exercise or For Option Term
Options/SARs Employees in Base Price Expiration ---------------------
Name Granted (#) Fiscal Year ($/sh) Date 5% ($) 10% ($)
- ---- ------------ ------------ ----------- ---------- ---------- ----------
James A. Cederna........ 400,000 60.9% $6.5300 4/20/09 $1,644,000 $4,164,000
Joseph A. Fischette..... 5,000 * 6.0625 6/30/04 8,388 18,488
John M. MacCrum......... 5,000 * 6.0625 6/30/04 8,388 18,488
Jonathan H. Mauer....... 5,000 * 6.0625 6/30/04 8,388 18,488
Benjamin F. Ward, Jr.... 5,000 * 6.0625 6/30/04 8,388 18,488
- --------
* Less than 1%.
9
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
Value of
Unexercised
Number of Securities In-the-Money
Shares Underlying Unexercised Options
Acquired on Value Options at FY-End (#) at FY-End ($)(1)
Exercise Realized ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
James A. Cederna........ 0 $ 0 100,000 300,000 $0 $0
Joseph A. Fischette..... 0 0 51,500 0 0 0
John M. MacCrum......... 0 0 50,000 0 0 0
Jonathan H. Maurer...... 0 0 31,500 0 0 0
Benjamin F. Ward, Jr.... 0 0 41,500 20,000 0 0
- --------
(1) Based upon the exercise price of the options and the fair market value of
the Common Stock of the Company as of December 31, 1999.
Employment Agreements
All the executive officers of the Company have entered into employment
agreements with the Company. The agreements generally provide for continued
employment of the officers until terminated by the Company with or without
cause. Officers terminated without cause are entitled to severance
compensation of up to one year's base salary plus equivalent benefits until
the employee is employed by another employer for compensation at least equal
to 90% of his prior compensation at the Company. The agreements provide for a
base salary and for bonus compensation as determined by the Company. The
agreements also contain change in control provisions pursuant to which, if a
change in control (as defined in the agreements) occurs, the employee is
permitted to terminate employment on a date which is within the period
beginning on the first anniversary of such change in control and ending on the
second anniversary. If an employee terminates his or her employment as
provided above, or if the Company terminates the employee other than a
termination for cause within three years after the change in control, the
Company is required to pay severance compensation to the employee for up to 36
months (or, if earlier, until the employee is employed by another employer for
compensation at least equal to 90% of his prior compensation) equal to his or
her monthly compensation (including salary but not bonuses) for the calendar
year immediately prior to termination. In addition, for such period the
employee will receive equivalent benefits as were provided at the time of
termination and any then unvested stock benefits held by the employee will
vest. The agreements also contain confidentiality and non-compete provisions.
Mr. Cederna has an employment agreement which provides that he shall be
employed through April 1, 2002. His employment will continue, unless otherwise
terminated in accordance with the agreement, for successive renewal periods of
one year each, commencing on January 1 in each renewal period. If Mr.
Cederna's employment is terminated due to board dissatisfaction or without due
cause, Mr. Cederna is entitled to severance compensation as described below
for a severance period of 24 calendar months, and Mr. Cederna would not be
entitled to acceleration of vesting on any stock benefits then held by him. If
Mr. Cederna's employment is terminated after a change in control, Mr. Cederna
is entitled to severance benefits as described below for a severance period of
36 calendar months, and all stock benefits not vested at the time of
termination would vest. If Mr. Cederna's employment is terminated for due
cause by the Company, then Mr. Cederna is not entitled to any severance pay or
any acceleration of stock benefits. If Mr. Cederna's employment is terminated
by Mr. Cederna upon a breach by the Company of the agreement, then Mr. Cederna
is entitled to severance compensation for a severance period of three calendar
months, or through the initial term of the contract, whichever is longer, and
Mr. Cederna's stock benefits would be accelerated. If Mr. Cederna's employment
is terminated by Mr. Cederna following a change in control, then Mr. Cederna
is entitled to severance compensation
10
for a severance period of six calendar months after such termination, and Mr.
Cederna's stock benefits would be accelerated. If Mr. Cederna's employment is
terminated by Mr. Cederna for any other reason, then Mr. Cederna is not
entitled to any severance pay or any acceleration of stock benefits.
Severance compensation means, in general, the amount of salary and cash bonus
received by Mr. Cederna for the calendar year immediately prior to the year in
which notice of termination is given. The severance period shall end on the
date, if ever, when Mr. Cederna is employed by another employer for total
compensation equal to at least 90% of his severance compensation. In addition,
during the severance period Mr. Cederna would receive equivalent benefits as
were provided to him at the time of termination. Mr. Cederna's agreement also
contains confidentiality and non-compete provisions.
Mr. Cederna's agreement provides that he shall be entitled to an annual grant
of stock options to purchase 100,000 shares of Common Stock at the fair market
value of such stock on the first business day of April of each year, subject
to customary vesting provisions. In addition, Mr. Cederna's agreement provides
that, in connection with his annual bonus under the Company's Incentive Plan,
the plan will provide that in the case of Mr. Cederna no such bonus is to
exceed 125% of his annual salary.
Compensation Committee Interlocks and Insider Participation
Harry H. Weil, a member of the Compensation Committee in 1999, was in 1999
counsel to the law firm of Reed Smith Shaw & McClay, which provides legal
services to the Company.
11
Performance Graph
Comparison of Five-Year Cumulative Total Return*
Among Calgon Carbon's Common Stock, S&P 500 Composite Index
and S&P Chemicals-Specialty Composite Index
[LINE GRAPH]
Measurement period
S&P 500
Measurement PT - CALGON CARBON CORP. S&P 500 INDEX CHEMICALS (SPECIALTY)
- ------------------ ------------------- ------------- ---------------------
FYE 12/31/94 $100 $100 $100
FYE 12/31/95 $129.00 $137.58 $131.43
FYE 12/31/96 $134.81 $169.17 $135.25
FYE 12/31/97 $121.88 $225.60 $166.93
FYE 12/31/98 $ 88.16 $290.08 $142.17
FYE 12/31/99 $ 72.52 $351.12 $157.37
* Assumes that the value of the investment in Calgon Carbon Common
Stock and each index was $100 on December 31, 1994 and that all
dividends were reinvested.
Pension Benefits
The Company's Retirement Plan for Salaried Employees is a non-contributory
defined benefit pension plan. In addition, the Company has a Supplemental
Retirement Plan, which is applicable to certain employees selected by the
Board of Directors, designed to supplement retirement benefits under the
Retirement Plan for Salaried Employees which have been limited by various
Internal Revenue Code provisions. At present no executive officers participate
in such Supplemental Retirement Plan. The following table shows the estimated
annual pension benefits which would be payable under the above-stated plans in
the form of a single life annuity, for
12
various levels of average annual compensation and years of service, based upon
retirement at age 65 in the calendar year 1999, before any reduction to take
account of benefits payable by the Company's former owner, Merck & Co., Inc.
(by agreement with Merck, benefits payable under Company plans are reduced by
the benefit amounts payable to the individual by Merck, which are computed
utilizing a 2.5% compensation increase assumption).
Average annual
compensation for highest
five consecutive years Annual benefits for years of service (1)
in 10-year period -----------------------------------------------------
preceding retirement 15 years 20 years 25 years 30 years 35 years
-------------------- -------- -------- -------- -------- --------
$150,000 $ 32,925 $ 43,900 $ 54,875 $ 65,850 $ 76,825
200,000 44,550 59,400 74,250 89,100 103,950
250,000 56,175 74,900 93,625 112,350 131,075
300,000 67,800 90,400 113,000 135,600 158,200
350,000 79,425 105,900 132,375 158,850 185,325
400,000 91,050 121,400 151,750 182,100 212,450
450,000 102,675 136,900 171,125 205,350 239,575
500,000 114,300 152,400 190,500 228,600 266,700
- --------
(1) Under Section 415 of the Internal Revenue Code of 1986, the amount of
annual benefits which may be paid under the Retirement Plan for Salaried
Employees to any employee may not exceed $135,000 during 2000 and $130,000
during 1999 and under Section 401(a)(17) of the Code the amount of annual
compensation of each employee taken into account under such plan for any
year may not exceed $170,000 during 2000 and $160,000 during 1999. These
limitations have not been reflected in the table.
Other than the reduction with respect to Merck benefits discussed above, the
benefits payable under the plans are not subject to any deduction for Social
Security or other offset amounts. Covered compensation for purposes of the
chart above includes salary and incentive awards which are reported in the
"bonus" column of the summary compensation table. As of December 31, 1999,
Messrs. Cederna, Fischette, MacCrum, Ward and Maurer had zero, 20, 30, 2 and 9
years of service, respectively, under the plans. Pursuant to his employment
agreement, Mr. Cederna is entitled to retirement income under the plan, when
combined with amounts then payable to Mr. Cederna under the retirement plans
of former employers of Mr. Cederna, equal to the retirement income he would
have received under the plan (without the application of any maximum amount of
retirement income specified in the plan) if his years of credited service
under the plan had included the years of his full-time employment by such
other employers.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP audited the Company's annual financial statements
for 1999. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting. They will have the opportunity to make
statements if they desire to do so and will be available to respond to
appropriate questions.
VOTE REQUIRED
The three nominees for election as Directors in the Class of 2003 at the
Annual Meeting who receive the greatest number of votes cast for the election
of Directors of their respective class at that meeting by the holders of the
Company's Common Stock, present in person or represented by proxy at the
meeting and entitled to vote at that meeting, a quorum being present, shall
become Directors at the conclusion of the tabulation of votes.
13
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented to
the Annual Meeting of Stockholders. If any other matters properly come before
the meeting, however, the persons named in the enclosed form of proxy will
vote the proxy in accordance with their best judgment.
STOCKHOLDER PROPOSALS
If any stockholder wishes to present a proposal to be acted upon at the 2001
Annual Meeting of Stockholders, the proposal must be received by the Secretary
of the Company by November 17, 2000 to be considered for inclusion in the
Company's Proxy Statement and form of proxy relating to the 2001 Annual
Meeting. The 2001 Annual Meeting is tentatively scheduled for April 17, 2001.
Section 1.08 of the By-laws of the Company requires that any shareholder
intending to present a proposal for action at an Annual Meeting must give
written notice of the proposal, containing the information specified in such
Section 1.08, so that it is received by the Company not later than the notice
deadline determined under such Section 1.08. This notice deadline will
generally be 60 days prior to the anniversary of the date of the Company's
Proxy Statement for the Annual Meeting for the previous year, or January 16,
2001 for the Company's Annual Meeting in 2001. Any shareholder proposal
received by the Secretary of the Company after January 16, 2001 will be
considered untimely under Rule 14a-4(c)(1) promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934.
Joseph A. Fischette
Secretary
March 17, 2000
14
CALGON CARBON CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting of the Stockholders April 18, 2000
P James A. Cederna and Joseph A. Fischette, or either of them, are hereby
appointed proxies for the undersigned, with full power of substitution,
R to vote all the shares of Common Stock of Calgon Carbon Corporation
(the "Company") which the undersigned may be entitled to vote at the Annual
O Meeting of Stockholders of the Company scheduled for April 18, 2000, and
at any adjournment thereof, as directed on the reverse side of this proxy
X card and, in their discretion, on any other matters which may properly come
before the meeting.
Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and will be
voted as specified on the reverse side hereof. If not specified, the
shares represented by this proxy will be voted FOR proposal 1.
--Directors with term expiring in 2003
James A. Cederna
Harry H. Weil
Robert L. Yohe
Please mark, sign and date this proxy card on the reverse ---------------
side hereof and return it in the enclosed envelope. | SEE REVERSE |
| SIDE |
---------------
/\ FOLD AND DETACH HERE /\
Annual Meeting of Stockholders
of
Calgon Carbon Corporation
April 18, 2000
1:00 P.M.
Company's Office
400 Calgon Carbon Drive
Pittsburgh, Pennsylvania
[X] Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR proposal 1.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 1.
- --------------------------------------------------------------------------------
1. To elect FOR WITHHELD The nominees are:
Directors. [ ] [ ] James A. Cederna (2003)
Harry H. Weil (2003)
Robert L. Yohe (2003)
For, except vote withheld from the following nominee(s):
-------------------------------------------------------
- --------------------------------------------------------------------------------
YES NO
I plan to attend the annual meeting. [ ] [ ]
SIGNATURE(S) DATE
--------------------------------------------- --------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
/\ FOLD AND DETACH HERE /\
Calgon Carbon Corporation
Please sign, date and return your proxy in the
enclosed envelope.