1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
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[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
MacDermid, Incorporated
_______________________________________________________
(Name of Registrant as Specified In Its Charter)
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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MACDERMID Incorporated
245 Freight Street
Waterbury, CT. 06702-0671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 12, 2005
The Annual Meeting of Shareholders of MacDermid, Incorporated
("MacDermid") will be held at MacDermid's offices located at 245 Freight Street,
Waterbury, CT. 06702 on Thursday, May 12, 2005 at 3:00 P.M. EDT, for the
following purposes:
1. To elect six (6) directors to hold office until the next annual meeting
or until their successors are elected and qualified;
2. To consider and act upon the ratification of the appointment of KPMG LLP,
Independent Registered Public Accountants, to serve as independent auditors for
2005;
3. To consider and act upon an amendment to the Special Stock Purchase Plan;
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 14, 2005 as
the record date for the determination of shareholders who will be entitled to
notice of and to vote at the meeting.
Whether or not you plan to attend the annual meeting, please promptly vote,
date and sign the enclosed proxy and return it in the enclosed postage-paid
envelope at your earliest convenience prior to the meeting.
Your proxy vote is very important. Prompt return of your proxy will
minimize proxy solicitation expense, assure a quorum and avoid confusion and
delay at the meeting.
By Order of the Board of Directors
Waterbury, Connecticut
March 15, 2005
(IN ORDER TO AVOID UNNECESSARY EXPENSE), we urge you to indicate voting
instructions on the enclosed proxy and date, sign and return it promptly PRIOR
to the meeting in the envelope provided.
MACDERMID
Incorporated
245 Freight Street
Waterbury, Connecticut 06702-0671
PROXY STATEMENT
GENERAL
The accompanying proxy is being solicited by the Board of Directors of
MacDermid, Incorporated ("MacDermid" or the "Company") for use at the Annual
Meeting of Shareholders of MacDermid and at any and all adjournments thereof
(the "Meeting") to be held, pursuant to the accompanying Notice of Annual
Meeting of Shareholders, at MacDermid, Incorporated, 245 Freight Street,
Waterbury, CT. 06702 on Thursday, May 12, 2005 at 3:00 P.M., EDT.
Each holder of MacDermid's common stock (the "Common Stock") is entitled to
one vote per share on each matter to be brought before the Meeting. Valid
proxies will be voted as specified thereon at the Meeting. Any shareholder
giving a proxy in the accompanying form (a "Proxy") retains the power to revoke
it at any time prior to the exercise of the powers conferred thereby by (1)
delivering written notice of such revocation to John L. Cordani, 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 (1) for the election of the nominees for directors named below, (2) for
ratification of the appointment of KPMG, LLP, (3) for approval of the amendment
to the Special Stock Purchase Plan and (4) by the persons granted the proxies in
their discretion on any other business properly to come before the Meeting.
MacDermid has retained D.F. King & Co., Inc. of New York, New York ("King")
to assist with the solicitation of Proxies and the mailing and distribution of
proxy material. The anticipated cost of King's services is approximately
$4,500, plus reimbursement of expenses. MacDermid will bear the cost of the
solicitation of Proxies, which may include the reasonable expenses of brokerage
firms and others for forwarding Proxies and proxy material to the beneficial
owners of Common Stock of MacDermid. In addition to the use of the mails,
Proxies may be solicited by King and by regular employees of MacDermid
personally, electronically or by telephone. Votes will be counted by employees
of The Bank of New York, the Company's transfer agent. MacDermid currently
anticipates that John L. Cordani, the Corporate Secretary of MacDermid, will be
the Inspector of Election who will certify the votes at the Meeting.
Only holders of Common Stock of record at the close of business on March
14, 2005 are entitled to notice of and to vote at the Meeting. On that date
there were 30,313,697 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.
Directions to withhold authority and abstentions will be counted for purposes of
determining the presence or absence of a quorum. Broker non-votes are not
counted for such purpose.
Any shares held for the account of a shareholder who participates in the
MacDermid Dividend Reinvestment Plan will be voted automatically with the
shareholder's other shares of Common Stock as directed by the shareholder on the
enclosed Proxy.
The approximate date on which this Proxy Statement and the accompanying
Proxy are first sent to shareholders is March 15, 2005. MacDermid's Annual
Report to Shareholders, containing financial statements for the fiscal year
ended December 31, 2004, accompanies these proxy materials to each shareholder.
MacDermid's principal executive offices are located at 1401 Blake Street,
Denver, Colorado 80202.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE
ITEM 1: ELECTION OF DIRECTORS
The Board of Directors, pursuant to the By-Laws, as amended, has fixed at
six (6) the number of directors to be elected at the Meeting. Shares
represented by Proxies will be voted for the election of the nominees for
Director listed below, unless otherwise indicated. Each Director of MacDermid
shall serve until the next annual meeting or until his successor has been
elected and qualified. All nominees are currently Directors of MacDermid.
Management has no reason to believe that any nominee named below will be
unable or unwilling to serve as a Director. If at the time of the Meeting a
nominee should be unable to serve, or for good cause will not serve, it is the
intention of the persons granted the Proxies to vote in their discretion for
such other person as may be designated as a nominee by the Board of Directors of
MacDermid.
The following information has been provided by each Director nominee.
--NOMINEES FOR DIRECTOR --
DANIEL H. LEEVER - Mr. Leever joined MacDermid in 1982. In 1989, he was
appointed Senior Vice President and Chief Operating Officer. The following
year, he was appointed President and Chief Executive Officer. In 1998, Mr.
Leever was appointed Chairman of the Board and currently serves as Chairman and
Chief Executive Officer. Mr. Leever attended undergraduate school at Kansas
State University and the graduate school at the University of New Haven School
of Business.
Principal occupation - Chairman of the Board and Chief Executive Officer of
MacDermid
Director since 1989
2,167,795 shares - 7.2% (1)
Age: 56
DONALD G. OGILVIE - Mr. Ogilvie has been President and Chief Executive Officer
of the American Bankers Association since 2002, and prior to that he served as
Executive Vice President since 1985. From 1980 to 1985 he was a Vice President
of Celanese Corporation and from 1977 to 1980 Associate Dean of Yale
University's School of Organization and Management. Earlier, he held posts in
the U.S. Department of Defense and in the Executive Office of the President as
Associate Director of National Security and International Affairs in the Office
of Management and Budget. Mr. Ogilvie has a B.A. degree from Yale University
and an M.B.A. from Stanford University's School of Business.
Principal occupation - President and Chief Executive Officer of American Bankers
Association
Director since 1986
49,847 shares - *(2) (3)
Chairman of the Audit Committee and member of the Compensation and Corporate
Governance Committees.
Age: 61
JAMES C. SMITH - Mr. Smith is Chairman of the Board (since 1995) and Chief
Executive Officer (since 1987) of Webster Financial Corporation and its
subsidiary, Webster Bank of Connecticut. From 1987 until April 2000, Mr. Smith
also served as President of Webster Financial Corporation and Webster Bank. Mr.
Smith is active in a number of organizations dedicated to enhancing the quality
of life in the communities served by Webster. Mr. Smith has an AB degree from
Dartmouth College.
Principal occupation - Chairman of the Board and Chief Executive Officer of
Webster Financial Corporation and its subsidiary, Webster Bank of
Connecticut.Director since 1994
59,963 shares - * (2) (3)
Member of the Audit, Compensation and Corporate Governance Committees.
Age: 56
JOSEPH M. SILVESTRI - Mr. Silvestri is a partner at Citigroup Venture Capital
Ltd where he has been employed since 1990. He is a member of the boards of
directors and compensation committees of Triumph Group, Inc., a manufacturer and
distributor of aircraft components, and Euramax, a fabricator of aluminum and
steel products. Mr. Silvestri is also a director of Worldspan, a global
distribution system for the travel industry. Mr. Silvestri has a BS degree from
Pennsylvania State University and an MBA degree from Columbia Business School.
Principal occupation - Partner at Citigroup Venture Capital Ltd.
Director since 1999
201,622 shares - * (2) (3)
Member of the Compensation Committee.
Age: 43
T. QUINN SPITZER, JR.- Mr. Spitzer is a partner in McHugh Consulting, a
management consulting firm specializing in business strategy and complexity
management. Mr. Spitzer has been an independent consultant since 1973. In 1978
he joined the consulting firm of Kepner-Tregoe, Inc. of Princeton, N.J. In
1990, he was appointed President and Chief Executive Officer of Kepner-Tregoe,
and in 1996 he also became Chairman of the Board of Kepner-Tregoe. In 1999 he
established McHugh Consulting. Mr. Spitzer received his undergraduate education
from the University of Virginia and his graduate education from the University
of Georgia. He serves on the Board of Directors of UTI, Inc.
Principal Occupation - Partner, McHugh Consulting
Director since 2000
42,287 shares - *(2) (3)
Chairman of the Compensation and Corporate Governance Committees,
as well as Lead Non-Management Director and member of the Audit
Committee
Age: 55
ROBERT L. ECKLIN - Mr. Ecklin is Executive Vice President-Optical Communications
for Corning Incorporated. He has held this position since January 2001 and has
been ExecutiveVice President for Corning since January, 1999. He joined Corning
in 1961 in the Engineering Division and has held a number of manufacturing and
operations positions at Corning. He was formerly plant manager of two Corning
facilities and was named Vice President in 1982. In 1990, Mr. Ecklin was
appointed Senior Vice President and General Manager, Industrial Products. Mr.
Ecklin serves on several boards including Pittsburgh Corning, Inc., Pittsburgh
Corning Europe, Inc., and Cormetec Inc., as well as several service
organizations, including the Alliance For Manufacturing and Technology for the
Southern Tier, the Committee of 50, Alfred
Technology Resources, Infotonics Inc. and the State University of New York,
Research Board. Mr. Ecklin holds a bachelor's degree in architectural
engineering and has completed the Executive Management Program at Dartmouth
University.
Principal occupation - Executive Vice President of Corning, Incorporated
Director since 2001
40,047 shares - *(2) (3)
Member of the Audit, Compensation and Corporate Governance Committees.
Age: 66
* Indicates less than 1% of the outstanding shares of Common Stock.
Notes to Election of Directors
(1) Includes 151,275 shares held by MacDermid's Profit Sharing and
Employee Stock Ownership Plans (reported as of December 31, 2004), 147,065
shares (135,000 of these are subject of the shareholder proposal presented later
in this proxy statement) 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 580,000 shares which may be acquired upon the
exercise of options granted under the 2001 Key Executive Performance Equity
Plan. Includes 7,600 shares held in trust by Mr. Leever for his son and 4,478
shares owned by his spouse, as to all of which Mr. Leever disclaims beneficial
ownership. Also includes 155,200 shares held by a certain trust established by
Mr. Harold Leever, for which Mr. Daniel Leever is co-trustee. Includes 100,000
shares which may be acquired upon exercise of options granted under the 2001 Key
Executive Performance Equity Plan on February 25, 2005.
(2) Except as otherwise indicated, owner has sole voting and investment
power.
(3) Includes director's premium options granted under the MacDermid,
Incorporated Stock Option Plan to purchase 2,295; 2,295; 3,501; 1,527 and 0
shares for Messrs. Ogilvie, Smith, Silvestri, Spitzer and Ecklin, respectively
and options granted under the 2001 Key Executive Performance Equity Plan to
purchase 25,779; 25,779; 34,914; 26,003; and 25,779 shares for Messrs. Ogilvie,
Smith, Silvestri, Spitzer and Ecklin, respectively. Also includes 1,055; 704;
3,201; 1,974; and 259 shares restricted stock issued under the Equity Incentive
Plan to Messrs. Ogilvie, Smith, Spitzer, Ecklin and Silvestri, respectively.
Includes options to purchase 10,000; 10,000; 10,000; 10,000, and 10,000 shares
of common stock granted under the 2001 Key Executive Performance Equity Plan for
Messrs. Ogilvie, Smith, Silvestri, Spitzer and Ecklin respectively in February
2004. Also includes 735; 294; 294; 882 and 294 shares of restricted stock
issued under the 1995 Equity Incentive Plan in February, 2005 for Messrs.
Ogilvie, Smith, Silvestri, Spitzer and Ecklin respectively. All remaining
shareholdings noted constitute personal or beneficial holdings on behalf of the
applicable nominee.
Vote Required
--------------
Each nominee for director shall be elected by a majority of the votes cast at
the Meeting provided a quorum is present. Directions to withhold authority and
abstentions will be counted for purposes of determining the presence or absence
of a quorum. Broker non-votes are not counted for such purpose.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation in the fiscal year ended December 31, 2004.
EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Compensation Committee is primarily responsible for MacDermid's overall
executive compensation policy of compensating MacDermid's officers competitively
with those of comparable companies, rewarding exceptional performance where
appropriate and providing incentive for future performance through cash
incentive payments and equity incentives. In the fiscal year ended December 31,
2004, MacDermid's executive compensation generally had three basic components:
annual base salary, short-term cash incentive bonus and equity incentives (long
term compensation).
In establishing levels of annual salary, incentive bonus and equity
incentives, the Committee generally considers, in order of emphasis, the
following factors: (i) MacDermid's performance, or in certain cases group
performance, relative to Committee expectations, (ii) the performance and
achievements of MacDermid's executives, individually, and collectively, (iii)
the responsibilities of each executive, (iv) the compensation practices of peer
companies, and (v) the level of cash compensation and equity incentives required
to attract and hold qualified executives.
The Committee uses a comparative group of specialty chemical companies (the
"Comparator Group") to serve as a factor for determining the appropriate cash
and equity incentive components of the program. The companies in the Comparator
Group are selected based upon their similarity to MacDermid, relative
complexity, and scope. Earnings trends, return on equity and other performance
measures are compared. The size and composition of the Comparator Group may
change from year to year but the Comparator Group is generally the same as or
similar to the Standard & Poors Specialty Chemical Index used in the Performance
Equity Plan. The Comparator Group is different from the specialty chemical
index used in the comparative stock performance graph.
Before considering the compensation factors discussed above, the Committee
targets annual base compensation at a level which, together with incentive
bonuses, would provide cash compensation to individual executives at below
median market compensation levels for poor corporate or unit performance, at
median market compensation levels for good performance, and above median market
compensation levels for excellent performance.
Base Salary and Annual Bonus Compensation
-----------------------------------------
Executives, other than the Chief Executive Officer, received base salaries
and were eligible to receive performance based bonuses. Base salaries were set
by the Committee in accordance with the above noted considerations. Primarily
base salaries were determined by considering the executive's qualifications and
responsibilities as well as the market based compensation practices of peer
companies. Executives were also eligible to receive performance bonuses based
primarily upon their individual and collective performance as well as the
performance of the business units each primarily affects, in comparison to goals
which have been pre-established by the Committee early in the fiscal year. The
financial goals established by the Committee in determining performance bonuses
use the operating profit and owner earnings of the business units most affected
by each executive. Thus for this fiscal year the goals established by the
Committee have encouraged executives to maximize the operating profit and owner
earnings generated by the business units applicable to each executive. Bonuses
were paid to the executives based upon the meeting of these pre-established
financial goals. Performance bonuses ranged from 0% to 79% of base salary as a
function of applicable financial performance in relation to the pre-established
financial goals.
Going forward for 2005, the Compensation Committee has determined that
it is appropriate for the President to be paid in accordance with a plan
similar to, but not the same as, the Executive Compensation Plan. Under this
which is new plan, which will take effect in 2005, the President will not
receive a salary. Instead, the President will be paid performance based
compensation tied directly, through a predetermined formula, to the operating
profit and operating profit growth of the Company.
Long Term Equity Compensation
-----------------------------
During the fiscal year ended December 31, 2004, 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 the 2001 Key Executive Performance Equity Plan (the
"Performance Equity Plan")(the Special Stock Purchase Plan, Equity Incentive
Plan, Stock Option Plan, and the Performance Equity Plan, collectively referred
to as the "Plans").
The Committee administers the Plans, and awards equity incentives to
executives and other employees of MacDermid. The purpose of awarding equity
incentives under the Plans is to enable MacDermid to attract, retain and
motivate its employees to exert their best efforts to enhance shareholder value
by giving them the ability to participate in the long-term growth of MacDermid.
The Committee generally considers the same factors in establishing the amounts
of equity awards for MacDermid's executive officers as those listed above. The
amounts of the awards are based upon the relative position of each executive
officer within MacDermid and individual performance independent of the terms and
amount of awards previously granted. The Compensation Committee has a stated
policy of not re-pricing options after issuance.
"Stock Option Plan" - No Options Awarded this Fiscal Year.
---------------------
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 Fiscal Year.
--------------------------------
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 of Shareholders, 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. An amendment to
the Special Stock Purchase Plan which would extend the exercise period for
certain options is presented with this Proxy. No options were granted under the
Special Stock Purchase Plan during the fiscal year.
"Equity Incentive Plan" - No Restricted Shares Awarded to Executives this Fiscal
-----------------------
Year.
Restricted stock awards issued under the Equity Incentive Plan generally
consist of shares of MacDermid Common Stock with vesting requirements and
restrictions on transfer. 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. An
aggregate of 1,812 shares of restricted stock were issued to non-employee
Directors during 2004 under the Equity Incentive Plan, and no restricted stock
was issued to executive officers under the Equity Incentive Plan during 2004
under the Equity Incentive Plan.
"Performance Equity Plan" -183,000 Options Awarded to Named Officers this Fiscal
-------------------------
Year.
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 for the first six (6) years after grant based upon the
comparative performance of the S&P Specialty Chemicals Index in relation to the
Company's share performance. 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 and/or earnings per share
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. During the fiscal year the Committee
awarded options to purchase 100,000; 42,000; 20,000; 20,000; and 1,000 shares of
MacDermid common stock to Messrs. Leever, Largan, Bolingbroke, Cordani, and
Monteiro respectively, under the Performance Equity Plan.
The Committee believes that the Plans allow executive officers to
participate in the enhancement of shareholder value. The Committee has also
adopted a stock retention policy (the "Policy") that is designed to encourage
MacDermid executives to hold the shares of common stock which arise from the
exercise of options under the Plans. The Policy provides that no covered
executive shall be entitled to receive additional option grants or restricted
share grants unless such executive has retained at least 75% of the aggregate of
all common stock that arose from the exercise of options/restricted share grants
previously provided to the executive after deduction for payment of applicable
taxes and the exercise price. The Committee has retained discretion to waive
compliance with the policy in exceptional circumstances. The Committee believes
that participation in the Plans, as augmented by the Policy, encourages
executives to concentrate on long-term shareholder value growth.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation for Daniel H. Leever, MacDermid's Chairman and Chief Executive
Officer, was determined in accordance with the MacDermid, Incorporated Executive
Compensation Plan, the material terms of which were approved by the Company's
shareholders at the 1998 Annual Meeting of Shareholders. Under the plan, no
base salary is paid to Mr. Leever. The amount of performance based short-term
annual compensation which was paid to Mr. Leever during the last fiscal year was
based directly and solely upon the following factors: (i) earnings per share,
and (ii) the two-year average of earnings per share growth. Compensation under
the plan was equal to the sum of two components. The first component was
determined by multiplying a base amount of $6,615 by the number of cents per
share the Company has earned for the fiscal year up to $1.00. The second
component was determined by multiplying the same base amount by the number of
cents per share earned by the Company during the fiscal year above $1.00,
further multiplied by a factor of from 0 to 2.5, which factor is determined
based upon the two year average of earnings per share growth. In determining
earnings, the Committee uses its discretion in including or excluding one time
or extraordinary gains or losses. Mr. Leever's annual performance based
compensation was determined and paid in accordance with the provisions noted
above.
Mr. Leever received options to purchase 100,000 shares of MacDermid common
stock pursuant to the terms of the Performance Equity Plan during the last
fiscal year.
The Company is subject to Internal Revenue Code Section 162(m), which could
limit the deductibility of certain compensation payments to its executive
officers. The Company intends to comply with the requirements of Section
162(m); however, it also weighs the burdens of such compliance against the
benefits to be obtained by the Company and may pay compensation that is not
fully deductible if it determines that such payments are in the Company's best
interests. During this fiscal year, all compensation paid to the Company's
executive officers was fully deducted by the Company.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
T. Quinn Spitzer, Jr. (Chairman)
Donald G. Ogilvie
James C. Smith
Joseph M Silvestri
Robert L. Ecklin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries. In the last fiscal year, no
executive officer of the Company served on the compensation committee or as a
director of another entity, one of whose executive officers served on the
Company's Compensation Committee or Board of Directors.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table summarizes annual, long-term and other
compensation paid by MacDermid for each of its three previous fiscal years to
MacDermid's Chief Executive Officer and the four other most highly compensated
executive officers.
Long-Term
Compensation
Annual Compensation Awards
Name and Fiscal Salary Bonus Other Restricted Securities All Other
Principal Year ($)(1) ($)(5) Annual Stock Underlying
Position Compensation Awards Options/SARs Compensation
($) ($)(2) (2)(#) ($) (3) (4)
Daniel H. 2004 - 1,807,200 - - 100,000 30,481
Leever 2003 - 1,480,500 - - 150,000 19,620
Chairman 2002 - 732,000 - - 160,000 308,131
And Chief
Executive
Officer
Stephen 2004 295,833 72,000 - - 42,000 362,056
Largan 2003 250,833 100,000 - - 50,000 152,766
President 2002 241,859 300,000 - - 30,000 7,059
Gregory M. 2004 242,667 45,000 - - 20,000 197,221
Bolingbroke 2003 205,000 100,000 - - 30,000 14,942
Senior Vice 2002 183,125 123,000 - - 30,000 25,556
President
and Treasurer
John L 2004 264,450 25,000 - - 20,000 6,000
Cordani 2003 256,667 40,000 - - 30,000 6,000
Vice 2002 157,609 125,000 - - 30,000 5,500
President
General
Counsel
Secretary
Frank 2004 111,847 12,000 - - 1,000 173,586
Monteiro 2003 102,500 12,000 - - 10,000 5,338
Assistant 2002 90,408 50,000 - - 2,000 4,039
Treasurer
(1) Salary amounts reported for Mr. Cordani in 2002 were for services
from June, 2002 through December, 2002.
(2) Awarded in fiscal year indicated. Awards listed for 2004 include
options to purchase 100,000; 42,000; 20,000; 20,000; and 1,000 shares of
MacDermid Common Stock for Messrs. Leever, Largan, Bolingbroke, Cordani and
Monteiro respectively, which options were granted pursuant to the Performance
Equity Plan. As of December 31, 2004, none of the named executive officers held
shares of restricted stock grants from the 1995 Equity Incentive Plan, which
still bore restrictions.
(3) Amounts listed for this fiscal year also include Company
contributions to the Employee Stock Ownership Plan in the amounts of $6,500;
$6,500; $6,500; $6,500 and $3,865 for Messrs. Leever, Largan, Bolingbroke,
Cordani and Monteiro respectively, as well as $8,178 in life insurance premiums
for Mr. Leever. The amounts also include $23,981; $4,648, $451 and $100 of
deemed compensation attributable to Messrs. Leever, Largan, Bolingbroke and
Cordani respectively primarily arising from use of Company aircraft. The
amounts for Messrs. Largan, Bolingbroke and Monteiro include payments of
$350,908; $190,270 and $169,721 respectively for their relocation to Denver,
Colorado.
(4) The Company has entered into severance agreements with Messrs.
Largan, Bolingbroke, Cordani and Monteiro. The severance agreements provide
for payment of a severance in the amount of one year's base salary, or in some
cases two years' compensation, in the case of termination without cause or in
the case of termination within two years of a change of control respectively. A
separate employment agreement with Mr. Cordani similarly provides for a minimum
annual salary of $250,000 during the term of employment.
(5) Includes bonuses accrued or earned in each year whether or not such
bonuses were paid in that year. Mr. Leever is not paid any salary, but is
instead paid performance based compensation as provided for under the MacDermid,
Incorporated Executive Compensation Plan, the material terms of which were
approved by the shareholders at the 1998 Annual Shareholder Meeting of
Shareholders.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to each exercise of
stock options during the fiscal year ended December 31, 2004 and the fiscal year
end value of unexercised options held by the Chief Executive Officer and the
named officers as of December 31, 2004 on an aggregate basis.
Name Shares Acquired Value Number of Securities Value of
on Exercise Realized Underlying Unexercised
# $ Unexercised In-the-money
Options/SARs at FY- Options at
end (#) Exercisable/ FY-end ($)
Unexercisable Exercisable/
Unexercisable(1)
Daniel H. 0 - 647,065/580,000(2) $4,671,968/
Leever $7,857,600 (2)
Stephen 0 - 50,000/153,000 $57,700/$1,753,650
Largan
Gregory M. 0 - 27,200/111,000 $57,700/$1,481,850
Bolingbroke
John L. 0 - 27,200/100,000 $57,700/$1,329,700
Cordani
Frank 0 - 500/13,000 $9,675/$167,520
Monteiro
(1) Value is reported based on the spread between the exercise price and the
market price on December 31, 2004 of $36.10 per share. Indexing of the exercise
price and number of options as it relates to options granted under the 2001 Key
Executive Performance Equity Plan was not taken into consideration.
(2) Includes 135,000 shares underlying exercisable options (valued at
$4,631,850) under the MacDermid, Incorporated Special Stock Purchase Plan which
have expired but which will have their exercise period extended until 30 days
after the Meeting if Item 3 presented in this proxy statement is approved by the
shareholders.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 2004 by the Company to each of
the named executive officers:
Name Number of Percent of Exercise Expiration Potential
Shares Total Options Price Date Realizable
Underlying Granted to ($/Share) Value at
Options all employees (2) Assumed Rates
Granted in F.Y. 2004 of Stock Price
(#) (1) Appreciation for
Option Term
5% $(3) 10% $(3)
Daniel 100,000 19.8% $38.65 2/19/14 0 $3,729,000
Leever
Stephen 42,000 8.3% $38.65 2/19/14 0 $1,566,180
Largan
Gregory
Bolingbroke 20,000 4.0% $38.65 2/19/14 0 $745,800
John 20,000 4.0% $38.65 2/19/14 0 $745,800
Cordani
Frank 1,000 0.2% $38.65 2/19/14 0 $37,290
Monteiro
(1) Represents options granted under the Performance Equity Plan. Under the
terms of the Performance Equity Plan the exercise price of the options is
adjusted based upon the comparative change of the S&P Specialty Chemicals Index
in relation to MacDermid's stock performance. These options will first become
exercisable four (4) years from the date of grant (February 19, 2008). The
number of options which vest may be increased or decreased based upon
MacDermid's cumulative owner earnings and/or earnings per share during the four
(4) year vesting period in relation to targets set by the Committee at the time
of the award. In the event of a change of control (as defined in the
Performance Equity Plan), all of the then outstanding options granted under the
Performance Equity Plan will become fully exercisable.
(2) Reflects the exercise price per share on the date of grant. Options
granted under the Performance Equity Plan have an exercise price that is
adjusted proportionately and annually for the first six (6) years after grant
based upon the comparative change of the S&P Specialty Chemicals Index in
relation to the Company's share performance.
(3) Options granted under the Performance Equity Plan have an exercise price
which is adjusted based upon comparative change of the S&P Specialty Chemicals
Index. This calculation assumes a 5% annual appreciation of the S&P Specialty
Chemicals Index. Value is reported based on the spread between the exercise
price and the market price on December 31, 2004 of $36.10 per share and the
length of the option period.
EMPLOYEES PENSION PLAN
The MacDermid Employees Pension Plan (the "Pension Plan") is a qualified
defined benefit plan. Pension payments may be made under the Pension Plan upon
normal retirement commencing when an executive reaches age 60 based upon
credited years of service up to a maximum of 30 years.
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 Internal Revenue 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, 2004 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 for benefits vested on December
21, 2004.
Estimated Annual Pension Payable at Normal
Retirement Based on Years of Service Indicated
Final Average 10 15 20 25 30
Earnings Years Years Years Years Years
-------- ----- ----- ----- ----- -----
$ 250,000 35,417 53,126 70,834 88,543 106,252
$ 300,000 42,917 64,376 85,834 107,293 128,752
$ 350,000 50,417 75,626 100,834 126,043 151,252
$ 400,000 57,917 86,876 115,834 144,793 173,752
$ 450,000 65,417 98,126 130,834 163,543 196,252
$ 500,000 72,917 109,376 145,834 182,293 218,752
$ 600,000 87,917 131,876 175,834 219,793 263,752
$ 700,000 102,917 154,376 205,834 257,293 308,752
$ 800,000 117,917 176,876 235,834 294,793 353,752
$ 900,000 132,917 199,376 265,834 332,293 398,752
$1,000,000 147,917 221,876 295,834 369,793 443,752
Covered compensation under the Pension Plan and the Supplemental Plan
includes an employee's annual salary and bonus, which, for the Chief Executive
Officer and five other named officers, is set forth in the Summary Compensation
Table. Messrs. Leever, Cordani, Bolingbroke, Largan and Monteiro have 25, 18,
12, 6 and 7 years of credited service, respectively, under the Pension Plan.
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. Effective January 1, 2005 the Pension Plan has been amended
to (i) change the normal retirement age from 60 to 65, (ii) eliminate the Social
Security supplement and (iii) apply decrements of 6% per year to the pension
paid for each year retirement is taken before age 65 but between ages 65 and 60
and an additional 4% per year for retirement between ages 60 and 55. However,
these amendments will not affect benefits vested as of December 31, 2004.
EQUITY COMPENSATION PLANS
Equity securities of MacDermid have been authorized for issuance under the
MacDermid Special Stock Purchase Plan (the "Special Stock Purchase Plan"), the
MacDermid Stock Option Plan dated July 6, 1998 (the "Stock Option Plan"), the
MacDermid 1995 Equity Incentive Plan (the "Equity Incentive Plan"), the 2001 Key
Executive Performance Equity Plan (the "Performance Equity Plan") and the All
Employee Stock Option Plan (the "All Employee Option Plan"). Each of the
foregoing plans has been approved by MacDermid's shareholders.
The following table provides information with respect to those equity
compensation plans as of December 31, 2004.
Number of securities
Plan (1) Number of securities Weighted average Remaining available
to be issued upon Exercise price of for future issuance
exercise of Outstanding options under equity
outstanding options Warrants and rights compensation plans
Warrants and rights (excluding securities
reflected in first
column)
Special Stock 147,065 (3) $4.33/sh 154,435
Purchase Plan
Equity Incentive 0 N/A 368,910
Plan
Stock Option Plan 829,600 $41.87/sh 659,400
Performance 2,507,494 $23.72/sh 2,450,506
Equity(2)Plan
All Employee 379,800 $18.64/sh 619,450
Option Plan
(1) All of the Company's equity compensation plans have received shareholder
approval.
(2) Under the Performance Equity Plan, the number of options granted is
leveraged against performance goals which depending on performance could change
the number of options granted from 0.5 to 2.0 times the number of options
initially granted. This leveraging aspect is not reflected here.
(3) Includes 135,000 shares underlying outstanding options with an exercise
price of $1.79 per share, which have expired under the terms of the MacDermid,
Incorporated Special Stock Purchase Plan. However, if Item 3 presented in this
proxy statement is approved by the shareholders, then the plan will be amended
to extend the exercise price for such options until 30 days after the Meeting.
Compensation of Directors
-------------------------
Directors who are employees of MacDermid received no compensation, other
than their compensation and benefits received as employees. Directors who are
not employees received options to purchase MacDermid common stock, pursuant to
the terms of the Performance Equity Plan and/or restricted stock grants pursuant
to the terms of the 1995 Equity Incentive Plan. During 2004 each of the
non-employee Directors received options to purchase 10,000 shares of MacDermid
common stock at an initial exercise price of $38.65 per share with a ten (10)
year exercise period under the terms of the Performance Equity Plan. The
Directors also received restricted share grants under the terms of the 1995
Equity Incentive Plan as noted below:
NO. OF OPTIONS NO. OF SHARES POSITION
---------------- --------------- --------
Robert Ecklin 10,000 259 Committee Member
Donald Ogilvie 10,000 388 Committee Chair
Joseph Silvestri 10,000 259 Committee Member
James Smith 10,000 259 Committee Member
T. Quinn Spitzer 10,000 647 Lead Director/
Committee Chair
In addition to the above, Mr. Ecklin received $1,054.45 in deemed compensation
during 2004 arising from use of Company aircraft.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
In addition to retaining KPMG LLP to audit the consolidated financial
statements for this fiscal year, the Company and its affiliates retained KPMG,
to provide various services in fiscal 2003 and 2004, and expect to continue to
do so in the future. The aggregate fees billed for professional services in
fiscal year, 2003 and 2004 were:
- Audit Fees: $805,222 and $1,897,679 in fiscal years 2003 and 2004
respectively for services rendered for the annual audit of the Company's
consolidated financial statements and the quarterly reviews of the financial
statements included in the Company's Forms 10-Q. Note that the fees for 2004
include $1,008,250 in fees paid for the required audit of internal controls and
other Sarbanes-Oxley related requirements.
- Tax Preparation and Planning Fees: $626,322 and $560,258 in fiscal years
2003 and 2004 respectively for tax services, including tax planning services and
return preparation services.
Audit-Related Fees: $126,510 and $17,704 for audit related services during
fiscal years 2003 and 2004 respectively.
- Other Fees: None and $218,911 for other allowable services during fiscal
years 2003 and 2004 respectively. These services related to accounting due
diligence services.
The Audit Committee (or one or more designated members thereof)
pre-approves all audit and non-audit services provided by the Company's outside
auditor. The Audit Committee has an audit/non-audit services pre-approval
policy. This policy is available on MacDermid's website at www.macdermid.com
- Under the policy, proposed services may either be pre-approved ("general
pre-approval") or require the specific pre-approval of the Audit Committee
("specific pre-approval"). The Audit Committee believes that the combination of
these two approaches in this policy will result in an effective and efficient
procedure to pre-approve services performed by the independent auditor. As set
forth in the policy, unless a type of service has received general pre-approval,
it will require specific pre-approval by the Audit Committee if it is to be
provided by the independent auditor. Pre-approval fee levels or budgeted
amounts for all services to be provided by the independent auditor will be
established annually by the Audit Committee. Any proposed services exceeding
these levels or amounts will require specific pre-approval by the Audit
Committee. The Audit Committee may delegate either type of pre-approval
authority to one or more of its members.
All requests or applications for services to be provided by the independent
auditor that do not require specific pre-approval by the Audit Committee will be
submitted to the Director of Internal Audit and to the Chairman of the Audit
Committee and must include a detailed description of the services to be
rendered. The Chairman of the Audit Committee will determine whether such
services are included within the list of services that have received general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the independent auditor. Requests
or applications to provide services that require specific pre-approval by the
Audit Committee will be submitted to the Audit Committee by both the independent
auditor and the Director of Internal Audit, and must include a joint statement
as to whether, in their view, the request or application is consistent with the
SEC's rules on auditor independence.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of the four directors named below. Each member of the Audit Committee
is an independent director as defined by New York Stock Exchange rules and as
defined by applicable SEC regulations. The Audit Committee has adopted a
written charter which has been approved by the Board of Directors, and which is
set forth on the Company's website (www.macdermid.com). The Audit Committee has
reviewed and discussed the Company's audited financial statements with
management, which has primary responsibility for the financial statements. KPMG
LLP ("KPMG"), the Company's independent auditors are responsible for expressing
an opinion on the conformity of the Company's audited financial statements with
U.S. generally accepted accounting principles. The Audit Committee has
discussed with KPMG the matters that are required to be discussed by Statement
on Auditing Standards No. 61 (Communication With Audit Committees) as well as
any other matters deemed material by the Committee or KPMG. KPMG has provided
to the Audit Committee the written disclosures and the letter required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with KPMG that firm's
independence. The only services, other than audit and audit related services,
provided by KPMG to the Company during the last fiscal year were tax services,
which were determined to be compatible with KPMG's independence and certain due
diligence services which were also determined to be compatible with KPMG's
independence. The Committee has determined that each of its members is
independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A.
Based on the considerations referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the last fiscal year.
The Board of Directors has determined that the Audit Committee's Chairman,
Donald Ogilvie, is an audit committee financial expert and meets the
requirements of the Audit Committee Charter through the following education and
experience:
- Mr. Ogilvie holds a B.A. degree from Yale University and an M.B.A. from
Stanford University School of Business.
- As Associate Director of the Office of Management and Budget from
1974-1976, Mr. Ogilvie was responsible for direct oversight of the budgets for
the Departments of Defense and of State as well as the budgets for the U.S.
intelligence community and foreign aid.
- As Associate Director of the Yale University School of Management, Mr.
Ogilvie was responsible for financial, accounting and audit functions.
- Mr. Ogilvie served as Vice President for the Celanese Corporation.
- As President and CEO of the American Bankers Association, Mr. Ogilvie is
responsible for budgeting, accounting and auditing functions, and has frequent
involvement with accounting issues. At the ABA, Mr. Ogilvie has continuous
involvement with accounting and auditing issues as they affect the financial
industry that he serves. Mr. Ogilvie is experienced with regard to audit
committees and their function.
- Mr. Ogilvie has been a director of MacDermid since 1986 and a member of
its Audit Committee since its formation. As a result, Mr. Ogilvie has extensive
knowledge of MacDermid.
In addition to Mr. Ogilvie, Mr. James Smith is also a member of the Audit
Committee. Mr. Smith also has considerable financial expertise including the
following:
- Mr. Smith has an AB degree from Dartmouth College.
- As Treasurer of Webster Bank from 1979-1982, Mr. Smith was directly
responsible for many of its financial functions.
- As CEO of Webster Financial, Mr. Smith has responsibility for the
integrity of Webster's financial operations and reporting.
- Mr. Smith has served on the Audit Committee of the American Banker's
Association.
- As a Director of MacDermid and a member of its Audit Committee since 1994,
Mr. Smith has developed an extensive knowledge of MacDermid.
The Committee has determined that all of its members are financially
literate. In view of all of the foregoing, the Board of Directors has
determined that the Audit Committee has an independent Audit Committee financial
expert and possesses the necessary financial expertise to properly carry out its
functions in accordance with its Charter and all applicable regulations.
The foregoing report is provided by the following independent directors,
who constitute the Audit Committee:
Donald Ogilvie (Chairman)
Robert Ecklin
James Smith
T. Quinn Spitzer
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare, during the five-year period
commencing December 31, 1999 (at the market close) and ending December 31, 2004,
the annual change in the cumulative total return on MacDermid's Common Stock
with the Standard and Poors 500 and the Media General Specialty Chemicals Stock
indices, assuming an investment of $100 on December 31, 1999 (at the market
close) and the reinvestment of any dividends.
FIVE YEAR CUMULATIVE TOTAL RETURN
Past share performance should not be viewed as necessarily indicative of future
performance.
Graph Dollar Values 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
MacDermid, Inc. 100 46 42 56 85 90
Standard & 100 99 106 88 113 158
Poors 500
Specialty Chemicals 100 91 80 62 80 89
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth information as of December 31, 2004,
(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 the four other most highly compensated executive
officers and by all Directors and officers of MacDermid as a group. Unless
otherwise noted, each person has sole voting and disposition power with respect
to such person's shares. The total shares of common stock beneficially owned by
the officers includes the right to acquire ownership through exercisable stock
options.
Beneficial Owner Number of Shares Percent
Beneficially Owned of Class
------------------- ------------------- ---------
FIVE PERCENT BENEFICIAL OWNERS
MacDermid Employees Profit Sharing, 2,579,978 8.5% (1)
Pension and Stock Ownership Plans
MacDermid Equipment, Inc. 401(K) Plan
245 Freight Street
Waterbury, Connecticut 06702
Bank of America Corporation 2,036,143 6.7% (2)
100 North Tryon Street
Charlotte, NC 28255
Vanguard/Primecap Fund, Inc. 1,701,000 5.6% (3)
100 Vanguard Blvd.
Malverne, PA 19355
Daniel H. Leever 2,067,795 6.8% (4)
c/o MacDermid, Incorporated
1401 Blake Street
Denver, Colorado 80202
NAMED EXECUTIVE OFFICERS
Daniel H. Leever 2,067,795 (4) 6.8%
Stephen Largan 206,761 (5) *
Gregory M. Bolingbroke 153,943 (5) *
Frank Monteiro 16,331 (5) *
John L. Cordani 129,357 (5) *
DIRECTORS
Robert L. Ecklin 29,753 (4) *
Daniel H. Leever 2,067,795 (4) 6.8%
Donald G. Ogilvie 39,112 (4) *
Joseph M. Silvestri 191,328 (4) *
James C. Smith 51,469 (4) *
T. Quinn Spitzer, Jr. 32,405 (4) *
All Directors, Director
Nominees and Officers 3,184,044 (5) 10.5%
as a group (12 persons)
*Less than 1% of shares outstanding
(1) 2,186,723 shares in the MacDermid Employees Profit Sharing and Employee
Stock Ownership
Plans are beneficially owned by the trustee of the plans, Charles Schwab Trust
Company, and 393,255 shares in the MacDermid, Incorporated Employees Pension
Plan were beneficially owned by the trustee of the plan, Wachovia Securities.
Under the terms of the Profit Sharing Plan and the ESOP, participants have the
right to vote the shares credited to their accounts; however, the trustee may,
in its discretion, vote any shares (including unallocated shares) not voted by
the participants. The trustee of the Pension Plan may vote all the MacDermid
shares beneficially owned thereunder.
(2) The information for Bank of America Corporation ("BOA") is taken from
its Schedule 13G
dated February 11, 2005. BOA has shared voting power with respect to 1,186,236
shares, and shared dispositive power with respect to 2,036,143 shares.
(3) The information for Vanguard Primecap Fund, Inc. is taken from its
Schedule 13G dated
February 14, 2005. Vanguard indicates no disposition power with respect to
1,701,000 shares but has sole power to vote such shares.
(4) Additional explanation of the shares beneficially owned is provided in
the footnotes under Election of Directors. Please note that shares and options
granted in February 2005 and any other transactions after December 31, 2004 are
not reported in this table, which reports holdings as of December 31, 2004.
(5) Includes shares reported by Mr. Leever as provided in the footnotes
under Election of Directors.
Also includes 15,743; 2,157; 3,761 and 2,831 shares held by Messrs. Bolingbroke,
Cordani, Largan and Monteiro respectively in the MacDermid Profit Sharing and
Employee Stock Ownership Plans, 91,000; 80,000; 111,000 and 12,000 options to
purchase shares of MacDermid common stock granted to Messrs. Bolingbroke,
Cordani, Largan and Monteiro respectively under the Performance Equity Plan and
50,000, 27,200 and 27,200 options to purchase shares of MacDermid common stock
granted to Messrs. Largan, Bolingbroke and Cordani respectively under the Stock
Option Plan. Also includes options to purchase 42,000; 20,000; 20,000 and 1,000
shares of common stock pursuant to the Performance Equity Plan which were
granted to Messrs. Largan, Bolingbroke, Cordani and Monteiro in February 2004.
CORPORATE GOVERNANCE
Board of Directors
--------------------
The Board of Directors held five (5) regular meetings during this fiscal
year. Each of the current members of the Board of Directors attended at least
75% of the meetings of the Board and the committees of which they were members.
The Board has Audit, Compensation and Corporate Governance Committees. The
non-management Directors schedule regular executive sessions in which they meet
without management participation. T. Quinn Spitzer is the lead non-management
director. The Board of Directors has determined that it is composed of a
majority of independent directors as independence is defined for board members
in the New York Stock Exchange listing standards. The following directors meet
the independence standards set by the Board and disclosed in MacDermid's
Corporate Governance Policy: Donald G. Ogilvie, James C. Smith, T. Quinn
Spitzer, Jr. and Robert Ecklin.
Audit Committee
----------------
The Audit Committee appoints independent auditors, determines the scope of
the audit examination and the independence of the auditors, reviews and approves
non-audit services provided by the auditors, reviews findings and
recommendations of the auditors and management's response thereto and reviews
MacDermid's internal audit function. The Committee had five (5) meetings during
the last fiscal year. Members of the Committee are Donald G. Ogilvie
(Chairman), Robert L. Ecklin, James C. Smith and T. Quinn Spitzer. The Audit
Committee Charter is available on the Company's website at www.macdermid.com.
Compensation Committee
-----------------------
The Compensation Committee reviews and determines officer compensation. It
administers the Special Stock Purchase Plan, the Stock Option Plan, the Equity
Incentive Plan and the Performance Equity Plan, determining the persons to whom
stock options and restricted shares are to be granted, the number of options or
restricted shares to be granted, the conditions of the grant, and the manner in
which the exercise price shall be payable. The Committee, which met three (3)
times during the last fiscal year, included T. Quinn Spitzer (Chairman), Donald
G. Ogilvie, James C. Smith, Joseph Silvestri, and Robert L. Ecklin. The
Compensation Committee Charter is available on the Company's website at
www.macdermid.com.
Corporate Governance Committee
--------------------------------
The Corporate Governance Committee reviews and makes recommendations to the
Board with regard to director nominees. Any shareholder wishing to recommend a
nominee to the Board should do so in writing addressed to John L. Cordani,
Secretary, MacDermid, Incorporated, 245 Freight Street, Waterbury, Connecticut
06702-0671. The Corporate Governance Committee also reviews corporate governance
in view of the principles and policies set by the Committee. The Committee
which met one time during the last fiscal year is comprised of T. Quinn Spitzer
(Chairman), Robert L. Ecklin, Donald G. Ogilvie and James C. Smith. The
Committee regularly meets outside of the presence of management. The Corporate
Governance Committee Charter and MacDermid's Corporate Governance and Ethics
Policies are available on the Company's website at www.macdermid.com and are
available in print to any shareholder who requests them. The members of the
Corporate Governance Committee are independent as independence for nominating
Committee members is defined in the New York Stock Exchange listing standards.
MacDermid has adopted a formal Corporate Compliance and Ethics Policy which
is applicable to all employees, officers, and directors of the Company. The
terms of the Corporate Compliance and Ethics Policy are available on MacDermid's
web site at www.macdermid.com.
Any suspected compliance or ethical breaches can be reported as provided for in
MacDermid's Ethics and Compliance Policy.
Shareholder Communication Policy
--------------------------------
The Corporate Governance Committee of the Company has adopted a Shareholder
Communication Policy that provides procedures enabling shareholders to
communicate with Directors. A copy of the policy is posted on the Company's
website at www.macdermid.com. Shareholders are encouraged to communicate with
Directors by following the procedures provided in the policy. All of
MacDermid's directors attended last year's annual meeting.
Shareholder Nomination Policy
-----------------------------
The Corporate Governance Committee of the Company has adopted a Shareholder
Nomination Policy that provides procedures enabling shareholders to suggest
individuals to the Corporate Governance Committee for consideration as Director
nominees. A copy of the policy is posted on the Company's website at
www.macdermid.com. Shareholders are encouraged to provide such suggestions by
following the procedures provided in the policy. For any shareholder
recommendation to be considered by the Committee for the 2006 annual shareholder
meeting it must be received by the Company no later than November 30, 2005.
The shareholder should send the suggestion for Director nomination in
writing to the attention of the Corporate Secretary at MacDermid, Incorporated,
245 Freight Street, Waterbury, CT 06702. The suggestion must include any
reasons supporting the suggestion, the qualifications of the person suggested to
be a Director of the Company, and the name and address of the shareholder making
such suggestion. Any suggestions made under the policy must be made by a person
or entity who is a shareholder at the time the suggestion is received by the
Company and the suggestion must include proof of share ownership in the Company
to the reasonable satisfaction of the Company. In the case of a shareholder of
record, such proof of share ownership may be the correct name and address of the
suggesting party such that the Company can determine share ownership based upon
the Company's current records. Upon receipt, by the Corporate Secretary, of an
appropriate written suggestion for Director nomination by a shareholder, which
written suggestion complies with the policy and the procedures set forth in the
policy, the Corporate Secretary will forward such communication to the
Committee. Upon receipt by the Committee of a suggestion for Director
nomination, properly submitted by a shareholder, the Committee will consider
action upon such suggestion in the Committee's sole discretion. In its
consideration, the Committee may take the following factors into account:
- the reputation and general qualifications of the suggested individual;
- the perceived ability of the suggested individual to add value to the
Board, the Company and its shareholders;
- the suggested individual's independence and potential conflicts of
interest;
- the suggested individual's knowledge of the Company, its operations and
business;
- the size of the Board;
- other directorships or affiliations held by the suggested individual;
- the ability of the suggested individual to effectively cooperate with the
other Directors; and
- any other factors deemed relevant by the Committee in its sole discretion.
Although the foregoing factors may be considered by the Committee, any
consideration given to the suggestion and any action or absence thereof shall be
in the sole discretion of the Committee.
ITEM 2.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The independent registered public accountants for MacDermid for fiscal year
2004 were KPMG LLP ("KPMG"), which firm has been selected to be MacDermid's
auditors for next fiscal year by the Audit Committee of the Board of Directors,
subject to the ratification of the shareholders. At the Meeting, a
representative of KPMG will have the opportunity to make a statement if he or
she wishes to do so and will be available to answer any appropriate questions
that may be asked by shareholders.
Vote Required
--------------
This proposal shall be approved by a majority of the votes cast at the Meeting
provided a quorum is present. Abstentions are counted in determining the shares
represented at the meeting but broker non-votes are not counted for such
purpose.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
ITEM 3.
Proposal to Approve an Amendment to the MacDermid, Incorporated Special Stock
Purchase Plan
The Board of Directors recommends that the MacDermid, Incorporated Special
Stock Purchase Plan (the "Plan") be amended effective April 1, 2004. The Board
of Directors is asking shareholders to approve the amendment in order to extend
the option exercise period of options outstanding as of April 1, 2004 under the
Plan until thirty (30) days after the 2005 annual meeting of the shareholders
(i.e. until June 11, 2005). This amendment will only apply to one tranche of
options that were outstanding under the Plan as of April 1, 2004 (the
"Tranche"), the details of which Tranche are summarized as follows:
Grantee No. of Exercise Original Original Expir. Date
Options Price Grant Date Expir. Date After Amendment
Daniel H. 135,000 $1.79/sh April 19, 1994 April 19, 2004 June 11, 2005
Leever
Thus, if adopted by the shareholders, this amendment to the Plan would extend
the exercise period of the foregoing Tranche of options under the Plan from
April 19, 2004 to June 11, 2005. This Tranche of options has not been
exercised. This proposed amendment to the Plan was adopted by the Board of
Directors on November 23, 2004, subject to shareholder approval.
A summary of the principal features of, and material changes to, the Plan
is provided below, but the summary is qualified in its entirety by reference to
the full text of the Plan which was originally adopted on November 15, 1991,
restated on November 1, 1992, and previously amended on February 13, 1996. The
current Plan, including the proposed amendment, is being filed with this proxy
statement and is attached hereto as Appendix A.
The Plan was adopted on November 15, 1991 and was restated on November
1992. The restated plan was then amended, effective February 13, 1996 with
shareholder approval at the 1996 annual shareholder meeting. The Plan provides
for the ability to grant employees of MacDermid and its subsidiaries options to
purchase MacDermid common stock under the terms and conditions of the Plan.
Although all employees of MacDermid and its subsidiaries (about 3,000 total
employees) are eligible to receive grants under the Plan, only two (2) sets of
options to Daniel H. Leever currently remain outstanding under the Plan. On
March 1, 2005, the closing price of MacDermid common stock on the New York Stock
Exchange was $33.91 per share.
The following two (2) sets of options currently remain outstanding under
the Plan:
Grantee No. of Exercise Original Original Expir. Date
Options Price Grant Date Expir. Date After Amendment
Daniel H. 135,000 $1.79/sh April 19, 1994 April 19, 2004 June 11, 2005
Leever
Daniel H. 12,065 $32.75/sh May 15, 1998 May 15, 2008 May 15, 2008
Leever
Note that the proposed amendment will only affect the 135,000 option Tranche by
extending its exercise period termination date from April 19, 2004 to June 11,
2005. The proposed amendment will not affect the 12,065 option set, whose
exercise period termination date will remain May 15, 2008.
The following table sets forth the options received by the specified
individuals (groups) under the Plan since the Plan's inception:
INDIVIDUAL GROUP OPTIONS RECEIVED (#)
================= ======================
Named Executive Officers
--------------------------
Daniel Leever 912,065
Stephen Largan 0
Gregory Bolingbroke 0
John Cordani 0
Frank Monteiro 0
All Current Executive Officers as a Group 912,065
Non-Executive Directors
------------------------
Donald Ogilvie 0
James Smith 0
Joseph Silvestri 0
T. Quinn Spitzer 0
Robert Ecklin 0
All Current Non-Executive Directors as a Group 0
Each Associate of any Director or Executive Officer 0
All Non-Executive Employees 1,633,500
Currently 154,435 shares remain available in the Plan for future issuance and
147,065 options remain outstanding under the Plan (including the 135,000 option
Tranche subject to this Amendment).
Material changes in the Amendment
---------------------------------
As described above, the amendment to the Plan will extend the option
exercise period for one Tranche of 135,000 options outstanding under the Plan
from April 19, 2004 to June 11, 2005.
The Board of Directors believes that this amendment is appropriate in order
to allow the Tranche of options to be exercised by the Grantee in accordance
with the original intent of the Company. As noted the Tranche was originally
granted on April 19, 1994. Pursuant to the 1996 amendment to the Plan, the
exercise period of the Tranche was set to expire on April 19, 2004. However,
the Tranche was not exercised as of April 19, 2004. As a result, the Board of
Directors has adopted this amendment to the Plan, subject to shareholder
approval, which would extend the exercise period of the Tranche until June 11,
2005, thereby allowing the Tranche to be exercised prior to June 11, 2005. The
Board of Directors believes that the amendment is appropriate and desirable in
order to allow the Tranche to be exercised and not lapse as a result of an
oversight.
Administration
--------------
The Plan is administered by a committee of not fewer than two members of
the Board of Directors (the "Committee"), each of whom is a non-employee,
disinterested 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 Internal Revenue Code. The Committee is the
Compensation Committee of the Board of Directors. The Committee may adopt such
rules and regulations as it may deem desirable for administration of the Plan.
Shares Available/Awards
-----------------------
Under the Plan, options may be granted to purchase an aggregate amount of
up to two million seven hundred thousand (2,700,000) shares of MacDermid common
stock. (Please note that the original 300,000 shares allotted to the Plan have
been adjusted for two (2) intervening 3 for 1 splits). Such shares may be
treasury shares or may be authorized and unissued shares. As of March 1, 2004,
154,435 shares remain available for grants of awards under the Plan. Under the
Plan, employees as designated by the Committee are eligible to receive awards.
The purchase price per share upon exercise of an option under the Plan shall be
equal to at least 66.6% of the fair market value of such shares at the time the
option is granted.
The original Plan provided that any option granted may be exercised only
within four (4) years from the date of grant (or, if later, within four (4)
years from the date that the Plan is approved by the shareholders). The 1996
amendment to the Plan extended this exercise period for previously granted but
unexercised options from four (4) years to ten (10) years on a share for share
basis, depending upon the number of options previously exercised by a
participant at any point in time. This extension applied to the Tranche thereby
originally giving it a ten (10) year exercise period from April 19, 1994 (grant
date) to April 19, 2004.
In the event that a participant retires, dies or otherwise leaves the
employment of MacDermid, any option held by the participant must be exercised,
if at all, as follows: (i) within three months following retirement in
accordance with MacDermid's established retirement policies, (ii) within six
months following the participant's death, or (iii) within one month following
termination of employment with MacDermid for reasons other than retirement or
death, all subject to the exercise period for the options. Upon request by a
retiring participant, the Committee may extend the three month period within
which his or her options may be exercised.
The shares purchased by a participant upon exercise of an option must be
held and may not be transferred by the participant (except to MacDermid) for a
period of four years commencing on the date of exercise of the option. In its
sole discretion, the Committee may waive the restrictions against transfer
applicable to the shares prior to the expiration of the four year period.
If a participant's employment with MacDermid is terminated for any reason
other than death, retirement in accordance with MacDermid's established
retirement policies, permanent disability or involuntary termination without
cause while the participant holds shares which are subject to restrictions on
transfer imposed by the Plan, the participant is required to sell such shares to
MacDermid for the price he or she paid for the shares. However, if a
participant's employment is terminated due to one of the reasons listed in the
preceding sentence, any restrictions on the transfer of shares held by the
participant pursuant to the Plan will lapse and such shares may be freely
transferred.
For federal income tax purposes, no taxable income results to the optionee
upon the grant of a stock option under the Plan or upon the issuance of shares
upon the exercise of the option. Correspondingly, no deduction is allowed to
MacDermid upon either the grant or the exercise of an option. The optionee will
be deemed to have received compensation equal to the difference between the
exercise price of the option for the shares purchased and the fair market value
of the shares upon the expiration of the restrictions described above. If,
however, a participant makes an election under Section 83(b) of the Code within
30 days of the exercise of the option, the participant will realize ordinary
income on the date of exercise equal to the fair market value of the shares at
that time (measured as if the shares were unrestricted and could be sold
immediately) less the exercise price paid for such shares. If the election is
made, no taxable income will be realized when the shares subject to such
election are no longer subject to the restrictions on transfer. Upon sale of
the shares after the restrictions on transfer have expired, the holding period
to determine whether the participant has long-term or short-term capital gain or
loss begins when the restriction period expires (or upon earlier issuance of the
shares, if the participant elected immediate recognition of income under Section
83(b) of the Code.)
In the case of an option with a purchase price less than the fair market value
on the date of grant the tax imposed on the optionee will be increased by an
amount equal to 20% of the compensation that is required to be included in
income unless the option meets certain requirements imposed by Section 409A of
the Code. If the shares subject to an election are repurchased by MacDermid,
the participant will not be entitled to any deduction, refund or loss for tax
purposes with respect to the repurchased shares.
Full payment of the exercise price, together with the amount of any taxes
due, must be made at the time any option granted under the Plan is exercised.
Payment may be made in cash, by certified or cashiers check or, at the
discretion of the Committee, by delivery of shares of Common Stock having a fair
market value equivalent to the amount required to be paid.
Provision is made in the Plan for hardship withdrawals and waiver of
restrictions, at the discretion of the Committee, where there is a demonstrated
need which cannot be satisfied from other reasonably available resources.
Hardship may include medical expenses incurred by the participant or the
participant's dependents, payment of tuition for post-secondary education or
expenditures to prevent eviction of the participant from his or her principal
residence.
In the event that MacDermid's outstanding shares of Common Stock are
increased or decreased as the result of a stock dividend, stock split,
recapitalization or other similar event, the number of shares available for
issuance under the Plan, the number of shares issuable pursuant to any
outstanding option and the exercise price of any option outstanding under the
Plan may be adjusted to the extent the Committee deems appropriate, with the
approval of counsel, to preserve the rights of the participants. The number of
shares available for issuance under the Plan, the number of shares issuable
pursuant to options outstanding under the Plan (including the Tranche) and the
exercise price of options outstanding under the Plan (including the Tranche)
have been adjusted for two, 3 for 1 stock splits.
In addition, if MacDermid reclassifies or exchanges outstanding shares of
Common Stock, consolidates or merges with or into another corporation (other
than with a subsidiary controlled by MacDermid) or otherwise recapitalizes or
reorganizes, or sells or conveys to another corporation all or substantially all
of its assets (collectively referred to herein as "Reorganizations"), each
participant shall have the right upon any subsequent exercise of an option to
acquire the same kind and amount of securities and property which the
participant would have been able to acquire if the participant had exercised the
option immediately before the Reorganization. In addition, the Committee shall
have the right in connection with any Reorganization to cause any outstanding
options to become immediately exercisable in whole or in part.
If any person or entity owns or acquires, directly or indirectly, shares of
the capital stock of MacDermid entitled to cast 25% or more of the votes
entitled to be cast generally in an election of directors (other than any such
shares owned or acquired by any qualified employees benefit plan maintained by
MacDermid), all restrictions imposed on any shares of Common Stock pursuant to
the Plan will immediately lapse and all options outstanding under the Plan will
become immediately exercisable.
The Board of Directors may amend, suspend, or terminate the Plan except
that no action may be taken which impairs participants' rights under outstanding
options without their consent and no amendment shall be made without shareholder
approval where such approval is required under Rule 16b-3. The Committee may
substitute new options for options previously granted to participants, including
without limitation, previously granted options having higher exercise prices.
The Plan provides specific protection for the exempt status of the Plan
under Rule 16b-3 of the Securities Exchange Act of 1934 (the "Act"), by
specifying that Shares acquired by a Plan participant who is subject to Section
16 of the Act, may not be sold for six (6) months after the later of the grant
of the option and, if applicable, the date on which the exercise period of the
option was extended to ten years pursuant to the Amendments.
In addition, the Plan prevents any action by the Committee or the Board if
such action would disqualify the Plan from the exemption provided by Rule 16b-3
or any successor provision.
FUTURE AWARDS
The amount of the awards to be granted in the future to current or future
participating employees 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 2004, the amount of awards
under the Plan (none) would not have been materially different.
VOTE REQUIRED
Approval of the amendment to the Plan will require the affirmative vote of
the holders of a majority of the votes cast on this proposal by holders of
Common Stock present in person or represented by proxy at the Annual Meeting
provided the total vote cast on the proposal represents over 50% of all
securities entitled to vote. 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 Plan. Broker non-votes are not considered shares
present in person or represented by proxy and entitled to vote on the amendment
to the 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 PLAN.
Section 16(a) Beneficial Ownership Reporting Compliance
------------------------------------------------------------
Based solely upon a review of Forms 3, 4, and 5 and amendments thereto
furnished to the Company with respect to its most recent fiscal year, the
Company believes that all reporting persons filed on a timely basis the reports
required by Section 16(a) of the Securities Exchange Act of 1934, as amended,
during the most recent fiscal year, except that Robert L. Ecklin, a director of
the Company, filed late Form 4's on January 18, 2005, reporting a transaction
that was not reported on a timely basis.
SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement relating to the
2006 annual meeting must comply in all respects with the rules and regulations
of the Securities and Exchange Commission and be received at MacDermid's
principal executive offices at 245 Freight Street, Waterbury, Connecticut
06702-0671 no later than November 30, 2005. If the Company does not have notice
of a shareholder proposal to be presented at the 2006 Annual Meeting by January
29, 2006, then such proposal will be considered untimely and proxies will confer
discretionary authority to vote on such proposal. Such proposals should be
addressed to the attention of John L. Cordani, Secretary.
MISCELLANEOUS
The Board of Directors knows of no matters other than those referenced in
the Notice of Annual Meeting which are to be brought before the Meeting.
However, if any other matters are properly presented, it is the intention of the
persons named in the Proxy to vote the Proxy in accordance with their best
judgment.
It is important that proxies be returned prior to the Meeting. Shareholders are
urged to sign and date the enclosed Proxy and promptly return it in the enclosed
envelope.
March 15, 2005 The Board of Directors
MACDERMID, INCORPORATED WILL PROVIDE WITHOUT CHARGE, TO ANY SHAREHOLDER,
UPON WRITTEN REQUEST, A COPY OF ITS ANNUAL REPORT ON FORM 10-K REQUIRED TO BE
FILE WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2004 AS WELL AS COPIES OF ANY POLICIES OR GUIDELINES REFERENCED
HEREIN. SUCH REQUEST SHOULD BE DIRECTED TO JOHN L. CORDANI, SECRETARY,
MACDERMID, INCORPORATED, 245 FREIGHT STREET, WATERBURY, CONNECTICUT 06702-0671.
APPENDIX A
----------
MACDERMID, INCORPORATED
SPECIAL STOCK PURCHASE PLAN
Dated November 15, 1991
(Restated November 1, 1992 AND
AMENDED EFFECTIVE FEBRUARY 13, 1996
FURTHER AMENDED EFFECTIVE APRIL 1, 2004
---------------------------------------
1. PURPOSES. The purposes of the MacDermid, Incorporated Special Stock
Purchase 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 employees who are in a position to
make a notable contribution to the welfare of the Company, the means to acquire
a proprietary interest in the Company, in order that such persons will have
financial incentives to contribute to the Company's growth and profitability,
and (ii) to enhance the ability of the Company to attract and retain in its
employ individuals of outstanding ability upon whom the success of the Company
will depend.
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" within the meaning of Rule 16b-3(c)
under the Securities Exchange Act of 1934, as amended (the "Act"). The
Committee may adopt such rules and regulations as it may deem necessary or
advisable for the administration of the Plan.
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 the Committee.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided herein, an
aggregate of 300,000 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 cancelled 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. All employees of the Company who are in a position to make
notable contribution to its welfare 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.
6. OPTION PRICE. The purchase price per share purchasable upon exercise of
an option under the Plan shall be equal to sixty-six and six tenths percent
(66.6%) of the fair market value of such shares at the time the option is
granted, as determined in good faith by the Committee.
7. OPTION PERIOD. Subject to Sections 12 and 13 and the following
provisions of this Section 7, the period for exercising an option (the "Exercise
Period") shall begin with the later of the date of grant of the option and
the date of approval of the Plan by the Company's stockholders and shall end
four (4) years thereafter.
Notwithstanding the foregoing, and subject to the approval of the Plan as
amended by the Company's stockholders, the Exercise Period for that number of
options held by a participant at the end of such four (4) years (the "Original
Termination Date") that is equal to the lesser of:
(a) one-half (1/2) of the total number of options granted to such
participant under the Plan, and
(b) the total number of options granted to such participant under the Plan
that have been exercised by the participant on or prior to the Original
Termination Date.
shall be extended automatically as of the Original Termination Date for an
additional six (6) years thereafter. Further, the exercise period for those
options under the Plan outstanding as of April 1, 2004 held by a participant,
shall be extended thereafter until thirty (30) days after the 2005 annual
meeting of the shareholders.
All extensions of the expiration date of outstanding options under the Plan
will be documented promptly after the Original Termination Date by the issuance
of a new stock option agreement, although the failure to do so shall not be
construed to invalidate any such extension.
If a participant retires in accordance with the Company's established
retirement policies at any time between the commencement and the expiration of
the Exercise Period, an option shall be exercisable by him or her only during
the three (3) months following his or her retirement (but in no event after the
expiration of the Exercise Period) and only as to the number of shares, if any,
as to which it was exercisable immediately prior to retirement. At the written
request of a participant, the Committee may, at its sole discretion, extend the
period for exercise of a particular option beyond said three-month period. Any
such request shall be delivered to the Committee at the principal business
office of the Company at least one (1) month prior to expiration of said
three-month period and shall set forth the reasons for the request.
If a participant dies at any time between the commencement and the
expiration of the Exercise Period, an option shall be exercisable by his or her
executor or administrator or, if not so exercised, by the legatees or the
distributes of his or her estate, only during the six (6) months following his
or her death (but in no event after the expiration of the Exercise Period), and
only as to the number of shares, if any, as to which it was exercisable
immediately prior to cessation of employment.
8. PAYMENT FOR SHARES AND RELATED MATTERS. Full payment for shares
purchased, 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 exercise of an option and
shall be made in cash or by certified or bank cashier's check or, in the
discretion of the Committee, in whole or in part by delivery of shares of Common
Stock of the Company having a fair market value at the date of such
delivery (determined in a manner approved by the Committee) of not less than the
amount for which payment is being made by delivery of the shares. The Company
shall issue no certificates for shares until (a) full payment therefore has been
made and (b) the participant purchasing such shares provides for payment to (or
withholding by) the Company of all amounts required under then applicable
provisions of the Internal Revenue Code of 1986, as amended, 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.
9. RESTRICTIONS ON SHARES ISSUED UNDER THE PLAN. Shares of Common Stock
issued upon exercise of an option under the Plan may not be sold or otherwise
transferred, V except to the Company for an amount equal to the price paid for
such shares upon exercise, for a period of four (4) years from the date of
issuance pursuant to such exercise, provided, however, that the Committee in its
sole discretion may determine from time to time for any reason to waive in
whole or in part the restrictions applicable to any such shares prior to the
expiration of such four (4) year period. Notwithstanding the foregoing, such
shares of Common Stock may be pledged, subject to the restrictions under this
Section 9, as security for obligations, directly related to the acquisition of
such Shares of Common Stock hereunder, prior to the expiration of such four (4)
year period, and nothing herein shall prevent the pledge from recovering on such
security (to the extent of and consistent with the provision of this Section 9)
in the event of a default on any such obligation.
If the employment of the holder of shares issued upon exercise of an option
under the plan is terminated for any reason other than death, retirement in
accordance with the Company's V qualified pension plan at or after attainment of
age sixty (60), permanent disability or involuntary termination without cause
while such shares are subject to the restrictions described in the immediately
preceding paragraph, the holder shall be required to sell such shares to the
Company for the price paid therefore by the holder, and all rights of the holder
with respect to such shares shall be immediately cancelled, unless the Company
declines in writing to purchase such shares.
Notwithstanding the foregoing provisions of this Section 9, if the
employment of the holder of shares issued upon exercise of an option under the
Plan is terminated due to death, retirement in accordance with the Company's V
qualified pension plan at or after attainment of age sixty (60),permanent
disability or involuntary termination without cause, the restrictions on such
shares shall lapse as of the date of such event, and such holder shall be free
to dispose of the shares without further restriction.
The restrictions imposed under this Section 9 shall apply as well to all
shares or other securities issued in respect of shares in connection with any
stock split, reverse stock split, stock dividend, recapitalization,
reclassification, spinoff, split-off, merger, consolidation or reorganization.
In the event any stock certificate is issued in respect of shares awarded upon
the exercise of an option under this Plan, such certificate shall be registered
in the name of the participant, and shall bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such shares.
10. NONTRANSFERABILITY. 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 and with the approval of counsel,
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. In case of any one or more
reclassifications, changes or exchanges of outstanding shares of Common Stock 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," a participant shall have the right,
upon any subsequent exercise of an option, to acquire the same kind and amount
of securities and property which such 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 canceled pursuant to any of same, the
adjustment rights in Section 11 and this Section being continuing and
cumulative, except that, anything to the contrary herein contained
notwithstanding, the Committee shall have the right in connection with any
Reorganizations, upon not less than thirty (30) days' written notice to the
participants, to terminate the term of any outstanding options so that, in such
event, all outstanding options may be exercised in whole or in part, only at a
time prior to or simultaneously with the consummation of such Reorganization.
The provisions and term of options held by participants who are no longer
employees of the Company shall not be affected pursuant to the preceding
sentence. 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.
13. CHANGE IN CONTROL. In the event that at any time after the effective
date of the Plan the Company shall have a "Principal Stockholder," as
hereinafter defined, then notwithstanding anything to the contrary contained
herein, upon the date such event occurs (a) all restrictions imposed pursuant to
Section 9 with respect to shares shall immediately lapse, and (b) all
outstanding options shall be exercisable immediately in whole or in part.
For purposed of this Section 13, (a) the term "Principal Stockholder" shall
mean any corporation, person, or other entity ("person") owning beneficially,
directly or indirectly, shares of the capital stock of the Company entitled to
cast twenty-five percent (25%) or more of the votes at the time entitled to be
cast generally in the election of Directors by all of the outstanding shares of
all classes of capital stock of the Company (other than any such shares held by
any qualified employee benefit plan maintained by the Company), considered for
purposes of this Section 13 as one class; (b) in determining such ownership, a
person shall be deemed to be the beneficial owner of any shares of capital stock
of the Company which are beneficially owned, directly or indirectly, by any
other person (i) with which it or its "affiliate" or "associate," as hereinafter
defined, has any agreement, arrangement or understanding for the purposes of
acquiring, holding, voting or disposing of capital stock of the Company of (ii)
which is its "affiliate" or "associate"; (c) a person shall be deemed to be an
"affiliate" of, or affiliated with, a specified person if such person directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified; and (d) the term
"associate" used to indicate a relationship with any person shall mean (A) any
corporation or organization (other than the Company or any subsidiary of the
Company) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity security, (B) any trusts or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, and (C) any relative or spouse of such person,
or any relative of such spouse, who has the same home as such person.
14. HARDSHIP WITHDRAWALS. Notwithstanding anything to the contrary
contained in Section 9 above, the Committee, in its sole discretion, may waive
the restrictions imposed by Section 9 on any shares issued upon exercise of
options under the Plan upon demonstration by a participant of financial
hardship. For purposes hereof, financial hardship shall mean an immediate and
heavy financial need of the participant such that the waiver of the restrictions
imposed by Section 9 is necessary to satisfy that need. Such an immediate
and heavy financial need may be deemed to exist with respect to the following
expenditures:
a) Medical expenses incurred by the participant or his or her spouse or
dependents (as defined in Section 152 of the Internal Revenue Code of 1986, as
amended);
b) Expenditures to prevent eviction of the participant from his or her
principal residence or foreclosure of a mortgage on the same.
A distribution will be deemed to be necessary to satisfy such a need only if it
is demonstrated on the basis of all the facts and circumstances that it does not
exceed the amount required to satisfy the need and the need cannot be satisfied
from other reasonably available resources.
15. EFFECTIVE DATE OF PLAN. Subject to the approval of the shareholders of
the Company, the Plan shall be effective on November 19, 1991. Prior to such
approval, options may be granted under the Plan expressly subject to such
approval.
16. 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.
17. SECTION 16 EXEMPTION. Notwithstanding any other provision of the Plan,
in order to qualify for the exemption provided by Rule 16b-3 under the Act, or
any successor provision, any shares of Common Stock acquired by a Plan
participant who is subject to Section 16 of the Act upon exercise of an option
granted under the Plan may not be sold for six months after the latter of the
grant of the option and, if applicable, the date on which the Exercise Period of
the option was extended to ten years pursuant to Section 7 hereof. 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.
18. INTERPRETATION. The interpretation and construction of any provision of
the Plan and the adoption of rules and regulations for administering the
Plan shall be made by the Committee. Determinations made by the Committee with
respect to any matter or provision contained in the Plan shall be final,
conclusive and binding upon the Company and upon all participants, their heirs
and legal representatives. Any rule or regulation adopted by the Committee
(whether under the authority of this Section or Section 2 above) shall remain in
full force and effect unless and until altered, amended or repealed by the
Committee.
APPENDIXB
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Front
PROXY MACDERMID, INCORPORATED PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders
May 12, 2005 at 3:00 P.M.,EDT
at MacDermid, Incorporated
245 Freight Street, Waterbury, Connecticut 06702.
The undersigned hereby constitutes and appoints DANIEL H. LEEVER or his
designee, attorney and proxy to act on behalf of the undersigned at said meeting
and at any adjournment thereof (the "Meeting"), with authority to vote on the
following matters all shares of stock which the undersigned would be entitled to
vote at the Meeting if personally present as directed on the reverse side hereof
with respect to the items set forth in the accompanying Proxy Statement and in
his discretion upon such other matters as may properly come before the Meeting.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY VOTING INSTRUCTION CARD
IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
Reverse
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
A vote FOR items 1 through 3 is recommended by the Board of Directors.
1. Election of Directors
Nominees: Daniel H. Leever, Donald G. Ogilvie, James C. Smith, Joseph M.
Silvestri, T. Quinn Spitzer and Robert L. Ecklin.
FOR WITHHOLD FOR ALL (Except Nominee(s)
[ ] [ ] [ ] written below)
2. Ratification of the appointment of KPMG L.L.P. as
Independent Accountants for the fiscal year ended December 31, 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the proposed amendment for the Special Stock Purchase Plan.
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:____________________,2005
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.]