SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Section240.14a-12

ENGELHARD CORPORATION
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(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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[LOGO] 101 WOOD AVENUE, ISELIN, NEW JERSEY 08830

ORIN R. SMITH
Chairman and
Chief Executive Officer

March 31, 1999

Dear Shareholder:

You are cordially invited to attend the 1999 Annual Meeting of Shareholders,
which will be held at 9 a.m., Eastern Daylight Savings Time, on Thursday, May 6,
at The Sheraton at Woodbridge Place, 515 Route 1 South, Iselin, N.J. 08830.

The enclosed Notice and Proxy Statement contain complete information about
matters to be considered at the Annual Meeting, at which the business and
operations of Engelhard will also be reviewed. Discussions at our Annual Meeting
have generally been interesting and useful, and we hope that you will be able to
attend. If you plan to attend, please check the box provided on the proxy card
and an admission ticket will be sent to you. Only shareholders and their proxies
will be permitted to attend the Annual Meeting.

Whether or not you plan to attend, we urge you to complete, sign and return
the enclosed proxy card, so that your shares will be represented and voted at
the Annual Meeting.

Sincerely yours,

[LOGO]

ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
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NOTICE OF THE 1999 ANNUAL MEETING OF SHAREHOLDERS
-------------------

To our Shareholders: March 31, 1999

The Annual Meeting of Shareholders of Engelhard Corporation, a Delaware
corporation, will be held on Thursday, May 6, 1999 at 9 a.m., Eastern Daylight
Savings Time, at The Sheraton at Woodbridge Place, 515 Route 1 South, Iselin,
N.J. 08830 for the following purposes:

(1) To elect four Directors;

(2) To approve the Engelhard Corporation Deferred Stock Plan for
Nonemployee Directors;

(3) To ratify the appointment of PricewaterhouseCoopers LLP as
independent public accountants;

(4) To transact such other business as may properly come before the
meeting.

The record date for the determination of the shareholders entitled to vote
at the meeting or at any adjournment thereof is close of business on March 19,
1999.

A list of shareholders entitled to vote at the Annual Meeting will be open
to the examination of any shareholder, for any purpose germane to the meeting,
at the offices of our Transfer Agent and Registrar, ChaseMellon Shareholder
Services, L.L.C., 120 Broadway, New York, New York 10271, during ordinary
business hours for ten days prior to the meeting.

By Order of the Board of Directors
Arthur A. Dornbusch, II

VICE PRESIDENT, GENERAL COUNSEL AND

SECRETARY

SHAREHOLDERS ARE URGED TO MARK, SIGN AND RETURN PROMPTLY
THE ACCOMPANYING PROXY IN THE ENCLOSED RETURN ENVELOPE

ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830

------------------------

PROXY STATEMENT FOR THE 1999
ANNUAL MEETING OF SHAREHOLDERS

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ABOUT THE MEETING

WHY AM I RECEIVING THESE MATERIALS?

The Board of Directors of Engelhard Corporation (sometimes referred to as
Engelhard or "we" or "our") is providing these proxy materials for you in
connection with our Annual Meeting of shareholders which will take place on
Thursday, May 6, 1999. You are invited to attend the Annual Meeting and are
requested to vote on the proposals described in this proxy statement.

WHO IS ENTITLED TO VOTE?

Holders of Common Stock as of the close of business on March 19, 1999 will
be entitled to vote. On such date there were outstanding and entitled to vote
144,953,082 shares of Common Stock of Engelhard, each of which is entitled to
one vote with respect to each matter to be voted on at the Meeting.

WHAT CONSTITUTES A QUOROM?

The presence at the Annual Meeting in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock entitled to vote shall
constitute a quorum for the transaction of business. Proxies marked as
abstaining (including proxies containing broker non-votes) on any matter to be
acted upon by shareholders will be treated as present at the meeting for
purposes of determining a quorum but will not be counted as votes cast on such
matters.

HOW DO I VOTE?

If you complete and properly sign the accompanying proxy card and return it
to Engelhard, it will be voted as you direct. If you are a registered
shareholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" shareholders who wish to vote at the meeting will need to
obtain a proxy form from the institution that holds their shares.

CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?

Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by submitting either a notice of
revocation or a duly executed proxy bearing a later date.

WHAT ARE THE BOARD'S RECOMMENDATIONS?

Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the Board
recommends a vote:

- for election of the nominated slate of directors (see page 5);

- for approval of the Engelhard Corporation Deferred Stock Plan for
Nonemployee Directors (see page 28);

- for ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors (see page 31); and

With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.

WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?

Each item to be voted on at the Annual Meeting requires the affirmative vote
of the holders of a majority of the shares represented in person or by proxy and
entitled to vote on the item for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Accordingly, an
abstention will have the effect of a negative vote.

If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.

WHO WILL BEAR THE EXPENSE OF SOLICITING PROXIES?

The cost of soliciting proxies in the form enclosed will be borne by
Engelhard. In addition to the solicitation by mail, proxies may be solicited
personally, or by telephone, by our employees. We have also engaged D.F. King &
Co., Inc., 77 Water Street, New York, New York, to assist in such solicitation
at an estimated fee of $14,000 plus disbursements. Engelhard may reimburse
brokers holding Common Stock in their names or in the names of their nominees
for their expenses in sending proxy material to the beneficial owners of such
Common Stock.

INFORMATION AS TO CERTAIN SHAREHOLDERS

WHO ARE THE LARGEST OWNERS OF ENGELHARD'S COMMON STOCK?

Set forth below is certain information with respect to the only persons
known to us who owned beneficially more than five percent of our voting
securities as of March 2, 1999.

AMOUNT PERCENT
BENEFICIALLY OF
OWNED CLASS
----------- ---------
Minorco........................................... 45,967,680 31.7%(1)
9 rue Sainte Zithe, L-2763
Luxembourg City, Grand Duchy of Luxembourg

State Farm Mutual Automobile Insurance Company.... 9,671,483 6.75%(2)
One State Farm Plaza,
Bloomington, Illinois 61710

PRIMECAP Management Company....................... 7,193,900 5.02%(3)
225 South Lake Avenue #400
Pasadena, California 91101-3005

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(1) We are informed by Minorco, a company incorporated under the laws of
Luxembourg, as a societe anonyme, as follows:

Minorco, through a wholly-owned subsidiary, holds 45,967,680 shares of
Common Stock of Engelhard, representing approximately 31.7% of our
outstanding voting securities. Shares granted to Messrs. Lea and Slack
pursuant to our Stock Bonus Plan for NonEmployee Directors and our Directors
Stock Option Plan have been ceded by them to Minorco and are included in the
above total.

Minorco is an international natural resources company with operations in
gold, base metals, industrial minerals, paper and packaging and
agribusiness. The capital stock of Minorco is owned in part as follows:

approximately 45.6%, directly or through subsidiaries, by Anglo American
Corporation of South Africa Limited ("Anglo American"), a publicly held
mining and finance company, and approximately 22.5%, directly or through
subsidiaries, by De Beers Centenary AG ("Centenary"), a publicly held
Swiss diamond mining and investment company. Approximately 37.9% of the
capital stock of Anglo American is owned, directly or through
subsidiaries, by De Beers Consolidated Mines Limited ("De Beers"), a
publicly held diamond mining and investment company. Approximately 29.8%
of the capital stock of Centenary

and approximately 33.5% of the capital stock of De Beers is owned,
directly or through subsidiaries, by Anglo American. De Beers owns
approximately 10.9% of Centenary.

Mr. Nicholas F. Oppenheimer, Deputy Chairman and a director of Anglo
American, and Chairman and a director of Centenary and De Beers and a
director of Minorco, and Mr. Slack, a director of Engelhard, Chief
Executive, President and a director of Minorco and a director of Anglo
American, have indirect partial interests in approximately 6% of the
outstanding shares of Minorco and approximately 9% of the outstanding shares
of Anglo American. Mr. Slack holds an additional indirect interest in 23
Anglo American Ordinary Shares, and his infant children hold a beneficial
interest of 900 shares in Minorco. Mr. Lea is a director of Anglo American
and Minorco, and his infant son holds a beneficial interest in 100 shares of
Minorco. Please see "Agreement with Minorco" below for information about our
agreement with Minorco regarding the disposition of shares owned by Minorco.

(2) As reported by State Farm Mutual Automobile Insurance Company and related
entities on Schedule 13G filed with the Securities and Exchange Commission
and dated February 1, 1999.

(3) As reported by PRIMECAP Management Company on Schedule 13G filed with the
Securities and Exchange Commission and dated December 31, 1998.

AGREEMENT WITH MINORCO

On March 2, 1999, we announced that we had reached an agreement with Minorco
relating to Minorco's previously announced intention to dispose of its stock
interest in Engelhard. We have agreed to purchase approximately 18 million of
those shares, with the remainder of Minorco's stake (approximately 28 million
shares) to be sold through an underwritten public offering. We have also agreed
to purchase up to an additional two million shares from Minorco if they are
available at the end of the public offering. The approximately 20 million shares
represents 13.9% of Engelhard's total shares outstanding. In addition, Minorco
will compensate Engelhard for the costs and expenses incurred in connection with
the transaction.

When the public offering is completed, Messrs. Anthony W. Lea, Executive
Director and Member of the Executive Committee of Minorco, and Henry R. Slack,
Chief Executive of Minorco, will resign from our Board of Directors. If the
public offering is completed before our Annual Meeting, Mr. Slack will withdraw
his nomination for election as a Director of Engelhard at the Annual Meeting. In
addition, Minorco has agreed to vote all of its shares which are sold after the
record date for our Annual Meeting (March 19, 1999) and prior to the Annual
Meeting in the same manner and in the same proportion as shares held by all
other shareholders of Engelhard are voted at the meeting. For information
regarding our agreement to purchase or "cash settle" certain securities owned by
Messrs. Lea and Slack and ceded by them to Minorco, see "Certain Transactions"
on page 12.

1. ELECTION OF DIRECTORS

Our Board of Directors consists of three classes, Class I, Class II and
Class III, each class serving for a full three-year term. Messrs. Perry,
Richards, Slack and Smith, all of whom are Class III Directors, are nominees for
reelection as Class III Directors at the Annual Meeting. If elected, they will
serve until 2002. The Class I Directors will be considered for reelection at our
2000 Annual Meeting. The Class II Directors will be considered for reelection at
our 2001 Annual Meeting.

Messrs. Slack and Smith have been members of the Board of Directors since
1981, Mr. Richards since 1983, Mr. Antonini since 1985, Mr. Napier since 1986,
Mrs. Pace since 1987, Mr. Watson since 1991, Mr. Lea since 1994, Ms. Alvarado
since 1995, Mr. Loomis since 1996 and Mr. Perry since 1997.

Directors will be elected by the affirmative vote of a majority of the votes
cast at the Meeting.

The persons named as proxies in the accompanying proxy intend to vote,
unless you instruct otherwise in your proxy, FOR the election of Messrs. Perry,
Richards, Slack and Smith as Class III Directors. Messrs. Lea and Slack will
resign from the Board of Directors upon completion of Minorco's public offering
of its Engelhard shares. Please see "Agreement with Minorco" on page 4 for
additional information.

INFORMATION WITH RESPECT TO NOMINEES AND
DIRECTORS WHOSE TERMS CONTINUE

The following table sets forth the name and age of each nominee and
Director; all other positions and offices, if any, now held by him or her with
Engelhard and his or her principal occupation during the last five years.

NOMINEES FOR REELECTION AT THIS MEETING,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE
PAST FIVE YEARS, BOARD MEMBERSHIPS (CLASS III)

BARRY W. PERRY
Age 52. President and Chief Operating Officer of Engelhard since 1997;
previously Group Vice President and General Manager of the Pigments and
Additives Group.
Mr. Perry is also a director of Arrow Electronics, Inc.

REUBEN F. RICHARDS
Age 69. Retired Chairman of the Board of Terra Industries, Inc.; Retired
Chairman of the Board of Minorco (U.S.A.); Retired Non-Executive
Chairman of the Board of Engelhard; Chairman of the Board of Terra
Industries Inc. from prior to 1994 until April 1996.
Mr. Richards is also a director of Santa Fe Energy Resources, Inc.,
Ecolab, Grupo Financiero Banorte and Potlatch Corporation.

HENRY R. SLACK
Age 49. Chief Executive of Minorco since December 1992; Member of the
Executive Committee of Minorco since prior to 1994, and President and a
director of Minorco since prior to 1994; director of Anglo American
Corporation of South Africa Limited since prior to 1994.
Mr. Slack is also a director of Terra Industries Inc.

ORIN R. SMITH
Age 63. Chairman and Chief Executive Officer of Engelhard since January
1995; previously President and Chief Executive Officer of Engelhard.
Mr. Smith is also a director of Ingersoll-Rand Company, Perkin-Elmer
Corporation, Summit Bancorp, and Vulcan Materials Company.

DIRECTORS WITH TERMS EXPIRING MAY 2000,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS, BOARD MEMBERSHIPS (CLASS I)

MARION H. ANTONINI
Age 68. Principal of Kohlberg & Co. since March 1998. President and Chief
Executive Officer of Welbilt Corporation from prior to 1994 to 1998.
Mr. Antonini is also a director of Vulcan Materials Company,
Scientific-Atlanta, Inc., Color Spot Nurseries, Inc. and Holley
Performance Products, Inc.

ANTHONY W. LEA
Age 50. Executive Director and Member of the Executive Committee of
Minorco since prior to 1994; Director of Anglo American Corporation of
South Africa since prior to 1994.
Mr. Lea is also a director of Terra Industries Inc.

DOUGLAS G. WATSON
Age 54. President, CEO and Director of Novartis Corporation, a life
sciences company, since January 1997. President of the Pharmaceuticals
Division of CIBA-GEIGY Corporation from prior to 1994 to January 1997.
Mr. Watson is also a director of Summit Bancorp.

DIRECTORS WITH TERMS EXPIRING MAY 2001,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS, BOARD MEMBERSHIPS (CLASS II)

LINDA G. ALVARADO
Age 46. President and Chief Executive Officer of Alvarado Construction,
Inc., since prior to 1994.
Ms. Alvarado is also a director of Cyprus Amax Minerals Company, Pitney
Bowes, Inc. and US West Communications Inc.

WILLIAM R. LOOMIS, JR.
Age 50. Chairman of the Board of Terra Industries Inc. since April 1996;
Managing Director, Lazard Freres & Co. LLC, an investment bank, since
prior to 1994; General Partner in the Banking Group of Lazard Freres &
Co. LLC from prior to 1994 to June 1995.

JAMES V. NAPIER
Age 62. Chairman of Scientific-Atlanta, Inc., a communications
manufacturing company, since prior to 1994.
Mr. Napier is also a director of Intelligent Systems Corporation, Vulcan
Materials Company, HBO & Company, Personnel Group of America, Inc. and
Westinghouse Air Brake Company.

NORMA T. PACE
Age 77. Partner, Paper Analytics Associates, a planning and consulting
company since 1995; Senior Advisor and Director of WEFA Group, Inc.,
economic consultants and forecasters since prior to 1994.
Mrs. Pace is also a director of Hasbro, Inc.

SHARE OWNERSHIP OF DIRECTORS AND OFFICERS

HOW MUCH COMMON STOCK DO ENGELHARD'S DIRECTORS AND EXECUTIVE OFFICERS OWN?

Set forth in the following table is the beneficial ownership of Common Stock
as of March 2, 1999 for all nominees, continuing Directors, each of the
Executive Officers listed on the Summary Compensation Table and all Directors
and Executive Officers as a group. No Director or Executive officer owns more
than 1% of the total outstanding shares (including exercisable options) other
than Mr. Smith who owns 1.8%. All Directors and Executive Officers as a group
own approximately 3.0% of the total outstanding shares (including exercisable
options).

NAME SHARES
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Linda G. Alvarado.............................................................................. 12,808(1)
Marion H. Antonini............................................................................. 44,128(1)
Thomas P. Fitzpatrick.......................................................................... 105,569(2)
Joseph E. Gonnella............................................................................. 171,625(2)
Anthony W. Lea................................................................................. 750(4)
William R. Loomis, Jr.......................................................................... 24,843(1)
James V. Napier................................................................................ 23,006(1)
Norma T. Pace.................................................................................. 30,565(1)
Barry W. Perry................................................................................. 269,826(2)
Reuben F. Richards............................................................................. 29,623(1)
Robert J. Schaffhauser......................................................................... 460,656(2)
Henry R. Slack................................................................................. 2,530(3)(4)
Orin R. Smith.................................................................................. 2,555,044(2)
Douglas G. Watson.............................................................................. 40,245(1)
All Directors and Executive Officers as a group................................................ 4,328,292(2)

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(1) Includes 4,500 shares of Common Stock subject to options granted to Messrs.
Antonini, Napier, Richards and Watson and Mses. Alvarado and Pace and 2,250
shares of Common Stock subject to options granted to Mr. Loomis under our
Directors Stock Option Plan, which options may be exercised within 60 days
from March 2, 1999.

(2) Includes 1,643,917, 224,562, 38,390, 322,891, 142,541 and 2,737,574 shares
of Common Stock subject to options granted to Messrs. Smith, Perry,
Fitzpatrick, Schaffhauser and Gonnella, and all Directors and Executive
Officers as a group, respectively, under our Stock Option Plan of 1981 (the
"1981 Stock Option Plan"), our Stock Option Plan of 1991 (the "Stock Option
Plan," together with the 1981 Stock Option Plan, the "Stock Option Plans")
and the Directors Stock Option Plan, which options may be exercised within
60 days from March 2, 1999 and also includes 1,157 shares owned by family
members in which persons in the group disclaim any beneficial interest.

(3) Excludes 410,433 shares of Common Stock in which Mr. Slack has an indirect
partial interest and in which he disclaims any beneficial interest.

(4) Excludes 4,500 shares of Common Stock subject to options and 7,593 shares of
Common Stock granted to each of Messrs. Slack and Lea under our Directors
Stock Option Plan and our Directors Stock Bonus Plan, respectively, which
are ceded to Minorco and are reflected in the Amount Beneficially Owned by
Minorco in the Section "Information as to Certain Shareholders" on page 3.

BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES

HOW OFTEN DID THE BOARD OF DIRECTORS MEET DURING 1998?

Our Board of Directors held a total of 14 meetings during 1998. During 1998
all of our Directors attended more than 75% of the meetings of the Board and
meetings of committees of the Board on which they served.

WHAT COMMITTEES DOES THE BOARD OF DIRECTORS HAVE?

Among the standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee and the Stock Option/Stock Bonus
Committee. The Board does not have a nominating committee.

AUDIT COMMITTEE

The members of the Audit Committee are Mr. Lea (Chairman), Ms. Alvarado,
Messrs. Antonini and Loomis and Mrs. Pace, all of whom are Nonemployee
Directors. The Audit Committee periodically reviews our accounting policies,
internal accounting controls and the scope and results of the independent
accountants' audit of our financial statements. The Audit Committee held 2
meetings during 1998.

COMPENSATION COMMITTEE

The members of the Compensation Committee are Messrs. Antonini (Chairman),
Napier, Richards and Watson and Mrs. Pace, all of whom are Nonemployee
Directors. The Compensation Committee determines the appropriate level of
compensation for the Officers and employees of Engelhard. The Compensation
Committee held 9 meetings during 1998.

STOCK OPTION/STOCK BONUS COMMITTEE

The members of the Stock Option/Stock Bonus Committee are Messrs. Antonini
(Chairman), Napier, Richards and Watson and Mrs. Pace, all of whom are
Nonemployee Directors. The Stock

Option/Stock Bonus Committee administers our stock option and stock bonus plans
and determines the terms and conditions for the issuance of stock options and
stock bonus awards to our Officers and employees. The members of the Committee
are not eligible to participate in such plans. The Stock Option/Stock Bonus
Committee held 5 meetings during 1998.

HOW ARE DIRECTORS COMPENSATED?

Directors who are not our employees each received a retainer at the annual
rate of $35,000 in 1998. In addition, Nonemployee Directors received a $1,350
fee for each Board meeting attended in 1998. During 1998, Nonemployee Directors
also received a $1,350 fee for each committee meeting attended; a $5,000 annual
retainer for each committee on which they served; and each chairman of a
committee received an additional $5,000 annual retainer. Directors who are
employed by us do not receive any Directors' fees or retainers.

Pursuant to the Retirement Plan for Directors of Engelhard Corporation (the
"Directors Retirement Plan"), which we currently sponsor, a Nonemployee Director
will receive retirement benefits following his or her retirement as a Director
if at the time of such retirement either:

(1) he or she has six or more years of service as a Nonemployee
Director, or

(2) his or her age and years of service as a Nonemployee Director equal
at least 65.

Such retirement benefits are an annual amount equal to the annual Board
retainer fee (excluding meeting and Committee fees) in effect on the date of the
Director's retirement and are payable in equal monthly installments commencing
on the first day of the month coinciding with or next following the Director's
65th birthday or, if later, the date of the Director's retirement and continuing
until the earlier of:

(1) the Director's death, or

(2) the completion of payments for a period equal to the period of the
Director's service as a Nonemployee Director.

The Directors Retirement Plan is being phased out by us. In December 1998,
our Board of Directors adopted the Engelhard Corporation Deferred Stock Plan for
Nonemployee Directors (the "Deferred Stock Plan"). This plan is subject to your
approval and is described in greater detail beginning on page 28. Nonemployee
Directors who are currently serving on our Board of Directors and wish to
discontinue participation in the Directors Retirement Plan, will have credited
to their account under the Deferred Stock Plan the net present value of the
accrued benefit as of December 31, 1998. Those Directors also will be entitled
to receive a greater annual award pursuant to the Deferred Stock Plan, described
more fully beginning on page 28. The Directors who do not wish to discontinue
participation in the Directors Retirement Plan will receive a smaller annual
award pursuant to the Deferred Stock Plan, as discussed below. New Nonemployee
Directors will not have the opportunity to participate in the Directors
Retirement Plan.

Pursuant to our Stock Bonus Plan for NonEmployee Directors (the "Directors
Stock Bonus Plan"), each person who becomes a Nonemployee Director prior to June
30, 2006 shall be awarded 7,593 shares of our Common Stock effective as of such
person's election to our Board of Directors. Such shares will vest in equal
increments over a ten-year period. Directors are entitled to receive cash
dividends on and to vote shares which are the subject of an award prior to their
distribution or forfeiture. Upon termination of the Director's service as a
Nonemployee Director, the Director (or, in the event of his or her death, his or
her beneficiary) shall be entitled, in the discretion of the committee formed to
administer the Directors Stock Bonus Plan, to receive the shares awarded to such
Director which have tentatively vested up to the date of such termination of
service; shares may be received prior to such date if there has been a "change
in control." If receipt of shares is accelerated due to a change in control, an
additional payment will be made to compensate for the loss of the tax deferral.

Pursuant to our Directors Stock Option Plan each Nonemployee Director in
office on the date of the regular meeting of the Board in December of each year
will automatically be granted an option to purchase 3,000 shares of Common Stock
with an exercise price equal to the fair market value of such shares at the date
of grant. Each option becomes exercisable in four equal installments, commencing
on the first anniversary of the date of grant and annually thereafter. Each
option terminates on the tenth anniversary of the date of grant. Each option
held by a director which was granted more than one year before his or her
termination of service as a director shall become fully exercisable upon
termination if such termination is a result of disability, death or retirement
after attaining age 65; options may become exercisable prior to such date if
there has been an "acquisition of a control interest."

Pursuant to our Deferred Compensation Plan for Directors and our Directors
Stock Bonus Plan, Nonemployee Directors may elect to defer payment of all or a
designated portion of their compensation for services as a Director. Under our
Deferred Compensation Plan for Directors, deferred amounts will be paid at time
of a "change in control" if the participant has made an advance election to that
effect. In the event distribution of deferred amounts is so accelerated, an
additional payment will be made in order to compensate for the loss of tax
deferral resulting from the accelerated payment.

CERTAIN TRANSACTIONS

Among other businesses, we market, fabricate and process various metals,
minerals and ores acquired from numerous domestic and foreign suppliers. We make
and will continue to make purchases, sales and leases of such materials, in the
ordinary course of our business, from and to entities in which we are informed
that Anglo American and/or Minorco have a material interest, upon terms which
are no less favorable to us than those obtainable from other sources. Our
purchases and sales of such materials from all sources during 1998 was $2.9
billion and $3.0 billion, respectively, including purchases of $175.8 million
from and no sales to entities in which we

are informed Anglo American has a material interest. We also entered into metal
leases of $17.5 million with such entities.

We have agreed to purchase or "cash settle" the following securities which
we awarded to Messrs. Lea and Slack and which they ceded to Minorco: vested
options to acquire 9,000 shares of Common Stock ("Options") granted pursuant to
the Directors Stock Option Plan; 11,389 shares of Common Stock ("Bonus Shares")
granted pursuant to our Stock Bonus Plan for Non-Executive Directors (which have
tentatively vested); and deferred Common Stock units granted pursuant to our
Deferred Stock Plan for Non-Employee Directors, which units will be settled by
delivering an equivalent number of shares of Common Stock (the "Deferred
Shares"), subject to shareholder approval at the Annual Meeting and following
termination of their service on the Board. Options which have not vested and
Bonus Shares which are not tentatively vested will be forfeited pursuant to the
terms of such plans. At the closing of the public offering, we will make a cash
payment to Minorco in full satisfaction and extinguishment of all rights of
Messrs. Lea and Slack and Minorco in respect of the Options, the Bonus Shares
(assuming such Bonus Shares have been vested by the Board) and, if they have
been distributed, the Deferred Shares. If the Deferred Shares have not been
distributed at that time we will make a cash payment to Minorco in respect of
the Deferred Shares as soon as practicable following their distribution. The
purchase price per share (the "Purchase Price") for the shares of Common Stock
purchased by us will be equal to the lower of (x) $18.90 or (y) the price at
which shares of Common Stock are sold in the public offering, net of the
underwriting spread. The cash price to be paid to Minorco for each Option will
be the excess of the Purchase Price over the exercise price per share of such
Option multiplied by the number of shares of Common Stock subject to the Option.
The cash payment to be paid to Minorco for each Bonus Share and each Deferred
Share will be the Purchase Price. See also the description of our agreement with
Minorco set out under "Agreement with Minorco" on page 4.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our Executive
Officers and Directors and persons who own more than 10% of a registered class
of Engelhard's equity securities to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange. Such Officers, Directors and shareholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of such forms furnished to us and
written representations from our Executive Officers and Directors, all persons
subject to the reporting requirements of Section 16(a) filed the required
reports on a timely basis for 1998, except that Messrs. Lea and Slack each filed
a Form 5 late with respect to options granted to them pursuant to the Directors
Stock Option Plan.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following table sets forth the compensation paid by us for services
rendered in all capacities during each of the last three fiscal years to our
Chief Executive Officer and our other four most highly compensated Executive
Officers.

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION
AWARDS(1)(2)
------------------------------
ANNUAL COMPENSATION RESTRICTED
------------------------------------- STOCK
YEAR SALARY ($) BONUS ($)(3) AWARD(S)($)(3) OPTIONS(#)(3)
--------- ----------- ------------- -------------- --------------

Orin R. Smith, Director,................ 1998 864,996 1,750,000 554,093 608,279
Chairman and Chief 1997 814,992 916,805 379,996 520,667
Executive Officer 1996 774,996 800,000 326,000 353,000

Barry W. Perry, Director,............... 1998 372,744 630,000 250,380 279,519
President and Chief 1997 349,991 338,320 172,002 231,348
Operating Officer 1996 282,216 150,000 101,875 81,000

Thomas P. Fitzpatrick,.................. 1998 314,000 523,500 188,858 249,825
Senior Vice President 1997 200,000 274,885 135,811 153,560
and Chief Financial Officer(4) 1996 -- -- -- --

Robert J. Schaffhauser,................. 1998 332,796 340,000 176,573 140,362
Vice President 1997 319,992 177,618 119,500 120,065
and Chief Technical Officer 1996 306,000 160,000 108,660 82,500

Joseph E. Gonnella,..................... 1998 316,500 325,000 117,000 122,046
Senior Vice President, Strategy and 1997 304,803 232,595 115,875 144,964
Corporate Development 1996 190,692 125,000 84,903 65,600

- ------------------------

(1) Our Key Employees Stock Bonus Plan and our Stock Option Plans provide for
acceleration of vesting in the event of a "change in control." For
information on what constitutes a "change in control," see "Employment
Contracts, Termination of Employment and Change in Control Arrangements" on
page 19.

(2) Currently, we have no Long Term Incentive Plans which are required to be
reported pursuant to the General Rules and Regulations of the Securities and
Exchange Commission.

(3) As of December 31, 1998, Messrs. Smith, Perry, Fitzpatrick, Schaffhauser and
Gonnella held 68,143, 20,030, 7,494, 21,110 and 13,578 unvested shares,
respectively, of stock which were

awarded pursuant to our Key Employees Stock Bonus Plan having a market value
of $1,328,789, $390,601, $146,133, $411,649 and $264,767, respectively. The
foregoing amounts do not include the reported grants, which were made in
February 1999 for services rendered during 1998. Restricted stock awards of
Engelhard's Common Stock granted under the Key Employees Stock Bonus Plan
vest in five equal annual installments commencing on the first anniversary
of the date of the grant. Vesting will be accelerated upon the occurrence of
a "change in control." We pay dividends on restricted stock, if and to the
extent paid on Common Stock generally, but pay no dividends on stock
options. For information on what constitutes a "change in control," see
"Employment Contracts, Termination of Employment and Change in Control
Arrangements" on page 19.

(4) Mr. Fitzpatrick joined Engelhard on May 1, 1997.

The following table sets forth information concerning individual grants of
stock options made under the Stock Option Plan in May and December 1998 and
February 1999 for services rendered during 1998 by each of the named Executive
Officers.

OPTION GRANTS FOR SERVICES RENDERED DURING 1998

INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------------- GRANT DATE
NUMBER OF % OF TOTAL VALUE
SECURITIES OPTIONS GRANTED --------------
UNDERLYING TO EMPLOYEES FOR GRANT DATE
OPTIONS SERVICES RENDERED EXERCISE OR BASE PRESENT VALUE
NAME GRANTED (#)(1) DURING 1998 PRICE ($/SH) EXPIRATION DATE ($)(2)
- ---------------------------- -------------- ----------------------- ------------------- --------------- --------------

Orin R. Smith............... 437,775 15% 19.13 12/17/2008 2,223,897
170,504 6% 19.59 02/11/2009 895,146

Barry W. Perry.............. 202,475 7% 19.13 12/17/2008 1,028,573
77,044 3% 19.59 02/11/2009 404,481

Thomas P. Fitzpatrick....... 50,000 2% 21.69 05/07/2008 311,500
141,725 5% 19.13 12/17/2008 719,963
58,100 2% 19.59 02/11/2009 305,025

Robert J. Schaffhauser...... 86,050 3% 19.13 12/17/2008 437,134
54,312 2% 19.59 02/11/2009 285,138

Joseph E. Gonnella.......... 86,050 3% 19.13 12/17/2008 437,134
35,996 1% 19.59 02/11/2009 188,979

- ------------------------

(1) Options have a ten-year term and vest in four equal annual installments
beginning on the first anniversary of the date of grant. Vesting will be
accelerated upon the occurrence of a "change in control." For information as
to what constitutes a "change in control," see "Employment Contracts,
Termination of Employment and Change in Control Arrangements" on page 19.

(2) The Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. Our use of this model
should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
The real value of the options in this table depends upon the actual changes
in the market price of the Common Shares during the applicable period. The
model assumes:

(a) an option term of 4 years, which represents anticipated exercise trends
for the named Executive Officers;

(b) an interest rate of 4.5% to 5.5% that represents the current yield
curves as of the grant dates;

(c) an average volatility of approximately 32% calculated using average
weekly stock prices for the four years prior to the grant date; and

(d) a dividend yield of approximately 1.8% to 2.0% (the current dividend
yield).

The following table sets forth information concerning each exercise of stock
options during 1998 by each of the named Executive Officers and the value of
unexercised options at December 31, 1998.

AGGREGATE OPTION EXERCISES IN 1998 AND VALUES AT DECEMBER 31, 1998

NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE DECEMBER 31, 1998 (#) DECEMBER 31, 1998 ($)
ACQUIRED ON REALIZED ---------------------------- -----------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------------- ------------------- ------------ -------------- ------------- --------------

Orin R. Smith............... 0 0 1,505,996 1,234,726 $ 3,823,012 $ 394,643
Barry W. Perry.............. 0 0 188,550 471,873 $ 269,081 $ 180,260
Thomas P. Fitzpatrick....... 0 0 27,150 318,135 $ 25,453 $ 135,516
Robert J. Schaffhauser...... 0 0 282,375 278,615 $ 642,914 $ 104,753
Joseph E. Gonnella.......... 0 0 116,925 263,814 $ 180,807 $ 102,554

PENSION PLANS

The following table shows estimated annual pension benefits payable to a
covered participant at normal retirement age under our qualified defined benefit
pension plan, as well as the non-qualified supplemental pension plan. This
non-qualified plan provides benefits that would otherwise be denied participants
by reason of certain Internal Revenue Code limitations on qualified plan
benefits and provides enhanced benefits for certain named key executives,
including the individuals named in the Summary Compensation Table, based on
remuneration that is covered under the plans and years of service with Engelhard
and its subsidiaries.

PENSION PLAN TABLE

YEARS OF SERVICE
---------------------------------------------------------------
FINAL AVERAGE PAY 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- --------------------------------------- ----------- ----------- ----------- ----------- -----------

$ 200,000.............................. 63,948 87,948 111,948 135,948 135,948
300,000............................... 99,948 135,948 171,948 207,948 207,948
400,000............................... 135,948 183,948 231,948 279,948 279,948
500,000............................... 171,948 231,948 291,948 351,948 351,948
600,000............................... 207,948 279,948 351,948 423,948 423,948
700,000............................... 243,948 327,948 411,948 495,948 495,948
800,000............................... 279,948 375,948 471,948 567,948 567,948
900,000............................... 315,948 423,948 531,948 639,948 639,948
1,000,000.............................. 351,948 471,948 591,948 711,948 711,948
1,100,000.............................. 387,948 519,948 651,948 783,948 783,948
1,200,000.............................. 423,948 567,948 711,948 855,948 855,948
1,300,000.............................. 459,948 615,948 771,948 927,948 927,948
1,400,000.............................. 495,948 663,948 831,948 999,948 999,948
1,500,000.............................. 531,948 711,948 891,948 1,071,948 1,071,948
1,600,000.............................. 567,948 759,948 951,948 1,143,948 1,143,948
1,700,000.............................. 603,948 807,948 1,011,948 1,215,948 1,215,948
1,800,000.............................. 639,948 855,948 1,071,948 1,287,948 1,287,948
1,900,000.............................. 675,948 903,948 1,131,948 1,359,948 1,359,948
2,000,000.............................. 711,948 951,948 1,191,948 1,431,948 1,431,948
2,100,000.............................. 747,948 999,948 1,251,948 1,503,948 1,503,948
2,200,000.............................. 783,948 1,047,948 1,311,948 1,575,948 1,575,948
2,300,000.............................. 819,948 1,095,948 1,371,948 1,647,948 1,647,948
2,400,000.............................. 855,948 1,143,948 1,431,948 1,719,948 1,719,948
2,500,000.............................. 891,948 1,191,948 1,491,948 1,791,948 1,791,948
2,600,000.............................. 927,948 1,239,948 1,551,948 1,863,948 1,863,948
2,700,000.............................. 963,948 1,287,948 1,611,948 1,935,948 1,935,948
2,800,000.............................. 999,948 1,335,948 1,671,948 2,007,948 2,007,948

2,900,000.............................. 1,035,948 1,383,948 1,731,948 2,079,948 2,079,948
3,000,000.............................. 1,071,948 1,431,948 1,791,948 2,151,948 2,151,948
3,100,000.............................. 1,107,948 1,479,948 1,851,948 2,223,948 2,223,948
3,200,000.............................. 1,143,948 1,527,948 1,911,948 2,295,948 2,295,948

A participant's remuneration covered by our pension plans is his or her
average monthly earnings, consisting of base salary and regular cash bonuses, if
any (as reported in the Summary Compensation Table), for the highest 60
consecutive calendar months out of the 120 completed calendar months next
preceding termination of employment. With respect to each of the individuals
named in the Summary Compensation Table on page 11, credited years of service
under the plans as of December 31, 1998 are as follows: Mr. Smith, 27 years; Mr.
Perry, 5 years; Mr. Fitzpatrick, 1 year; Mr. Schaffhauser, 9 years and Mr.
Gonnella, 6 years. Benefits shown are computed as a straight line single life
annuity beginning at age 65 and the benefits listed in the Pension Plan Table
are not subject to any deduction for Social Security or other offset amounts.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS

We entered into a three-year employment agreement with Mr. Smith commencing
May 21, 1996. On May 20, 1998, Mr. Smith's agreement was automatically extended
to December 31, 2000. The agreement provides for an annual salary of not less
than $775,000, an annual cash bonus of at least $216,645 and an award of at
least 22,500 shares of our Common Stock; provided, however, that an annual cash
bonus of at least $581,250, equity pool share awards with a value of at least
$484,375 and stock option awards with a value of at least $1,162,500 will be
awarded to Mr. Smith if our performance for any year is greater than or equal to
a predictable level of performance for such year, as determined by the
Compensation Committee. In addition, Mr. Smith is entitled to participate in our
benefit plans.

Pursuant to our Change In Control Agreements, we will provide severance
benefits in the event of a termination of an Executive (as defined), except a
termination:

(1) because of death,

(2) because of "Disability,"

(3) by Engelhard for "Cause," or

(4) by the Executive other than for "Good Reason,"

within the period beginning on the date of a "Potential Change in Control" (as
such terms are defined in the Change In Control Agreement) or "change in
control" (as defined below) and ending

on the third anniversary of the date on which a "change in control" occurs. The
severance benefits include:

(1) the payment of salary to the Executive through the date of termination
of employment together with salary in lieu of vacation accrued;

(2) an amount equal to a pro-rated incentive pool award under the our
Incentive Compensation Plan, determined as set forth in the Agreement;

(3) an amount equal to two times the sum of the highest annual salary and
incentive pool award in effect during any of the preceding 36 months,
determined as set forth in the Agreement;

(4) continued coverage under our life, disability, health, dental and other
employee welfare benefit plans for up to two years;

(5) continued participation and benefit accruals under our Supplemental
Retirement Program for two years following the date of termination; and

(6) an amount sufficient, after taxes, to reimburse the Executive for any
excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended.

Each of Messrs. Smith, Perry, Fitzpatrick, Schaffhauser and Gonnella is
defined as an Executive.

For purposes of our Change In Control Agreement, a "change in control" is
triggered if one of the following occurs:

(1) twenty-five percent or more of our outstanding securities entitled to
vote in the election of directors shall be beneficially owned, directly
or indirectly, by any person or group of Persons, other than the groups
presently owning the same, or

(2) a majority of our Board of Directors ceases to consist of the existing
membership or successors nominated by the existing membership or their
similar successors, or

(3) shareholders approve a reorganization or merger with respect to which
the persons who were the beneficial owners of our outstanding voting
securities immediately prior thereto do not, following the reorganization
or merger, beneficially own more than 60% of the outstanding voting
securities of the corporation resulting from the reorganization or merger
in substantially the same proportions as their ownership of our voting
securities immediately prior thereto, or

(4) shareholder approval of either:

(a) a complete liquidation or dissolution of Engelhard or

(b) a sale or other disposition of all or substantially all of the assets
of Engelhard, other than to Engelhard, with respect to which
following such sale or other disposition, more than 60% of
Engelhard's outstanding securities entitled to vote generally in the
election of directors are thereafter beneficially owned, in
substantially the same proportions, by all or substantially all of
the individuals and entities who were the beneficial owners of such
securities prior to such sale or other disposition.

Our Key Employees Stock Bonus Plan and our Stock Option Plans, in which all
of the Executive Officers participate, provide for the acceleration of vesting
of awards granted in the event of an acquisition of a control interest. If
vesting of awards under the Key Employees Stock Bonus Plan is accelerated, an
additional payment will be made to compensate for the loss of tax deferral. For
purposes of the stock option and stock bonus awards granted before March 7, 1996
under our Stock Option Plan and the Key Employees Stock Bonus Plan, an
accelerated vesting is triggered if either (a) or (b) in the above definition of
"change in control" occurs. For awards made on or after
March 7, 1996, a participant under these plans will, subject to such other
conditions, if any, as the Committee may impose, receive accelerated vesting of
awards granted in the event of a "change in control," as defined above, except
that a "change in control" is triggered by twenty percent, rather than
twenty-five percent, beneficial ownership of Engelhard's outstanding securities
entitled to vote in the election of directors, directly or indirectly, by any
person or group of persons, other than the groups presently owning the same.

Unless a contrary advance election is made, amounts deferred under our
Deferred Compensation Plan for Key Employees will be paid in a lump sum upon an
"acquisition of a control interest" (defined as described above for purposes of
awards made prior to March 7, 1996 under our Key Employees Stock Bonus Plan). If
payments are so accelerated, an additional payment will be made in order to
compensate for the loss of tax deferral. Under our Directors and Executives
Deferred Compensation Plans, which provided for elective deferrals of
compensation earned for years from 1986 through 1993, deferred amounts will be
paid at the time of an "acquisition of a control interest" if the participant
has made an advance election to that effect. In the event distribution of
deferred amounts is so accelerated, an additional payment will be made in order
to compensate for the loss of tax deferral resulting from the accelerated
payment. In addition, certain supplemental retirement benefits under our
Supplemental Retirement Program will vest upon a "change in control" (defined as
described above in the case of the Change in Control Agreements).

We have entered into a Supplemental Retirement Trust Agreement in order to
assist us in paying benefits under the Supplemental Retirement Program, each of
our deferred compensation plans and our Retirement Plan for Directors. We are
required to deposit funds in the trust sufficient to fund unpaid benefits under
each of such plans at the time of a "change in control" (defined as described
above for purposes of the Change in Control Agreements). The assets of the trust
will be subject to the claims of our creditors in the event of our bankruptcy or
insolvency.

REPORT ON EXECUTIVE COMPENSATION

Under the overall direction of the Compensation Committee and the Stock
Option/Stock Bonus Committee of the Board of Directors and in accordance with
our Stock Option Plan and Stock Bonus Plan approved by our shareholders, we have
developed and implemented compensation programs designed to:

- Attract and retain key employees who can build and continue to grow a
successful company;

- Provide incentive to achieve high levels of company, business, and
individual performance; and

- Maintain and enhance alignment of employee and shareholder interests.

The Compensation and Stock Option Plan/Stock Bonus Committees are composed
entirely of Nonemployee Directors individually noted as signatories to this
report.

The Compensation Committee is responsible for overseeing the development and
for review and approval of:

- Overall compensation policy;

- Salaries for the Chief Executive Officer and for approximately 51 other
senior managers worldwide; and

- Aggregate cash incentive awards for Engelhard and specific individual cash
awards under the annual plan for the Chief Executive Officer and
approximately 51 other senior managers worldwide.

The Stock Option/Stock Bonus Committee is responsible for overseeing the
development and for review and approval of:

- Plan design and policies related to senior management and employee awards
of options and restricted stock; and

- Individual grants under the Stock Option Plan and restricted stock awards
under the Key Employees Stock Bonus Plan to the Chief Executive Officer
and approximately 419 employees worldwide.

In exercising those responsibilities and in determining the compensation in
particular of Mr. Smith and in general of other senior managers individually
reviewed, the Committees examine and set:

1. BASE SALARY

The Compensation Committee reviews salaries annually against industry
practices as determined by professional outside consultants who conduct
annual surveys. Our current competitive target is to pay somewhat above the
median for positions of comparable level. This target is being achieved on
average for the professional, technical, and managerial salaried work force.
Salary structures are set each year based on our target and its actual
competitive position. There was a 3.5% structure increase for 1998 for the
U.S. professional, technical and managerial group and a 3.5% adjustment for
1999. Likewise merit budgets are established based on a competitive target,
actual competitive position, and our desire to recognize and reward
individual contribution. For international employees and non-exempt salaried
employees in the United States, structure adjustments and merit budgets are
determined based on local market conditions.

Individual merit adjustments are based upon the managers' quantitative
and qualitative evaluation of individual performance, including feedback
from customers served, against business objectives such as earnings, return
on capital, market share, new customers, and development of new commercial
products. Performance is also considered in the context of expectations for
behavior and the individuals' positions in their respective salary--ranges
the better the performance and the lower the position in range, the greater
the percentage base salary increase. Conversely, the lower the performance
is evaluated and the higher the position in range, the lower the percentage
base salary increase.

Mr. Smith's salary was increased 9.8% for 1999 based on competitive
practice and business results, which included earnings results while funding
investments in capital expansion, research and development, joint ventures,
and acquisitions. Base salary continues to be less than one-fourth of total
compensation for Mr. Smith and generally less than one-half of total
compensation for other senior management. This reflects our emphasis on
non-fixed compensation which varies with Engelhard performance and on other
equity vehicles which are closely aligned with shareholder interests.

2. ANNUAL CASH AND LONG TERM EQUITY INCENTIVE COMPENSATION

Our Management Incentive Plan integrates all incentive compensation
vehicles (including cash bonus award, restricted stock and stock options) to
link total compensation for the participant with both competitive practice
and the performance of Engelhard and/or applicable business unit and the
individual. The plan facilitates clarity of performance expectations and
encourages the identification and commitment to "breakthrough" results.
Overall incentive pools are established for cash, restricted stock equity,
and stock options. The pools are

determined by a formula based on competitive total compensation for
comparable performance; desired compensation mix among cash, restricted
stock and options; and on the actual performance of Engelhard and its
business units against specific predetermined levels of earnings targets. A
threshold level is established below which incentives will not normally be
paid. The Committees may adjust these pools up or down based on the economic
climate or other special circumstances, but did not factor any pools up or
down for 1998. Individual awards are determined based on performance against
specific objectives within the limits of the pools.

Our overall results increased, against the results which served as the
basis for 1997's incentive awards, by more than 19%. As provided under the
plan, the level of pool generated for Engelhard overall and each business
group depends upon that group's actual performance against targets
established at the beginning of 1998. Once each group's pool has been
established, individual performance based awards were made as described
below.

a. ANNUAL CASH INCENTIVE PROGRAM

This program is designed to provide focus on expected annual results and
recognition of accomplishment for the year. Approximately 251 employees
worldwide received awards under our program.

For 1998, actual cash payouts were 97.6% of the competitively defined
pool as factored for performance.

For the year 1998, Mr. Smith received a cash incentive award of
$1,750,000 compared with $916,805 for 1997. This was consistent with the
plan design considering performance and targets and the payout for Engelhard
overall.

Total cash compensation paid to eligible participants reflects
competitive practice for results achieved and is projected to be around the
60th percentile of competitive practice-- higher in lower level positions
and lower in higher level positions.

b. RESTRICTED STOCK

Providing for vesting of shares in equal amounts over a period of five
years, the Key Employees Stock Bonus Plan is designed to align key employee
and shareholder long-term interests by providing designated employees an
equity interest in Engelhard. Approximately 419 employees are eligible to
participate in our plan worldwide. Eligible employees are reviewed annually
for award grants determined in the manner previously described.

The total equity shares awarded for 1998 was slightly under the plan
generated pool. The Committee grants a number of equity shares which are
then converted to a combination of restricted stock and stock options.
Approximately two-thirds of the value of the equity shares,

using present value methodologies, awarded for 1998 were in the form of
stock options. This resulted in 222,145 restricted shares awarded compared
with 198,695 for 1997.

For the year 1998, Mr. Smith received a grant of 28,415 shares plus
options noted below. This compares with 17,815 shares in 1997 and 16,000
shares in 1996.

c. STOCK OPTIONS

The Stock Option Plan has been designed to link employee compensation
growth directly to growth in share price. In conjunction with restricted
stock, options are the major driver of senior management compensation
aligning their reward with shareholder interests. As noted above, over
two-thirds of the compensation value of equity shares was paid in the form
of options. Utilizing actuarial and financial Black-Scholes models, the
value of an option was calculated to be approximately one-third of the value
of a restricted share award.

In addition, approximately 419 senior managers worldwide are reviewed
for annual stock option grants determined in the manner previously
described. Options vest in equal increments over four years and normally
have a ten-year life.

Options granted for 1998 totaled 2,950,471 which was within the pool
generated. This compares with 3,093,479 granted for 1997.

For the year 1998, Mr. Smith was awarded 437,775 options plus an
additional 170,504 options representing value paid in the form of options
instead of restricted stock. The options awarded are consistent with the
plan design and the overall awards for Engelhard.

The Committees direct the purchase of compensation survey information from
several independent professional consultants in order to review the base, annual
cash incentive, and total compensation of Mr. Smith and other individual senior
managers and employee groups. Although there is some overlap in the compensation
comparison groups with The Standard & Poor's Chemical Composite Index used in
the Performance Graph below, for the most part they are different companies.
There are two key reasons for the divergence in samples: (1) we generally
utilize standard surveys in the belief that the general lack of precision
inherent in survey methodology and compensation decision making does not
normally warrant the additional cost of specialized surveys (most of The
Standard & Poor's Chemical Composite Index do not participate in the standard
surveys purchased); (2) the predominant labor markets in which Engelhard
competes for people differ from The Standard & Poor's Chemical Composite Index
in that they also include firms in other business line industries, e.g.,
petroleum and in geographic concentrations, e.g., New Jersey.

The Committees are satisfied that relevant competitive data and achievements
of Engelhard against its targets in the context of the economic and competitive
environment in which Engelhard has operated, support the objectives of
attracting and retaining key talent, providing incentives for

superior performance, and aligning employee and shareholder interests.
Nevertheless, the Committees may reevaluate the current compensation program
design as part of their ongoing process of oversight on such matters.

Section 162(m) of the Internal Revenue Code generally limits the deductible
amount of annual compensation paid to certain individual executive officers
(i.e., the chief executive officer and the four other most highly compensated
executive officers of Engelhard) to no more than $1 million. However, qualifying
performance-based compensation will be excluded from the $1 million cap on
deductibility, and the Committee believes, based on information currently
available, that Engelhard's stock options issued to its executive officers
qualify for this exclusion. Considering the current structure of executive
officer compensation and the availability of deferral opportunities, the
Committee believes that we will not be denied any significant tax deductions for
1998. The Committee will continue to review tax consequences as well as other
relevant considerations in connection with compensation decisions.

COMPENSATION COMMITTEE
STOCK OPTION/STOCK BONUS COMMITTEE

Marion H. Antonini James V. Napier Norma T. Pace
Reuben F. Richards Douglas G. Watson

PERFORMANCE GRAPH

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG ENGELHARD CORPORATION, S&P 500 INDEX AND
S&P CHEMICAL COMPOSITE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

ENGELHARD CORPORATION S&P 500 S&P CHEMICALS

1993 100.00 100.00 100.00
1994 92.43 101.32 115.77
1995 138.34 139.40 151.23
1996 123.65 171.40 199.79
1997 114.48 228.58 245.55
1998 131.20 293.91 223.65

DECEMBER 31,
----------------------------------------------------------------
1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- ---------

Engelhard Corporation................................. 100.00 92.43 138.34 123.65 114.48 131.20
S&P 500............................................... 100.00 101.32 139.40 171.40 228.58 293.91
S&P Chemical Composite................................ 100.00 115.77 151.23 199.79 245.55 223.65

- ------------------------

* Assumes $100 invested on December 31, 1993 in each referenced group with
reinvestment of dividends.

2. APPROVAL OF THE ADOPTION OF THE DEFERRED STOCK PLAN FOR
NONEMPLOYEE DIRECTORS

Subject to shareholder approval, the Board of Directors has, on December 17,
1998, adopted the Engelhard Corporation Deferred Stock Plan for Nonemployee
Directors (the "Deferred Stock Plan"), a copy of which is annexed to this Proxy
Statement as Exhibit A. The Deferred Stock Plan is being submitted to you for
your approval.

SUMMARY DESCRIPTION OF THE DEFERRED STOCK PLAN FOR NONEMPLOYEE DIRECTORS

The primary purpose of the Deferred Stock Plan is to provide for the payment
of a greater portion of the compensation of our Nonemployee Directors in the
form of equity, thereby more closely aligning the interests of our Nonemployee
Directors with those of our other shareholders. The Deferred Stock Plan is
intended to replace the Directors Retirement Plan described above. Each
Nonemployee Director who is serving as our Director on December 31, 1998, and
any new Nonemployee Director shall be eligible to participate in the Deferred
Stock Plan. The total number of shares of our Common Stock that may be issued
pursuant to the Deferred Stock Plan shall not exceed 200,000, subject to
proportionate adjustment in the event of a stock split, reverse stock split,
reorganization or recapitalization.

Under the Deferred Stock Plan, an account will be established for each
Nonemployee Director to which deferred stock units will be credited. Each
deferred stock unit will evidence the right to receive a share of Common Stock
of Engelhard upon the Director's termination of service. Deferred stock units
will be credited to the accounts of the Nonemployee Directors on the date the
Deferred Stock Plan is approved by the shareholders (the "Effective Date") and
annually thereafter on each May 31. The amount of the award of deferred stock
units to current Nonemployee Directors pursuant to the Deferred Stock Plan will
be dependent upon a Nonemployee Director's irrevocable election to continue or
discontinue participation in the Directors Retirement Plan. If a Nonemployee
Director has irrevocably elected, on or prior to December 31, 1998, to
discontinue his or her participation in the Directors Retirement Plan, the
amount of deferred stock units credited on an annual basis to the account of the
Nonemployee Director will be calculated by dividing an amount equal to 40% of
the annual retainer payable to Nonemployee Directors then in effect by the
average daily closing price per share of Common Stock of Engelhard for the 20
trading days prior to such date (the "Fair Market Value Per Share"). Those
current Nonemployee Directors who have not on or prior to December 31, 1998
irrevocably elected to discontinue participation in the Directors Retirement
Plan will have credited to their accounts an amount of deferred stock units
calculated by dividing an amount equal to 15% of the annual retainer then in
effect by the Fair Market Value Per Share. Each of the Nonemployee Directors
elected to discontinue their participation in the Directors Retirement Plan.
Each person who becomes a Nonemployee Director after the Effective Date will not
be eligible to participate in the Directors Retirement Plan and will receive an
award equal to 40% of the annual retainer on May 31 of each year that such
person serves as a Director. On each

date on which a regular cash dividend is paid on the Common Stock, the account
of each eligible Nonemployee Director will be credited with additional deferred
stock units corresponding to the cash dividend paid on the number of shares of
Common Stock evidenced by the deferred stock units credited to the account of
such Nonemployee Director.

Subject to approval of the Deferred Stock Plan by our shareholders, with
respect to each Nonemployee Director who on or prior to December 31, 1998 has
made an irrevocable election not to continue to participate in the Directors
Retirement Plan, the present value of their accrued benefit under the Directors
Retirement Plan (determined assuming payments under the Directors Retirement
Plan would have begun on the later of December 31, 1998 or age 65, using a 6.75%
discount rate, and assuming death would not occur until all benefits under the
Directors Retirement Plan would be made), shall be converted into a
corresponding number of deferred stock units in the Deferred Stock Plan based on
the Fair Market Value Per Share on December 31, 1998.

The entire balance of a Nonemployee Director's account under the Deferred
Stock Plan will be paid to the Nonemployee Director, in either a lump sum or
installments at the election of such Nonemployee Director, in shares of our
Common Stock upon the Nonemployee Director's termination of service. The value
of the deferred stock units is dependent upon the fair market value of shares of
our Common Stock, and therefore is subject to market fluctuations in the value
of our Common Stock.

The distribution of the Nonemployee Director's account will commence within
120 days following the date the Nonemployee Director's service with the Board of
Directors terminates. In the event of death prior to retirement or distribution
of the entire balance, the entire balance in the account on death shall be paid
in a lump sum or installments as elected by the Nonemployee Director, to the
surviving beneficiary designated by notice or by will, or to the legal
representative of the Nonemployee Director's estate.

If a "change in control" (as defined below) occurs and after such change in
control the Nonemployee Director ceases to be a Director or the Deferred Stock
Plan is terminated, the entire balance of the account will be payable in lump
sum within 30 days. A "change in control" means the occurrence of any of the
following:

(1) twenty-five percent or more of Engelhard's outstanding securities
entitled to vote in the election of directors shall be beneficially
owned, directly or indirectly, by any person or group of Persons, other
than the groups presently owning the same, or

(2) a majority of our Board of Directors ceases to consist of the existing
membership or successors nominated by the existing membership or their
similar successors, or

(3) shareholders approve a reorganization or merger with respect to which
the persons who were the beneficial owners of Engelhard's outstanding
voting securities immediately prior thereto do not, following the
reorganization or merger, beneficially own more than 60% of

the outstanding voting securities of the corporation resulting from the
reorganization or merger in substantially the same proportions as their
ownership of Engelhard voting securities immediately prior thereto, or

(4) shareholder approval of either:

(a) a complete liquidation or dissolution at Engelhard or

The Deferred Stock Plan may be amended or terminated at any time without the
consent of our shareholders, provided that no amendment shall materially and
adversely affect the rights of any Nonemployee Director with respect to any
deferred stock units credited to such Nonemployee Director without such
Nonemployee Director's written consent.

FEDERAL INCOME TAX CONSEQUENCES

The crediting of deferred stock units to a Nonemployee Director's account
will not result in taxable income to the Nonemployee Director or an income tax
deduction for Engelhard at the time such deferred stock units are credited. A
Nonemployee Director will recognize income at the time the Engelhard Common
Stock is transferred to the Nonemployee Director in settlement of the deferred
stock unit. The amount of such income will be equal to the fair market value of
our Common Stock at the time of such distribution. We will be entitled to a
corresponding income tax deduction. A Director's tax basis for purposes of
future sales of shares of Common Stock of Engelhard received under the Deferred
Stock Plan will be equal to the amount includible in the Nonemployee Director's
income as described above. In general, for purposes of determining whether the
gain is long-term or short-term, the Nonemployee Director's holding period will
begin on the distribution date.

The following table sets forth the compensation to be paid to each eligible
Nonemployee Director under the Deferred Stock Plan during the first year of the
Deferred Stock Plan (excluding dividend credits and excluding conversion of
accrued benefit from the Directors Retirement Plan). As stated above, a
Nonemployee Director will either receive a 15% of retainer grant or a 40% of
retainer grant dependent upon whether the Nonemployee Director irrevocably
elects to continue participation in the Directors Retirement Plan.

NEW PLAN BENEFITS FOR ALL NONEMPLOYEE DIRECTORS

CASH VALUE DEFERRED STOCK UNITS(1)
------------- ----------------------------

40% Award(2)......................................... $ 14,000 765 shares

- ------------------------

(1) Assumes a price per share of Common Stock of $18 5/16, which was the closing
price per share on March 2, 1999. The actual number of shares received in
the first award will be based on the Fair Market Value Per Share of the
Common Stock as of the Effective Date.

(2) Each Nonemployee Director elected to discontinue participation in the
Directors Retirement Plan. Such dollar amount represents 40% of the annual
retainer for Nonemployee Directors as currently in effect.

The Board of Directors recommends a vote FOR the proposal to approve the
Deferred Stock Plan for Nonemployee Directors.

3. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, based on the recommendation of the Audit Committee,
voted to retain PricewaterhouseCoopers LLP to serve as independent public
accountants for the year 1999. PricewaterhouseCoopers LLP expects to have a
representative at the meeting who will have the opportunity to make a statement
and who will be available to answer appropriate questions.

It is understood that even if the appointment is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board of Directors believes
that such a change would be in the best interests of Engelhard and its
shareholders.

The Board of Directors recommends that you vote FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent public accountants
for the year 1999.

FUTURE SHAREHOLDER PROPOSALS

HOW DO I MAKE A PROPOSAL FOR THE 2000 ANNUAL MEETING?

The deadline for you to submit a proposal pursuant to Rule 14a-8 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") for inclusion
in our proxy statement and form of proxy for the 2000 Annual Meeting of
Shareholders (the "2000 Annual Meeting") is November 30, 1999. The date after
which notice of a shareholder proposal submitted outside of the processes of
Rule 14a-8 of the Exchange Act is considered untimely is February 14, 2000. If
notice of a shareholder proposal submitted outside of the processes of Rule
14a-8 of the Exchange Act is received by us after February 14, 2000, then our
proxy for the 2000 Annual Meeting may confer

discretionary authority to vote on such matter without any discussion of such
matter in the proxy statement for the 2000 Annual Meeting.

OTHER MATTERS

At the date of this Proxy Statement, the Board of Directors has no knowledge
of any business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, the persons named in the enclosed proxy will vote such proxy
thereon in accordance with their judgment in the best interests of Engelhard.

By Order of the Board of Directors
ARTHUR A. DORNBUSCH, II
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY

March 31, 1999

EXHIBIT A

ENGELHARD CORPORATION
DEFERRED STOCK PLAN FOR
NONEMPLOYEE DIRECTORS

1. DEFINITIONS.

As used herein, the following terms shall have the meanings hereinafter set
forth:

(a) "ANNUAL MEETING" means the Annual Meeting of the shareholders of the
Company.

(b) "BOARD" shall mean the Board of Directors of the Company.

(d) "DEFERRED STOCK UNIT" means the equivalent of one Share, as established
pursuant to this Plan.

(e) "DIRECTORS RETIREMENT PLAN" means the Retirement Plan for Directors of
Engelhard Corporation.

(f) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(g) "FAIR MARKET VALUE PER SHARE" means the average of the daily closing
prices of a Share as reported on the New York Stock Exchange for the
twenty (20) trading days prior to the date of determination, or if the
Shares are not listed on such exchange, on the principal United States
securities exchange registered under the Exchange Act on which the Shares
are listed.

(h) "NONEMPLOYEE DIRECTOR" means any person who is a member of the Board and
who is not, as of the date of an award under this Plan, an employee of
the Company or any of its subsidiaries.

(i) "PLAN" means this Engelhard Corporation Deferred Stock Plan for
Nonemployee Directors, as it may be amended from time to time.

(j) "SHARE" means a share of the Company's Common Stock, $1.00 par value
per share.

2. PURPOSE AND EFFECTIVE DATE.

The primary purpose of the Plan is to advance the interests of the Company
and its shareholders by providing for the payment of a greater portion of the
compensation of Nonemployee Directors in the form of equity by the grant to such
directors of Deferred Stock Units under the

A-1

terms set forth herein. By thus compensating Nonemployee Directors and
increasing Nonemployee Directors' equity position in the Company, the Company
seeks to attract, retain, compensate, and motivate those highly competent
individuals upon whose judgment, initiative, leadership, and continued efforts
the success of the Company in large measure depends and to align more closely
the interests of the Nonemployee Directors with those of the shareholders of the
Company.

This Plan is designed to replace the Directors Retirement Plan. The
Directors Retirement Plan shall be phased out after adoption of this Plan as set
forth below. New Nonemployee Directors shall not be permitted to participate in
the Directors Retirement Plan, and shall instead be permitted to participate in
this Plan. Furthermore, current Nonemployee Directors who elect to terminate
participation in the Directors Retirement Plan after the adoption of this Plan
shall be entitled to a larger annual grant pursuant to paragraph 6 below.

The Plan shall be deemed adopted and shall become effective as of the date
of its approval by the affirmative vote of the holders of a majority of the
Shares of the Company voted in person or by proxy at the next Annual Meeting
(the "Effective Date"). Except as provided in Section 6(c) below, no grants of
Deferred Stock Units shall be made unless and until such shareholder approval is
obtained.

3. ELIGIBILITY.

Each director who as of the date of any award made pursuant to the Plan is
not an employee of the Company or any of its subsidiaries shall be eligible to
participate in the Plan.

4. SHARES OF COMMON STOCK AVAILABLE.

The number of Shares that may be issued pursuant to the Plan shall not
exceed 200,000, subject to proportionate adjustment in the event of any stock
split, reverse stock split, reorganization or recapitalization.

5. DEFERRED STOCK ACCOUNT.

The Company shall establish a deferred stock account (an "Account") for each
Nonemployee Director participating in the Plan. On each Award Date (as defined
below) and on each Dividend Date (as defined below), as the case may be, the
Company shall credit the Account with the number of Deferred Stock Units
determined in accordance with paragraph 6 below. Distributions from a
Nonemployee Director's Account shall be made in Shares at the time set forth in
paragraphs 7 and 8 below. The value of the Deferred Stock Units is dependent
upon the fair market value of the Shares on the date the Shares are distributed
to the Nonemployee Director, and is therefore subject to market fluctuations in
value until such distribution.

A-2

6. ANNUAL AWARDS.

(a) On or prior to December 31, 1998, each Nonemployee Director shall make
an irrevocable election to continue or discontinue participation in the
Company's Directors Retirement Plan.

(b) On the Effective Date and on May 31 of each year thereafter (an "Award
Date"), the Company shall credit to the Account of (i) each Nonemployee
Director who on or prior to December 31, 1998 has made an irrevocable
election not to continue to participate in the Directors Retirement Plan
and (ii) each person who becomes a Nonemployee Director after such date,
the number of Deferred Stock Units calculated by dividing an amount equal
to forty percent (40%) of the annual retainer payable to Nonemployee
Directors then in effect by the Fair Market Value Per Share as of the
applicable Award Date. The Account of each Nonemployee Director who does
not irrevocably elect on or prior to December 31, 1998 to discontinue his
or her participation in the Directors Retirement Plan shall be credited
on each Award Date with the number of Deferred Stock Units calculated by
dividing an amount equal to fifteen percent (15%) of the annual retainer
payable to Nonemployee Directors then in effect by the Fair Market Value
Per Share as of the applicable Award Date.

(c) Subject to and contingent upon approval of this Plan by shareholders of
the Company as set forth in Section 2 above, on December 31, 1998 the
present value of the accrued benefit under the Directors Retirement Plan
of each Nonemployee Director who on or prior to such date has made an
irrevocable election not to continue to participate in the Directors
Retirement Plan shall be converted into a number of Deferred Stock Units
in such Nonemployee Director's Account under this Plan. The number of
Deferred Stock Units shall be an amount determined by dividing the
present value, as of December 31, 1998, of the Nonemployee Director's
accrued benefit under the Directors Retirement Plan by the Fair Market
Value of a Share on such date. For this purpose the present value of a
Nonemployee director's accrued benefit shall be determined, as of
December 31, 1998, by (i) assuming payment of benefits under the
Director's Retirement Plan would begin on the later of December 31, 1998
or the date on which the Nonemployee Director attains age 65; (ii) using
a discount rate of 6.75%, compounded annually; and (iii) assuming that
the Nonemployee Director's death will occur after all benefit payments to
which the Nonemployee Director is entitled under the Director's
Retirement Plan have been made. After the Effective Date, no benefits
shall be payable to such Nonemployee Directors under the Director's
Retirement Plan.

(d) At any time a balance is maintained in a Nonemployee Director's Account,
there shall be credited to the Account of such Nonemployee Director
additional Deferred Stock Units on each regular cash dividend payment
date (a "Dividend Date"). The number of such additional Deferred Stock
Units shall be determined by (i) multiplying the total number of

A-3

Deferred Stock Units (including fractional Deferred Stock Units) credited
to the Account immediately prior to the Dividend Date by the amount of
the dividend and (ii) dividing the product by the Fair Market Value Per
Share as of the day preceding the Dividend Date.

(e) In the event of any change in the outstanding Shares upon which the
stock equivalency hereunder is based, by reason of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split, combination or exchange of shares, or any other change in
corporate structure or in the event of any dividend that is paid in
Shares or other property, the number of Deferred Stock Units credited to
the Account shall be adjusted in such a manner as the Board shall
determine to be fair under the circumstances; provided, however, that if
a Change in Control shall have occurred, then such determination shall be
made by the Incumbent Board.

7. DISTRIBUTION.

(a) Except as otherwise provided herein, the balance of each Nonemployee
Director's Account shall be paid to the Nonemployee Director, in a lump
sum or in installments, as determined by the Nonemployee Director in
accordance with paragraph 7(d) below, commencing within 120 days
following the date on which the Nonemployee Director's service on the
Board terminates.

(b) In the event of the death of the Nonemployee Director prior to such
director's retirement or prior to the distribution of the entire balance
in such director's Account, the entire balance in the Account as of the
date of the Nonemployee Director's death shall be paid in Shares in a
lump sum or in installments, as determined by the Nonemployee Director in
accordance with paragraph 7(d) below, to the surviving beneficiary or
beneficiaries as the Nonemployee Director may have designated by notice
in writing to the Company or by will, or, if no beneficiaries are so
designated, the legal representative of such director's estate.

(c) All distributions of Deferred Stock Units made pursuant to this Plan
shall be in Shares in an amount equal to the number of Deferred Stock
Units held in the Account. On the date of any such distribution, the
Company shall cause to be issued and delivered to such Nonemployee
Director a stock certificate evidencing the Shares registered in the name
of such Nonemployee Director, or such other person as the Nonemployee
Director may designate.

(d) All distributions of Shares in accordance with this paragraph 7 shall be
made, at such director's election, either in a lump sum or in monthly,
quarterly, semiannual or annual installments, PROVIDED, HOWEVER, that
such director shall have delivered to the Secretary of the Company a form
specifying the director's election at least six (6) months prior to the
date payments are to commence. In the event that such director fails to
make a timely

A-4

election, the distribution of Shares shall be made in a lump sum.
Deferred Stock Units representing fractional Shares shall be paid in
cash.

(e) The provisions of this Plan shall apply to and be binding upon the
beneficiaries, distributees, and personal representatives, and any other
successors in interest of the Nonemployee Director.

(f) The Company shall deduct from all distributions hereunder any taxes
required to be withheld by the federal, state or local law.

8. ACCELERATION OF DISTRIBUTION.

(a) "CHANGE IN CONTROL" means:

i) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act, (a "Person"), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 25% or more of either (1) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common
Stock") or (2) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change
in Control: (i) any acquisition directly from the Company (other than by
exercise of a conversion privilege); (ii) any acquisition by the Company
or any of its subsidiaries; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any of its subsidiaries; (iv) any acquisition by any corporation with
respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior
to such acquisition in substantially the same proportions as their
ownership, immediately prior to such acquisition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be; or (v) any acquisition by a Person owning more than 25% of
the Outstanding Company Common Stock on the date hereof; or

ii) during any period of two consecutive years, individuals who, as of the
beginning of such period, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board;
PROVIDED, HOWEVER, that any individual becoming a director subsequent
to the beginning of such period whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual

A-5

were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or

iii) approval by the shareholders of the Company of a reorganization, merger
or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation, do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be; or

iv) approval by the shareholders of the Company of (1) a complete
liquidation or dissolution of the Company or (2) a sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale or
other disposition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportions as their ownership, immediately prior
to such sale or other disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be.

(b) Notwithstanding any other provision of the Plan, if a Change in Control
occurs and at any time after the occurrence of such Change in Control
either of the following events occurs:

i) the Nonemployee Director ceases for any reason to be a director of the
Company; or

ii) the Plan is terminated;

then the entire balance of the Account shall be payable in a lump sum to the
director in Shares. Such payment shall be made by the Company as promptly as
practicable, but not more than thirty (30) days following the date on which
the right to such payment arose.

A-6

(c) The Company shall promptly reimburse the director for all legal fees and
expenses reasonably incurred in successfully seeking to obtain or enforce
any right or benefit provided under this paragraph 8.

(d) This paragraph 8 may not be amended or modified after the occurrence of
a Change in Control.

9. NONTRANSFERABILITY OF DEFERRED STOCK UNITS.

No Deferred Stock Units shall be transferred by a Nonemployee Director other
than by will or the laws of descent and distribution.

10. AMENDMENT AND TERMINATION.

The Board may amend, suspend, discontinue or terminate the Plan at any time
without the consent of shareholders of the Company; PROVIDED, HOWEVER, that no
amendment to the Plan shall materially and adversely affect any right of any
Nonemployee Director with respect to any Deferred Stock Units theretofore
credited without such Nonemployee Director's written consent.

11. TERM.

The Plan shall continue in effect without limit unless and until the Board
otherwise determines.

12. MISCELLANEOUS.

(a) Neither the Plan nor any action taken hereunder shall be construed as
giving any Nonemployee Director any right to continue to serve as a
director of the Company or otherwise to be retained in the service of the
Company.

(b) No Shares shall be issued hereunder unless and until counsel for the
Company shall be satisfied such issuance will be in compliance with
applicable federal, state and other securities laws and regulations.

(d) Neither the Nonemployee Director nor any other person shall have any
interest in any fund or in any specific asset of the Company by reason of
amounts credited to the Account of such director, nor the right to
exercise any of the rights or privileges of a shareholder with respect to
any Deferred Stock Unit credited to such Account, nor the right to
receive any distribution under the Plan except as expressly provided
herein. Distributions hereunder shall be made from the general funds of
the Company, and the rights of the director shall be those of an
unsecured general creditor of the Company.

(e) The Plan, the grant of Deferred Stock Units thereunder, and the
obligation of the Company to deliver Shares, shall be subject to all
applicable federal and state laws, rules and regulations and to such
approvals by any governmental or regulatory agency or national

A-7

securities exchange as may be required. The Company shall not be required
to issue or deliver any certificates for Shares prior to the completion
of any registration or qualification of such Shares under any federal or
state law or any ruling or regulation of any governmental body or
national securities exchange which the Company shall, in its sole
discretion, determine to be necessary or advisable.

(f) This Plan shall be interpreted by and all questions arising in
connection therewith shall be determined by the Board, whose
interpretation or determination, when made in good faith, shall be
conclusive and binding, except in the event of a Change in Control, in
which case such interpretation and determination shall be made by the
Incumbent Board.

A-8

[LOGO]

NOTICE OF
ANNUAL MEETING
OF
SHAREHHOLDERS
AND PROXY
STATEMENT

May 6, 1999

ENGELHARD CORPORATION
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF SHAREHOLDERS--MAY 6, 1999
P
The undersigned hereby constitutes and appoints Orin R. Smith, Reuben F.
R Richards and Arthur A. Dornbusch, II, and each of them, his true and lawful
agents and proxies with full power of substitution in each, to represent the
O undersigned at the Annual Meeting of Shareholders of ENGELHARD CORPORATION to
be held at The Sheraton at Woodbridge Place, 515 Route 1 South, Iselin, NJ
X 08830 on Thursday, May 6, 1999 at 9:00 A.M. Eastern Daylight Savings Time
and at any adjournments thereof, on all matters coming before said meeting.
Y
(Change of Address/Comments)

ELECTION OF DIRECTORS. NOMINEES:
Barry W. Perry, Reuben F. Richards,
Henry R. Slack and Orin R. Smith _________________________________
_________________________________
_________________________________
_________________________________

You are encouraged to specify your choices by marking the appropriate boxes.
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxy Committee
cannot vote your shares unless you sign and return this card.

SEE REVERSE
SIDE

FOLD AND DETACH HERE

This proxy when properly excuted will be voted Please mark /X/
in the manner directed herein by the undersigned your votes as
shareholder(s). If no direction is made, this indicated in
proxy will be voted FOR Proposals 1,2,3 and 4. in this example

1. Election of Directors (see reverse) (To withhold vote for any individual nominee write that name below.)

FOR WITHHELD ________________________________________________________________________
/ / / /

2. Approval of the Engelhard Corporation Deferred Stock
Plan for Nonemployee Directors.

FOR AGAINST ABSTAIN
/ / / / / /

3. Ratification of appointment of Pricewaterhouse 4. In their discretion, upon other matters as they
Coopers LLP as independent public accountants. may properly come before the meeting.

FOR AGAINST ABSTAIN I PLAN TO ATTEND
/ / / / / / THE MEETING. / /

Please mark, sign and return promptly using the
enclosed envelope. Executors, administrators, trustees,
etc. should give full title as such. If the signer is a
corporation, please sign full corporate name by
authorized officer.

_________________________________________________________

, 1999
_________________________________________________________
SIGNATURE(S) DATED

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FOLD AND DETACH HERE

Dear Shareholder(s):

Enclosed you will find material relative to the Company's 1999 Annual Meeting
of shareholders. The notice of the annual meeting and proxy statement
describe the formal business to be transacted at the meeting, as summarized
on the attached proxy card.

Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. Please remember that your
vote is important to us.

ENGELHARD CORPORATION