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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
THE GENERAL CHEMICAL GROUP INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
.......................................................................
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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[LOGO] THE GENERAL CHEMICAL GROUP INC.
April 12, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The General Chemical Group Inc. to be held at the Mellon Bank Building, 8 West
Loockerman Street, Dover, Delaware on Wednesday, May 16, 2001 at 9:30 a.m. local
time.
The Annual Meeting has been called for the purpose of: (1) electing six
Directors for a one-year term; (2) approving an amendment to the Company's
Certificate of Incorporation to effect any of a one-for-five, one-for-seven and
one-half, or one-for-ten reverse split of the Company's Common Stock and Class B
Common Stock, as determined by the Board of Directors in its sole discretion;
(3) ratifying the appointment of Deloitte & Touche LLP as the Company's
independent auditors; and (4) considering and voting upon such other business as
may properly come before the Annual Meeting and any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on March 28, 2001 as
the record date for determining stockholders entitled to receive notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors recommends that you vote "FOR" the election of each
of the six nominees of the Board of Directors as Directors of the Company, the
approval of the reverse split of the Company's Common Stock and Class B Common
Stock, and the ratification of Deloitte & Touche LLP as the Company's
independent auditors.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
Very truly yours,
/s/ Todd M. DuChene
TODD M. DUCHENE
Secretary
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THE GENERAL CHEMICAL GROUP INC.
Liberty Lane
Hampton, New Hampshire 03842
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2001
------------------------
To Stockholders of The General Chemical Group Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of THE
GENERAL CHEMICAL GROUP INC. (the "Company") will be held at the Mellon Bank
Building, 8 West Loockerman Street, Dover, Delaware on Wednesday, May 16, 2001
at 9:30 a.m. local time for the following purposes:
1. To elect six Directors of the Company, each for a one-year term;
2. To approve an amendment to the Company's Certificate of
Incorporation to effect any of a one-for-five, one-for-seven and one-half,
or one-for-ten reverse split of the Company's Common Stock and Class B
Common Stock as determined by the Board of Directors in its sole
discretion;
3. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the current fiscal year; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Holders of record of the Company's Common Stock and Class B Common Stock at
the close of business on March 28, 2001 are entitled to notice of and to vote at
the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ Todd M. DuChene
TODD M. DUCHENE
Secretary
Hampton, New Hampshire
April 12, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE
PAID ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
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THE GENERAL CHEMICAL GROUP INC.
------------------------
ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
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APRIL 12, 2001
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The General Chemical Group Inc., a Delaware
corporation ("General Chemical Group" or the "Company"), for use at the
Company's Annual Meeting of Stockholders (the "Annual Meeting") to be held at
the Mellon Bank Building, 8 West Loockerman Street, Dover, Delaware, May 16,
2001 at 9:30 a.m. local time, and any adjournment thereof. This proxy statement
and the related proxy card, together with the Company's Annual Report to
Stockholders for the year ended December 31, 2000, were first mailed by the
Company on or about April 12, 2001 to stockholders of record as of March 28,
2001.
All proxies in the enclosed form that are properly executed and returned to
the Company will be voted at the Annual Meeting or any adjournment thereof in
accordance with the specifications thereon, or, if no specification is made,
will be voted FOR approval of each of the proposals set forth in the Notice of
Annual Meeting of Stockholders. A previously returned proxy may be revoked by
any stockholder who attends the Annual Meeting and gives oral notice of his or
her intention to vote in person, without compliance with any other formalities.
In addition, any proxy given pursuant to this solicitation may be revoked prior
to the Annual Meeting by delivering a written revocation or a duly executed
proxy bearing a later date to the Secretary of the Company at Liberty Lane,
Hampton, New Hampshire 03842.
A proxy may confer discretionary authority to vote with respect to any
matter presented at the Annual Meeting, except as set forth in the proxy and
except for matters proposed by a stockholder who notifies the Company not later
than the close of business on the tenth day following the day on which such
stockholder's Notice of Annual Meeting of Stockholders was mailed by the
Company. At the date hereof, management has no knowledge of any business that
will be presented for consideration at the Annual Meeting and which would be
required to be set forth in this proxy statement or the related proxy card other
than the matters set forth in the Notice of Annual Meeting of Stockholders. If
any other matter is properly presented at the Annual Meeting for consideration,
it is intended that the persons named in the enclosed form of proxy and acting
thereunder will vote in accordance with their best judgment on such matter.
The expense of preparing, printing and mailing this proxy statement and the
proxies solicited hereby will be borne by the Company. In addition to the use of
the mails, proxies may be solicited by officers and directors and regular
employees of the Company, without additional remuneration, by personal
interview, telephone, telegraph or otherwise. The Company will also request
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record on March 28, 2001 and will
provide reimbursement for the cost of forwarding the material in accordance with
customary charges.
RECORD DATE, VOTING RIGHTS AND OUTSTANDING SHARES
Holders of record of shares of Common Stock and Class B Common Stock of the
Company at the close of business on March 28, 2001, are entitled to notice of
and to vote at the Annual Meeting. Holders of Common Stock and Class B Common
Stock vote together as a single class. Holders of Common Stock are entitled to
one vote per share and holders of Class B Common Stock are entitled to ten votes
per share, both with respect to matters properly presented at the Annual
Meeting. A stockholder list will be available for examination by
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stockholders at the Annual Meeting and at the office of the Company at Liberty
Lane, Hampton, New Hampshire 03842, during ordinary business hours during the
ten-day period prior to the Annual Meeting for any purpose germane to the
meeting.
On March 28, 2001, there were 16,930,523 shares of Common Stock and
3,958,421 shares of Class B Common Stock issued and outstanding and entitled to
vote at the Annual Meeting. The holders of a majority of the shares entitled to
vote, present in person or represented by proxy at the Annual Meeting, will
constitute a quorum for the transaction of business at the Annual Meeting.
Shares that are represented at the Annual Meeting but abstain from voting
on any or all matters and shares that are "broker non-votes" will be counted in
determining whether a quorum is present at the Annual Meeting. Such abstentions
and broker non-votes will have no effect on the outcome of the vote for Proposal
1 (Election of Directors) or Proposal 3 (Ratification of Appointment of
Independent Auditors), but will be counted as being voted against Proposal 2
(Reverse Stock Split). "Broker non-votes" are shares held by brokers of nominees
which are represented at the meeting but with respect to which the broker or
nominee does not have discretionary power to vote on a particular matter and has
received no instructions from the beneficial owners thereof or persons entitled
to vote thereon.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 28, 2001 certain information
concerning each person believed to be a beneficial owner of more than 5% of
Common Stock and Class B Common Stock and beneficial ownership by each nominee,
director, named executive officer and all directors and officers as a group.
SHARES OF PERCENT OF
CLASS B CLASS B
SHARES OF PERCENT OF COMMON COMMON
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK(1) STOCK(2) STOCK
------------------------ ------------ --------------- --------- ----------
Paul M. Montrone(3)................. 9,811,421(4) 46.97 3,958,421(4) 100.0%
Paul M. Meister(3).................. 2,213,127(5) 10.53 829,140(5) 20.95
1996 GRAT........................... 2,068,127(4) 9.90 829,140(4) 20.95
Gabelli Asset Management Inc.(6).... 1,325,300(7) 6.34 -- --
DeLyle W. Bloomquist(3)............. 96,234(8) * -- --
Philip E. Beekman(3)................ 90,000(9)(10) * -- --
Gerald J. Lewis(3).................. 35,000(9)(10) * -- --
Joseph M. Volpe(3).................. 15,000(9)(11) * -- --
John M. Kehoe, Jr.(3)............... 60,100(12) * -- --
David S. Graziosi................... 9,500(13) * -- --
All Directors and executive officers
As a group (8 persons)............ 10,265,255(14) 48.3% 3,958,421 100%
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* Less than 1%
(1) The percentage ownership of Common Stock has been calculated assuming the
conversion of all outstanding shares of Class B Common Stock. Percentage
figures are based on 20,888,944 shares, which represents the total number
of shares of Common Stock and Class B Common Stock outstanding as of March
28, 2001. As of such date, there were 16,930,523 shares of Common Stock and
3,958,421 shares of Class B Common Stock outstanding.
(2) Holders of Class B Common Stock may convert each share of Class B Common
Stock at any time and from time to time into one fully-paid and
nonassessable share of Common Stock.
(3) The address for all directors and executive officers is c/o The General
Chemical Group Inc., Liberty Lane, Hampton, New Hampshire 03842.
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(4) Includes 1,167,019 shares of Common Stock and 2,088,631 shares of Class B
Common Stock held directly by Mr. Montrone; 30,000 shares of Common Stock
held directly by Sandra G. Montrone, the wife of Mr. Montrone; 3,000 shares
of Common Stock held by a family trust; 1,238,987 shares of Common Stock
and 829,140 shares of Class B Common Stock held by a grantor retained
annuity trust formed in 1996 (the "1996 GRAT"); 1,201,687 shares of Common
Stock and 811,283 shares of Class B Common Stock held by a grantor retained
annuity trust formed in December 1998 (the "December 1998 GRAT"); 1,212,307
shares of Common Stock and 229,367 shares of Class B Common Stock and held
by a grantor retained annuity trust formed in March 1999 (the "1999 GRAT");
and 1,000,000 shares of Common Stock held by Sewall Associates Family,
L.P., a limited partnership under which Mr. and Mrs. Montrone are general
partners and Mr. Montrone and a grantor-retained annuity trust formed in
January 2000 (the "2000 GRAT") are the limited partners. Mrs. Montrone and
Paul M. Meister are the co-trustees of the 1996 GRAT and Mrs. Montrone is
the sole trustee with investment and voting discretion of the December 1998
GRAT. By virtue of her position as trustee, Mrs. Montrone may be deemed the
beneficial owner of all shares held by the 1996 GRAT. Mr. and Mrs. Montrone
are co-trustees of the 1998 GRAT and the 1999 GRAT, and by virtue of their
position as co-trustees, each of Mr. and Mrs. Montrone may be deemed the
beneficial owners of all shares held by the December 1998 GRAT and the 1999
GRAT. The address for Mr. and Mrs. Montrone and each of the GRATs is c/o
The General Chemical Group Inc., Liberty Lane, Hampton, NH 03842.
Does not include 100,000 shares of Common Stock held by a charitable
foundation, of which Mr. Montrone is a Director and Mrs. Montrone is a
director and officer. By virtue of their positions with the charitable
foundation, Mr. and Mrs. Montrone may be deemed to be beneficial owners of
the shares of Common Stock held by the charitable foundation. Mr. and Ms.
Montrone disclaim any beneficial ownership of the 100,000 shares of Common
Stock held by the charitable foundation.
The shares of Common Stock and Class B Common Stock beneficially owned by
Mr. Montrone represent 80.40% of the combined voting power of the
outstanding shares of the voting stock.
Pursuant to a registration rights agreement with General Chemical Group,
Mr. Montrone and his family trusts may request, at any time prior to April
2004, the registration of their shares of Common Stock (including shares of
Common Stock received upon the conversion of any Class B Common Stock) for
sale under the Securities Act of 1933. The Company is required to accept up
to three such requests for registration and, in addition, to include the
shares of Mr. Montrone and his family trusts in a proposed registration of
shares of Common Stock under the Securities Act in connection with the sale
of shares of Common Stock by the Company or any other stockholder of the
Company. The Company will be responsible for the expenses of any
registration of shares of Mr. Montrone and his family trusts effected under
the registration rights agreement, other than brokerage and underwriting
commissions and taxes relating to the sale of the shares.
(5) Includes 120,000 shares of Common Stock issuable upon the exercise of
options within 60 days of March 23, 2001; 10,000 shares of Common Stock
owned by Mr. Meister directly; an aggregate of 15,000 restricted units
granted pursuant to the Company's Restricted Unit Plan (as defined below).
Also includes 1,238,987 shares of Common Stock and 829,140 shares of Class
B Common Stock held by the 1996 GRAT. By virtue of his status as co-trustee
of the 1996 GRAT, Mr. Meister may be deemed to beneficially own the shares
held by the 1996 GRAT. Mr. Meister expressly disclaims beneficial ownership
of such shares.
(6) The address of Gabelli Asset Management Inc. ("Gabelli") is One Corporate
Center, Rye, NY 10580-1435.
(7) The information presented herein is based solely upon a Schedule 13D filing
made with the SEC by Gabelli on January 16, 2001. According to the Schedule
13D filing, Gabelli possesses sole voting power and sole dispositive power
over the 1,325,300 shares. The percentage ownership of Common Stock for
Gabelli prior to the conversion of all outstanding shares of Class B Common
Stock into Common Stock would be 7.83%.
(8) Includes 18,200 Shares of Common Stock held by Mr. Bloomquist directly, an
aggregate of 43,534 restricted units granted pursuant to the Company's
Restricted Unit Plan and 34,500 shares of Common Stock issuable upon the
exercise of options within 60 days of March 28, 2001.
(9) Includes 5,000 restricted units granted pursuant to the Company's
Restricted Unit Plan for Non-Employee Directors. Pursuant to this plan,
twenty-five percent of the restricted units and related Dividend
Equivalents
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(as defined in the plan) vest for each year of service as a non-employee
director. Except as otherwise provided in the plan, vested restricted units are
payable when the grantee ceases to be a director of the Company.
(10) Includes options to purchase 30,000 shares of Common Stock.
(11) Includes options to purchase 10,000 shares of Common Stock.
(12) Includes 60,000 shares of Common Stock issuable upon the exercise of
options within 60 days of March 28, 2001 and 100 shares held directly by
Mr. Kehoe.
(13) Includes 5,000 shares of Common Stock held by Mr. Graziosi directly and
4,500 shares of Common Stock issuable upon the exercise of options within
60 days of March 28, 2001.
(14) Includes 5,941,300 shares of Common Stock held directly and 3,958,421
shares of Class B Stock, 58,534 restricted units granted pursuant to the
Company's Restricted Unit Plan which have become vested, 15,000 restricted
units granted pursuant to the Company's Restricted Unit Plan for
Non-Employee Directors, which vest according to the schedule described in
footnote 11 above, and 292,000 shares of Common Stock issuable upon the
exercise of options within 60 days of March 28, 2001.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board of Directors of The General Chemical Group Inc. (the "Board")
consists of Paul M. Montrone (Chairman), Paul M. Meister (Vice Chairman), Philip
E. Beekman, John M. Kehoe, Jr., Gerald J. Lewis and Joseph M. Volpe. Mr.
Montrone has been a director of the Company since 1988. Messrs. Meister, Beekman
and Lewis have been directors of the Company since 1996 and Messrs. Kehoe and
Volpe have been directors of the Company since April 1999.
Upon recommendation of the Nominating Committee (as defined below), the
Board has nominated for election as directors at the Annual Meeting Messrs. Paul
M. Montrone, Paul M. Meister, Philip E. Beekman, John M. Kehoe, Jr., Gerald J.
Lewis and Joseph M. Volpe, each of whom is currently a director whose term
expires at the Annual Meeting. If elected, the nominees will serve for a
one-year term expiring in 2002. Management does not contemplate that the
nominees will be unable to serve, but in that event, proxies solicited hereby
will be voted for the election of such other person as may be recommended by the
Board in place of such nominee.
The affirmative vote of a plurality of the votes cast is required to elect
the directors. Abstentions from voting on this proposal (and broker non-votes)
will have no effect on the outcome of the vote. Mr. Montrone and the Montrone
family trusts and entities, as described in note 4 to the table under "Security
Ownership of Certain Beneficial Owners and Management," have indicated that they
intend to vote for the nominees for election as directors. It is expected,
therefore, that the nominees for director will be elected regardless of the vote
by other stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES AS DIRECTORS.
Information about the nominees for election as directors, including
biographical and employment information, is set forth below.
NOMINEES FOR ELECTION AS DIRECTORS (ALL FOR A TERM EXPIRING IN 2002)
Paul M. Montrone, 59, Chairman of the Board, has been a director of the
Company since 1988 and was President of the Company from 1987 to 1994. Mr.
Montrone has been Chairman of the Board of Fisher Scientific International Inc.
("Fisher") (healthcare laboratory products) since March 1998, Chief Executive
Officer and a director of Fisher from prior to 1996 to March 1998, and President
of Fisher from prior to 1996 until 1998. Mr. Montrone is also a director of
Waste Management, Inc. (environmental services) and GenTek Inc. (Chairman)
(telecommunications equipment).
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Paul M. Meister, 48, has been Vice Chairman of the Board since 1998 and has
been a director of the Company since 1996. Mr. Meister has been Vice Chairman of
the Board and Executive Vice President of Fisher since March 2001 and was Vice
Chairman of the Board, Executive Vice President and Chief Financial Officer of
Fisher from March 1998 to March 2001. From prior to 1996 to March 1998 Mr.
Meister was Senior Vice President and Chief Financial Officer of Fisher. Mr.
Meister is also a director of Mineral Technologies Inc., M&F Worldwide Corp. and
GenTek Inc. (Vice Chairman).
Philip E. Beekman, 69, has been a director of the Company since 1996. Mr.
Beekman has been President of Owl Hollow Enterprises (consulting and investment)
since prior to 1996. Mr. Beekman is also a director of Linens 'n Things Inc.
(retail), Kendle International Inc. (research and development services for
biotechnology and pharmaceutical companies) and Sunbeam Corporation (home
appliances).
John M. Kehoe, Jr., 67, has been a director, President and Chief Executive
Officer of the Company since April 1999. Mr. Kehoe has served as President and
Chief Executive Officer of Wheelabrator Technologies Inc. (energy and
environmental services) since prior to 1996.
Gerald J. Lewis, 67, has been a director of the Company since 1996. Judge
Lewis has been Chairman of Lawsuit Resolution Services since 1997, and was of
counsel to the law firm of Latham & Watkins from prior to 1996 to 1997. Judge
Lewis is also a director of Invesco Mutual Funds.
Joseph M. Volpe, 60, has been a director of the Company since April 1999.
Mr. Volpe has been General Manager of the Metropolitan Opera since prior to
1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities (collectively, "Section 16 reporting persons"), to file with
the SEC and the New York Stock Exchange initial reports of beneficial ownership
and reports of changes in beneficial ownership of such equity securities of the
Company. Section 16 reporting persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations that no other
reports were required, during the fiscal year ended December 31, 2000, the
Section 16 reporting persons complied with all Section 16(a) filing requirements
applicable to them.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board met four (4) times during 2000. Each of the members of the Board
attended all of the meetings of the Board and all the meetings of the Board
Committees on which he served. The Board has three standing committees: the
Audit Committee, the Compensation Committee and the Nominating Committee. During
2000, the Audit Committee and Compensation Committee met two times and the
Nominating Committee met one time.
Audit Committee. The Audit Committee of the Board consists of Messrs.
Beekman, Lewis and Volpe, with Judge Lewis serving as Chairman. Each member of
the Audit Committee is "independent" within the meaning of the New York Stock
Exchange rules pertaining to such matters and, as a result, no member has any
relationship with the Company that may interfere with the exercise of his
independence from the Company and the Company's management.
On March 8, 2000, the Board adopted a new charter for the Audit Committee
(the "Charter"). The Charter contains the Committee's mandate, membership
requirements and duties and obligations. The Committee reviewed the Charter in
March 2001 to determine its adequacy and will review the Charter annually and,
if appropriate, recommend revisions to the Board. Under the Charter, the Audit
Committee is responsible, among other tasks, for recommending the firm to be
appointed as independent auditors to audit the Company's financial statements
and to perform services related to the audit; reviewing with management and the
independent auditors the Company's year-end operating results; considering the
adequacy of the internal accounting and control
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procedures of the Company; reviewing the non-audit services to be performed by
the independent auditors, if any; and considering the effect of such performance
on the auditor's independence.
Compensation Committee. The Compensation Committee of the Board consists of
Messrs. Beekman, Meister and Volpe, with Mr. Beekman serving as Chairman. It is
responsible for reviewing and recommending compensation arrangements for
directors and officers; approving such arrangements for other senior level
employees; administering certain benefit and compensation plans of the Company
and its subsidiaries; monitoring the activities of an internal committee of
members of management established to carry out policies and guidelines with
respect to such plans; and performing such other tasks related to and in
furtherance of the foregoing as it may consider necessary or appropriate or as
may be assigned to it by the Board from time to time.
Nominating Committee. The Nominating Committee of the Board consists of all
members of the Board, with Mr. Montrone serving as Chairman. It is responsible
for nominating persons for election to the Board. The Nominating Committee will
consider nominees properly recommended by stockholders. The By-Laws of the
Company prescribe an advance notice procedure with regard to the nomination,
other than by or at the direction of the Board or a committee thereof, of
candidates for election as directors (the "Nomination Procedure").
The Nomination Procedure requires that a stockholder give prior written
notice, in proper form, of a planned nomination to the Secretary of the Company.
The requirements as to the form and timing of that notice are specified in the
By-Laws. The Company's By-Laws provide that any stockholder of record wishing to
nominate candidates for election as directors must provide written notice of
such proposal and appropriate supporting documentation, as set forth in the
By-Laws, to the Company at its principal executive office, not less than 75 days
nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting (the "Anniversary Date"), provided, however, that in
the event the annual meeting is scheduled to be held on a date more than 30 days
before the Anniversary Date or more than 60 days after the Anniversary Date, a
stockholder's notice shall be timely if delivered to, or mailed and received by,
the Company at its principal executive office not later than the close of
business on the later of (a) the 75th day prior to the scheduled date of such
annual meeting or (b) the 15th day following the day on which public
announcement of the date of such annual meeting is first made by the Company. If
the inspectors of election determine that a person was not nominated in
accordance with the Nomination Procedure, such person will not be eligible for
election as a director. Stockholder recommendations may be sent to the
Nominating Committee, c/o Secretary, The General Chemical Group Inc., Liberty
Lane, Hampton, New Hampshire 03842.
REPORT OF AUDIT COMMITTEE
During the past year, the Audit Committee has, among other activities, (i)
reviewed and discussed with management the Company's audited annual financial
statements for the fiscal year ended December 31, 2000 and interim quarterly
results, (ii) discussed with Deloitte & Touche LLP, the Company's independent
auditors, the matters required to be discussed by American Institute of
Certified Public Accountants Auditing Standards Board on Auditing Standards No.
61 ("Communications with Audit Committees"), and (iii) considered the
independence of Deloitte & Touche LLP, by having discussions with
representatives of Deloitte & Touche LLP and receiving a letter from them
including disclosures required by the Independence Standards Board Standard No.
1 ("Independence Discussions with Audit Committees"). On the basis of the above,
the Audit Committee has recommended to the Board that the Company's audited
financial statements for the fiscal year ended December 31, 2000 be included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
The Audit Committee
Of the Board of Directors
Gerald J. Lewis, Chairman
Philip E. Beekman
Joseph M. Volpe
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COMPENSATION OF DIRECTORS
The non-employee directors of General Chemical Group are entitled to
receive cash compensation and compensation pursuant to the plans described
below.
Cash Compensation. Non-employee directors of the Company (other than
Messrs. Montrone and Meister) receive compensation of $40,000 per year, with no
additional fees for attendance at Board or committee meetings. Pursuant to the
Deferred Compensation Plan for Non-Employee Directors of The General Chemical
Group Inc., any director entitled to compensation may elect, generally prior to
the commencement of any calendar year, to have all or any portion of the
director's compensation for such calendar year and for succeeding calendar years
credited to a deferred compensation account. Amounts credited to the director's
account will accrue interest based upon the average quoted rate for ten-year
U.S. Treasury Notes. Deferred amounts will be paid in a lump sum or in
installments at the director's discretion commencing on the first business day
of the calendar year following the year in which the director ceases to serve on
the Company's Board or of a later calendar year specified by such director.
Retirement Plan for Non-Employee Directors. Pursuant to the Retirement Plan
for Non-Employee Directors of The General Chemical Group Inc., any non-employee
director who retires from the Board with at least five years of service as a
director (other than Messrs. Montrone and Meister) is eligible for an annual
retirement benefit for the remainder of such director's lifetime. The annual
retirement benefit for a director who retires with five years of service is
equal to 50% of the director fee in effect at the date of the director's
retirement and for directors with more than five years of service the annual
retirement benefit is increased by 10% of the director fee in effect at the date
of such director's retirement for each additional year of service, up to 100
percent of such fee for 10 or more years of service as a director or for
directors who retire after age 70 regardless of length of service.
Restricted Unit Plan for Non-Employee Directors. Pursuant to the Restricted
Unit Plan for Non-Employee Directors of The General Chemical Group Inc., each
non-employee director of the Company (other than Messrs. Montrone and Meister),
upon becoming a director of the Company, receives a one-time grant of 5,000
restricted units under the Restricted Unit Plan for Non-Employee Directors
evidencing a right to receive shares of Common Stock, subject to certain
restrictions. The Company will maintain a memorandum account for each director
who received the grant of restricted units and credit to such account the amount
of any cash dividends and shares of stock of any subsidiary distributed on the
shares of Common Stock ("Dividend Equivalents") underlying such director's
restricted units from the date of grant until the payment date described below.
No shares of Common Stock will be issued at the time restricted units are
granted, and the Company will not be required to set aside a fund for any such
grant or for amounts credited to the memorandum account. Pursuant to the terms
of the plan neither the restricted units nor the memorandum account may be sold,
assigned, pledged or otherwise disposed of. Twenty-five percent of the
restricted units and the related Dividend Equivalents will vest for each year of
service as a director of the Company. Vested restricted units and the related
Dividend Equivalents will not be payable until the director ceases to be a
member of the Company's Board. At that time, the director will receive one share
of Common Stock for each vested restricted unit, provided that a director may
elect, prior to the date on which restricted units vest, to have payment
deferred to a later date. Any restricted units and related Dividend Equivalents
that have not vested at the time the director ceases to be a director of the
Company will be cancelled unless service has terminated because of death or
disability, in which event all such restricted units and related Dividend
Equivalents will vest immediately. When payment of restricted units is made,
eligible non-employee directors will also receive cash and securities equal to
the related Dividend Equivalents, together with interest on the cash based upon
the average quoted rate for ten-year U.S. Treasury Notes. In the event of a
stock dividend, stock split, recapitalization, merger, liquidation or similar
event, the Board, in its sole discretion, may make equitable adjustments in
outstanding awards and the number of shares of Common Stock reserved for
issuance under the plan.
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COMPENSATION OF EXECUTIVE OFFICERS AND KEY EMPLOYEES
I. SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the President and
Chief Executive Officer and each of the Company's two other executive officers
or key employees (the "Named Executives") for services in all capacities to
General Chemical Group and its subsidiaries during or with respect to 1998, 1999
and 2000. The Company did not have any other executive officers or key
employees.
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- -----------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY$ BONUS$ AWARDS OPTIONS(#) COMPENSATION$(1)
------------------ ---- ------- ------- ---------- ---------- ----------------
John M. Kehoe, Jr.(2)............... 2000 187,500 125,000 0 200,000 0
President and Chief Executive
Officer 1999 142,300 187,000 0 0 0
DeLyle W. Bloomquist................ 2000 225,000 125,000 0 20,000 23,000
Vice President and 1999 225,000 150,000 0 10,000 23,000
Chief Operating Officer 1998 200,000 50,000 0 0 13,000
David S. Graziosi(3)................ 2000 120,000 80,000 0 15,000 4,000
Vice President -- Finance
- ---------------
(1) Amounts listed in this column reflect the Company's contributions to the
Company's Savings and Profit Sharing Plan and Supplemental Savings Plan.
(2) Mr. Kehoe joined the Company in April 1999.
(3) Mr. Graziosi joined the Company in March 2000.
II. OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted during 2000 to the
Named Executives.
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE PRESENT
OPTIONS EMPLOYEES IN PRICE EXPIRATION VALUE
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE ($)(2)
---- ---------- ------------ -------- ---------- -------------
John M. Kehoe, Jr............... 200,000 43.29% 2.00 03/02/2010 338,000
DeLyle W. Bloomquist............ 20,000 4.33% 2.00 03/02/2010 33,800
David S. Graziosi............... 15,000 3.25% 2.00 03/02/2010 25,350
- ---------------
(1) Options granted pursuant to The General Chemical Group Inc. 1996 Stock
Option and Incentive Plan (the "1996 Plan") or The General Chemical Group
Inc. 2000 Long-Term Incentive Plan (the "2000 Plan"). Options become
exercisable in installments of 30%, 30% and 40%, on the first three
anniversaries of the date of grant, respectively.
(2) The estimated grant date present value reflected in this column is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value
of the options reflected above include (i) a stock price as indicated in the
table above, equal to the fair market value of the underlying stock on the
date of grant; (ii) options are exercised at the end of a five year period;
(iii) interest rates representing the interest rate on U.S. Treasury
Securities with maturity dates of five years as of the date of grant; and
(iv) volatility of approximately 90%. The ultimate value of the options will
depend on the future market price of the Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, an optionee
will realize upon exercise of an option will depend on the excess of the
market value of the Common Stock on the date the option is exercised over
the exercise price.
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III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table includes information for each Named Executive Officer
with regard to the aggregate number of stock options held on December 31, 2000.
No stock options were exercised by Named Executive Officers in 2000.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY
SHARES 12/31/00(#) OPTIONS AT 12/31/00($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
John M. Kehoe, Jr............ -- -- 0 200,000 0 0
DeLyle W. Bloomquist......... -- -- 18,000 52,000 0 0
David S. Graziosi............ -- -- 0 15,000 0 0
- ---------------
(1) The value of the underlying securities at December 29, 2000 was $.938 per
share.
PENSION PLANS
The General Chemical Corporation Salaried Employee's Pension Plan (the
"Pension Plan") is a defined benefit plan that generally benefits full-time,
salaried employees. A participating employee's annual retirement benefit is
determined by the employee's credited service under the Pension Plan and average
annual earnings during the five years of the final ten years of service credited
under the Pension Plan for which such employee's earnings were highest. Annual
earnings include principally salary, overtime and short-term incentive
compensation. The Pension Plan provides that a participating employee's right to
receive benefits under the Pension Plan becomes fully vested after five years of
service. Under the Pension Plan, benefits are adjusted by a portion of the
social security benefits received by participants. Under this formula, the
average recognized compensation under the Pension Plan for each of the named
executives as of December 31, 2000 was: Mr. Kehoe, $374,000; Mr. Bloomquist,
$350,000; and Mr. Graziosi, $212,500.
In addition, the Named Executive Officers participate in an unfunded
nonqualified excess benefit plan which pays benefits which would otherwise
accrue in accordance with the provisions of the Pension Plan, but which are not
payable under the Pension Plan by reason of certain benefit limitations imposed
by the Internal Revenue Code of 1986, as amended (the "Code").
The table below indicates the estimated maximum annual retirement benefit a
hypothetical participant would be entitled to receive under the Pension Plan and
the excess benefit plan (without regard to benefit limitations imposed by the
Code) before any deduction for social security benefits if the retirement
occurred December 31, 2000, at the age of 65, after the indicated number of
years of credited service and if average annual earnings equaled the amounts
indicated.
AVERAGE YEARS OF CREDITED SERVICE (2)
ANNUAL --------------------------------------------------------------------------
EARNINGS(1) 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ----------- -------- -------- -------- -------- -------- -------- --------
$ 200,000 $ 20,000 $ 40,000 $ 60,000 $ 80,000 $100,000 $100,000 $105,000
250,000 25,000 50,000 75,000 100,000 125,000 125,000 131,250
300,000 30,000 60,000 90,000 120,000 150,000 150,000 157,500
400,000 40,000 80,000 120,000 160,000 200,000 200,000 210,000
500,000 50,000 100,000 150,000 200,000 250,000 250,000 262,500
600,000 60,000 120,000 180,000 240,000 300,000 300,000 315,000
700,000 70,000 140,000 210,000 280,000 350,000 350,000 367,500
800,000 80,000 160,000 240,000 320,000 400,000 400,000 420,000
900,000 90,000 180,000 270,000 360,000 450,000 450,000 472,500
1,000,000 100,000 200,000 300,000 400,000 500,000 500,000 525,000
- ---------------
(1) Compensation qualifying as annual earnings under the Pension Plan
approximate the amounts set forth as Salary and Bonus in the Summary
Compensation table for the individuals listed on such table.
(2) The number of years of credited service under the Pension Plan for Messrs.
Kehoe, Bloomquist and Graziosi is approximately 2, 12, and 2, respectively.
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's compensation program is administered by the Compensation
Committee of the Board (the "Committee") which has responsibility for reviewing
all aspects of compensation paid by the Company to its executive officers. The
Committee's primary objectives with respect to executive compensation are to
attract and retain the best possible executive talent, incentivize these
executives to achieve General Chemical Group's business objectives, and
strengthen the link between management and shareholder interests. To achieve
these objectives, the Committee expects to retain those compensation plans that
tie a substantial portion of an executive's overall compensation to General
Chemical Group's performance.
The principal elements of General Chemical Group's executive compensation
program consist of base salaries and incentive variable compensation in the form
of annual bonus, stock options and other long-term compensation awards. The
policies of the Compensation Committee with respect to the base salary and
incentive compensation awarded to the Company's senior executives, including Mr.
Kehoe, the Company's President and Chief Executive Officer, are discussed below.
Base Salaries. The initial base salaries for executive officers are
determined by the Compensation Committee based on its evaluation of the
responsibilities of the position held by the executive, as well as the
executive's business experience, past performance and anticipated contributions
to the Company's future success.
Salary adjustments are based on a periodic evaluation of the performance of
the Company and of each executive officer. The Compensation Committee will take
into consideration in the case of each executive officer the scope of his or her
responsibilities, time commitments, financial results, product quality
improvements, regulatory compliance, new business development and any other
applicable factors.
Annual Incentive Compensation. Pursuant to the terms of General Chemical
Group's Performance Plan, annual cash incentive awards are payable to the extent
that annual Company and individual business performance objectives specified by
the Committee are attained. Company and individual performance objectives may be
based on Company-wide or operating unit performance in the following areas:
earnings per share, revenues, operating cash flow, operating earnings, working
capital to sales ratio and return on capital, the level of individual
contribution to the success of the Company, and compensation opportunities under
other General Chemical Group incentive plans. Based on the performance of the
Company in 2000, Mr. Kehoe was awarded a bonus of $125,000 for 2000.
Long-Term Incentive Compensation. The Committee expects to endeavor to
foster an ownership culture that encourages superior performance by General
Chemical Group's executive officers and employees through the use of stock-based
compensation plans designed to increase stock ownership throughout the Company.
To that end, in 2000 pursuant to The General Chemical Group Inc. 1996 Stock
Option and Incentive Plan and The General Chemical Group Inc. 2000 Long-Term
Incentive Plan, the Board of Directors has awarded 462,000 options to purchase
shares having an exercise price range of $0.469 to $2.00. The Committee in its
discretion will determine subsequent awards.
Compliance with Section 162(m). The Compensation Committee believes that,
unless circumstances warrant an exception, General Chemical Group should only
pay compensation to its executive officers in excess of $1 million if such
excess amount is performance-based compensation exempt from the limit on
deductibility of such compensation under Section 162(m) of the Code.
The Compensation Committee
of the Board of Director
Philip E. Beekman, Chairman
Gerald J. Lewis
Joseph Volpe
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2000, there were no interlocking relationships existing between the
Company's Board of Directors or compensation committee of any other company.
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PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 on May 31,
1996 (the date of the Company's initial public offering of Common Stock) in each
of (1) The General Chemical Group Inc. Common Stock, (2) the Standard & Poor's
500 Index, (3) the Standard & Poor's Chemical Composite Index, and (4) the
Standard & Poor's Small Cap Chemicals Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE GENERAL CHEMICAL GROUP INC. COMMON STOCK,
THE STANDARD & POOR'S 500 INDEX, THE STANDARD & POOR'S
CHEMICAL COMPOSITE INDEX AND THE STANDARD & POOR'S SMALL CAP CHEMICALS INDEX
[GRAPH]
S&P CHEMICALS S&P SMALLCAP
GEN CHEM (GCG) S&P 500 COMP. INDEX COMPOSITE INDEX CHEMICALS INDEX
-------------- ------------------- --------------- ---------------
5/31/96 100 100 100 100
12/31/96 123.46 112.1 108.62 110.83
12/31/97 140.84 149.49 132.15 115.18
12/31/98 73.78 192.21 123.83 96.22
12/31/99 53.76 232.66 145.17 102.78
12/31/00 21.79 211.48 132.97 80.69
ASSUMES $100 INVESTED ON MAY 31, 1996
ASSUMES DIVIDENDS REINVESTED
5/31/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
------- -------- -------- -------- -------- --------
General Chemical (GCG).................... 100.00 123.46 140.84 73.78 53.76 21.79
S&P 500 Composite Index................... 100.00 112.10 149.49 192.21 232.66 211.48
S&P Chemicals Composite Index............. 100.00 108.62 132.15 123.83 145.17 132.97
S&P Small Cap Chemicals Index............. 100.00 110.83 115.18 96.22 102.78 80.69
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company is party to a management agreement with Latona Associates Inc.
("Latona Associates"). Latona Associates is a management advisory company that,
since 1995, has provided the Company with strategic management, business and
financial advisory services, including guidance and advice relating to
financings, security offerings, recapitalization, restructurings, acquisitions
and tax and employee benefit matters. Paul M. Montrone, the controlling
stockholder and Chairman of the Board of the Company, also controls Latona
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Associates. In addition, Paul M. Meister, Vice Chairman of the Board of the
Company, is a Managing Director of Latona Associates.
In connection with the spin-off in April 1999 of the Company's former
subsidiary, GenTek Inc., Latona Associates agreed to provide its services
separately to the Company and to GenTek Inc. and to split its current fee
between the two companies. The Company's fee for 2000 was $1,595,000. These
annual fees are payable quarterly in advance and are adjusted annually for
increases in the U.S. Department of Labor, Bureau of Labor Statistics, Consumer
Price Index. In addition, if the Company requests that Latona provide advisory
services in connection with any acquisition, business combination or other
strategic transaction, the Company will pay Latona Associates additional fees,
comparable to those received by investment banking firms for similar services
(subject to the approval of a majority of the independent directors).
The Company's agreement with Latona Associates extends through 2004. The
agreement may be terminated by the Company or Latona Associates if the other
party ceases, or threatens to cease, to carry on its business, or commits a
material breach of the agreement which is not remedied within 30 days of notice
of such breach. The Company may terminate the agreement if Mr. Montrone ceases
to hold, directly or indirectly, shares of the Company's capital stock
constituting at least 20% of the aggregate voting power of the Company's capital
stock.
While there can be no assurance that the amount of fees paid by the Company
to Latona Associates for services does not exceed the amount that the Company
would have to pay to obtain similar services from unaffiliated third parties,
the Company believes that the employees of Latona Associates have extensive
knowledge concerning its business which would be impractical for a third party
to obtain. As a result, the Company has not compared the fees payable to Latona
Associates with fees that might be charged by third parties for similar
services.
Proposals regarding amendments to, waivers of, extensions of or other
changes in the terms of the agreement with Latona Associates, as well as any
transactions perceived to involve potential conflicts of interest, will be dealt
with on a case-by-case basis, taking into account relevant factors including the
requirements of the New York Stock Exchange and prevailing corporate practices.
PROPOSAL 2:
REVERSE STOCK SPLIT
The Company is seeking stockholder approval to effect a reverse split of
its Common Stock and Class B Common Stock by amending the Company's Certificate
of Incorporation (the "Reverse Split"). The text of the proposed amendment to
the Certificate of Incorporation (the "Reverse Split Amendment") is attached to
this Proxy Statement as Appendix A.
The Company is seeking stockholder approval of three different reverse
split ratios (each, a "Reverse Split Ratio"), (a) a one-for-five reverse split,
(b) a one-for-seven and one-half reverse split, and (c) a one-for-ten reverse
split, with the Board having the authority to determine which of the three
Reverse Split Ratios will be employed by the Company. Although the Company is
seeking stockholder approval of the three Reverse Split Ratios, only one of
these ratios will be effected and implemented by the Board in its sole
discretion. Therefore, the Reverse Split Amendment will provide for only one
Reverse Split of the Common Stock and Class B Common Stock utilizing the Reverse
Split Ratio chosen by the Board. The Board will be authorized to determine which
of the three Reverse Split Ratios will be employed in the Reverse Split, and
once this determination is made, the two other Reverse Split Ratios will be
deemed abandoned by the Board and thereafter may not be effected by the Company
without stockholder approval. In making its determination, the Board will
consider, among other factors, the issues discussed under "Purpose and
Background of the Reverse Split" below.
The following is a description of the impact of each of the three Reverse
Split Ratios on the Company's capital structure:
- A one-for-five Reverse Split of the Company's Common Stock and Class B
Common Stock would reduce the number of issued shares of Common Stock and
Class B Common Stock by approximately 80%, with each share of outstanding
Common Stock currently issued being reclassified into approximately
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0.20 shares of Common Stock and each share of Class B Common Stock being
reclassified into approximately 0.20 shares of Class B Common Stock. The
total number of shares held by each stockholder will be reclassified
automatically into the number of shares equal to the number held
immediately before the Reverse Split divided by five, except that the
stockholders will receive cash in lieu of fractional shares.
- A one-for-seven and one-half Reverse Split of the Company's Common Stock
and Class B Common Stock would reduce the number of issued shares of
Common Stock and Class B Common Stock by approximately 76.7%, with each
share of outstanding Common Stock being reclassified into approximately
0.13 shares of Common Stock and each share of Class B Common Stock being
reclassified into approximately 0.13 shares of Class B Common Stock. The
total number of shares held by each stockholder will be reclassified
automatically into the number of shares equal to the number held
immediately before the Reverse Split divided by seven-and-one-half,
except that the stockholders will receive cash in lieu of fractional
shares.
- A one-for-ten Reverse Split of the Company's Common Stock and Class B
Common Stock would reduce the number of shares of Common Stock and Class
B Common Stock by approximately 90%, with each share of outstanding
Common Stock being reclassified into 0.10 shares of Common Stock and each
share of Class B Common Stock being reclassified into 0.10 shares of
Class B Common Stock. The total number of shares held by each stockholder
will be reclassified automatically into the number of shares equal to the
number held immediately before the Reverse Split divided by ten, except
that the stockholders will receive cash in lieu of fractional shares.
PURPOSE AND BACKGROUND OF THE REVERSE SPLIT
The Reverse Split is intended to raise the per share price of Common Stock
in an effort to continue its listing on the New York Stock Exchange (the "NYSE")
or to enable the Company to seek to list its Common Stock on an alternative
national securities exchange or quotation system. In July 2000, the Company
received notice from the NYSE that it was not in compliance with the NYSE's
requirement that the average trading price of a listed company's common stock
over any 30-day period equal or exceed $1.00 per share. The NYSE has informed
the Company that the trading price of Common Stock must exceed $1.00 per share
by the later of (a) six months from the NYSE's July 2000 notice, i.e., February
2001, or (b) the Company's next annual stockholders' meeting, which is the
Annual Meeting for which this Proxy Statement is being sent to the Company's
stockholders. Since July 1, 2000, the closing price of the Common Stock on the
NYSE has ranged from $0.469 to $1.50 per share.
In February 2000, the Company received notice from the NYSE stating that it
was no longer in compliance with the NYSE's continued listing criteria, which
require, among other things, that a listed company have a market capitalization
of not less than $50 million and total shareholder equity of not less than $50
million. In order to maintain the continued listing of its common stock on the
NYSE, the Company is following the NYSE 's rules and procedures applicable to
listed companies which fail to meet the continued listing criteria, and is
currently subject to quarterly compliance monitoring by the NYSE. Accordingly,
the Reverse Split will not necessarily result in the Company's compliance with
NYSE's continued listing criteria.
While there can be no assurance, the Company believes the implementation of
the Reverse Split, if approved by its stockholders, will result in an increase
in the trading price of the Common Stock above the $1.00 per share minimum
mandated by the NYSE for continued listing and enable the Common Stock to
continue to trade on the NYSE. However, while the Company believes that
implementation of a Reverse Split is a satisfactory mechanism to achieve
compliance with the NYSE's share price requirements, the Reverse Split will not
result in compliance with the minimum shareholders equity requirement of the
NYSE, even if the trading price for the Common Stock exceeds the $1.00 minimum
threshold for the mandated period as a result of the Reverse Split.
In the event that the Common Stock is delisted by the NYSE, or if it
becomes apparent to the Company that it will be unable to meet the NYSE's
continued listing criteria in the foreseeable future, the Company will seek to
have its stock listed or quoted on another national securities exchange or
quotation system. The Company is also proposing the Reverse Split to enable it
to seek to list the Common Stock on an alternative national securities exchange
or quotation system, if necessary. As with the NYSE, other national securities
exchanges and quotation
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systems typically require that a listed security have a minimum average trading
price per share over a given period. In addition, most national securities
exchanges and quotation systems require that the per share price upon the
initial listing of a stock exceed a number higher than $1.00, such as $4.00 or
$5.00 per share. Therefore, the Company needs to effect the Reverse Split in
order to maintain its listing on the NYSE, or to secure an alternative listing
on another national securities exchange or quotation system.
If the market price for the Common Stock remains below $1.00 per share and
the Common Stock is no longer listed on the NYSE, the Common Stock may be deemed
to be "penny stock". If the Common Stock is considered penny stock, it would be
subject to rules that impose additional sales practices on broker-dealers who
sell Company securities. For example, broker-dealers must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. Also, a disclosure schedule
must be prepared before any transaction involving a penny stock, and disclosure
is required about (1) sales commissions payable to both the broker-dealer and
the registered representative and (2) current quotations for the securities.
Monthly statements are also required to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stock. The additional burdens imposed upon
broker-dealers by these requirements could discourage them from facilitating
trades in the Common Stock, which could have an adverse effect on the liquidity
of the Common Stock.
GIVEN THE PURPOSE AND BACKGROUND OF THE REVERSE SPLIT, IF PROPOSAL 2 IS
APPROVED BY THE STOCKHOLDERS, THE BOARD EXPECTS TO SELECT THE REVERSE SPLIT
RATIO THAT WILL RESULT IN THE SMALLEST POSSIBLE DECREASE IN THE NUMBER OF
OUTSTANDING SHARES OF CAPITAL STOCK, STILL RESULTING IN THE INCREASE IN THE
TRADING PRICE OF THE COMMON STOCK TO THE AMOUNT IN EXCESS OF THAT REQUIRED TO
MAINTAIN THE LISTING OF THE COMMON STOCK ON THE NYSE OR TO ENABLE THE COMPANY TO
LIST THE COMMON STOCK ON AN ALTERNATIVE NATIONAL SECURITIES EXCHANGE OR
QUOTATION SYSTEM.
EFFECTIVENESS OF THE REVERSE SPLIT
If Proposal 2 is approved by the Company's stockholders, the Reverse Split
would become effective at 5:00 p.m. Eastern Standard Time on the day (the
"Effective Time") that the Company files the Reverse Split Amendment with the
Secretary of State of the State of Delaware. The Reverse Split Amendment will
contain the Reverse Split Ratio selected by the Board as the ratio to be
employed by the Company to implement the Reverse Split.
If Proposal 2 is approved by stockholders, the Company expects to file the
Reverse Split Amendment promptly after the Annual Meeting. However, the Board
has the discretion to delay effecting the Reverse Split or not to carry out the
Reverse Split if it determines that it is not in the Company's best interests.
In accordance with Delaware law, the Board has reserved the right,
notwithstanding the approval of Proposal 2 by the stockholders, to abandon the
Reverse Split at any time before the filing of the Reverse Split Amendment with
the Secretary of State of the State of Delaware. The Board may consider a
variety of factors in determining the Reverse Split Ratio to be employed and
whether or not to proceed with the Reverse Split, including overall trends in
the stock market, business developments and the Company's actual and projected
financial performance.
STOCK CERTIFICATES
Mellon Investor Services LLC, the transfer agent for the Company, will act
as the exchange agent for the Reverse Split. As soon as practicable following
the Effective Time, the exchange agent will contact the holders of record of
Common Stock to exchange the stock certificates representing their shares of
Common Stock for certificates representing the number of whole shares of Common
Stock into which such shares have been reclassified as a result of the Reverse
Split and, if applicable, cash in lieu of a fractional share (see "No Fractional
Shares" below). Each stockholder will receive instructions on how to exchange
certificates. STOCKHOLDERS SHOULD NOT SUBMIT THEIR OLD CERTIFICATES TO THE
TRANSFER AGENT UNTIL THEY RECEIVE THESE INSTRUCTIONS. In order to receive new
certificates, stockholders will be required to surrender their old certificates
in accordance with the exchange agent's instructions.
Until exchanged by the exchange agent, each old certificate will be deemed
for all purposes to evidence ownership of the number of whole shares of Common
Stock into which the shares evidenced by such old certificate have been
reclassified.
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NO FRACTIONAL SHARES
No fractional shares will be issued. If the number of shares held by a
holder of Common Stock prior to the Effective Time is not evenly divisible into
the Reverse Split Ratio selected by the Board to effect the Reverse Split, such
holder will not receive a fractional share and, instead of such fractional
interest, will be entitled to receive a cash payment, without interest, equal to
(1) the fractional interest times (2) the average closing price of the Common
Stock on the NYSE over the ten trading days preceding the Effective Time.
As promptly as practicable after the Effective Time, the Company will
deposit with Mellon Investor Services LLC, as the exchange agent, cash in an
amount equal to the value of the estimated aggregate number of fractional shares
that will result from the Reverse Split. The Company's stockholder list shows
that some of the outstanding Common Stock is registered in the names of clearing
agencies and broker nominees. Since the Company does not know the number of
shares held by each beneficial owner for whom the clearing agencies and broker
nominees are record holders, the Company cannot predict with certainty the
number of fractional shares that will result from the Reverse Split or the total
amount the Company will be required to pay for fractional share interests.
However, the Company expects that the amount will be immaterial.
STOCK OPTIONS
The Board will take appropriate action to adjust proportionately the number
of shares of Common Stock issuable upon exercise of outstanding options, and to
adjust the related exercise prices, to reflect the Reverse Split. When the
Reverse Split becomes effective, the number of shares covered by each option
will be reduced by the Reverse Split Ratio chosen by the Board and the exercise
price per share will be increased by one divided by the Reverse Split Ratio
chosen by the Board, to account for the Reverse Split. For example, if a
one-for-five Reverse Split is effected by the Company, the number of shares
covered by each option will be reduced to one-fifth of the number currently
covered by such option, and the exercise price per share of such option will be
increased by five times.
EFFECTS OF THE REVERSE SPLIT
Upon the effectiveness of the Reverse Split, the number of outstanding
shares of Common Stock and Class B Common Stock would be automatically reduced
by multiplying such number of shares by the Reverse Split Ratio selected by the
Board to effect the Reverse Split.
While the Reverse Split would, upon its effectiveness, increase the price
per share of the Common Stock, it could also negatively impact the aggregate
market value of the Company. There can be no assurance that the market price of
the Common Stock will rise in proportion to the reduction in the number of
outstanding shares resulting from the Reverse Split.
The Reverse Split may adversely affect the liquidity of the Common Stock
because of the reduced number of shares outstanding after the Reverse Split. In
addition, the Reverse Split will increase the number of stockholders who own
odd-lots. An odd-lot is fewer than 100 shares. Stockholders who hold odd-lots
may experience an increase in the cost of selling their shares and may have
greater difficulty in making sales. The extent of the decrease in the number of
outstanding shares, and the increase in the number of odd-lot shareholders, will
depend on the Reverse Split Ratio selected by the Board to effect the Reverse
Split.
There will be no change in the terms of Common Stock or Class B Common
Stock as a result of the Reverse Split. After the Reverse Split, shares of
Common Stock will have the same voting rights and rights to dividends and
distributions and will be identical in all other respects to the
currently-issued Common Stock now authorized. Because no fractional shares of
Common Stock will be issued, any stockholder who would own less than one whole
share of Common Stock immediately following the effectiveness of the Reverse
Split will cease to be a stockholder on the Effective Time. It is not
anticipated that the Reverse Split will result in any material reduction in the
number of holders of Common Stock. Each stockholder's percentage ownership of
the Common Stock will not be altered except for the effect of eliminating
fractional shares.
Because the number of authorized shares of capital stock will not be
reduced, the overall effect will be an increase in authorized but unissued
shares of Common Stock and Class B Common Stock as a result of the
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Reverse Split. These shares may be issued by the Board in its discretion. Any
future issuance will have the effect of diluting the percentage of stock
ownership and voting rights of the present holders of Common Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following description of certain federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended, applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this proxy
statement. This discussion is for general information only and does not discuss
consequences which may apply to special classes of taxpayers (for example,
nonresident aliens, broker-dealers or insurance companies) or any aspects of
state, local or foreign tax laws. Stockholders are urged to consult their own
tax advisors to determine the particular tax consequences to them of the Reverse
Split.
The Company has been advised that because the Reverse Split is not part of
a plan to increase periodically a stockholder's proportionate interest in the
assets or earnings and profits of the Company, the Reverse Split should not
result in the recognition by stockholders of any gain or loss for federal income
tax purposes (except to the extent of the cash received in lieu of fractional
shares). The holding period for each share of new common stock received by a
stockholder will include the stockholder's holding period for its shares of old
common stock with respect to which the shares of new common stock are issued,
provided that the shares of old common stock were held as capital assets. The
adjusted tax basis of each share of new common stock received by a stockholder
(including the fractional share for which cash is received) will be the same as
the adjusted tax basis of the shares of old common stock with respect to which
the share of new common stock is issued. A stockholder who receives cash in lieu
of a fractional share of new common stock generally will recognize taxable gain
or loss equal to the difference, if any, between the amount of cash received and
the portion of the stockholder's aggregate adjusted tax basis in the shares of
old common stock allocated to the fractional share. If the shares of old common
stock allocated to the fractional shares were held by the stockholder as capital
assets, the gain or loss resulting from the payment of cash in lieu of the
issuance of a fractional share will be taxed as capital gain or loss.
VOTE REQUIRED; NO APPRAISAL RIGHTS
The affirmative vote of the holders of the majority of the outstanding
shares of Common Stock and the Class B Common Stock is required for approval of
the Reverse Split. Abstentions from voting on this proposal and broker non-votes
will be counted as being voted against this proposal. Mr. Montrone and the
Montrone family trusts and entities, as described in note (4) to the table under
"Security Ownership of Certain Beneficial Owners and Management," have indicated
that they intend to vote for this proposal. Therefore, it is expected that the
Reverse Split will be approved by stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT EFFECTING THE REVERSE SPLIT.
Stockholders have no right under Delaware law or the Company's Certificate
of Incorporation or By-Laws to exercise dissenters' rights of appraisal with
respect to the Reverse Split.
PROPOSAL 3:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board, the Board has
appointed Deloitte & Touche LLP as the Company's independent auditors for the
2001 fiscal year and hereby recommends that the stockholders ratify such
appointment.
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte") for professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended December 31, 2000 and for
the review of the financial statements included in the Company's Quarterly
Reports on Form 10-Q for that year were $278,000.
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FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Deloitte for professional services rendered
for information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2000.
ALL OTHER FEES
The aggregate fees billed by Deloitte for services rendered to the Company,
other than the services described above under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees," for the fiscal year ended
December 31, 2000 were $219,000. These fees were for tax consulting, due
diligence services, statutory audits and other non-audit services.
The audit committee has considered whether the provision of non-audit
services is compatible with maintaining the independent auditors' independence.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they so desire, and
to respond to appropriate questions from stockholders.
SUBMISSION OF PROPOSALS FOR 2002 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings, consistent with regulations adopted by
the SEC and the By-Laws of the Company. Proposals to be considered for inclusion
in the proxy statement for the 2002 Annual Meeting of Stockholders must be
received by the Company at its principal executive offices not later than
December 13, 2001. Proposals to be timely submitted for stockholder action at
the Company's 2002 Annual Meeting must be received by the Company at its
principal executive offices not less than 30 days nor more than 60 days prior to
the 2002 Annual Meeting. Proposals should be directed to the attention of the
Secretary, The General Chemical Group Inc., Liberty Lane, Hampton, New Hampshire
03842.
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year ended
December 31, 2000 and this proxy statement are being mailed together to all
stockholders of the Company of record on March 28, 2001, the record date for
voting at the Annual Meeting.
By Order of the Board of Directors,
TODD M. DUCHENE
Secretary
April 12, 2001
THE COMPANY'S 2000 ANNUAL REPORT ON FORM 10-K, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE BY WRITTEN REQUEST FROM THE
OFFICE OF THE SECRETARY, THE GENERAL CHEMICAL GROUP INC. LIBERTY LANE, HAMPTON,
NEW HAMPSHIRE 03842.
Additional information about the Company can be found at the Company's
internet site: http://www.genchem.com
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APPENDIX A
CERTIFICATE OF AMENDMENT
OF
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
THE GENERAL CHEMICAL GROUP INC.
PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The General Chemical Group Inc. (the "Corporation"), a corporation
organized under the General Corporation Law of the State of Delaware (the
"DGCL"), hereby certifies as follows:
FIRST: That the Board of Directors of the Corporation has duly adopted a
resolution authorizing the Corporation to reclassify and change each share of
the Corporation's common stock, par value $0.01 per share, into
[ ] shares of common stock, par value $0.01 per share, and each
share of the Corporation's class B common stock, par value $0.01 per share, into
[ ] shares of class B common stock, par value $0.01 per share.
SECOND: That the Board of Directors of the Corporation has duly adopted a
resolution setting forth the following proposed amendment to the Amended and
Restated Certificate of Incorporation of the Corporation and declaring such
amendment to be advisable (the "Amendment"):
Section 1 of Article IV of the Amended and Restated Certificate of
Incorporation of the Corporation is hereby amended by adding two new
paragraphs at the end of such Section 1, with such paragraphs to read as
follows:
"Each share of the Common Stock, par value $0.01 per share, of the
Corporation issued and outstanding or held in treasury (the "Old
Common Stock") as of 5:00 p.m. (Eastern Standard Time) on the date of
the filing of the Certificate of Amendment with the Secretary of State
of the State of Delaware (the "Effective Time") shall be automatically
reclassified into [ ] ([ ]) shares of
Common Stock, par value $0.01 per share, of the Corporation (the "New
Common Stock"), without any action by the holders thereof. Each
stockholder who, immediately prior to the Effective Time, owns a
number of shares of Common Stock which is not evenly divisible by
[ ] shall, with respect to such fractional interest, be
entitled to receive from the Corporation cash in the an amount equal
to such fractional interest multiplied by the average closing price of
the Common Stock on the New York Stock Exchange over the ten-trading
day period immediately preceding the Effective Time (with the last day
of such period being the date on which the Effective Time occurs) (the
"Averaging Period"). Any stock certificate that, immediately prior to
the Effective Time, represented shares of Old Common Stock shall,
automatically and without the necessity of presenting the same for
exchange, represent the number of shares of New Common Stock as equals
[ ] represented by such stock certificate, as adjusted with
respect to fractional interests as provided in the preceding sentence.
Each share of the Class B Stock, par value $0.01 per share, of the
Corporation issued and outstanding or held in treasury immediately
prior to the Effective Time shall be automatically reclassified into
[ ] ([ ]) shares of Class B Stock, par value $0.01
per share, of the Corporation (the "New Class B Stock"), without any
action by the holders thereof. Each stockholder who, immediately prior
to the Effective Time, owns a number of shares of Class B Stock which
is not evenly divisible by [ ] shall, with respect to
such fractional interest, be entitled to receive from the Corporation
cash in the an amount equal to such fractional interest multiplied by
the average closing price of the Common Stock on the New York Stock
Exchange over the Averaging Period. Any stock certificate that,
immediately prior to the Effective
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Time, represented shares of Old Class B Stock shall, automatically and
without the necessity of presenting the same for exchange, represent
the number of shares of New Class B Stock as equals [ ]
represented by such stock certificate, as adjusted with respect to
fractional interests as provided in the preceding sentence."
THIRD: That the Amendment was duly adopted, in accordance with the DGCL and
the Amended and Restated Certificate of Incorporation and the By-Laws of the
Corporation, by the stockholders of the Corporation at a meeting of the
stockholders duly held on May 16, 2001.
IN WITNESS WHEREOF, the undersigned, being a duly authorized [title of
officer] of the Corporation, for the purpose of amending the Amended and
Restated Certificate of Incorporation of the Corporation pursuant to Section 242
of the General Corporation Law of the State of Delaware, does make and file this
Certificate, hereby declaring and certifying that the facts herein stated are
true, and accordingly has hereunto set his hand, this day of
, 2001.
--------------------------------------
[Name and Title of Officer]
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THE GENERAL CHEMICAL GROUP INC.
ANNUAL MEETING, MAY 16, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Messrs. Paul M. Meister, Todd M. DuChene and Robert J. Gagalis each with power
of substitution, are hereby authorized to vote all shares of common stock of The
General Chemical Group Inc., which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of The General Chemical
Group Inc. to be held on Wednesday, May 16, 2001, and at any adjournments, as
specified on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE REVERSE SIDE
HEREON AND RETURN IT IN THE ENCLOSED ENVELOPE.)
* FOLD AND DETACH HERE *
24
Please mark
your votes as
indicated in [ X ]
this example
1. Election of Directors with terms expiring at the Annual Meeting in 2002.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed at right
[ ] [ ]
Nominees: Paul M. Montrone, Paul M. Meister, Philip E. Beekman, John M. Kehoe,
Jr., Gerald J. Lewis and Joseph M. Volpe
(Instructions: To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.)
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2. Approval of amendment to the Company's Certificate of Incorporation to effect
any of a (a) one-for-five, (b) one-for-seven and one-half, or (c) one-for-ten
reverse split of the Company's Common Stock and Class B Common Stock as
determined by the Board of Directors in its sole discretion.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratify the appointment of Deloitte & Touche LLP as inde-
pendent auditors of the Company for the current fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, on such other business as may properly come before
the meeting.
A MAJORITY (OR IF ONLY ONE, THEN THAT ONE) OF THE
ABOVE PERSONS OR THEIR SUBSTITUTES WHO SHALL BE
PRESENT AND ACTING AT THE MEETING SHALL HAVE THE
POWERS CONFERRED HEREBY.
Dated: , 2001
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Signature of Stockholder(s)-please sign name exactly as imprinted
(do not print). Please indicate any change of address.
NOTE: Executors, administrators, trustees and others signing in a representative
capacity should indicate the capacity in which they sign. If shares are held
jointly, EACH holder should sign.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
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*FOLD AND DETACH HERE *