SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CROMPTON CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO]
CROMPTON CORPORATION
One American Lane
Greenwich, CT 06831
VINCENT A. CALARCO
Chairman, President and
Chief Executive Officer
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Crompton Corporation to be held at 11:15 a.m. on Tuesday, April 30, 2002, at the
Dolce Heritage, 522 Heritage Road, Southbury, Connecticut.
Information about the business of the meeting and the nominee for election
as a member of the Board of Directors is set forth in the formal meeting notice
and Proxy Statement on the following pages. This year you are asked to elect one
director and to ratify the Board of Directors' selection of an independent
auditor for the fiscal year ending December 31, 2002.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend the session in person, we hope that you will vote on the
matters to be considered and sign, date and return your proxy in the enclosed
envelope as promptly as possible. Alternatively, you may choose to vote by
telephone or on the internet in accordance with the instructions found on your
proxy card.
The Company's fiscal year 2001 Annual Report is being mailed to stockholders
herewith, but it is not part of the proxy solicitation material.
Respectfully yours,
/s/ VINCENT A. CALARCO
Vincent A. Calarco
Chairman, President &
Chief Executive Officer
March 29, 2002
[LOGO]
CROMPTON CORPORATION
ONE AMERICAN LANE, GREENWICH, CT 06831
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, APRIL 30, 2002
11:15 A.M. EASTERN TIME
DOLCE HERITAGE
522 HERITAGE ROAD
SOUTHBURY, CONNECTICUT
AGENDA
1. To elect one director, Mr. Robert A. Fox, for a term of three years
expiring at the 2005 Annual Meeting of Stockholders and until his
successor is elected and qualified;
2. To ratify the appointment of KPMG LLP as the Company's independent
auditors for 2002; and
3. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 1, 2002, are
entitled to notice of the annual meeting and may vote at the meeting and any
adjournment thereof.
We urge you to date, sign and return the enclosed proxy promptly whether or
not you plan to attend the annual meeting. You may also vote by telephone or on
the internet in accordance with the instructions found on your proxy card. If
you attend the meeting, you may still vote your shares in person, if you wish.
By Order of the Board of Directors,
[LOGO]
Barry J. Shainman
Secretary
March 29, 2002
TABLE OF CONTENTS
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Proxy Statement. 1
About the Meeting........................................... 1
Election of One Director.................................... 4
Board of Directors.......................................... 5
Corporate Governance........................................ 8
Principal Holders of Voting Securities...................... 10
Security Ownership of Management............................ 11
Report of the Committee on Executive Compensation........... 12
Report of the Audit Committee............................... 14
Performance Graph........................................... 16
Officers' and Directors' Compensation....................... 17
Approval of Selection of Independent Auditor................ 22
Section 16(a) Beneficial Ownership Reporting Compliance..... 23
Other Matters............................................... 23
Appendix A.................................................. A-1
PROXY STATEMENT
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This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of the Company (the "Board" or the "Board of
Directors") for use at the annual meeting of the stockholders of the Company to
be held on April 30, 2002, at the Dolce Heritage, 522 Heritage Road, Southbury,
Connecticut, and at any adjournment thereof.
The Company's annual report for the fiscal year ended December 31, 2001,
accompanies this Proxy Statement. It is not proxy soliciting material, nor is it
incorporated herein by reference.
This Proxy Statement and the enclosed form of proxy are first being sent to
stockholders on or about March 29, 2002.
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ABOUT THE MEETING
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Q: WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
A: At the Annual Meeting, the Company's stockholders will be
asked to vote on the matters listed in the accompanying
notice of annual meeting, namely:
* the election of Mr. Robert A. Fox as a director; and
* the ratification of KPMG LLP as the Company's independent
auditors for 2002.
Stockholders will also transact other business that may
properly come before the meeting. The Company's management
will be present at the meeting to report on the Company's
performance during 2001, and will answer stockholder
questions.
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Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on the record date,
March 1, 2002, are entitled to vote their shares of the
Company's common stock. Each outstanding share of common
stock is entitled to one vote. At the close of business on
the record date, there were 113,188,090 shares of the
Company's common stock outstanding. The Company has no other
voting securities issued and outstanding.
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1
Q: HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A: A quorum must be present at the meeting for business to be
conducted. A quorum is reached when there are present at the
meeting, in person or by proxy, the holders of a majority of
the shares of the Company's common stock outstanding on the
record date. Abstentions and withhold-authority votes will
be included for purposes of determining a quorum and for
purposes of calculating the vote, but will not be considered
to have been voted in favor of the item voted upon. Broker
non-votes will be included for purposes of determining a
quorum, but will not be considered to be represented at the
meeting for purposes of calculating the vote so they will
not affect the outcome of any proposal.
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Q: WHAT IF A QUORUM IS NOT PRESENT AT THE MEETING?
A: If a quorum is not present at the time of the meeting, the
stockholders who are represented may adjourn the meeting
until a quorum is present. The time and place of the
adjourned meeting will be announced at the time the
adjournment is taken, and no other notice will be given.
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Q: HOW DO I VOTE?
A: You may vote in any of three ways:
* YOU MAY VOTE BY MAIL if you complete, sign and date the
accompanying proxy card and return it in the prepaid
envelope. Your shares will be voted confidentially and in
accordance with your instructions;
* YOU MAY VOTE BY TELEPHONE OR INTERNET in accordance with
the instructions found on your proxy card; and
* YOU MAY VOTE IN PERSON if you are a registered
stockholder and attend the meeting and deliver your
completed proxy card in person. At the meeting, the
Company will also pass out written ballots to registered
stockholders who wish to vote in person at the meeting.
Beneficial owners of shares held in "street name" who
wish to vote at the meeting will need to obtain a proxy
form from the institution that holds their shares.
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Q: HOW MANY VOTES DOES IT TAKE TO APPROVE THE ITEMS TO BE VOTED
UPON?
A: Directors are elected by a plurality. This means that
assuming a quorum is present at the meeting, Mr. Fox will be
elected if he receives more affirmative votes cast for
director than any other person. The affirmative vote of a
majority of the shares having voting power present in person
or represented by proxy at the meeting is needed to ratify
the selection of KPMG LLP as the Company's independent
auditors for 2002.
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2
Q: CAN I REVOKE MY PROXY BEFORE IT IS EXERCISED?
A: Yes, you may revoke your proxy and change your vote at any
time before the polls close at the meeting:
* by signing another proxy with a later date;
* by voting by telephone or on the internet after the date
and time of your last telephone or internet vote; or
* if you are a registered stockholder, by giving written
notice of such revocation to the Secretary of the Company
prior to or at the meeting or by voting in person at the
meeting.
Attendance at the meeting will not automatically revoke a
previously granted proxy.
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Q: WHO WILL COUNT THE VOTES?
A: The Company's transfer agent, Mellon Investor Services LLC,
will tabulate and certify the votes and act as inspector of
election at the meeting.
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Q: HOW ARE SHARES IN THE CROMPTON EMPLOYEE SAVINGS PLAN,
CROMPTON EMPLOYEE STOCK OWNERSHIP PLAN, CROMPTON EMPLOYEE
STOCK PURCHASE PLAN AND CROMPTON DIVIDEND REINVESTMENT PLAN
VOTED?
A: The shares of Company common stock held by the trustee under
the Crompton Employee Savings Plan and the Crompton Employee
Stock Ownership Plan and in each employee's account under
the Crompton Employee Stock Purchase Plan and Crompton
Dividend Reinvestment Plan will be voted according to each
employee's voting instructions. If no instructions are
received, the shares in the Crompton Employee Savings Plan,
Crompton Employee Stock Ownership Plan and Crompton Employee
Stock Purchase Plan will not be voted while an individual's
shares in the Crompton Dividend Reinvestment Plan will be
voted in the same manner that such person's shares held of
record are voted.
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Q: WHO IS SOLICITING MY VOTE AND WHO PAYS THE COST?
A: The Company has retained Mellon Investor Services LLC to
assist in the distribution of proxy materials and the
solicitation of votes for a fee of $4,500, excluding
out-of-pocket expenses. The Company will pay the entire cost
of the solicitation and will reimburse banks, brokerage
firms, custodians, nominees and fiduciaries for their
reasonable expenses in sending proxy materials to the
beneficial owners of the Company stock. Proxies may be
solicited personally, by mail, by telephone, by facsimile or
by telegraph, by the directors, officers or other employees
of the Company, without remuneration other than regular
compensation.
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3
Q: WHEN ARE THE YEAR 2003 STOCKHOLDER PROPOSALS DUE?
A: If a stockholder wants a proposal to be included in the
Company's proxy statement for the 2003 Annual Meeting of
Stockholders, the proposal, in writing and addressed to the
Company's Secretary, must be received by the Company no
later than November 30, 2002. If a stockholder wishes to
recommend nominees to the Board of Directors, or to bring
other business before an annual meeting, the proposal, in
writing and addressed to the Company's Secretary, must be
received by the Company no later than January 31, 2003, or
not later than ten days after notice of the date of the
annual meeting is given to stockholders, whichever date is
earlier.
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Q: WHAT OTHER INFORMATION ABOUT THE COMPANY IS AVAILABLE?
A: Interested parties may request a copy of the Company's
Annual Report on Form 10-K and our quarterly financial news
releases by fax or through the mail. This and other
important information about the Company is also available on
our web site at www.cromptoncorp.com.
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ELECTION OF ONE DIRECTOR
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The by-laws of the Company provide for a board of directors of not less than
eight nor more than fifteen directors, as determined from time to time by a
resolution of the Board, divided into three classes. Directors of one class are
elected each year for a term of three years. There are currently eight directors
in office, one of whom is standing for election as Class II director whose term
will expire at the 2005 annual meeting, three of whom are Class III directors
whose term will expire at the 2003 annual meeting, and three of whom are
Class I directors whose term will expire at the 2004 annual meeting.
The Board has nominated Mr. Robert A. Fox to serve as Class II director for
a three-year term expiring at the 2005 annual meeting and until his successor is
elected and has qualified. Mr. Fox is a member of the present Board and has
served as a director since 1990. All of the incumbent directors, including
Mr. Fox, have previously been elected by the stockholders. If Mr. Fox is not
available, an event not anticipated, the proxies will be voted for a substitute
if any is designated by the Board of Directors.
Mr. Harry G. Hohn will reach age 70 during this fiscal year, the normal
retirement age for directors, and will retire from the Board effective on the
date of the 2002 annual meeting. The Company is currently taking steps to
identify a candidate to fill the vacancy on the Board created by the retirement
of Mr. Hohn.
4
BOARD OF DIRECTORS
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NOMINEE FOR DIRECTOR
CLASS II (TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS IN 2005)
ROBERT A. FOX, 64, is the Managing General Partner of
[LOGO] Fox Investments L.P., an investment management
company, Palo Alto, CA, and Chairman of AgriCapital
Advisors, an advisory board to AgriCapital
Corporation, a New York, NY based firm providing
banking, financing and consulting services to the
agriculture industry. He is former President and Chief
Executive Officer of Foster Farms, a privately held,
integrated poultry company, Livingston, CA. Mr. Fox
has been a director of the Company, or a predecessor
company, since 1990. He also serves as a director of
the American Balanced Fund, Fundamental Investors, the
Growth Fund of America, Inc., the Income Fund of
America, Inc., the New Perspective Fund and the New
World Fund, Inc. He also serves as a trustee of the
Euro-Pacific Growth Fund.
INCUMBENT DIRECTORS
CLASS III (TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS IN 2003)
VINCENT A. CALARCO, 59, is Chairman of the Board,
[LOGO] President and Chief Executive Officer of the Company
and served a predecessor corporation in those same
capacities. Mr. Calarco has been a director of the
Company, or a predecessor company, since 1985. He also
serves as a director of Consolidated Edison, Inc. and
Newmont Mining Corporation.
5
ROGER L. HEADRICK, 65, is the Managing General Partner
[LOGO] of HMCH Ventures, a private investment company,
Wayzata, MN, the President and Chief Executive Officer
of ProtaTek International, Inc., a biotechnical animal
vaccine company, St. Paul, MN and Chairman of New
Biotics, Inc., a cancer research and development
company, San Diego, CA. Mr. Headrick is the former
President and Chief Executive Officer of the Minnesota
Vikings Football Club, Inc., Eden Prairie, MN. Mr.
Headrick has been a director of the Company, or a
predecessor company, since 1988. He also serves as a
director of Caremark Rx, Inc.
PATRICIA K. WOOLF, PH.D., 67, is a private investor,
[LOGO] and Lecturer in the Department of Molecular Biology,
Princeton University, Princeton, NJ. Dr. Woolf has
been a director of the Company, or a predecessor
company, since 1994. She also serves as a director of
the American Balanced Fund, Fundamental Investors, the
Growth Fund of America, Inc., the Income Fund of
America, Inc., Smallcap World Fund, Inc., First Energy
Corporation and the National Life Holding Co. Dr.
Woolf also serves as a trustee of the New Economy
Fund.
CLASS I (TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS IN 2004)
LEO I. HIGDON, JR., 55, is the President of the
[LOGO] College of Charleston, Charleston, SC. He is the
former President of Babson College, Babson Park, MA,
and former Dean of the Darden Graduate School of
Business Administration of the University of Virginia,
Charlottesville, VA. Mr. Higdon is also a former
Managing Director and member of the Executive
Committee of Salomon Brothers, an investment banking
firm, New York, NY. Mr. Higdon has been a director of
the Company, or a predecessor company, since 1993. He
also serves as a director of Newmont Mining
Corporation and Eaton Vance Corp.
6
C. A. (LANCE) PICCOLO, 61, is President and Chief
[LOGO] Executive Officer of HealthPic Consultants, Inc., a
strategic health-care consulting firm, Lincolnshire,
IL. Prior to the merger of Caremark International Inc.
and MedPartners/Mullikin, Inc., he was the Chairman
and Chief Executive Officer of Caremark International
Inc., a provider of alternate-site health-care
services, North Brook, IL. He is former Executive Vice
President of Baxter International Inc., a supplier of
health-care products, Deerfield, IL. Mr. Piccolo has
been a director of the Company, or a predecessor
company, since 1988. He also serves as a director and
Vice Chairman of the Board of Caremark Rx, Inc. and as
a director of Novamed Eyecare, Inc.
BRUCE F. WESSON, 59, is President of Galen Associates,
[LOGO] a health care venture firm, New York, NY and a General
Partner of Galen Partners, L.P., New York, NY. Prior
to January 1991, he was Senior Vice President and
Managing Director of Smith Barney, Harris Upham & Co.
Incorporated, an investment banking firm, New York,
NY. Mr. Wesson has been a director of the Company, or
a predecessor company, since 1980. He also serves as
Chairman of the Board of QMED and as a director of
Halsey Drug Co., Inc. and Encore Medical Corp.
The affirmative vote of the holders of a plurality of the shares that are
present in person or represented by proxy at the meeting is required to elect
directors.
The Board of Directors recommends a vote FOR the election of Mr. Fox as a
director, and proxies will be so voted unless stockholders specify to the
contrary in their proxies.
Proxies cannot be voted for a greater number of persons than the number of
nominees named.
7
CORPORATE GOVERNANCE
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ROLE OF THE BOARD OF DIRECTORS IN CORPORATE GOVERNANCE
The Board of Directors of the Company is elected by the stockholders with
the responsibility to oversee and direct the management of the Company so as to
enhance stockholder value. The Board works with management to select and approve
a corporate philosophy and mission and in connection therewith the Board
reviews, approves and monitors management's strategic and business plans and the
Company's financial objectives, plans and actions. The Board approves the
Company's material transactions, significant capital allocations and
expenditures and measures the performance of management in relation to the
performance of peer companies and the speciality chemical industry as a whole.
The Board also periodically reviews the performance of the Chief Executive
Officer.
The Board adopts policies of corporate conduct including compliance with
applicable laws and regulations, auditing and accounting principles and
financial controls, and the Company's own governing documents. The Board
assesses its own effectiveness in fulfilling these and other Board
responsibilities and performs such other functions as are prescribed by law, or
assigned to the Board in the Company's governing documents.
ROLE OF THE ORGANIZATION, COMPENSATION AND GOVERNANCE COMMITTEE IN CORPORATE
GOVERNANCE
The Organization, Compensation and Governance Committee makes
recommendations to the Board with respect to the organization, size and
composition of the Board, including the assignment of directors to committees
and committee chairmanships. The Committee identifies suitable candidates for
Board membership, reviews their qualifications and proposes a slate of directors
for election by the stockholders at each annual meeting.
The Organization, Compensation and Governance Committee makes an annual
assessment of the performance of the Board and reviews its corporate governance
principles, recommends its compensation and advises the Board with respect to
the selection and performance of the Chief Executive Officer. The Committee
assists the Board in providing for the orderly succession in the top management
of the Company.
BOARD MEETINGS HELD
The Board of Directors held four regular meetings and one special meeting
during 2001. All of the directors attended at least 75% of the aggregate number
of meetings of the Board and the committees on which they served in 2001.
8
BOARD COMMITTEES
The Board has established four committees to assist it in the discharge of
its responsibilities. Committee membership is limited to directors who are not
employees of the Company.
COMMITTEE MEMBERSHIP
ORGANIZATION,
FINANCE AND COMPENSATION AND SAFETY, HEALTH
NAME AUDIT PENSION GOVERNANCE AND ENVIRONMENT
--------------------- -- -- -- --
Robert A. Fox x x
Roger L. Headrick x *
Leo I. Higdon, Jr. *
Harry G. Hohn x x
C. A. (Lance) Piccolo x x
Bruce F. Wesson * x
Patricia K. Woolf x *
No. of Mtgs. in 2001 3 3 3 2
* Chairman of the Committee
The Audit Committee meets periodically with the Company's management to
review the Company's major financial risk exposures and with the independent
auditor to review the scope of the annual audit and the policies relating to
internal auditing procedures and controls, provides general oversight with
respect to the adequacy and effectiveness of the Company's internal
administrative and business process controls and to the accounting principles
employed in the Company's financial reporting, and reviews the Company's annual
report on Form 10-K prior to its filing. The Audit Committee also recommends to
the Board each year the selection of the auditor, evaluates the auditor's
performance, has responsibility for approving professional non-audit services
provided by the independent auditor, considers the possible effect of providing
such non-audit services on the auditor's independence, and reviews the range of
fees of the auditor for both audit and non-audit services.
The Organization, Compensation and Governance Committee is responsible for
the administration of the Company's compensation plans, including approval of
the level of compensation for senior executive officers named in the proxy
statement and adoption of bonus and deferred compensation plans and arrangements
for executive officers. The Committee also makes recommendations with respect to
the organization, size and composition of the Board, identifies suitable
candidates for Board membership and reviews their qualifications, proposes a
slate of directors for election by the stockholders at each annual meeting, and
assists the Board in providing for orderly succession in the top management of
the Company.
9
The Finance and Pension Committee has the authority, which it may exercise
when the Board is not in session, to approve certain debt financings and reviews
and makes recommendations to the Board regarding the issuance or reacquisition
of securities, major debt financings, capital expenditures, acquisitions,
divestitures and other expenditures, dividend policy, management of pension
assets, and risk management policy and strategy.
The Safety, Health and Environment Committee provides guidance to and
oversight of management with respect to safety, health and environmental matters
including the review of the Company's safety, health and environmental
performance, policies, standards, procedures, management systems and strategic
plans. The Committee also recommends actions and policies that will enable the
Company to achieve a high level of safety, health and environmental performance
compared with its peers in the chemical industry and to maintain good relations
with the Company's neighbors.
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PRINCIPAL HOLDERS OF VOTING SECURITIES
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The following persons were known to the Board of Directors to be the
beneficial owner of more than 5% of the Company's outstanding voting securities
as of December 31, 2001:
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED CLASS
------------------------------------------ ----------------- ---------------
Capital Research and Management Company 10,671,200(1) 9.45%
333 South Hope Street
Los Angeles, CA 90071
Barrow, Hanley, Mewhinney & Strauss, Inc. 8,730,024(2) 7.73%
3232 McKinney Avenue
Dallas, TX 75204
(1) Capital Research and Management Company has advised that they have sole
dispositive power for 10,671,200 shares. Capital Research and Management
Company acts as investment advisor for Washington Mutual Investors
Fund, Inc. with respect to 5,800,001 of the shares listed above. Capital
Research and Management Company disclaims beneficial ownership of all shares
pursuant to Rule 13d-4.
(2) Barrow, Hanley, Mewhinney & Strauss, Inc. has advised that they have sole
voting power for 1,143,319 shares, shared voting power for 7,586,705 shares
and sole dispositive power for 8,730,024 shares. Barrow, Hanley,
Mewhinney & Strauss, Inc. acts as investment advisor for Vanguard Windsor
Funds Windsor II Fund with respect to 6,238,569 of the shares listed above.
10
SECURITY OWNERSHIP OF MANAGEMENT
----------------------------------------------------------------------------
The directors and the executive officers of the Company have advised that
they were directly or indirectly the beneficial owners of outstanding Common
Stock of the Company at the close of business on March 1, 2002, as set forth
below, in each case representing less than one percent of such shares
outstanding except as otherwise indicated. The table also shows the number of
shares credited to the individual's account under the Directors Deferred
Compensation Plan ("Deferred Compensation Plan"), Directors Restricted Stock
Plan ("Restricted Stock Plan"), the Dividend Reinvestment Plan ("DRIP") and
stock options exercisable within 60 days of March 1, 2002 ("Exercisable
Options").
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP(1) DEFERRED
-------------------------
EXERCISABLE COMPENSATION RESTRICTED
NAME COMMON STOCK OPTIONS PLAN DRIP STOCK PLAN
----------------------- ------------ --------- ------- ------ ------
Vincent A. Calarco 1,285,161(2) 2,008,833 -- 36,953 --
Robert A. Fox 48,562 53,083 14,316 716 13,952
Roger L. Headrick 44,000 53,083 15,989 1,760 15,677
Leo I. Higdon, Jr. 7,000 52,241 15,633 176 2,727
Harry G. Hohn 933 27,917 24,493 -- --
C.A. (Lance) Piccolo 2,400 53,083 14,470 1,564 14,139
Bruce F. Wesson 3,235 27,917 26,465 -- --
Patricia K. Woolf 4,875 51,308 10,961 558 6,288
Joseph B. Eisenberg 69,238 458,443 -- -- --
Gerald H. Fickenscher 109,552(3) 182,333 -- -- --
Alfred F. Ingulli 173,338(4) 524,544 -- -- --
William A. Stephenson 70,460(5) 349,811 -- -- --
Directors and Executive
Officers as a Group
(23 persons)......... 2,754,121(6) 6,057,162 122,327 45,221 52,783
(1) Except as noted below, the executive officers and directors have both sole
voting and sole investment power over the shares reflected in this table.
(2) Includes 499,785 shares held under the 1988 Long Term Incentive Plan (the
"1988 Plan") and the Crompton Corporation Employee Stock Ownership Plan (the
"ESOP"), as to which he has voting but, except with respect to 49,912 shares
in the ESOP, no investment power; 12,126 shares acquired through the Benefit
Equalization Plan Trust (the "BEP"); 58,872 shares owned by his wife and
33,833 shares held in trust for their children, as to which he disclaims
beneficial ownership. Mr. Calarco is deemed to be the beneficial owner of
2.9% of the outstanding shares of the Company's Common Stock.
(3) Includes 2,740 shares held under the ESOP as to which he has voting but no
investment power.
11
(4) Includes 35,885 shares held under the 1988 Plan and the ESOP as to which he
has voting but, except with respect to 1,704 shares in the ESOP, no
investment power.
(5) Includes 23,968 shares held under the 1988 Plan and the ESOP as to which he
has voting but, except with respect to 1,762 shares in the ESOP, no
investment power.
(6) Includes 970,957 shares held under the 1988 Plan and the ESOP, as to which
they have voting but, except with respect to 199,864 shares in the ESOP, no
investment power; 40,951 shares held through the BEP; 5,080 shares held
through the Crompton Corporation Employee Stock Purchase Plan; and 95,306
shares owned by wives and in trusts for children, as to which beneficial
ownership is disclaimed. Directors and Executive Officers as a group are
deemed to be the beneficial owner of 7.6% of the outstanding shares of the
Company's Common Stock.
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REPORT OF THE COMMITTEE
ON EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION PHILOSOPHY
The compensation program for the Company's executive officers is
administered in accordance with a pay for performance philosophy to link
executive compensation with the values, objectives, business strategy,
management initiatives and financial performance of the Company. In addition, a
significant portion of each executive officer's compensation is contingent upon
the creation of shareholder value.
The Organization, Compensation and Governance Committee of the Board (the
"Committee") believes that stock ownership by management and restricted stock-
based performance compensation plans serve to align the interests of management
and other stockholders in the enhancement of shareholder value. To that end,
executive officers are encouraged to retain the shares they earn through the
compensation programs and are given the opportunity to defer receipt of the
shares of common stock.
The compensation of the Company's executive officers comprises cash and
equity components and is designed to be competitive and highly leveraged based
upon corporate financial performance and shareholder returns. The compensation
program provides an opportunity to earn compensation in the third quartile
within the chemical industry as well as within a broader group of companies of
comparable size and complexity. Actual compensation levels may be greater or
less than competitive levels in surveyed companies based upon annual and
long-term performance of the Company as well as individual performance. Several
performance measures are used for compensation purposes for the Company's
executive officers and heads of the businesses. Primary measures used in the
annual and long-term incentive programs include earnings growth, debt reduction
and market cap growth, with executives also linked to shareholder return through
stock options and restricted performance share awards.
12
BASE SALARIES
Base salary ranges at the median to 75th percentile levels for executive
officers are determined after reviewing data from several national surveys on
salaries for executives at broad groups of companies of similar size and
complexity.
MANAGEMENT INCENTIVE PLAN
Annual incentives may be earned under the Company's Management Incentive
Plan. Target and maximum incentives (currently at 175% of target) are set by
formula to offer executive officers an opportunity to earn annual compensation
at the 75th percentile levels if high levels of performance are met.
STOCK OPTIONS AND PERFORMANCE SHARES
Long-term incentives at the Company consist of annual grants of stock
options and periodic grants of restricted performance shares that can be earned
over a multi-year period based on goals selected by the Committee out of those
approved under the 1998 Long-Term Incentive Plan. Awards are divided evenly in
value between stock options and restricted performance shares and are set at
levels designed to offer opportunities at the 75th percentile.
STOCK OWNERSHIP
The Company has adopted stock ownership goals for its executive officers,
which range from five times salary for the CEO to two times salary for the
remaining officers. Total stock ownership for this group as of March 1, 2002, is
2,683,562 shares.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee's policy on the tax deductibility of compensation is to
maximize deductibility to the extent possible without abdicating all of its
discretionary power. To this end, the Committee has submitted complying plans to
stockholders; however, the Committee has occasionally taken actions that result
in non-deductible compensation and may do so again in the future when it
determines that such actions are in the Company's best interests.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In 2001, the base salary, incentive compensation, stock option and
restricted stock awards for the Chief Executive Officer were determined by the
Board of Directors based on the recommendations of the Committee using the
principles outlined above. The Committee increased Mr. Calarco's base salary
from $825,000 to $865,000 during fiscal year 2001 and granted him a stock option
award of 350,000 shares. Based on the financial performance of the Company,
Mr. Calarco and most other members of senior management were not eligible to
receive an annual incentive payment for 2001 under the terms of the Management
Incentive Plan.
13
ORGANIZATION, COMPENSATION AND GOVERNANCE COMMITTEE
Decisions on compensation of the Company's executive officers are made by
the Organization, Compensation and Governance Committee, a committee of the
Board of Directors composed of the persons listed below, all of whom are
non-employee directors. The Committee has retained an independent executive
compensation consultant who has access to independent compensation data to
evaluate the Company's executive compensation program.
The Organization, Compensation and Governance Committee:
Roger L. Headrick, Chairman
Harry G. Hohn
C. A. Piccolo
--------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
--------------------------------------------------------------------------------
A copy of the written charter of the Audit Committee is attached as
Appendix A to this Proxy Statement. The Company's Audit Committee consists of
four independent members of the Board as defined in Sections 303.01(B)(2)(a) and
(3) of the New York Stock Exchange's listing standards.
The Audit Committee has reviewed and discussed the audited financial
statements for the fiscal year ended December 31, 2001, with management. The
Audit Committee has also discussed with the Company's independent auditors, KPMG
LLP, the matters required to be discussed by SAS 61. In addition, the Audit
Committee has received the written disclosure from KPMG LLP required by
Independence Standards Board Standard No. 1 and has discussed with KPMG LLP such
auditing firm's independence. Based upon these reviews and discussions, the
Audit Committee recommended that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the last fiscal year for filing
such report with the U.S. Securities and Exchange Commission.
The Audit Committee:
Bruce F. Wesson, Chairman
Robert A. Fox
C. A. Piccolo
Patricia K. Woolf, Ph.D.
AUDIT FEES
The aggregate fees billed for professional services rendered by KPMG LLP for
the audit of the Company's annual financial statements for the most recent
fiscal year
14
and the review of the financial statements included in the Company's Quarterly
Reports on Form 10-Q for the fiscal year were $1.9 million.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees billed for professional services rendered by KPMG LLP for
financial information systems design and implementation for the most recent
fiscal year were $5.5 million.
ALL OTHER FEES
The aggregate fees billed for professional services rendered by KPMG LLP
other than audit fees and financial information systems design and
implementation fees for the most recent fiscal year were $2.9 million of which
$1.3 million were audit-related services and $1.6 million were tax-related
services.
The Audit Committee has considered whether the providing of financial
information systems design and implementation and all other services by KPMG LLP
to the Company is compatible with maintaining the independence of KPMG LLP and
concluded that the independence of KPMG LLP is not compromised by the providing
of such services.
15
PERFORMANCE GRAPH
----------------------------------------------------------------------------
The following graph compares the cumulative total return on the Common Stock
of the Company for the last five fiscal years with the returns on the
Standard & Poor's 500 Stock Index and the Chemicals (Specialty)-500 Index,
assuming the investment of $100 in the Company's Common Stock, the S&P 500 Index
and the Chemicals (Specialty)-500 Index on December 31, 1996, and the
reinvestment of all dividends.
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL RETURN AMONG CROMPTON CORPORATION,
S&P 500 AND CHEMICALS (SPECIALTY)-500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
CROMPTON CORPORATION $100.00 $138.00 $108.90 $70.30 $56.30 $49.30
S&P 500 $100.00 $133.30 $171.50 $207.50 $188.60 $166.20
CHEMICALS (SPECIALTY)-500 $100.00 $123.80 $105.50 $116.70 $103.80 $97.30
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
------ ------ ------ ------ ------ ------
CROMPTON CORPORATION........................... $100.0 $138.0 $108.9 $ 70.3 $ 56.3 $ 49.3
S&P 500........................................ $100.0 $133.3 $171.5 $207.5 $188.6 $166.2
CHEMICALS (SPECIALTY)-500...................... $100.0 $123.8 $105.5 $116.7 $103.8 $ 97.3
Note: Assumes an initial investment of $100 on December 31, 1996. Total return
includes reinvestment of dividends.
The Chemicals (Specialty)-500 Index companies are as follows: Ecolab Inc., Great
Lakes Chemical Corporation, Hercules, Inc., International Flavors &
Fragrances Inc. and Sigma-Aldrich Corporation.
16
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 (the "Exchange Act") that might incorporate future filings, including
this Proxy Statement, in whole or in part, the foregoing Report of the
Organization, Compensation and Governance Committee, the Report of the Audit
Committee and the Performance Graph shall not be deemed incorporated by
reference into any such filings.
--------------------------------------------------------------------------------
OFFICERS' AND DIRECTORS' COMPENSATION
--------------------------------------------------------------------------------
The following tables set forth information concerning compensation paid or
to be paid to the chief executive officer of the Company and each of the four
most highly compensated executive officers of the Company other than the chief
executive officer, for services to the Company in all capacities during 1999,
2000 and 2001, except as noted, and options granted to and exercised by the same
individuals during the period indicated.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- --------------------
RESTRICTED
OTHER STOCK SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) OPTIONS(#) ($)
------------------------------- ---- ------- ------- ------- -------- ------- --------
Vincent A. Calarco 2001 861,667 -- 116,959 -- 350,000 --
Chairman of the Board, 2000 823,750 500,000 176,502 -- 375,000 --
President and CEO 1999 787,500 405,000 152,905 -- 800,000 --
Alfred F. Ingulli 2001 371,667 170,000 70,304 -- 60,000 --
Executive Vice President, 2000 325,000 186,000 47,635 -- 75,000 --
Crop Protection 1999 312,917 100,000 45,952 -- 100,000 --
William A. Stephenson 2001 316,667 115,000 58,012 -- 60,000 --
Executive Vice President, 2000 286,667 235,000 42,022 -- 75,000 --
Plastics & Petroleum 1999 266,333 142,500 23,613 -- 100,000 --
Additives
Gerald H. Fickenscher 2001 282,500 105,000 51,043 -- 60,000 --
Regional Vice President, 2000 267,500 110,000 52,422 -- 75,000 --
Europe, Africa/Middle East 1999 220,000 50,000 40,082 -- 100,000 --
Joseph B. Eisenberg(3) 2001 366,298 -- 49,334 -- -- --
Executive Vice President, 2000 350,000 25,000 44,034 -- 75,000 --
Polymer Additives 1999 294,583 100,000 43,873 -- 200,000 --
(1) Includes the following amounts paid during 2001 under the Company's
Supplemental Medical and Dental Reimbursement Plans (the "SMD"), The
Uniroyal Age Supplement (the "AS"), the
17
Uniroyal Chemical split dollar life insurance plan (the "SDP"), the Uniroyal
Excess Cap Program (the "ECAP") or as employer contributions under the
Company's Employee Stock Ownership Plan (the "ESOP") and Crompton Employee
Savings Plan (the "CESP") (with that portion of the ESOP and CESP
contributions in excess of the Section 401(k) and Section 415 limitations
having been paid into the Company's Benefit Equalization Plan):
Mr. Calarco, $6,082(SMD), $34,467(ESOP), $56,008(CESP); Mr. Ingulli,
$28,520(AS), $6,098(SDP), $2,095(ECAP), $11,988 (ESOP), $9,517 (CESP);
Mr. Stephenson, $9,455(AS), $3,334(SDP), $11,346(ECAP), $5,617(ESOP),
$6,827(CESP); Mr. Fickenscher, $15,500(ESOP), $23,087 (CESP); and
Dr. Eisenberg, $12,061(AS), $8,845(ECAP), $5,800(ESOP), $9,425(CESP).
(2) Total restricted stock outstanding for the persons shown in the table at the
end of fiscal year 2001: Vincent A. Calarco, 644,578 shares valued at
$5,801,202, of which 500,578 shares valued at $4,505,202 are forfeitable;
Alfred F. Ingulli, 77,166 shares valued at $694,494, all of which shares are
forfeitable; William A. Stephenson, 77,166 shares valued at $694,494, all of
which shares are forfeitable; Gerald H. Fickenscher, 73,229 shares valued at
$659,061, all of which shares are forfeitable; and Joseph B. Eisenberg,
77,166 shares valued at $694,494, all of which shares were earned. Dividends
are paid on restricted shares from the date of grant but do not vest and are
not distributed until the underlying shares are distributed.
(3) Dr. Eisenberg retired from the Company, effective December 31, 2001.
OPTION GRANTS IN LAST FISCAL YEAR(1)
Individual Grants
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
------------------------------- ----------- -------------- --------- -------- --------- ---------
Vincent A. Calarco 337,374(2) 19.16% 7.92 11/22/11 1,680,408 4,258,483
12,626(3) 0.72% 7.92 10/23/11 62,888 159,371
Alfred F. Ingulli 47,374(2) 2.69% 7.92 11/22/11 235,963 597,975
12,626(3) 0.72% 7.92 10/23/11 62,888 159,371
William A. Stephenson 47,374(2) 2.69% 7.92 11/22/11 235,963 597,975
12,626(3) 0.72% 7.92 10/23/11 62,888 159,371
Gerald H. Fickenscher 47,374(2) 2.69% 7.92 11/22/11 235,963 597,975
12,626(3) 0.72% 7.92 10/23/11 62,888 159,371
Joseph B. Eisenberg -- -- -- -- -- --
(1) An option entitles the holder to purchase one share of the Common Stock of
the Company at a purchase price equal to the fair market value of the
Company's Common Stock on the date of grant of all of the options shown in
the table. All options are subject to expiration prior to the dates shown in
the table in case of death or termination of employment. The purchase price
for stock on the exercise of options may be paid in cash or in shares of the
Company's Common Stock already owned by the option holder, or by a
combination thereof. In the event of a change in control of the Company, all
of the options shown in the table will immediately become exercisable.
(2) Non-qualified options. Vest on 10/23/2002 and 10/23/2003.
(3) Incentive Stock options. Vest on 10/23/2003.
18
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
ACQUIRED UNDERLYING UNEXERCISED AT FY-END ($)
ON VALUE OPTIONS AT FY-END (#) 12/31/01--FMV $9.23
EXERCISE REALIZED ---------------------- ---------------------
NAME (#) $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------- ---------- -------- --------- ---------- -------- ----------
Vincent A. Calarco -- -- 2,008,833 804,167 673,994 896,162
Alfred F. Ingulli 39,186 213,000 524,544 97,500 141,227 118,866
William A. Stephenson 10,649 49,399 349,811 130,833 103,463 148,407
Gerald H. Fickenscher -- -- 182,333 139,167 99,349 148,407
Joseph B. Eisenberg 14,875 58,379 458,443 104,167 165,079 99,349
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Hohn and Piccolo served as members and Mr. Headrick served as
Chairman of the Organization, Compensation and Governance Committee during the
last completed fiscal year. No member of the Organization, Compensation and
Governance Committee is a current or former officer or employee of the Company
or any of its subsidiaries.
RETIREMENT PLANS
Each of the persons shown in the Summary Compensation Table on page 17 is
covered by a supplemental retirement agreement with the Company.
SUPPLEMENTAL RETIREMENT AGREEMENTS WITH VINCENT A. CALARCO AND
GERALD H. FICKENSCHER. In the case of Messrs. Calarco and Fickenscher, the
executive's total annual benefit payable under the supplemental retirement
agreement to the executive for life will be 60% and 50%, respectively, of the
average total compensation (including salary and bonus) paid to the executive
during the highest five years of the last ten years prior to the executive's
normal retirement age.
SUPPLEMENTAL RETIREMENT AGREEMENTS WITH ALFRED F. INGULLI, WILLIAM A.
STEPHENSON AND JOSEPH B. EISENBERG. In the case of Messrs. Ingulli, Stephenson
and Eisenberg, the executive's retirement benefits under each supplemental
agreement supplement the benefit paid to the executive under a Uniroyal Chemical
Company, Inc. ("Uniroyal") defined benefit pension plan so that the total annual
benefit payable to the executive will be 55% of the average total compensation
(including salary and bonus) paid to the executive during the highest five years
of the last ten years prior to the executive's retirement or, at their election,
Messrs. Ingulli and Eisenberg may receive a lump sum payment earned under a
previous supplemental retirement agreement with Uniroyal.
19
PROVISIONS FOR REDUCED PAYMENTS UNDER THE SUPPLEMENTAL RETIREMENT
AGREEMENTS. A supplemental benefit in a reduced amount may be payable in the
event of termination of employment prior to normal retirement age. At any time
after the date on which benefit payments commence, the executive may elect to
receive a single lump sum equal to 90% of the actuarial equivalent of the
benefit otherwise payable to the executive. An executive may elect to have the
executive's supplemental benefit under the agreement paid in a form which will
provide for the continuation of benefits, to a beneficiary selected by the
executive, upon the executive's death after retirement. Each agreement also
provides for the payment of a reduced benefit to the executive's beneficiary in
the event of the executive's death prior to normal retirement age and for the
payment of disability benefits in addition to those available under the
Company's regular disability insurance program. Benefits under each agreement
are not payable if the executive voluntarily terminates the executive's
employment, unless such termination is the result of the executive's retirement
(in the case of Mr. Calarco, on or after reaching age 62) or is with approval of
the Board, and meets certain other conditions set forth in the agreement.
The following table sets forth the estimated aggregate annual benefit
payable to each of the executives named in the table under the executive's
supplemental retirement agreement and from Uniroyal's defined benefit pension
plan upon retirement at or after normal retirement age based on each executive's
compensation history to date and assuming payment of such benefit in the form of
a life annuity:
ESTIMATED ANNUAL
RETIREMENT
NAME OF INDIVIDUAL BENEFIT
------------------------------------------ --------
Vincent A. Calarco $846,500
Alfred F. Ingulli 270,848
William A. Stephenson 228,195
Gerald H. Fickenscher 142,000
Joseph B. Eisenberg 210,670
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENT WITH VINCENT A. CALARCO. Mr. Calarco is employed
pursuant to an employment agreement which was amended and restated in May 1999.
The agreement provides for Mr. Calarco's employment as Chairman of the Board,
President and Chief Executive Officer for a term of three years, with automatic
annual one-year extensions of the term unless the Company gives notice at least
60 days prior to the anniversary of the date of the agreement that the term will
not be extended.
The amended agreement calls for a base salary of not less than $750,000 and
for Mr. Calarco's continued participation in employee benefit plans and other
fringe benefit arrangements substantially as in the past. In the event
Mr. Calarco's employment is terminated by the Company other than for cause,
disability, or death
20
or by Mr. Calarco for good reason (as defined in the agreement), the Company is
obligated to pay Mr. Calarco his salary to the date of termination, incentive
compensation in an amount no less than the bonus paid to him for the prior year
pro-rated to that date, and a lump sum termination payment equal to three times
the sum of his then current salary and the highest bonus paid to him during the
three years preceding his termination, to continue certain employee and fringe
benefits provided under the agreement for a period of three years or until he
obtains other employment and certain other benefits for the life of Mr. Calarco
and his spouse, and to make certain additional payments to cover any excise tax
imposed under the Internal Revenue Code on the amounts payable as a result of
his termination and any legal fees incurred by Mr. Calarco in enforcing the
Company's obligations under the agreement.
EMPLOYMENT AGREEMENTS WITH ALFRED F. INGULLI, WILLIAM A. STEPHENSON AND
GERALD H. FICKENSCHER. The Company has entered into employment agreements with
certain other key management employees, including Messrs. Ingulli, Stephenson
and Fickenscher. Each agreement is operative upon the occurrence of a change in
control (as defined in the agreement) and is intended to encourage the executive
to remain in the employ of the Company by providing the executive with greater
security. Absent a change in control, the agreements do not require the Company
to retain the executive or to pay the executive any specified level of
compensation or benefits except that Messrs. Ingulli and Stephenson have
agreements that require that they be paid severance payments in the event that
they are terminated without cause or they resign for good reason (as defined in
the agreements) during an annually renewable two-year period.
In the event of a change in control, the agreements provide that there will
be no change, without the executive's consent, in the salary, bonus opportunity,
benefits, duties, and location of employment of the executive for a period of
two or three years after the change in control. If, during such period, the
executive's employment is terminated by the Company other than for cause,
disability, or death or the executive resigns for good reason (as defined in the
agreements), the Company will pay the executive his salary to the date of
termination, incentive compensation in an amount no less than the bonus paid to
the executive for the prior year pro-rated to that date, and a lump sum
severance payment equal to two or three times (depending on the executive) the
sum of the executive's base salary and the highest bonus paid to the executive
during the three years preceding the executive's termination and will continue
other employee benefits similar to those provided to the executive prior to the
executive's termination for a period of two or three years or until the
executive's earlier employment with another employer.
21
COMPENSATION OF DIRECTORS
Members of the Board who are not employees of the Company receive the
following for their services:
* an annual retainer of $35,000 (committee chairmen receive an additional
retainer of $5,000); and
* a fee of $12,000 for Board and committee meeting service.
Directors are reimbursed for expenses incurred in attending meetings. In
addition, the Company provides accidental death and travel insurance coverage
for each non-employee director.
Each year non-employee directors may elect to defer all or any portion of
their retainers and fees in the form of shares of the Company's Common Stock
pursuant to the Directors Deferred Compensation Plan.
The Crompton Corporation 1998 Long Term Incentive Plan (the "1998 Plan")
provides for the issuance to non-employee directors on the date of the first
meeting of the Board in the fourth quarter of each year of an option to purchase
up to 20,000 shares of the Company's Common Stock. The exercise price of the
options may not be less than the fair market value of the Company's Common Stock
on the grant date. The options to be granted under the 1998 Plan are
non-qualified options not intended to qualify as incentive stock options under
the Internal Revenue Code of 1986, and may not be exercisable more than
10 years and one month after the date of grant.
Directors who are employees of the Company receive no additional
compensation for services on the Board of Directors.
--------------------------------------------------------------------------------
APPROVAL OF SELECTION
OF INDEPENDENT AUDITOR
--------------------------------------------------------------------------------
The Board of Directors has, subject to approval by the stockholders,
selected the firm of KPMG LLP to act as auditor for the fiscal year 2002. The
Board of Directors recommends a vote FOR approval, and unless otherwise
directed, proxies will be voted in favor of this selection. The affirmative vote
of the holders of a majority of the shares of the Company represented and
entitled to vote at the meeting is required for such approval.
Representatives of KPMG LLP will be present at the annual meeting, with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions raised at the meeting.
22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
----------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and stockholders who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and stockholders who own more than ten percent of
such of the Company's securities are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during fiscal year 2001,
all filings required of its officers, directors and covered stockholders were
made in compliance with applicable SEC regulations.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
As of the date of this statement, the Board of Directors does not know of
any matter other than those referred to in this Proxy Statement as to which
action is expected to be taken at the annual meeting of stockholders.
The shares represented by proxies in the form solicited by the Board of
Directors will be voted at the meeting. Where a choice is specified on the proxy
with respect to a matter to be voted upon, the shares represented by the proxy
will be voted in accordance with the specification so made. If no choice is
specified, such shares will be voted (i) for the election as a director of the
one nominee for directorship named herein, and (ii) in favor of the selection of
KPMG LLP as auditor for fiscal year 2002.
If any business not referred to in this Proxy Statement shall properly come
before the meeting, it is intended that those persons named as proxies will vote
the proxies in accordance with their judgment of the best interests of the
Company and its stockholders.
By Order of the Board of Directors,
[LOGO]
Barry J. Shainman
Secretary
Dated: March 29, 2002
23
APPENDIX A
CROMPTON CORPORATION
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
COMPOSITION: The Board of Directors annually elects, by majority vote of the
directors then in office, the members, not fewer than three in
number, of the Audit Committee. The Board shall designate one member
to serve as chairman of the committee. Audit Committee members shall
meet the requirements of the New York Stock Exchange. All members of
the Audit Committee shall be Independent Directors who are
financially literate, and at least one member of the committee shall
have accounting or related financial management expertise.
FUNCTIONS
AND
AUTHORITY: The functions and authority of the Audit Committee include:
- Meeting periodically with the corporation's independent
auditor to review the scope of the annual audit, policies
relating to internal accounting and auditing procedures and
controls, and the completed annual audit including any
significant comments or recommendations of the auditor
together with the responses of management
- Meeting periodically with management to review the
corporation's major financial risk exposures and the steps
management has taken to monitor and control such exposures
- Reviewing with the corporation's general counsel at least
annually legal matters that may have a material impact on
the financial statements, the corporation's compliance
policies and any significant reports or inquiries received
from regulators or governmental agencies
- Meeting at least annually with the chief financial officer,
the internal auditor and the independent auditor in separate
executive sessions to discuss any matters they believe
should be brought to the attention of the committee
- Exercising general oversight with respect to the adequacy
and effectiveness of the corporation's internal
administrative, business process and accounting controls
A-1
- Reviewing the audited financial statements and, if so
determined by the committee, recommending to the Board that
the audited financial statements be included in the annual
report on Form 10-K
- Preparing annually a report to the shareholders, as required
by the Securities and Exchange Commission, to be included in
the corporation's proxy statement
- Evaluating together with the Board the performance of the
independent auditor and, if so determined by the Audit
Committee, recommending that the Board replace the
independent auditor
- Recommending to the Board each year the selection of the
corporation's independent auditor, which firm is ultimately
accountable to the Audit Committee and the Board
- Reviewing the range of fees of the auditor for both audit
and non-audit services and approving any particular
non-audit services including non-compliance tax services
provided by the independent auditor where the cost of such
services to the corporation exceeds $250,000 or where the
total cost of such services in any one year exceeds
$1,500,000, giving consideration to the possible effect that
providing such non-audit services could have on the
auditor's independence
- Receiving periodic reports from the independent auditor
regarding the independent auditor's independence, discussing
such reports with the independent auditor, and if so
determined by the Audit Committee, recommending that the
Board take appropriate action to satisfy itself of the
independence of the independent auditor
- Discussing with the independent auditor those matters
required to be communicated to audit committees by Statement
of Auditing Standards (SAS) No. 61
- Reviewing significant programs maintained by the corporation
with respect to compliance with law and exercising oversight
of the activities of the Corporate Compliance Committee
- Periodically reporting to the Board concerning the
activities of the committee
- Reviewing this charter on an annual basis and recommending
to the Board appropriate modifications or additions hereto
A-2
It is not the duty of the Audit Committee to plan or conduct audits
or to determine that the corporation's financial statements are
complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and
the independent auditor. Finally, it is not the duty of the Audit
Committee to conduct investigations to assure compliance with laws
and regulations and the corporation's policies and code of conduct.
MEETINGS: The Audit Committee meets three times each year in March, July and
October and, as necessary, at other times during the year. In
addition, in each quarter in which the corporation files or releases
quarterly financial statements, the chairman of the Audit Committee
will meet by telephone or in person with management and the
independent auditor prior to such filing or release to determine
whether there have been any significant changes in the corporation's
accounting principles and whether there are any items required to be
communicated by the independent auditors to the Audit Committee in
accordance with SAS No. 61. Based upon the outcome of this meeting,
the chairman will determine whether or not to convene a meeting of
the Audit Committee prior to the filing or release of the quarterly
financial statements.
A-3
PLEASE MARK
YOUR VOTES AS /X/
INDICATED IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. FOR THE NOMINEE WITHHOLD AUTHORITY
with exceptions noted FOR THE NOMINEE
1. Election of a director: 01 Robert A. Fox to serve as Class II director for / / / /
a term expiring in 2005.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
2. Approval of the selection by the FOR AGAINST ABSTAIN THIS PROXY IS SOLICITED ON BEHALF
Board of KPMG LLP as OF THE BOARD OF DIRECTORS.
independent auditors for 2002. / / / / / /
By checking the box to the right, I consent to future delivery of / /
annual reports, proxy statements, prospectuses and other
materials and shareholder communications electronically via the
Internet at a webpage which will be disclosed to me. I understand
that the Company may no longer distribute printed materials to me
from any future shareholder meeting until such consent is
revoked. I understand that I may revoke my consent at any time by
contacting the Company's transfer agent, Mellon Investor Services
LLC, Ridgefield Park, NJ and that costs normally associated with
electronic delivery, such as usage and telephone charges as well
as any costs I may incur in printing documents, will be my
responsibility.
SIGNATURE _________________________________________________ SIGNATURE ___________________________________ DATE ____________________
NOTE: SIGNATURE SHOULD AGREE WITH NAME STENCILED HEREON. WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE, OR ATTORNEY,
PLEASE GIVE FULL TITLE AS SUCH. FOR JOINT ACCOUNTS OR CO-FIDUCIARIES, ALL JOINT OWNERS OR CO-FIDUCIARIES SHOULD SIGN.
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VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET TELEPHONE MAIL
HTTP://WWW.EPROXY.COM/CK 1-800-435-6710
Use the Internet to vote your Use any touch-tone telephone to Mark, sign and date
proxy. Have your proxy card in OR vote your proxy. Have your proxy OR your proxy card
hand when you access the web card in hand when you call. You will and
site. You will be prompted to enter be prompted to enter your control return it in the
your control number, located in number, located in the box below, enclosed postage-paid
the box below, to create and sub- and then follow the directions given. envelope.
mit an electronic ballot.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY
TELEPHONE, YOU DO NOT NEED TO MAIL BACK
YOUR PROXY CARD.
CROMPTON CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON APRIL 30, 2002, AT THE DOLCE HERITAGE,
522 HERITAGE ROAD, SOUTHBURY, CONNECTICUT, 11:15 A.M.
The undersigned appoints VINCENT A. CALARCO, JOHN T. FERGUSON II and BARRY
J. SHAINMAN or each of them, with power of substitution, proxy and attorney for
the undersigned to vote all shares of stock of Crompton Corporation that the
undersigned is entitled to vote at the Annual Meeting of the Stockholders of
said Corporation to be held on Tuesday, April 30, 2002, at 11:15 a.m. and any
adjournments thereof, with all powers the undersigned would have if present,
upon the proposals set forth on the reverse side and in their discretion on all
matters properly coming before the meeting, including those described in the
Notice and Proxy Statement thereof, receipt of which is acknowledged.
THIS PROXY WILL BE VOTED AS DIRECTED, OR WHERE NO DIRECTION IS GIVEN, WILL
BE VOTED "FOR" PROPOSALS NOS. 1 AND 2. If the nominee for the Board of Directors
named in the Proxy Statement is unavailable to serve, this Proxy will be voted
for such substitute nominee as may be recommended by the Board of Directors. The
Board of Directors is not aware of other matters to come before the meeting.
CONTINUED, AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE
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