SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MacDermid, Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
MACDERMID
Incorporated
245 Freight Street
Waterbury, CT. 06702-0671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD April 30, 2003
The Annual Meeting of Shareholders of MacDermid, Incorporated
("MacDermid") will be held at MacDermid's corporate headquarters located at 245
Freight Street, Waterbury, CT. 06702 on Wednesday, April 30, 2003 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; and
2. To consider and act upon the ratification of the appointment of KPMG
L.L.P. as independent accountants for 2003; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 3, 2003
as the record date for the determination of shareholders who will be
entitled to notice of and to vote at the meeting.
Whether or not you plan to attend the annual meeting, please promptly vote,
date and sign the enclosed proxy and return it in the enclosed postage-paid
envelope at your earliest convenience prior to the meeting.
Your proxy vote is very important. Prompt return of all your proxies
will minimize proxy solicitation expense, assure a quorum and avoid
confusion and delay at the meeting.
Please note that, in addition to the annual shareholders meeting noted
----------------
above, MacDermid will also be holding a separate investors information session
on Friday, May 2, 2003 at the Embassy Suites in Omaha, Nebraska at 2:00 P.M.
All shareholders who wish to attend are invited to both, or either, of the
annual meeting noted above or the information session. However please note that
all voting on issues contained herein will occur only at the annual shareholders
----
meeting to be held on April 30, 2003 at 3:00 p.m. at MacDermid's headquarters in
Waterbury, Connecticut.
By Order of the Board of Directors,
Waterbury, Connecticut John L. Cordani
March 26, 2003 Corporate Secretary
(IN ORDER TO AVOID UNNECESSARY EXPENSE), we urge you to indicate voting
instructions on the enclosed proxy and date, sign and return it promptly
PRIOR to the meeting in the envelope provided, no matter how large or small
your holdings may be.
MACDERMID
Incorporated
245 Freight Street
Waterbury, Connecticut 06702-0671
PROXY STATEMENT
GENERAL
THE ACCOMPANYING PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF
MACDERMID, INCORPORATED ("MACDERMID") for use at the annual meeting of
Shareholders of MacDermid and at any and all adjournments thereof (the
"Meeting") to be held, pursuant to the accompanying Notice of Annual Meeting
of Shareholders, at MacDermid, Incorporated, 245 Freight Street, Waterbury, CT.
06702 on Wednesday, April 30, 2003 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 for the election of the nominees for directors named
below, and by the persons granted the proxies in their discretion on any other
business properly to come before the Meeting.
MacDermid has retained D.F. King & Co., Inc. of New York, New York
("King") to assist with the solicitation of Proxies and the mailing and
distribution of proxy material. The anticipated cost of King's services is
approximately $4,500, 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 or
telegram. Votes will be counted by employees of The Bank of New York of New
York, the Corporation's transfer agent. MacDermid currently anticipates that
John L. Cordani, the Corporate Secretary of MacDermid, will be the Inspector of
Election who will certify the votes at the meeting of shareholders.
Only holders of Common Stock of record at the close of business on
March 3, 2003 are entitled to notice of and to vote at the Meeting. On that
date there were 32,311,504 shares of Common Stock outstanding and entitled to be
voted. Holders of a majority of such outstanding shares, present in person or
represented by proxy, will be necessary to constitute a quorum at the Meeting.
If a quorum is present, the affirmative vote of a majority of the shares present
in person or represented by proxy at the Meeting will be necessary for the
election of each nominee for director and for the approval of the other items
proposed. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum. Abstentions are counted in
determining the shares represented at the Meeting with respect to each proposal
presented to shareholders, but broker non-votes are not counted for such
purpose.
Any shares held for the account of a shareholder who participates in
the MacDermid Dividend Reinvestment Plan will be voted automatically with
the shareholder's other shares of Common Stock as directed by the
shareholder on the enclosed Proxy.
The approximate date on which this Proxy Statement and the accompanying
Proxy are first sent to shareholders is March 26, 2003. MacDermid's Annual
Report to Shareholders, containing financial statements for the fiscal year
ended December 31, 2001, accompanies these proxy materials to each shareholder.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
Please complete, sign and return your proxy card
in the enclosed envelope.
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors, pursuant to the By-Laws, as amended, has fixed at
six (6) the number of directors to be elected at the Meeting. Shares
represented by Proxies will be voted for the election of the nominees for
Director listed below, unless otherwise indicated. Each Director of MacDermid
shall serve until the next annual meeting or until his successor has been
elected and qualified. All nominees are currently Directors of MacDermid.
Management has no reason to believe that any nominee named below will
be unable to serve as a Director. If at the time of the Meeting a nominee
should be unable to stand for election, it is the intention of the persons
granted the Proxies to vote in their discretion for such person as may be
designated as a nominee by the Board of Directors of MacDermid.
The following information has been provided by each Director nominee.
--NOMINEES FOR DIRECTOR --
DANIEL H. LEEVER Mr. Leever joined MacDermid in
1982. In 1989, he was appointed Senior Vice
President and Chief Operating Officer. The
following year, he was appointed President and
Chief Executive Officer. In 1998, Mr. Leever was
appointed Chairman of the Board and currently
serves as Chairman and Chief Executive Officer.
Mr. Leever attended undergraduate school at Kansas
State University and the graduate school at the
University of New Haven School of Business.
Principal occupation -Chairman of the Board and Chief Executive Officer of
MacDermid
Director since 1989
2,103,227 shares - 6.5% (1)
Age: 54
DONALD G. OGILVIE - Mr. Ogilvie has been
President of the American
Bankers Association since 1985. From 1980 to
1985 he was a Vice President of Celanese Corporation
and from 1977 to 1980 Associate Dean of Yale
University's School of Organization and Management.
Earlier, he held posts in the U.S. Department of
Defense and in the Executive Office of the President
as Associate Director of National Security and
International Affairs in the Office of Management
and Budget. Mr. Ogilvie has a B.A. degree from Yale
University and an M.B.A. from Stanford University's
School of Business.
Principal occupation - President of American Bankers Association
Director since 1986
28,724 shares - *(2) (3)
Chairman of the Audit Committee and member of the Compensation and Corporate
Governance Committees.
Age: 59
JAMES C. SMITH Mr. Smith is Chairman of
the Board (1995) and Chief Executive Officer (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
40,130 shares - * (2) (3)
Member of the Audit, Compensation and Corporate Governance Committees.
Age: 54
JOSEPH M. SILVESTRI Mr. Silvestri has been a Vice President of Citicorp Venture
Capital Ltd since 1995. He is a member of the boards of directors and
compensation committees of Triumph Group, Inc, a manufacturer and distributor of
aircraft components, Euramax, a fabricator of aluminum and steel products and
ISG Resources, a manufacturer of building products. Mr. Silvestri is also a
director of Delco Remy, a manufacturer of automotive parts. He also serves on
the Boards of Directors of a number of private corporations. Mr. Silvestri has
a BS degree from Pennsylvania State University and an MBA degree from Columbia
Business School.
Mr. Silvestri serves as Citicorp's director
nominee pursuant to the terms of the
Acquisition agreements entered into between the Company, Citicorp, and PTI, Inc.
on December 29, 1999.
Principal occupation - Vice President of Citicorp Venture Capital Ltd.
Director since 1999
176,424 shares - * (2) (3)
Member of the Compensation Committee.
Age: 41
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 Boards of Directors
of UTI, Inc.
and the National Alliance of Business.
Principal Occupation - Partner, McHugh Consulting
Director since 2000
21,115 shares - *(2) (3)
Chairman of the Compensation and Corporate Governance Committees,
as well as Lead Director.
Age: 53
ROBERT L. ECKLIN Mr. Ecklin is Executive Vice President-
Optical Communications for Corning Incorporated. He has
held this position since January 2001 and has been Executive
Vice President for Corning since January,1999. He joined
Corning in 1961 in the Engineering Division and has held a
number of manufacturing and operations positions at Corning.
He was formerly plant manager of two Corning facilities and
was named Vice President in 1982. In 1990, Mr. Ecklin was
appointed Senior Vice President and General Manager, Industrial
Products. Mr. Ecklin serves on several boards including Pittsburgh
Corning, Pittsburgh Corning Europe as well as several service
organizations, including the Alliance For Manufacturing and
Technology for the Southern Tier, the Committee of 50, Alfred
Technology Resources, National Alliance of Business and the
State University of New York, Research Board. Mr. Ecklin holds
a bachelor's degree in architectural engineering and has completed
the Executive Management Program at Dartmouth University.
Principal occupation - Executive Vice President of
Corning, Incorporated
Director since 2001
16,724 shares - *(2) (3)
Member of the Audit, Compensation and Corporate Governance Committees.
Age: 64
* Indicates less than 1% of the outstanding shares of Common Stock.
Notes to Election of Directors
(1) Includes 148,647 shares held by MacDermid's Profit Sharing and
Employee Stock Ownership plans (reported as of December 31, 2002), 282,065
shares which may be acquired upon exercise of options granted under the Special
Stock Purchase Plan and 500,000 shares which may be acquired upon exercise of
options granted under the MacDermid Incorporated Stock Option Plan dated July 6,
1998 and 330,000 shares which may be acquired upon the exercise of options
granted under the 2001 Key Executive Performance Equity Plan. Includes 6,795
shares held in trust by Mr. Leever for his son and 3,973 shares owned by his
spouse, as to all of which Mr. Leever disclaims beneficial interest. Also
includes 210,599 shares held by a certain trust established by Mr. Harold
Leever, for which Mr. Daniel Leever is co-trustee. Also includes 150,000
options issued to Mr. Leever pursuant to the terms of the 2001 Key Executive
Performance Equity Plan in February, 2003.
(2) Owner has sole voting power.
(3) Includes director's premium options granted under the MacDermid,
Incorporated Stock Option Plan of 2,295; 2,295; 3,501; 1,527 and 0 for Messrs.
Ogilvie, Smith, Silvestri, Spitzer and Ecklin, respectively and options granted
under the 2001 Key Executive Performance Equity Plan to purchase 5,779; 5,779;
7,789; 6,003; and 5,779 for Messrs. Ogilvie, Smith, Silvestri, Spitzer and
Ecklin, respectively. Also includes 10,000; 10,000; 12,500; 10,000 and 10,000
options issued under the Key Executive Performance Equity Plan to Messrs.
Ogilvie, Smith, Silvestri, Spitzer and Ecklin, respectively, as well as 667,
445, 1,111 and 445 shares restricted stock issued under the Equity Incentive
Plan to Messrs. Ogilvie, Smith, Spitzer and Ecklin, respectively, all in
February 2003 as Director's retainer.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation in the fiscal year ended December 31, 2002.
EXECUTIVE COMPENSATION
The Compensation Committee is primarily responsible for MacDermid's overall
executive compensation policy of compensating MacDermid's officers competitively
with those of comparable companies, rewarding exceptional performance where
appropriate and providing incentive for future performance through cash
incentive payments and equity incentives. In the fiscal year ended December 31,
2002, MacDermid's executive compensation generally had three basic components:
annual base salary, short-term cash incentive bonus and equity incentives (long
term compensation).
In establishing levels of annual salary, incentive bonus and equity
incentives, the Committee generally considers, in order of emphasis, the
following factors: (i) MacDermid's performance, or in certain cases group
performance, relative to Committee expectations, (ii) the performance and
achievements of MacDermid's executives, individually, and collectively, (iii)
the responsibilities of each executive, (iv) the compensation practices of peer
companies, and (v) the level of cash compensation and equity incentives required
to attract and hold qualified executives.
MacDermid uses a comparative group of specialty chemical companies, (the
"Comparator Group") to serve as a factor for determining the appropriate cash
and equity incentive components of the program. The companies in the Comparator
Group are selected based upon their similarity to MacDermid,
relative complexity, and scope. Earnings trends, return on equity and other
performance measures are compared. The size and composition of the Comparator
Group may change from year to year. The Comparator Group differed from the
group of companies included in the Media General Specialty Chemical stock index
used in the Comparative Stock Performance graph. The Media General Specialty
Chemical stock index, which consists of approximately 70 companies, is too
unwieldy to use for compensation purposes because of the large number of
companies and their disparate compensation practices. The Comparator Group is
not used in the performance graph principally because of the need to maintain
consistency in the indices or peer groups used in the graph.
Before considering the compensation factors discussed above, the Committee
targets annual base compensation at a level which, together with incentive
bonuses, would provide cash compensation to individual executives at below
median market compensation levels for poor corporate or unit performance, at
median market compensation levels for good performance, and above median market
compensation levels for excellent performance.
Executives, other than the Chief Executive Officer, received base salaries
and were eligible to receive performance based bonuses. Base salaries were set
by the Committee in accordance with the above noted considerations. Primarily
base salaries were determined by considering the executive's qualifications and
responsibilities as well as the market based compensation practices of peer
companies. Executives were also eligible to receive performance bonuses based
primarily upon their individual and collective performance as well as the
performance of the business units each primarily affects, in comparison to goals
which have been pre-established by the Committee early in the fiscal year. The
financial goals established by the Committee in determining performance bonuses
use the operating profit and owners earnings of the business units most affected
by each executive. Thus for this fiscal year the goals established by the
Committee have encouraged executives to maximize the operating profit and owners
earnings generated by the business units applicable to each executive. Bonuses
were paid to the executives based upon the meeting of these pre-established
financial goals. Performance bonuses ranged from 0 to 130 percent of base
salary as a function of applicable financial performance in relation to the
pre-established financial goals.
During the fiscal year ended December 31, 2002, MacDermid's executives were
eligible to receive equity incentives (Stock Options or Restricted Stock Awards)
under the MacDermid Special Stock Purchase Plan (the "Special Stock Purchase
Plan"), the MacDermid, Incorporated 1995 Equity Incentive Plan (the "Equity
Incentive Plan"), the MacDermid Stock Option Plan dated July 6, 1998 (the "Stock
Option Plan"), and under the 2001 Key Executive Performance Equity Plan (the
"Performance Equity Plan")(the Special Stock Purchase Plan, Equity Incentive
Plan, Stock Option Plan, and the Performance Equity Plan, collectively referred
to as the "Plans").
The Committee administers the Plans, and awards equity incentives to
executives and other employees of MacDermid. The purpose of awarding equity
incentives under the Plans is to enable MacDermid to attract, retain and
motivate its employees to exert their best efforts to enhance shareholder value
by giving them the ability to participate in the long-term growth of MacDermid.
The Committee generally considers the same factors in establishing the amounts
of equity awards for MacDermid's executive officers as those listed above. The
amounts of the awards are based upon the relative position of each executive
officer within MacDermid and individual performance independent of the terms and
amount of awards previously granted. The Compensation Committee has a stated
policy of not re-pricing options after issuance.
"Stock Option Plan" - No Options Awarded this F.Y.
Stock options awarded under the Stock Option Plan are in the form of
options to purchase a specified number of shares of MacDermid common stock at an
exercise price which is set at a premium over the market price on the date of
grant. The actual premium is set by the Compensation Committee. The period for
exercising an option will begin four years after the date of grant and will end
ten years after the date of grant. Vesting requirements, if any, are
established by the Committee. Unless determined otherwise by the Compensation
Committee, the exercise period will automatically terminate ninety (90) days
after the grantee ceases to be employed by the Company on a full time basis, for
any reason. During the fiscal year no options were granted under the Stock
Option Plan.
"Special Stock Purchase Plan" - No Options Awarded this F.Y.
Stock Options awarded under the Special Stock Purchase Plan are in the form
of options to purchase a specified number of restricted shares of MacDermid
Common Stock at an exercise price at least 66.6% of the market price of the
Common Stock on the date of award. The options are generally exercisable only
during the four-year period beginning on the date of award. However, at the
1996 Annual Meeting, the shareholders approved amendments to the Special Stock
Purchase Plan which may extend the foregoing exercise period under certain
conditions. The shares of Common Stock acquired upon any exercise are treated
as restricted stock for a period of four years commencing on the date of
exercise. Such shares may not be sold during such period (other than to
MacDermid at the exercise price) and must be resold to MacDermid at the exercise
price if the participant's employment with MacDermid is terminated during such
period, except in the case of death, retirement, permanent disability or
involuntary termination without cause. Such restrictions may, however, be
waived by the Committee in its discretion from time to time. No options were
granted under the Special Stock Purchase Plan during the fiscal year.
"Equity Incentive Plan" - No Restricted Shares Awarded this F.Y.
Restricted stock awards issued under the Equity Incentive Plan generally
consist of restricted stock having a fair market value equal to twenty (20)
percent of the participant's annual bonus amount made in lieu of the allocable
bonus amount plus a matching portion equal to a multiple of the shares awarded
in lieu of the allocable bonus amount. Restricted grants may also be made to
participants who do not participate in MacDermid's annual bonus. The restricted
stock awards may not be sold or transferred for a period of time. The
restricted stock is forfeited to MacDermid if the participant's employment with
MacDermid is terminated during the restricted period, except in the case of
death, permanent disability, involuntary termination without cause or
retirement. Such restrictions may, however, be waived by the Committee in its
discretion from time to time.
"Performance Equity Plan" -470,000 Options Awarded to Named Officers this F.Y.
Options to purchase MacDermid common shares pursuant to the terms of the
Performance Equity Plan are issued at fair market value at the time of the
grant, adjusted annually based upon comparative performance with the S&P
Specialty Chemicals Index. The options generally vest at the end of a four (4)
year period. The number of options which vest may be increased or decreased
based upon MacDermid's cumulative owner earnings during the four year vesting
period in relation to targets set by the Committee at the time of the award.
The exercise period generally begins upon vesting and ends 10 years from the
date of grant or 90 days after termination of the participant's employment for
any reason, whichever occurs sooner. During the fiscal year the Committee
awarded options to purchase 160,000; 200,000; 30,000; 50,000; and 30,000 shares
of MacDermid common stock to Messrs. Leever, Malfettone, Boehner, Cordani and
Bolingbroke respectively. Mr. Malfettone subsequently forfeited his options.
The Committee believes that the Plans allow executive officers to
participate in the enhancement of shareholder value.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation for Daniel H. Leever, MacDermid's Chairman and Chief Executive
Officer, was determined in accordance with the terms of the MacDermid,
Incorporated Executive Compensation Plan, the material terms of which were
approved by the Company's shareholders at the 1998 Annual Meeting. Under the
terms of the plan, no base salary is paid to Mr. Leever. The amount of
performance based short-term annual compensation which was paid to Mr. Leever
during this fiscal year was based directly and solely upon the following
factors: (i) earnings per share, and (ii) the two-year average of earnings per
share growth. Compensation under the plan was equal to the sum of two
components. The first component was determined by multiplying a base amount of
$6,000 by the number of cents per share the Company has earned for the fiscal
year up to $1.00. The second component was determined by multiplying the same
base amount by the number of cents per share earned by the Company during the
fiscal year above $1.00, further multiplied by a factor of from 0 to 2.5, which
factor is determined based upon the two year average of earnings per share
growth. In determining earnings, the Committee uses its discretion in including
or excluding one time or extraordinary gains or losses. Mr. Leever's annual
performance based compensation was determined and paid solely in accordance with
the terms of the plan as noted above.
Mr. Leever received options to purchase 160,000 shares of MacDermid common
stock pursuant to the terms of the Performance Equity Plan during this fiscal
year.
The Company is subject to Internal Revenue Code Section 162(m), which could
limit the deductibility of certain compensation payments to its executive
officers. The Company intends to comply with the requirements of Section
162(m); however, it also weighs the burdens of such compliance against the
benefits to be obtained by the Company and pays compensation that is not fully
deductible if it determines that such payments are in the Company's best
interests. During this fiscal year, all compensation paid to the Company's
executive officers was fully deductible by the Company.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
T. Quinn Spitzer, Jr. (Chairman)
Donald G. Ogilvie
James C. Smith
Joseph M Silvestri
Robert L. Ecklin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries. In this fiscal year, no
executive officer of the Company served on the compensation committee or as a
director of another entity, one of whose executive officers served on the
Company's Compensation Committee or Board of Directors.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table summarizes annual, long-term and other
compensation paid by MacDermid for each of its three previous fiscal years (the
year noted as December, 2001 was a 9 month fiscal year)to MacDermid's Chief
Executive Officer and its other stated officers.
Long-Term
Annual Compensation Compensation
Awards
Securities
Name and Other Restricted Underlying All
Compensation Salary Bonus Annual Stock Options/ Other
Principal Fiscal Compensation Awards SARs Compensation
Position Year ($) (1) ($) ($) ($) (2) (#) ($) (3) (4)
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Daniel H. . . . 2002 - 732,000 - - 160,000 308,131
Leever. . . . . Dec. 2001 - 298,367 - - 170,000 1,141,497
Chairman and. . 2001 - 541,500 - - - 3,195,446
Chief Executive
Officer
John Malfettone 2002 208,461 100,000 - 130,000 (5) 200,000 (5) 500,000
Vice President. Dec.2001 - - - - -
2001 - - - - -
Gregory M.. . . 2002 183,125 125,000 - - 30,000 25,556
Bolingbroke . . Dec.2001 105,000 100,000 - - 31,000 51,350
Vice President, 2001 122,167 30,000 - - 10,000 100,008
Treasurer and
Controller
Richard Boehner 2002 188,333 50,000 - - 30,000 -
Vice President. Dec.2001 83,308 25,000 - - 50,000 -
2001 - - - - - -
John L. Cordani 2002 157,609 125,000 - - 50,000 5,500
Vice President. Dec.2001 - 25,000 - - - -
General . . . . 2001 - - - - - -
Counsel
Secretary
(1) Salary amounts reported for John Malfettone were for services from January, 2002 to September,
2002 since Mr. Malfettone's employment ended in September. 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 include options to purchase 160,000; 200,000;
30,000; 30,000; and 50,000 shares of MacDermid Common Stock for Messrs. Leever, Malfettone, Bolingbroke,
Boehner and Cordani respectively, which options were granted pursuant to the Performance Equity Plan.
(3) Amounts shown for this fiscal year include deemed compensation which arose from
restrictions lapsing on certain restricted share grants under the Equity Incentive Plan in the amounts
of $230,460 and $20,056 for Messrs. Leever and Bolingbroke respectively. Amounts listed for this fiscal
year also include Company contributions to the E.S.O.P. in the amounts of $5,500; $5,500; and $5,500
for Messrs. Leever, Bolingbroke and Cordani respectively, as well as $4,693 in split dollar life
insurance premiums and $67,478 in other deemed income for Mr. Leever. Lastly amounts for this
year show $500,000 in severance income paid to Mr. Malfettone in accordance with a termination agreement
entered into between the Company and Mr. Malfettone, which agreement was filed with the Company's 10Q
for the quarter ended September 30, 2002 and is incorporated herein by reference.
(4) The Company has entered into employment agreements with Messrs. Bolingbroke, Boehner
and Cordani. The employment agreements provide for payment of a severance in the amount of one year's
base salary, or in some cases two years' compensation, in the case of termination without cause or in
the case of termination within two years of a change of control. A separate employment agreement with
Mr. Cordani similarly provides for a potential two year severance in the case of termination without
Cause as well as a minimum annual salary of $250,000.00 during the employment.
(5) Mr. Malfettone subsequently forfeited the 200,000 options and 70,000 restricted shares.
(6) Includes bonuses accrued or earned in each year whether or not such bonuses were paid in
that year. In the Company's previous proxy statements, bonuses were included in the year paid.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to the aggregate
number of unexercised options held by the Chief Executive Officer and the named
officers as of December 31, 2002.
Value of
Unexercised
Number of In-the-money
Securities
Underlying Options at
Shares Unexercised FY-end ($)
Acquired
on Exercise Value Options/SARS at FY- Exercisable/
During Fiscal 2002 Realized end (#) Exercisable/ Unexercisable
Name # $ Unexercisable (1)
Daniel H. (2)
Leever. . . 180,000 3,242,160 2,782,065/ $ 5,672,497/
930,000 $ 1,733,300
John (3)
Malfettone. 0 - 0/0 0/0
Gregory M.
Bolingbroke 0 - 15,000/73,200 0/319,070
Richard
Boehner . . 0 - 0/80,000 0/417,700
John
Cordani . . 0 - 15,000/62,200 0/260,500
(1) Value is reported as the spread between the exercise price and the market
price on December 31, 2002 of $22.85 per share.
(2) Value reported was calculated based upon the difference between the exercise
price and the market close on the day of exercise. However, the shares acquired
remain restricted for four (4) years from the date of exercise and cannot be sold
until November 3, 2006.
(3) All options granted to Mr. Malfettone were forfeited.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 2002 by the Company to each of
the named executive officers:
Percent of
Number of Total Potential Realizable
Shares Options Value at Assumed
Underlying Granted Rates of Stock Price
Options to all Exercise Appreciation For
Granted employees Price Expiration Option Term
Name (#) (1) in F.Y. 2002 ($/Share) Date 5% $(3) 10% $
Daniel H. Leever. 160,000 17.0% $ 20.29 2/26/12 0 3,203,200
John (2) 0 0
Malfettone. . . . 200,000 21.3% $ 17.66 1/7/12
Gregory M.
Bolingbroke . . . 30,000 3.2% $ 20.29 2/26/12 0 600,060
Richard Boehner
30,000 3.2% $ 20.29 2/26/12 0 600,060
John
Cordani . . . . . 50,000 5.3% $ 17.66 1/7/12 0 872,000
(1) Represents options granted under the Performance Equity Plan. Under the terms of the
Performance Equity Plan the exercise price of the options is adjusted based upon the comparative
change of the S&P Specialty Chemicals Index. These options will first become exercisable four
(4) years from the date of grant (February 26, 2006 in the case of Messrs. Leever, Bolingbroke
and Boehner and January 7, 2006 in the case of Mr. Cordani.
(2) Mr. Malfettone's options have been forfeited.
(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.
EMPLOYEES PENSION PLAN
The MacDermid Employees Pension Plan (the "Pension Plan") is a qualified
defined benefit plan. Pension payments may be made under the Pension Plan upon
normal retirement commencing when an executive reaches age 60 based upon
credited years of service up to a maximum of 30 years. Annual benefits are
calculated on a single-life annuity basis and are subject to offsets for (i)
amounts based on the value of the executive's interest in the Profit Sharing
Plan as of March 31, 1976, if any, and (ii) 0.45% of the lesser of covered
compensation or final average compensation, as defined by the Internal Revenue
Code (the "Code") Section 401(1), multiplied by the years of service.
Under the MacDermid, Incorporated Supplemental Executive Retirement Plan
(the "Supplemental Plan"), executive officers are entitled to the difference
between the benefits actually paid to them under the Pension Plan and the
benefits which they would have received under the Pension Plan were it not for
certain restrictions imposed under the Code relating to the amount of benefits
payable under the Pension Plan and the amount of annual compensation which may
be taken into account in determining benefits under the Pension Plan.
Assuming that there are no changes in the Pension Plan and that
participants historically have had earnings at least equal to the maximum Social
Security wage base in each year of employment with MacDermid, the following
table illustrates the estimated annual benefit payable for life under the
Pension Plan and the Supplemental Plan to an employee retiring at age 60 on
December 31, 2002 with maximum service under the Plan of up to 30 years. These
benefits do not reflect a Social Security supplement which is payable under the
Pension Plan until the employee reaches age 65.
ESTIMATED ANNUAL PENSION PAYABLE AT NORMAL RETIREMENT
BASED ON YEARS OF SERVICE INDICATED
Final average. 10 yrs 15yrs 20 yrs 25yrs 30yrs
earnings
150,000 . . . 20,135 30,203 40,271 50,338 60,406
200,000 . . . 27,635 41,453 55,271 69,088 82,906
250,000 . . . 35,135 52,703 70,271 87,838 105,406
300,000 . . . 42,635 63,953 85,271 106,588 127,906
350,000 . . . 50,135 75,203 100,271 125,338 150,406
400,000 . . . 57,635 86,453 115,271 144,088 172,906
450,000 . . . 65,135 97,703 130,271 162,838 195,406
500,000 . . . 72,635 108,953 145,271 181,588 217,906
600,000 . . . 87,635 131,453 175,271 219,088 262,906
700,000 . . . 102,635 153,953 205,271 256,588 307,906
800,000 . . . 117,635 176,453 235,271 294,088 352,906
900,000 . . . 132,635 198,953 265,271 331,588 397,906
Covered compensation under the Pension Plan includes an employee's annual
salary and bonus, which, for the Chief Executive Officer and four other named
officers, is set forth in the Summary Compensation Table. Messrs. Leever,
Malfettone, Cordani, Bolingbroke and Boehner have 23, 0, 16, 10 and 2 years of
credited service, respectively, under the Pension Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
In addition to retaining KPMG LLP to audit the consolidated financial
statements for this fiscal year, the Company and its affiliates retained KPMG,
as well as other accounting and consulting firms, to provide various consulting
services in fiscal 2002, and expect to continue to do so in the future. The
aggregate fees billed for professional services in this fiscal year for these
various services were:
- Audit Fees: $773,168 for services rendered for the annual audit of the
Company's consolidated financial statements for this fiscal year and the
quarterly reviews of the financial statements included in the Company's Forms
10-Q;
- All Other Fees: $756,658 for tax services, including tax planning services
and return preparation.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of the three 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 in Appendix A of this Proxy Statement. The Audit Committee has
reviewed and discussed the Company's audited financial statements with
management, which has primary responsibility for the financial statements. KPMG
LLP ("KPMG"), the Company's independent auditors are responsible for expressing
an opinion on the conformity of the Company's audited financial statements with
generally accepted accounting principles. The Audit Committee has discussed
with KPMG the matters that are required to be discussed by Statement on Auditing
Standards No. 61 (Communication With Audit Committees)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 services, provided by KPMG to the Company during this
fiscal year were tax services, which were determined to be compatible with
KPMG's independence.
Based on the considerations referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K this fiscal year and that
KPMG be appointed independent auditors for the Company for the fiscal year ended
December 31, 2003.
The Audit Committee has determined that its 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, has frequent
involvement with accounting issues, and has oversight of Audit Committee
meetings. At the ABA, Mr. Ogilvie has continuous involvement with accounting
and auditing issues as they affect the financial industry that he serves.
- Mr. Ogilvie has been a director of MacDermid since 1986 and a member of
its Audit Committee since its formation. As a result, Mr. Ogilvie has extensive
knowledge of MacDermid.
In addition to Mr. Ogilvie, Mr. James Smith is also a member of the Audit
Committee. Mr. Smith also has considerable financial expertise including the
following:
- Mr. Smith has an AB degree from Dartmouth College.
- As Treasurer of Webster Bank from 1979-1982, Mr. Smith was directly
responsible for many of its financial functions.
- As CEO of Webster Financial, Mr. Smith has responsibility for the
integrity of Webster's financial operations and reporting.
- Mr. Smith has served on the Audit Committee of the American Banker's
Association.
- As a Director of MacDermid and a member of its Audit Committee since 1994,
Mr. Smith has developed an extensive knowledge of MacDermid.
In view of the foregoing, the Audit Committee has determined that it 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
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare, during the five-year period
commencing December 31, 1997 (at the market close) and ending December 31, 2002,
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, 1997 (at the market
close) and the reinvestment of any dividends.
FIVE YEAR CUMULATIVE TOTAL RETURN
(GRAPH)
Past share performance should not be viewed as necessarily indicative
of future performance.
Graph Dollar Values 1997 1998 1999 2000 2001 2002
--------------------------------------------------------
MacDermid, Inc.. . . 100 139 146 68 61 82
Standard & Poors 500 100 129 156 141 124 97
Specialty Chemicals. 100 88 85 84 90 75
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth information as of December 31, 2002,
(unless otherwise noted) with respect to ownership of common stock by
any person known by MacDermid to be a beneficial owner of more than
5% of its common stock, by MacDermid's C.E.O. and four other most highly
compensated executive officers and by all Directors and officers of MacDermid
as a group. Unless otherwise noted, each person has sole voting and
disposition power with respect to such person's shares. The total shares
of common stock beneficially owned by the officers includes the right to
acquire ownership through exercisable stock options.
--------------------------------------------------------------------------------
Number of Shares
Beneficially Percent
Owned of Class
--------------------------------------------------------------------------------
FIVE PERCENT BENEFICIAL OWNERS
Citigroup, Inc.. . . . . . . . . . . . 3,330,770 10.3% (1)
399 Park Avenue
New York, New York 10043
MacDermid Employees Profit Sharing,. . 2,883,382 8.9% (2)
Pension and Stock Ownership Plans
MacDermid Equipment, Inc. 401(K) Plan
245 Freight Street
Waterbury, Connecticut 06702
Fleet Boston Financial Corporation . . 1,914,960 5.9% (3)
100 Federal Street
Boston, Massachusetts 02110
Vanguard/Primecap Fund, Inc. . . . . . 1,701,000 5.3% (4)
P.O. Box 2600
Valley Forge, PA 19482
Daniel H. Leever . . . . . . . . . . . 2,103,227 6.5% (5)
c/o MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702
NAMED EXECUTIVE OFFICERS
Daniel H. Leever . . . . . . . . . . . 2,103,227 (5) 6.5%
John Malfettone. . . . . . . . . . . . -0- (6) *
Gregory M. Bolingbroke . . . . . . . . 106,317 (6) *
Richard L. Boehner . . . . . . . . . . 80,000 (6) *
John L. Cordani. . . . . . . . . . . . 77,977 (6) *
All Directors, Director
Nominees and Officers . . . . . . . . 2,887,005 (6) 8.9%
as a group (8 persons)
*Less than 1% of shares outstanding
(1) The information for Citigroup is taken from its Schedule 13D dated
September 19, 2002 and its Form 4 dated February 25, 2003. Total includes
2,730,770 shares beneficially owned by Citicorp Venture Capital Ltd. ("CVC") and
600,000 shares held by affiliates of CVC, to which CVC disclaims beneficial
ownership.
(2) 2,490,127 shares in the MacDermid Employees Profit Sharing and
Employee Stock Ownership Plans are beneficially owned by the trustee of the
plans, First Union National Bank, and 393,255 shares in the MacDermid,
Incorporated Employees Pension Plan are beneficially owned by the trustee of the
plan, First Union National Bank. Under the terms of the Profit Sharing Plan and
the ESOP, participants have the right to vote the shares credited to their
accounts; however, the trustee may, in its discretion, vote any shares
(including unallocated shares) not voted by the participants. The trustee of
the Pension Plan may vote all the MacDermid shares beneficially owned
thereunder.
(3) The information for Fleet Boston Financial Corporation ("Fleet") is
taken from its Schedule 13G dated February 14, 2002. Fleet has sole voting power
with respect to 1,653,671 shares, sole dispositive power with respect to
1,059,082 shares and shared dispositive power with respect to 845,830 shares.
(4) The information for Vanguard Primecap Fund, Inc. is taken from its
Schedule 13G dated February 14, 2003.
(5) Additional explanation of the shares beneficially owned by Mr.
Leever is provided in the footnotes under Election of Directors.
(6) Includes shares reported by Mr. Leever as provided in the footnotes
under Election of Directors. Also includes 13,869; 777; 0 and 0 shares held by
Messrs. Bolingbroke, Cordani, Malfettone and Boehner respectively in the
MacDermid Profit Sharing and Employee Stock Ownership Plans, 61,000; 50,000; 0
and 80,000 options to purchase shares of MacDermid common stock granted to
Messrs. Bolingbroke, Cordani, Malfettone and Boehner respectively under the
Performance Equity Plan and 27,200 and 27,200 options to purchase shares of
MacDermid common stock granted to Messrs. Bolingbroke and Cordani respectively
under the Stock Option Plan.
INTERESTS OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS AND FAMILY RELATIONSHIPS
During this fiscal year, the Company engaged the services of Carmody &
Torrance, LLP. Mr. John L. Cordani, MacDermid's Secretary, was a partner at this
law firm during this fiscal year. The Company paid $1,103,789.00 for legal
services rendered by Carmody & Torrance, LLP. during the fiscal year.
ADDITIONAL INFORMATION RELATING TO
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four (4) regular meetings during this fiscal
year. Each of the current members of the Board of Directors attended 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 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 met three (3) times during
this fiscal year. Members of the Committee are Donald Ogilvie (Chairman),
Robert Ecklin and James Smith. Attached as Appendix A is the Audit Committee
Charter.
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 this fiscal year, included T. Quinn Spitzer, Jr. (Chairman), Donald
G. Ogilvie, James C. Smith, Joseph M. Silvestri, and Robert L. Ecklin. Attached
as Appendix B is the Compensation Committee Charter.
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. Any suspected
compliance or ethical breaches can be reported as provided for in MacDermid's
Ethics and Compliance Policy. The Committee which met twice during this fiscal
year is comprised of T. Quinn Spitzer (Chairman), Robert Ecklin, Donald Ogilvie
and James Smith. The Committee regularly meets outside of the presence of
management. Attached hereto as Appendix's C and D are the Corporate Governance
Committee Charter and MacDermid's Corporate Governance Policy.
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.
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. The value of the Director option
grants, at the time of the grant, is $32,000 per Director, calculated using the
Black-Scholes method of option valuation. MacDermid also provides $50,000 of
group life insurance for each outside Director, for which it paid a nominal
amount in premiums this year.
ITEM 2.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The independent public accountants for MacDermid for this fiscal year 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement relating to the
2003 annual meeting must comply in all respects with the rules and regulations
of the Securities and Exchange Commission and be received at MacDermid's
principal executive offices at 245 Freight Street, Waterbury, Connecticut
06702-0671 no later than July 31, 2003. 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 26, 2003 JOHN L. CORDANI
Secretary
MACDERMID, INCORPORATED WILL PROVIDE WITHOUT CHARGE, TO ANY SHAREHOLDER,
UPON WRITTEN REQUEST, A COPY OF ITS ANNUAL REPORT ON FORM 10-K TO THE SECURITIES
AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002. SUCH
REQUEST SHOULD BE DIRECTED TO JOHN L. CORDANI, SECRETARY, MACDERMID,
INCORPORATED, 245 FREIGHT STREET, WATERBURY, CONNECTICUT 06702-0671.
Appendix A
MACDERMID, INCORPORATED
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member. No committee
member may, directly or indirectly, within the last fiscal year, or will while
a member, accept, any consulting, advisory or other compensatory fee (other than
directors' compensation) from the Company or its subsidiaries.
STATEMENT OF POLICY
The audit committee shall have oversight responsibility in fulfilling the
Board's responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In doing so, it is the responsibility of the audit committee to
maintain free and open communication between the directors, the independent
auditors, the internal auditors, and the financial management of the
corporation.
QUALIFICATIONS
Each member of the audit committee must have a working knowledge of corporate
financial, accounting and reporting practices. In addition the chairman of the
audit committee should, through education or experience, have (1) an
understanding of U.S. generally accepted accounting principles and their
application to financial statements, (2) experience in preparing, evaluating, or
auditing financial statements of a U.S. public company and in the use of
estimates, accruals and reserves, (3) experience with internal accounting
controls, and (4) an understanding of audit committee functions. The board of
directors may determine that a person meets the foregoing attributes if, in the
board's judgment, such person has expertise and experience similar to the
attributes noted.
RESPONSIBILITIES
In carrying out its oversight responsibilities, the audit committee believes
its policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
- Have sole authority to appoint, compensate and oversee the independent
auditors who will audit the financial statements of the corporation and its
subsidiaries. The selected independent auditors shall report directly to the
committee.
- Review, on a periodic basis, all relationships between the independent
auditors and the corporation in order to determine whether any such relationship
has a likelihood of compromising the auditor's independence and take action to
ensure that independence is maintained.
- Approve, in advance, the engagement of and the fees to be paid to the
independent auditor for any function other than the audit, if the aggregate of
such other fees will amount to more than five percent (5%) of the approved audit
compensation.
- Meet with the independent auditors and financial management of the
corporation to review and determine the scope of the proposed audit for the
current year and the audit procedures to be utilized, and at the conclusion
thereof, review such audit, including any comments or recommendations of the
independent auditors.
- Review with the independent auditors, the company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that might be
deemed illegal or otherwise improper. Further, the committee periodically
should review company policy statements to determine their adherence to the
appropriate standards.
- Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year, and the coordination of such plans with the
independent auditors. Ensure that the internal auditor reports findings
directly to the committee.
- Receive a summary of findings from completed internal audits and a
progress report on the proposed internal audit plan, with explanations for any
deviations from the original plan.
- Review the financial statements and notes contained in the corporation's
quarterly and annual reports filed on forms 10-Q and 10-K with management and
the independent auditors (together and separately) to determine that the
independent auditors are satisfied with the disclosure and content of the
financial statements to be presented to the shareholders. Any changes in
accounting principles should be reviewed.
- Provide sufficient opportunity for the internal and independent auditors
to meet with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the independent
auditors' evaluation of the corporation's financial, accounting, and auditing
personnel, and the cooperation that the independent auditors received during the
course of the audit.
- Review sufficiency of accounting and financial human resources and
succession planning within the company.
- Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in its
judgment, that is appropriate.
- Investigate and be responsible for the resolution of any disagreements
between management and the independent auditor.
- Have in place procedures for addressing complaints concerning auditing
issues and procedures for employees to anonymously submit their concerns
regarding accounting or auditing issues.
- Review with the corporation's counsel any legal matters that could have a
significant adverse impact on the corporation's financial statements and the
corporation's compliance with legal and regulatory requirements as required.
- Prepare the audit committee report to be included in the corporation's
annual proxy statement.
- Review the corporation's policy and strategy regarding financial risk
management.
- Set clear hiring policies for employees or former employees of the
independent auditors.
APPENDIX B
MACDERMID, INCORPORATED
COMPENSATION COMMITTEE CHARTER
The Board of Directors of MacDermid, Incorporated (the "Company") has
constituted and established a Compensation Committee (the "Committee") with
authority, responsibility, and specific duties as described in this Compensation
Committee Charter.
COMPOSITION
The Committee shall consist of directors who are independent of management
and free from any relationship that, in the opinion of the Board of Directors,
as evidenced by its election of such Committee members, would interfere with the
exercise of independent judgment as a Committee member. Each member of the
Committee shall be a "Non-Employee Director" within the meaning of Rule 16-3(b)
under the Securities Exchange Act of 1934 and an "Outside Director" within the
meaning of Section 162 (m) (4) (c) (i) of the Internal Revenue Code.
MISSION STATEMENT AND PRINCIPAL FUNCTIONS
The Committee's basic responsibility is to assure that the senior
executives of the Company and its wholly-owned affiliates are compensated
effectively in a manner consistent with the shareholders' interests and with the
compensation strategy of the Company, internal equity considerations,
competitive practice, and the requirements of the appropriate regulatory bodies.
The Committee shall communicate to shareholders the Company's compensation
policies and the reasoning behind such policies. More specifically, the
Committee shall be responsible for the following:
Review from time to time and approve the Company's compensation strategy to
ensure that management is rewarded appropriately for its contributions to
Company growth and profitability and that the executive compensation strategy
supports organization objectives and promotes shareholder interests.
- Review annually, and determine the individual elements of, total
compensation for the Chief Executive Officer and communicate in the annual Board
Compensation Committee Report to shareholders the factors and criteria on which
the Chief Executive Officer's compensation for the last year was based,
including the relationship of the Company's performance to the Chief Executive
Officer's compensation.
- Review and approve the individual elements of total compensation for the
senior management of the Company other than the Chief Executive Officer and
communicate in the annual Board Compensation Committee Report to shareholders
the specific relationship of corporate performance to executive compensation.
- Assure that the Company's equity incentive compensation programs and the
annual incentive plans are administered in a manner consistent with shareholder
interests.
- Approve, subject, where appropriate, to submission to shareholders, all new
equity incentive plans and modifications thereto.
- Approve compensation for Board of Directors.
- Approve annual compensation and equity incentive grants for the Company's
officers and senior executives.
- Review with the Chief Executive Officer matters relating to management
succession and development, including, but not limited to, compensation.
- Review the Company's employee benefit programs and approve changes subject,
where appropriate, to shareholder or Board of Director approval.
- If appropriate, hire experts in the field of executive compensation to
assist the Committee with its reviews.
- Such other duties and responsibilities as may be assigned to the Committee,
from time to time, by the Board of Directors of the Company and/or the Chairman
of the Board of Directors, or as designated in plan documents.
MEETINGS
The Committee will meet as often as necessary to carry out its
responsibilities. Meetings may be called by the Chairman of the Committee
and/or management of the Company. Reports of meetings of the Committee shall be
made to the Board of Directors at its next regularly scheduled meeting following
the Committee meeting accompanied by any recommendations to the Board of
Directors approved by the Committee.
APPENDIX C
NOMINATING/CORPORATE GOVERNANCE COMMITTEE CHARTER
COMPOSITION AND TERM OF OFFICE
The Board of Directors has created and shall designate annually three or
more of its independent directors (as defined in the NYSE regulations for
listed companies) to constitute members of the Committee. The Committee will
appoint a chairman from among its members.
PURPOSE
The Committee shall identify individuals qualified to become board members,
and select the director nominees for election by the shareholders at each annual
meeting. The Committee shall review and implement a set of corporate governance
principles and a compliance policy.
PRIMARY RESPONSIBILITIES
The Committee shall have the following primary responsibilities:
1. The Committee shall review, at least annually, the structure of the Board
to assure that the proper skills and experience are represented on the Board and
that the Board includes a majority of independent directors. The Nominating
Committee shall propose to the full Board, nominees for Board membership, based
upon the foregoing criteria and the Committee's collective best judgment.
2. The Committee shall review potential conflicts of prospective and
incumbent Board members.
3. Committee shall periodically review and recommend to the full Board the
size of the Board.
4. Committee shall recommend to the Board the membership of the committees
of the Board.
5. The Committee will review outside directorships in other companies held
by senior officers and directors of the company.
6. The Committee shall review the qualifications of all director nominees,
and the performance of all incumbent directors, in making the Committee's
selection for director nominees for each annual meeting.
7. The Committee shall review and set the compensation for members of the
Board of Directors for service as a director or member of any committee.
8. The Committee shall review and oversee the implementation of a code of
ethics and compliance policy for the corporation and its employees and officers.
9. The Committee shall establish procedures for receiving complaints
regarding breaches of the ethics and compliance policy both directly and on an
anonymous basis.
10. The Committee shall meet regularly outside of the presence of management
to discuss corporate governance.
11. The Committee shall evaluate the performance of the directors, the board
as a whole and its committees;
12. The Committee shall perform such other functions which from time to time
may be assigned by the Board of Directors.
MEETING TIMES
The Committee shall hold meetings as necessary upon the request of the
Chairman of the Committee or the request of the full Board of Directors.
APPENDIX D
Corporate Governance Policy
Effective corporate governance requires a clear understanding of the
respective roles of the board and of senior management and their relationships
with others in the corporate structure. This policy is intended to clarify
these relationships and responsibilities and to promote effective corporate
governance.
THE BOARD OF DIRECTORS
The board of directors has the important role of overseeing management
performance on behalf of stockholders. The board exercises its oversight
responsibilities and authority by:
- Delegating authority and responsibility for managing the everyday affairs
of the corporation to the CEO and senior management while monitoring and
overseeing management's execution of these responsibilities and performance;
- Planning for management succession;
- Understanding, reviewing, and monitoring implementation of the
corporation's strategic plans;
- Understanding and reviewing annual operating plans and budgets;
- Taking reasonable steps, through its audit committee, to become
comfortable that the corporation's financial statements and other related
disclosures fairly and accurately present the corporation's financial condition
and results of operations;
- Reviewing internal controls;
- Selecting, overseeing and compensating (through its compensation
committee), a well qualified and ethical chief executive officer who, with
senior management, runs the Corporation on a daily basis;
- Reviewing and approving significant corporate actions;
- Through its nominating/corporate governance committee, nominating
directors and committee members and overseeing corporate governance; and
- Reviewing and implementing any other actions which, in the discretion of
the board or its committees, are necessary to promote the interests of the
shareholders and effective corporate governance.
Directors should bring a range of experience and knowledge to the
corporation and should not have any interests which, in the reasonable
discretion of the board, could reasonably be expected to interfere with the
Director's obligation to effectively represent the interests of the shareholders
or effectively govern the corporation.
In performing its oversight function, the board is entitled to reasonably
rely on the advice, reports, and opinions of management, counsel, auditors and
expert advisors. In this reliance, the board should be satisfied with the
qualification of the advisor and the processes used by the advisor in reaching
decisions and making recommendations.
Management
It is the responsibility of the CEO and the senior management to operate
the corporation in an effective and ethical manner. As part of this operational
responsibility, the CEO and senior management are charged with:
- Operating the business of the corporation in a manner which is reasonably
calculated to maximize the long term value of the corporation;
- Establishing and implementing a strategic plan for the corporation;
- Establishing and implementing annual operating plans and budgets;
- Selecting qualified management and establishing an effective
organizational structure;
- Identifying and managing risks;
- Establishing internal controls and a financial reporting system which are
reasonably calculated to produce financial reports that accurately and fairly
present the corporation's financial condition;
- Setting a strong ethical tone for the corporation and establishing and
implementing a code of conduct which is reasonably calculated to discourage and
detect misconduct;
- Effectively and candidly communicating with shareholders on a timely
basis;
- Treating employees fairly and equitably;
- Establishing the corporation as a good corporate citizen within the
community;
- Implementing other goals and programs established by the board or its
committees.
This policy is intended to provide a broad and flexible framework for
defining the roles of, and relationships between, the board and management for
effective governance of the corporation. In accordance with this policy, it is
this corporation's goal that the relationships of the board and management
- with shareholders be characterized by candor and good faith;
- with employees be characterized by fairness;
- with the communities in which the corporation operates by good
citizenship; and
- with the government by commitment to compliance.
Appendix E
FORM OF PROXY
Front
PROXY MACDERMID, INCORPORATED PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - April 30, 2003 at 3:00 P.M.,EDT
at MacDermid, Incorporated, 245 Freight Street, Waterbury, Connecticut 06702.
The undersigned hereby constitutes and appoints DANIEL H. LEEVER, attorney
and proxy to act on behalf of the undersigned at said meeting and at any
adjournment thereof (the "Meeting"), with authority to vote on the following
matters all shares of stock which the undersigned would be entitled to vote at
the Meeting if personally present as directed on the reverse side hereof with
respect to the items set forth in the accompanying Proxy Statement and in his
discretion upon such other matters as may properly come before the Meeting.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY VOTING INSTRUCTION CARD IN THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
Reverse
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
A vote FOR items 1 through 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, 2003.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. 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:____________________,2003
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.]