DFAN14A 1 c28175_dfan14a.txt AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 2003 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. __) Filed by the Registrant [ ] Filed by a Party other than the Registrant |X| Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [_] Definitive Proxy Statement [_] Definitive Additional Materials |X| Soliciting Material Pursuant to Rule 14a-12 HERCULES INCORPORATED (Name of Registrant as Specified in Its Charter) HERCULES SHAREHOLDERS' COMMITTEE FOR NEW MANAGEMENT (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: ================================================================================ [The following material was provided to Institutional Shareholder Services in connection with a meeting on May 8, 2003]
------------------------------------------------------------------------------------------------------------------------------------ HERCULES CGQ DATA ------------------------------------------------------------------------------------------------------------------------------------ 1. BOARD ISSUES ------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 1 Board Composition The Board is comprised There are currently 13 members 2002 Proxy Statement. of a majority of on the company's Board. Four of "independent" outsiders. them were nominated by ISP and elected by shareholders in 2001. Dr. William Joyce, the company's CEO, is a member of the Board as well as his four handpicked directors, all of whom have prior relationships with him and were appointed to the Board without initially being elected by shareholders. To the best of our recollection, with the exception of one or two isolated instances with respect to one or two directors, the majority directors have never voted against Dr. Joyce's position. ------------------------------------------------------------------------------------------------------------------------------------ 2 Nominating Committee The nominating committee Two of the members of the 2002 Proxy Statement; Bloomberg; Composition is comprised solely of nominating committee have prior Board Minutes. "independent" outside relationships with Dr. Joyce. directors. In addition, despite being told that committee assignments were based on seniority, the Board has refused to include any of the four directors elected at the 2001 annual meeting of shareholders on the nominating committee while appointing two directors who were appointed to the Board by the CEO after the minority directors' election. ------------------------------------------------------------------------------------------------------------------------------------ 3 Compensation Committee The compensation Two of the four members of the 2002 Proxy Statement; Bloomberg; Composition committee is comprised compensation committee have Board Minutes. solely of "independent" prior relationships with Dr. outside directors. Joyce. Also, despite being told that committee assignments were based on seniority, the Board has refused to appoint Mr. Heyman, Mr. Kumar or Ms. Schaffer (three minority directors) to the audit or compensation committees while appointing two directors to each of these committees who were appointed to the Board by the CEO after the minority directors' election. ------------------------------------------------------------------------------------------------------------------------------------ 4 Governance Committee The company does not 2002 Proxy Statement. Composition have a separate committee that oversees governance issues. ------------------------------------------------------------------------------------------------------------------------------------ 5 Board Structure The Board of Directors 2002 Proxy Statement. is classified. ------------------------------------------------------------------------------------------------------------------------------------ 6 Board Size There are currently 2002 Proxy Statement; Article 6 thirteen directors of the Charter. serving on the Board. The charter provides that the Board must have between 7 and 18 members. ------------------------------------------------------------------------------------------------------------------------------------ 7 Cumulative Voting Shareholders do not have The company has a highly 2002 Proxy Statement; Article 2 Rights cumulative voting rights unusual bylaw election Section 2 of the Bylaws. in director elections. provision which the Board interprets to require a majority vote (not a plurality as is seen in virtually all companies) of the outstanding shares of common stock for the election of directors. Despite the insistence of the minority directors, the Board has refused to nullify this provision. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 8 Boards Served On Dr. William Joyce, the Dr. Joyce lives over 200 miles 2002 Proxy Statement. company's CEO, serves on away from Wilmington, the city the boards of two or in which the company has its fewer other companies. headquarters, and he has refused to move closer to Wilmington. ------------------------------------------------------------------------------------------------------------------------------------ 9 Former CEOs No former CEO of the 2002 Proxy Statement; Bloomberg. company serves on the Board. ------------------------------------------------------------------------------------------------------------------------------------ 10 Chairman/CEO Separation Dr. William Joyce is Four current directors, who 2002 Proxy Statement; Bloomberg; both the Chairman and have joined the company's Board Various Press Releases Chief Executive Officer without shareholder approval disclosing the company's of the company. since Dr. Joyce became CEO, earnings. have prior ties with Dr. Joyce and, to the best or our recollection, have never voted against Dr. Joyce's position. In addition, Dr. Joyce has refused to appoint a CFO, has been acting as the company's CFO and serves on the Board's Finance Committee (and even served as Chairman of this committee for two meetings). We believe this is particularly troubling given the company's myriad of financial problems including the need to restructure the company's long-term debt and its significant pension and asbestos exposures. Moreover, under Dr. Joyce's leadership, the company has taken substantial "non-recurring" charges in all 7 full reported quarters since he came to the company despite the SEC's increasing concern about the misuse of pro-forma earnings. In fact, over these 7 quarters, the company has reported $384 million in net, after tax, "non-recurring" charges while only recording about $78 million in "pro-forma" earnings. Finally, it should be noted that the company has filed its periodic reports late four times since the beginning of 2001, including the first certification required by the Sarbanes-Oxley Act of 2002. ------------------------------------------------------------------------------------------------------------------------------------ 11 Board Guidelines The company does not have Board guidelines. ------------------------------------------------------------------------------------------------------------------------------------ 12 Withhold Votes At the Company's 1991 The Rights Agreement dated annual meeting of August 4, 2000 between the stockholders, a majority company and Chasemellon of stockholders voted to Shareholder Services L.L.C. and redeem or submit the the company's 10-Q for the Company's then existing quarter ended March 31, 1991. rights plan to a binding stockholder vote. Such rights plan was eventually redeemed by the Board prior to its expiration. However, in August 2000, the Board of Directors adopted the Company's current rights plan, without shareholder approval. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 13 Change Board Size The Charter and By-laws Charter/By-laws. of the company do not require stockholder approval and the company does not have a written policy for increasing/decreasing the size of the Board. In 2001, after the Board's nominees had been defeated at the Company's 2001 annual meeting of stockholders, the Board of Directors, without stockholder approval, increased its size by one in order to reinstate one of the defeated directors to the Board. ------------------------------------------------------------------------------------------------------------------------------------ 14 Board Attendance Two majority directors Board Minutes. attended less than 75% of the Board meetings last year. ------------------------------------------------------------------------------------------------------------------------------------ 15 Board Vacancies Any vacancies occurring All of the vacancies in the By-laws, Art II, Section 4; on the Board of last two and a half years have Charter Article 6, Sections 1 Directors, whether by been filled with individuals and 2; Bloomberg. death, resignation, that have prior ties with Dr. removal or an increase Joyce. In addition, in 2001, in the number of after the Board's nominees had directors or otherwise been defeated at the Company's may be filled by the 2001 annual meeting of affirmative vote of a stockholders, the Board of majority of the Directors, without stockholder remaining directors, approval, increased its size by even though less than a one in order to reinstate one quorum. The company's of the defeated directors to practice has been to the Board. To the best of our fill vacancies without a recollection, Dr. Joyce's shareholder vote handpicked directors have never (vacancies have been voted against his position. filled four times in the last two and a half years without shareholder approval). ------------------------------------------------------------------------------------------------------------------------------------ 16 Boards Served on - The company does not Other than the CEO have a policy that limits the number of other boards that directors may serve on. ------------------------------------------------------------------------------------------------------------------------------------ 17 Related Party No "related party" 2002 Proxy Statement. Transaction transactions in which the CEO is a party have been disclosed. ------------------------------------------------------------------------------------------------------------------------------------ 2. AUDIT ------------------------------------------------------------------------------------------------------------------------------------ 18 Audit Committee The audit committee does 2002 Proxy Statement. Composition not include insiders or affiliated outsiders. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 19 Audit Fees For 2002, the total fees The company's relationship with 2001 Proxy Statement; 2002 Proxy paid by the company to its auditor in 2002 is Statement; Information provided its auditor was $21.1 consistent with the company's by management to the Board. million. Of this pattern of engaging its amount, the fees paid by "independent" auditor for the company for non-audit services. In recurring audit related particular, in 2000, the services was $3.1 company paid $2.1 million in million (an additional audit fees and $8.6 million in $1.8 million was paid non-audit fees to its for tax compliance accounting firm and, in 2001, services) while the the company paid $2 million in company's auditor was audit fees and $8.7 million in paid $9.9 million in non-audit fees to its fees for non-audit accounting firm (although it related services. (It should be noted that an should be noted that in additional $8.2 million was addition to the fees billed by the company's described above, $6.3 accountants in 2001 for audit million in fees were and other services rendered in paid in 2002 for audit 2000 and 2001 in connection related services with the company's amendment of provided in connection its credit facilities). In with one-time events addition, the total fees paid including the company's by the company to its auditor sale of its in both 2001 ($18.9 million) Betz-Dearborn business and 2002 ($21.1 million) was and its amendment of its greater than any company in the credit facilities.) S&P 500 Chemicals Index other than DuPont, which is more than 10 times the size of Hercules. ------------------------------------------------------------------------------------------------------------------------------------ 20 Auditor Rotation The company does not have a policy of rotating auditing firms. ------------------------------------------------------------------------------------------------------------------------------------ 21 Audit Ratification The company's selection 2002 Proxy Statement. of an independent accounting firm was put up for shareholder ratification last year. ------------------------------------------------------------------------------------------------------------------------------------ 3. CHARTER AND BYLAWS ------------------------------------------------------------------------------------------------------------------------------------ 22 Poison Pills Adoption The company has a poison The poison pill was adopted The Rights Agreement dated pill in place that was less than two weeks after ISP August 4, 2000 between the not approved by publicly reported acquiring company and Chasemellon shareholders. 9.9% of the company's shares. Shareholder Services L.L.C. and This poison pill was then used the company's 10-Q for the to deny the company's quarter ended March 31, 1991. shareholders the right to consider a proposal by ISP to acquire an additional 25 million shares for $17.50 per share in cash - thereby costing the company's shareholders $185 million (based on recent market prices). Thereafter, even after ISP responded to the company's stated concern by offering a standstill agreement that would prevent it from ever acquiring control of the company, the Board refused to amend the poison pill to increase the trigger to 15%. In fact, Dr. Joyce indicated that he would only consider a change in the threshold if ISP would agree not to contest his reelection, which ISP obviously rejected. Finally, it should be noted that this poison pill was adopted by the Board, without a shareholder vote, despite the fact that, in 1991, a non-binding proposal to redeem the company's then-existing poison pill, or submit it to a shareholder vote, was approved by shareholders. ------------------------------------------------------------------------------------------------------------------------------------ 23 Poison Pill Features The company's poison The Rights Agreement dated - Sunset Provision pill does not contain a August 4, 2000 between the sunset provision (a company and Chasemellon provision requiring Shareholder Services L.L.C. reapproval of the plan at least every three years). ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 24 Poison Pill Features The poison pill does not The Rights Agreement dated - Qualified Offer contain a qualified August 4, 2000 between the Clause Provision offer clause. company and Chasemellon Shareholder Services L.L.C. ------------------------------------------------------------------------------------------------------------------------------------ 25 Poison Pill Features The poison pill contains According to an Investor The Rights Agreement dated - Trigger Provision a trigger provision of Responsibility Research Center August 4, 2000 between the 10%. study of more than 2,000 company and Chasemellon companies with poison pills, Shareholder Services L.L.C.; only 6% have 10% triggers. IRRC Governance Research Service, Report on Poison Pills, dated February 2003 ------------------------------------------------------------------------------------------------------------------------------------ 26 Amendment to the In order to amend, alter Charter, Art. 6, Sec I, 5 and 6 Charter / Bylaws or repeal certain and Charter, Art. 9, Sec VI. provisions of the charter and bylaws (or to adopt any provision inconsistent therewith), the affirmative vote of the holders of at least 80% of the voting power of all the shares entitled to vote in the election of directors, voting together as a single class, is required. ------------------------------------------------------------------------------------------------------------------------------------ 27 Approval of Mergers Certain extraordinary It should be noted that, Article 9 of the Charter and transactions, including despite the urging of major Board Minutes a merger or institutional shareholders and consolidation of the certain directors, the Board company, with an refused to allow the company's Interested Stockholder shareholders to vote on the (as defined in the 2002 sale of the BetzDearborn Charter, generally business, which accounted for a speaking a shareholder significant amount of the that holds a stake of company's assets. 10% or more of the voting power of the company) or any affiliate thereof require the affirmative vote of holders of at least 80% of the voting power of the then outstanding shares of capital stock of the company entitled to vote generally in the election of directors (Charter, Art. 9, Sec I). Supermajority approval, however, is not required if the extraordinary transaction was approved by the majority of the Disinterested Directors (as defined therein) and complies with the other requirements of Art. 9, Sec. II of the Charter. ------------------------------------------------------------------------------------------------------------------------------------ 28 Written Consent Shareholders can not act By-laws, Art. I, Section 11, by written consent. Charter, Art. 6, Sec I, 4 ------------------------------------------------------------------------------------------------------------------------------------ 29 Special meetings Unless otherwise By-laws, Art. I, Section 2. prescribed by law, special meetings of shareholders may not be called by shareholders; special meetings can only be called by the Chairman of the Board, the CEO, the President or a majority of the Board of Directors. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 30 Board Amendments The company's Board of By-laws, Art. VII, Section 1; Directors is authorized Charter, Art. 6, Section I, 5. to make, alter, amend or repeal from time to time the By-laws, without subsequent ratification through a shareholder vote. Additionally, shareholders may amend or repeal the By-laws by a majority vote of the holders of capital stock entitled to vote thereon at any shareholders meeting, provided that notice of such proposed amendment or repeal is included in the notice of such meeting. However, in order to amend, alter or repeal certain provisions of the bylaws (or to adopt any provision inconsistent therewith), the affirmative vote of the holders of at least 80% of the voting power of all the shares entitled to vote in the election of directors, voting together as a single class, is required. ------------------------------------------------------------------------------------------------------------------------------------ 31 Capital Structure The company is Certificate of Amendment to the authorized to issue company's Restated Certificate 302,000,000 shares, of of Incorporation. which 300,000,000 shall be shares of common stock and the remaining 2,000,000 shall be shares of preferred stock. The preferred stock is blank check and could be used to prevent consummation of a transaction opposed by management. ------------------------------------------------------------------------------------------------------------------------------------ 32 Poison Pill Features The company's poison The Rights Agreement dated - Tide Provision pill does not contain a August 4, 2000 between the TIDE (Three-Year company and Chasemellon Independent Director Shareholder Services L.L.C. Evaluation) provision. ------------------------------------------------------------------------------------------------------------------------------------ 4. STATE OF INCORPORATION ------------------------------------------------------------------------------------------------------------------------------------ 33 Anti-Takeover The company is Delaware General Corporation Law Provisions incorporated in a state Section 203. with anti-takeover provisions. ------------------------------------------------------------------------------------------------------------------------------------ 34 Acquisition Statute The company is not subject to a control share acquisition statute. ------------------------------------------------------------------------------------------------------------------------------------ 35 Cash-out Statue The company is incorporated in a state without a cash-out statute. ------------------------------------------------------------------------------------------------------------------------------------ 36 Freezeout provision The company is subject Delaware General Corporation Law to a freezeout provision. Section 203. ------------------------------------------------------------------------------------------------------------------------------------ 37 Fair Price Provision The company is incorporated in a state without a fair price provision. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 38 Stakeholder Laws The company is not subject to a stakeholder law. ------------------------------------------------------------------------------------------------------------------------------------ 39 Endorsement of Even though Delaware Poison Pills General Corporation Law does not have a statute that expressly endorses poison pills, case law and corporate practice in the state approve the use of rights plans by Delaware entities. ------------------------------------------------------------------------------------------------------------------------------------ 5. EXECUTIVE AND DIRECTOR COMPENSATION ------------------------------------------------------------------------------------------------------------------------------------ 40 ISS Vote based on The last time ISS ISS proxy analysis (5/31/2002). plan cost evaluated the company's option plans, ISS deemed the shareholder value transfer of the plan to be reasonable. ------------------------------------------------------------------------------------------------------------------------------------ 41 Options Repricing Options have not been It should be noted that, 2002, 2001 and 2000 Proxy repriced without partially in recognition of Statements; Board Minutes. shareholder approval the fact that recent stock during the past three option grants were "out of the years money", the Board, in lieu of repricing options, recently decided to take the further step of granting restricted stock awards instead of stock options to senior management as part of their 2003 compensation package. ------------------------------------------------------------------------------------------------------------------------------------ 42 Repricing prohibited The Hercules Long-Term The Hercules Long-Term Incentive Incentive Compensation Compensation Plan; The Plan expressly prohibits Nonemployee Director Stock repricing. The Non- Accumulation Plan; 2002 Proxy Employee Director Stock Statement. Accumulation Plan does not expressly prohibit repricing. ------------------------------------------------------------------------------------------------------------------------------------ 43 Shareholder Approval All stock-based incentive The restricted stock grants Board Minutes of Stock-incentive plans have been approved recently approved by the Board plans by shareholders. How- were intentionally chosen ever, changes to such rather than options because plans which were adopted the Board could not, it was in 2000 by the company's acknowledged, deliver Board (including a change equivalent value in stock in the definition of options without securing "change of control" to further shareholder include a shift in the authorization. composition of a majority of the directors as a result of a proxy contest which will accelerate the vesting of all awards) were never disclosed to shareholders even though the company solicited votes in 2002 to extend the term of the plan and to increase the maximum annual awards that an individual may receive. ------------------------------------------------------------------------------------------------------------------------------------ 44 Committee Interlocks There are no interlocks Two of the four members of the Bloomberg. among compensation compensation committee were committee members. handpicked by Dr. Joyce and have prior relationships with him. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 45 Director Compensation Directors receive the In addition, the compensation 2001 and 2002 Proxy Statement. majority of their of non-employee directors was compensation in cash and increased by almost 100% in the balance of their October 2002 despite the compensation in the form objection of the minority of equity. However, the directors. Moreover, only shares granted to after the minority directors directors are issued at were elected and demanded its a 15% discount to their termination did the company fair market value. terminate a program pursuant to which million dollar gifts were made to charitable organizations on behalf of directors. ------------------------------------------------------------------------------------------------------------------------------------ 46 Pension Plans To our knowledge, non- employee directors do not participate in the company's pension plan. ------------------------------------------------------------------------------------------------------------------------------------ 47 Option Expensing The company does not The minority directors have Form 10-K for the year ended expense stock option requested that the company 12/31/02 and Board Minutes; grants on its income expense stock option grants; Chemicals Stock Option Update statement. however, the majority of the issued by Deutsche Bank Board has not acted upon such Securities Inc. on April 21, request. In addition, 2003. according to a study of 25 chemical companies published by Deutsche Bank Securities, the company would have had the 4th highest fair value stock option expense as a percentage of 2002 earnings per share. ------------------------------------------------------------------------------------------------------------------------------------ 48 Option Burn Rate The aggregate amount of Form 10-K for the year ended options granted in the 12/31/02. last 3 years is 8,443,999. This amount is equal to 7.72% of the total out- standing shares of the company's common stock (109,361,651). Therefore, the average options granted in the past three years as a percentage of basic shares outstanding exceeds 2% (2.24%). ------------------------------------------------------------------------------------------------------------------------------------ 49 Corporate Loans The company's option plans do not provide for company loans to employees. ------------------------------------------------------------------------------------------------------------------------------------ 6. QUALITATIVE FACTORS ------------------------------------------------------------------------------------------------------------------------------------ 50 Mandatory Retirement The company does not 2002 Proxy Statement. Age for Directors have a mandatory retirement age for directors. ------------------------------------------------------------------------------------------------------------------------------------ 51 Term Limits The company does not Several current directors have 2002 Proxy Statement. have term limits for been serving since 1993. directors. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 52 Board Performance The company does not It should be noted that the Board Minutes. Reviews have a policy pursuant management objectives set forth to which the Board by the Board's Compensation reviews its own Committee for the company's performance regularly. chairman and CEO were limited almost exclusively to cost reduction and other measurements directly related thereto. By way of just one example, management of the company's two principal non-operating issues, its pension and asbestos exposures, which resulted last year in pre-tax charges to earnings of more than $600 million, were not even mentioned in Dr. Joyce's 2002 management objectives. Moreover, we believe that the Board has failed to make sure that the CEO's compensation arrangement is designed to closely align his interests with those of the company's shareholders. By way of example, under Dr. Joyce's employment contract, he would have been paid more money had the company been sold for $9 per share in his first year of employment (even though it closed at $12 per share on the day he was elected CEO) than if he had effectuated a turnaround of the company's businesses, helping to propel the company's stock to $19 per share during the same period of time. ------------------------------------------------------------------------------------------------------------------------------------ 53 Outside Directors Except to consider a Meetings without the CEO Board Minutes. Meet without CEO matter in which the CEO present were held only after might have an interest, the minority directors insisted outside directors do not on it. meet without the CEO present. ------------------------------------------------------------------------------------------------------------------------------------ 54 CEO Succession Plan The company has neither The lack of a CEO succession Board Minutes. a CEO succession plan plan is particularly troubling nor a policy in that given Dr. Joyce's age and the regard. circumstances under which he was brought to the company. The company does not have a president, COO or CFO nor has it taken any action to retain a person in any of these positions. ------------------------------------------------------------------------------------------------------------------------------------ 55 Outside Advisors There is no express Contrary to the wishes of the Board Minutes. authority that permits minority directors, the outside the outside directors to directors have been reluctant hire their own advisors. to hire outside advisors other than the historical advisors of the company. ------------------------------------------------------------------------------------------------------------------------------------ 56 Directors Resignation There is no disclosure of a policy that directors are required to submit a letter of resignation upon a job change. ------------------------------------------------------------------------------------------------------------------------------------ 7. OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ 57 Stock Ownership All directors own Other than Mr. Heyman, the 2002 Proxy Statement and securities of the company's directors were Forms 3s, 4s and 5s of company. granted a significant portion directors. of their shares for their service on the company's Board. In fact, three current directors (one-third of the majority directors), including Dr. Joyce, have never purchased a single share of company stock. ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ ISSUE ID RATING ISSUE RESPONSE ADDITIONAL COMMENTS DATA SOURCE ------------------------------------------------------------------------------------------------------------------------------------ 58 Stock Ownership The company has stock The Company has entered into 2002 Proxy Statement. Guidelines for ownership guidelines for change of control agreements Executives executives, although it with several executives that is not clear whether were not approved by such guidelines are shareholders. Pursuant to such being followed or agreements, certain executives enforced. may receive in excess of three times their base salary and bonus upon a change of control. We estimate that these agreements will have a potential cost to the company of well in excess of $10 million. In addition, the restricted stock awards granted to management last month are another form of "golden parachute" which could have a potential cost to shareholders of more than $10 million. ------------------------------------------------------------------------------------------------------------------------------------ 59 Stock Ownership The company has stock Board Minutes. Guidelines for ownership guidelines for Directors directors. ------------------------------------------------------------------------------------------------------------------------------------ 60 Officers and Officers and directors 2002 Proxy Statement; Directors Ownership other than Mr. Samuel Preliminary Proxy Statement Heyman own less than 1% filed by the Hercules of the company's Shareholders' Committee for outstanding shares. Mr. New Management. Heyman may be deemed to beneficially own approximately 9.1% of the company's outstanding shares. ------------------------------------------------------------------------------------------------------------------------------------ 8. DIRECTOR EDUCATION ------------------------------------------------------------------------------------------------------------------------------------ 61 Director Education To our knowledge, no directors have participated in an ISS accredited director education program. ------------------------------------------------------------------------------------------------------------------------------------
International Specialty Products Inc., Samuel J. Heyman, Raymond S. Troubh, Sunil Kumar, Gloria Schaffer, Harry Fields, Anthony T. Kronman, Vincent Tese and Gerald Tsai, Jr. and certain other persons may be deemed participants in the solicitation of proxies from the shareholders of Hercules Incorporated ("Hercules") in connection with Hercules' 2003 Annual Meeting of Shareholders. Information concerning such participants is available in the Hercules Shareholders' Committee for New Management's (the "Committee") revised preliminary proxy statement on Schedule 14A (the "Preliminary Proxy Statement") filed by the Committee with the Securities and Exchange Commission (the "SEC") on May 6, 2003. SHAREHOLDERS OF HERCULES ARE ADVISED TO READ THE COMMITTEE'S DEFINITIVE PROXY STATEMENT (THE "DEFINITIVE PROXY STATEMENT") IN CONNECTION WITH THE COMMITTEE'S SOLICITATION OF PROXIES FROM HERCULES SHAREHOLDERS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders of Hercules and other interested parties may obtain, free of charge, copies of the Preliminary Proxy Statement and the Definitive Proxy Statement (when available) and any other documents filed by the Committee with the SEC, at the SEC's Internet website at www.sec.gov. The Preliminary Proxy Statement and the Definitive Proxy Statement (when available) and these other documents may also be obtained free of charge by contacting Georgeson Shareholder Communications Inc., the firm assisting the Committee in the solicitation of proxies, toll-free at 1-866-288-2190. Page 10 of 10