SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
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[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
MacDermid, Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MACDERMID Incorporated
245 Freight Street
Waterbury, CT. 06702-0671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD April 27, 2004
The Annual Meeting of Shareholders of MacDermid, Incorporated
("MacDermid") will be held at MacDermid's corporate headquarters located at 245
Freight Street, Waterbury, CT. 06702 on Tuesday, April 27, 2004 at 3:00 P.M.
EDT, for the following purposes:
1. To elect six (6) directors to hold office until the next annual meeting
or until their successors are elected and qualified;
2. To consider and act upon the ratification of the appointment of KPMG
L.L.P. as independent
accountants for 2004;
3. To consider and act upon an amendment to the 2001 Key Executive
Performance Equity Plan;
4. To consider and act upon an amendment to the 1995 Equity Incentive Plan;
and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 3, 2004 as
the record date for the determination of shareholders who will be entitled to
notice of and to vote at the meeting.
Whether or not you plan to attend the annual meeting, please promptly vote,
date and sign the enclosed proxy and return it in the enclosed postage-paid
envelope at your earliest convenience prior to the meeting.
Your proxy vote is very important. Prompt return of your proxy will
minimize proxy solicitation expense, assure a quorum and avoid confusion and
delay at the meeting.
By Order of the Board of Directors.
Waterbury, Connecticut
March 15, 2004
(IN ORDER TO AVOID UNNECESSARY EXPENSE), we urge you to indicate voting
instructions on the enclosed proxy and date, sign and return it promptly PRIOR
to the meeting in the envelope provided.
MACDERMID
Incorporated
245 Freight Street
Waterbury, Connecticut 06702-0671
PROXY STATEMENT
GENERAL
The accompanying proxy is being solicited by the Board of Directors of
MacDermid, Incorporated ("MacDermid" or the "Company") for use at the annual
meeting of Shareholders of MacDermid and at any and all adjournments thereof
(the "Meeting") to be held, pursuant to the accompanying Notice of Annual
Meeting of Shareholders, at MacDermid, Incorporated, 245 Freight Street,
Waterbury, CT. 06702 on Tuesday, April 27, 2004 at 3:00 P.M., EDT.
Each holder of MacDermid's common stock (the "Common Stock") is entitled to
one vote per share on each matter to be brought before the Meeting. Valid
proxies will be voted as specified thereon at the Meeting. Any shareholder
giving a proxy in the accompanying form (a "Proxy") retains the power to revoke
it at any time prior to the exercise of the powers conferred thereby by (1)
delivering written notice of such revocation to John L. Cordani, Secretary,
MacDermid, Incorporated, 245 Freight Street, Waterbury, Connecticut 06702-0671;
(2) delivering to the Corporate Secretary a duly executed Proxy or other proxy
form bearing a date subsequent to the date on the given Proxy; or (3) appearing
at the Meeting and requesting to vote his or her shares in person. Any
shareholder who attends the Meeting in person will not be deemed thereby to
revoke the Proxy unless such shareholder affirmatively indicates at the Meeting
his intention to vote the shares in person.
Unless a shareholder provides contrary instructions on a Proxy, all shares
represented by the Proxy (if not revoked before such shares are voted) will be
voted (1) for the election of the nominees for directors named below, (2) for
ratification of the appointment of KPMG LLP, (3) for approval of the amendment
to the 2001 Key Executive Performance Equity Plan, (4) for approval of the
amendment to the 1995 Equity Incentive Plan and (5) by the persons granted the
proxies in their discretion on any other business properly to come before the
Meeting.
MacDermid has retained D.F. King & Co., Inc. of New York, New York ("King")
to assist with the solicitation of Proxies and the mailing and distribution of
proxy material. The anticipated cost of King's services is approximately
$4,500, plus reimbursement of expenses. MacDermid will bear the cost of the
solicitation of Proxies, which may include the reasonable expenses of brokerage
firms and others for forwarding Proxies and proxy material to the beneficial
owners of Common Stock of MacDermid. In addition to the use of the mails,
Proxies may be solicited by King and by regular employees of MacDermid
personally, electronically or by telephone. Votes will be counted by employees
of The Bank of New York, the Company's transfer agent. MacDermid currently
anticipates that John L. Cordani, the Secretary of MacDermid, will be the
Inspector of Election who will certify the votes at the meeting of shareholders.
Only holders of Common Stock of record at the close of business on March 3,
2004 are entitled to notice of and to vote at the Meeting. On that date there
were 30,285,977 shares of Common Stock outstanding and entitled to be voted.
Holders of a majority of such outstanding shares, present in person or
represented by proxy, will be necessary to constitute a quorum at the Meeting.
If a quorum is present, the affirmative vote of a majority of the shares present
in person or represented by proxy at the Meeting will be necessary for the
election of each nominee for director and for the approval of the other items
proposed. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum. Abstentions are counted in
determining the shares represented at the Meeting with respect to each proposal
presented to shareholders, but broker non-votes are not counted for such
purpose.
Any shares held for the account of a shareholder who participates in the
MacDermid Dividend Reinvestment Plan will be voted automatically with the
shareholder's other shares of Common Stock as directed by the shareholder on the
enclosed Proxy.
The approximate date on which this Proxy Statement and the accompanying
Proxy are first sent to shareholders is March 15, 2004. MacDermid's Annual
Report to Shareholders, containing financial statements for the fiscal year
ended December 31, 2003, accompanies these proxy materials to each shareholder.
MacDermid's principal offices are located at 245 Freight Street, Waterbury,
Connecticut 06702.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
Please complete, sign and return your proxy card in the enclosed envelope
ITEM 1: ELECTION OF DIRECTORS
The Board of Directors, pursuant to the By-Laws, as amended, has fixed at
six (6) the number of directors to be elected at the Meeting. Shares
represented by Proxies will be voted for the election of the nominees for
Director listed below, unless otherwise indicated. Each Director of MacDermid
shall serve until the next annual meeting or until his successor has been
elected and qualified. All nominees are currently Directors of MacDermid.
Management has no reason to believe that any nominee named below will be
unable or unwilling to serve as a Director. If at the time of the Meeting a
nominee should be unable to serve, or for good cause will not serve, it is the
intention of the persons granted the Proxies to vote in their discretion for
such other person as may be designated as a nominee by the Board of Directors of
MacDermid.
The following information has been provided by each Director nominee.
--NOMINEES FOR DIRECTOR --
DANIEL H. LEEVER - Mr. Leever joined MacDermid in 1982. In 1989, he was
appointed Senior Vice President and Chief Operating Officer. The following year,
he was appointed President and Chief Executive Officer. In 1998, Mr. Leever was
appointed Chairman of the Board and currently serves as Chairman and Chief
Executive Officer. Mr. Leever attended undergraduate school at Kansas State
University and the graduate school at the University of New Haven School of
Business.
Principal occupation - Chairman of the Board and Chief Executive Officer of
MacDermid
Director since 1989
2,191,054 shares - 7.2% (1)
Age: 55
DONALD G. OGILVIE - Mr. Ogilvie has been President and Chief Executive Officer
of the American Bankers Association since 2002, and prior to that he served as
Executive Vice President since 1985. From 1980 to 1985 he was a Vice President
of Celanese Corporation and from 1977 to 1980 Associate Dean of Yale
University's School of Organization and Management. Earlier, he held posts in
the U.S. Department of Defense and in the Executive Office of the President as
Associate Director of National Security and International Affairs in the Office
of Management and Budget. Mr. Ogilvie has a B.A. degree from Yale University and
an M.B.A. from Stanford University's School of Business.
Principal occupation - President and Chief Executive Officer of American Bankers
Association
Director since 1986
39,112 shares - *(2) (3)
Chairman of the Audit Committee and member of the Compensation and Corporate
Governance Committees.
Age: 60
JAMES C. SMITH - Mr. Smith is Chairman of the Board (since 1995) and Chief
Executive Officer (since 1987) of Webster Financial Corporation and its
subsidiary, Webster Bank of Connecticut. From 1987 until April 2000, Mr. Smith
also served as President of Webster Financial Corporation and Webster Bank. Mr.
Smith is active in a number of organizations dedicated to enhancing the quality
of life in the communities served by Webster. Mr. Smith has an AB degree from
Dartmouth College.
Principal occupation - Chairman of the Board and Chief Executive Officer of
Webster Financial Corporation and its subsidiary, Webster Bank of Connecticut.
Director since 1994
50,389 shares - * (2) (3)
Member of the Audit, Compensation and Corporate Governance Committees.
Age: 55
JOSEPH M. SILVESTRI - Mr. Silvestri is a partner at Citigroup Venture Capital
Ltd where he has been employed since 1990. He is a member of the boards of
directors and compensation committees of Triumph Group, Inc., a manufacturer and
distributor of aircraft components, and Euramax, a fabricator of aluminum and
steel products. Mr. Silvestri is also a director of Worldspan, a global
distribution system for the travel industry. Mr. Silvestri has a BS degree from
Pennsylvania State University and an MBA degree from Columbia Business School.
Principal occupation - Partner at Citigroup Venture Capital Ltd.
Director since 1999
191,328 shares - * (2) (3)
Member of the Compensation Committee.
Age: 42
T. QUINN SPITZER, JR.- Mr. Spitzer is a partner in McHugh Consulting, a
management consulting firm specializing in business strategy and complexity
management. Mr. Spitzer has been an independent consultant since 1973. In 1978
he joined the consulting firm of Kepner-Tregoe, Inc. of Princeton, N.J. In 1990,
he was appointed President and Chief Executive Officer of Kepner-Tregoe, and in
1996 he also became Chairman of the Board of Kepner-Tregoe. In 1999 he
established McHugh Consulting. Mr. Spitzer received his undergraduate education
from the University of Virginia and his graduate education from the University
of Georgia. He serves on the Board of Directors of UTI, Inc.
Principal Occupation - Partner, McHugh Consulting
Director since 2000
33,205 shares - *(2) (3)
Chairman of the Compensation and Corporate Governance Committees,
as well as Lead Director and member of the Audit Committee
Age: 54
ROBERT L. ECKLIN - Mr. Ecklin is Executive Vice President-Optical Communications
for Corning Incorporated. He has held this position since January 2001 and has
been ExecutiveVice President for Corning since January,1999. He joined Corning
in 1961 in the Engineering Division and has held a number of manufacturing and
operations positions at Corning. He was formerly plant manager of two Corning
facilities and was named Vice President in 1982. In 1990, Mr. Ecklin was
appointed Senior Vice President and General Manager, Industrial Products. Mr.
Ecklin serves on several boards including Pittsburgh Corning, Inc., Pittsburgh
Corning Europe, Inc., and Cormetec Inc., as well as several service
organizations, including the Alliance For Manufacturing and Technology for the
Southern Tier, the Committee of 50, Alfred Technology Resources, Infotonics Inc.
and the State University of New York, Research Board. Mr. Ecklin holds a
bachelor's degree in architectural engineering and has completed the Executive
Management Program at Dartmouth University.
Principal occupation - Executive Vice President of Corning, Incorporated
Director since 2001
28,253 shares - *(2) (3)
Member of the Audit, Compensation and Corporate Governance Committees.
Age: 65
* Indicates less than 1% of the outstanding shares of Common Stock.
Notes to Election of Directors
(1) Includes 150,044 shares held by MacDermid's Profit Sharing and
Employee Stock Ownership plans (reported as of December 31, 2003), 147,065
shares which may be acquired upon exercise of options granted under the Special
Stock Purchase Plan and 500,000 shares which may be acquired upon exercise of
options granted under the MacDermid Incorporated Stock Option Plan dated July 6,
1998 and 480,000 shares which may be acquired upon the exercise of options
granted under the 2001 Key Executive Performance Equity Plan. Includes 7,285
shares held in trust by Mr. Leever for his son and 4,463 shares owned by his
spouse, as to all of which Mr. Leever disclaims beneficial ownership. Also
includes 199,699 shares held by a certain trust established by Mr. Harold
Leever, for which Mr. Daniel Leever is co-trustee. Also includes 100,000
options issued to Mr. Leever pursuant to the terms of the 2001 Key Executive
Performance Equity Plan in February, 2004.
(2) Owner has sole voting and investment power.
(3) Includes director's premium options granted under the MacDermid,
Incorporated Stock Option Plan to purchase 2,295; 2,295; 3,501; 1,527 and 0
shares for Messrs. Ogilvie, Smith, Silvestri, Spitzer and Ecklin, respectively
and options granted under the 2001 Key Executive Performance Equity Plan to
purchase 15,779; 15,779; 24,914; 16,003; and 15,779 shares for Messrs. Ogilvie,
Smith, Silvestri, Spitzer and Ecklin, respectively. Also includes 667, 445,
2,554 and 1,715 shares restricted stock issued under the Equity Incentive Plan
to Messrs. Ogilvie, Smith, Spitzer and Ecklin, respectively. Includes options to
purchase 10,000; 10,000; 10,000; 10,000, and 10,000 shares of common stock
granted under the 2001 Key Executive Performance Equity Plan for Messrs.
Ogilvie, Smith, Silvestri, Spitzer and Ecklin respectively in February 2004.
Also includes388, 259, 259, 647 and 259 shares of restricted stock issued under
the 1995 Equity Incentive Plan in February, 2004 for Messrs. Ogilvie, Smith,
Silvestri, Spitzer and Ecklin respectively. All remaining shareholdings noted
constitute personal or beneficial holdings on behalf of the applicable nominee.
Vote Required
-------------
Each nominee for director shall be elected by a majority of the votes cast at
the Meeting provided a quorum is present. Abstentions are counted in determining
the shares represented at the meeting but broker non-votes are not counted for
such purpose.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation in the fiscal year ended December 31, 2003.
EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Compensation Committee is primarily responsible for MacDermid's overall
executive compensation policy of compensating MacDermid's officers competitively
with those of comparable companies, rewarding exceptional performance where
appropriate and providing incentive for future performance through cash
incentive payments and equity incentives. In the fiscal year ended December 31,
2003, MacDermid's executive compensation generally had three basic components:
annual base salary, short-term cash incentive bonus and equity incentives (long
term compensation).
In establishing levels of annual salary, incentive bonus and equity
incentives, the Committee generally considers, in order of emphasis, the
following factors: (i) MacDermid's performance, or in certain cases group
performance, relative to Committee expectations, (ii) the performance and
achievements of MacDermid's executives, individually, and collectively, (iii)
the responsibilities of each executive, (iv) the compensation practices of peer
companies, and (v) the level of cash compensation and equity incentives required
to attract and hold qualified executives.
The Committee uses a comparative group of specialty chemical companies (the
"Comparator Group") to serve as a factor for determining the appropriate cash
and equity incentive components of the program. The companies in the Comparator
Group are selected based upon their similarity to MacDermid, relative
complexity, and scope. Earnings trends, return on equity and other performance
measures are compared. The size and composition of the Comparator Group may
change from year to year but the Comparator Group is generally the same as or
similar to the Standard & Poors Specialty Chemical Index used in the Performance
Equity Plan. The Comparator Group is different from the specialty chemical
index used in the comparative stock performance graph.
Before considering the compensation factors discussed above, the Committee
targets annual base compensation at a level which, together with incentive
bonuses, would provide cash compensation to individual executives at below
median market compensation levels for poor corporate or unit performance, at
median market compensation levels for good performance, and above median market
compensation levels for excellent performance.
Base Salary and Annual Bonus Compensation
-----------------------------------------
Executives, other than the Chief Executive Officer, received base salaries
and were eligible to receive performance based bonuses. Base salaries were set
by the Committee in accordance with the above noted considerations. Primarily
base salaries were determined by considering the executive's qualifications and
responsibilities as well as the market based compensation practices of peer
companies. Executives were also eligible to receive performance bonuses based
primarily upon their individual and collective performance as well as the
performance of the business units each primarily affects, in comparison to goals
which have been pre-established by the Committee early in the fiscal year. The
financial goals established by the Committee in determining performance bonuses
use the operating profit and owners earnings of the business units most affected
by each executive. Thus for this fiscal year the goals established by the
Committee have encouraged executives to maximize the operating profit and owners
earnings generated by the business units applicable to each executive. Bonuses
were paid to the executives based upon the meeting of these pre-established
financial goals. Performance bonuses ranged from 0% to 65% of base salary as a
function of applicable financial performance in relation to the pre-established
financial goals.
Long Term Equity Compensation
-----------------------------
During the fiscal year ended December 31, 2003, MacDermid's executives were
eligible to receive equity incentives (Stock Options or Restricted Stock Awards)
under the MacDermid Special Stock Purchase Plan (the "Special Stock Purchase
Plan"), the MacDermid, Incorporated 1995 Equity Incentive Plan (the "Equity
Incentive Plan"), the MacDermid Stock Option Plan dated July 6, 1998 (the "Stock
Option Plan"), and under the 2001 Key Executive Performance Equity Plan (the
"Performance Equity Plan")(the Special Stock Purchase Plan, Equity Incentive
Plan, Stock Option Plan, and the Performance Equity Plan, collectively referred
to as the "Plans").
The Committee administers the Plans, and awards equity incentives to
executives and other employees of MacDermid. The purpose of awarding equity
incentives under the Plans is to enable MacDermid to attract, retain and
motivate its employees to exert their best efforts to enhance shareholder value
by giving them the ability to participate in the long-term growth of MacDermid.
The Committee generally considers the same factors in establishing the amounts
of equity awards for MacDermid's executive officers as those listed above. The
amounts of the awards are based upon the relative position of each executive
officer within MacDermid and individual performance independent of the terms and
amount of awards previously granted. The Compensation Committee has a stated
policy of not re-pricing options after issuance.
"Stock Option Plan" - No Options Awarded this F.Y.
-------------------
Stock options awarded under the Stock Option Plan are in the form of
options to purchase a specified number of shares of MacDermid common stock at an
exercise price which is set at a premium over the market price on the date of
grant. The actual premium is set by the Compensation Committee. The period for
exercising an option will begin four years after the date of grant and will end
ten years after the date of grant. Vesting requirements, if any, are
established by the Committee. Unless determined otherwise by the Compensation
Committee, the exercise period will automatically terminate ninety (90) days
after the grantee ceases to be employed by the Company on a full time basis, for
any reason. During the fiscal year no options were granted under the Stock
Option Plan.
"Special Stock Purchase Plan" - No Options Awarded this F.Y.
-----------------------------
Stock Options awarded under the Special Stock Purchase Plan are in the form
of options to purchase a specified number of restricted shares of MacDermid
Common Stock at an exercise price at least 66.6% of the market price of the
Common Stock on the date of award. The options are generally exercisable only
during the four-year period beginning on the date of award. However, at the
1996 Annual Meeting, the shareholders approved amendments to the Special Stock
Purchase Plan which may extend the foregoing exercise period under certain
conditions. The shares of Common Stock acquired upon any exercise are treated
as restricted stock for a period of four years commencing on the date of
exercise. Such shares may not be sold during such period (other than to
MacDermid at the exercise price) and must be resold to MacDermid at the exercise
price if the participant's employment with MacDermid is terminated during such
period, except in the case of death, retirement, permanent disability or
involuntary termination without cause. Such restrictions may, however, be
waived by the Committee in its discretion from time to time. No options were
granted under the Special Stock Purchase Plan during the fiscal year.
"Equity Incentive Plan" - No Restricted Shares Awarded to Executives this F.Y.
-----------------------
Restricted stock awards issued under the Equity Incentive Plan generally
consist of restricted stock having a fair market value equal to twenty (20)
percent of the participant's annual bonus amount made in lieu of the allocable
bonus amount plus a matching portion equal to a multiple of the shares awarded
in lieu of the allocable bonus amount. Restricted grants may also be made to
participants who do not participate in MacDermid's annual bonus. The restricted
stock awards may not be sold or transferred for a period of time. The
restricted stock is forfeited to MacDermid if the participant's employment with
MacDermid is terminated during the restricted period, except in the case of
death, permanent disability, involuntary termination without cause or
retirement. Such restrictions may, however, be waived by the Committee in its
discretion from time to time.
"Performance Equity Plan" -310,000 Options Awarded to Named Officers this F.Y.
-------------------------
Options to purchase MacDermid common shares pursuant to the terms of the
Performance Equity Plan are issued at fair market value at the time of the
grant, adjusted annually based upon comparative performance with the S&P
Specialty Chemicals Index. The options generally vest at the end of a four (4)
year period. The number of options which vest may be increased or decreased
based upon MacDermid's cumulative owner earnings during the four year vesting
period in relation to targets set by the Committee at the time of the award.
The exercise period generally begins upon vesting and ends 10 years from the
date of grant or 90 days after termination of the participant's employment for
any reason, whichever occurs sooner. During the fiscal year the Committee
awarded options to purchase 150,000; 30,000; 30,000; 50,000; and 50,000 shares
of MacDermid common stock to Messrs. Leever, Bolingbroke, Cordani, Haji and
Largan respectively. Mr. Haji resigned as an officer as of December 31, 2003
and as a result will forfeit the options noted above.
The Committee believes that the Plans allow executive officers to
participate in the enhancement of shareholder value. The Committee has also
adopted a stock retention policy (the "Policy") which is designed to encourage
MacDermid executives to hold the shares of common stock which arise from the
exercise of options under the Plans. The Policy provides that no covered
executive shall be entitled to receive additional option grants or restricted
share grants unless such executive has retained at least 75% of the aggregate of
all common stock that arose from the exercise of options/restricted share grants
previously provided to the executive after deduction for payment of applicable
taxes and the exercise price. The Committee has retained discretion to waive
compliance with the policy in exceptional circumstances. The Committee believes
that participation in the Plans, as augmented by the Policy, encourages
executives to concentrate on long-term shareholder value growth.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation for Daniel H. Leever, MacDermid's Chairman and Chief Executive
Officer, was determined in accordance with the terms of the MacDermid,
Incorporated Executive Compensation Plan, the material terms of which were
approved by the Company's shareholders at the 1998 Annual Meeting. Under the
terms of the plan, no base salary is paid to Mr. Leever. The amount of
performance based short-term annual compensation which was paid to Mr. Leever
during the last fiscal year was based directly and solely upon the following
factors: (i) earnings per share, and (ii) the two-year average of earnings per
share growth. Compensation under the plan was equal to the sum of two
components. The first component was determined by multiplying a base amount of
$6,300 by the number of cents per share the Company has earned for the fiscal
year up to $1.00. The second component was determined by multiplying the same
base amount by the number of cents per share earned by the Company during the
fiscal year above $1.00, further multiplied by a factor of from 0 to 2.5, which
factor is determined based upon the two year average of earnings per share
growth. In determining earnings, the Committee uses its discretion in including
or excluding one time or extraordinary gains or losses. Mr. Leever's annual
performance based compensation was determined and paid solely in accordance with
the terms of the plan as noted above.
Mr. Leever received options to purchase 150,000 shares of MacDermid common
stock pursuant to the terms of the Performance Equity Plan during the last
fiscal year.
The Company is subject to Internal Revenue Code Section 162(m), which could
limit the deductibility of certain compensation payments to its executive
officers. The Company intends to comply with the requirements of Section
162(m); however, it also weighs the burdens of such compliance against the
benefits to be obtained by the Company and may pay compensation that is not
fully deductible if it determines that such payments are in the Company's best
interests. During this fiscal year, all compensation paid to the Company's
executive officers was fully deductible by the Company.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
T. Quinn Spitzer, Jr. (Chairman)
Donald G. Ogilvie
James C. Smith
Joseph M Silvestri
Robert L. Ecklin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries. In the last fiscal year, no
executive officer of the Company served on the compensation committee or as a
director of another entity, one of whose executive officers served on the
Company's Compensation Committee or Board of Directors.
On May 7, 2003, MacDermid agreed to repurchase 2,201,720 shares of common
stock from Citicorp Venture Capital, Ltd. ("CVC"). The Purchase and Sale
Agreement between MacDermid and CVC has been filed with the SEC on Form 8-K.
Joseph M. Silvestri, a partner at CVC, is a director of MacDermid and a member
of its Compensation Committee.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table summarizes annual, long-term and other
compensation paid by MacDermid for each of its three previous fiscal years plus
a shortened fiscal year (the year noted as December, 2001 was a 9 month fiscal
year)to MacDermid's Chief Executive Officer and the four other most highly
compensated executive officers.
Long-Term
Compensation
Annual Compensation Awards
Securities
Name and Other Restricted Underlying All Other
Principal. . . . Fiscal Salary Bonus Annual Stock Options/ Compensation
Position . . . . Year Compensation Awards SARs (2)
($) (1) ($) (5) ($) ($) (2) (#) ($) (3) (4)
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Daniel H.
Leever . . . . . 2003 - 1,480,500 - - 150,000 19,620
Chairman and . . 2002 - 732.000 - - 160,000 308,131
Chief Executive. Dec. 2001 - 298,367 - - 170,000 1,141,497
Officer. . . . . 2001 - 541,500 - - - 3,195,446
Stephen Largan . 2003 250,833 100,000 - - 50,000 152,766
Executive. . . . 2002 241,859 300,000 - - 30,000 7,059
Vice President/. Dec. 2001 152,507 185,000 - - 31,000 -
Operations . . . 2001 152,507 30,000 - - 10,000 75,815
Gregory M. . . . 2003 205,000 100,000 - - 30,000 14,942
Bolingbroke. . . 2002 183,125 123,000 - - 30,000 25,556
Senior . . . . . Dec. 2001 105,000 100,000 - - 31,000 51,350
Vice President . 2001 122,167 30,000 - - 10,000 100,008
and Treasurer
Salim Haji (6) . 2003 106,812 - - - 50,000 3,208
Senior . . . . . 2002 - - - - -
Vice President . Dec. 2001 - - - - -
2001 - - - - -
John L. Cordani. 2003 256,667 40,000 - - 30,000 6,000
Vice President . 2002 157,609 125,000 - - 50,000 5,500
General Counsel. Dec. 2001 - 25,000 - - - -
Secretary. . . . 2001 - - - - - -
(1) Salary amounts reported for Salim Haji were for services from July, 2003 through December, 2003.
Salary amounts reported for Mr. Cordani in 2002 were for services from June, 2002 through December, 2002.
(2) Awarded in fiscal year indicated. Awards listed for 2003 include options to purchase 150,000;
50,000; 30,000; 50,000; and 30,000 shares of MacDermid Common Stock for Messrs. Leever, Largan, Bolingbroke,
Haji and Cordani respectively, which options were granted pursuant to the Performance Equity Plan. As of
December 31, 2003, none of the named executive officers held shares of restricted stock grants from the 1995
Equity Incentive Plan, which still bore restrictions.
(3) Amounts listed for this fiscal year also include Company contributions to the E.S.O.P. in the
amounts of $6,000; $6,000; $6,000; $3,208 and $6,000 for Messrs. Leever, Largan, Bolingbroke, Haji and Cordani
respectively, as well as $4,693 in life insurance premiums for Mr. Leever. The amounts also include $8,927;
$2,925 and $3,454 of deemed compensation attributable to Messrs. Leever, Bolingbroke and Largan respectively.
The amounts for Mr. Largan and Mr. Bolingbroke also include $143,312 and $6,017 in relocation allowances
respectively.
(4) The Company has entered into severance agreements with Messrs. Largan, Bolingbroke and Cordani.
The severance agreements provide for payment of a severance in the amount of one year's base salary, or in
some cases two years' compensation, in the case of termination without cause or in the case of termination
within two years of a change of control. A separate employment agreement with Mr. Cordani similarly provides
for a minimum annual salary of $250,000 during the term of employment. Reference is made to copies of the
agreements which have been filed with the SEC.
(5) Includes bonuses accrued or earned in each year whether or not such bonuses were paid in that
year. Mr. Leever is not paid any salary or bonus, but is instead paid performance based compensation as
provided for under the MacDermid, Incorporated Executive Compensation Plan, the material terms of which were
approved by the shareholders at the 1998 Annual Shareholder Meeting.
(6) Mr. Haji resigned as an officer as of December 31, 2003, and will forfeit the options granted.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to each exercise of
stock options during the fiscal year ended December 31, 2003 and the fiscal year
end value of unexercised options held by the Chief Executive Officer and the
named officers as of December 31, 2003 as an aggregate basis.
Shares Acquired Number of Securities Value of
on Exercise Underlying Unexercised
During Fiscal 2003 Unexercised In-the-money
# Options/SARs at FY- Options at
End (#) Exercisable/ FY-end ($)
Value Unexercisable Exercisable/
Name Realized Unexercisable
$ (2) (1)
-------------------------------------------------------------------------------------------------
647,065/
Daniel Leever . . . 135,000 3,700,350 480,000 $4,399,375/$967,800
Stephen 40,000/
Largan . . . . . . . 0 - 121,000 0/$1,586,330
Gregory Bolingbroke 0 - 17,200/101,000 0/$1,351,690
Salim
Haji . . . . . . . . 0 - 0/50,000 0/$287,500
John
Cordani. . . . . . . 0 - 17,200/90,000 0/$1,220,000
(1) Value is reported based on the spread between the exercise price and the market price on
December 31, 2003 of $34.24 per share. Indexing of the exercise price as it relates to options
granted under the 2001 Key Executive Performance Equity Plan was not taken into consideration.
(2) Value reported was calculated based upon the difference between the exercise price and
the market close on the day of exercise. However, the shares acquired remain restricted for four
(4) years from the date of exercise and cannot be sold until November 1, 2007.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 2003 by the Company to each of
the named executive officers:
Name. . . . . . . . Number of Potential Realizable
Shares Percent of Total Exercise Value at Assumed Rates
Underlying Options Granted Price Expiration Date of Stock Price
Options to all employees Appreciation for Option
Granted in F.Y. 2003 ($/Share) (2) Term
(#) (1)
5% $(3) 10% $(3)
Daniel Leever. . . 150,000 20.6% $ 22.51 2/24/13 0 $2,729,000
Stephen Largan. . . 50,000 6.9% $ 22.51 2/24/13 0 $910,500
Gregory Bolingbroke 30,000 4.1% $ 22.51 2/24/13 0 $546,000
Salim Haji 50,000 6.9% $ 28.49 8/5/13 0 $446,000
John Cordani 30,000 4.1% $ 22.51 2/24/13 0 $546,000
(1) Represents options granted under the Performance Equity Plan. Under the terms of the Performance Equity
Plan the exercise price of the options is adjusted based upon the comparative change of the S&P Specialty
Chemicals Index. These options will first become exercisable four (4) years from the date of grant (February 24,
2007 in the case of Messrs. Leever, Largan, Bolingbroke and Cordani and August 5, 2007 in the case of Mr. Haji).
Mr. Haji resigned as an officer of December 31, 2003 and therefore the options granted to him will be forfeited.
(2) Reflects the exercise price per share on the date of grant. Options granted under the Performance Equity
Plan have an exercise price that is adjusted proportionately based upon the comparative change of the S&P
Specialty Chemicals
Index in relation to the Company's share performance.
(3) Options granted under the Performance Equity Plan have an exercise price which is adjusted based upon
comparative change of the S&P Specialty Chemicals Index. This calculation assumes a 5% annual appreciation of the
S&P Specialty Chemicals Index. Value is reported based on the spread between the exercise price and the market
price on December 31, 2003 of $34.24 per share and the remainder of the option period.
EMPLOYEES PENSION PLAN
The MacDermid Employees Pension Plan (the "Pension Plan") is a qualified
defined benefit plan. Pension payments may be made under the Pension Plan upon
normal retirement commencing when an executive reaches age 60 based upon
credited years of service up to a maximum of 30 years. Annual benefits are
calculated on a single-life annuity basis and are subject to offsets for (i)
amounts based on the value of the executive's interest in the Profit Sharing
Plan as of March 31, 1976, if any, and (ii) 0.45% of the lesser of covered
compensation or final average compensation, as defined by the Internal Revenue
Code (the "Code") Section 401(1), multiplied by the years of service.
Under the MacDermid, Incorporated Supplemental Executive Retirement Plan
(the "Supplemental Plan"), executive officers are entitled to the difference
between the benefits actually paid to them under the Pension Plan and the
benefits which they would have received under the Pension Plan were it not for
certain restrictions imposed under the Code relating to the amount of benefits
payable under the Pension Plan and the amount of annual compensation which may
be taken into account in determining benefits under the Pension Plan.
Assuming that there are no changes in the Pension Plan and that
participants historically have had earnings at least equal to the maximum Social
Security wage base in each year of employment with MacDermid, the following
table illustrates the estimated annual benefit payable for life under the
Pension Plan and the Supplemental Plan to an employee retiring at age 60 on
December 31, 2003 with maximum service under the Plan of up to 30 years. These
benefits do not reflect a Social Security supplement which is payable under the
Pension Plan until the employee reaches age 65.
ESTIMATED ANNUAL PENSION PAYABLE AT NORMAL RETIREMENT
BASED ON YEARS OF SERVICE INDICATED
Final average earnings 10 yrs 15yrs 20 yrs 25yrs 30yrs
------- ------- ------- ------- -------
150,000. . . . . . . . 20,025 30,037 40,049 50,062 60,074
200,000. . . . . . . . 27,525 41,287 55,049 68,812 82,574
250,000. . . . . . . . 35,025 52,537 70,049 87,562 105,074
300,000. . . . . . . . 42,525 63,787 85,049 106,312 127,574
350,000. . . . . . . . 50,025 75,037 100,049 125,062 150,074
400,000. . . . . . . . 57,525 86,287 115,049 143,812 172,574
450,000. . . . . . . . 65,025 97,537 130,049 162,562 195,074
500,000. . . . . . . . 72,525 108,787 145,049 181,312 217,574
600,000. . . . . . . . 87,525 131,287 175,049 218,812 262,574
700,000. . . . . . . . 102,525 153,787 205,049 256,312 307,574
800,000. . . . . . . . 117,525 176,287 235,049 293,812 352,574
900,000. . . . . . . . 132,525 198,787 265,049 331,312 397,574
Covered compensation under the Pension Plan and the Supplemental Plan
includes an employee's annual salary and bonus, which, for the Chief Executive
Officer and five other named officers, is set forth in the Summary Compensation
Table. Messrs. Leever, Cordani, Bolingbroke, Haji and Largan have 24, 17, 11, 0
and 5 years of credited service, respectively, under the Pension Plan.
EQUITY COMPENSATION PLANS
Equity securities of MacDermid have been authorized for issuance under the
MacDermid Special Stock Purchase Plan (the "Special Stock Purchase Plan"), the
MacDermid Stock Option Plan dated July 6, 1998 (the "Stock Option Plan"), the
MacDermid 1995 Equity Incentive Plan (the "Equity Incentive Plan"), the 2001 Key
Executive Performance Equity Plan (the "Performance Equity Plan") and the All
Employee Stock Option Plan (the "All Employee Option Plan"). Each of the
foregoing plans has been approved by MacDermid's shareholders.
The following table provides information with respect to those equity
compensation plans as of December 31, 2003.
Number of securities
Remaining available for
Number of securities to Weighted average future issuance under
Be issued upon exercise Exercise price of equity compensation plans
Plan (1) . . . . . . . Of outstanding options, Outstanding options, (excluding securities
Warrants, and rights Warrants and rights reflected in first column)
----------------------- -------------------- --------------------------
Special Stock
Purchase Plan. . . . . 147,065 $ 4.33/sh 154,435
Equity Incentive
Plan . . . . . . . . . 0 N/A 370,722
Stock Option Plan. . . 1,006,650 $ 41.73/sh 493,350
Performance Equity (2) 2,221,994 $ 23.24/sh 778,006
Plan
All Employee
Option Plan. . . . . . 383,775 $ 17.89/sh 616,225
(1) All of the Company's equity compensation plans have received shareholder
approval.(2)
Under the Performance Equity Plan, the number of options granted is
leveraged against performance goals which depending on performance could change
the number of options granted from 0.5 to 2.0 times the number of options
initially granted. This leveraging aspect is not reflected here.
Compensation of Directors
-------------------------
Directors who are employees of MacDermid received no compensation, other
than their compensation and benefits received as employees. Directors who are
not employees received options to purchase MacDermid common stock, pursuant to
the terms of the Performance Equity Plan and/or restricted stock grants pursuant
to the terms of the 1995 Equity Incentive Plan. The value of the Director
option grants, at the time of the grant, was $40,000 per Director, calculated
using the Black-Scholes method of option valuation. Additional option value or
restricted share value of $10,000, $15,000 or $25,000 is provided to the
directors who serve as committee members, committee chairs or as lead director
respectively. MacDermid also provides $50,000 of group life insurance for each
outside Director, for which it paid a nominal amount in premiums this year.
INDEPENDENT PUBLIC ACCOUNTANTS
In addition to retaining KPMG LLP to audit the consolidated financial
statements for this fiscal year, the Company and its affiliates retained KPMG,
to provide various services in fiscal 2002 and 2003, and expect to continue to
do so in the future. The aggregate fees billed for professional services in
fiscal year, 2002 and 2003 were:
Audit Fees: $773,168 and $726,606 in fiscal years 2002 and 2003
respectively for services rendered for the annual audit of the Company's
consolidated financial statements and the quarterly reviews of the financial
statements included in the Company's Forms 10-Q;
- Tax Preparation and Planning Fees: $756,658 and $575,778 in fiscal years
2002 and 2003 respectively for tax services, including tax planning services and
return preparation services.
All Other Fees: $91,874 for other allowable services during fiscal 2003.
The Audit Committee (or one or more designated members thereof)
pre-approves all auditing and non- auditing services provided by the Company's
outside auditor. The Audit Committee has an audit/non-audit services
pre-approval policy. This policy is available on MacDermid's website at
www.macdermid.com
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of the four directors named below. Each member of the Audit Committee
is an independent director as defined by New York Stock Exchange rules and as
defined by applicable SEC regulations. The Audit Committee has adopted a
written charter which has been approved by the Board of Directors, and which is
set forth on the Company's website (www.macdermid.com). The Audit Committee has
reviewed and discussed the Company's audited financial statements with
management, which has primary responsibility for the financial statements. KPMG
LLP ("KPMG"), the Company's independent auditors are responsible for expressing
an opinion on the conformity of the Company's audited financial statements with
generally accepted accounting principles. The Audit Committee has discussed
with KPMG the matters that are required to be discussed by Statement on Auditing
Standards No. 61 (Communication With Audit Committees)as well as any other
matters deemed material by the Committee or KPMG. KPMG has provided to the
Audit Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
and the Audit Committee discussed with KPMG that firm's independence. The only
services, other than audit and audit related services, provided by KPMG to the
Company during this fiscal year were tax services, which were determined to be
compatible with KPMG's independence. The Committee has determined that each of
its members is independent as that term is used in Item 7(d)(3)(iv) of Schedule
14A.
Based on the considerations referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the last fiscal year.
The Board of Directors has determined that the Audit Committee's Chairman,
Donald Ogilvie, is an audit committee financial expert and meets the
requirements of the Audit Committee Charter through the following education and
experience:
- Mr. Ogilvie holds a B.A. degree from Yale University and an M.B.A. from
Stanford University School of Business.
- As Associate Director of the Office of Management and Budget from
1974-1976, Mr. Ogilvie was responsible for direct oversight of the budgets for
the Departments of Defense and of State as well as the budgets for the U.S.
intelligence community and foreign aid.
- As Associate Director of the Yale University School of Management, Mr.
Ogilvie was responsible for financial, accounting and audit functions.
- Mr. Ogilvie served as Vice President for the Celanese Corporation.
- As President and CEO of the American Bankers Association, Mr. Ogilvie is
responsible for budgeting, accounting and auditing functions, and has frequent
involvement with accounting issues. At the ABA, Mr. Ogilvie has continuous
involvement with accounting and auditing issues as they affect the financial
industry that he serves. Mr. Ogilvie is experienced with regard to audit
committees and their function.
- Mr. Ogilvie has been a director of MacDermid since 1986 and a member of
its Audit Committee since its formation. As a result, Mr. Ogilvie has extensive
knowledge of MacDermid.
In addition to Mr. Ogilvie, Mr. James Smith is also a member of the Audit
Committee. Mr. Smith also has considerable financial expertise including the
following:
- Mr. Smith has an AB degree from Dartmouth College.
- As Treasurer of Webster Bank from 1979-1982, Mr. Smith was directly
responsible for many of its financial functions.
- As CEO of Webster Financial, Mr. Smith has responsibility for the
integrity of Webster's financial operations and reporting.
- Mr. Smith has served on the Audit Committee of the American Banker's
Association.
- As a Director of MacDermid and a member of its Audit Committee since 1994,
Mr. Smith has developed an extensive knowledge of MacDermid.
In view of the foregoing, the Board of Directors has determined that the
Audit Committee has an independent Audit Committee financial expert and
possesses the necessary financial expertise to properly carry out its functions
in accordance with its Charter and all applicable regulations.
The foregoing report is provided by the following independent directors,
who constitute the Audit Committee:
Donald Ogilvie (Chairman)
Robert Ecklin
James Smith
T. Quinn Spitzer
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare, during the five-year period
commencing December 31, 1998 (at the market close) and ending December 31, 2003,
the annual change in the cumulative total return on MacDermid's Common Stock
with the Standard and Poors 500 and the Media General Specialty Chemicals Stock
indices, assuming an investment of $100 on December 31, 1998 (at the market
close) and the reinvestment of any dividends.
FIVE YEAR CUMULATIVE TOTAL RETURN
(Graph)
Past share performance should not be viewed as necessarily indicative
of future performance.
Graph Dollar Values 1998 1999 2000 2001 2002 2003
------------------- ---- ----- ---- ---- ---- ----
MacDermid, Inc. 100 105 49 44 59 89
Standard & Poors 100 121 110 97 76 97
500
Specialty Chemicals 100 97 95 102 85 109
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth information as of December 31, 2003,
(unless otherwise noted) with respect to ownership of common stock by any person
known by MacDermid to be a beneficial owner of more than 5% of its common stock,
by MacDermid's C.E.O. and four other most highly compensated executive officers
and by all Directors and officers of MacDermid as a group. Unless otherwise
noted, each person has sole voting and disposition power with respect to such
person's shares. The total shares of common stock beneficially owned by the
officers includes the right to acquire ownership through exercisable stock
options.
Beneficial Owner Number of Shares Percent
Beneficially Owned of Class
-------------------------------------------------------------------------------
FIVE PERCENT BENEFICIAL OWNERS
MacDermid Employees Profit Sharing, 2,749,769 9.1 % (1)
Pension and Stock Ownership Plans
MacDermid Equipment, Inc. 401(K) Plan
245 Freight Street
Waterbury, Connecticut 06702
Fleet Boston Financial Corporation 1,753,792 5.8 % (2)
100 Federal Street
Boston, Massachusetts 02110
Vanguard/Primecap Fund, Inc. 1,701,000 5.6 % (3)
100 Vanguard Blvd.
Malverne, PA 19355
Daniel H. Leever 2,191,054 7.2 % (4)
c/o MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702
NAMED EXECUTIVE OFFICERS
Daniel H. Leever 2,191,054 (4) 7.2 %
Stephen Largan 208,201 (5) *
Gregory M. Bolingbroke 157,423 (5) *
Salim Haji 50,320 (5) *
John L. Cordani 128,793 (5) *
All Directors, Director
Nominees and Officers 3,300,131 (5) 10.9 %
as a group (13 persons)
-------------------------------------------------------------------------------
*Less than 1% of shares outstanding
(1) 2,356,514 shares in the MacDermid Employees Profit Sharing and Employee
Stock Ownership Plans are beneficially owned by the trustee of the plans,
Charles Schwab Trust Company, and 393,255 shares in the MacDermid, Incorporated
Employees Pension Plan are beneficially owned by the trustee of the plan,
Wachovia Securities. Under the terms of the Profit Sharing Plan and the ESOP,
participants have the right to vote the shares credited to their accounts;
however, the trustee may, in its discretion, vote any shares (including
unallocated shares) not voted by the participants. The trustee of the Pension
Plan may vote all the MacDermid shares beneficially owned thereunder.
(2) The information for Fleet Boston Financial Corporation ("Fleet") is
taken from its Schedule 13G dated December 31, 2003. Fleet has sole voting power
with respect to 703,687 shares, shared voting power with respect to 844,000
shares, sole dispositive power with respect to 812,287 shares and shared
dispositive power with respect to 911,989 shares.
(3) The information for Vanguard Primecap Fund, Inc. is taken from its
Schedule 13G dated December 31, 2003. Vanguard indicates no disposition power
with respect to 1,701,000 shares.
(4) Additional explanation of the shares beneficially owned by Mr. Leever is
provided in the footnotes under Election of Directors.
(5) Includes shares reported by Mr. Leever as provided in the footnotes
under Election of Directors. Also includes 14,975; 1,593; 3,201 and 320 shares
held by Messrs. Bolingbroke, Cordani, Largan and Haji respectively in the
MacDermid Profit Sharing and Employee Stock Ownership Plans, 91,000; 80,000;
111,000 and 50,000 options to purchase shares of MacDermid common stock granted
to Messrs. Bolingbroke, Cordani, Largan and Haji respectively under the
Performance Equity Plan and 50,000, 27,200 and 27,200 options to purchase shares
of MacDermid common stock granted to Messrs. Largan, Bolingbroke and Cordani
respectively under the Stock Option Plan. Also includes options to purchase
42,000; 20,000; and 20,000 shares of common stock pursuant to the Performance
Equity Plan which were granted to Messrs. Largan, Bolingbroke and Cordani in
February 2004.
CORPORATE GOVERNANCE
Board of Directors
------------------
The Board of Directors held four (4) regular meetings during this fiscal
year. Each of the current members of the Board of Directors attended at least
75% of the meetings of the Board and the committees of which they were members.
The Board has Audit, Compensation and Corporate Governance Committees. The
non-management Directors schedule regular executive sessions in which they meet
without management participation. T. Quinn Spitzer is the lead non-management
director. The board of Directors has determined that it is composed of a
majority of independent directors as independence is defined for board members
in the New York Stock Exchange listing standards.
Audit Committee
---------------
The Audit Committee appoints independent auditors, determines the scope of
the audit examination and the independence of the auditors, reviews and approves
non-audit services provided by the auditors, reviews findings and
recommendations of the auditors and management's response thereto and reviews
MacDermid's internal audit function. The Committee had four (4) regular
meetings during the last fiscal year. Members of the Committee are Donald
Ogilvie (Chairman), Robert Ecklin, James Smith and T. Quinn Spitzer. The Audit
Committee Charter is available on the Company's website at www.macdermid.com.
Compensation Committee
----------------------
The Compensation Committee reviews and determines officer compensation. It
administers the Special Stock Purchase Plan, the Stock Option Plan, the Equity
Incentive Plan and the Performance Equity Plan, determining the persons to whom
stock options and restricted shares are to be granted, the number of options or
restricted shares to be granted, the conditions of the grant, and the manner in
which the exercise price shall be payable. The Committee, which met three (3)
times during the last fiscal year, included T. Quinn Spitzer (Chairman), Donald
G. Ogilvie, James C. Smith, Joseph M. Silvestri, and Robert L. Ecklin. The
Compensation Committee Charter is available on the Company's website at
www.macdermid.com.
Corporate Governance Committee
------------------------------
The Corporate Governance Committee reviews and makes recommendations to the
Board with regard to director nominees. Any shareholder wishing to recommend a
nominee to the Board should do so in writing addressed to John L. Cordani,
Secretary, MacDermid, Incorporated, 245 Freight Street, Waterbury, Connecticut
06702-0671. The Corporate Governance Committee also reviews corporate governance
in view of the principles and policies set by the Committee. The Committee
which met three times during this fiscal year is comprised of T. Quinn Spitzer
(Chairman), Robert Ecklin, Donald Ogilvie and James Smith. The Committee
regularly meets outside of the presence of management. The Corporate Governance
Committee Charter and MacDermid's Corporate Governance and Ethics Policies are
available on the Company's website at www.macdermid.com. The members of the
Corporate Governance Committee are independent as independence for nominating
Committee members is defined in the New York Stock Exchange listing standards.
MacDermid has adopted a formal Corporate Compliance and Ethics Policy which
is applicable to all employees, officers, and directors of the Company. The
terms of the Corporate Compliance and Ethics Policy are available on MacDermid's
web site at www.macdermid.com. Any suspected compliance or ethical breaches can
be reported as provided for in MacDermid's Ethics and Compliance Policy.
Shareholder Communication Policy
--------------------------------
The Corporate Governance Committee of the Company has adopted a Shareholder
Communication Policy that provides procedures enabling shareholders to
communicate with Directors. A copy of the policy is posted on the Company's
website at www.macdermid.com. Shareholders are encouraged to communicate with
Directors by following the procedures provided in the policy.
Shareholder Nomination Policy
-----------------------------
The Corporate Governance Committee of the Company has adopted a Shareholder
Nomination Policy that provides procedures enabling shareholders to suggest
individuals to the Corporate Governance Committee for consideration as Director
nominees. A copy of the policy is posted on the Company's website at
www.macdermid.com. Shareholders are encouraged to provide such suggestions by
following the procedures provided in the policy. For any shareholder
recommendation to be considered by the Committee for the 2005 annual shareholder
meeting it must be received by the Company no later than November 15, 2004.
Certain Relationships and
-------------------------
Related Transactions
--------------------
On May 7, 2003, MacDermid agreed to repurchase 2,201,720 shares of common
stock from Citicorp Venture Capital, Ltd. ("CVC"). The Purchase and Sale
Agreement between MacDermid and CVC has been filed with the SEC on Form 8-K.
Joseph M. Silvestri, a partner at CVC, is a director of MacDermid and a member
of its Compensation Committee.
MacDermid has engaged the services of Carmody & Torrance, LLP., a law firm.
John L. Cordani, the Company's Secretary and General Counsel is also a partner
of the firm. Mr. Cordani has no direct or indirect interest in any revenues
earned or received by the firm from MacDermid or its subsidiaries.
ITEM 2.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The independent public accountants for MacDermid for fiscal year 2003 were
KPMG LLP ("KPMG"), which firm has been selected to be MacDermid's auditors for
next fiscal year by the Audit Committee of the Board of Directors, subject to
the ratification of the shareholders. At the Meeting, a representative of KPMG
will have the opportunity to make a statement if he or she wishes to do so and
will be available to answer any appropriate questions that may be asked by
shareholders.
Vote Required
-------------
This proposal shall be approved by a majority of the votes cast at the Meeting
provided a quorum is present. Abstentions are counted in determining the shares
represented at the meeting but broker non-votes are not counted for such
purpose.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
ITEM 3.
-------
PROPOSAL TO APPROVE AN AMMENDMENT TO THE MACDERMID, INCORPORATED 2001 KEY
EXECUTIVE PERFORMANCE EQUITY PLAN
The Board of Directors recommends that the shareholders approve an
amendment to the MacDermid, Incorporated 2001 Key Executive Performance Equity
Plan (the "Executive Plan"). The Board of Directors is asking shareholders to
approve the amendment, for among other reasons to (i) add an additional two (2)
million shares to the shares subject to issuance under the Plan, (ii) to allow
the Committee to use Owner Earnings and/or Earnings Per Share targets as
performance goals under the Plan and (iii) to provide for a fixed exercise price
after the end of the sixth (6th) year following the grant date. A summary of
the principal features of, and material changes to, the Executive Plan is
provided below, but the summary is qualified in its entirety by reference to the
full text of the Executive Plan, which was filed electronically with the
Securities and Exchange Commission with MacDermid's proxy statement for the
Annual Meeting held on July 25, 2001, the amendment to the Executive Plan
adopted at the May 1, 2002 meeting (also filed with the SEC) and the amendment
to the Executive Plan, which is being filed with this proxy statement and is
attached hereto as Appendix A.
On May 21, 2001, the Board of Directors adopted the Executive Plan, which
was approved by the shareholders at the Annual Meeting held on July 25, 2001.
The Executive Plan was amended with shareholder approval at the annual 2002
shareholder meeting. The Executive Plan, as amended, is a performance-based
plan which provides for the ability to grant to directors, officers and other
key employees of MacDermid and its subsidiaries options to purchase Common Stock
under the terms and conditions of the Executive Plan. The Executive Plan
closely aligns the incentive compensation of MacDermid's directors, officers and
key employees with the interests of MacDermid's shareholders, since the amount
of incentive compensation received by such individuals under the Executive Plan
is based upon both (i) MacDermid's earnings performance and (ii) MacDermid's
share price performance relative to other specialty chemical companies. On
February 19, 2004, the Board of Directors adopted amendments to the Executive
Plan, subject to shareholder approval, primarily to accomplish the purposes
noted above. Currently, there are six (6) directors and seventy-five (75)
executives and other key employees world-wide who are eligible to receive option
grants under the Executive Plan. On March 3, 2004, the closing price of
MacDermid Common Stock on the New York Stock Exchange was $38.12 per share.
The following table sets forth the options received by the specified individuals
(groups) under the Executive Plan since the plan's inception:
Individual/Group Options Received (#)
================ ====================
Named Executive Officers
------------------------
Daniel Leever 580,000
Stephen Largan 153,000
Gregory Bolingbroke 111,000
Salim Haji 50,000
John Cordani 100,000
All Current Executive Officers as a Group 994,000
Non Executive Directors
-----------------------
Donald Ogilvie 25,779
James Smith 25,779
Joseph Silvestri 34,914
T. Quinn Spitzer 26,003
Robert Ecklin 25,779
All Current Non Executive Directors as a Group 138,254
Each Associate of any Director or Executive Officer 0
All Non-Executive Employees 1,727,994
Material Changes in the Amendment
As described above, the amendment to the Executive Plan will:
- Add an additional two (2) million shares to the shares subject to issuance
under the Plan thereby increasing the number of shares subject to issuance under
the Executive Plan from three (3) million to a total of five (5) million;
- Allow the Committee to use Owner Earnings and/or Earnings Per Share
targets as performance goals under the Plan; and
- Provide that the exercise price of granted options after the end of the
sixth (6th) year following the grant date be fixed by ceasing the indexing
provided for during the first six (6) years.
The Board of Directors believes that these amendments are appropriate since
(i) the Board wishes to continue to use the Executive Plan to issue options and
the shares subject to issuance under the Executive Plan are nearly exhausted
given the reserve requirements noted below, (ii) the Board believes that it is
appropriate to use Owner Earnings and/or Earnings Per Share as performance
targets, and (iii) the Board believes that it is appropriate to fix (i.e. cease
the annual index adjustment of) the exercise price after the end of the first
six (6) years of indexing in order to not encourage market timing by the
grantees in their decision to exercise. It should be noted that the Executive
Plan provides for a potential multiplier (generally from 0.5 to 2) that applies
to the granted number of options. The determination of the applicable
multiplier is made at the end of the four (4) year vesting period based upon the
Company's owner earnings and/or earnings per share performance during the
vesting period. The potential multiplier therefore requires that the Committee
reserve an adequate number of ungranted options under the plan to cover the
effect of the potential multiplier.
Administration
The Executive Plan is administered by a committee of not fewer than two
members of the Board of Directors (the "Committee"), each of whom must be a
"Non-Employee Director' within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, and an "outside director" within the meaning
of Section 162(m)(4)(C)(i) of the Code. The Committee is the Compensation
Committee of the Board of Directors. The Committee may adopt such rules and
regulations as it may deem desirable for administration of the Executive Plan.
Shares Available; Awards
Under the Executive Plan, as amended herein, options may be granted to
purchase an aggregate amount of up to five million (5,000,000) shares of Common
Stock. Such shares may be treasury shares or may be authorized and unissued
shares. As of March 3, 2004, 274,006 shares remain available for grants of
awards under the Executive Plan, not including the additional two (2) million
shares pursuant to this amendment. Under the Executive Plan, key employees as
designated by the Committee, officers and directors are eligible to receive
awards, provided that in no event shall any individual be granted options during
any single calendar year to acquire more than 1 million shares of Common Stock.
The option exercise price will be the fair market value of MacDermid's Common
Stock at the time the option is granted, adjusted annually based upon the
comparative performance of the S&P Specialty Chemicals index or another index
chosen by the Committee. The exercise price will be fixed after the end of the
first six (6) years of any option grant. Options will normally vest at the end
of four (4) years after the date of grant in an amount equal to the amount of
the initial grant, multiplied by an option multiple or fraction determined by
the Committee. The option multiple or fraction will be based upon the
cumulative percentage growth in Owner Earnings and/or Earnings per share during
the four year vesting period. Owner Earnings is a measure of free cash flow
generated by the business and equals the net cash flow generated from
operations, less the net capital expenditures incurred by MacDermid during the
corresponding period.
The period for exercising an option (the "Exercise Period") will begin on
the date the option vests, which will generally be four (4) years after the date
of grant, and will end ten (10) years after the date of grant. Unless
specifically determined otherwise by the Committee, the Exercise Period will
automatically terminate ninety (90) days after the optionee ceases to be
employed by MacDermid on a full-time basis for any reason, other than retirement
at normal retirement age (or as otherwise determined by the Committee). Full
payment for shares purchased, together with the amount of any tax or excise due
in respect of the sale and issuance thereof, will be paid at the time of
exercise of an option.
In the event that an optionee retires from MacDermid upon normal retirement
at or after the age of sixty (60) (or as otherwise determined by the Committee),
during the four year vesting period, the optionee will be deemed (solely for
vesting purposes under this plan) to have remained employed by MacDermid from
the date of such retirement or termination until the end of the four year
vesting period. At such time, in the case of a retiree, the Exercise Period
will commence, and will end ten (10) years after the date of grant. In the case
of an optionee terminated by MacDermid without Cause during the four (4) year
vesting period, the Exercise Period will commence upon vesting on the date of
such termination and will automatically terminate (90) days later. Regardless
of the multiplier formula determined by the Committee, in no event will the
multiplier applicable in the case of an optionee terminated without Cause exceed
one (1), and the options will vest only in a prorated manner, with 25% of such
options vesting for each year lapsed between the grant date and the date of
termination without Cause.
In the event of a Reorganization (as defined below) or a change of Control
(as defined in the Executive Plan, as amended), all options then outstanding and
unvested shall immediately vest and become exercisable.
Transferability
Unless specifically determined otherwise by the Committee, options granted
under the Executive Plan are not assignable or transferable by a participant
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined under the Code or Title 1 of the
Employee Retirement Income Security Act of 1974 or the rules thereunder.
Amendment, Suspension or Termination
The Board may amend, suspend or terminate the Executive Plan or any portion
thereof at any time provided that (a) no such action will be taken which impairs
the rights of any participant under any outstanding option without such
participant's consent and (b) no amendment will be made without shareholder
approval if such approval is necessary to comply with any tax or regulatory
requirement.
Adjustments of Awards
In the event that MacDermid's outstanding shares of Common Stock are
increased or decreased as the result of a stock dividend, stock split,
recapitalization or other similar event, the number of shares available for
issuance under the Executive Plan may be adjusted to the extent the Committee
deems appropriate to preserve the rights of the participants.
In addition, if MacDermid reclassifies or exchanges outstanding shares of
Common Stock, consolidates or merges with or into another corporation or
otherwise recapitalizes or reorganizes (other than with a subsidiary controlled
by MacDermid) or sells or conveys to another corporation all or substantially
all of MacDermid's assets (each a "Reorganization"), the Committee will have the
right to substitute in any previously granted options the same or similar kind
and amount of securities and/or property which the participant would have been
able to acquire if the participant had exercised such option immediately before
the first of such Reorganizations and continued to hold such securities and
property which came to that participant as a result of that and subsequent
Reorganizations, less all securities and property to be surrendered in
connection with such Reorganization.
Federal Income Tax Consequences
Non-qualified Options. A person who is granted a non-qualified option
under the Executive Plan will not have taxable income on the date of grant
unless the option has a readily ascertainable fair market value at that time.
Generally, there is no such readily ascertainable fair market value for these
options. The holder of a non-qualified option granted under the Executive Plan
that does not have taxable income on the date of grant will be deemed to have
received compensation income on the date of exercise equal to the difference
between the option exercise price and the fair market value of the shares on the
date of exercise. The optionee's basis in such shares will be increased by the
amount which is deemed compensation income. For the year in which such an
option is exercised, MacDermid will be entitled to a deduction equal to the
amount the optionee is required to include in his or her income as compensation,
provided MacDermid satisfies its reporting requirements. When the optionee
disposes of such shares, he or she will recognize capital gain or loss in an
amount equal to the difference between the amount realized on disposition and
the basis in the shares (as increased by the amount of compensation income
previously realized by the optionee). Any capital gain on an optionee's
disposition of shares that are held for more than 12 months will be subject to
federal tax at the long-term capital gain rate. Any capital gain on an
optionee's disposition of shares held for 12 months or less will be subject to
tax as the short-term capital gain.
Incentive Stock Options. As in the case of a non-qualified option, the
optionee recognizes no taxable income upon the grant of an incentive stock
option. Unlike a non-qualified option, however, the optionee will not recognize
compensation income upon the exercise of an incentive stock option, and no
corresponding expense deduction will be available to MacDermid. Generally, if
an optionee holds shares acquired upon the exercise of an incentive stock option
until the later of (i) two years from the grant of the option and (ii) one year
from the date of transfer of the purchased shares to him or her (the "Statutory
Holding Period"), any gain recognized by the optionee on a subsequent sale of
the shares will be treated as long-term capital gain subject to tax at a maximum
long-term capital gain rate. The federal income tax effect on the holder of
incentive stock options is to defer, until the purchased shares are sold,
taxation of any increase in the shares' value from the time of grant to the time
of exercise.
If the optionee sells shares acquired upon the exercise of an incentive
stock option prior to the expiration of the Statutory Holding Period, he or she
will recognize taxable income at ordinary income tax rates in an amount equal to
the lesser of (i) the fair market value of the shares on the date of exercise
less the option price, or (ii) the amount realized on the date of sale less the
option price. Subject to Section 162(m) of the Code, MacDermid will be entitled
to a corresponding expense deduction. Any excess of the amount realized by the
optionee on disposition over the fair market value of the shares at the time of
exercise will be treated as short-term capital gain, and taxed at ordinary
rates.
For purposes of the "alternative minimum tax" applicable to individuals,
the exercise of an incentive stock option is treated in the same manner as the
exercise of a non-qualified stock option. Thus, in the year of option exercise,
an optionee generally must include in his or her alternative minimum taxable
income the difference between the option exercise price and the fair market
value of the shares on the date of exercise. The amount of adjusted net
alternative minimum tax paid in any taxable year is available as a credit
against regular tax in future years.
Compensation Deduction. Section 162(m) of the Code provides a $1 million
limit for deductions of MacDermid with respect to the compensation of its Chief
Executive Officer and four other most highly compensated executive officers.
Stock options (whether non-qualified stock options or incentive stock options
treated as non-qualified stock options by reason of the disposition of the
underlying incentive stock prior to the end of the Statutory Holding Period)
will be excluded from this limitation provided that the exercise price of the
option is equal to the fair market value of MacDermid's shares subject to the
option on the date of grant, and certain other requirements relating to the
composition of the Compensation Committee and shareholder approval of the
Executive Plan are met.
The foregoing discussion does not take into account any changes in the Code
or the regulations thereunder which may occur after the date of this Proxy
Statement, and is only a summary of the material Federal income tax consequences
of option awards and exercises under the Executive Plan; it is not intended to
be all inclusive or to constitute tax advice, and does not cover possible
foreign, state or local tax consequences. Each participant has been and is
encouraged to seek the advice of a qualified tax advisor regarding the tax
consequences of participation in the Executive Plan.
Future Awards
The amount of the awards to be granted in the future to current or future
participating directors and executive officers will be decided at the time they
are granted and cannot be determined at this time. Actual amounts will depend
on a number of factors, including an individual's potential contribution to the
business, compensation practices at the time, retention issues and MacDermid's
stock price. MacDermid believes that, had the amendment been in effect in
fiscal 2003, the amount of awards under the Executive Plan would not have been
materially different.
Vote Required
Approval of the amendment to the Executive Plan will require the
affirmative vote of the holders of a majority of the votes cast by holders of
Common Stock present in person or represented by proxy at the Annual Meeting.
Abstentions are considered shares of stock present in person or represented by
proxy at the Annual Meeting and entitled to vote and are counted in determining
the number of votes necessary for a majority. An abstention therefore will have
the practical effect of voting against adoption of the amendment to the
Executive Plan. Broker non-votes are not considered shares present in person or
represented by proxy and entitled to vote on the amendment to the Executive Plan
and will have no effect on the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" APPROVAL
AND ADOPTION OF THE AMENDMENT
TO THE EXECUTIVE PLAN.
ITEM 4
PROPOSAL TO AMEND THE MACDERMID, INCORPORATED
1995 EQUITY INCENTIVE PLAN
The Board of Directors recommends that the shareholders approve certain
amendments (the "Amendments") to the MacDermid, Incorporated 1995 Equity
Incentive Plan (the "Plan") intended to provide the Committee with additional
discretion in granting restricted stock awards. The Board of Directors has
determined that this additional discretion is necessary to properly utilize the
Plan. The Board of Directors of the Company adopted the proposed Amendments,
subject to shareholder approval, at a board meeting held on February 19, 2004.
The Board of Directors is of the opinion that the Plan has been of
significant importance and benefit to the Company and its shareholders in
enabling the Company to attract and retain officers and other key employees and
in aligning their interests with the interests of the shareholders. In the view
of the Board of Directors, the proposed Amendments will enable the Company to
continue to realize the benefits of the restricted stock grants made under the
Plan.
A summary of the proposed Amendments is sent forth below, followed by a
description of the terms of the Plan. The full text of the amended Plan is
annexed to this proxy statement as Exhibit B, and the summary is qualified in
its entirety by reference to Appendix B.
Shares subject to the Plan
--------------------------
The Plan as originally approved by the stockholders at the July 20, 1995
Annual Meeting of Shareholders provided for 50,000 shares of Common stock to be
available for issuance under the Plan. An amendment at the 1997 shareholder's
meeting revised the foregoing number to 300,000. A subsequent 3 for 1 split in
the Common Stock increased the number of shares available to 900,000.
Material Changes in the Amendment
---------------------------------
The amendment to the Plan deletes the requirement that a restricted share
grant be tied to a participant's annual bonus, if applicable. The Board has
determined that this restriction is no longer advisable since situations
frequently arise where restricted share grants would be appropriate separate and
apart from annual bonus payments. For example, restricted share grants may be
used to provide special recognition for a particular accomplishment, for
director compensation, or as replacement for certain non-qualified retirement
obligations. As a result, the Board recommends that the restrictions tying
grants to bonuses be deleted and that the Compensation Committee be given
discretion to provide grants without these restrictions. At March 3, 2004,
there were 368,910 shares remaining in the Plan for restricted stock grants.
The following table sets forth the restricted shares received by the
specified individuals (groups) under the 1995 Equity Incentive Plan since the
Plan's inception:
Restricted Shares
==================
Individual/Group. . . . . . . . . . . . . . . . . . Received(#)
=================================================== ==================
Named Executive Officers
---------------------------------------------------
Daniel Leever . . . . . . . . . . . . . . . . . . . 119,673
Stephen Largan. . . . . . . . . . . . . . . . . . . 0
Gregory Bolingbroke . . . . . . . . . . . . . . . . 5,175
Salim Haji. . . . . . . . . . . . . . . . . . . . . 0
John Cordani. . . . . . . . . . . . . . . . . . . . 5,029
All current Executive Officers as a group . . . . . 129,877
Non-Executive Directors
---------------------------------------------------
Donald Ogilvie. . . . . . . . . . . . . . . . . . . 1,055
James Smith . . . . . . . . . . . . . . . . . . . . 704
Joseph Silvestri. . . . . . . . . . . . . . . . . . 259
T. Quinn Spitzer. . . . . . . . . . . . . . . . . . 3,201
Robert Ecklin . . . . . . . . . . . . . . . . . . . 1,974
All current Non-Executive Directors as a group. . . 7,193
Each Associate of any Director or Executive Officer 0
All Non-Executive Employees . . . . . . . . . . . . 399,401
Summary of the Plan
-------------------
The principal provisions of the Plan are summarized below. This summary is
qualified in its entirety by reference to the Plan, a copy of which is attached
hereto as Exhibit B.
The Plan is administered by a committee of not fewer than two members of
the Board of Directors (the "Committee"), each of whom must be a "non-employee
director" within the meaning of Rule 16b-3(c) under the Securities Exchange Act
of 1934, as amended ("Rule 16b-3") and an "outside director" within the meaning
of section 162(m)(4)(c)(i) of the Internal Revenue Code (the "Code"). The
Committee is the Compensation Committee of the Board of Directors. The
Committee may adopt such rules and regulations as it may deem desirable for
administration of the Plan.
Under the Plan, as amended, restricted shares may be granted for an
aggregate, subject to certain adjustments, of up to 900,000 shares of Common
Stock. Such shares may be treasury shares or may be authorized and unissued
shares. Not more than 50,000 restricted shares may be issued under the Plan in
any one year. On March 3, 2004, the closing price of a share of MacDermid stock
was $38.12. A participant who is awarded restricted stock will have no rights
with respect to such award unless the participant accepts the award by written
instrument delivered to the Company. Subject to certain exceptions, all shares
of restricted stock issued under the Plan must be held and cannot be sold or
otherwise transferred by the participant (except to MacDermid for the price paid
therefor) for a period of four (4) years from the date of the award. In its
sole discretion, the Committee may waive the restrictions against transfer
applicable to the shares prior to the expiration of the four (4) year period.
Under the Plan the Committee will select the appropriate individuals who
will participate. Subject to the provisions of the Plan, the Committee will
then determine the size of the award of restricted stock ("Restricted Stock"),
the conditions under which the award will be made, the purchase price to be
paid, and the restrictions to be placed upon the shares. A participant will
have all the rights of a stockholder with respect to the Restricted Stock
awarded to him or her including voting and dividend rights, subject to any
applicable restrictions on transfer and MacDermid repurchase rights, and subject
to any other conditions contained in the award.
If a participant's employment by MacDermid is terminated for any reason
other than death, retirement in accordance with MacDermid's qualified pension
plan at or after attainment of age sixty (60), permanent disability or
involuntary termination without cause while the participant holds shares which
are subject to restrictions on transfer imposed by the Plan, the participant is
required, at MacDermid's option, to sell such shares to MacDermid for the price
he or she paid for the shares. However, if a participant's employment is
terminated due to death or permanent disability any restrictions on the transfer
of shares held by the participant pursuant to the Plan will lapse and such
shares may be freely transferred.
If a participant's employment by MacDermid is terminated by retirement in
accordance with MacDermid's qualified pension plan at or after attainment of age
sixty (60) while the participant holds shares which are subject to restrictions
on transfer imposed by the Plan, the participant will be required to sell such
shares to MacDermid for the price paid therefor if the Committee, determines
that the participant has engaged in misconduct, or if the participant competes
with MacDermid within the restriction period. If the employment of a holder of
shares of Restricted Stock is terminated due to involuntary termination without
cause, while the shares are subject to restrictions, the restrictions on such
shares will be deemed to have lapsed in annual installments of twenty-five (25)
percent on the first anniversary of the date of award of such shares and
twenty-five (25) percent on each of the next three anniversaries of such date.
Provision is made in the Plan for waiver of restrictions, at the discretion of
the Committee.
In the event that MacDermid's outstanding shares of Common Stock are
increased or decreased as the result of a stock dividend, stock split,
recapitalization or other similar event, the number of shares available for
issuance under the Plan may be adjusted to the extent the Committee deems
appropriate, with the approval of counsel, to preserve the rights of the
participants.
In addition, if MacDermid reclassifies or exchanges outstanding shares of
Common Stock, consolidates or merges with or into another corporation or
otherwise recapitalizes or reorganizes (other than with a subsidiary controlled
by MacDermid), or sells or conveys to another corporation all or substantially
all of MacDermid's assets (each a "Reorganization"), a Plan participant will
have the right upon receipt of shares pursuant to an award to acquire the same
kind and amount of securities and property which the participant would have been
able to acquire if the participant had received such shares immediately before
the Reorganization. In addition, the Committee will have the right in
connection with any Reorganization to terminate all outstanding awards and/or to
remove restrictions from some or all outstanding shares of restricted stock.
If any person or entity owns or acquires, directly or indirectly, shares of
the capital stock of MacDermid entitled to cast 25% or more of the votes to be
cast generally in an election of directors (other than any such shares owned or
acquired by any qualified employee benefit plan maintained by MacDermid), all
restriction imposed on any shares of Common Stock issued pursuant to the Plan
will immediately lapse unless all members of the Board, who were members before
such event and who comprise a majority of the Board of Directors, determine
otherwise by unanimous vote.
The Board of Directors may amend, suspend, or terminate the Plan except
that no action may be taken which impairs participants' rights under outstanding
awards without their consent and no amendment may be made without shareholder
approval where such approval is required under Rule 16b-3. The Committee may
substitute new awards for awards previously granted to participants.
Federal Income Tax Consequences
-------------------------------
A recipient of Restricted Stock generally will be subject to tax at
ordinary income rates on the fair market value of the stock at the time the
stock is no longer subject to forfeiture, less any amount paid for the stock.
However, a recipient who makes an election under Section 83(b) of the Code
within 30 days of the date of issuance of the Restricted Stock will realize
ordinary income on the date of issuance equal to the fair market value of the
shares of Restricted Stock at that time (measured as if the shares were
unrestricted and could be sold immediately), less any amount paid for the stock.
If the election is made, no taxable income will be recognized when the shares
subject to the election are no longer subject to forfeiture. If the shares
subject to the election are forfeited, the recipient will not be entitled to any
deduction, refund or loss for tax purposes with respect to amounts previously
included in income. Subject to the limitations of Section 162(m) of the Code,
MacDermid, in general, will be entitled to a deduction equal to the amount of
income recognized by the recipient in respect of the transfer of the shares of
Restricted Stock. The holding period to determine whether the recipient has
long-term or short-term capital gain or loss upon sale of the shares after the
forfeiture period has expired begins when the restriction period expires (or
upon earlier issuance of the shares, if the recipient elected immediate
recognition of income under Section 83(b) of the Code).
The choice of individuals who will participate in the Plan is subject to
the discretion of the Committee. In addition, any award made is subject to
acceptance by the participant in accordance with its terms. As a result, it is
not possible to indicate at this time the specific awards which may be received
hereafter by any individual participant or groups of participants under the
Plan.
Vote Required
-------------
Approval of the amendment to the Plan will require the affirmative vote of
the holders of a majority of the votes cast by holders of Common Stock present
in person or represented by proxy at the Annual Meeting. Abstentions are
considered shares of stock present in person or represented by proxy at the
Annual Meeting and entitled to vote and are counted in determining the number of
votes necessary for a majority. An abstention therefore will have the practical
effect of voting against adoption of the amendment to the Executive Plan.
Broker non-votes are not considered shares present in person or represented by
proxy and entitled to vote on the amendment to the Executive Plan and will have
no effect on the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" APPROVAL AND
ADOPTION OF THE AMENDMENT TO THIS PLAN
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement relating to the
2005 annual meeting must comply in all respects with the rules and regulations
of the Securities and Exchange Commission and be received at MacDermid's
principal executive offices at 245 Freight Street, Waterbury, Connecticut
06702-0671 no later than November 15, 2004. Such proposals should be addressed
to the attention of John L. Cordani, Secretary.
MISCELLANEOUS
The Board of Directors knows of no matters other than those referenced in
the Notice of Annual Meeting which are to be brought before the Meeting.
However, if any other matters are properly presented, it is the intention of the
persons named in the Proxy to vote the Proxy in accordance with their best
judgment.
It is important that proxies be returned prior to the Meeting.
Shareholders are urged to sign and date the enclosed Proxy and promptly return
it in the enclosed envelope.
March 15, 2004 The Board of Directors
MacDermid, Incorporated will provide without charge, to any shareholder,
upon written request, a copy of its Annual Report on Form 10-K to the Securities
and Exchange Commission for the fiscal year ended December 31, 2003. Such
request should be directed to John L. Cordani, Secretary, MacDermid,
Incorporated, 245 Freight Street, Waterbury, Connecticut 06702-0671.
APPENDIX A
----------
MACDERMID, INCORPORATED
2001 KEY EXECUTIVE PERFORMANCE EQUITY PLAN
Dated May 21, 2001
1. Purposes.
------------
The purposes of the MacDermid, Incorporated 2001 Key Executive Performance
Equity Plan (the "Plan") are (i) to enable MacDermid, Incorporated and its
subsidiary corporations (hereinafter referred to, unless the context otherwise
requires, as the "Company") to grant to its key employees, officers, and
directors the means to acquire a proprietary interest in the Company, in order
that such persons will have additional long term financial incentives to
contribute to the Company's growth and profitability; (ii) to enhance the
ability of the Company to attract and retain in its employ and service
individuals of outstanding ability upon whom the success of the Company will
depend; and (iii) to align the interests of the Company's directors, officers,
and key employees with those of its shareholders.
2. Administration.
------------------
The Plan shall be administered by a committee of not fewer than two members
of the Board of Directors (the "Committee") appointed by the Board of Directors
of the Company (the "Board"). Each member of the Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3(b) under the Securities
Exchange Act of 1934, as amended (the "Act") and an "outside director" within
the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Committee may adopt such rules and regulations as it
may deem necessary or advisable for the administration of the Plan, provided
however that the Committee shall have no authority to take any action if the
authority to take such action, or the taking of such action, would disqualify
the Plan from the exemption provided by Rule 16b-3 under the Act or any
successor provision.
3. Grant of Awards.
-------------------
Subject to the terms and provisions of the Plan, options to purchase shares
of Common Stock of the Company shall be granted on behalf of the Company by, and
at the discretion of, the Committee. Subject to the terms of the Plan, the
Committee may place restrictions on options granted, as the Committee deems
appropriate. The Committee, from time to time within the limits of the Plan,
shall determine the persons to whom options are to be granted, the number of
shares to be optioned, the manner in which the option price shall be payable and
other conditions and limitations applicable to the exercise of the options.
Options granted under the Plan may be either incentive stock options, within the
meaning of Section 422 of the Code, or non-qualified stock options. Each option
granted under the Plan shall be designated by the Committee at the time the
option is granted as either an incentive stock option or a non-qualified stock
option, provided, however, that in no event shall any individual be granted
options during any single calendar year to acquire more than 1 million shares of
Common Stock of the Company.
4. Shares Subject to the Plan.
-------------------------------
Subject to adjustment as provided herein, an aggregate of three
five ( 3 5,000,000) shares of the Common Stock of the Company (the
"Common Stock"), shall be available for issuance pursuant to options granted
under the Plan. Such shares may be authorized and unissued shares or shares held
in the Company's treasury. All shares subject to options that shall have
terminated or shall have been forfeited in whole or in part or canceled for any
reason (other than by surrender for cancellation upon any exercise of all or
part of such options) shall be available for issuance pursuant to options
granted subsequently under the Plan.
5. Participants.
----------------
Key employees, as designated by the Committee, officers, and directors of
the Company shall be eligible to receive options and thereby become participants
in the Plan. Receipt of an option shall in no way be deemed to constitute a
contract or promise of continued employment by the Company or appointment to the
Board.
6. Option Price.
----------------
The price per share at which Common Stock may be purchased upon exercise of
an option under the Plan shall be the fair market value of such shares at the
time the option is granted, adjusted annually on such date as determined by the
Committee for the first six (6) years after the date of option grant based upon
----------------------------------------------------------
the S&P Specialty Chemicals Index, or such other index as determined by the
Committee. For purposes of the Plan, "fair market value" shall mean the average
closing price of the Company's Common Stock on the final five (5) trading days
preceeding the date of grant. The exercise price of any option grant, after the
-------------------------------------------------
first six (6) years of annual adjustment as provided for above, shall be fixed
------------------------------------------------------------------------------
and no further index based adjustments will be made for the remainder of the
----------------------------------------------------------------------------
option period.
--------------
7. Right to Exercise.
---------------------
Except as otherwise provided in Sections 11 and 12 of this Plan, subject to
the Company attaining Owner Earnings and/or Earnings Per Share targets
-------------------------
established by the Committee, options granted under the Plan will first become
exercisable by the grantee, or 'vest,' at the end of the four (4) year period
commencing on the date of grant, provided that in the case of employees the
grantee remains in the continuous employ of the Company from the date of grant
to the end of the four (4) year vesting period. Notwithstanding the foregoing,
in the event that a grantee retires from the employ of the Company upon normal
retirement at or after the age of sixty (60), (or as otherwise determined by the
Committee), during the four (4) year vesting period, the grantee shall be
deemed, solely for purposes of the foregoing sentence and the second sentence of
Section 8 hereof, to have remained in the continuous employ of the Company on a
full time basis from the date of such retirement until the end of the four (4)
year vesting period. Provided further that if a grantee is terminated without
Cause (as defined herein) during the four (4) year vesting period then the
options shall vest, in a prorated manner, on the date of termination without
Cause and the grantee must exercise, if at all, such vested options only within
ninety (90) days from the date of termination without Cause. The amount of
vested options shall generally be determined by multiplying the amount of
options specified in the option grant by a multiplier based upon the Company's
cumulative Owner Earnings growth and/or Earnings Per Share growth during
the four (4) year vesting period. The specific multiplier formula and applicable
Owner Earnings and/or Earnings Per Share targets shall be determined by
the Committee for each grant, provided, however, that, regardless of the
multiplier formula determined by the Committee, in no event shall the multiplier
applicable in the case of a grantee whose employment is terminated by the
Company without Cause exceed the number one (1). In the case of a grantee whose
employment was terminated without Cause during the four (4) year vesting period,
options will vest on a prorated basis with 25% of the options vesting for each
year from the grant date to the date of termination without Cause. For
purposes of this Plan, (a) 'Owner Earnings' shall mean the net cash flow
----
generated from operations of the Company, less net capital expenditures during
the corresponding period, or such other calculation as determined by the
Committee, (b) Earnings Per Share shall be as defined by U.S. generally
accepted accounting principles with such adjustments for extra ordinary items as
determined by the Committee in its discretion , and ( c ) a grantee
shall be deemed to have been terminated by the Company without Cause in the
event of any involuntary termination by the Company other than a termination for
any one or more of the following reasons:
(i) the grantee is convicted of or pleads guilty or nolo contendere to any
crime constituting a felony (other than an offense related to the operation of
an automobile that results only in a fine or other non-custodial penalty) or
involving dishonesty or moral turpitude;
(ii) the grantee engages in any activity that amounts to negligence and that
significantly and adversely affects the business affairs or reputation of the
Company;
(iii) the grantee willfully fails to perform his or her duties or performs
such duties in a grossly negligent manner, which failure or performance
continues for twenty (20) days after written notice from the Company to the
grantee specifying such failure or performance;
(iv) the grantee violates the Company's standard policies, or violates the
law, and such violation creates a substantial liability (actual or potential)
for the Company.
8. Exercise Period.
-------------------
Subject to Section 12, the period for exercising an option (the "Exercise
Period") shall begin on the later of (i) the date such option vests, as
determined in accordance with this Plan, and (ii) the date of approval of the
Plan by the Company's shareholders, and shall end ten (10) years after the date
of grant. Notwithstanding the foregoing, unless specifically determined
otherwise by the Committee, the Exercise Period shall automatically terminate
ninety (90) days after the grantee ceases to be employed by the Company on a
full time basis, for any reason other than normal retirement at or after the
attainment of age sixty (60) (or as otherwise determined by the Committee).
9. Payment for Shares and Related Matters.
------------------------------------------
Full payment for shares purchased pursuant to the exercise of an option
granted under this Plan, together with the amount of any tax or excise due in
respect of the sale and issue thereof, shall be paid at the time of such
exercise and shall be made in cash or by certified or bank cashier's check or,
in the discretion of the Committee, in whole or in part by delivery of shares of
Common Stock of the Company having a fair market value at the date of such
delivery (determined in a manner approved by the Committee) of not less than the
amount for which payment is being made by delivery of the shares. The Company
shall issue no certificates for shares until (a) full payment therefore has
been made and (b) the participant purchasing such shares provides for payment
to (or withholding by) the Company of all amounts required under then applicable
provisions of the Code and state and local tax laws to be withheld with respect
to such purchase, and a participant shall have none of the rights of a
stockholder until certificates for the shares purchased are issued to him or
her.
10. Nontransferability.
------------------------
Unless specifically determined otherwise by the Committee, no option shall
be assignable or transferable by a participant otherwise than by will or by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title I of
the Employee Retirement Income Security Act of 1974, or the rules thereunder.
Each option shall be exercisable during the lifetime of a participant only by
such participant, except that, if permissible under applicable law, an option
may also be exercised by the guardian or legal representative of a participant.
11. Effect of Changes in Common Stock.
--------------------------------------
In the event that the outstanding shares of Common Stock of the Company are
increased or decreased as a result of a stock dividend, stock split,
recapitalization or other means having the same effect, the number of shares
available for issuance under the Plan, the number of shares issuable pursuant to
any outstanding option, and the exercise price of any option outstanding under
the Plan, shall be adjusted as the Committee shall deem appropriate, in its sole
discretion, to preserve unimpaired the rights of the participants. All
determinations made by the Committee hereunder shall be conclusive and binding
upon the participants.
12. Effect of Reorganizations or Change of Control.
---------------------------------------------------
In case of any one or more reclassifications, changes or exchanges of
outstanding shares of Common Stock (other than as provided in Section 11) or
consolidations of the Company with, or mergers of the Company into, other
corporations, or other recapitalizations or reorganizations (other than
consolidations with a subsidiary in which the Company is the continuing
corporation and which do not result in any reclassifications, changes or
exchanges of outstanding shares of Common Stock), or in case of any one or more
sales or conveyances to another corporation of the property of the Company as an
entirety, or substantially as an entirety, any and all of which are hereinafter
in this Section called "Reorganizations," the Committee shall have the right to
substitute in any previously granted options, the same or similar kind and
amount of securities and/or property which any participant would then have if
such participant had exercised such option immediately before the first of any
such Reorganizations and continued to hold all securities and property which
came to such participant as a result of that and subsequent Reorganizations,
less all securities and property surrendered or cancelled pursuant to any of
same, the adjustment rights in Section 11 and this Section being continuing and
cumulative. In any such event, such options may be exercised or converted, to
the extent permitted by their terms, prior to or simultaneously with the
consummation of such Reorganization. In connection with a Reorganization or in
the event of a change of control (as hereinafter defined), all of the options
granted under the Plan and then outstanding shall become fully exercisable
notwithstanding any provision of the Plan or the applicable option agreement(s)
to the contrary. In such event, the amount of Owner Earnings and/or Earnings
Per Share assumed for option vesting purposes shall be the maximum Owner
Earnings and/or Earnings Per Share targets then in effect under the Plan.
The Committee, in its discretion, shall determine the appropriate index to
establish the exercise price for such options, and shall consider the potential
economic loss to participants in making such determination to preserve the
rights of the participants.
For purposes of this Plan, a "Change of Control" means (i) the acquisition
by any person or group (within the meaning of Section 13 (d)(3) or 14(d)(2) of
the Act), except for an employee benefit plan sponsored by the Company, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of 50% or more of (A) the outstanding shares of Common Stock of the
Company, or (B) the combined voting power of the then outstanding voting
securities of the Company that are entitled to vote generally in the election of
directors, or (ii) individuals who as of January 1, 2002 are members of the
Board (or directors whose subsequent nomination or election was approved by a
vote of at least a majority of such incumbents, but excluding any individual
whose initial assumption of office occurs as a result of an actual or threatened
solicitation of proxies or consents other than by the Board to which Regulation
14A promulgated under the Act applies, or other actual or threatened
solicitation of proxies or consents other than by the Board) cease for any
reason to constitute a majority of the Board.
13. Effective Date of Plan.
---------------------------
Subject to the approval of the shareholders of the Company, the Plan shall
be effective on May 21, 2001. Prior to such approval, options may be granted
under the Plan expressly subject to such approval. In the event that the
shareholders do not approve the Plan within twelve months after its adoption,
then the Plan and each option, if any, granted thereunder, shall be null and
void.
14. Amendment and Termination; Modification.
--------------------------------------------
The Board by resolution at any time may amend, suspend or terminate the
Plan, provided that (i) no such action shall be taken which impairs the rights
of any participant under any outstanding option, without such participant's
consent, and (ii) no amendment shall be made without shareholder approval if
such approval is necessary to comply with any applicable tax or regulatory
requirement, including any requirements for exemptive relief under Section 16(b)
of the Act, or any successor provision. The Committee may substitute new
options for, or modify the terms of, options previously granted to participants,
including, without limitation, previously granted options having higher exercise
prices, provided that no such action shall be taken which impairs the rights of
any participant under any outstanding option, without such participant's
consent.
15. Section 16 Exemption.
-------------------------
The Committee shall take all reasonable measures to qualify for the
exemption provided by Rule 16b-3 of the Act, the grant and exercise of options
to acquire Common Stock by the Plan participants who are subject to Section 16
of the Act. The Committee and the Board shall have no authority to take any
action if the authority to take such action, or the taking of such action, would
disqualify the Plan from the exemption provided by Rule 16b-3 under the Act, and
any successor provision.
16. Interpretation.
-------------------
The interpretation and construction of any provision of the Plan and the
adoption of rules and regulations for administering the Plan shall be made by
the Committee. Determinations made by the Committee with respect to any matter
or provision contained in the Plan shall be made in the Committee's sole
discretion and shall be final, conclusive and binding upon the Company and upon
all participants, their heirs and legal representatives. Any rule or regulation
adopted by the Committee (whether under the authority of this Section or Section
2 above) shall remain in full force and effect unless and until altered, amended
or repealed by the Committee.
APPENDIX B MACDERMID, INCORPORATED
----------
1995 EQUITY INCENTIVE PLAN
1. Purposes. The purposes of the MacDermid, Incorporated 1995 Equity
---------
Incentive Plan (the "Plan") are (a) to enable MacDermid, Incorporated and its
subsidiary corporations (hereinafter referred to, unless the context otherwise
requires, as the "Company") to provide to its employees the means to acquire a
proprietary interest in the Company, in order that such persons will have
additional financial incentives to contribute to the Company's growth and
profitability, and (b) to enhance the ability of the Company to attract and
retain individuals of outstanding ability upon whom the success of the Company
will depend. The Plan is intended to accomplish these goals by enabling the
Company to grant awards ("Awards") in the form of restricted stock, all as more
fully described below.
2. Administration. The Plan shall be administered by a committee of not
---------------
fewer than two members of the Board of Directors of the Company (the "Board).
Each member of the Committee shall be a "non-employee director" within the
meaning of Rule 16B-3(c) under the Securities Exchange Act of 1934, as amended
(the "Act") and an "outside director" within the meaning of Section
162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the "Code")
and applicable Treasury regulations thereunder. The Committee may adopt such
rules and regulations as it may deem necessary or advisable for the
administration of the Plan. The Committee shall have no authority to take any
action if the authority to take such action, or the taking of such action, would
disqualify the Plan from the exemption provided by Rule 16b-3 under the Act or
any successor provision.
3. Participants. All officers, directors and employees of the Company shall
------------ -----------------------
be eligible to receive Awards and thereby become participants in the Plan. In
granting Awards the Committee may include or exclude previous participants in
the Plan as the Committee may determine. Receipt of an Award shall in no way be
deemed to constitute a consent to or promise of continued employment by the
Company.
4. Shares Subject to the Plan. Subject to adjustment as provided herein, an
--------------------------
aggregate of up to 900,000 shares of the Common Stock, without par value per
share (the "Common Stock"), shall be available for issuance under the Plan. Such
shares may be authorized and unissued shares or shares held in the Company's
treasury. If any Award in respect of shares of Common Stock is forfeited for any
reason or settled in a manner that results in fewer shares of Common Stock
outstanding than were initially awarded, including without limitation the
surrender of shares of Common Stock in payment of any tax obligation on the
Award, the shares of Common Stock subject to such Award or so surrendered, as
the case may be, to the extent of such forfeiture or decrease, shall again be
available for award under the Plan.
5. Grant of Awards.
----------------
(a) Subject to the provisions of the Plan, the Committee may award shares
of restricted stock to a participant under the Plan. A restricted stock Award
entitles the recipient to acquire, for a purchase price equal to or exceeding
par value, shares of Common Stock subject to the restrictions described in
Section 6 below ("Restricted Stock"). A maximum of 50,000 shares of Restricted
Stock may be awarded by the Committee in any year.
(b) Subject to the provisions of the Plan, the Committee shall determine
the persons to whom Awards are to be granted, the size of the Award and all
other terms and conditions of the Award provided however, that in the case of
a Plan participant who is also then a participant in a Company annual bonus
plan, any Award granted by the Committee to such participant shall be comprised
of:
(i) That number of shares of Restricted Stock having a fair market value
as of the date of the Award, as determined in good faith by the Committee equal
to twenty (20) percent of the annual bonus payout awarded to the participant
under the applicable bonus plan (such Award to be in lieu of payment of the
allocable bonus amount); plus
(ii)The additional number of shares, if any, which the Committee in its
sole discretion determines is appropriate to award to the participant for long
term compensation and which is a fraction or multiple of the number of shares
awarded to the participant under the immediately preceding clause (i), provided,
further, however, that in no event shall the fair market value of shares awarded
to any participant under the preceding clauses (i) and (ii) exceed in any year
one hundred (100) percent of the annual bonus payout awarded to the participant
under the applicable bonus plan.
6. Terms of Restricted Stock.
--------------------------
(a) A participant who is granted a Restricted Stock Award will have no
rights with respect to such Award unless the participant accepts the Award by
written instrument delivered or mailed to the Company accompanied by payment in
full of the specified purchase price, if any, of the shares covered by the
Award. Payment may be by certified or bank check or other instrument acceptable
to the Committee.
(b) A participant who receives Restricted Stock will have all rights of a
stockholder with respect to the Stock, including voting and dividend rights,
subject to the restrictions described in this Section 6 and any other conditions
imposed by the Committee at the time of grant. If the Committee determines so,
certificates evidencing shares of Restricted Stock will remain in the possession
of the Company until (i) such shares are free of all restrictions under the
Plan, and (ii) the participant provides for payment to (or withholding by) the
Company of all amounts, if any, required under then applicable provisions of the
Code and state and local tax laws to be withheld with respect to the issuance of
such shares to the participant.
(c) Except as otherwise specifically provided by the Plan, Restricted
Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or
disposed of, except to the Company (if the Company agrees to purchase the
shares) for an amount equal to the price paid for the shares, for a period of
four (4) years from the date of issuance pursuant to an Award; provided,
however, that the Committee in its sole discretion may determine from time to
time for any reason to waive in whole or in part the restrictions applicable to
any shares prior to the expiration of such four (4) year period.
(d) If the employment of a holder of shares of Restricted stock is
terminated for any reason other than death, retirement in accordance with the
Company's qualified pension plan at or after attainment of age sixty (60),
permanent disability or involuntary termination without cause, while the shares
are subject to the restrictions described in the immediately preceding
paragraph, the holder shall be required to sell such shares to the Company for
the price paid therefor by the holder, and all rights of the holder with respect
to such shares shall be immediately canceled, unless the Company declines in
writing to purchase the shares.
(e) If the employment of a holder of shares of Restricted Stock is
terminated for retirement in accordance with the Company's qualified pension
plan at or after attainment of age sixty (60), and the Committee, at any time
while the shares are subject to the restrictions described in paragraph (c)
above, determines that the holder, either before or after termination of the
holder's employment by the Company, (i) has committed an act of misconduct for
which he or she could have been discharged for cause by the Company, or (ii) has
engaged directly or indirectly, in competition with the Company, whether as an
officer, employee, agent, proprietor or otherwise of, or by having any material
investment or other material interest in, any business that involves in whole or
in part any product or device similar to or competitive with any product or
device sold by the Company during the employment of the holder or under active
development by the Company at the time of the holder's cessation of employment,
the holder shall be required to sell such shares to the Company for the price
paid therefor by the holder, and all rights of the holder with respect to such
shares shall be immediately canceled, unless the Company declines in writing to
purchase the shares.
(f) If the employment of a holder of shares of Restricted Stock is
terminated due to involuntary termination without cause, while the shares are
subject to the restrictions described in paragraph (c) above, the restrictions
on such shares shall be deemed to have lapsed in annual installments as follows:
twenty-five (25) percent on the first anniversary of the date of award of such
shares and twenty-five (25) percent on each of the next three anniversaries of
such date (reduced in the event of any resulting fraction to the next lowest
whole number).
(g) If the employment of a holder of shares of Restricted Stock is
terminated due to death or permanent disability, while the shares are subject to
the restrictions described in paragraph (c) above, the restrictions on such
shares shall lapse as of the date of such event, and the holder shall be free to
dispose of the shares without further restriction.
(h) The restrictions imposed under this Section 6 shall apply as well to all
shares or other securities issued in respect of shares in connection with any
stock split, reverse stock split, stock dividend, recapitalization,
reclassification, spin-off, split-off, merger, consolidation or reorganization.
Any stock certificate issued in respect of shares awarded under the Plan shall
be registered in the name of the participant, and shall bear an appropriate
legend referring to the terms, conditions and restrictions applicable to such
shares.
7. Conditions to Effectiveness of the Plan. The Plan shall not become
----------------------------------------
effective, and any Awards granted under the Plan shall not be effective, unless
and until the Plan shall have been duly approved by the shareholders of the
Company.
8. Amendment and Termination. The Board by resolution at any time may amend,
-------------------------
suspend or terminate the Plan, provided that (a) no such action shall be taken
which impairs the rights of any participant under any outstanding Award, without
such participant's consent, and (b) no amendment shall be made without
shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement, including any requirements for
exemptive relief under Section 16(b) of the Act, or any successor provision.
9. Effect of Changes in Common Stock. If the Company shall combine,
----------------------------------
subdivide or reclassify the shares of Common Stock which have been or may be
awarded under the Plan, or shall declare thereon any dividend payable in shares
of Common Stock, or shall take any other action of a similar nature affecting
the Common Stock, then the number and class of shares of stock as to which
Awards may thereafter be granted (in the aggregate and to any participant) shall
be appropriately adjusted and, in the case of each Award outstanding at the time
of any such action, the number and class of shares subject to such Award shall
likewise be appropriately adjusted, all to such extent as may be determined by
the Committee in its sole discretion, with the approval of counsel, to be
necessary to preserve unimpaired the rights of the participant. Each and every
such determination shall be conclusive and binding upon the participants.
10. Effect of Reorganizations. In case of any one or more
--------------------------
reclassifications, changes or exchanges of outstanding shares of common Stock or
other stock (other than as provided in Section 11), or consolidations of the
Company with, or mergers of the Company into, other corporations, or other
recapitalizations or reorganizations (other than consolidations with a
subsidiary in which the Company is the continuing corporation and which do not
result in any reclassifications, changes or exchanges of shares of the Company),
or in case of any one or more sales or conveyances to any other corporation of
the property of the Company as an entirety, or substantially as an entirety, any
and all of which are hereinafter in this Section called "Reorganizations," a
participant shall have the right, upon any subsequent receipt of shares pursuant
to an Award, to acquire the same kind and amount of securities and property
which such participant would then have if such participant had received such
shares immediately before the first of any such Reorganizations and continued to
hold all securities and property which came to such participant as a result of
that and subsequent Reorganizations, less all securities and property
surrendered or canceled pursuant to any of the same, the adjustment rights in
Section 9 and this Section 10 being continuing and cumulative.
Notwithstanding any provision of Section 6 or any foregoing provision of
this Section 10 to the contrary, the Committee shall have the right in
connection with any Reorganization, upon not less than thirty (30) days' written
notice to the participants, to terminate all outstanding Awards. In connection
with such termination, the Committee in its discretion, prior to the effective
date of the reorganization, may remove the restrictions from some or all
outstanding shares of Restricted Stock.
11. Change in Control. In the event that at any time after the effective
------------------
date of the Plan the Company shall have a "Principal Stockholder," as
hereinafter defined, then notwithstanding anything to the contrary contained
herein, upon the date such event occurs, all restrictions imposed pursuant to
Section 6 with respect to shares shall immediately lapse, unless the Board by
unanimous vote of members who served as directors before such event and who
constitute at least fifty-one (51) percent of the Board determines otherwise.
For purposes of this Section 11, (a) the term "Principal Stockholder" means
any corporation, person or other entity ("person") owning beneficially, directly
or indirectly, shares of the capital stock of the Company entitled to cast
twenty-five percent (25%) or more of the votes at the time entitled to be cast
generally in the election of Directors by all of the outstanding shares of all
classes of capital stock of the Company (other than any such shares held by any
qualified employee benefit plan maintained by the Company), considered for
purposes of this Section 11 as one class; (b) in determining such ownership, a
person shall be deemed to be the beneficial owner of any shares of capital stock
of the Company which are beneficially owned, directly or indirectly, by any
other person (i) with which it or its "affiliate" or "associate," as hereinafter
defined, has any agreement, arrangement or understanding for the purposes of
acquiring, holding, voting or disposing of capital stock of the company or (ii)
which is its "affiliate" or "associate;"(c) a person shall be deemed to be an
"affiliate" of, or affiliated with, a specified person if such person directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified; and (d) the term
"associate" used to indicate a relationship with any person shall mean (A) any
corporation or organization (other than the Company or any subsidiary of the
Company) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity security, (B) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, and (C) any relative or spouse of such person,
or any relative of such spouse, who has the same home as such person.
12. General Provisions.
-------------------
(a) Notwithstanding any other provision of the Plan, to the extent
required to qualify for the exemption provided by Rule 16b-3 under the Act, and
any successor provision, any Common Stock or other equity security offered under
the Plan to a person subject to Section 16 of the Act may not be sold for at
least six months after acquisition.
(b) Each Award under the Plan shall be evidenced by a writing delivered to
the participant specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the Plan as
the Committee considers necessary or advisable to achieve the purposes of the
Plan or comply with applicable tax or regulatory laws and accounting principles.
(c) The terms of each Award need not be identical, and the Committee need
not treat participants uniformly. Except as otherwise provided by the Plan or a
particular Award, any determination with respect to an Award may be made by the
Committee at the time of award or at any time thereafter.
(d) No Award may be transferred other than by will or by the laws of
descent and distribution.
(e) When a participant purchases Restricted Stock pursuant to an Award for
a price equal to the par value of the Restricted Stock, the Committee in its
discretion may determine that such price has been satisfied by past services
rendered by the participant.
13. Interpretation. The interpretation and construction of any provision of
---------------
the Plan and the adoption of rules and regulations for administering the Plan
shall be made by the Committee. Determinations made by the Committee with
respect to any matter or provision contained in the Plan shall be final,
conclusive and binding upon the Company and upon all participants, their heirs
and legal representatives. Any rule or regulation adopted by the Committee
(whether under the authority of this Section or Section 2 above) shall remain in
full force and effect unless and until altered, amended or repealed by the
Committee.
APPENDIX C
----------
Front
PROXY MACDERMID, INCORPORATED PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders
April 27, 2004 at 3:00 P.M.,EDT
at MacDermid, Incorporated
245 Freight Street, Waterbury, Connecticut 06702.
The undersigned hereby constitutes and appoints DANIEL H. LEEVER or his
designee, attorney and proxy to act on behalf of the undersigned at said meeting
and at any adjournment thereof (the "Meeting"), with authority to vote on the
following matters all shares of stock which the undersigned would be entitled to
vote at the Meeting if personally present as directed on the reverse side hereof
with respect to the items set forth in the accompanying Proxy Statement and in
his discretion upon such other matters as may properly come before the Meeting.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY VOTING INSTRUCTION CARD
IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
Reverse
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
A vote FOR items 1 through 4 is recommended by the Board of Directors.
1. Election of Directors
Nominees: Daniel H. Leever, Donald G. Ogilvie, James C. Smith, Joseph M.
Silvestri, T. Quinn Spitzer and Robert L. Ecklin.
FOR WITHHOLD FOR ALL (Except Nominee(s)
[ ] [ ] [ ] written below)
2. Ratification of the appointment of KPMG L.L.P. as
Independent Accountants for the fiscal year ended December 31, 2004.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the proposed amendment for the 2001 Key Executive Performance
Equity Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Approval of the proposed amendment to the 1995 Equity Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, upon any other matters as may properly come before
the meeting.
AUTHORITY AUTHORITY ABSTAIN
GRANTED WITHHELD
[ ] [ ] [ ]
This proxy, when properly executed, will be voted in the manner directed herein
by the stockholder. If no direction is made, this proxy will be voted FOR the
above matters.
Dated:____________________,2004
Signature(s)_____________________________
_____________________________
NOTE:Please sign exactly as name appears hereon. For joint accounts
both owners should sign. When signing as executor, administrator,
attorney, trustee, guardian, corporate officer, etc., please give
your full title.
[Space is provided for a mailing label containing
the shareholder's name, address, account number,
CUSIP number, sequence number and number of shares.]