UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
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 Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
RPM International Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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previously. Identify the previous filing by registration statement number,
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RPM INTERNATIONAL INC. - 2628 Pearl Road - P.O. Box 777 - Medina, Ohio
44258 - 330-273-5090
[RPM LOGO]
THOMAS C. SULLIVAN
Chairman
August 25, 2005
TO RPM INTERNATIONAL STOCKHOLDERS:
I would like to extend a personal invitation for you to join us at this
year's Annual Meeting of RPM Stockholders which will be held at 2:00 p.m.,
Eastern Daylight Time, Friday, October 7, 2005, at the Holiday Inn Select
located at Interstate 71 and Route 82 East, Strongsville, Ohio.
At this year's Annual Meeting, you will vote on the election of four
Directors. In addition, we look forward to giving you a progress report on the
first quarter of our current fiscal year, which will end on August 31. As in the
past, there will be an informal discussion of the Company's activities, during
which time your questions and comments will be welcomed.
We hope that you are planning to attend the Annual Meeting personally, and
we look forward to seeing you. Whether or not you expect to attend in person,
the return of the enclosed Proxy as soon as possible would be greatly
appreciated and will ensure that your shares will be represented at the Annual
Meeting. If you do attend the Annual Meeting, you may, of course, withdraw your
Proxy should you wish to vote in person.
On behalf of the Directors and management of RPM, I would like to thank you
for your continued support and confidence.
Sincerely yours,
/s/ Thomas C. Sullivan
THOMAS C. SULLIVAN
[RPM LOGO]
2628 PEARL ROAD - P.O. BOX 777
MEDINA, OHIO 44258
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is Hereby Given that the Annual Meeting of Stockholders of RPM
International Inc. will be held at the Holiday Inn Select located at Interstate
71 and Route 82 East, Strongsville, Ohio, on Friday, October 7, 2005, at 2:00
P.M., Eastern Daylight Time, for the following purposes:
(1) To elect four Directors in Class III for a three-year term ending in
2008; and
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Holders of shares of Common Stock of record at the close of business on
August 12, 2005 are entitled to receive notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors.
P. KELLY TOMPKINS
Secretary
August 25, 2005
Please fill in and sign the enclosed Proxy and return the Proxy
in the envelope enclosed herewith.
[RPM LOGO]
2628 PEARL ROAD - P.O. BOX 777
MEDINA, OHIO 44258
PROXY STATEMENT
MAILED ON OR ABOUT AUGUST 25, 2005
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 7, 2005
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of RPM International Inc. (the "Company") to
be used at the Annual Meeting of Stockholders of the Company to be held on
October 7, 2005, and any adjournment or postponement thereof. The time, place
and purposes of the Annual Meeting are stated in the Notice of Annual Meeting of
Stockholders which accompanies this Proxy Statement.
The accompanying Proxy is solicited by the Board of Directors of the
Company. All validly executed Proxies received by the Board of Directors of the
Company pursuant to this solicitation will be voted at the Annual Meeting, and
the directions contained in such Proxies will be followed in each instance. If
no directions are given, the Proxy will be voted FOR the election of the four
nominees listed on the Proxy.
Any person giving a Proxy pursuant to this solicitation may revoke it. A
stockholder, without affecting any vote previously taken, may revoke a Proxy by
giving notice to the Company in writing, in open meeting or by a duly executed
Proxy bearing a later date.
The expense of soliciting Proxies, including the cost of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. The Company may pay persons holding shares for others their
expenses for sending proxy materials to their principals. In addition to
solicitation of Proxies by mail, the Company's Directors, officers and
employees, without additional compensation, may solicit Proxies by telephone,
telegraph, and personal interview.
VOTING RIGHTS
The record date for determination of stockholders entitled to vote at the
Annual Meeting was the close of business on August 12, 2005. On that date, the
Company had 117,654,373 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), outstanding and entitled to vote at the Annual Meeting. Each
share of Common Stock is entitled to one vote.
At the Annual Meeting, in accordance with the General Corporation Law of
the State of Delaware and the Company's Amended and Restated By-Laws, the
inspectors of election appointed by the Board of Directors for the Annual
Meeting will determine the presence of a quorum and will tabulate the results of
stockholder voting. As provided by the General Corporation Law of the State of
Delaware and the Company's Amended and Restated By-Laws, holders of shares
entitling them to exercise a majority of the voting power of the Company,
present in person or by proxy at the Annual Meeting, will constitute a quorum
for such meeting. Under applicable Delaware law, if a broker returns a Proxy and
has not voted on a certain proposal, such broker non-votes will count for
purposes of determining a quorum. The shares represented at the Annual Meeting
by Proxies, which are marked, with respect to the election of Directors,
"withheld" will be counted as shares present for the purpose of determining
whether a quorum is present.
1
Nominees for election as Directors receiving the greatest number of votes
will be elected Directors. Votes that are withheld or broker non-votes in
respect of the election of Directors will not be counted in determining the
outcome of the election. The General Corporation Law of the State of Delaware
provides that stockholders cannot elect Directors by cumulative voting unless a
company's certificate of incorporation so provides. The Company's Amended and
Restated Certificate of Incorporation does not provide for cumulative voting.
2
STOCK OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of shares of Common
Stock as of May 31, 2005, unless otherwise indicated, by (i) each person or
group known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each Director and nominee for election as a
Director of the Company, (iii) each executive officer named in the Executive
Compensation tables below and (iv) all Directors and executive officers as a
group. All information with respect to beneficial ownership has been furnished
by the respective Director, nominee for election as a Director, or executive
officer, as the case may be. Unless otherwise indicated below, each person named
below has sole voting and investment power with respect to the number of shares
set forth opposite his or her respective name. The address of each Director
nominee, Director and executive officer is 2628 Pearl Road, P.O. Box 777,
Medina, Ohio 44258.
NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE OF
BENEFICIALLY SHARES OF
NAME OF BENEFICIAL OWNER OWNED(1) COMMON STOCK(1)
------------------------ ---------------- ---------------
Barclays Global Investors, NA(2)........................... 6,030,321 5.13%
45 Fremont Street
San Francisco, CA 94105
National City Corp.(3)..................................... 5,902,553 5.02%
1900 East Ninth Street
Cleveland, OH 44114
Max D. Amstutz(4).......................................... 29,243 *
Edward B. Brandon(5)....................................... 29,400 *
Bruce A. Carbonari(6)...................................... 4,400 *
Paul G. P. Hoogenboom(7)................................... 99,225 *
James A. Karman(8)......................................... 568,644 .5
Robert L. Matejka(9)....................................... 118,094 .1
Donald K. Miller(10)....................................... 14,400 *
William A. Papenbrock(11).................................. 23,142 *
Albert B. Ratner(12)....................................... 10,650 *
Charles A. Ratner(13)...................................... 0 *
Ronald A. Rice(14)......................................... 161,319 .1
Frank C. Sullivan(15)...................................... 717,073 .6
Thomas C. Sullivan(16)..................................... 810,465 .7
William B. Summers, Jr.(17)................................ 12,000 *
Jerry Sue Thornton(18)..................................... 4,400 *
P. Kelly Tompkins(19)...................................... 184,773 .2
Joseph P. Viviano(20)...................................... 14,400 *
All Directors and executive officers as a group (twenty
persons including the directors and executive officers
named above)(21)......................................... 3,327,122 2.8
---------------
* Less than .1%.
(1) In accordance with Securities and Exchange Commission ("Commission") rules,
each beneficial owner's holdings have been calculated assuming full
exercise of outstanding options covering Common Stock, if any, exercisable
by such owner within 60 days after May 31, 2005, but no exercise of
outstanding options covering Common Stock held by any other person.
(2) According to a Schedule 13G filed with the Commission on February 14, 2005,
the following entities, which are affiliates of one another, may be deemed
to beneficially own all of the shares of Common Stock reflected in the
table above as of December 31, 2004 and have sole voting power with respect
to 5,527,184 shares of Common Stock, sole dispositive power with respect to
all of the shares of Common Stock, and shared voting or shared dispositive
power with respect to no shares of Common Stock. The following affiliates
own Common Stock in the amounts and manner indicated: Barclays Global
Investors, N.A., beneficial owner of 3,124,361 shares of Common Stock, with
sole voting power with respect to 2,624,193 shares of Common Stock and sole
dispositive power with respect to 3,124,193 shares of Common Stock; and
Barclays Global Fund Advisors, beneficial owner of 2,905,960 shares of
Common Stock, with sole voting power with respect to 2,902,991 shares of
Common Stock and sole dispositive power with respect to 2,905,960 shares
3
of Common Stock. The Schedule 13G states that the shares reported are held
in trust accounts for the economic benefit of the beneficiaries of those
accounts.
(3) According to a Schedule 13G filed with the Commission on February 14, 2005,
National City Corp., as of December 31, 2004, has sole voting power over
198,359 shares of Common Stock, shared voting power over 5,692,269 shares
of Common Stock, sole dispositive power over 77,291 shares of Common Stock,
and shared dispositive power over 118,263 shares of Common Stock shown in
the table above.
(4) Dr. Amstutz is a Director of the Company.
(5) Mr. Brandon is a Director of the Company.
(6) Mr. Carbonari is a Director of the Company.
(7) Mr. Hoogenboom is an executive officer of the Company. His ownership is
comprised of 51,023 shares of Common Stock which he owns directly, 46,250
shares which he has the right to acquire within 60 days of May 31, 2005
through the exercise of stock options, and approximately 1,481 shares held
by Wachovia Bank N.A., as trustee of the RPM International Inc. 401(k) Plan
which represents Mr. Hoogenboom's approximate percentage ownership of the
total shares held in the RPM International Inc. 401(k) Plan as of May 31,
2005. Mr. Hoogenboom also has a total of 471 stock equivalent units in the
Company's Deferred Compensation Program.
(8) Mr. Karman is a Director of the Company. Mr. Karman's ownership is
comprised of 97,522 shares of Common Stock which he owns directly, 127,372
shares of Common Stock which are held by a family-owned corporation of
which Mr. Karman is an officer and director and 343,750 shares of Common
Stock which he has the right to acquire within 60 days after May 31, 2005
through the exercise of stock options. Ownership of the shares held by the
family-owned corporation is attributed to Mr. Karman pursuant to Commission
rules.
(9) Mr. Matejka is an executive officer of the Company. Mr. Matejka's ownership
is comprised of 59,299 shares of Common Stock which he owns directly,
57,500 shares which he has the right to acquire within 60 days of May 31,
2005 through the exercise of stock options, and approximately 899 shares
held by Wachovia Bank, N.A., as trustee of the RPM International Inc.
401(k) Plan, which represents Mr. Matejka's approximate percentage
ownership of the total shares of Common Stock held in the RPM International
Inc. 401(k) Plan as of May 31, 2005. He also has 396 stock equivalent units
in the Company's Deferred Compensation Program.
(10) Mr. Miller is a Director of the Company.
(11) Mr. Papenbrock is a Director of the Company.
(12) Mr. Ratner is a Director of the Company. Mr. Ratner is retiring from the
Board of Directors as of the date of this year's Annual Meeting.
(13) Mr. Charles A. Ratner is a Director nominee of the Company.
(14) Mr. Rice is an executive officer of the Company. His ownership is comprised
of 56,142 shares of Common Stock which he owns directly, 100,450 shares
which he has the right to acquire within 60 days of May 31, 2005 through
the exercise of stock options, and approximately 3,313 shares held by
Wachovia Bank, N.A., as trustee of the RPM International Inc. 401(k) Plan,
which represents Mr. Rice's approximate percentage ownership of the total
shares held in the plan as of May 31, 2005. Mr. Rice also has a total of
1,414 stock equivalent units in the Company's Deferred Compensation
Program.
(15) Mr. Frank C. Sullivan is a Director and an executive officer of the
Company. Mr. Sullivan's ownership is comprised of 275,867 shares of Common
Stock which he owns directly, 7,266 shares which he holds as Custodian for
his sons, 427,500 shares of Common Stock which he has the right to acquire
within 60 days after May 31, 2005 through the exercise of stock options,
and approximately 3,056 shares held by Wachovia Bank, N.A., as trustee of
the RPM International Inc. 401(k) Plan, which represents Mr. Sullivan's
approximate percentage ownership of the total shares of Common Stock held
in the RPM International Inc. 401(k) Plan as of May 31, 2005. Ownership of
the shares held as Custodian for his sons is attributed to Mr. Sullivan
pursuant to Commission rules. Mr. Sullivan also has a total of 3,384 stock
equivalent units in the Company's Deferred Compensation Program.
(16) Mr. Thomas C. Sullivan is Chairman of the Board of Directors of the
Company. Mr. Sullivan's ownership is comprised of 214,352 shares of Common
Stock which he owns directly, 17,363 shares which are owned by his wife and
578,750 shares of Common Stock which he has the right to acquire within 60
days after May 31, 2005 through the exercise of stock options. Ownership of
the shares of Common Stock held by his wife is attributed to Mr. Sullivan
pursuant to Commission rules.
(17) Mr. Summers is a Director of the Company.
(18) Dr. Thornton is a Director of the Company. Dr. Thornton has elected to
receive her Directors' fees in the form of stock equivalent units in
connection with the Company's Deferred Compensation Program. As of May 31,
2005, Dr. Thornton had approximately 17,740 stock equivalent units in the
Deferred Compensation Program.
(19) Mr. Tompkins is an executive officer of the Company. Mr. Tompkins's
ownership is comprised of 59,824 shares of Common Stock which he owns
directly, 121,350 shares which he has the right to acquire within 60 days
after May 31, 2005 through the exercise of stock options, and approximately
2,618 shares held by Wachovia Bank, N.A., as trustee of
4
the RPM International Inc. 401(k) Plan, which represents Mr. Tompkins's
approximate percentage ownership of the total shares of Common Stock held
in the RPM International Inc. 401(k) Plan as of May 31, 2005. Mr. Tompkins
also has a total of 981 stock equivalent units in the Company's Deferred
Compensation Program.
(20) Mr. Viviano is a Director of the Company.
(21) The number of shares of Common Stock shown as beneficially owned by the
Company's Directors and executive officers as a group on May 31, 2005
includes 2,062,375 shares which the Company's Directors and executive
officers as a group have the right to acquire within 60 days after said
date through the exercise of stock options granted to them under the
Company's stock option plans, and approximately 20,542 shares of Common
Stock held by Wachovia Bank, N.A., as trustee of the RPM International Inc.
401(k) Plan, which represents the group's approximate percentage ownership
of the total shares of Common Stock held in the RPM International Inc.
401(k) Plan as of May 31, 2005.
5
ELECTION OF DIRECTORS
The authorized number of Directors of the Company presently is fixed at
twelve, with the Board of Directors divided into three Classes of four Directors
each. The term of office of one Class of Directors expires each year, and at
each Annual Meeting of Stockholders the successors to the Directors of the Class
whose term is expiring at that time are elected to hold office for a term of
three years.
The term of office of Class III of the Board of Directors expires at this
year's Annual Meeting of Stockholders. The term of office of the persons elected
Directors in Class III at this year's Annual Meeting will expire at the time of
the Annual Meeting held in 2008. Each Director in Class III will serve until the
expiration of that term or until his or her successor shall have been duly
elected. The Board of Directors' nominees for election as Directors in Class III
are Dr. Max D. Amstutz, Charles A. Ratner, William B. Summers, Jr. and Dr. Jerry
Sue Thornton. Each of Dr. Amstutz, Dr. Thornton and Mr. Summers currently serves
as a Director in Class III. The Company has an informal retirement policy which
provides that directors over the age of 75 normally do not stand for reelection.
Pursuant to this policy, Albert B. Ratner, a Director in Class III, will retire
as a Director effective as of the expiration of his term at the time of this
year's Annual Meeting. To fill the vacancy that will be created by the
retirement of Mr. Albert B. Ratner, the Board, upon the recommendation of the
Governance and Nominating Committee, has nominated Charles A. Ratner to stand
for election as a Director in Class III. Mr. Charles A. Ratner was initially
recommended to the Governance and Nominating Committee by the Chief Executive
Officer. Mr. Charles A. Ratner is a first cousin to Mr. Albert B. Ratner.
Dr. Max D. Amstutz, age 76 and a Director in Class III, has agreed to stand
for reelection at this year's Annual Meeting, despite the Company's informal
retirement policy. At the request of the Board and the Governance and Nominating
Committee, Dr. Amstutz has agreed to serve as a Director until such time as the
Governance and Nominating Committee has found a qualified successor who
possesses significant experience in international business and finance.
The Proxy holders named in the accompanying Proxy or their substitutes will
vote such Proxy at the Annual Meeting or any adjournment or postponement thereof
for the election as Directors of the four nominees unless the stockholder
instructs, by marking the appropriate space on the Proxy, that authority to vote
is withheld. If any nominee should become unavailable for election (which
contingency is not now contemplated or foreseen), it is intended that the shares
represented by the Proxy will be voted for such substitute nominee as may be
named by the Board of Directors. In no event will the accompanying Proxy be
voted for more than four nominees or for persons other than those named below
and any such substitute nominee for any of them.
6
NOMINEES FOR ELECTION
[Dr. Max D. Amstutz photo]
DR. MAX D. AMSTUTZ, age 76 -- Director since 1995
Director, Finter Bank Zurich, Switzerland since 1994 (interim Chairman
from 2001 to 2003); Director and Chairman of the Audit Committee of
Precious Woods Holding Ltd., Switzerland since 1993. From 1998 to 2002,
Dr. Amstutz was the Chairman of SGS-Societe Generale de Surveillance
Holding S.A., Geneva Switzerland, a world leader in verification,
testing and certification. From 1970 to 1994, Dr. Amstutz was Managing
Director of Holderbank Financiere Glaris Ltd., a world leader in
cement. From 1994 to 2000, Dr. Amstutz was Chairman and Chief Executive
Officer of Von Roll Holding Ltd., a designer and manufacturer of
environmental technology products, electrotechnical and industrial
insulation systems and industrial metal specialties, and from 1986 to
1999, was Vice Chairman of Alusuisse -- Lonza Holding Ltd., a
conglomerate of chemical, aluminum and packaging firms. Dr. Amstutz
received his degree in Business Administration and a Doctorate of
Economics from the University of Berne, Switzerland.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: NOMINEE TO CLASS III
29,243 (TERM EXPIRING IN 2008)
[Charles A Ratner photo]
CHARLES A. RATNER, age 64
Chief Executive Officer and President of Forest City Enterprises, since
1995. Mr. Ratner serves as a Director of American Greetings Corpora-
tion. Mr. Ratner also serves as a trustee of the Mandel Associated
Foundations, David and Inez Myers Foundation, University Hospitals
Health System and Mt. Sinai Health Care Foundation, and Mr. Ratner
currently serves on the boards of The Musical Arts Association, Greater
Cleveland Partnership, United Way Services and Jewish Community
Federation.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: 0 NOMINEE TO CLASS III
(TERM EXPIRING IN 2008)
[William B. Summers, Jr. photo]
WILLIAM B. SUMMERS, JR., age 55 -- Director since 2004
Chairman of McDonald Investments Inc., an investment banking and
securities firm and a subsidiary of KeyCorp, since 1994. From 1994
until 2000, Mr. Summers was the Chief Executive Officer of McDonald
Investments Inc. and from 1998 until 2000, Mr. Summers was the Chairman
of Key Capital Partners and an Executive Vice President of KeyCorp. Mr.
Summers is a Director of Developers Diversified Realty Corporation and
Greatbatch, Inc. and a member of the Advisory Board of Molded Fiber
Glass Companies and the Board of Executives of the New York Stock
Exchange.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: NOMINEE TO CLASS III
12,000 (TERM EXPIRING IN 2008)
7
[Dr. Jerry Sue Thornton photo]
DR. JERRY SUE THORNTON, age 58 -- Director since 1999
President of Cuyahoga Community College since 1992. From 1985 to 1992,
Dr. Thornton served as President of Lakewood Community College in White
Bear Lake, Minnesota. She received her Ph.D. from the University of
Texas at Austin and her M.A. and B.A. from Murray State University. Dr.
Thornton is also a Director of National City Corporation, American
Greetings Corporation and Applied Industrial Technologies, Inc. Dr.
Thornton is also a board member of United Way of Cleveland, Greater
Cleveland Partnership and the Rock and Roll Hall of Fame and
Museum -- Cleveland and New York.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: NOMINEE TO CLASS III
4,400* (TERM EXPIRING IN 2008)
DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER ANNUAL MEETING
[Bruce A. Carbonari photo]
BRUCE A. CARBONARI, age 49 -- Director since 2002
President and Chief Executive Officer of Fortune Brands Home and
Hardware, a consumer products company specializing in kitchen, bath and
related products. Fortune Brands operating units include Moen
Incorporated, a producer of residential and commercial plumbing prod-
ucts. Prior to joining the Moen business as President and Chief
Operating Officer in 1990, Mr. Carbonari was Executive Vice President
and Chief Financial Officer of Stanadyne, Inc., Moen's parent company
at that time. He began his career at PricewaterhouseCoopers prior to
joining Stanadyne in 1981. Mr. Carbonari also serves on the board of
the Rock and Roll Hall of Fame and Museum.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS II
4,400 (TERM EXPIRING IN 2006)
[James A. Karman photo]
JAMES A. KARMAN, age 68 -- Director since 1963
Mr. Karman holds a B.S. degree from Miami University (Ohio) and an
M.B.A. degree from the University of Wisconsin. Mr. Karman taught
corporate finance at the University of Wisconsin and was an Invest-
ment Manager at The Union Bank & Trust Company, Grand Rapids, Michigan,
prior to joining RPM. From October 1973 through September 1978, Mr.
Karman served as our Executive Vice President, Secretary and Treasurer
and, prior to that time, as Vice President -- Finance and Treasurer.
From September 1978 to August 1999, he served as our President and
Chief Operating Officer. Mr. Karman also served as Chief Financial
Officer from October 1982 to October 1993, and again from June 2001 to
October 2001. He was Vice Chairman from 1999 to 2002. Mr. Karman is a
Director of A. Schulman, Inc.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS II
568,644 (TERM EXPIRING IN 2006)
---------------
* Dr. Thornton has elected to participate in the Company's Deferred Compensation Program, and is
deferring the payment of her Directors' fees in the form of stock equivalent units. As of May 31,
2005, Dr. Thornton had approximately 17,740 stock equivalent units in the Deferred Compensation
Program.
8
[Donald K. Miller photo]
DONALD K. MILLER, age 73 -- Director since 1972
Chairman of Axiom International Investors LLC, an international equity
asset management firm, since 1999. From 1986 to 1996, Mr. Miller was
Chairman of Greylock Financial Inc., a venture capital firm. Formerly,
Mr. Miller served as Chairman and CEO of Thomson Advisory Group L.P.
("Thomson"), a money management firm, from November 1990 to March 1993
and Vice Chairman from April 1993 to November 1994 when Thomson became
PIMCO Advisors L.P. Mr. Miller served as Director of PIMCO Advisors,
L.P. from November 1994 to December 1997. Mr. Miller is a Director of
Layne Christensen Company, a successor corporation to Christensen
Boyles Corporation, a supplier of mining products and services, where
Mr. Miller served as Chairman from January 1987 through December 1995.
Mr. Miller received his B.S. degree from Cornell University and his
M.B.A. degree from Harvard University Graduate School of Business
Administration.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS II
14,400 (TERM EXPIRING IN 2006)
[Joseph P. Viviano photo]
JOSEPH P. VIVIANO, age 67 -- Director since July 2001
Retired Vice Chairman of Hershey Foods, a manufacturer, distributor and
marketer of consumer food products. Prior to his retirement, Mr.
Viviano served as the Vice Chairman of Hershey Foods from 1999 to March
2000, and as its President and Chief Operating Officer from 1994 to
March 1999. Mr. Viviano is also a Director of Chesapeake Corporation,
Harsco Corporation, Huffy Corporation and Reynolds American Inc.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS II
14,400* (TERM EXPIRING IN 2006)
[Edward B. Brandon photo]
EDWARD B. BRANDON, age 73 -- Director since 1989
Retired Chairman and Chief Executive Officer, National City Corpora-
tion. Mr. Brandon received his B.S. degree in economics from North-
western University and his M.B.A. degree from Wharton School of Banking
and Finance. He joined National City Bank in 1956. Mr. Brandon served
as President of National City Corporation and President and Chief
Executive Officer of National City Bank prior to his election as
Chairman in September 1987, and served as Chief Executive Officer of
National City Bank until April 1989. Mr. Brandon also served as Chief
Executive Officer of National City Corporation from September 1987
until July 1995. Mr. Brandon retired from National City Corporation in
October 1995.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS I
29,400 (TERM EXPIRING IN 2007)
---------------
* Effective June 1, 2005, Mr. Viviano has elected to participate in the Company's Deferred Compensation
Program, and is deferring the payment of his Directors' fees in the form of stock equivalent units.
9
[William A. Papenbrock photo]
WILLIAM A. PAPENBROCK, age 66 -- Director since 1972
Retired Partner, Calfee, Halter & Griswold LLP, Attorneys-at-law. Mr.
Papenbrock received his B.S. degree in Business Administration from
Miami University (Ohio) and his LL.B. degree from Case Western Reserve
Law School. After serving one year as the law clerk to Chief Justice
Taft of the Ohio Supreme Court, Mr. Papenbrock joined Calfee, Halter &
Griswold LLP as an attorney in 1964. He became a partner of the firm in
1969 and is the past Vice Chairman of the firm's Executive Committee.
Calfee, Halter & Griswold LLP serves as counsel to the Company.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS I
23,142 (TERM EXPIRING IN 2007)
[Frank C. Sullivan photo]
FRANK C. SULLIVAN, age 44 -- Director since 1995
President and Chief Executive Officer, RPM International Inc. Mr. Frank
C. Sullivan entered the University of North Carolina as a Morehead
Scholar and received his B.A. degree in 1983. From 1983 to 1986, Mr.
Sullivan held various commercial lending and corporate finance
positions at Harris Bank and First Union National Bank prior to joining
RPM as a Technical Service Representative from 1987 to 1988 and as
Regional Sales Manager from 1988 to 1989 at RPM's AGR Company joint
venture. In 1989, he became the Company's Director of Corporate
Development. He became a Vice President of the Company in 1991, Chief
Financial Officer in 1993, Executive Vice President in 1995, President
in 1999, Chief Operating Officer in 2001 and was elected Chief
Executive Officer in October 2002. Mr. Sullivan serves on the boards of
The Timken Company, The Cleveland Foundation, the Greater Cleveland
Chapter of the American Red Cross, the Cleveland Clinic Foundation's
Digestive Disease Center Leadership Board, the Rock and Roll Hall of
Fame and Museum and the Greater Cleveland Partnership. Frank C.
Sullivan is the son of Thomas C. Sullivan.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS I
717,073 (TERM EXPIRING IN 2007)
[Thomas C. Sullivan photo]
THOMAS C. SULLIVAN, age 68 -- Director since 1963
Chairman, RPM International Inc. Mr. Thomas C. Sullivan received his
B.S. degree in Business Administration from Miami University (Ohio). He
joined RPM as a Divisional Sales Manager in 1961 and was elected Vice
President in 1967. He became Executive Vice President in 1969, and in
1971 Mr. Sullivan was elected Chairman of the Board. He also served as
President from 1970 to 1978 and Chief Executive Officer from 1971 to
2002. Mr. Sullivan is a Director of Agilysys, Inc., Huffy Corporation
and Kaydon Corporation.
SHARES OF COMMON STOCK BENEFICIALLY OWNED: DIRECTOR IN CLASS I
810,465 (TERM EXPIRING IN 2007)
10
INFORMATION REGARDING MEETINGS AND COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Governance and Nominating Committee. The Executive
Committee exercises the power and authority of the Board in the interim period
between Board meetings. The functions of each of the Compensation Committee, the
Governance and Nominating Committee and the Audit Committee are governed by
charters that have been adopted by the Board of Directors. The Board of
Directors also has adopted Corporate Governance Guidelines to assist the Board
of Directors in the exercise of its responsibilities, and a Code of Business
Conduct and Ethics that applies to the Company's Directors, officers, and
employees.
The charters of the Audit Committee, Compensation Committee and Governance
and Nominating Committee and the Corporate Governance Guidelines and Code of
Business Conduct and Ethics are available on the Company's website at
www.rpminc.com and in print to any stockholder who requests a copy. Requests for
copies should be directed to Manager of Investor Relations, RPM International
Inc., P.O. Box 777, Medina, Ohio 44258. The Company intends to disclose any
amendments to the Code of Business Conduct and Ethics, and any waiver of the
Code of Business Conduct and Ethics granted to any Director or executive officer
of the Company, on the Company's website. As of the date of this Proxy
Statement, there have been no such waivers.
BOARD INDEPENDENCE
The Company's Corporate Governance Guidelines and the NYSE listing
standards provide that at least a majority of the members of the Board of
Directors must be independent, i.e., free of any material relationship with the
Company, other than his or her relationship as a Director or Board Committee
member. A Director is not independent if he or she fails to satisfy the
standards for independence under the NYSE listing standards, the rules of the
Securities and Exchange Commission, and any other applicable laws, rules and
regulations. Pursuant to the NYSE listing standards, the Board has adopted
categorical standards (the "Categorical Standards"), which it revised effective
April 20, 2005 in light of recent amendments to the NYSE listing standards, to
assist it in making independence determinations. The Categorical Standards
specify the criteria by which the independence of the Directors will be
determined. The Categorical Standards, which are set forth on Annex A hereto,
meet or exceed the independence requirements set forth in the NYSE listing
standards.
The Board of Directors, after a review of all relevant facts and
circumstances, has affirmatively determined that each of Dr. Max D. Amstutz,
Albert B. Ratner, William B. Summers, Jr., Dr. Jerry Sue Thornton, Bruce A.
Carbonari, Donald K. Miller, Joseph P. Viviano, Edward B. Brandon and William A.
Papenbrock, as well as Charles A. Ratner, the Director nominee, is free from any
material relationship with the Company pursuant to the Categorical Standards and
is independent. Messrs. Frank C. Sullivan, Thomas C. Sullivan and James A.
Karman are not independent pursuant to the NYSE listing standards.
AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in fulfilling its
oversight of the integrity of the Company's financial statements, the Company's
compliance with legal and regulatory requirements, the independent auditor's
qualifications and independence, and the performance of the Company's internal
audit function and independent auditor, and prepares the report of the Audit
Committee. The specific functions and responsibilities of the Audit Committee
are set forth in the Audit Committee Charter which is available on the Company's
website.
The Board has determined that each member of the Audit Committee is
financially literate and satisfies the current independence standards of the
NYSE listing standards and Section 10A(m)(3) of the Securities Exchange Act of
1934. The Board has also determined that each of Donald K. Miller and William B.
Summers, Jr. qualifies as an "audit committee financial expert" as that term is
defined
11
in Item 401(h) of Regulation S-K. As an audit committee financial expert, each
of Messrs. Miller and Summers also satisfies the NYSE accounting and financial
management expertise requirements.
COMPENSATION COMMITTEE
The Compensation Committee assists the Board of Directors in discharging
its oversight responsibilities relating to, among other things, executive
compensation, equity and incentive compensation plans, management succession
planning and producing the Compensation Committee Report. The Compensation
Committee administers the Company's Stock Option Plans, Incentive Compensation
Plan, Restricted Stock Plan, the 2002 Performance Accelerated Restricted Stock
Plan, the 2003 Restricted Stock Plan for Directors and the 2004 Omnibus Equity
and Incentive Plan. The Compensation Committee reviews and determines the salary
and bonus compensation of the Chief Executive Officer, as well as reviews and
recommends to the Board of Directors for its approval the compensation of the
other executive officers of the Company. Each of the members of the Compensation
Committee is independent within the meaning of the NYSE listing standards and
the Company's Corporate Governance Guidelines.
GOVERNANCE AND NOMINATING COMMITTEE
The Governance and Nominating Committee, established in October 2002,
reports to the Board on all matters relating to corporate governance of the
Company, including the development and recommendation to the Board of a set of
corporate governance principals applicable to the Company, selection,
qualification and nomination of the members of the Board and nominees to the
Board, and administration of the Board's evaluation process. Each of the members
of the Governance and Nominating Committee is independent within the meaning of
the NYSE listing standards and the Company's Corporate Governance Guidelines.
In identifying and considering possible candidates for election as a
Director, the Governance and Nominating Committee, after consultation with the
Board and the Chief Executive Officer, will consider all relevant factors and
will be guided by the following principals: (1) each Director should be an
individual of the highest character and integrity; (2) each Director shall have
demonstrated exceptional ability and judgment and should have substantial
experience which is of particular relevance to the Company; (3) each Director
should have sufficient time available to devote to the affairs of the Company;
and (4) each Director should represent the best interests of the stockholders as
a whole rather than special interest groups. This evaluation is performed in
light of the Governance and Nominating Committee's views as to the needs of the
Board and the Company as well as what skill set and other characteristics would
most complement those of the current Directors.
The Governance and Nominating Committee will consider potential candidates
recommended by stockholders, current Directors, Company officers, employees and
others. The Governance and Nominating Committee will use the above enumerated
factors to consider potential candidates regardless of the source of the
recommendation. Stockholder recommendations for director nominations may be
submitted to the Secretary of the Company at P.O. Box 777, Medina, Ohio 44258,
and they will be forwarded to the Governance and Nominating Committee for
consideration, provided such recommendations are accompanied by sufficient
information to permit the Governance and Nominating Committee to evaluate the
qualifications and experience of the nominees. Recommendations should include,
at a minimum, the following:
- the name, age, business address and residence address of the proposed
nominee;
- the principal occupation or employment of the proposed nominee;
- the number of shares of Common Stock of the Company which are
beneficially owned by such candidate;
12
- a description of all arrangements or understandings between the
stockholder(s) making such nomination and each candidate and any other
person or persons (naming such person or persons) pursuant to which
nominations are to be made by the stockholder;
- detailed biographical data and qualifications and information regarding
any relationships between the candidate and the Company within the past
three years;
- any other information relating to the proposed nominee that would be
required to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder;
- any other information the stockholder believes is relevant concerning the
proposed nominee;
- a written consent of the proposed nominee(s) to being named as a nominee
and to serve as a director if elected;
- whether the proposed nominee is going to be nominated at the Annual
Meeting of Stockholders or is only being provided for consideration by
the Governance and Nominating Committee;
- the name and record address of the stockholder who is submitting the
notice;
- the number of shares of Common Stock which are owned of record or
beneficially by the stockholder who is submitting the notice and the date
such shares were acquired by the stockholder and if such person is not a
stockholder of record or if such shares are owned by an entity,
reasonable evidence of such person's ownership of such shares or such
person's authority to act on behalf of such entity; and
- if the stockholder who is submitting the notice intends to nominate the
proposed nominee at the Annual Meeting of Stockholders, a representation
that the stockholder intends to appear in person or by proxy at the
annual meeting to nominate the proposed nominee named in the notice.
COMMITTEE MEMBERSHIP
Set forth below is the current membership of each of the above-described
Committees, with the number of meetings held during the fiscal year ended May
31, 2005 in parentheses:
EXECUTIVE COMPENSATION GOVERNANCE AND
COMMITTEE (0) AUDIT COMMITTEE (6) COMMITTEE (4) NOMINATING COMMITTEE (3)
------------- ----------------------- ----------------------- ------------------------
Frank C. Sullivan Donald K. Miller Edward B. Brandon Joseph P. Viviano
(Chairman) (Chairman) (Chairman) (Chairman)
Edward B. Brandon Dr. Max D. Amstutz Albert B. Ratner Bruce A. Carbonari
Albert B. Ratner William B. Summers, Jr. Dr. Jerry Sue Thornton William A. Papenbrock
Thomas C. Sullivan
Dr. Jerry Sue Thornton
Under the Company's Amended and Restated By-Laws, the Board may designate
one or more independent directors as alternate members of any Committee, in
order to replace any absent or disqualified member at any meetings. The Board
has designated Mr. Papenbrock as an alternate member of the Audit and
Compensation Committees and Dr. Thornton as an alternate member of the
Governance and Nominating Committee. Each alternate member also meets the
applicable independence, composition and related requirements of the Securities
and Exchange Commission and the NYSE with respect to his or her respective
Committees.
BOARD MEETINGS
The Board of Directors held four meetings during the fiscal year ended May
31, 2005. No Director attended fewer than 75% of the aggregate of (i) the total
number of meetings of the Board
13
of Directors held during the period he or she served as a Director and (ii) the
total number of meetings held by Committees of the Board on which the Director
served, during the periods that the Director served.
NON-MANAGEMENT DIRECTORS MEETINGS AND INDEPENDENT DIRECTORS MEETINGS
Each of the Directors, other than Frank C. Sullivan, is a non-management
Director. Non-management Directors will meet in executive sessions each year in
January, April and July. For the coming year, the presiding Director for the
January, April and July meetings will be Joseph P. Viviano, Edward B. Brandon,
and Donald K. Miller, respectively. Each of the non-management Directors, other
than Thomas C. Sullivan and James A. Karman, are independent within the meaning
of the NYSE listing standards and the Company's Corporate Governance Guidelines.
The independent Directors will meet in executive session at least once per year.
COMMUNICATIONS WITH THE BOARD
Stockholders and other interested persons may communicate with the
non-management Directors as a group or any chair of a Board Committee. Such
communications may be confidential or anonymous, if so designated, and may be
submitted in writing to Board of Directors Communications c/o General Counsel,
RPM International Inc., P.O. Box 777, Medina, Ohio 44258 or by email to
directors@rpminc.com. Unless specifically directed to one of the Committee
chairs, communications will be forwarded to the presiding Director for the next
scheduled meeting of non-management Directors.
All communications received in accordance with these procedures will be
reviewed initially by the RPM legal department, who will relay all such
communications (or a summary thereof) to the appropriate Director or Directors
unless he or she determines that such communication:
- Does not relate to the business or affairs of the Company or the
functioning or constitution of the Board of Directors or any of its
Committees; or
- Relates to routine or insignificant matters that do not warrant the
attention of the Board of Directors.
In the alternative to the procedures outlined above, any stockholder or
interested party may report any suspected accounting or financial misconduct
confidentially through our compliance hotline. Information regarding our
compliance hotline is available on our website, www.rpminc.com.
ATTENDANCE AT ANNUAL MEETINGS OF STOCKHOLDERS
It is a policy of the Board that all its members attend the Annual Meeting
of Stockholders absent exceptional cause. All of the Directors who were at that
time members of the Board were present at the October 2004 Annual Meeting.
DIRECTOR COMPENSATION
During the 2005 fiscal year, Directors who were not employees of or
consultants to the Company received a quarterly fee of $8,000 and an additional
$1,000 for each Board and Committee meeting attended. The Chair of the Audit
Committee receives an additional quarterly fee of $3,000. The Chair of each of
the Compensation Committee and the Governance and Nominating Committee receives
an additional quarterly fee of $1,500. William A. Papenbrock attends all
Committee meetings as acting secretary of each Committee, and as such he
receives the same compensation as the members of the Committees. A non-employee
or non-consultant Director who is not a member of a particular committee but who
attends a committee meeting at the invitation or request of the Chief Executive
Officer or the Chairman of the Committee receives $1,000 for attending the
meeting in its entirety. In April 1986, the Board of Directors adopted a
Deferred Compensation Plan providing for the deferred payment of Directors' fees
in either cash or stock equivalents and the
14
payment of such deferred fees in cash commencing six months following the date
of the participating Director's retirement, resignation or death, or termination
of such participating Director's Deferred Compensation Agreement. Participation
in the Deferred Compensation Plan is at the election of each Director entitled
to receive compensation for serving on the Board. In order to create an
appropriate compensation program for Directors and to bring total Board
compensation to a competitive level, as well as to enhance the ability of the
Company to recruit and retain Directors and further align interests of Directors
with interests of Stockholders, in October 2003 the Company's stockholders
adopted the 2003 Restricted Stock Plan for Directors that provides for the
granting of shares of Common Stock to Directors who are not employees of or
consultants to the Company. For fiscal 2005, each Director, other than Frank C.
Sullivan and Thomas C. Sullivan, was granted 2,000 shares of restricted Common
Stock pursuant to the 2003 Restricted Stock Plan for Directors
During fiscal 2005, Mr. Thomas C. Sullivan was a party to a consulting
agreement with the Company which provided for the payment by the Company of
monthly fees of $72,500 and certain other benefits. In June 2005, Mr. Sullivan's
consulting agreement was extended for an additional two-year period, with
monthly payments of $42,000 and other benefits similar to those contained in his
original consulting agreement. For additional details, see "Employment
Agreements."
15
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended May 31, 2005, 2004 and 2003 of those persons who were, at May 31, 2005:
(i) the Chief Executive Officer; and (ii) the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
----------------------------
RESTRICTED
ANNUAL COMPENSATION SECURITIES STOCK PLAN ALL OTHER
------------------------------ UNDERLYING GRANTS/ DOLLAR COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS VALUE(1) (2)(3)
--------------------------- ---- ------------ -------- ---------- --------------- ------------
Frank C. Sullivan 2005 $720,000 $700,000 125,000 $ 804,885 $13,100
President and 2004 700,000 515,000 100,000 101,758 11,473
Chief Executive Officer 2003 600,000 420,000 100,000 1,073,469 11,278
P. Kelly Tompkins 2005 $310,000 $295,000 30,000 $ 161,015 $12,135
Senior Vice President, 2004 300,000 225,000 50,000 37,819 12,017
General Counsel 2003 245,000 175,000 40,000 495,881 9,526
and Secretary
Ronald A. Rice 2005 $300,000 $295,000 30,000 $ 155,485 $10,897
Senior Vice President- 2004 280,000 200,000 50,000 31,923 10,757
Administration 2003 225,000 160,000 40,000 494,522 8,501
Paul G. P. Hoogenboom 2005 $258,000 $210,000 25,000 $ 114,893 $11,083
Vice President- 2004 250,000 175,000 40,000 27,000 10,677
Operations and Chief 2003 220,000 155,000 40,000 493,027 8,944
Information Officer
Robert L. Matejka 2005 $237,000 $210,000 25,000 $ 114,298 $19,144
Vice President, 2004 230,000 165,000 40,000 21,197 17,657
Chief Financial Officer 2003 220,000 120,000 40,000 491,369 15,450
and Controller
---------------
(1) (a) The purpose of the 1997 Restricted Stock Plan is to replace the cash
based Benefit Restoration Plan with a stock based plan. Shares granted under
the Restricted Stock Plan directly reduce and replace the cash amount of
supplemental retirement restoration benefits and supplemental death
restoration benefits owed to participants under the Benefit Restoration
Plan. The Benefit Restoration Plan was frozen on June 1, 1997. All prior
accruals of supplemental retirement restoration benefits and death
restoration benefits under the Benefit Restoration Plan have been replaced
by prior grants of shares under the Restricted Stock Plan. All current
grants of shares will be in an amount equivalent to the accruals of
supplemental retirement restoration benefits and death restoration benefits
required under the Benefit Restoration Plan if it were not frozen. See
"Restricted Stock Plan" hereinafter. Dollar value for the fiscal year ended
May 31, 2005 was calculated by multiplying the number of restricted shares
granted pursuant to the Company's 1997 Restricted Stock Plan (Mr. Frank C.
Sullivan -- 7,030 shares, Mr. Tompkins -- 2,652 shares, Mr. Rice -- 2,262
shares, Mr. Hoogenboom -- 1,886 shares and Mr. Matejka -- 1,844 shares) by
the closing price of $14.18 on July 14, 2004, the effective date of grant.
The dollar value for the fiscal year ended May 31, 2004 was calculated by
multiplying the number of restricted shares granted pursuant to the
Company's 1997 Restricted Stock Plan (Mr. Frank C. Sullivan -- 7,628 shares
of Common Stock, Mr. Tompkins -- 2,835 shares of Common Stock, Mr.
Rice -- 2,393 shares of Common Stock, Mr. Hoogenboom -- 2,024 shares of
Common Stock and Mr. Matejka -- 1,589 shares of Common Stock) by the closing
price of $13.34 on July 14, 2003, the effective date of grant. The dollar
value for the fiscal year ended May 31, 2003 was calculated by multiplying
the number of restricted shares granted pursuant to the Company's 1997
Restricted Stock Plan (Mr. Frank C. Sullivan -- 3,997 shares of Common
Stock, Mr. Tompkins -- 1,198 shares of Common Stock, Mr. Rice -- 1,098
shares of Common Stock, Mr. Hoogenboom -- 988 shares of Common Stock and Mr.
Matejka -- 866 shares of Common Stock) by the closing price of $13.59 on
July 17, 2002, the effective date of grant. At the end of the fiscal year
ended May 31, 2005, the number and value (based upon the closing price on
May 31, 2005 of $17.60) of the aggregate restricted stock holdings,
including dividends added to the Deferred Compensation Plan, were as
follows: Mr. Frank C. Sullivan -- 39,782 shares of Common Stock -- $700,163;
Mr. Tompkins -- 12,522 shares of Common Stock -- $220,387; Mr. Rice -- 9,202
shares of Common Stock -- $161,955; Mr. Hoogenboom -- 6,115 shares of Common
Stock -- $107,624; and Mr. Matejka -- 4,316 shares of Common
Stock -- $75,962. Dividends are paid on restricted stock as and when
dividends are paid on Common Stock. The 2003 Restricted Stock Award reported
with respect to Mr. Matejka will vest on May 31, 2008. None of the other
restricted stock awards reported on the Summary Compensation Table are
scheduled to vest within three years from the respective date of grant.
16
(b) The Purpose of the 2002 Performance Accelerated Restricted Stock Plan
("PARS") is to provide an added incentive to key officers to improve the
long-term performance of the company. See "Compensation Committee Report on
Executive Compensation -- Description of the Company's Compensation Programs
for Executive Officers and Directors -- PARS Plan" hereinafter. Dollar value
for the fiscal year ended May 31, 2003 was calculated by multiplying the
number of restricted shares granted pursuant to PARS (Mr. Frank C.
Sullivan -- 85,000 shares of Common Stock, Mr. Tompkins -- 40,000 shares of
Common Stock, Mr. Rice -- 40,000 shares of Common Stock, Mr. Hoogenboom --
40,000 shares of Common Stock, and Mr. Matejka -- 40,000 shares of Common
Stock) by the closing price of $11.99 on July 22, 2002, the effective date
of the grant. At the end of the fiscal year ended May 31, 2005, the number
and value (based upon the closing price on May 31, 2005 of $17.60) of the
aggregate restricted stock holdings, including dividends added to the
Deferred Compensation Plan, were as follows: Mr. Frank C. Sullivan -- 85,806
shares of Common Stock -- $1,510,186, Mr. Tompkins -- 40,379 shares of
Common Stock -- $710,670, Mr. Rice -- 40,379 shares of Common
Stock -- $710,670, Mr. Hoogenboom -- 40,379 shares of Common
Stock -- $710,670, and Mr. Matejka -- 40,379 shares of Common
Stock -- $710,670. Dividends are paid as and when dividends are paid on
Common Stock. None of the restricted stock awards granted under the PARS
plan reported on the Summary Compensation Table are scheduled to vest within
three years from the respective date of grant unless certain performance
goals are achieved in which case, vesting would be accelerated.
(c) The purpose of the 2004 Omnibus Equity and Incentive Plan is to be the
primary stock-based award program for covered employees. See "Compensation
Committee Report on Executive Compensation -- Description of the Company's
Compensation Programs for Executive Officers and Directors -- 2004 Omnibus
Equity and Incentive Plan" contained elsewhere herein. Dollar value for
fiscal year ended May 31, 2005 was calculated by multiplying the number of
restricted shares granted pursuant to the Omnibus Plan (Mr. Frank C.
Sullivan -- 40,000 shares of Common Stock, Mr. Tompkins -- 7,000 shares of
Common Stock, Mr. Rice -- 7,000 shares of Common Stock, Mr. Hoogenboom --
5,000 shares of Common Stock and Mr. Matejka -- 5,000 shares of Common
Stock) by the closing price of $17.63 on October 29, 2004, the effective
date of the grant. At the end of the fiscal year ended May 31, 2005, the
value (based on the closing price on May 31, 2005 of $17.60) of the
aggregate restricted stock holdings was as follows: Mr. Frank C.
Sullivan -- $704,000, Mr. Tompkins -- $123,200, Mr. Rice -- $123,200, Mr.
Hoogenboom -- $88,000 and Mr. Matejka -- $88,000.
(2) All Other Compensation consists of in fiscal 2005, the value (Mr. Frank C.
Sullivan $8,400, Mr. Tompkins $8,367, Mr. Rice $8,533, Mr. Hoogenboom $8,333
and Mr. Matejka $8,311) of the Company's matching contributions to the RPM
International Inc. 401(k) Plan relating to before-tax contributions made by
the Named Executive Officers. Effective October 1, 2002, the 401(k) Plan was
amended so that matching contributions by the Company are invested in the
same manner as participants invest their own contributions. Prior to that
time, Company matching contributions were made in the form of shares of
Company Common Stock. In fiscal 2004 and 2003, the value of the Company's
matching contributions to the RPM International Inc. 401(k) Plan for each of
the Named Executive Officers were as follows: Mr. Frank C. Sullivan $8,200
(2004) and $8,125 (2003); Mr. Tompkins $8,968 (2004) and $6,657 (2003); Mr.
Rice $8,964 (2004) and $6,828 (2003); Mr. Hoogenboom $8,500 (2004) and
$6,917 (2003); Mr. Matejka $8,202 (2004) and $6,565 (2003).
(3) All Other Compensation includes insurance premiums paid by the Company in
connection with executive life insurance policies, including the following
amounts equal to the full dollar economic value of the premiums paid by the
Company in connection with life insurance policies issued pursuant to the
Split Dollar Life Insurance Agreements between the Company and the following
named Executive Officers during 2005, 2004 and 2003, respectively: Mr. Frank
C. Sullivan $3,110 (2005), $2,862 (2004) and $1,683 (2003); Mr. Tompkins
$1,548 (2005), $1,411 (2004) and $829 (2003); Mr. Rice $1,014 (2005), $912
(2004) and $443 (2003); Mr. Hoogenboom $1,010 (2005), $932 (2004) and $437
(2003); Mr. Matejka $3,303 (2005), $2,857 (2004) and $1,925 (2003). The
premiums paid by the Company in connection with the life insurance policies
issued pursuant to such Split Dollar Life Insurance Agreements set forth in
the preceding sentence will be recovered in full by the Company upon the
payment of any death benefits under any such life insurance policy.
17
OPTION GRANTS
Shown below is information on grants of stock options pursuant to the
Company's 1996 Key Employees Stock Option Plan during the fiscal year ended May
31, 2005 to the executive officers who are named in the Summary Compensation
Table.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
PERCENTAGE AT ASSUMED ANNUAL RATES
OF TOTAL OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR OPTIONS
SECURITIES GRANTED TO EXERCISE OR TERMS(3)(4)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME OPTIONS(1)(5) FISCAL YEAR (PER SHARE)(2) DATE 5% 10%
--------------------------- ------------- ------------ -------------- ---------- ------------ ------------
Frank C. Sullivan 125,000(5) 21.40% $17.63 10/29/2014 $1,385,927 $3,512,210
President and Chief
Executive Officer
P. Kelly Tompkins 30,000(5) 5.14% $17.63 10/29/2014 $ 332,623 $ 842,930
Senior Vice President,
General Counsel and
Secretary
Ronald A. Rice 30,000(5) 5.14% $17.63 10/29/2014 $ 332,623 $ 842,930
Senior Vice President --
Administration
Paul G. P. Hoogenboom 25,000(5) 4.28% $17.63 10/29/2014 $ 277,186 $ 702,442
Vice President --
Operations and Chief
Information Officer
Robert L. Matejka 25,000(5) 4.28% $17.63 10/29/2014 $ 277,186 $ 702,442
Vice President, Chief
Financial Officer and
Controller
---------------
(1) The option agreements relating to the options granted under the Company's
1996 Stock Option Plan provide that such options become fully vested upon
certain "changes in control" of the Company described in such option
agreements.
(2) This price represents the fair market value at the date of grant pursuant to
the terms of the Company's 1996 Stock Option Plan.
(3) The dollar amounts under these columns are the result of calculations at the
5% and 10% appreciation rates dictated by the Commission and are not
intended to be forecasts of the Company's stock price.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERMS
------------------------------------
5% 10%
---------------- ----------------
(4) Value created for all stockholders: $1,301,147,617 $3,297,363,526
Gain of named executive officers as a percent of value
created for all stockholders: 0.20% 0.20%
(5) These options were granted on October 29, 2004 pursuant to the Company's
1996 Stock Option Plan. Twenty-five percent of the shares subject to the
option become exercisable on each anniversary thereof.
18
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the exercise of stock options
during the fiscal year ended May 31, 2005 to purchase the Company's Common Stock
by the executive officers named in the Summary Compensation Table and with
respect to the unexercised stock options at May 31, 2005 to purchase the
Company's Common Stock for the executive officers named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND MAY 31, 2005 OPTION VALUE
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT MAY 31, 2005 AT MAY 31, 2005(2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------- ----------- ----------- ----------- -------------- ----------- --------------
Frank C. Sullivan 39,063 $169,416.23 427,500 250,000 $2,199,313 $438,500
President and Chief
Executive Officer
P. Kelly Tompkins 18,675 $111,433.73 121,350 87,500 $ 492,591 $201,650
Senior Vice
President, General
Counsel and
Secretary
Ronald A. Rice 19,550 $156,286.28 100,450 87,500 $ 402,741 $201,650
Senior Vice
President --
Administration
Paul G. P. Hoogenboom -- -- 46,250 75,000 $ 183,525 $175,400
Vice President --
Operations and Chief
Information Officer
Robert L. Matejka -- -- 57,500 77,500 $ 331,725 $193,750
Vice President,
Chief Financial
Officer and
Controller
---------------
(1) Represents the difference between the option exercise price and the last
sales price of a share of Common Stock on the NYSE on the date of exercise.
(2) Based on the last sales price of the Common Stock of $17.60 on the NYSE on
May 31, 2005 (the last trading day of the Company's fiscal year ended May
31, 2005). The ultimate realization of profit on the sale of the Common
Stock underlying such options is dependent upon the market price of such
shares on the date of sale.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning shares of Common
Stock authorized or available for issuance under the Company's equity
compensation plans as of May 31, 2005.
NUMBER OF SECURITIES
WEIGHTED- REMAINING AVAILABLE
NUMBER OF SECURITIES AVERAGE EXERCISE FOR FUTURE ISSUANCE
TO BE ISSUED UPON PRICE OF UNDER EQUITY
EXERCISE OF OUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- -------------------- ----------------- -------------------------
(A) (B) (C)(1)
Equity compensation plans approved
by stockholders 6,764,299 $13.90 6,961,678
Equity compensation plans not
approved by stockholders(2) -- -- --...............
--------- ------ ---------
Total 6,764,299 $13.90 6,961,678
========= ====== =========
---------------
(1) Includes 5,678,500 shares available for future issuance under the Company's
Omnibus Equity and Incentive Plan of which 2,678,500 shares may be subject
to full value awards such as restricted stock, 703,731 shares available for
future issuance under the Company's 1997 Restricted Stock Plan and 515,200
shares available for future issuance under the Company's 2002 Performance
Accelerated Restricted Stock Plan.
(2) The Company does not maintain equity compensation plans that have not been
approved by its stockholders.
19
EMPLOYMENT AGREEMENTS
Under an Amended and Restated Employment Agreement, dated as of October 11,
2002, Frank C. Sullivan is employed as the President and Chief Executive Officer
of the Company for a term ending on May 31, 2006, which is automatically
extended for additional one-year periods unless Mr. Sullivan or the Company
gives the other party notice of nonrenewal two months in advance of the annual
renewal date. Pursuant to the terms of his Employment Agreement, Frank C.
Sullivan is to receive an annual base salary of not less than $750,000 beginning
on June 1, 2005. In addition to his base salary, Mr. Sullivan is entitled to
such annual incentive compensation or bonuses as the Compensation Committee
determines and to participate in other benefit plans provided by the Company.
Under the provisions of the Employment Agreement, the Company may terminate his
employment for Disability or Cause (as defined). If the Company were to
terminate Mr. Sullivan's employment without Cause at any time, if the Company
elected not to renew the term of the Employment Agreement, or if Mr. Sullivan
resigns for Good Reason (as defined) within two years after a Change in Control
(as defined), he would be entitled to receive an amount equal to his incentive
compensation for the preceding fiscal year (if not yet paid) plus three times
the sum of his annual base salary then in effect and his average annual
incentive compensation and continuation, for a period of three years, of health,
welfare and other specified benefits. In addition, if the Company terminates Mr.
Sullivan's employment without Cause at any time, if the Company elected not to
renew the term of the Employment Agreement, or if Mr. Sullivan resigns for Good
Reason within two years after a Change in Control, he would also be entitled to
the lapse of restrictions on restricted shares granted under the Company's 1997
Restricted Stock Plan and a lump-sum payment equal to the cash value of the
benefits he would have received under that plan had he continued to receive
annual plan awards for a period of three years. Additionally, if a Change in
Control occurs as determined under the Company's PARS Plan, Mr. Sullivan is
entitled to the lapse of transfer restrictions imposed on grants of restricted
stock to him under that plan. Likewise, if a Change in Control occurs as
determined by the terms of Performance Earned Restricted Stock ("PERS") granted
to Mr. Sullivan under the Omnibus Equity and Incentive Plan, Mr. Sullivan is
entitled to the lapse of restrictions on such PERS. A portion of payments made
to Mr. Sullivan as a result of the termination of his employment in connection
with a Change in Control of the Company may not be deductible to the Company as
an ordinary and necessary business expense and may be subject to a 20% excise
tax imposed on Mr. Sullivan under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"). The Employment Agreement
provides for an additional payment to Mr. Sullivan equal to the amount of any
excise tax imposed on him by Section 4999 of the Internal Revenue Code and any
taxes, interest or penalties incurred with respect thereto, which could be
substantial. The Employment Agreement also provides for the payment by the
Company of up to $500,000 in legal fees incurred by Mr. Sullivan in the event
that, following a Change of Control, Mr. Sullivan may be caused to institute or
defend legal proceedings to enforce his rights under the Employment Agreement.
In addition, the Employment Agreement imposes customary noncompetition,
nonsolicitation and confidentiality obligations on Mr. Sullivan.
Under an Amended and Restated Employment Agreement, dated as of February 1,
2001 and amended as of October 14, 2002, P. Kelly Tompkins is employed as the
Senior Vice President, General Counsel and Secretary of the Company for a term
ending on May 31, 2006, which is automatically extended for additional one-year
periods unless Mr. Tompkins or the Company gives the other party notice of
nonrenewal two months in advance of the annual renewal date. Pursuant to the
terms of the Agreement, Mr. Tompkins is to receive an annual base salary of not
less than $325,000 beginning on June 1, 2005. In addition to his base salary,
Mr. Tompkins is entitled to such annual incentive compensation or bonuses as the
Compensation Committee determines and to participate in other benefit plans
provided by the Company. Under the provisions of the Employment Agreement, the
Company may terminate his employment for Disability or Cause (as defined). If
the Company were to terminate Mr. Tompkins' employment without Cause or the
Company elected not to renew the term of the Employment Agreement, Mr. Tompkins
would be entitled to receive an amount equal to the product of his annual base
salary then in effect multiplied by two, plus his
20
incentive compensation for the preceding fiscal year (if not yet paid) and an
amount equal to his average annual incentive compensation prorated for the
current year, and continuation, for a period of two years, of health, welfare
and other specified benefits. Alternatively, if the Company terminates Mr.
Tompkins' employment without Cause within two years after a Change in Control
(as defined), or if Mr. Tompkins resigns for Good Reason (as defined) during
that period, he would be entitled to receive an amount equal to the product of
his annual base salary then in effect multiplied by three, plus his incentive
compensation for the preceding fiscal year (if not yet paid) and an amount equal
to his average annual incentive compensation prorated for the current year, and
continuation, for a period of three years, of health, welfare, and other
specified benefits. In addition, if his employment is terminated without Cause
at any time, if the Company elected not to renew the term of his Employment
Agreement, or if he resigns for Good Reason within two years after a Change in
Control, Mr. Tompkins would also be entitled to the lapse of restrictions on
restricted shares granted under the Company's 1997 Restricted Stock Plan and a
lump-sum payment equal to the cash value of the benefits he would have received
under that plan had he continued to receive annual plan awards for a period of
two years or, if his employment is so terminated within two years after a Change
in Control, for a period of three years. Additionally, if a Change in Control
occurs as determined under the Company's PARS Plan, Mr. Tompkins is entitled to
the lapse of transfer restrictions imposed on grants of restricted stock to him
under that plan. Likewise, if a Change in Control occurs as determined by the
terms of PERS granted to Mr. Tompkins under the Omnibus Equity and Incentive
Plan, Mr. Tompkins is entitled to the lapse of restrictions on such PERS. A
portion of payments made to Mr. Tompkins as a result of the termination of his
employment in connection with a Change in Control of the Company may not be
deductible to the Company as an ordinary and necessary business expense and may
be subject to a 20% excise tax imposed on Mr. Tompkins under Section 4999 of the
Internal Revenue Code. The Employment Agreement provides for an additional
payment to Mr. Tompkins equal to the amount of any excise tax imposed on him by
Section 4999 of the Internal Revenue Code and any taxes, interest or penalties
incurred with respect thereto, which could be substantial. The Employment
Agreement also provides for the payment by the Company of up to $500,000 in
legal fees incurred by Mr. Tompkins in the event that, following a Change of
Control, Mr. Tompkins may be caused to institute or defend legal proceedings to
enforce his rights under the Employment Agreement. In addition, the Employment
Agreement imposes customary noncompetition, nonsolicitation and confidentiality
obligations on Mr. Tompkins.
Under an Amended and Restated Employment Agreement, dated as of February 1,
2001 and amended as of October 14, 2002, Ronald A. Rice is employed as the
Senior Vice President-Administration of the Company for a term ending on May 31,
2006, which is automatically extended for additional one-year periods unless Mr.
Rice or the Company gives the other party notice of nonrenewal two months in
advance of the annual renewal date. Pursuant to the terms of the Employment
Agreement, Mr. Rice is to receive an annual base salary of not less than
$325,000 beginning on June 1, 2005. Mr. Rice's Employment Agreement contains
substantially the same provisions that are described above for Mr. Tompkins'
Employment Agreement. In addition, shares of restricted stock granted under the
PARS Plan and PERS granted under the Omnibus Equity and Incentive Plan to Mr.
Rice are subject to the Change in Control provisions described above for Mr.
Tompkins.
Under an Employment Agreement, dated as of February 1, 2001 and amended as
of October 14, 2002, Paul G. Hoogenboom is employed as the Vice
President-Operations and Chief Information Officer of the Company for a term
ending on May 31, 2006, which is automatically extended for additional one-year
periods unless Mr. Hoogenboom or the Company gives the other party notice of
nonrenewal two months in advance of the annual renewal date. Pursuant to the
terms of the Employment Agreement, Mr. Hoogenboom is to receive an annual base
salary of not less than $270,000 beginning on June 1, 2005. Mr. Hoogenboom's
Employment Agreement contains substantially the same provisions that are
described above for Mr. Tompkins' Employment Agreement. In addition, shares of
restricted stock granted under the PARS Plan and PERS granted under the
21
Omnibus Equity and Incentive Plan to Mr. Hoogenboom are subject to the Change in
Control provisions described above for Mr. Tompkins.
Under an Employment Agreement, dated as of February 1, 2001 and amended as
of October 14, 2002, Robert L. Matejka is employed as the Vice President, Chief
Financial Officer and Controller of the Company for a term ending on May 31,
2006, which is automatically extended for additional one-year periods unless Mr.
Matejka or the Company gives the other party notice of nonrenewal two months in
advance of the annual renewal date. Pursuant to the terms of the Employment
Agreement, Mr. Matejka is to receive an annual base salary of not less than
$270,000 beginning on June 1, 2005. Mr. Matejka's Employment Agreement contains
substantially the same provisions that are described above for Mr. Tompkins'
Employment Agreement. In addition, shares of restricted stock granted under the
PARS Plan and PERS granted under the Omnibus Equity and Incentive Plan to Mr.
Matejka are subject to the Change in Control provisions described above for Mr.
Tompkins.
Pursuant to the terms of a Succession and Post-Retirement Consulting letter
agreement entered into in April 2002, between Thomas C. Sullivan and the Company
(the "Sullivan Consulting Agreement"), Mr. Sullivan stepped down from his
position as the Chief Executive Officer of the Company effective as of October
11, 2002, and retired as an employee of the Company effective as of January 1,
2003. Mr. Sullivan, however, continues to serve as Chairman of the Board and as
a member of the Board of Directors. During fiscal 2005, the Sullivan Consulting
Agreement provided for the payment by the Company of monthly fees of $72,500,
use of a part-time administrative assistant, continued use of Mr. Sullivan's
current Company car, continued coverage under the Company's health insurance
plan, payment of certain club dues and continuation of financial planning
services in consideration for Mr. Sullivan's services as a consultant, Chairman
of the Board and Board member. The Sullivan Consulting Agreement expired by its
terms on May 31, 2005 and was extended on June 8, 2005 (the "Extended Sullivan
Consulting Agreement"). Under the Extended Sullivan Consulting Agreement, Mr.
Sullivan does not participate in any of the Company's benefit plans, except as
provided by law or as governed by the terms of the benefit plans themselves or
by the terms of the Extended Sullivan Consulting Agreement. The Extended
Sullivan Consulting Agreement provides that effective June 1, 2005 and
continuing through May 31, 2007, Mr. Sullivan will serve the Company in a
consulting capacity, providing assistance in the area of corporate development
such as identifying and introducing the Company to possible merger candidates
and assisting in the consummation of such transactions. During the 24-month
consulting period, Mr. Sullivan is entitled to monthly payments of $42,000, use
of a part-time administrative assistant, continued use of Mr. Sullivan's current
Company car, continued coverage under the Company's health insurance plan,
payment of certain club dues and continuation of financial planning services for
his service as a consultant.
22
DEFINED BENEFIT PENSION PLAN
The table below sets forth the normal annual retirement benefits payable
upon retirement at age 65 (as of June 1, 2005) under the Company's tax qualified
defined benefit retirement plan (the "Retirement Plan") for employees in the
compensation ranges specified, under various assumptions with respect to average
annual compensation and years of benefit service, assuming that the employee
elected to receive his or her pension on a normal life annuity basis:
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
(AS OF JUNE 1, 2005) WITH YEARS OF SERVICE INDICATED(1)
AVERAGE ANNUAL --------------------------------------------------------
COMPENSATION(2) 5 YEARS 10 YEARS 20 YEARS 30 YEARS 35 YEARS
--------------- ------- --------- --------- --------- ---------
$ 100,000 $ 5,399 $ 10,798 $ 21,596 $ 32,394 $ 34,043
150,000 8,881 17,762 35,525 53,287 56,543
200,000 12,363 24,727 49,453 74,180 79,043
250,000 15,845 31,691 63,382 95,073 101,543
300,000 19,328 38,655 77,311 115,966 124,043
350,000 22,810 45,620 91,239 136,859 146,543
400,000 26,292 52,584 105,168 157,751 169,043
450,000 29,774 59,548 119,096 178,644 191,543
500,000 33,256 66,512 133,025 199,537 214,043
550,000 36,738 73,477 146,953 220,430 236,543
600,000 40,220 80,441 160,882 241,323 259,043
650,000 43,703 87,405 174,811 262,216 281,543
700,000 47,185 94,370 188,739 283,109 304,043
750,000 50,667 101,334 202,668 304,001 326,543
800,000 54,149 108,298 216,596 324,894 349,043
850,000 57,631 115,262 230,525 345,787 371,543
900,000 61,113 122,227 244,453 366,680 394,043
950,000 64,595 129,191 258,382 387,573 416,543
1,000,000 68,078 136,155 272,311 408,466 439,043
1,050,000 71,560 143,120 286,239 429,359 461,543
1,100,000 75,042 150,084 300,168 450,251 484,043
1,150,000 78,524 157,048 314,096 471,144 506,543
1,200,000 82,006 164,012 328,025 492,037 529,043
1,250,000 85,488 170,977 341,953 512,930 551,543
---------------
(1) The amounts listed may be reduced in accordance with certain provisions of
the Internal Revenue Code of 1986 which limit the maximum amount of
compensation that may be taken into account under the Retirement Plan to
$210,000 and the maximum annual benefit payable under the Retirement Plan to
$170,000. Prior to June 1, 1997, the Company maintained a Benefit
Restoration Plan for its executive officers providing for the payment of
supplemental retirement benefits because of such Internal Revenue Code
limits. See "Benefit Restoration Plan" below. At the October 1997 Annual
Meeting, the stockholders approved the adoption of the 1997 Restricted Stock
Plan. All prior accruals of supplemental benefits have been replaced by
awards of shares of restricted stock under the 1997 Restricted Stock Plan.
(2) Includes base compensation as in effect on June 1, 2004, overtime and
commissions paid and bonuses paid or accrued. The compensation covered by
the Retirement Plan for the executive officers and former executive officers
named in the Summary Compensation Table is the salary and bonus listed in
such table.
With respect to the executive officers listed in the Summary Compensation
Table: Mr. Frank C. Sullivan, has 16.3 years of service; Mr. Tompkins, 8.9 years
of service, Mr. Ronald A. Rice, 10.4 years of service, Mr. Hoogenboom, 6 years
of service and Mr. Matejka, 4.8 years of service.
23
RESTRICTED STOCK PLAN
At the October 1997 Annual Meeting, the stockholders approved the adoption
of the 1997 Restricted Stock Plan (the "Restricted Stock Plan"). The purpose of
the Restricted Stock Plan is to replace the cash based Benefit Restoration Plan
(the "Benefit Restoration Plan") with a stock based plan. Effective January 1,
1991, the Company established the Benefit Restoration Plan for the purpose of
providing for the cash payment of supplemental retirement and death benefits to
officers of the Company designated by the Board of Directors whose Retirement
Plan benefits may be limited under the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and the Internal Revenue Code. Shares
granted under the Restricted Stock Plan (the "Restricted Shares") directly
reduce and replace the cash amount of supplemental retirement restoration
benefits and supplemental death restoration benefits owed to participants under
the Benefit Restoration Plan. The Benefit Restoration Plan was frozen on June 1,
1997. No further supplemental benefits accrued after that date. All prior
accruals of supplemental retirement restoration benefits and death restoration
benefits under the Benefit Restoration Plan have been replaced by prior grants
of shares under the Restricted Stock Plan. All current grants of shares will be
in an amount equivalent to the accruals of supplemental retirement restoration
benefits and death restoration benefits required under the Benefit Restoration
Plan if it were not frozen. The Restricted Stock Plan is administered by the
Compensation Committee of the Board of Directors, which has the exclusive right
and sole discretion to authorize the granting of Restricted Shares. Only
employees of the Company, including employee Directors who are not members of
the Compensation Committee, are eligible to participate in the Restricted Stock
Plan. The Company is permitted to take a tax deduction for the value of the
Restricted Shares upon the vesting of such shares. The Restricted Stock Plan
will expire on May 31, 2007 or such earlier date as may be determined by the
Board of Directors. The plan was amended effective in January 2003 to provide
that certain participants will now receive cash dividends under the Plan.
Previously, all participants were required to defer receipt of such cash
dividends into the Company's Deferred Compensation Plan. In October 2003, the
Compensation Committee amended the Restricted Stock Plan to provide for the
mandatory sale of enough shares of Common Stock on behalf of participants in
order to pay federal, state and local income tax obligations of such
participants after the date that any shares of Common Stock awarded under the
plan vest and become subject to taxation.
The Restricted Shares are shares of Common Stock of the Company which are
forfeitable and nontransferable for a specified period of time. The transfer
restrictions remain in place until the earliest of (a) the later of either the
employee's termination of employment or the lapse of forfeiture restrictions,
(b) a "change of control" with respect to the Company, as such term is defined
in the Restricted Stock Plan, or (c) the termination of the Restricted Stock
Plan. The Restricted Shares are subject to complete forfeiture until the
earliest to occur of (a) the later of either the employee's attainment of age 55
or the fifth anniversary of the May 31st immediately preceding the date on which
the Restricted Shares were awarded, (b) the retirement of the employee on or
after the attainment of age 65, or (c) a "change in control" with respect to the
Company, as such is defined in the Restricted Stock Plan. Notwithstanding the
above, if the employee's service to the Company is terminated on account of the
death or total disability prior to the lapsing of restrictions, such
restrictions shall lapse.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
administers the cash salary, bonus, and other incentive compensation and stock
option programs for the executive officers of the Company pursuant to (i) the
Amended and Restated By-Laws of the Company, which were adopted by the Board of
Directors on October 11, 2002, and (ii) a Committee Charter, which was amended
and restated in April 2004 in light of the requirements of the Sarbanes-Oxley
Act of 2002 and the New York Stock Exchange corporate governance rules. The
Committee Charter, as amended and restated, provides for the Committee to
oversee the Company's compensation
24
programs and, in consultation with the Chief Executive Officer, develop and
recommend to the Board an appropriate compensation and benefits philosophy and
strategy for the Company. The Committee Charter also provides the Committee with
the responsibility (i) to determine and approve the compensation of the Chief
Executive Officer based on the Committee's evaluation of the Chief Executive
Officer's performance, (ii) to review and approve compensation programs covering
executive officers of the Company, (iii) to administer and approve awards under
the Company's cash incentive compensation plans and equity-based plans, and make
recommendations to the Board with respect to the establishment and
administration of new plans or the material revision or termination of existing
plans, (iv) to review and recommend to the Board of Directors the amount of
reasonable compensation and payment of expenses and other benefits to be paid to
members of the Board of Directors for their attendance at each meeting of the
Board or a Committee of the Board, (v) to review management succession planning
and management development for senior management, (vi) to produce the
Compensation Committee Report to be included in the Company's Proxy Statement
for the Annual Stockholders Meeting, (vii) to oversee, in consultation with
senior management, regulatory compliance with respect to compensation matters
and (viii) to undertake additional activities within the scope of the
Committee's primary functions as it or the Board may deem appropriate. The
Committee presently consists of three independent Directors who are appointed to
the Committee by and report to the entire Board of Directors. Each member of the
Committee qualifies as a "non-employee director" within the definition of Rule
16b-3 under the Securities Exchange Act of 1934, as an "outside director" within
the meaning of Section 162(m) of the Internal Revenue Code, and as an
"independent" director under the rules of the New York Stock Exchange. The
Committee Charter is available on the Company's website at www.rpminc.com.
OVERVIEW OF COMPENSATION PHILOSOPHY AND PROGRAMS
Compensation Philosophy.
The Company's general compensation philosophy is that the Company's
executive officers should be well compensated for achieving strong operating
results. The Committee has designed compensation policies and programs for the
Company's executive officers which are intended to compensate such executive
officers at the market median for a relevant group of similarly-sized companies
and competitors within the Company's industry, with the potential for higher
than average compensation when the Company significantly exceeds its annual
business plan. The Company's primary compensation goals are to retain key
leaders, reward past performance, incentivize strong future performance and
align executives' long-term interests with those of the Company's stockholders.
The Committee oversees the Company's programs of compensation and benefits to
ensure consistency with the Company's philosophy and strategy.
Cash Salary and Bonus.
The Committee determines the annual cash salary, bonus, stock and option
awards and other incentives to be awarded to Frank C. Sullivan, President and
Chief Executive Officer, based on an annual evaluation of his performance. The
Committee does not utilize pre-established, specific performance goals in making
cash salary compensation decisions. In determining the Chief Executive Officer's
cash salary and bonus (subject to the provisions of the Incentive Compensation
Plan described below), the Committee considers many factors including the
results of the Board's Chief Executive Officer annual evaluation. In connection
with the Chief Executive Officer evaluation process, the Committee distributes a
Chief Executive Officer evaluation form to the entire Board of Directors for the
purpose of soliciting feedback on the Chief Executive Officer's performance in a
number of key areas including leadership, strategic planning, achievement of
performance objectives, Board and external relations, integrity, succession
planning, important contributions within the past year and overall job
performance. In connection with its evaluation of the performance of the Chief
Executive Officer, the Committee also reviews and considers a number of
additional factors,
25
including (i) Company sales, pre-tax earnings, net income, earnings per share
and other financial measures such as cash flow, (ii) accomplishing the Company's
business plan, (iii) performance of the Company's Common Stock in the open
market, (iv) cash dividends paid to stockholders, (v) return on Stockholders'
Equity, and (vi) acquisitions, corporate financings, and other general corporate
objectives which were achieved during the fiscal year.
The Committee also reviews and approves compensation programs covering
other executive officers. Upon the recommendation of the Chief Executive
Officer, the Committee reviews and recommends to the Board of Directors for its
approval individual compensation awards for executive officers, other than the
Chief Executive Officer. In determining the cash salary and bonus component of
executive officer compensation, the Committee reviews and approves a mix of
performance measures similar to those factors listed above with respect to Chief
Executive Officer compensation, with a significant amount of emphasis placed on
the compensation recommendations of the Chief Executive Officer.
Each executive officer is employed under an employment agreement. The
employment agreements provide that any increase in cash salary for the executive
officer is made retroactive to June 1 of each fiscal year and that once awarded,
an increase in salary cannot be reduced without the executive officer's consent.
The employment agreements also provide for automatic annual renewal unless the
Committee or the executive officer gives the other party notice of non-renewal
two months in advance of the annual renewal date. In March 2005, the Committee
determined that it was advisable and in the best interest of the Company that
the term of the employment agreements each be extended for an additional
one-year period ending May 31, 2006.
The Company's Incentive Compensation Plan (the "Incentive Plan") is
intended to be utilized as the primary annual cash bonus program for those
employees of the Company who in any respective fiscal year are the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company (the "Covered Employees"). The Incentive Plan is designed to
promote the interests of the Company and its stockholders by: (i) attracting and
retaining officers who are key employees of the Company; (ii) motivating such
officers by reason of performance-related incentives to achieve the Company's
performance goals; (iii) enabling such officers to participate in the growth and
financial success of the Company; and (iv) qualifying the bonus awards as
"performance-based" compensation under Section 162(m) of the Internal Revenue
Code, assuring that the Company will continue to be able to deduct cash bonuses
paid to the Covered Employees for federal income tax purposes.
The Incentive Plan calls for providing an aggregate bonus award pool of
1.5% of the Company's Income Before Income Taxes ("pre-tax income") in each
applicable fiscal year for the Covered Employees. Within the first three months
of each fiscal year the Committee, which administers the Incentive Plan, is
required to determine in writing the maximum portion of such aggregate bonus
award pool that each Covered Employee may receive in respect of such fiscal
year. At the end of each fiscal year, the Committee calculates the aggregate
bonus award pool based on the Company's audited pre-tax income and each
individual's bonus award payout amount.
The Committee may reduce or eliminate a Covered Employee's bonus award, at
the Committee's sole discretion, based solely on individual performance. In
determining what portion of the eligible Incentive Plan bonus pool to award to
the Covered Employees (including the Chief Executive Officer), the Committee
reviews the relevant factors described above relating to the determination of
salary and bonus.
The total of all bonus award payments made under the Incentive Plan in any
given fiscal year shall not exceed 1.5% of the Company's pre-tax income.
Furthermore, the total of all payments to any one individual Covered Employee
under the Incentive Plan in any fiscal year shall not exceed $1,500,000.
Payments under the Incentive Plan, pursuant to the terms herein described, are
intended to satisfy the requirements of Section 162(m) of the Internal Revenue
Code as "performance-based" compensation and therefore be fully tax deductible
to the Company. For
26
fiscal years 2003 and 2000, the Company awarded bonuses in excess of the pool as
a result of the unanticipated effect of special charges which, despite positive
operating results and solid operating performance of the Covered Employees,
significantly reduced the available bonus pool. In each case, a small portion of
the aggregate compensation paid to certain of the Covered Employees was
nondeductible for federal income tax purposes under Section 162(m). See "Section
162(m) of the Internal Revenue Code" below for additional information regarding
Section 162(m).
Equity Incentive Compensation.
In 2003, the Company retained a professional compensation consulting firm
to review the Company's long-term stock-based compensation plans for management
and other key employees of the Company in light of (i) the trend of public
companies granting restricted stock instead of stock options and (ii) possible
changes in the accounting treatment for stock options and other forms of stock
compensation which have been the subject of Financial Accounting Standards Board
and other regulatory and legislative activity. The consulting firm concluded
that the Company's existing long-term stock-based compensation plans, i.e., the
1996 Key Employees Stock Option Plan (the "1996 Stock Option Plan") and the
Performance Accelerated Restricted Stock Plan (the "PARS Plan"), were inadequate
to provide compensation that is competitive with the long-term stock-based
compensation provided by the Company's peer group. Furthermore, as of May 31,
2004, only 648,397 shares remained available for stock option grants under the
1996 Stock Option Plan. Based on these factors, the Committee requested the
consulting firm to submit a proposal outlining a form of plan that would provide
for maximum flexibility in the type and mix of awards. As a result of analysis
of these issues, including significant input from the consultants, in July 2004,
at the recommendation of the Committee, the Board of Directors adopted the 2004
Omnibus and Incentive Plan (the "Omnibus Plan"), which was approved by
stockholders at the Annual Meeting of Stockholders held in October 2004. The
Omnibus Plan, which is administered by the Committee, is intended to be the
primary stock-based award program for those employees of the Company, its
subsidiaries and certain allied enterprises, whom the Committee determines from
time to time are eligible for awards.
Company management makes annual recommendations to the Committee of the
type and amount of equity awards for the Chief Executive Officer and other
executive officers. In determining the equity incentive compensation component
of Chief Executive Officer compensation, the Committee considers, in addition to
the factors used to determine salary and bonus: (i) the value of similar
incentive awards to chief executive officers at peer group and other companies
and (ii) awards given to the Chief Executive Officer in past years. In
determining the equity incentive compensation of the other executive officers,
the Committee reviews and approves a mix of performance measures similar to
those factors listed above with respect to Chief Executive Officer compensation,
with a significant amount of emphasis placed on the compensation recommendations
of the Chief Executive Officer.
The Committee utilizes the various equity incentive awards available to it
under the Omnibus Plan, the 1996 Stock Option Plan, and the PARS Plan to retain
executives and other key employees and achieve the following additional goals,
(i) to reward past performance, (ii) to incentivize future performance (both
short-term and long-term), (iii) to align executives' long-term interest with
that of the stockholders and (iv) to enhance the longer-term performance and
profitability of the Company and its subsidiaries. The Committee's current
intention is to achieve these goals by making annual awards to the Company's
executive officers and other key employees, using a combination of
performance-based restricted stock and either stock options or stock settled
SARs.
Section 162(m) of the Internal Revenue Code.
In the course of fulfilling its responsibilities, the Committee routinely
reviews the impact of Section 162(m) of the Internal Revenue Code. For example,
in 1995 the Company retained a professional compensation consulting firm to
review the Company's executive compensation
27
programs in light of Section 162(m) of the Internal Revenue Code which disallows
a tax deduction for certain compensation paid in excess of $1,000,000 to each of
the top five paid executive officers of the Company. The regulations under
Section 162(m), however, except from this $1,000,000 limit various forms of
compensation, including "performance-based" compensation. The consulting firm
eventually recommended to the Committee the performance-based Incentive Plan,
described above, which would satisfy the requirements of Section 162(m). The
Omnibus Plan also provides for the flexibility in making awards which would
satisfy the requirements of Section 162(m). Awards made under certain other of
the Company's compensation programs, including the PARS Plan and the 1997
Restricted Stock Plan, do not qualify for favorable tax treatment under Section
162(m). Although the Committee carefully considers the impact of Section 162(m)
when administering the Company's compensation programs, the Committee does not
make decisions regarding executive compensation solely based on the expected tax
treatment of such compensation. In order to maintain flexibility in designing
compensation programs that retain key leaders, reward past performance,
incentivize strong future performance and align executives' long-term interests
with stockholders, the Committee may deem it appropriate at times to forgo
162(m) qualified awards in favor of awards that may not be fully tax-deductible.
This may occur, for example, if the Company's operating results are adversely
impacted by restructuring, asbestos or other non-operating charges, yet the
Company performs significantly better than its business plan notwithstanding the
charge.
2005 EXECUTIVE OFFICER COMPENSATION
Salary and Bonus Determinations.
In setting salaries for the Chief Executive Officer and the other executive
officers for fiscal 2005, the Committee reviewed and considered the Company's
business plan for fiscal 2004 as compared to the actual results for fiscal 2004
and the summary financial results for fiscal years 2003 and 2002. The Committee
also reviewed the recommendations of the Chief Executive Officer with respect to
recommended base salaries and bonuses for executive officers other than the
Chief Executive Officer. In making its determinations, the Committee noted that
the Company's financial results were better than business plan for net sales,
net income and diluted earnings per share, and that cash flow from operations
and dividends paid to stockholders exceeded the business plan. The Committee
also noted that the only financial measure which did not meet business plan was
capital expenditures. Additionally, in setting the salary for the Chief
Executive Officer for fiscal 2005, the Committee considered the Board's positive
evaluation of Mr. Sullivan's performance as reflected in the responses to the
Chief Executive Officer evaluation form. The Committee engaged in similar
deliberations with respect to salary determinations for fiscal 2006, which
salary amounts are reflected under the heading "Executive
Compensation -- Employment Agreements."
In August 2004, the Committee determined on a percentage basis the portion
of the aggregate bonus award pool under the Incentive Plan to be awarded to each
of the Covered Employees in respect of the Company's performance for the fiscal
year ending May 31, 2005 as follows: Frank C. Sullivan, 40%; P. Kelly Tompkins,
15%; Ronald A. Rice, 15%; Paul G. P. Hoogenboom, 15%; and Robert L. Matejka,
15%. In addition, in October 2004 the Committee determined that the maximum
bonuses awarded to any Covered Employee would not exceed 100% of their
respective salaries. In July 2005, the Committee made similar determinations
with respect to the bonus pool allocations for fiscal 2006. However, the
Committee has determined that for fiscal 2006 the bonuses paid will range from
zero to 133% of salary, which is the range currently applicable to other key
management employees of the Company under their comparable cash bonus plans.
For fiscal 2005, the Company's reported pre-tax income was $163.7 million,
providing a bonus pool under the Incentive Plan for the Covered Employees of
approximately $2,455,920. Upon the recommendation of Frank C. Sullivan, and
after a review a variety of factors including an analysis of the Company's net
sales, gross profit, operating income and net income for 2005 as compared to the
Company's business plan and fiscal 2004 results, the Committee awarded bonuses
totaling $1,710,000 to the Covered Employees. The bonuses paid to each of these
Covered Employees for
28
fiscal year 2005 was significantly below the bonus amounts which were authorized
to be paid pursuant to the bonus pool formula and are fully tax deductible.
Equity Incentive Awards.
PERS. In October 2004, pursuant to the Omnibus Plan and based on the
Company's favorable fiscal 2004 results, the Committee awarded performance
earned restricted stock grants ("PERS") totaling 309,500 shares to executive
officers and other key employees of the Company and its subsidiaries (including
40,000 shares awarded to the Chief Executive Officer). Recipients of these PERS
awards qualified for these grants as a result of achieving their relevant annual
business plan. Restrictions on PERS will lapse upon the determination of the
Committee that the recipient has been continuously employed by the Company for
three years from the effective date of the grant. Of these PERS awards, the
awards to the Covered Employees do not satisfy the requirements of Section
162(m) of the Internal Revenue Code and, therefore, payments made by the Company
under these grants may not be entirely tax deductible in future years and in
amounts which cannot yet be determined.
In October 2004, the Committee also approved PERS awards to the Covered
Employees of up to 90,000 shares, contingent on the attainment of fiscal 2005
projected earnings increase performance goals. But for the unexpected asbestos
charges taken during fiscal 2005, these performance goals were met. As a result
of the Company's positive operating performance notwithstanding the asbestos
charges, the Committee anticipates that in October 2005 it will grant equity
awards to the Covered Employees that are roughly equivalent to the PERS awards
described above.
In July 2005, the Committee also approved a contingent award of PERS to the
Covered Employees of up to 90,000 shares to be based on the level of attainment
of fiscal 2006 performance goals related to planned "earnings before interest
and taxes" increase. In making the determination of whether the 2006 planned
"earnings before interest and taxes" increase has been attained, the actual 2006
results will be adjusted to exclude the impact of restructuring, asbestos and
other similar non-operating charges or credits.
Stock Options. Also in October 2004, the Committee granted stock options
under the 1996 Stock Option Plan totaling 553,000 shares to executive officers
and other key employees of the Company and its subsidiaries.(1) The purpose of
these grants is to incentivize future performance. These option grants were
based upon the recommendation of the Company. Of the 553,000 shares subject to
such awards, 125,000 were awarded to the Chief Executive Officer. The Committee
currently anticipates making a combination of stock option and/or stock settled
SAR grants in the future.
Restricted Stock. The Committee also awarded 37,778 shares of restricted
stock for fiscal 2005 to executive officers and other key employees under the
1997 Restricted Stock Plan. These grants (as described in further detail under
the heading "Executive Compensation -- Restricted Stock Plan") were made solely
for the purpose of replacing, in an equal amount, unfunded cash benefits owed to
participants under the Benefit Restoration Plan.
DESCRIPTION OF THE COMPANY'S COMPENSATION PROGRAMS FOR EXECUTIVE OFFICERS AND
DIRECTORS
The following is a summary discussion of the plans (other than the
Incentive Plan and Restricted Stock Plan which are described in detail above)
and programs administered by the Committee:
---------------
1 In October 2004, the Compensation Committee originally authorized and
approved the grant of 555,000 stock appreciation rights ("SARs"). However,
subsequent to such authorization and approval but prior to the issuance of the
SARs, and as a result of announced statutory changes in the federal tax
treatment of SARs, upon the recommendation of the Company, the Compensation
Committee agreed to cancel the award of 555,000 SARs, and in lieu thereof, to
award the stock options described above.
29
2004 Omnibus Equity and Incentive Plan.
The Omnibus Plan provides the Company with flexibility to grant a wide
variety of stock and stock-based awards, as well as dollar-denominated
performance-based awards. Any dollar-denominated performance awards granted
under the Omnibus Plan are intended to complement and not replace cash bonus
awards made under the Incentive Compensation Plan. The Omnibus Plan also allows
the Committee the flexibility to provide a mix of awards determined by taking
into account such factors as the type and level of employee, relevant business
and performance goals and the prevailing tax and accounting treatments. The goal
of the Omnibus Plan is to make the most appropriate award depending upon these
and other factors and to promote the interests of the Company and its
stockholders by attracting, retaining, motivating and rewarding employees who
render services that benefit the Company, its subsidiaries and allied business
enterprises and aligning the interests of these employees with the Company's
stockholders.
1996 Stock Option Plan.
The Company's 1996 Stock Option Plan for its executive officers and other
key employees is intended to provide long-term equity incentive to the officers
and employees and, in the long-term, relates to stockholder value. Options to
executive officers are awarded by the Committee based primarily upon the
recommendation of Frank C. Sullivan, and the various presidents of the Company's
operating subsidiaries submit recommendations with respect to option grants to
subsidiary employees. Options are granted at the closing sales price on the New
York Stock Exchange on the date of grant, have a term of ten years, and
generally vest at the rate of 25% per year after one year. At May 31, 2005, only
64,247 shares remained available for stock option grants under the 1996 Stock
Option Plan.
PARS Plan.
The 2002 PARS Plan was adopted by the Company in 2002. The purpose of the
PARS Plan is to provide an added incentive to key officers to improve the
long-term performance of the Company. The PARS Plan is administered by the
Committee. Officers of the Company and its subsidiaries are eligible to
participate in the plan. Restrictions on the shares granted under the PARS Plan
lapse if all performance goals are attained during any fiscal year beginning
prior to June 1, 2011 and, alternatively, restrictions on shares will lapse on
May 31, 2012 for any participant who has been continually employed with the
Company or a subsidiary from June 1, 2002 to May 31, 2012. The performance goals
for the Company in any fiscal year beginning prior to June 1, 2011 will be the
financial or other goals determined by the Committee and set forth in a
restricted stock agreement entered into in connection with the plan.
The PARS Plan was amended by the Committee effective in January 2003 to
provide that certain participants will now receive cash dividends under the
plan. Previously, all participants were required to defer receipt of such cash
dividends into the Company's Deferred Compensation Plan. In October 2003, the
Committee amended the PARS Plan to provide for the mandatory sale of enough
shares of Common Stock on behalf of participants in order to pay federal, state
and local income tax obligations of such participants after the date that any
shares of Common Stock awarded under the plan become subject to taxation. The
PARS Plan is not considered a performance-based compensation plan satisfying the
requirements of Section 162(m) of the Internal Revenue Code and, therefore,
payments made by the Company under the plan may not be entirely tax deductible.
2003 Restricted Stock Plan for Directors.
In July 2003, at the recommendation of the Committee, the Board of
Directors approved the RPM International Inc. 2003 Restricted Stock Plan for
Directors (the "2003 Plan"). In October 2003, the stockholders approved the 2003
Plan at the Annual Meeting of Stockholders. The purpose of the
30
2003 Plan is to bring total compensation of the Directors to a competitive level
and enhance the ability of the Company to recruit and retain Directors, as well
as to align interests of Directors with the interests of stockholders. The 2003
Plan is administered by the Committee. Directors who are not employees of the
Company are eligible to participate in the 2003 Plan. Restrictions on shares
granted under the 2003 Plan will lapse, among other reasons, upon death or
disability, on the last day of the month of the third anniversary of the date of
grant, upon normal retirement, and upon a Change in Control (as defined in the
2003 Plan). In October 2004, awards totaling 20,000 shares of Common Stock were
made under the 2003 Plan, with each non-employee Director (with the exception of
Mr. Thomas C. Sullivan) receiving a grant of 2,000 shares. It is anticipated
that similar awards will be made on an annual basis. The 2003 Plan will
terminate at such time as determined by the Board of Directors. Payments made by
the Company under the 2003 Plan are tax deductible. The 2003 plan provides for
the mandatory sale, upon the lapse of restrictions, of enough shares of Common
Stock on behalf of participants in order to pay federal, state and local income
tax obligations of such participants. In July 2004, upon the early retirement of
Director E. Bradley Jones, the Board of Directors accelerated the vesting of a
prior award of 2,400 shares made to Mr. Jones under the 2003 Plan.
Director Cash Compensation.
In July 2003, the Committee approved the cash compensation for outside
Directors described below following a review of the conclusions and
recommendations of the Company's professional compensation consulting firm. The
consultant found that, while the Company was competitively positioned at the
peer group median with respect to cash compensation, it was in the bottom 10th
percentile of its peer group with respect to total compensation paid to outside
Directors. The Company's lack of stock compensation to its outside Directors
resulted in a Board compensation package that was not competitive. Consequently,
in connection with the adoption of the 2003 Plan, the Committee also slightly
increased Director cash compensation in order to provide a total Board
compensation package which is competitive with the Company's peer group.
Directors who are not employees of or consultants to the Company receive a
quarterly fee of $8,000. The cash fee for attendance at Board and Committee
meetings is $1,000 per meeting. In addition, the Audit Committee Chair receives
a quarterly fee of $3,000 and the Chair of each of the Compensation and
Governance and Nominating Committees receives a quarterly fee of $1,500.
Thomas C. Sullivan Consulting Agreement.
On June 8, 2005, upon approval of the Committee, the Company entered into
an extension to the Succession and Post-Retirement Consulting Agreement between
Thomas C. Sullivan and the Company which expired by its terms on May 31, 2005.
Mr. Sullivan is Chairman of the Company's Board of Directors, the former Chief
Executive Officer of the Company, and the father of Frank C. Sullivan, Chief
Executive Officer of the Company. The extension agreement provides that
effective June 1, 2005 and continuing through May 31, 2007, Mr. Sullivan will
serve the Company in a consulting capacity, providing assistance in the area of
corporate development. Mr. Sullivan's consulting services include identifying
and introducing the Company to possible merger and acquisition candidates and
assisting in the consummation of such transactions. For his services as a
consultant during the 24-month extension period, Mr. Sullivan is entitled to
monthly payments of $42,000, use of a part-time administrative assistant,
continued use of Mr. Sullivan's current Company car, continued coverage under
the Company's health insurance plan, payment of certain club dues and
continuation of financial planning services.
Deferred Compensation.
The Company's revised and updated Deferred Compensation Plan, adopted in
2002, supersedes the deferred compensation plan that was adopted by the Company
in February 1994. Under this plan, selected management employees, certain highly
compensated employees and Directors
31
are eligible to defer a portion of their salary, bonus, incentive plan amounts,
Director fees and grants of restricted stock until a future date. The plan also
provides that if a participant elects to defer compensation that she or he would
otherwise have contributed to the Company's 401(k) Plan, the participant's
account will be credited with an amount equal to the matching contribution the
Company otherwise would have made to the 401(k) Plan for the participant,
reduced by the amount of any matching contribution the Company makes to the
401(k) Plan on behalf of the participant. Amounts credited to a participant's
account under the predecessor deferred compensation plan were credited to the
participant's account under the new plan. A participant's account will be
credited with investment gains or losses as if the amounts credited to the
account were invested in selected investment funds. Any compensation deferred
under the plan is not included in the $1,000,000 limit provided for under
Section 162(m) of the Internal Revenue Code until the year in which the
compensation actually is paid. In addition, to the extent that any compensation
paid to a participant would not be deductible by the Company by reason of the
Section 162(m) limitation, the Company may defer payment of any or all of a
distribution under the plan and such deferred amount will be distributed to the
participant at the earliest date on which the deductibility of the compensation
will not be limited by Section 162(m). In October 2003, the Committee amended
the Deferred Compensation Plan to provide for the mandatory sale of enough
shares of Common Stock in a participant's restricted stock account in order to
pay federal, state and local income tax obligations of such participant prior to
distribution from a participant's Restricted Stock Account. In July 2004, the
Board of Directors, upon the recommendation of the Committee, amended the
Deferred Compensation Plan to provide for the crediting of certain interests
cancelled and surrendered under the Omnibus Plan and to create accounts and
administrative procedures for the implementation of such credits.
Edward B. Brandon, Chairman
Albert B. Ratner
Dr. Jerry Sue Thornton
32
PERFORMANCE GRAPHS
Set forth below are line graphs comparing the yearly cumulative total
stockholders' return on the Company's Common Stock against the yearly cumulative
total return of the S&P Composite -- 500 Stock Index and an index of certain
companies selected by the Company as comparative to the Company (the "Peer Group
Index"). The companies selected to form the peer group index are: Detrex
Corporation, Ferro Corporation, H. B. Fuller Company, Imperial Chemical
Industries PLC, NL Industries, Inc., PPG Industries Inc., Rohm and Haas Company,
The Sherwin-Williams Company and Valspar Corporation.
The graphs assume that the value of the investment in the Company's Common
Stock, the S&P Composite -- 500 Stock Index and the respective peer group index
was $100 on May 31, 2000 and May 31, 1995, respectively, and that all dividends,
if any, were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG RPM INTERNATIONAL INC., THE S&P 500 INDEX AND
A PEER GROUP
[PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN
---------------------------------------------------
5/00 5/01 5/02 5/03 5/04 5/05
------ ------ ------ ------ ------ ------
RPM INTERNATIONAL INC........................... 100.00 89.14 177.14 145.26 178.24 220.88
S&P 500......................................... 100.00 89.45 77.06 70.85 83.83 90.74
PEER GROUP...................................... 100.00 101.84 118.17 97.66 128.65 148.46
* $100 INVESTED ON 05/31/00 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
33
COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN*
AMONG RPM INTERNATIONAL INC., THE S&P 500 INDEX AND
A PEER GROUP
[PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN
------------------------------------------------------------------------------------------------
5/95 5/96 5/97 5/98 5/99 5/00 5/01 5/02 5/03 5/04 5/05
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
RPM INTERNATIONAL
INC................. 100.00 107.40 126.62 145.51 122.52 89.75 80.00 158.99 130.37 159.97 198.24
S&P 500............... 100.00 128.44 166.22 217.22 262.89 290.44 259.79 223.81 205.77 243.48 263.54
PEER GROUP............ 100.00 116.84 140.05 181.76 154.25 128.02 130.37 151.27 125.02 164.69 190.05
* $100 INVESTED ON 05/31/95 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and Directors and persons who own 10% or more of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Commission.
Officers, Directors and 10% or greater stockholders are required by Commission
regulations to furnish the Company with copies of all Forms 3, 4 and 5 they
file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its officers and Directors complied
with all filing requirements applicable to them with respect to transactions
during the fiscal year ended May 31, 2005.
34
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight of the integrity of the Company's
financial statements, the Company's compliance with legal and regulatory
requirements, the independent auditor's qualifications and independence, and the
performance of the Company's internal audit function and independent auditor.
The Audit Committee's activities are governed by a written charter adopted by
the Board of Directors. Among other responsibilities specified in the charter,
the Audit Committee has the sole authority to appoint, retain and where
appropriate, terminate, the Company's independent auditor. The Audit Committee
is also directly responsible for, among other things, the evaluation,
compensation and oversight of the work of the Company's independent auditor for
the purpose of preparing or issuing an audit report or related work. In
addition, the Audit Committee must pre-approve all audit and permitted non-audit
services performed by the Company's independent auditor. It is not the duty of
the Audit Committee to plan or conduct audits or determine that the Company's
financial statements and disclosures are complete and accurate and in accordance
with generally accepted accounting principles and applicable rules and
regulations. These are the responsibilities of management and the independent
auditor.
In fulfilling its responsibilities, the Audit Committee has reviewed and
discussed the audited financial statements contained in the 2005 Annual Report
on Form 10-K with the Company's management and Ciulla, Smith & Dale, LLP, the
independent auditor for fiscal 2005.
The Audit Committee discussed with Ciulla, Smith & Dale, LLP, the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. In addition, the Audit
Committee has discussed with Ciulla, Smith & Dale, LLP, the auditor's
independence from the Company and its management, including the matters in the
written disclosures required by Independence Standard Board No. 1, Independence
Discussions with Audit Committees, which the Company has received.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board (and the Board has approved) that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 2005, for filing with the Securities and Exchange
Commission.
The Audit Committee has determined that the rendering of the non-audit
services by Ciulla, Smith & Dale, LLP was compatible with maintaining the
auditor's independence.
As described below under the heading "Independent Auditors," the Audit
Committee has engaged Ernst & Young LLP as the Company's independent registered
public accountant for fiscal 2006.
Submitted by the Audit Committee of the Board of Directors as of July 18,
2005.
Donald K. Miller, Chairman
Max D. Amstutz
William B. Summers, Jr.
35
AUDIT FEES
During the fiscal years ended May 31, 2005 and 2004, Ciulla, Smith & Dale,
LLP provided various audit services and non-audit services to the Company. Set
forth below are the aggregate fees and expenses billed for these services for
the last two fiscal years:
MAY 31,
-----------------------
2005 2004
---------- ----------
Audit Fees................................................. $2,402,000 $1,685,000
Audit Related Fees......................................... 122,000 87,000
Tax Services............................................... 544,000 490,000
All Other Fees............................................. -- --
---------- ----------
Total Fees............................................... $3,068,000 $2,262,000
========== ==========
Audit Fees: The aggregate fees billed for professional services rendered
for the audit of the Company's financial statements for the fiscal years ended
May 31, 2005 and 2004 and for the reviews of the financial statements included
in the Company's quarterly reports on Form 10-Q for the fiscal years ended May
31, 2005 and 2004 were $2,402,000 and $1,685,000 respectively. The increase in
audit fees for fiscal 2005 was due in part to the audit by Ciulla, Smith & Dale,
LLP of the Company's internal control over financial reporting as required by
Section 404 of the Sarbanes-Oxley Act of 2002.
Audit Related Fees: The aggregate fees billed by Ciulla, Smith & Dale, LLP
for services rendered to the Company for 401(k) and pension plan audits,
Securities and Exchange Commission registration and due diligence related to
acquisitions for the fiscal years ended May 31, 2005 and 2004 were $122,000 and
$87,000, respectively.
Tax Fees: The aggregate fees relating to tax preparation and planning for
the 2005 and 2004 fiscal years were $544,000 and $490,000, respectively.
All Other Fees: No other fees were paid to Ciulla, Smith & Dale, LLP in
either fiscal year except for insignificant fees paid by the Company in
connection with the preparation of personal tax returns of certain of the
Company's officers.
In addition to the fees the Company has paid to Ciulla, Smith & Dale, LLP,
the Company has historically paid fees to other accounting firms in connection
with certain of its foreign operations. For example, during fiscal 2005 in
connection with its operations in Europe, Asia, Latin America, Africa and the
Middle East the Company paid aggregate fees of approximately $1,954,000,
including approximately $966,000 for audit and audit related fees and $401,000
for tax services, to accounting firms other than Ciulla, Smith & Dale, LLP.
INDEPENDENT AUDITORS
Effective June 23, 2005, the Company received notification that its
principal independent registered public accountant, Ciulla, Smith & Dale, LLP,
was declining to stand for re-election after completion of the Company's fiscal
2005 audit and the Company engaged a new auditor as described below. The fiscal
2005 audit has been completed and the Company filed its Annual Report on Form
10-K for the fiscal year ended May 31, 2005 on August 15, 2005 which contained
Ciulla, Smith and Dale, LLP's report on the fiscal 2005 audit and, as a result,
the audit relationship with Ciulla, Smith & Dale, LLP has terminated as of that
date.
Ciulla, Smith & Dale, LLP's reports on the Company's financial statements
for each of the fiscal years ended May 31, 2005 and May 31, 2004 contained no
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope or accounting principles. Ciulla,
36
Smith & Dale, LLP's report on management's assessment of internal control over
financial reporting for the fiscal year ended May 31, 2005 contained no adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty or audit scope. During the two fiscal years ended May 31, 2005 and
May 31, 2004 and through August 15, 2005, there have been no disagreements
between the Company and Ciulla, Smith & Dale, LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Ciulla,
Smith & Dale, LLP, would have caused it to make reference to the subject matter
of the disagreements in connection with its reports.
On June 23, 2005, the Company announced that it was engaging Ernst & Young
LLP as its principal independent registered public accountant for fiscal 2006.
There were no consultations during the two fiscal years ended May 31, 2005 and
through June 23, 2005 by the Company with Ernst & Young LLP regarding (1) the
application of accounting principles to any transaction, either completed or
proposed; (2) the type of audit opinion that might be rendered on the Company's
financial statements; or (3) any matter that was the subject of a disagreement
(as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as
described in Item 304(a)(1)(v) of Regulation S-K).
The decision to engage Ernst & Young LLP was made by the Company's Audit
Committee.
Representatives of Ciulla, Smith& Dale, LLP and Ernst & Young LLP will be
present at the Annual Meeting and will have an opportunity to make a statement
should they so desire. The representatives also will be available to respond to
appropriate questions from stockholders.
STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Any stockholder proposal intended to be presented at the 2006 Annual
Meeting of Stockholders must be received by the Company's Secretary at its
principal executive offices not later than April 27, 2006 for inclusion in the
Board of Directors' Proxy Statement and form of Proxy relating to that meeting.
Each proposal submitted should be accompanied by the name and address of the
stockholder submitting the proposal and the number of shares of Common Stock
owned. If the proponent is not a stockholder of record, proof of beneficial
ownership also should be submitted. All proposals must be a proper subject for
action and comply with the Proxy Rules of the Securities and Exchange
Commission.
The Company may use its discretion in voting Proxies with respect to
stockholder proposals not included in the Proxy Statement for the Fiscal Year
ended May 31, 2006, unless the Company receives notice of such proposals prior
to July 11, 2006.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to come
before the meeting other than those mentioned in the accompanying Notice.
However, if other matters shall properly come before the meeting, it is the
intention of the persons named in the accompanying Proxy to vote in accordance
with their best judgment on such matters.
Upon the receipt of a written request from any stockholder entitled to vote
at the forthcoming Annual Meeting, the Company will mail, at no charge to the
stockholder, a copy of the Company's Annual Report on Form 10-K, including the
financial statements and schedules required to be filed with the Commission
pursuant to Rule 13a-1 under the Securities Exchange Act of 1934, as amended,
for the Company's most recent fiscal year. Requests from beneficial owners of
the Company's voting securities must set forth a good-faith representation that
as of the record date for the Annual Meeting,
37
the person making the request was the beneficial owner of securities entitled to
vote at such Annual Meeting. Written requests for the Annual Report on Form 10-K
should be directed to:
P. Kelly Tompkins, Secretary
RPM International Inc.
P.O. Box 777
Medina, Ohio 44258
You are urged to sign and return your Proxy promptly in order to make
certain your shares will be voted at the Annual Meeting. For your convenience a
return envelope is enclosed requiring no additional postage if mailed in the
United States.
By Order of the Board of Directors.
P. Kelly Tompkins
Secretary
August 25, 2005
38
ANNEX A
RPM INTERNATIONAL INC.
CATEGORICAL INDEPENDENCE STANDARDS FOR DIRECTORS
(AMENDED AND RESTATED AS OF APRIL 20, 2005)
The New York Stock Exchange ("NYSE") listing standards require that a
majority of RPM directors be independent. Under the NYSE standards, to be
considered an "independent director," the Board must determine that such
director does not have any direct or indirect material relationship with RPM.
The Board has established the following categorical standards to assist it in
determining director independence in accordance with the NYSE listing standards
and other applicable rules and regulations.
A director shall be deemed independent if, in the opinion of the Board, he
or she does not have any of the following relationships with RPM:
(a) The director is, or has been within the last three years, employed
by RPM, or an immediate family member of the director is, or has been
within the last three years, an executive officer of RPM;
(b) The director is a current employee, or an immediate family member
is a current executive officer, of a company, that received payments from
or made payments to RPM for property or services in an amount which, in any
of the last three fiscal years, exceeded the greater of $1.0 million, or 2%
of such other company's consolidated gross revenues;
(c) The director is or was an executive officer, director or trustee
of a foundation, university, charitable or other not for profit
organization that received contributions from RPM (matching of employee
charitable contributions will not be included in RPM's contributions for
this purpose) which, in any of the last three fiscal years, exceeded the
greater of $1.0 million or 5% of such charitable organization's
consolidated gross revenues;
(d) The director, or an immediate family member of the director,
received during any twelve month period within the last three years, more
than $100,000 in direct compensation from RPM other than for director and
committee fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in any way on
continued service);
(e) (A) The director or an immediate family member is a current
partner of a firm that is RPM's internal or external auditor; (B) the
director is a current employee of such a firm; (C) the director has an
immediate family member who is a current employee of such a firm and who
participates in the firm's audit, assurance, or tax compliance (but not tax
planning) practice; or (D) the director or an immediate family member was
within the last three years (but is no longer) a partner or employee of
such a firm and personally worked on RPM's audit within that time;
(f) The director or an immediate family member is, or has been within
the last three years, employed as an executive officer of another company
where any of RPM's present executive officers at the same time serves or
served on that company's compensation committee; or
(g) The director is or was an executive officer of another company or
bank or other financial institution which is indebted to RPM, or to which
RPM is indebted, and the total amount of either entity's indebtedness to
the other (except amounts due for purchases subject to usual trade terms or
publicly issued debt) in any of the last three fiscal years exceeded 5% of
the total consolidated assets of the indebted entity.
A-1
For relationships that are not currently in existence and which are not
covered by the categorical standards listed above, or for relationships that are
covered by paragraphs (c) or (g) above, but as to which the Board believes a
director may nonetheless be independent, the determination of whether the
relationship is material or not, and therefore whether the director would be
independent or not, shall be made by the directors who satisfy the standards set
forth above. RPM will explain in the next proxy statement the basis for any
Board determination that a relationship is immaterial despite the fact that it
does not meet the categorical standards set forth above.
For purposes of these categorical standards, "immediate family member"
includes a person's spouse, parents, children, siblings, mothers and
fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and
anyone (other than domestic employees) who shares such person's home.
Also for purposes of these categorical standards, "RPM" includes RPM
International Inc. and any of its subsidiaries.
A-2
[RPM LOGO] VOTE BY INTERNET - www.proxyvote.com
-----------------
Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern
RPM INTERNATIONAL INC. Time the day before the cut-off date or meeting date. Have your
C/O NATIONAL CITY BANK proxy card in hand when you access the web site and follow the
P.O. BOX 92301 instructions to obtain your records and to create an
CLEVELAND, OHIO 44193-0900 electronic voting instruction form.
AUTO DATA PROCESSING VOTE BY PHONE - 1-800-690-6903
INVESTOR COMM SERVICES Use any touch-tone telephone to transmit your voting
ATTENTION: instructions up until 11:59 P.M. Eastern Time the day before
TEST PRINT the cut-off date or meeting date. Have your proxy card in hand
51 MERCEDES WAY when you call and then follow the instructions.
EDGEWOOD, NY
11717 VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to RPM
[BAR CODE HERE] International Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] RPMINA KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
RPM INTERNATIONAL INC.
THE RPM BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE FOLLOWING.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL To withhold authority to vote, mark "For All Except"
ALL ALL EXCEPT and write the nominee's number on the line below.
1. ELECTION OF DIRECTORS
(01) Dr. Max D. Amstutz [ ] [ ] [ ] ____________________________________________________
(02) Charles A. Ratner
(03) William B. Summers, Jr.
(04) Dr. Jerry Sue Thornton
In their discretion, to act on any other matter or matters which may properly come before the meeting.
Note: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee, or
guardian, please give full title as such. CONSENT TO ELECTRONIC DELIVERY
By checking the box to the right, I consent to
receive Proxy Statements and Annual Reports
For address changes and/or comments, please check electronically via the Internet instead of in the
this box and write them on the back where mail. The Company will not distribute printed
indicated [ ] materials to me for future stockholder meetings YES NO
unless I request them or revoke my consent, and will
notify me when and where its Proxy Statements and
Annual Reports are available on the Internet. [ ] [ ]
Please Indicate if you plan to attend Annual Meeting [ ] [ ]
------------------------------------- ---------- --------------------------- ----------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
DIRECTIONS TO THE HOLIDAY INN SELECT
STRONGSVILLE
15471 Royalton Road, Strongsville, OH
Phone: (440) 238-8800
FROM CLEVELAND AND POINTS NORTH {INCLUDING HOPKINS AIRPORT)
I-71 South to the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE OHIO TURNPIKE EAST AND WEST
Ohio Turnpike (I-80) to I-71 South (exit 10).
Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE EAST
I-480 West to I-71 South. Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE SOUTH
I-71 North to the Strongsville exit (#231).
Turn right at end of ramp and hotel is on the right hand side.
[STRONGSVILLE MAP]
--------------------------------------------------------------------------------
RPM INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS - OCTOBER 7,2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints FRANK C. SULLIVAN and P. KELLY
TOMPKINS, and each of them, as Proxy holders and attorneys, with full power of
substitution, to appear and vote all of the shares of Common Stock of RPM
International Inc., which the undersigned shall be entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the Holiday Inn
Select, located at Interstate 71 and Route 82 East, Strongsville, Ohio, on
Friday, October 7, 2005 at 2:00 P.M. Eastern Time, and at any adjournment or
postponement thereof, hereby revoking any and all proxies heretofore given and
(ii) authorizes and directs said Proxy holders to vote all of the shares of
Common Stock of the Company represented by this Proxy as follows, with the
understanding that if no directions are given on the reverse side, said shares
of Common Stock will be voted "FOR" the election of the four Directors nominated
by the Board of Directors.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE. The Proxies cannot vote the Common Stock unless you
sign and return this Card.
ELECTRONIC ACCESS TO FUTURE DOCUMENTS AVAILABLE
-----------------------------------------------
The Company has the option of providing its Proxy Statements and Annual
Reports over the Internet. If you have not done so in prior years, you may give
your consent to receive these documents via the Internet and we will advise you
when these documents become available. Once you give your consent, it will
remain in effect until you notify the Company in writing by mail that you wish
to resume mail delivery of the Proxy Statements and Annual Reports. Even if you
give your consent, you will have the right to request copies of these documents
at any time by mail. You will be responsible for costs associated with Internet
usage, such as telephone charges and access fees. To give your consent, if you
have not done so in prior years, please check the appropriate box located at the
bottom of the reverse side of this card.
ADDRESS CHANGES/COMMENTS:
------------------------------------------------------
--------------------------------------------------------------------------------
(IF YOU NOTED ANY ADDRESS CHANGES/COMMENTS ABOVE,
PLEASE MARK CORRESPONDING BOX ON THE REVERSE SIDE.)
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
[RPM LOGO] VOTE BY INTERNET - www.proxyvote.com
-----------------
Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern
RPM INTERNATIONAL INC. Time the day before the cut-off date or meeting date. Have
C/O NATIONAL CITY BANK your proxy card in hand when you access the web site and
P.O. BOX 92301 follow the instructions to obtain your records and to create
CLEVELAND, OHIO 44193-0900 an electronic voting instruction form.
AUTO DATA PROCESSING VOTE BY PHONE - 1-800-690-6903
INVESTOR COMM SERVICES Use any touch-tone telephone to transmit your voting
ATTENTION: instructions up until 11:59 P.M. Eastern Time the day before
TEST PRINT the cut-off date or meeting date. Have your proxy card in hand
51 MERCEDES WAY when you call and then follow the instructions.
EDGEWOOD, NY
11717 VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to RPM
[BAR CODE HERE] International Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] RPMINB KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
RPM INTERNATIONAL INC.
THE RPM BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE FOLLOWING.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL To withhold authority to vote, mark "For All Except"
ALL ALL EXCEPT and write the nominee's number on the line below.
1. ELECTION OF DIRECTORS
(01) Dr. Max D. Amstutz [ ] [ ] [ ] ____________________________________________________
(02) Charles A. Ratner
(03) William B, Summers, Jr
(04) Dr. Jerry Sue Thornton
In their discretion, to act on any other matter or matters which may properly
come before the meeting.
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, or guardian, please
give full title as such.
YES NO
Please indicate if you plan to attend Annual Meeting [ ] [ ]
------------------------------------- ---------- --------------------------- ----------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
DIRECTIONS TO THE HOLIDAY INN SELECT
STRONGSVILLE
15471 Royalton Road, Strongsville, OH
Phone: (440) 238-8800
FROM CLEVELAND AND POINTS NORTH (INCLUDING HOPKINS AIRPORT)
I-71 South to the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side
FROM THE OHIO TURNPIKE EAST AND WEST
Ohio Turnpike (I-80) to I-71 South (exit 10).
Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE EAST
I-480 West to I-71 South. Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE SOUTH
I-71 North to the Strongsville exit (#231).
Turn right at end of ramp and hotel is on the right hand side.
[STRONGSVILLE MAP]
--------------------------------------------------------------------------------
RPM INTERNATIONAL INC.
401(k) TRUST AND PLAN
TO: WACHOVIA BANK, N.A.
The undersigned hereby directs Wachovia Bank, N.A., RPM International
Inc. 401(k) Trust and Plan Trustee, to vote shares of Common Stock held for the
undersigned's 401(k) Plan account at the Annual Meeting of the Stockholders of
the Company to be held at the Holiday Inn Select, located at Interstate 71 and
Route 82 East, Strongsville, Ohio, on Friday, October 7,2005 at 2:00 P.M.
Eastern Time, and at any adjournment or postponement thereof, WITH THE
UNDERSTANDING THAT IF A SIGNED DIRECTION CARD IS RETURNED WITH NO DIRECTIONS
GIVEN ON THE REVERSE SIDE, SAID SHARES OF COMMON STOCK WILL BE VOTED "FOR" THE
ELECTION OF THE FOUR DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND IN
ACCORDANCE WITH THE TRUSTEE'S DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
[RPM LOGO] VOTE BY INTERNET - www.proxyvote.com
-----------------
Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern
RPM INTERNATIONAL INC. Time the day before the cut-off date or meeting date. Have
C/O NATIONAL CITY BANK your proxy card in hand when you access the web site and
P.O. BOX 92301 follow the Instructions to obtain your records and to create
CLEVELAND, OHIO 44193-0900 an electronic voting instruction form.
AUTO DATA PROCESSING VOTE BY PHONE - 1-800-690-6903
INVESTOR COMM SERVICES Use any touch-tone telephone to transmit your voting
ATTENTION: Instructions up until 11:59 P.M. Eastern Time the day before
TEST PRINT the cut-off date or meeting date. Have your proxy card in hand
51 MERCEDES WAY when you call and then follow the instructions.
EDGEWOOD, NY
11717 VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to RPM
[BAR CODE HERE] International Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] RPMINC KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
RPM INTERNATIONAL INC.
THE RPM BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE FOLLOWING.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL To withhold authority to vote, mark "For All Except"
ALL ALL EXCEPT and write the nominee's number on the line below.
1. ELECTION OF DIRECTORS
(01) Dr. Max D. Amstutz [ ] [ ] [ ] ____________________________________________________
(02) Charles A. Ratner
(03) William B. Summers, Jr.
(04) Dr. Jerry Sue Thornton
In their discretion, to act on any other matter or matters which may properly
come before the meeting.
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, or guardian, please
give full title as such.
YES NO
Please indicate if you plan to attend Annual Meeting [ ] [ ]
------------------------------------- ---------- --------------------------- ----------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
DIRECTIONS TO THE HOLIDAY INN SELECT
STRONGSVILLE
15471 Royalton Road, Strongsville, OH
Phone: (440) 238-8800
FROM CLEVELAND AND POINTS NORTH (INCLUDING HOPKINS AIRPORT)
I-71 South to the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE OHIO TURNPIKE EAST AND WEST
Ohio Turnpike (I-80) to I-71 South (exit 10).
Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE EAST
I-480 West to I-71 South. Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE SOUTH
I-71 North to the Strongsville exit (#231).
Turn right at end of ramp and hotel is on the right hand side.
[STRONGSVILLE MAP]
--------------------------------------------------------------------------------
RPM INTERNATIONAL INC.
UNION 401(k) TRUST AND PLAN
TO: WACHOVIA BANK, N.A.
The undersigned hereby directs Wachovia Bank, N.A., RPM International
Inc. Union 401(k) Trust and Plan Trustee, to vote shares of Common Stock held
for the undersigned's 401(k) Plan account at the Annual Meeting of the
Stockholders of the Company to be held at the Holiday Inn Select, located at
Interstate 71 and Route 82 East, Strongsville, Ohio, on Friday, October 7, 2005
at 2:00 P.M. Eastern Time, and at any adjournment or postponement thereof, WITH
THE UNDERSTANDING THAT IF A SIGNED DIRECTION CARD IS RETURNED WITH NO DIRECTIONS
GIVEN ON THE REVERSE SIDE, SAID SHARES OF COMMON STOCK WILL BE VOTED "FOR" THE
ELECTION OF THE FOUR DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND IN
ACCORDANCE WITH THE TRUSTEE'S DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.