-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GUN20kT7RI14FoSaltBj7fWOUOBggVjWQYomlhRFrWHZQgod5z5VIBwpaUFHMmo9 NW+BCnlmTRJQ+iduMCW1lQ== 0000950131-95-000604.txt : 19950615 0000950131-95-000604.hdr.sgml : 19950615 ACCESSION NUMBER: 0000950131-95-000604 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950317 FILED AS OF DATE: 19950315 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NALCO CHEMICAL CO CENTRAL INDEX KEY: 0000069598 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 361520480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04957 FILM NUMBER: 95520919 BUSINESS ADDRESS: STREET 1: ONE NALCO CTR CITY: NAPERVILLE STATE: IL ZIP: 60563 BUSINESS PHONE: 7083051000 MAIL ADDRESS: STREET 1: ONE NALCO CENTER CITY: NAPERVILLE STATE: IL ZIP: 60563-1198 DEF 14A 1 1995 NOTICE & PROXY SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 NALCO CHEMICAL COMPANY (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: [LOGO OF NALCO CHEMICAL] March 17, 1995 Dear Stockholder: We cordially invite you to attend the 1995 Annual Meeting of Stockholders. It will be held at the Company's Corporate and Technical Center, One Nalco Center, Naperville, Illinois, beginning at 10:00 A.M. on Thursday, April 20, 1995. The Corporate and Technical Center is located at the Southeast corner of the intersection of Illinois Route 59 and the East-West Tollway (Interstate Route 88). The attached Notice of Meeting and Proxy Statement cover the formal business items to be considered at this meeting. We also will report on current operations and answer stockholder questions. We hope you will be able to attend. If you cannot do so, we urge you to exercise your right to vote by promptly returning your signed proxy card in the enclosed prepaid envelope. Sincerely yours, [SIGNATURE OF E. J. MOONEY] E. J. Mooney NALCO CHEMICAL COMPANY NOTICE OF ANNUAL MEETING OF STOCKHOLDERS APRIL 20, 1995 To Nalco Stockholders: The Annual Meeting of Stockholders of Nalco Chemical Company will be held at the Company's Corporate and Technical Center, One Nalco Center, Naperville, Illinois, on Thursday, April 20, 1995, at 10:00 A.M., to consider and vote upon the following proposals: 1. Election of three Class II directors and one Class I director. 2. Approval of Independent Auditors. The Board of Directors has designated the close of business on February 21, 1995 as the record date for determination of the stockholders entitled to notice of and to vote at the meeting or any adjournment thereof. Please complete, sign, date and return the proxy promptly in the enclosed envelope so that your shares will be represented at the meeting. [SIGNATURE OF SUZZANNE J. GIOIMO] Suzzanne J. Gioimo Secretary Naperville, Illinois March 17, 1995 PROXY STATEMENT SOLICITATION OF PROXIES This Proxy Statement is furnished commencing approximately March 17, 1995, in connection with the solicitation of proxies for use at the Annual Meeting of Stockholders of Nalco Chemical Company (the "Company") to be held on April 20, 1995, at the time and place and for the purposes set forth in the accompanying notice of the meeting. The accompanying Proxy is solicited by and on behalf of the Board of Directors of the Company and is revocable by written notice to the Company or by any later dated proxy at any time prior to its use at the Annual Meeting. The Company will bear the cost of the solicitation. The Company has retained Georgeson & Company Inc., Wall Street Plaza, New York, N.Y. 10005 to aid in the solicitation of proxies from banks, brokers, other custodians, nominees and fiduciaries and institutional holders at a cost not to exceed $10,000 plus reasonable out of pocket expenses. In addition, certain directors, officers and other employees of the Company, not specifically employed for the purpose, may solicit proxies, without additional remuneration therefor, by personal interview, mail, telephone or telefax. The Company will reimburse banks, brokers or other nominees for the expenses incurred in forwarding proxy material to beneficial owners. It is the Company's policy that all proxies, ballots and voting tabulations that identify how shareholders voted be kept confidential, except when disclosure is mandated by law, when such disclosure is expressly requested by a shareholder, during a contested election for the Board of Directors or in the event of a contested proxy solicitation, and that the tabulators and the inspectors of election be independent and not employees of the corporation. PROPOSAL 1. ELECTION OF DIRECTORS The Board of Directors currently consists of eleven directors elected for staggered terms which expire alternately over a three-year period. C. W. Parry reached the mandatory Board retirement age and will retire from the Board as of April 20, 1995. The present term of the Class II directors expires at the 1995 Annual Meeting. The Board of Directors therefore proposes the election of three Class II directors to serve for three years until the 1998 Annual Meeting, and in each case until their successors have been elected and qualified. In addition, Jose Luis Ballesteros was elected as a Class I Director by the Board effective January 1, 1995 and is proposed for election by the shareholders to serve for the remainder of a Class I term expiring in 1997. Shares represented by proxies, which are returned properly signed, will be voted for the nominees named in the following table unless the stockholder indicates on the proxy that authority to vote the shares is withheld. Each of the nominees has consented to 1 serve as a director if elected. If any nominee becomes unavailable for election, the proxy may be voted for such substitute nominee as the Board of Directors may designate or the Board may reduce the number of directors to eliminate the vacancy.
YEAR BECAME NAME PRINCIPAL OCCUPATION OR EMPLOYMENT AGE DIRECTOR ---- ---------------------------------- --- -------- The nominee for Class I Director for election at the 1995 Annual Meeting for a term to expire in 1997 is as follows: J. L. Executive Vice Chairman, President and 53 1995 Ballesteros..... Chief Executive Officer, Grupo Synkro, S.A. de C.V. The nominees for Class II Directors for election at the 1995 Annual Meeting for a term to expire in 1998 are as follows: H. Corless...... Retired; formerly Chairman, ICI Americas, 66 1989 Inc. H. M. Dean...... Chairman and Chief Executive Officer, Dean 57 1987 Foods Company E. J. Mooney.... Chairman, Chief Executive Officer and 53 1988 President, Nalco The present directors whose terms continue after the 1995 Annual Meeting are as follows: The Class III Directors with terms to expire in 1996 are: H. G. Bernthal.. Chairman, CroBern, Inc. 66 1980 W. A. Pogue..... Retired; formerly Chairman and Chief 67 1981 Executive Officer, CBI Industries, Inc. J. J. Shea...... Vice Chairman, President and Chief 57 1993 Executive Officer, Spiegel, Inc. The Class I Directors with terms to expire in 1997 are: J. P. Frazee, Retired; formerly President and Chief 50 1985 Jr.............. Operating Officer, Sprint Corporation A. L. Kelly..... Managing Partner, KEL Enterprises Ltd. 57 1992 F. A. Krehbiel.. Chairman and Chief Executive Officer, Molex 53 1990 Incorporated
BIOGRAPHY OF NOMINEE FOR CLASS I DIRECTOR J. L. Ballesteros has been Executive Vice Chairman since 1983 and President and Chief Executive Officer since 1988 of Grupo Synkro, S. A. de C. V. (a holding company). He has been 2 Executive Vice Chairman, President and Chief Executive Officer since 1994 for both Kayser Roth Corporation (US based-hosiery) and Arcoplus, S. A. (Argentina based-hosiery), and for Cannon Mills, S. A. de C. V. (producer of men's and women's hosiery), Calzado Puma, S. A. de C. V. (shoe manufacturer) and Grupo Prolar, S. A. de C. V. (manufacturer of home cleaning products and home and garden products) since 1988 all of which companies are subsidiaries of Grupo Synkro, S. A. de C. V. Other directorships: Grupo Mexicano de Desarrollo, S. A. de C. V., Corporacion Mexicana de Aviacion, S. A. de C. V., Grupo Financiero Inverlat, S. A. de C. V., Grupo Financiero Invermexico, S. A. de C. V., Grupo Financiero Multivalores, S. A. de C. V., Fimsa Grupo Financiero, S. A. de C. V., and Kativo Chemical Industries, S. A. BIOGRAPHY OF NOMINEES FOR CLASS II DIRECTORS H. Corless was Chairman of ICI Americas, Inc. (a company engaged in manufacture and sale of chemicals and pharmaceuticals) and ICI American Holdings, Inc. (a holding company), subsidiaries of Imperial Chemicals Industries PLC ("ICI") (a worldwide chemical manufacturer, headquartered in London) from 1986 to 1989 when he retired. He was director of C-I-L Inc. (a Canadian subsidiary of ICI and manufacturer of chemicals, fertilizers, industrial explosives, paints and plastics) from 1982 to 1989. Other directorships: Delaware Trust Company, Meridian Bancorp, Inc., Uniroyal Chemical Corporation and the Medical Center of Delaware, Inc. H. M. Dean has been Chairman of Dean Foods Company (a diversified food processor and distributor) since 1989. He became Chief Executive Officer in 1987. Other directorships: Ball Corporation, Yellow Corporation and Dean Foods Company. E. J. Mooney was elected Chief Executive Officer of Nalco effective April, 1994 and Chairman of the Board effective July, 1994. He has been President since 1990. He was Chief Operating Officer from 1992 to 1994, and Executive Vice President, U.S. Operations, from 1988 to 1990. Other directorship: CBI Industries, Inc. BIOGRAPHIES OF OTHER DIRECTORS H. G. Bernthal has been Chairman of CroBern, Inc. (a healthcare investment company) since 1986. Other directorships: Butler Manufacturing Company and National-Standard Company. J. P. Frazee, Jr., was President and Chief Operating Officer of Sprint Corporation (a diversified telecommunications company) from March, 1993 to August, 1993. He was Chairman and Chief Executive Officer of Centel Corporation (a telecommunications firm) from 1988 to 1993. Other directorships: Dean Foods Company and Security Capital Group Incorporated. 3 A. L. Kelly has been the Managing Partner of KEL Enterprises L.P. (a holding and investment partnership) since 1982. Other directorships: Bayerische Motoren Werke (BMW) A.G., Deere & Company, Northern Trust Corporation and its principal banking subsidiary, The Northern Trust Company, and Snap-on Incorporated. F. A. Krehbiel has been Chairman and Chief Executive Officer of Molex Incorporated (a manufacturer and distributor of electrical and electronic devices) since 1993. From 1988 to 1993 he was Vice Chairman and Chief Executive Officer. Other directorships: Tellabs, Inc., Northern Trust Corporation and its principal banking subsidiary, The Northern Trust Company, and Molex Incorporated. W. A. Pogue was Chairman and Chief Executive Officer of CBI Industries, Inc. (a company engaged in metal plate fabrication, industrial gases, real estate and investments), a position he held from 1982 to 1989. Other directorships: Bethlehem Steel Corporation, and Amerada Hess Corp. J. J. Shea has served as President and Chief Executive Officer of Spiegel, Inc. (apparel, specialty retail and catalog sales) since 1985 and as Vice Chairman since 1989. Other directorship: Spiegel, Inc. MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD The Board of Directors held seven regular and special meetings in 1994. Each director attended more than 75% of the meetings of the Board of Directors and Committees on which he served. The Executive Committee. The Executive Committee, presently composed of four directors, three of whom are non-employee directors, may exercise all of the authority of the Board of Directors except for, among other items, the amendment or repeal of the Company's Restated Certificate of Incorporation or By-laws and the exercise of those powers reserved for other committees of the Board. Present members are E. J. Mooney (Chairman) H. G. Bernthal, C. W. Parry and W. A. Pogue. The Executive Committee did not meet in 1994. The Audit Committee. The Audit Committee, composed of five non-employee directors, is responsible for (i) reviewing the Company's accounting and auditing policies and practices, (ii) reviewing the appointment and discharge of independent auditors, (iii) reviewing the independence of the independent auditors, (iv) reviewing the scope and nature of the non-audit related services performed by the independent auditors, and (v) reporting to and making recommendations to the Board with respect to the foregoing. The Audit Committee generally meets with management, the internal auditors, and the independent auditors. The independent auditors and internal auditors have full and free access to the Audit Committee 4 without management's presence to discuss internal accounting controls, results of audits, and financial reporting matters. Present members are C. W. Parry (Chairman), H. Corless, J. P. Frazee, Jr., F. A. Krehbiel and J. J. Shea. In 1994 the Audit Committee met three times. The Executive Compensation Committee. The Executive Compensation Committee, composed of four non-employee directors, is responsible for (i) recommending to the Board of Directors the compensation to be paid to the Chief Executive Officer, (ii) approving compensation of corporate officers who are also directors, (iii) consulting with the Chief Executive Officer on matters related to executive compensation, and (iv) administering the Company's Management Incentive Plan, stock option plans, Restricted Stock Plan, and Performance Share Plan. Present members are W. A. Pogue (Chairman), H. G. Bernthal, H. M. Dean and A. L. Kelly. In 1994 this Committee met two times. The Board Affairs and Nominating Committee. The Board Affairs and Nominating Committee, composed of four directors, three of whom are non-employee directors, is responsible for reviewing the qualifications of possible directors and submitting its recommendations to the Board of Directors to fill Board vacancies. Candidates for election to the Board submitted by shareholders will be considered by the Committee if sent to the Secretary with the candidate's qualifications. Present members are H. M. Dean (Chairman), H. G. Bernthal, W. A. Pogue, and E. J. Mooney. The Board Affairs and Nominating Committee met two times in 1994. DIRECTORS' REMUNERATION AND RETIREMENT POLICIES Compensation of non-employee directors of the Company consists of an annual retainer of $25,000 plus $1,000 for each Board meeting attended, an additional $6,000 per year for membership on one or more Committees of the Board, and an additional fee of $6,000 per year to the Chairmen of the Audit Committee, Executive Compensation Committee and Board Affairs and Nominating Committee. Directors who are employees of the Company do not receive fees for service on the Board or any Committees. A deferred compensation plan is available to all non-employee directors under which they may defer all or a part of their annual retainer and committee and attendance fees for any year and receive, generally following retirement or at such time as the Board approves, the amount computed as set forth below, in five equal annual payments (or such other number of annual payments, not more than ten, as the Company elects). Deferred compensation accounts set up for directors who elect deferral are credited with the deferred amounts. These amounts are converted into share units based on the average of the month-end closing prices of the Company's common stock during the calendar year and credited with the dividend equivalents of the dividends a director would have received had the director owned shares of common stock equal to the share units in the director's account, also converted into share units 5 on the same basis. At the end of the deferral period, units are converted into cash based on the average of the month-end closing prices of the Company's common stock during the year prior to or of payment. The Board of Directors has adopted a policy establishing the retirement date of each member of the Board to be the date of the Annual Meeting of Stockholders which next follows the earlier of either the date of retirement from employment by the Company or the date of the member's 70th birthday. Early retirement can be taken following the attainment of a non-employee director's 68th birthday. Such policy also provides that upon retirement from the Board, each non-employee director with at least five years of service on the Board shall be paid an annual amount equal to the annual retainer paid to non- employee directors multiplied by a factor, the numerator of which is the number of years of service on the Board, but not exceeding ten, and the denominator of which is ten, such annual payment to continue for the lifetime of the retired director. In 1993 the Board adopted a new retirement policy effective for all directors elected to the Board for the first time after October 1993. Present directors may choose to retire under the old policy or the new one. The new retirement policy also provides for payment of an amount equal to the annual retainer, multiplied by a fraction, the numerator of which is the number of years of service on the Board but not exceeding ten, and the denominator of which is ten, to be paid for a period not greater than ten years. However under the new policy, should a Director die prior to retirement or after retirement but before the ten year period has expired, the Director's spouse shall receive 50% of the payment amount for the lesser of life or the remainder of the ten year period. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN The Stock Option Plan for Non-Employee Directors (the "Directors Plan") provides for the grant of options to purchase up to 500,000 shares of Company common stock, subject to adjustment in certain events, to non-employee directors of the Company. Automatic grants of options to purchase 4,000 shares of the Company's common stock are made to each non-employee director of the Company on the date of each Annual Meeting from April, 1990 to May 1, 2000. The option price is the fair market value of the Company's common stock on the date of grant. Payment for the exercise of options may be made in cash or in shares of Company common stock that have been held by the director for at least six months. Each option extends for 10 years from the date of grant. Options terminate upon termination of service as a director, except that an optionee may exercise the option within five years following retirement under the Company's retirement policy for directors or termination of service as a director because of total and permanent disability. If the director dies while a director or within five years of retirement as a director, the option may be exercised within the longer of five years from the date of retirement or one year from the date 6 of death by any person to whom the option passes by will or the laws of descent and distribution. For options granted before 1992, these exercise periods are three years. In all instances, however, the option must be exercised during the term of the grant. An optionee may elect to surrender an option and receive shares of common stock of the Company having a fair market value equal in value to the excess of the fair market value of the unpurchased shares over the option price of such shares. Any shares covered by an option which is surrendered shall not be available for future grant under the Directors Plan (but shares subject to options that are otherwise canceled or terminated will again become available for use under the Directors Plan). The Directors Plan may be terminated at any time or may, from time to time, be modified or amended by the Board of Directors except that Plan provisions shall not be amended more than once every six months other than to comport with changes in the Internal Revenue Code, the Employee Retirement Security Act or the rules thereunder. EXECUTIVE COMPENSATION The following table sets forth certain information regarding compensation paid during each of the Company's last three fiscal years to the Company's Chief Executive Officer and each of the Company's other four most highly compensated executive officers and its retired Chief Executive Officer. 7 SUMMARY COMPENSATION TABLE
LONG-TERM ANNUAL COMPENSATION COMPENSATION ---------------------------- ------------------ AWARDS(2) PAYOUTS OTHER ---------- ------- ALL ANNUAL SHARES OTHER COMPEN- UNDERLYING LTIP COMPEN- NAME AND PRINCIPAL SALARY BONUS SATION OPTIONS PAYOUTS SATION POSITION YEAR ($) ($)(1) ($) (#) ($) ($)(3) - ----------------------- ---- ------- ------- ------- ---------- ------- ------- E. J. Mooney, Chairman of the Board, 1994 462,372 211,334 7,131 50,000 0 30,396 President & Chief 1993 390,000 176,982 7,969 0 230,693 27,508 Executive Officer 1992 364,000 200,200 8,887 58,000 225,494 25,558 W. S. Weeber 1994 280,000 110,964 3,067 0 0 18,774 Executive Vice Presi- dent, 1993 265,000 106,344 1,459 0 113,849 18,692 Operations Staff 1992 247,000 97,318 719 28,000 111,284 17,343 M. B. Harp 1994 280,000 108,500 3,067 0 0 18,774 Executive Vice Presi- dent, 1993 265,000 106,344 1,459 0 108,316 18,692 Operations 1992 235,000 92,825 719 28,000 105,876 16,501 P. Dabringhausen 1994 270,303 72,150 3,067 0 0 14,396 Group Vice President, President 1993 253,525 68,695 1,459 0 63,746 9,794 Process Chemicals Divi- sion 1992 238,172 55,725 719 11,300 62,310 8,928 J. D. Tinsley 1994 227,019 71,008 3,067 0 0 15,019 Group Vice President, President 1993 212,000 68,688 1,459 0 91,262 13,692 Water & Waste Treatment Division 1992 195,000 75,750 719 18,000 89,207 11,652 W. H. Clark 1994 400,000 168,480 10,944 0 0 21,791 Retired Chief Executive 1993 610,000 328,119 30,501 0 426,933 43,026 Officer 1992 570,000 376,086 10,318 104,520 417,311 40,023
- ---------- (1) Amount represents Management Incentive Plan awards earned for stated year. (2) Dividends are paid on restricted stock share units. Based on the closing stock price of $33.50 on December 31, 1994, the restricted stock holdings and their market value at the end of 1994 for each named executive officer are: E. J. Mooney--8,050 shares, $269,675; W. S. Weeber--4,510 shares, $151,085; M. B. Harp--4,210 shares, $141,035; P. Dabringhausen--1,990 shares, $66,665; J. D. Tinsley--1,910 shares, $63,985; W. H. Clark--0 shares. (3) Allocations under the Nalco Employee Stock Ownership Plan, (ESOP), including comparable amounts under Excess ERISA Agreements. ESOP allocations are respectively: $10,058, $10,058, $10,058, $10,058, $10,058 and $10,058 for 1994. Amounts allocated under Excess ERISA agreements are respectively: $20,338, $8,716, $8,716, $4,339, $4,962 and $11,734 for 1994. 8 OPTION GRANTS IN LAST FISCAL YEAR The only option grant during 1994 to an Executive Officer named in the Summary Compensation Table is as follows:
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION INDIVIDUAL GRANTS(1) TERM(2) - ------------------------------------------------- ------------------------- % OF TOTAL OPTIONS NUMBER OF GRANTED SECURITIES TO EXERCISE UNDERLYING EMPLOYEES OR BASE OPTIONS IN FISCAL PRICE EXPIRATION NAME GRANTED YEAR ($/SH) DATE 0% 5% 10% - ------- ---------- --------- -------- ---------- --- ---------- ---------- E. J. Mooney 50,000 12.4 32.6875 4/20/04 0 $1,027,850 $2,604,775
- ---------- (1) The grant became exercisable on April 20, 1994. (2) The dollar amounts under these columns are the difference between the option exercise price and assumed market prices at the end of the option term. The Company did not use an alternative formula for a grant date valuation, as the Company is not aware of any formula which will determine with reasonable accuracy a present value based on future unknown or volatile factors. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES The following table provides information related to options exercised by the named executive officers during 1994 and the number and value of options held at year-end.
VALUE OF UNEXERCISED IN-THE-MONEY NUMBER OF SHARES UNDERLYING OPTIONS AT UNEXERCISED OPTIONS AT YEAR-END SHARES YEAR-END (#) ($)(1) ACQUIRED ON VALUE --------------------------- ------------- EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/ NAME (#) ($) UNEXERCISABLE UNEXERCISABLE - ---------------- ----------- -------- --------------------------- ------------- E. J. Mooney 19,200 391,394 103,000/0 804,079/0 W. S. Weeber 14,301 284,064 33,200/0 452,786/0 M. B. Harp 46,200 717,173 0/0 0/0 P. Dabringhausen 9,700 140,646 6,000/0 80,062/0 J. D. Tinsley 30,800 565,493 0/0 0/0 W. H. Clark 0 0 80,400/0 1,072,833/0
- ---------- (1) Valued on the difference between $33.50 (the closing price on December 31, 1994) and the exercise price of the option. 9 LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR The following table covers long term incentive compensation awards granted to the named executive officers during 1994.
PERFORMANCE ESTIMATED FUTURE PAYOUTS OR OTHER ------------------------------------ NUMBER OF PERIOD UNTIL UNDER NON-STOCK PRICE BASED PLANS SHARES, UNITS OR MATURATION ------------------------------------ NAME OTHER RIGHTS (#) OR PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#) - -------------- ---------------- ------------ ------------- ---------- ----------- E. J. Mooney 6,218 1994/95/96 3,731 6,218 7,462 W. S. Weeber 3,769 1994/95/96 2,261 3,769 4,523 M. B. Harp 3,769 1994/95/96 2,261 3,769 4,523 P. Dabringhausen 2,455 1994/95/96 1,473 2,455 2,946 J. D. Tinsley 2,412 1994/95/96 1,447 2,412 2,894
- ---------- Awards are denominated in shares of common stock of the Company under the Performance Share Plan ("PSP"). A 6%, 10% and 12% compounded increase in fully diluted net earnings per share is required to earn threshold, target and maximum payouts, respectively. If earned, half of the awards are to be paid in cash at the end of the performance period in an amount based on the average Company stock price during the last five days of the performance period, and the remaining shares to be paid in Company Common Stock are to vest three years after the end of the performance period contingent on continued employment. In the event of termination of employment due to death, disability, retirement or change in control, all unvested Common Stock already awarded shall vest immediately and shall be distributed to a participant or his beneficiary. RETIREMENT INCOME PLAN AND SUPPLEMENTAL RETIREMENT INCOME PLAN The following table sets forth the annual benefits payable, with respect to specified final average earnings and years of service categories, under the Company's Retirement Income Plan and Supplemental Retirement Income Plan, before giving effect to any social security offset. PENSION PLAN TABLE
YEARS OF SERVICE FINAL AVERAGE ---------------------------------------------- EARNING 15 20 25 30 35 - ------------- -------- -------- -------- -------- ---------- $ 125,000....................... $ 39,750 $ 53,000 $ 66,250 $ 76,188 $ 86,125 150,000....................... 47,700 63,600 79,500 91,425 103,350 170,000....................... 54,060 72,080 90,100 103,615 117,130 200,000....................... 63,600 84,800 106,000 121,900 137,800 300,000....................... 95,400 127,200 159,000 182,850 206,700 400,000....................... 127,200 169,600 212,000 243,800 275,600 500,000....................... 159,000 212,000 265,000 304,750 344,500 600,000....................... 190,800 254,400 318,000 365,700 413,400 700,000....................... 222,600 296,800 371,000 426,650 482,300 800,000....................... 254,400 339,200 424,000 487,600 551,200 900,000....................... 286,200 381,600 477,000 548,550 620,100 1,000,000....................... 318,000 424,000 530,000 609,500 689,000
10 The credited years of participation at December 31, 1994 for each individual named in the cash compensation table are: E. J. Mooney, 26; W. S. Weeber, 28; M. B. Harp, 23; P. Dabringhausen, 9; J. D. Tinsley, 30. W. H. Clark retired during 1994 with 34 credited years of service. The credited earnings are approximately the same as the salary and bonus set forth in the summary compensation table. The Plan uses a final average earnings formula based on the average annualized pay for the highest paid 48 months during the last 120 months before retirement. In general, the annual retirement income in the 10-year certain form of settlement at normal retirement date will be equal to 2% of "final average earnings" for each of the first 25 years of Plan participation plus 1.5% of "final average earnings" for each year over 25 years, less a prorated offset not to exceed 50% of the primary social security benefit at age 62, depending on years of Plan participation. The Company has entered into agreements with its officers, including those listed in the summary compensation table, to restore any benefits under the Retirement Income Plan and the Profit Sharing, Investment and Pay Deferral Plan and Employee Stock Ownership Plan ("ESOP") reduced by the Employee Retirement Income Security Act of 1974 and the Revenue Reconciliation Act of 1993. Any reductions in benefits will first be made in Retirement Plan accounts and then if necessary in the Profit Sharing, Investment and Pay Deferral Plan and ESOP accounts. Under these agreements, the Company also agrees to pay to the beneficiary of each executive officer an amount equal to one year's salary in the event of death. KEY EXECUTIVE AGREEMENTS The Company has entered into Key Executive Agreements with those individuals listed in the summary compensation table, as an assurance to the Company and the officers of continuity of management in the event of any actual or threatened change in control of the Company. Under the Agreements, which become effective upon a change in control, the Company agrees to employ each executive for a three-year period thereafter (but not after age 62) in the capacity in which the executive was employed immediately prior thereto ("Employment Period"). During the Employment Period, the executive will be compensated, as detailed in the Agreements, in a manner comparable to his or her prior compensation and will be entitled to all opportunities for bonuses and other Company benefits provided for executives by the Company. In the event of termination of the executive (including resignation) as a result of a change in control or a significant change in the executive's authority or duties in effect immediately prior to the effective date of the Agreement, a reduction in total compensation opportunities, or a breach of the Agreement by the Company, the executive would be paid a lump sum equivalent to anticipated salary, bonuses and incentives for the remainder of the Employment Period, as well as any benefits that would have accrued, including those under profit sharing, ESOP, pension, stock option and insurance plans. The Company will pay any expenses associated with enforcement of an executive's rights under an Agreement, and will secure its obligations under the Agreements by an irrevocable letter of credit for the benefit of the executive. 11 DEATH BENEFIT AGREEMENTS The Company has also entered into Death Benefit Agreements ("Benefit Agreements") with those individuals listed in the summary compensation table, as an inducement to the executive officer to continue in the Company's employ and to provide the benefit of his or her advice after his or her retirement. Each Benefit Agreement provides for payment by the Company to the executive's beneficiaries of an amount equal to the executive's base annual salary as of his or her last day of work, if the executive dies (a) while employed by the Company and covered by a Benefit Agreement, or (b) any time after retirement and before reaching age 62 if a Benefit Agreement was in effect at retirement. The Company will pay a benefit equal to twice the executive's base annual salary as of his or her last day of work to the executive's beneficiaries if the executive dies after retirement and after reaching age 62 if a Benefit Agreement was in effect at the time of retirement. Payments under these Benefit Agreements will be made by the Company from its general funds. It is not necessary for a named executive officer to provide consulting services to the Company after retirement to be awarded benefits under the Benefit Agreement. BENEFIT PROTECTION TRUSTS Four trust funds (the "Trusts") have been established to assist in accumulating the amounts necessary to satisfy the Company's contractual liabilities under the non-qualified benefit plans described herein, including the deferred compensation plan for directors. However, the Company shall remain primarily liable under the plans to pay benefits, and the Trusts' assets shall remain subject to the claims of the Company's general creditors. The Company may fund the Trusts at any time, but shall, no later than three business days after a change in control of the Company, fund the Trusts in an amount which at least equals the present value of all of the unpaid benefits under the Trusts. To determine this value, the actuarial assumptions stated in the Retirement Income Plan in effect on the first day of the Plan year in which a change in control occurs will be used. A Trust beneficiary's benefit under a plan shall be based on his or her service and compensation at the time of the change in control. CHANGE IN CONTROL "Change in control" as used in the plans and agreements discussed herein generally means: (a) a merger, consolidation, reorganization or sale of all or substantially all of the Company's business or assets if less than 80% of the outstanding voting securities or other capital interests in the surviving or acquiring company is not owned in the aggregate by the stockholders of the Company immediately prior thereto; (b) the reported acquisition by any person or group of beneficial ownership of 20% or more of the outstanding voting securities of the Company; or (c) a change during any two-year period in a majority of the Board of Directors not approved by at least two-thirds of the prior Directors. 12 EXECUTIVE COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS Executive Compensation Policy The Executive Compensation Committee ("Committee") of Nalco Chemical Company is comprised entirely of non-employee directors. The Committee is responsible for establishing and administering Nalco's compensation policies. Currently, the compensation program for executives consists of four principal elements listed in order of importance: 1. A base salary that is kept competitive by utilizing various surveys provided or published by independent consultants from time to time. These surveys are executive compensation surveys for groups of manufacturing and service companies including representation from the chemical industry. The latest surveys consisted of two groups, the first with average sales of approximately $1.4 billion and average total market value of approximately $1.8 billion and the second with average sales of approximately $4.9 billion and average total market value of approximately $5 billion based on 1993 numbers. This compares with the Company's 1993 sales of $1.4 billion and total market value of $2.5 billion. Various size and performance measures, including return on equity, assets, sales and capital are used to compare survey companies to the Company and to judge the appropriateness of compensation comparisons. However, the Company's sales, earnings and earnings per share, as well as the individual executive's yearly performance and contribution to the Company's overall performance, are primarily considered in setting salaries. Base salaries for 1994 were set at the end of 1993. Disregarding the special charge against earnings in 1993, earnings from continuing operations and earnings per share increased by 5.3% and 5.0% respectively. Salary increases for Executive Officers averaged 6.2%. 2. The Management Incentive Plan ("MIP") is an annual incentive plan that provides cash compensation based on the achievement of goals set by the Committee for the Company and the individuals that are approved by the Board of Directors for participation. For 1994, there were corporate performance goals for increases in sales and earnings as well as for strategic management performance. The individual management performance goals were set for each executive, depending on his or her particular responsibilities and strategic objectives for the year. For the MIP, sales, earnings and individual goals are weighted at 37.5%, 37.5% and 25% respectively. For 1994. Executive Officers earned 73% of the portion of their target award related to sales and earnings. 3. The Performance Share Plan ("PSP") provides for awards based on long- term, per-share earnings goals of the Company that are approved by the Board of Directors. Awards are composed of Company common stock and/or cash and are based upon 13 the Company's achievement of at least a threshold compounded increase in fully diluted net earnings per share during a three-year performance period. This plan provides for a threshold and maximum amount below and above the respective target amounts. The first three year performance period in this plan ended in December, 1994. Because the earnings goals were not met, none of the awarded performance shares were earned for this period. The Committee granted awards for the 1994-95-96 PSP cycle. A 6%, 10% and 12% compounded increase in fully diluted net earnings per share is required to earn threshold, target and maximum payouts, respectively for this cycle. The size of the initial awards to Executive Officers and the CEO are determined by the Executive Compensation Committee. 4. Stock options are awarded from time to time. The Committee utilized an outside consulting firm to provide comparative data upon which the Committee based the grant amounts, taking into consideration individual positions and performance. Grants are intended to be competitive and provide long-term incentive motivation. Option prices are based on fair market value as of the grant date and the value of any particular option when exercised depends on the performance of the Company's common stock during the interim. Since the last major grant in 1992 that included most of the officers vests over a three year period, no grants were made to the five named Executive Officers in 1994, other than E. J. Mooney. The Committee tries to focus the executive compensation program to strengthen the overall performance of the Company by integrating both short-term and long- term performance goals. PSP long-term objective goals are based 100% on earnings performance. Once awards are made under an annual or long-term incentive plan, the Committee has no discretion to adjust them. No restricted stock grants have been awarded to Executive Officers since 1991. The Committee believes that rewarding executives through stock ownership tends to maximize shareholder value over the long term. Having an ongoing stock option program that provides stock to executives not only ties their financial well-being to that of the Company, but also allows them to realize the benefits of a stock price enhanced by their efforts. The Committee does not consider outstanding stock options when awarding current stock option grants. Chief Executive Officer Compensation The pay-for-performance philosophy of the Company's total compensation program outlined above also applies to Mr. E. J. Mooney, Nalco's Chief Executive Officer. 14 In 1993, Nalco sales and earnings before extraordinary loss and effect of accounting change were up 1.1% and 5.3%, respectively. Because of the basic increase in Company performance and the strength of Mr. Mooney's performance, the Committee approved a 7.7% increase in his base salary in January 1993, while he was President and Chief Operating Officer of the Company. A 11.9% salary increase was approved effective May 1, 1994, after Mr. Mooney's election as CEO of the Company in April of 1994. The 1994 Management Incentive Plan award was based primarily on achievement of corporate performance goals for sales and earnings and Mr. Mooney's performance as determined by the Committee. Even though Mr. Mooney met his individual goals for 1994, he has earned 73% of the portion of his target award related to sales and earnings. As a result, the MIP award paid to Mr. Mooney was below the target amount. The total MIP payment Mr. Mooney received for 1994 was $211,334. Potentially, 60% to 70% of Mr. Mooney's base salary can come from performance related compensation plans such as the MIP and PSP. Because the 1994 MIP payout was below target levels and no performance shares were earned under the PSP, 31% of Mr. Mooney's cash compensation was based on performance related plans during 1994. Mr. Mooney received a stock option grant in April, 1994 after his election as CEO. The grant vested and was exercisable on April 20, 1994 at an exercise price of $32.6875 per share. The grant he received in 1992 became exercisable in equal portions beginning in 1993, 1994 and 1995 at an exercise price of $36 per share. Exercise prices for stock options are set at the fair market value of the Company's common stock on the date of grant. The size of stock option grants are based on the recommendations of an independent compensation consulting firm in order to provide a competitive level of stock options. No adjustments are permitted for awards except for the Committee's right to reduce any unvested portions of an award, should Mr. Mooneys performance decline, in the opinion of the Committee. During 1994, Mr. Mooney exercised stock options and realized value as stated in the table under "Option Grants in the Last Fiscal Year." These options were granted in 1985 and 1986. All options were issued at fair market value on the date of grant. Since the first grant of the exercised options, the Company's stock has appreciated by 158%. The Committee continues to monitor qualifying compensation paid to its Executive Officers for deductibility under the $1 million deduction limit for executive salaries. Included compensation did not exceed this limit in 1994 and is not expected to do so in 1995. The Executive Compensation Committee W. A. Pogue H. M. Dean H. G. Bernthal A. L. Kelly 15 STOCK PRICE PERFORMANCE GRAPH THE GRAPH BELOW COMPARES CUMULATIVE TOTAL RETURN OF THE COMPANY, THE S&P 500 INDEX AND THE SPECIALTY CHEMICALS VALUE LINE INDEX (DIVIDENDS REINVESTED). THE GRAPH ASSUMES $100 WAS INVESTED ON DECEMBER 31, 1989 IN NALCO STOCK, THE S&P 500 INDEX AND THE SPECIALTY CHEMICAL VALUE LINE INDEX. [GRAPH APPEARS HERE] COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NALCO CHEMICAL, S&P 500 INDEX AND SPECIALTY CHEMICALS VALUE LINE INDEX
SPECIALTY CHEMICALS Measurement Period NALCO S&P VALUE LINE (Fiscal Year Covered) CHEMICAL 500 INDEX INDEX - ------------------- ---------- --------- ---------- Measurement Pt- 12/31/89 $100.00 $100.00 $100.00 FYE 12/31/90 $117.53 $ 96.89 $103.77 FYE 12/31/91 $177.87 $126.42 $153.18 FYE 12/31/92 $151.60 $136.05 $173.07 FYE 12/31/93 $168.24 $149.76 $196.06 FYE 12/31/94 $154.55 $151.74 $193.66
There can be no assurance that the Company's stock performance will continue into the future with the same or similar trends depicted in the graph above. The Company does not make or endorse any predictions as to future stock performance. 16 PROPOSAL 2. APPROVAL OF INDEPENDENT AUDITORS Price Waterhouse was selected by the Board of Directors upon the recommendation of the Audit Committee to serve as independent auditors for the Company and its consolidated subsidiaries for 1995, and the stockholders' approval of such selection is requested. Representatives of Price Waterhouse are expected to be present at the Annual Meeting of Stockholders to make a statement if they so desire and to respond to appropriate questions. Ernst & Young was dismissed by the Board as the Company's auditors in February 1993, on the recommendation of the Audit Committee. Ernst & Young's reports on the Company's financial statements for the years ended December 31, 1991 and 1992 did not contain an adverse opinion or a disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audits of the Company for the years ended December 31, 1991 and 1992 and to the date of their dismissal, there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to their satisfaction, would have caused Ernst & Young to make reference to the subject matter of the disagreement in connection with its report. If the stockholders do not approve the auditors, the Audit Committee and the Board of Directors will reconsider the selection. The Board of Directors recommends a vote FOR Proposal 2. SHARES OUTSTANDING AND VOTING RIGHTS Only stockholders of record at the close of business on February 21, 1995 are entitled to vote at the meeting. On that date the Company had outstanding 67,974,388 shares of common stock, each of which is entitled to one vote, and 403,851 shares of ESOP Preferred Stock, each of which is entitled to 20 votes and will be converted upon retirement or separation from service into 20 shares of common stock (subject to adjustments in certain events). A quorum is a majority of the votes represented by the outstanding shares of stock of the Company either present at the meeting or represented by proxy. The common stock and the ESOP Preferred Stock will vote together as a single class on each of these Proposals, and the affirmative vote of a majority of the quorum is necessary to adopt any of the Proposals referred to herein. Abstentions and broker non-votes will each be treated as shares that are represented at the meeting for purposes of determining the presence of a quorum. Each is tabulated separately. Abstentions have the effect of votes against proposals presented to shareholders, whereas broker non-votes have no effect on the outcome. 17 SECURITY OWNERSHIP OF MANAGEMENT The following table shows the number of shares of common stock and ESOP Preferred Stock owned beneficially (as defined by the Securities and Exchange Commission) by each director, director nominee and named executive officer and by all present directors and executive officers as a group (in each instance, amounting to less than 1% of the outstanding class) as of February 21, 1995 (as of December 31, 1994, as to shares held in the Profit Sharing, Investment and Pay Deferral Plan).
ESOP COMMON PREFERRED NAME SHARES SHARES ---- ------- --------- J. L. Ballesteros....................................... 0 H. G. Bernthal.......................................... 20,400 H. Corless.............................................. 22,000 P. Dabringhausen........................................ 13,138 102 H. M. Dean.............................................. 21,000 J. P. Frazee, Jr........................................ 22,634 M. B. Harp.............................................. 66,888 154 A. L. Kelly............................................. 15,067 F. A. Krehbiel.......................................... 24,000 E. J. Mooney............................................ 200,467 159 C. W. Parry............................................. 20,400 W. A. Pogue............................................. 20,902 J. J. Shea.............................................. 9,000 J. D. Tinsley........................................... 35,608 129 W. S. Weeber............................................ 68,328 159 All Directors and Executive Officers as a Group......... 587,745 839
The above amounts include common shares which are subject to outstanding stock options exercisable within 60 days of March 17 as follows: M. B. Harp, 28,000 shares; E. J. Mooney, 161,000 shares; W. S. Weeber, 52,000 shares; P. Dabringhausen, 11,300 shares; J. D. Tinsley, 18,000 shares; H. G. Bernthal, H. Corless, H. M. Dean, J. P. Frazee, Jr., F. A. Krehbiel, C. W. Parry, and W. A. Pogue, 20,000 shares each; A. L. Kelly, 12,000 shares; J. J. Shea, 8,000 shares; and directors and executive officers as a group, 453,100 shares. The table does not include ESOP Preferred Stock not held for the account of the foregoing individuals that the ESOP trustee is required to vote or dispose of in the manner and proportion in which allocated shares are directed to be voted or disposed of, or common shares into which any ESOP Preferred Stock may be converted. 18 SECURITY OWNERSHIP OF CERTAIN OWNERS Based on 13G filings received, the following listed companies are the only 5% or greater owners of its securities known to the Company.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS -------------- ------------------- -------------------- ---------- Common Shares FMR Corp. 8,815,059(1) 12.92% 82 Devonshire Street Boston, MA 02109 Common Shares INVESCO PLC 6,642,340(2) 9.7% 11 Devonshire Square London EC2M 4 YR England
- ---------- (1) Edward C. Johnson, Chairman and FMR Corp., through its control of Fidelity Management and Research Company and the Fidelity Funds each has sole power to dispose of 8,302,280 shares (12.17%) beneficially owned by the Fidelity Management and Research Company. Voting power over these shares resides with the Funds' Boards of Trustees. Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp., is the beneficial owner of 512,779 shares (0.75%). Edward C. Johnson and FMR Corp. have sole dispositive power over these shares, sole power to vote or direct the voting of 326,179 shares and no power to vote 186,600 shares. Edward C. Johnson, Chairman of FMR Corp., and Abigail P. Johnson each owns 24.9% of the outstanding voting common stock of FMR Corp. Various Johnson family members and trusts for the benefit of Johnson family members own FMR Corp. voting common stock. Those family members form a controlling group with respect to FMR Corp. (2) INVESCO PLC and its subsidiaries, INVESCO North American Group, Ltd., INVESCO, Inc., INVESCO North American Holdings, Inc., INVESCO Capital Management, Inc., and INVESCO Group Services Inc., have shared voting power and shared dispositive power of 6,642,340 shares. 19 STOCKHOLDER PROPOSAL DEADLINE Stockholder proposals, to be considered for inclusion in the proxy statement for the 1996 Annual Meeting of Stockholders, must be received by the Company by November 18, 1995. DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS The Board of Directors presently knows of no other matters scheduled to be presented at the Annual Meeting. With respect to any other matter requiring a vote of the stockholders that may come before the Annual Meeting, the proxies in the enclosed form confer upon the person or persons entitled to vote the shares represented by such proxies authority to vote the same in respect of any such other matter in their discretion. By Order of the Board of Directors S. J. Gioimo Secretary Naperville, Illinois March 17, 1995 20 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT THURSDAY, APRIL 20, 1995 NALCO CHEMICAL COMPANY ONE NALCO CENTER, NAPERVILLE, ILLINOIS 60563-1198 - -------------------------------------------------------------------------------- P R O X Y NALCO CHEMICAL COMPANY ONE NALCO CENTER, NAPERVILLE, ILLINOIS 60563-1198 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE 1995 ANNUAL MEETING The undersigned hereby appoints M. B. Harp and W. S. Weeber, and each of them, attorneys and proxies of the undersigned, with full power of substitution, to represent and vote all the shares held by the undersigned at the Annual Meeting of Stockholders to be held at the Company's Corporate and Technical Center, One Nalco Center, Naperville, Illinois on Thursday, April 20, 1995, at 10:00 A.M., local time, or at any adjournments thereof, on all matters coming before said meeting. (Change of address/comments) ELECTION OF CLASS I DIRECTOR: J. L. Ballesteros ____________________________ ELECTION OF CLASS II DIRECTORS: ____________________________ H. Corless ____________________________ H. M. Dean E. J. Mooney 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 . IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON. WE URGE YOU TO COMPLETE AND MAIL YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. - ------------------------------------------------------------------------------- Please mark your 7824 [X] votes as in this example. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2, AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS PROPERLY COMING BEFORE THE MEETING. - -------------------------------------------------------------------------------- DIRECTORS RECOMMEND A VOTE "FOR" - -------------------------------------------------------------------------------- 1. Election of FOR* WITHHOLD Directors [_] [_] *FOR, except vote withheld from the following nominee(s): Nominees for Director: H. Corless H. M. Dean E. J. Mooney J. L. Ballesteros __________________________ 2. Approval of FOR AGAINST ABSTAIN Auditors [_] [_] [_] - -------------------------------------------------------------------------------- -------------------------------------- If you have noted comments on the other [_] side of the card, please mark box at right. -------------------------------------- Please sign exactly as name appears hereon and return promptly. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. _____________________________________ _____________________________________ SIGNATURE(S) DATE - -------------------------------------------------------------------------------- . FOLD AND DETACH HERE . -----END PRIVACY-ENHANCED MESSAGE-----