UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[ ] Definitive Proxy Statement
[x] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Hercules Incorporated
------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------------
[HERCULES LOGO] HERCULES INCORPORATED
Hercules Plaza
1313 North Market Street
Wilmington, DE 19894-0001
May 14, 2001
Fellow Shareholder:
Hercules has made progress on a number of fronts over the last several months.
OUR ACTIONS HAVE BEEN EXTENSIVE AND DECISIVE. THEY ARE PAYING OFF EVERY DAY.
Consider these achievements:
o NEW CEO APPOINTED - Dr. William Joyce was appointed CEO and a member of the
Hercules Board on May 8th, 2001. Prior to joining Hercules, he was Chairman
and CEO since 1996 of Union Carbide Corporation, which recently merged with
The Dow Chemical Company.
o DEBT RESTRUCTURED - Since October, we have restructured the Company's debt,
which has allowed us to operate our businesses without disruptions. Our
customers and employees have also been reassured by this achievement, and
we continue to focus on ways to reduce our indebtedness. For example,
shedding non-essential assets has helped reduce our debt. We continue in
this effort.
o ASSET SALES PROGRESS - The divestiture process is continuing successfully.
In early May, we completed the sale of the majority of our resins division
to Eastman Chemical Company. We also signed a definitive agreement to sell
our peroxy chemicals business, and expect that sale to close in the next
several weeks. In the last year, we have generated proceeds from asset
sales of approximately $700 million.
o COSTS REDUCED - Sharpening our focus on costs has paid off too. The
workforce has been reduced by 2.5% through normal attrition and this,
combined with a hiring freeze and a tight control on discretionary
spending, has helped to control costs. During the first quarter, cash flow
improved due to increased attention to working capital (cut by 15%) and
capital expenditures (reduced by 43%).
o OUR CORE BUSINESSES REMAIN HEALTHY - Despite the difficult economic climate
we are facing, our core businesses have retained their leadership position
as either #1 or a strong #2 in their respective markets, and operating
profit for these core businesses was down only 2% from the fourth quarter.
LET ME ASSURE YOU THAT OUR SIGHTS ARE FIXED ON ONE GOAL: TO MAXIMIZE VALUE
FOR ALL SHAREHOLDERS.
Letter to Shareholders
May 14, 2001
Page 2
-------------------------------
ELECTING HEYMAN AND HIS NOMINEES AT THIS TIME WOULD BE UNWISE AND
COUNTERPRODUCTIVE.
o We believe it would damage or delay the sale process - and may
ultimately cause potential buyers to abandon the process. What potential
buyer will want to deal with Heyman and a divided board?
o In addition, we don't believe Heyman and his nominees would contribute
anything new as Directors while we move to complete the sale process. The
Hercules' management team will need a supportive and informed board. We
believe Heyman and his nominees will be neither.
Our 2001 meeting is now within sight. We look forward to seeing many
shareholders attend, but whether you plan to attend or not, we urge you to vote
your WHITE proxy card. PLEASE DO NOT DELAY ANY LONGER. YOUR WHITE PROXY CARD
MUST BE RECEIVED BY THE CLOSE OF BUSINESS ON MAY 23RD TO MAKE CERTAIN THAT IT
WILL BE COUNTED AS A VOTE IN THIS IMPORTANT ELECTION.
Thank you for your critical support at this crucial time for Hercules,
Sincerely,
/s/ Thomas L. Gossage /s/ William H. Joyce
Thomas L. Gossage William H. Joyce
Chairman of the Board Chief Executive Officer
--------------------------------------------------------------------------------
If you have any questions about the annual meeting, need assistance in voting
your WHITE proxy card or need additional copies of Hercules proxy materials,
please call MacKenzie Partners TOLL FREE at (800) 322-2885 or collect at
(212) 929-5500. You may also call the Company directly toll free at
(800) 441-9274.
--------------------------------------------------------------------------------
IMPORTANT DEVELOPMENTS
INSTITUTIONAL SHAREHOLDER SERVICES RECOMMENDS
VOTING FOR HERCULES' DIRECTOR NOMINEES
Institutional Shareholder Services, the preeminent proxy advisory service -
heavily relied on by institutions, mutual funds and other investment
professionals in casting their votes in contested elections - has announced its
unqualified support for reelecting the Hercules Board nominees.
In an 18-page report, Institutional Shareholder Services clearly analyzes the
issues involved in this proxy fight and weighs the merits of the competing
positions of Hercules and ISP. The report concludes by stating "THE DECISION
COMES DOWN TO WHO IS MORE VITAL TO COMPLETING THE SALE PROCESS THAT IS UNDERWAY,
AND WHO IS MORE VITAL IN THE TRANSITION TO THE NEW CEO. WE BELIEVE IT IS THE
MANAGEMENT SLATE. THERE IS NO ARGUMENT OF HERCULES' PAST FAILINGS. BUT MR.
GOSSAGE, IN CONJUNCTION WITH THE BOARD, HAS ATTEMPTED TO REDRESS THEM AND MOVE
THE COMPANY FORWARD ON A SOUNDER PATH. WE BELIEVE MR. JOYCE HAS BOTH THE COMMAND
AND THE BACKING OF THE BOARD TO CONTINUE THIS PROCESS IN AN EXPEDITIOUS MANNER.
WE THEREFORE ADVOCATE REELECTING MANAGEMENT'S NOMINEES."
Shirley Westcott, Chief Policy Advisor of Institutional Shareholder Services,
elaborated in the report, "IN RECENT DAYS, THE DISSIDENTS [ISP] HAVE PUBLICLY
ADVOCATED THE SALE OF BETZDEARBORN, EVEN THOUGH THE COMPANY HAS ALREADY BEEN
EXPLORING THAT OPTION. THEY HAVE URGED THE APPOINTMENT OF A PERMANENT CEO AS THE
"HIGHEST PRIORITY," AND JUST YESTERDAY ONE HAS BEEN SELECTED. ONE HAS TO ASK
WHAT COULD AN ISP SLATE ADD TO THE BOARD NOW?"
The report further stated, "AS THE MEETING APPROACHES, IT IS THE DISSIDENTS THAT
SEEM TO BE DEVISING ELEVENTH-HOUR CAMPAIGN THEMES. THEY ARE LOSING GROUND
BECAUSE THE COMPANY IS DOING EXACTLY WHAT ISP HAS BEEN ADVOCATING."
WE ASK YOU TO FOLLOW THE INSTITUTIONAL SHAREHOLDER SERVICES RECOMMENDATION
AND VOTE FOR HERCULES' NOMINEES
# # #