SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or 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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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4) Date Filed:
MACDERMID
Incorporated
245 Freight Street
Waterbury, CT. 06702-0671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 1, 2002
The Annual Meeting of Shareholders of MacDermid, Incorporated
("MacDermid") will be held at the Mattatuck Museum, 144 West Main Street,
Waterbury, CT. on Wednesday, May 1, 2002 at 2:00 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; and
2. To consider and act upon proposed amendments to the MacDermid,
Incorporated 2001 Key Executive Performance Equity Plan.
3. To consider and act upon the ratification of the appointment of KPMG
L.L.P. as independent accountants for 2002; and
4. 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 4, 2002
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 all your proxies
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 John L. Cordani
March 22, 2002 Corporate Secretary
(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, no matter how large or small
your holdings may be.
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") 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 the Mattatuck Museum, 144 West Main Street, Waterbury, CT.
on Wednesday, May 1, 2002 at 2:00 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, Corporate 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 for the election of the nominees for directors named
below, and 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 $4,000, 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 or by telephone or telegram.
Votes will be counted by employees of The Bank of New York of New York, New York
the Corporation's transfer agent. MacDermid currently anticipates that John L.
Cordani, the Corporate 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 4, 2002 are entitled to notice of and to vote at the Meeting. On that
date there were 32,251,303 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 22, 2002. MacDermid's Annual
Report to Shareholders, containing financial statements for the fiscal year
ended December 31, 2001, accompanies these proxy materials to each shareholder.
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 to serve as a Director. If at the time of the Meeting a nominee
should be unable to stand for election, it is the intention of the persons
granted the Proxies to vote in their discretion for such 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
1,770,769 shares - 5.5% (1)
Member of the Executive and Nominating Committees
Age: 53
DONALD G. OGILVIE - Mr. Ogilvie has been
Executive Vice President of the American
Bankers Association 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 - Executive Vice President of American Bankers Association
Director since 1986
18,057 shares - *(2) (3)
Member of the Audit (Chairman), Compensation, Executive and Nominating
Committees.
Age: 59
JAMES C. SMITH Mr. Smith is Chairman of
the Board and Chief Executive Officer of
Webster Financial Corporation and its subsidiary,
Webster Bank of Connecticut. From prior to 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
29,685 shares - * (2) (3)
Member of the Audit, Compensation, Executive and Nominating Committees.
Age: 53
JOSEPH M. SILVESTRI Mr. Silvestri has been a Vice President
of Citicorp Venture Capital Ltd. since 1995. He is a member of the
boards of directors and compensation committees of Triumph
Group, Inc, a manufacturer and distributor of aircraft components,
Euramax, a fabricator of aluminum and steel products and ISG
Resources, a manufacturer of building products. Mr. Silvestri is
also a director of Delco Remy, a manufacturer of automotive parts.
Mr. Silvestri also serves on the Boards of Directors of a number of
private corporations. Mr. Silvestri has a BS degree from
Pennsylvania State University and an MBA degree from Columbia
Business School.
Principal occupation - Vice President of Citicorp Venture Capital Ltd.
Director since 1999
164,424 shares - * (2) (3)
Member of the Audit, Compensation, Executive and Nominating Committees.
Age: 40
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 as 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 Boards of Directors
of a number of organizations, including the National Alliance of Business.
Principal Occupation - Partner, McHugh Consulting
Director since 2000
14,773 shares - *(2) (3)
Member of the Audit, Compensation (Chairman), Executive and Nominating
Committees
Age: 53
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 Executive
Vice 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, Pittsburgh Corning Europe as well as several service
organizations, including the Alliance For Manufacturing and
Technology for the Southern Tier, the Committee of 50, Alfred
Technology Resources, National Alliance of Business 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
6,279 shares - *(2) (3)
Member of the Audit, Compensation, Executive and Nominating Committees.
Age: 63
* Indicates less than 1% of the outstanding shares of Common Stock.
Notes to Election of Directors
(1) Includes 147,316 shares held by MacDermid's Profit Sharing and Employee
Stock Ownership plans (reported as of December 31, 2001), 462,065 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 170,000 shares which may be acquired upon the exercise of options granted
under the 2001 Key Executive Performance Equity Plan. Also includes 10,020
shares which are subject to restrictions on transfer until May 14, 2002 under
the terms of the MacDermid 1995 Equity Incentive Plan. Includes 6,387 shares
held in trust by Mr. Leever for his son and 3,128 shares owned by his spouse, as
to all of which Mr. Leever disclaims beneficial interest. Also includes 67,989
shares held by a certain trust established by Mr. Harold Leever, for which Mr.
Daniel Leever is co-trustee and 92,055 shares held by the Leever Foundation,
Inc., over which Mr. Leever holds voting power. Options to purchase 160,000
shares of MacDermid common stock pursuant to the terms of the 2001 Key Executive
Performance Equity Plan were granted to Mr. Leever on February 26, 2002 but are
not included in the foregoing total.
(2) Owner has sole voting power.
(3) Includes director's premium options granted under the MacDermid,
Incorporated Stock Option Plan of 2,295; 2,295; 3,501; 1,527 and 0 for Messrs.
Ogilvie, Smith, Silvestri, Spitzer and Ecklin, respectively and options granted
under the 2001 Key Executive Performance Equity Plan to purchase 5,779; 5,779;
7,789; 6,003; and 5,779 for Messrs. Ogilvie, Smith, Silvestri, Spitzer and
Ecklin, respectively.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation in the fiscal year ended December 31, 2001.
EXECUTIVE COMPENSATION
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,
2001, 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.
MacDermid 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. The Comparator Group differed from the
group of companies included in the Media General Specialty Chemical stock index
used in the Comparative Stock Performance graph on page 19. The Media General
Specialty Chemical stock index, which consists of approximately 70 companies, is
too unwieldy to use for compensation purposes because of the large number of
companies and their disparate compensation practices. The Comparator Group is
not used in the performance graph principally because of the need to maintain
consistency in the indices or peer groups used in the 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.
Executives, other than the Chief Executive Officer, were eligible to
receive incentive bonuses pursuant to MacDermid's Short-Term Executive Incentive
Compensation Plan, the purpose of which is to motivate executives to use their
best efforts to enhance shareholder value through improvements in MacDermid's
financial performance. The Committee uses a formula in determining the amount
of the executive incentive bonus. The formula utilizes one or more of the
following three factors: (i) the increase in earnings per share (the "EPS
Change"), (ii) the return on sales ("ROS") and/or (iii) the return on equity
("ROE"). The factors may be measured on corporate or group performance. The
amount of incentive bonus that is actually paid to corporate executive officers
is subject to adjustment by the Committee based upon individual performance.
During the fiscal year ended December 31, 2001, 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.
"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" - 130,000 Restricted Shares Awarded 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. During the fiscal year the Compensation Committee
awarded 130,000 shares of restricted stock to John P. Malfettone, subject to his
appointment and acceptance of the office of Chief Financial Officer of
MacDermid. These restricted shares were granted to Mr. Malfettone partially as
compensation for equity incentives he forfeited upon leaving his former employer
to accept a position at MacDermid.
"Performance Equity Plan" -282,000 Options Awarded to Executive 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 170,000; 50,000; 31,000; and 31,000 shares of
MacDermid common stock to Messrs. Leever, Boehner, Largan and Bolingbroke
respectively.
The Committee believes that the Plans allow executive officers to
participate in the enhancement of shareholder value.
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 this 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
$5,144 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. For this fiscal year,
the two year average growth in earnings per share was zero and the resulting
factor was zero. 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 170,000 shares of MacDermid common
stock pursuant to the terms of the Performance Equity Plan during this 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 pays 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 this 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.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table summarizes annual, long-term and other
compensation paid by MacDermid for each of its two previous fiscal years ended
March 31, 2001 and its 9 month fiscal year ended December 31, 2001 to
MacDermid's Chief Executive Officer and its other officers.
Annual Compensation Long-Term
Compensation Awards
----------------------- -----------------------------------------
Securities
Other Restricted Underlying All
Name and Salary Bonus Annual Stock Options/ Other
Principal Compensation Awards SARs Compensation
Position Year ($) ($) ($) ($) (#) (1) ($) (2)
--------------------------------------------------------------------------------------------------------
Daniel H. Leever Dec.2001 - 293,222 - - 170,000 1,141,497
Chairman, President 2001 - 541,500 - - - 3,195,446
and Chief Executive 2000 - 427,500 - - - 6,753,317
Officer
Stephen Largan Dec.2001 162,500 75,000 - - 31,000 9,188
Vice President 2001 148,340 30,000 - - 10,000 4,025
2000 139,706 30,000 - - 40,000 1,849
Gregory M. Dec.2001 105,000 - - - 31,000 51,350
Bolingbroke 2001 122,167 30,000 - - 10,000 100,008
Vice President, 2000 102,500 30,000 - - 10,000 4,902
Treasurer and
Controller
Richard Boehner Dec.2001 83,308 - - - 50,000 -
Vice President 2001 - - - - - -
2000 - - - - - -
(1) Awarded in fiscal year indicated. Awards listed include options to purchase 170,000; 50,000;
31,000; and 31,000 shares of MacDermid Common Stock for Messrs. Leever, Boehner, Largan and Bolingbroke
respectively, which options were granted pursuant to the Performance Equity Plan.
(2) Amounts shown for this fiscal year include deemed compensation, which arose from
restrictions lapsing on certain optioned shares exercised in previous years under the MacDermid
Incorporated Special Stock Purchase Plan, in the amount of $1,121,924 in respect of Mr. Leever; and
$40,325 in respect of Mr. Bolingbroke. Amounts listed for this fiscal year also include payments by
MacDermid of premiums for split dollar life insurance in the amount of $3,823 on behalf of Mr. Leever;
and Company contributions to the E.S.O.P. in the amounts of $5,250; $3,675; and $3,063 on behalf of
Messrs. Leever, Bolingbroke, and Largan respectively. The above-named executive officers did not
receive contributions to the Profit Sharing Plan for this fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to the aggregate
number of unexercised options held by the Chief Executive Officer and the named
officers as of December 31, 2001.
Value of
Number of Securities Unexercised
Underlying In-the-money
Shares Acquired Unexercised Options at
on Exercise Value Options at FY- FY-end ($)
During Fiscal 2001 Realized end (#) Exercisable/ Exercisable/
Name # $ (1) Unexercisable Unexercisable
--------------------------------------------------------------------------------------------
Daniel H. Leever 0 - 962,065/170,000 $ 5,672,301/0
Stephen Largan 0 - 50,000/31,000 0/0
Gregory M. Bolingbroke 0 - 17,500/10,000 0/0
Richard Boehner 0 - 0/ 50,000 0/0
(1) Value is reported as the spread between the exercise price and the market price on
December 31, 2001 of $16.90 per share.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 2001 by the Company to each of
the named executive officers:
Percent of
Number of Total Potential Realizable
Shares Options Value at Assumed
Underlying Granted Rates of Stock Price
Options to all Exercise Appreciation For
Granted employees Price Expiration Option Term (2)
Name (#) (1) in F.Y. 2001 ($/Share) Date 5% 10% $
------------------------------------------------------------------------------------------------
Daniel H. Leever 170,000 16.0% $ 16.66 8/6/11 1,778,260 4,513,500
Stephen Largan 31,000 2.9% $ 16.66 8/6/11 324,260 823,050
Gregory M.
Bolingbroke 31,000 2.9% $ 16.66 8/6/11 324,260 823,050
Richard Boehner 50,000 4.7% $ 16.66 8/6/11 523,000 1,327,500
(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 comparitive
change of the S&P Specialty Chemicals Index.
(2) Calculated based upon the average closing price of MacDermid common stock on the five
trading days preceding the date of grant.
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, 2001 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 20,265 30,398 40,531 50,664 60,796
200,000 27,765 41,648 55,531 69,414 83,296
250,000 35,265 52,898 70,531 88,184 105,798
300,000 42,765 64,148 85,531 106,914 128,296
350,000 50,265 75,398 100,531 125,664 150,796
400,000 57,765 86,648 115,531 144,414 173,296
450,000 65,265 97,898 130,531 163,164 195,796
500,000 72,765 109,148 145,531 181,914 218,296
600,000 87,765 131,648 175,531 219,414 263,296
700,000 102,765 154,148 205,531 258,914 308,296
800,000 117,765 178,648 235,531 294,414 353,296
900,000 132,765 199,148 265,531 331,914 398,296
Covered compensation under the Pension Plan includes an employee's annual
salary and bonus, which, for the Chief Executive Officer and four other named
officers, is set forth in the Summary Compensation Table. Messrs. Leever,
Largan, Bolingbroke, and Boehner have 22, 3, 9, and 1 years of credited service,
respectively, under the Pension Plan.
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,
as well as other accounting and consulting firms, to provide various consulting
services in fiscal 2001, and expect to continue to do so in the future. The
aggregate fees billed for professional services in this fiscal year for these
various services were:
Audit Fees: $205,625 for services rendered for the annual audit of the
Company's consolidated financial statements for this fiscal year and the
quarterly reviews of the financial statements included in the Company's Forms
10-Q;
All Other Fees: $369,635 for tax services, including tax planning services
and return preparation and for non-financial statement audit services,
consisting primarily of due diligence procedures associated with mergers and
acquisitions and ISO consulting services.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of the five directors named below. Each member of the Audit Committee
is an independent director as defined by New York Stock Exchange rules. The
Audit Committee has adopted a written charter which has been approved by the
Board of Directors, and which is set forth in Appendix A of this Proxy
-----------
Statement. 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).
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 Audit Committee also considered whether KPMG's
provision of non-audit services to the Company and its affiliates is compatible
with KPMG's independence.
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 this fiscal year and that
KPMG be appointed independent auditors for the Company for the fiscal year ended
December 31, 2002. The foregoing report is provided by the following
independent directors, who constitute the Audit Committee:
Joseph Silvestri (Chairman)
Donald Ogilvie
James Smith
T. Quinn Spitzer
Robert L. Ecklin
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare, during the five-year period
commencing December 31, 1996 (at the market close) and ending December 31, 2001,
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 the investment of $100 on December 31, 1996 (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 1996 1997 1998 1999 2000 2001
-------------------------------------------------------
MacDermid, Inc. 100 310 430 452 209 188
Standard & Poors 500 100 133 171 208 188 166
Specialty Chemicals 100 118 104 100 99 107
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth information as of December 31, 2001,
(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.
Number of Shares
Beneficially Percent
Owned of Class
FIVE PERCENT BENEFICIAL OWNERS
---------------------------------------------------------------------
Citigroup, Inc. 4,446,461 13.8% (1)
399 Park Avenue
New York, New York 10043
MacDermid Employees Profit Sharing, 3,072,684 9.5% (2)
Pension and Stock Ownership Plans
MacDermid Equipment, Inc. 401(K) Plan
245 Freight Street
Waterbury, Connecticut 06702
Fleet Boston Financial Corporation 1,914,960 5.9% (3)
100 Federal Street
Boston, Massachusetts 02110
Ruthann Leever 1,704,826 5.3% (4)
366 Guilds Hollow Road
Bethlehem, CT. 06751
Vanguard/Primecap Fund, Inc. 1,701,000 5.3% (5)
P.O. Box 2600
Valley Forge, PA 19482
Daniel H. Leever 1,770,769 5.5% (6)
c/o MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702
NAMED EXECUTIVE OFFICERS
---------------------------------------------------------------------
Daniel H. Leever 1,770,769 (6) 5.5%
Stephen Largan 86,618 (7) *
Gregory M. Bolingbroke 75,119 (7) *
Richard L. Boehner 50,000 (7) *
All Directors, Director Nominees 1,984,562 (7) 6.1%
and Officers as a group (8 persons)
*Less than 1% of shares outstanding
(1) The information for Citigroup is taken from its Schedule 13D dated
March 4, 2002. Total includes 3,411,796 shares beneficially owned by Citicorp
Venture Capital Ltd. ("CVC") and 1,034,665 shares held by affiliates of CVC, to
which CVC disclaims beneficial ownership.
(2) 2,662,699 shares in the MacDermid Employees Profit Sharing and Employee
Stock Ownership Plans and 16,730 shares in the MacDermid Equipment Company
401(K) Plan are beneficially owned by the trustee of the plans, First Union
National Bank, and 393,255 shares in the MacDermid, Incorporated Employees
Pension Plan are beneficially owned by the trustee of the plan, First Union
National Bank. 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.
(3) The information for Fleet Boston Financial Corporation ("Fleet") is
taken from its Schedule 13G dated February 14, 2002. Fleet has sole voting power
with respect to 1,653,671 shares, sole dispositive power with respect to 1
,059,082 shares and shared dispositive power with respect to 845,830 shares.
(4) Includes 1,047,853 shares held in trust for which Ms. Leever and Fleet
are co-trustees; 264,310 shares held by Ms. Leever as executrix of the estate of
Harold Leever; 92,055 shares held by the Leever Foundation, for which Ms. Leever
is a director holding voting power; and 35,519 shares held in the MacDermid
Profit Sharing and Employee Stock Ownership Plans, for which Ms. Leever
disclaims beneficial ownership.
(5) The information for Vanguard Primecap Fund, Inc. is taken from its
Schedule 13G dated February 11, 2000.
(6) Additional explanation of the shares beneficially owned by Mr. Leever
is provided in the footnotes under Election of Directors.
(7) Includes 1,618; 12,671; and 0 shares which are held by Messrs. Largan,
Bolingbroke, and Boehner, respectively, in the MacDermid Profit Sharing and
Employee Stock Ownership Plans (reported as of December 31, 2001) as well as
5,029 shares held by Mr. Bolingbroke which are subject to restrictions on
transfer under the terms of the MacDermid, Incorporated 1995 Equity Incentive
Plan; options to purchase 50,000; and 27,200 shares of MacDermid common stock
granted to Messrs. Largan and Bolingbroke respectively,under the Stock Option
Plan; and options to purchase 31,000; 31,000 and 50,000 shares of MacDermid
common stock granted to Messrs. Largan, Bolingbroke and Boehner respectively,
under the Equity Performance Plan.
INTERESTS OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS AND FAMILY RELATIONSHIPS
During this fiscal year, the Company engaged the services of Carmody &
Torrance, a law firm in which Mr. John L. Cordani, MacDermid's Secretary, is a
partner. The Company paid $746,932 for legal services rendered by Carmody &
Torrance during the fiscal year.
ADDITIONAL INFORMATION RELATING TO
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four (4) regular meetings during this fiscal
year. Each of the current members of the Board of Directors attended all of the
meetings of the Board and the committees of which they were members. The Board
has Audit, Compensation, Executive and Nominating Committees.
The Audit Committee recommends independent auditors, reviews 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 met two (2) times during
this fiscal year. Members of the Committee during this fiscal year were Donald
G. Ogilvie, James C. Smith, Joseph M. Silvestri (Chairman), T. Quinn Spitzer,
Jr., and Robert L. Ecklin.
The Compensation Committee reviews and makes recommendations to the Board
with respect to officer compensation and 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 this
fiscal year, included T. Quinn Spitzer, Jr. (Chairman), Donald G. Ogilvie, James
C. Smith, Joseph M. Silvestri, and Robert L. Ecklin.
The Executive Committee may exercise, subject to limitations prescribed by
law, those powers assigned to it by the Board of Directors. The Committee,
which did not meet during this fiscal year, includes all members of the Board of
Directors.
The Nominating 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 Committee, which met once during this fiscal year, included
Daniel H. Leever, Donald G. Ogilvie, James C. Smith, Joseph M. Silvestri, T.
Quinn Spitzer, Jr. and Robert L. Ecklin.
Directors who are employees of MacDermid received no compensation in
addition to their salaries and benefits received as employees. Directors who
are not employees or former employees were paid $1,000 for each meeting of the
Board attended, $15,000 in options under the Stock Option Plan, $150 for each
committee meeting attended not coincident with a meeting of the Board, a
quarterly cash retainer of $750, and an annual retainer of $8,000, payable in
shares of MacDermid Common Stock. Directors are given a choice to receive cash
and/or MacDermid Common Stock portions of their compensation in the form of
options to purchase MacDermid Common Stock. Going forward all directors have
chosen to take all compensation in the form of MacDermid stock and options.
MacDermid provided up to $50,000 group term life insurance for each outside
director, for which it paid a nominal amount in premiums during this fiscal
year.
Item 2.
Proposal to Approve an Amendment 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 preserve MacDermid's federal
income tax deduction for compensation paid to its "covered employees" under
Section 162(m) of the Internal Revenue Code (the "Code"). 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, and the amendment to the Executive Plan, which is being
filed with this proxy statement and is attached hereto as Appendix B.
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, 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 to
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
relative to other specialty chemical companies. On February 26, 2002, the Board
of Directors adopted amendments to the Executive Plan, primarily to clarify
those persons eligible to participate in the Executive Plan and to amend certain
provisions of the Plan relating to the vesting of options granted under the
Executive Plan. 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 February 28, 2002, the closing price of
MacDermid Common Stock on the New York Stock Exchange was $20.75 per share.
Material Changes in the Amendment
As described above, the amendment to the Executive Plan will:
- Include a limitation on the maximum number of options that may be granted
to any single employee in any one year;
- Permit vesting on a pro-rated basis, in the case of an optionee terminated
by MacDermid without Cause, as defined in the amendment, but limit the
multiplier applicable to such award to a number equal to one or less and shorten
the exercise period to 90 days after such termination;
- Clarify eligibility to participate in the Executive Plan and the
definition of Owners Earnings;
- Provide that, in the case of normal retirement options will continue to
vest according to their terms for the four year vesting period, instead of
vesting immediately upon retirement; and
- Provide for accelerated vesting in the event of a Change of Control (as
defined in the Executive Plan, as amended).
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 may adopt such rules and
regulations as it may deem desirable for administration of the Executive Plan.
Shares Available; Awards
Under the Executive Plan, options may be granted to purchase an aggregate
amount of up to three million (3,000,000) shares of Common Stock. Such shares
may be treasury shares or may be authorized and unissued shares. As of February
28, 2002, 1,674,500 shares remain available for grants of awards under the
Executive Plan. 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.
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
(as defined below) 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, the Exercise Period will
commence upon vesting on the date of such termination and will automatically
terminate ninety (90) days later. Regardless of the multiplier formula
determined by the Committee, in no event will the multiplier applicable in the
case of a optionee terminated without Cause exceed one (1), and the options will
vest only in a pro-rated 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 I 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 a maximum long-term capital gain rate of 20%. Any capital gain
on an optionee's disposition of shares held for 12 months or less will be
subject to tax at ordinary rates.
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 of 20%. 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 alternative minimum tax is
imposed upon an individual's alternative minimum taxable income at rates of 26%
to 28%, but only to the extent that such tax exceeds the taxpayer's regular
income tax liability for the taxable year. 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 2001, 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 3.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The independent public accountants for MacDermid for this fiscal year were
KPMG LLP ("KPMG"), which firm had been selected to be MacDermid's auditors for
next fiscal year by 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement relating to the
2003 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 July 31, 2002. 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 22, 2002 JOHN L. CORDANI
Secretary
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, 2001. Such
request should be directed to John L. Cordani, Secretary, MacDermid,
Incorporated, 245 Freight Street, Waterbury, Connecticut 06702-0671.
APPENDIX A
MACDERMID, INCORPORATED
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In doing so, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its divisions
and subsidiaries.
- Review, on a periodic basis, all relationships between the independent
auditors and the corporation in order to determine whether any such relationship
has a likelihood of compromising the auditor's independence and take action to
ensure that independence is maintained.
- Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current year and
the audit procedures to be utilized, and at the conclusion thereof review such
audit, including any comments or recommendations of the independent auditors.
- Review with the independent auditors, the company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that might be
deemed illegal or otherwise improper. Further, the committee periodically
should review company policy statements to determine their adherence to the
appropriate standards.
- Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year, and the coordination of such plans with the
independent auditors.
- Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan, with
explanations for any deviations from the original plan.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that the
independent auditors are satisfied with the disclosure and content of the
financial statements to be presented to the shareholders. Any changes in
accounting principles should be reviewed.
- Provide sufficient opportunity for the internal and independent auditors
to meet with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the independent
auditors' evaluation of the corporation's financial, accounting, and auditing
personnel, and the cooperation that the independent auditors received during the
course of the audit.
- Review sufficiency of accounting and financial human resources and
succession planning within the company.
- Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in its
judgment, that is appropriate.
APPENDIX B
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
"disinterested person" "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 million
(3,000,000) 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, and 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, 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.
7. Right to Exercise.
-------------------
Except as otherwise provided in Section 11 and 12 of this Plan, subject to
the Company attaining Owner Earnings targets established by the Committee,
options granted under the Plan will first become exercisable by the grantee, or
"vest," at the end of four (4) year period commencing on the date of grant. The
amount of vested options shall 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 during the four (4) year vesting period. The
specific multiplier formula and applicable Owner Earnings targets shall be
determined by the Committee for each grant. For purposes of this Plan, "Owner
Earnings" shall mean the net cash flow generated from operations of the Company,
less net capital expenditures during the corresponding period, plus or minus the
increase or decrease in cash during such period, or such other calculation as
determined by the Committee. Options shall also vest immediately upon normal
retirement at or after the age of sixty (60).
"Except as otherwise provided in Sections 11 and 12 of this Plan, subject to the
--------------------------------------------------------------------------------
Company attaining Owner Earnings 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 pro-rated
--------------------------------------------------------------------------------
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 during
--------------------------------------------------------------------------------
the four (4) year vesting period. The specific multiplier formula and
-------------------------------------------------------------------------------
applicable Owner Earnings target 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, and (b) 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 therefor 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 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 any 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 assumed for option
vesting purposes shall be the maximum Owner Earnings 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 C
FORM OF PROXY
Front
PROXY MACDERMID, INCORPORATED PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - May 1, 2002 at 2:00 P.M.,EDT
at the Mattatuck Museum, 144 West Main Street, Waterbury, Connecticut
The undersigned hereby constitutes and appoints DANIEL H. LEEVER, 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. Approval of the Amendments to the 2001 Key Executive Performance Equity Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of KPMG L.L.P. as
Independent Accountants for the fiscal year ended December 31, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. 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:____________________,2002
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.]