OM Group, Inc. DEF 14A
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. )
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
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o Preliminary
Proxy Statement |
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
þ Definitive Proxy
Statement |
o Definitive
Additional Materials |
o Soliciting
Material Pursuant to Section 240.14a-12 |
OM GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by
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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. |
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Form, Schedule or Registration Statement No.: |
OM Group, Inc.
127 Public Square
1500 Key Tower
Cleveland, Ohio 44114-1221
Notice of Annual Meeting of Stockholders
to be Held October 11, 2005
The Annual Meeting of Stockholders of OM Group, Inc. will be
held at the Gillespie Auditorium, 9th Floor, Key Tower, 127
Public Square, Cleveland, Ohio 44114, on Tuesday,
October 11, 2005, at 10:00 a.m., for the following
purposes:
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1. To elect two directors for terms expiring in 2007 and
two directors for terms expiring in 2008; and |
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2. To consider any other business that is properly brought
before the meeting or any adjournment. |
Stockholders of record at the close of business on
August 18, 2005 are entitled to notice of and to vote at
the meeting.
We cordially invite you to attend the meeting. To ensure your
representation at the meeting, please vote promptly by mail,
telephone or the Internet by following the instructions on the
enclosed proxy or voting instruction card, even if you plan to
attend the meeting. Mailing your completed proxy or voting
instruction card, or using our telephone or Internet voting
systems, will not prevent you from voting in person at the
meeting if you wish to do so.
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By Order of the Board of Directors |
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Carolyn J. Buller,
Secretary |
Cleveland, Ohio
September 1, 2005
PROXY STATEMENT
Voting and Meeting Information
What am I voting on?
You will be voting on the election of two directors to serve for
terms expiring at our annual meeting in 2007, and two directors
to serve for terms expiring at our annual meeting in 2008.
We are not aware of any other matters to be presented for a vote
at the meeting.
Who is entitled to vote?
Holders of record of our common stock as of the close of
business on August 18, 2005 are entitled to vote at the
annual meeting. As of that date, we had 28,519,806 outstanding
shares of common stock. We have no other outstanding classes of
stock that are entitled to vote at the annual meeting. Voting
stockholders are entitled to one vote per share. Only those
votes cast for or withheld will be
counted as votes cast with respect to the election of directors.
How do I vote?
You may vote in person at the meeting or through a proxy. To
vote by proxy, you should sign and date each proxy card you
receive and return it in the prepaid envelope. If you are a
registered shareholder, you may vote by telephone or
electronically through the Internet, by following the
instructions included on your proxy card.
What if I hold shares indirectly?
If you hold shares in a stock brokerage account or through a
bank or other nominee, you are considered to be the beneficial
owner of shares held in street name and these proxy
materials are being forwarded to you by your broker or nominee.
You may not vote directly any shares held in street name, but as
the beneficial owner you have the right to direct your broker
how to vote. Under the New York Stock Exchange rules, your
broker is permitted to vote your shares on the election of
directors, even if you do not furnish voting instructions to
your broker.
If your shares are held in street name, you will
need to contact your broker or other nominee to determine
whether you may vote by telephone or electronically through the
Internet.
Can I change my vote?
You have the right to change your vote at any time before votes
are counted at the meeting by any of the following methods:
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notifying us in writing at our corporate offices and to the
attention of our Director-Investor Relations; |
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returning a later-dated proxy card; |
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voting at a later time by telephone or over the Internet; or |
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voting in person at the meeting. |
How many votes must be present to hold the meeting?
Your shares are counted as present at the meeting if you attend
the meeting or if you properly return a proxy by mail or vote by
telephone or through the Internet. In order for us to vote on
matters at the meeting, a majority of our outstanding shares of
common stock as of August 18, 2005 must be present in
person or by proxy at the meeting, which includes shares that
have been voted by telephone or the Internet. This is referred
to as a quorum. Abstentions and broker non-votes will be counted
for purposes of establishing a quorum at the meeting. If a
quorum is not present, the meeting will be adjourned until a
quorum is present.
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How many votes are needed to elect directors?
The nominees for director in each class who receive the greatest
number of for votes will be elected to the open
director positions. Shares not voted will have no impact on the
election of directors. If you sign and return a proxy card or
use the telephone or Internet procedures but do not give voting
instructions, your shares will be voted for the
candidates nominated by the Nominating and Governance Committee
and approved by the Board.
How will voting on any other business be conducted?
We currently do not know of any business to be considered at the
annual meeting other than the election of directors. If any
other business is properly presented at the meeting, your signed
proxy card or use of the telephone or Internet procedures gives
authority to the named proxies to vote your shares on such
matters in their discretion.
Who will count the vote?
Representatives of National City Bank will tabulate the votes
and act as inspectors of election.
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INTRODUCTORY EXPLANATORY NOTE
This proxy statement relates to the annual meetings of our
stockholders for 2004 and 2005 that have been delayed as a
result of the restatement of our consolidated financial
statements for the years 1999-2002 and the first three quarters
of 2003. Due to the combined nature and timing of the annual
meetings, this proxy statement includes information from both
2003 and 2004, as well as selected information from 2005.
The restatement of our consolidated financial statements
initially arose from an independent investigation conducted by
the audit committee of our board of directors related to certain
inventory accounting issues. The investigation, which commenced
in December 2003, was conducted with the assistance of outside
legal counsel and forensic accountants, and involved an
extensive examination of our systems and procedures for valuing
and reporting assets, liabilities and results of operations in
the consolidated financial statements. The investigation
included the review of accounting records, supporting
documentation and e-mail communications, as well as interviews
with numerous current and former employees.
A primary focus of the investigation was adjustments made by or
directed to be made by certain former corporate accounting
personnel as part of the financial statement close process,
after financial results were submitted to corporate from the
operating units. As a result of the investigation, we concluded
that many of these top-side adjustments were not appropriate.
The restatement adjustments included correction of these
entries. We are cooperating with the SECs Division of
Enforcement in its review of the findings of the audit committee
with respect to evidence of accounting irregularities by former
employees. The audit committee investigation concluded there was
no evidence of wrongdoing by current employees. In connection
with the restatement process, which included expanded audit
procedures at a number of locations worldwide, additional
adjustments were identified and recorded in the restated
consolidated financial statements.
The restatement process was completed in March 2005 and the
restated consolidated financial statements are included in our
Form 10-K for the year ended December 31, 2003, which
was filed with the SEC on March 31, 2005. Subsequent to
completion of the restatement process, we undertook and
completed preparation of consolidated financial statements for
2004, which permitted us to file our Forms 10-Q for the
2004 quarterly periods on June 10, 2005 and our
Form 10-K for the year ended December 31, 2004 on
August 22, 2005. The 2004 Form 10-K is being
distributed to stockholders with this proxy statement.
As a result of the issues underlying the audit committee
investigation and the restatement process, as well as our other
activities related to our internal accounting and financial
systems, we have made a number of improvements to our internal
control environment. The most important of these changes are
summarized under Item 9A. Controls and
Procedures in the accompanying 2004 Form 10-K.
We also have implemented a comprehensive corporate governance
structure during the last two years. Various elements of this
corporate governance structure are summarized under
Corporate Governance in this proxy statement.
In addition, we recently have undergone significant changes in
senior management. Most importantly, Joseph M. Scaminace became
our Chief Executive Officer in June 2005. He replaced Frank E.
Butler, who became interim Chief Executive Officer in January
2005 when James P. Mooney, who had been Chief Executive Officer
since 1991, ceased to be employed by us.
Our Board of Directors has undergone changes as well. Lee
Brodeur and Frank Butler retired from the Board in August of
this year after 12 years and 9 years of service,
respectively, and James Mooneys term as a director expires
at this annual meeting. Joseph Scaminace became a director in
June and Chairman of the Board of Directors in August of this
year. Leo Daley, former Chief Financial Officer of Air Products
and Chemicals, Inc., became a director in May of this year. In
addition, we have adopted as a governance principle a
requirement that all directors who are not OMG executives must
meet our independence criteria. Consistent with the adoption of
this governance principle, John Mooney and Markku Toivanen, who
do not meet such criteria, resigned from the Board in August of
this year. Richard W. Blackburn, former Executive Vice President
and General Counsel of Duke Energy Corporation, was appointed by
the Board in August to fill one of the vacant board seats. The
Nominating and Governance Committee intends to seek an
individual who meets our independence criteria to fill the
remaining vacancy.
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We also have been subject to shareholder class action and
derivative lawsuits filed in November 2002 relating to the
decline in our stock price following our third quarter 2002
earnings announcement. We have entered into a final settlement
agreement with respect to the shareholder class action lawsuits
and an agreement in principle to settle the shareholder
derivative lawsuits. These lawsuits are described under
Item 3. Legal Proceedings in the accompanying
2004 Form 10-K.
CORPORATE GOVERNANCE
In response to the enactment of the Sarbanes-Oxley Act of 2002,
the adoption of new corporate governance listing standards by
the NYSE and the issues underlying the restatement process, we
have implemented a comprehensive corporate governance structure
over the last two years. We have strengthened our policies and
performance in the area of corporate governance in the following
ways:
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Our Corporate Governance Principles meet or exceed the standards
set forth in Section 303A of the NYSE listing standards.
Our Corporate Governance Principles currently require a majority
of independent directors, provide for a lead independent
director if the chairman of the board is not independent and
require executive sessions of independent directors in
connection with each Board meeting. Lead independent director
Katharine L. Plourde presides at those executive sessions. Our
independent directors meet in executive session during each
Board meeting. You may contact the lead independent director or
the independent directors as a group by sending a letter marked
Confidential and addressed to Lead Independent
Director, OM Group, Inc. c/o Carolyn Buller, Secretary,
1500 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304. |
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We adopted independence criteria that our directors must meet in
order to be deemed independent by the Board. These
independence criteria incorporate and exceed the NYSE
independence requirements and are summarized under
Election of Directors Director
Independence in this proxy statement. |
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Members of our Human Resources staff traveled to our facilities
worldwide to introduce a new Code of Conduct and Ethics. This
Code applies to directors, officers and all employees. We are
working to enhance our training programs regarding our ethics
and compliance policies and expectations. |
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We also formed a Compliance and Ethics Committee to coordinate
company-wide initiatives to promote an ethical culture and to
educate all employees concerning the law and our expectations.
This committee is comprised of five high-level functional and
regional members of management including the director of
internal audit and legal counsel. |
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In accordance with the requirements of the SEC and the NYSE, we
have created fully independent Audit, Nominating and Governance,
and Compensation Committees (See Election of
Directors Committees and Meetings of the Board of
Directors). |
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We implemented a comprehensive compensation policy that sets
goals for the executive compensation program and parameters for
determining compensation levels. |
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The Audit Committee adopted a policy for the receipt, retention
and prompt resolution of complaints relating to accounting,
internal accounting controls, suspected securities fraud or
violations of ethics policies and instituted formal procedures
for the pre-approval of engagements of the independent auditors. |
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We instituted three procedures by which employees can report
anonymously suspected illegal or unethical behavior, including
accounting issues, either to a toll free help line, to the
www.mysafeworkplace.com web site or to the Board in writing. |
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We are committed to maintaining and expanding our corporate
governance structure as we deem necessary to ensure that our
strong ethics and compliance policies continue. |
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ELECTION OF DIRECTORS
Our authorized number of directors is presently fixed at seven,
divided into three classes, with two classes having two members
and one class having three members. Mr. James P. Mooney is
not standing for re-election and effective at this annual
meeting our authorized number of directors will be reduced to
six.
Generally, our directors are elected to serve three-year terms,
so that the term of office of one class of directors expires at
each annual meeting. As a result of the restatement of prior
year consolidated financial statements and the delay in holding
our annual meeting, the terms of two classes of directors will
be expiring at our upcoming annual meeting. Accordingly, we will
be electing two directors for terms expiring at our annual
meeting in 2007 and two directors for terms expiring at our
annual meeting in 2008. Messrs. John Mooney and Toivanen,
whose terms were to expire at the 2006 annual meeting, recently
resigned in accordance with our new governance principle
requiring all non-OMG executive directors to meet our
independence criteria. Richard W. Blackburn was appointed by the
Board in August to fill the unexpired term of one of those
vacancies. We intend to seek an independent director to fill the
remaining vacancy.
The Nominating and Governance Committee has recommended, and the
Board of Directors has approved, the nomination of the following
two people for election as directors for terms expiring at our
annual meeting in 2007:
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Leo J. Daley |
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Katharine L. Plourde |
and the following two people for election as directors for terms
expiring at our annual meeting in 2008:
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William J. Reidy |
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Joseph M. Scaminace |
If these nominees become unavailable for election, the
accompanying proxy may be voted for a substitute, or in favor of
holding a vacancy to be filled by the directors. We have no
reason to believe that the nominees will be unavailable. The
accompanying proxy may be voted for up to the number of nominees
named and the nominees receiving the largest number of votes
will be elected to the director positions to be filled. Each of
the nominees is currently a director.
The following information is provided regarding each nominee for
election as a director and the continuing director.
Nominees for Election as directors for terms expiring at our
annual meeting in 2007
Leo J. Daley, age 59, has been a director of OMG
since May 2005. Mr. Daley retired from Air Products and
Chemicals, Inc. in 2003 after 23 years at that company. For
the last four years at the company, Mr. Daley was the vice
president, finance and chief financial officer. Mr. Daley
has served on a number of civic and nonprofit boards, including
the board of directors of Penn State Universitys Smeal
College. Mr. Daley received a B.S. degree in Accounting
from Penn State University and M.B.A. in Finance from Widener
University. If elected, Mr. Daleys term will expire
in 2007.
Katharine L. Plourde, age 52, has been a director of
OMG since 2002. Ms. Plourde was a Principal and analyst at
the investment banking firm of Donaldson, Lufkin &
Jenrette, Inc., New York, New York, until November 1997. Since
that time she has engaged in private investing. Ms. Plourde
is a director of Pall Corporation and serves as a director of a
private corporation. Ms. Plourde received a B.A. degree in
English Literature from Barnard College at Columbia University
and M.B.A. in Finance from Fordham University. If elected,
Ms. Plourdes term will expire in 2007.
Nominees for Election as directors for terms expiring at our
annual meeting in 2008
William J. Reidy, age 63, has been a director of OMG
since 2002. Mr. Reidy, a CPA, was the managing partner of
the Northeast Ohio practice of PricewaterhouseCoopers LLP. He
retired from PricewaterhouseCoopers in 1999 after a 35-year
career with the firm. In 1980-1981, Mr. Reidy left the firm
for
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two years to serve as the first director of finance for
Clevelands then newly elected Mayor George V. Voinovich.
Mr. Reidy is a graduate of Leadership Cleveland, and he
currently serves on the boards of several nonprofit
organizations including Cleveland Clinic Western Region,
Cleveland Initiative for Education and Citizens League Research
Institute. If elected, Mr. Reidys term will expire in
2008.
Joseph M. Scaminace, age 52, has been a director and
Chief Executive Officer of OMG since June 2005 and Chairman of
the Board of Directors since August 2005. Mr. Scaminace was
the president, chief operating officer and a board member of The
Sherwin-Williams Company since 1999. Mr. Scaminace received
a B.S. degree in Economics from University of Dayton and
received his M.B.A. from Weatherhead School of Management at
Case Western Reserve University. Mr. Scaminace currently is
a member of several boards of directors, including Parker
Hannifin Corporation, the Boler Company and The Cleveland Clinic
Foundation. If elected, Mr. Scaminaces term will
expire in 2008. Pursuant to the terms of his employment
agreement as our Chief Executive Officer, we agreed to nominate
Mr. Scaminace as a director for a term expiring at our
annual meeting in 2008.
Director Whose Term of Office Will Continue After the
Meeting:
Richard W. Blackburn, age 63, has been a director of
the Company since August 2005. Mr. Blackburn retired from
Duke Energy Corporation in 2004 after six years as the executive
vice president and general counsel, the last year of which he
was also the chief administrative officer. Mr. Blackburn is
a director of Enesco Group, Inc., a global marketer of porcelain
and cold-cast collectibles, and is the chair of the board of
advisors of George Washington University Law School and a
trustee at the Massachusetts Eye and Ear Infirmary and George
Washington University. Mr. Blackburn received a B.A. degree
from Michigan State University and a law degree from George
Washington University Law School. Mr. Blackburns term
will expire in 2006.
Director Independence
In addition to the independence criteria under the NYSE listing
standards, our Board of Directors has adopted the following
standards to determine director independence under our Corporate
Governance Principles.
A director will not be considered independent if he or she:
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has been employed by OMG or our subsidiaries in an executive
capacity within two years immediately prior to the annual
meeting at which he or she will be voted upon; |
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is a significant advisor or consultant to OMG or our
subsidiaries or is affiliated with a company or firm that is; |
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is affiliated with a significant customer or supplier of OMG or
our subsidiaries; |
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has significant personal service contracts with OMG or our
subsidiaries; |
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is affiliated with tax-exempt entities that receive significant
contributions from OMG or our subsidiaries; or |
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is a spouse, parent, mother-in-law, father-in-law,
sister-in-law, brother-in-law, sibling or child of any person
who would not be considered independent under the criteria
listed above. |
The Board has determined that Richard W. Blackburn, Leo J.
Daley, Katharine L. Plourde and William J. Reidy meet these
standards of independence.
Committees and Meetings of the Board of Directors
Our Board of Directors met 9 times in 2004 and 12 times in 2003.
The Board has a standing Audit Committee, Compensation
Committee, and Nominating and Governance Committee, each
composed solely of independent directors as defined by the NYSE
listing standards and our Corporate Governance Principles.
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During 2004 and 2003, each director attended at least 75% of the
meetings of the Board of Directors and those committees on which
he or she served.
The Audit Committee, currently composed of Ms. Plourde and
Messrs. Daley and Reidy, met 22 times in 2004 and 6 times
in 2003. Mr. Reidy is the committee chairman. The committee
is responsible for:
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appointing our independent auditors and monitoring our financial
reporting process and internal control system; |
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reviewing and approving in advance any non-audit services
provided by the independent auditor; |
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overseeing the internal audit and risk management functions; and |
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recording, reviewing and resolving as appropriate concerns
reported to us regarding accounting, auditing matters or
suspected fraud. |
In performing its functions, the Audit Committee acts in an
oversight capacity for our management processes and systems,
internal control structure, financial reporting and risk
management. It is not responsible for preparing or assuring the
accuracy of our financial statements or filings, or conducting
audits of financial statements. A copy of the committees
current charter is attached as an exhibit to this proxy
statement. Each member of the committee is
independent as defined by Rule 10A-3 of the
Securities Exchange Act of 1934. The Board had determined that
each committee member is financially literate and has designated
each of Mr. Reidy and Mr. Daley as an Audit Committee
financial expert. The Audit Committees report can be found
under Executive Compensation in this proxy statement.
The Compensation Committee, currently composed of
Ms. Plourde and Messrs. Daley and Reidy, met five
times in 2004 and three times in 2003. Mr. Daley is the
committee chairman. The primary functions of the Compensation
Committee are:
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to consider and authorize the compensation philosophy for
OMGs personnel; |
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to review and evaluate the chief executive officers
performance in light of corporate goals and objectives and,
together with the outside directors, set the chief executive
officers compensation and approve perquisites; |
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to review and authorize rates of compensation for other
executive officers; |
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to designate those employees who will receive grants of stock
options and other stock awards under our 1998 Long-Term
Incentive Compensation Plan and 2002 Stock Incentive Plan,
together with the type and size of such grants; and |
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to determine the bonus levels for key executives and middle
management employees under our bonus program. |
The Compensation Committees report can be found under
Executive Compensation in this proxy statement.
The Nominating and Governance Committee, currently composed of
Ms. Plourde and Messrs. Daley and Reidy, met one time
in 2004 and four times in 2003. Ms. Plourde is the
committee chair.
The Nominating and Governance Committee is responsible for:
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recommending to the Board corporate governance principles; |
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overseeing adherence to the corporate governance principles
adopted by the Board; |
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recommending to the Board criteria and qualifications for new
Board members; |
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recommending to the Board nominees for appointment or election
as directors; |
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recommending to the Board the establishment of
committees; and |
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recommending to the Board the composition of committees and the
chairs of each. |
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In its role as the nominating body for the Board, the committee
reviews the credentials of potential director candidates
(including potential candidates recommended by stockholders) and
conducts interviews and makes formal recommendations to the
Board for the annual and any interim election of directors. In
making its recommendations, the committee considers a variety of
factors, including skills, diversity, experience with business
and other organizations of comparable size, the interplay of the
candidates experience with the familiarity and background
of other Board members, and the extent to which the candidate
would be a desirable addition to the Board and any committees of
the Board. Other than the foregoing, there are no stated minimum
criteria for director nominees, although the committee may also
consider such other factors as it deems appropriate and in the
best interests of OMG and our shareholders.
The committee has retained a third-party search firm to assist
in the identification of director candidates. In addition, the
committee identifies nominees for director through discussions
with the directors or others that may come in contact with
qualified persons.
The committee will consider candidates for director who are
recommended by stockholders. Stockholder recommendations should
be submitted in writing to: Chair of the Nominating and
Governance Committee, OM Group, Inc., 1500 Key Tower, 127 Public
Square, Cleveland, Ohio 44114-1304 USA. The recommendation
letter shall include the stockholders name, address and
the number of shares of stock owned and the candidates
name, age, business address, residence address, and principal
occupation, as well as the number of shares of OMG stock owned
by the candidate. The recommendation letter should provide all
of the information that would need to be disclosed in the
solicitation of proxies for the election of directors under
Federal securities laws. Finally, the stockholder should also
submit the recommended candidates written consent to be
elected and commitment to serve if elected. The committee may
also require a candidate to furnish additional information
regarding his or her eligibility and qualifications. A complete
copy of our Policies and Procedures for Stockholders to Propose
Candidates for Directors is available by writing to our
Nominating and Governance Committee Chair.
Code of Conduct and Ethics, Corporate Governance Principles
and Committee Charters
We have adopted a Code of Conduct and Ethics that applies to all
of our employees, including the chief executive officer, the
chief financial officer and the controller. The Code of Conduct
and Ethics, our Corporate Governance Principles and all
committee charters are posted on the Corporate Governance
portion of our website (www.omgi.com). A copy of any of these
documents is available in print free of charge to any
stockholder who requests a copy, by writing to OM Group, Inc.,
127 Public Square, 1500 Key Tower, Cleveland, Ohio 44114-1221
USA, Attention: Greg Griffith, Director of Investor Relations.
Compensation of Directors
Directors who also are executive officers of OMG receive no
additional compensation for serving as directors. Outside
directors currently receive an annual directors fee of
$100,000. The chair of the Audit Committee receives an
additional annual payment of $20,000, and the chairs of the
Compensation Committee and the Nominating and Governance
Committee each receives an additional annual payment of $10,000.
Any non-executive Chairman of the Board of Directors receives an
additional annual payment of $75,000. During 2005, all of these
fees are expected to be paid in cash. In future years, it is
intended that a substantial portion of the outside
directors annual fee will be paid in equity of OMG.
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EXECUTIVE OFFICERS
Set forth below is the name, age and positions held by each of
the Companys executive officers, as well as their business
experience during the past five years. Years indicate the year
the individual was named to the indicated position.
Joseph M. Scaminace 52
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Chairman, August 2005 |
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Chief Executive Officer, June 2005 |
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President, Chief Operating Officer and Board Member, The
Sherwin-Williams Company 1999-2005 |
R. Louis Schneeberger 50
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Chief Financial Officer, February 2004 |
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Chairman, Royal Appliance, 1995-2003 |
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Chief Financial Officer and Board Member, Olympic Steel,
1987-2000 |
Marcus P. Bak 42
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Vice President and General Manager, Nickel Group, January 2003 |
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President, OMG Harjavalta Nickel Oy, October 2002
January 2003 |
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Vice President and General Manager, OMG Powdered Metals, January
2000 October 2002 |
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Vice President-Operations, OMG Americas, December
1997 January 2000 |
Stephen D. Dunmead 42
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Vice President and General Manager, Cobalt Group, August 2003 |
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Corporate Vice President of Technology, 2000 August
2003 |
|
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Director of Research & Development, OMG Americas,
1998 2000 |
SECURITY OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning the number
of shares of our common stock beneficially owned by our current
directors, the named executive officers included in the 2004
summary compensation table in this proxy statement, and all our
directors and executive officers as a group as of
August 30, 2005. As of August 30, 2005, no director or
executive officer beneficially owned more than 1% of our
outstanding shares of common stock and all directors and
executive officers as a group beneficially owned approximately
1.0% of our outstanding shares. The totals shown below for each
person and for the group include shares held personally, shares
held under our Profit-Sharing Plan, and shares acquirable within
60 days of August 30, 2005 by the exercise of stock
options granted under our equity compensation plans.
9
Amount and Nature of Beneficial Ownership (1)
as of August 30, 2005
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Name of |
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Direct or Indirect | |
|
Profit-Sharing | |
|
Exercisable | |
|
|
Beneficial Owner |
|
Ownership | |
|
Plan | |
|
Options | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
Marcus P. Bak
|
|
|
360 |
|
|
|
1,670 |
|
|
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43,440 |
|
|
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45,470 |
|
Richard W. Blackburn
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Leo J. Daley
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|
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Stephen D. Dunmead
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2,000 |
|
|
|
210 |
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|
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16,000 |
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18,210 |
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Thomas R. Miklich
|
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21,000 |
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21,000 |
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James P. Mooney
|
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31,986 |
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1,723 |
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33,709 |
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Katharine L. Plourde
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1,000 |
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2,700 |
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3,700 |
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William J. Reidy
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3,220 |
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3,220 |
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Joseph M. Scaminace
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166,194 |
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166,194 |
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R. Louis Schneeberger
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|
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|
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5,000 |
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|
|
5,000 |
|
All Directors and Executive Officers as a Group (consisting of
10 persons)
|
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222,540 |
|
|
|
3,603 |
|
|
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70,360 |
|
|
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296,503 |
|
|
|
(1) |
Each person has sole voting and investment power with respect to
all shares shown. |
The following table sets forth information concerning each
person known to us to be the beneficial owner of more than 5% of
our outstanding common stock as of December 31, 2004, which
is the latest date for which we know such information.
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Name and Address |
|
Amount and Nature of | |
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of Beneficial Owner |
|
Beneficial Ownership | |
|
Percent of Class | |
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| |
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| |
FMR Corporation
|
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2,750,000 |
|
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9.7 |
% |
|
82 Devonshire Street
Boston, Massachusetts 02109(1) |
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LSV Asset Management
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1,744,822 |
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6.1 |
% |
|
1 North Wacker Dr. Suite 4000
Chicago, Illinois 60606(2) |
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Barclays Global Investors, N.A.
|
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|
1,735,042 |
|
|
|
6.1 |
% |
|
45 Fremont Street
San Francisco, CA 94105(3) |
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(1) |
Information regarding share ownership was obtained from the
Schedule 13G filed jointly on February 14, 2005 by FMR
Corp., Edward C. Johnson 3d, Abigail P. Johnson,
Fidelity Management & Research Company
(Fidelity) and Fidelity Low Priced Stock Fund. The
ownership of Fidelity Low Priced Stock Fund amounted to
2,750,000 shares or 9.699% of the common stock outstanding.
Fidelity Low Priced Stock Fund has its principal business office
at 82 Devonshire Street, Boston, Massachusetts 02109.
Edward C. Johnson 3d, FMR Corp., through its control
of Fidelity, and the Fidelity Funds each has sole power to
dispose of the 2,750,000 shares owned by the Fidelity
Funds. Neither FMR Corp. nor Edward C. Johnson 3d,
Chairman of FMR Corp., has the sole power to vote or direct the
voting of the shares owned directly by the Fidelity Funds, which
power resides with the Funds Boards of Trustees. Fidelity
carries out the voting of the shares under written guidelines
established by the Funds Boards of Trustees. Members of
the Edward C. Johnson 3d family are the predominant
owners of Class B shares of common stock of FMR Corp.,
representing approximately 49% of the voting power of FMR Corp.
Mr. Johnson 3d owns 12.0% and Abigail Johnson owns 24.5% of
the aggregate outstanding voting stock of FMR Corp.
Mr. Johnson 3d is Chairman of FMR Corp. and
Abigail P. Johnson is a Director of FMR Corp. The Johnson
family group and all other Class B shareholders have
entered into a shareholders voting agreement under which
all Class B shares will be voted in accordance with the
majority vote of Class B shares. Accordingly, through their
ownership of voting common stock and the execution of the |
10
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|
shareholders voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940,
to form a controlling group with respect to FMR Corp. |
|
(2) |
Information regarding share ownership was obtained from the
Schedule 13G filed on February 11, 2005 by LSV Asset
Management, which is an investment advisor registered under the
Investment Advisors Act of 1940. LSV Asset Management has sole
voting power with respect to 1,134,522 of the shares listed
above and has sole dispositive power with respect to all
1,744,822 shares shown. |
|
(3) |
Information regarding share ownership was obtained from the
Schedule 13G filed jointly on February 14, 2005 by
Barclays Global Investors, NA., Barclays Global
Fund Advisors, Barclays Global Investors, Ltd., Barclays
Global Investors Japan Trust and Banking Company Limited,
Barclays Life Assurance Company Limited, Barclays Bank Plc,
Barclays Capital Securities Limited, Barclays Capital Inc.,
Barclays Private Bank & Trust (Isle of Man) Limited,
Barclays Private Bank and Trust (Jersey) Limited, Barclays Bank
Trust Company Limited, Barclays Bank (Suisse) SA, Barclays
Private Bank Limited, Bronco (Barclays Cayman) Limited, Palomino
Limited, and HYMF Limited. Barclays Global Investors, NA. has
sole voting power with respect to 760,628 of the shares shown
above and sole dispositive power with respect to 933,169 of the
shares shown. Barclays Global Fund Advisors, which has its
principal business address at 45 Fremont Street,
San Francisco, CA 94105, has sole voting power with respect
to 760,106 of the shares shown above and sole dispositive power
with respect to 763,673 of the shares shown. Barclays Bank Plc,
which has its principal business address at 54 Lombard Street,
London, England EC3P 3AH, has sole voting and dispositive power
with respect to 17,100 of the shares shown above. Palomino
Limited, which has its principal business address at Walker
House Mary Street, P.O. Box 908 GT, George Town, Grand
Cayman (Cayman Islands), has sole voting and dispositive power
with respect to 21,100 of the shares shown above. |
11
EXECUTIVE COMPENSATION
Summary Compensation Tables
The following two tables set forth all compensation earned and
awarded to our Chief Executive Officer and our four other most
highly compensated executive officers, who are referred to
collectively as our named executive officers, in
2004, 2003 and 2002, and 2003, 2002 and 2001, respectively.
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|
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|
Annual Compensation | |
|
Long-Term Compensation |
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|
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| |
|
|
|
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|
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|
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|
Awards | |
|
Payouts |
|
|
|
|
|
|
|
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| |
|
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|
|
|
|
|
|
|
|
Restricted | |
|
Securities | |
|
|
|
|
Name and |
|
|
|
|
|
Other Annual | |
|
Stock | |
|
Underlying Stock | |
|
LTIP |
|
All Other | |
Principal Position |
|
Year | |
|
Salary | |
|
Bonus(1) | |
|
Compensation(2) | |
|
Awards(3) | |
|
Options (Shares) | |
|
Payouts |
|
Compensation(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
| |
James P. Mooney
|
|
|
2004 |
|
|
$ |
1,140,000 |
|
|
|
|
|
|
$ |
87,060 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
350,456 |
|
Chairman & CEO(5)
|
|
|
2003 |
|
|
|
1,140,000 |
|
|
$ |
570,000 |
|
|
|
86,145 |
|
|
$ |
570,000 |
|
|
|
|
|
|
|
|
|
|
|
179,456 |
|
|
|
|
2002 |
|
|
|
1,140,000 |
|
|
|
|
|
|
|
68,323 |
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
12,950 |
|
R. Louis Schneeberger
|
|
|
2004 |
|
|
|
311,863 |
|
|
|
210,000 |
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
|
|
|
|
46,779 |
|
CFO(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcus P. Bak
|
|
|
2004 |
|
|
|
325,000 |
|
|
|
162,500 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
72,833 |
|
Vice President and General
|
|
|
2003 |
|
|
|
243,008 |
|
|
|
120,000 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
36,645 |
|
|
Manager Nickel(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen D. Dunmead
|
|
|
2004 |
|
|
|
330,000 |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
65,250 |
|
Vice President and General
|
|
|
2003 |
|
|
|
189,827 |
|
|
|
105,000 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
28,474 |
|
|
Manager Cobalt(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Miklich
|
|
|
2004 |
|
|
|
197,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former CFO(5)
|
|
|
2003 |
|
|
|
475,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,523,750 |
|
|
|
|
|
2002 |
|
|
|
316,667 |
|
|
|
156,000 |
|
|
|
106,254 |
|
|
|
1,860,600 |
|
|
|
21,000 |
|
|
|
|
|
|
|
107,840 |
|
|
|
(1) |
Amount awarded to the named executive officer under our bonus
program for key executives and middle management. |
|
(2) |
For 2004 and 2003, the amounts in this column reflect
Mr. Mooneys personal use of our aircraft of $50,060
and $49,426, respectively, and a tax gross-up related to
Mr. Mooneys personal use of our aircraft of $37,000
and $36,719, respectively. For 2002, the amounts in this column
reflect Mr. Mooneys personal use of our aircraft and
a tax gross-up related to an inducement payment made to
Mr. Miklich in connection with entering into his employment
agreement. |
|
(3) |
For 2003, we awarded Mr. Mooney 21,789 shares of
restricted stock. The dollar amount shown for Mr. Mooney
equals the 21,789 shares granted multiplied by the stock
price on the grant date ($26.16). Mr. Mooneys
restricted stock vested on January 11, 2005, the date upon
which he ceased to be employed by us. For 2002, pursuant to
Mr. Miklichs employment agreement with us, we awarded
him 28,000 shares of restricted stock in connection with
the commencement of his employment. The dollar amount shown for
Mr. Miklich equals the 28,000 shares granted
multiplied by the stock price on the grant date ($66.45). All of
Mr. Miklichs restricted stock vested on July 31,
2003. As of December 31, 2004, Mr. Mooney held
21,789 shares of restricted stock with a value of $683,511. |
|
(4) |
For 2004, this column includes amounts contributed under our
qualified Profit-Sharing Plan (Mr. Mooney
$30,750; Mr. Schneeberger $30,750;
Mr. Bak $30,750; and
Mr. Dunmead $30,750), amounts accrued under the
OM Group, Inc. Benefit Restoration Plan
(Mr. Mooney $311,250;
Mr. Schneeberger $16,029;
Mr. Bak $41,889; and
Mr. Dunmead $34,500) and the insurance premiums
paid by us with respect to supplemental life insurance
(Mr. Mooney $8,456 and Mr. Bak
$194). |
|
(5) |
Mr. Schneeberger joined us as an executive officer on
February 17, 2004. Mr. Bak and Mr. Dunmead became
executive officers on October 23, 2003. Mr. Miklich
joined us as an executive officer on May 1, 2002 and ceased
to be employed by us effective April 30, 2004.
Mr. Mooney ceased to be employed by us effective
January 11, 2005. |
12
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|
|
|
|
|
Annual Compensation | |
|
Long-Term Compensation |
|
|
|
|
|
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| |
|
|
|
|
|
|
|
|
|
|
Awards | |
|
Payouts |
|
|
|
|
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|
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| |
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|
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|
|
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|
|
|
Restricted | |
|
Securities | |
|
|
|
|
Name and |
|
|
|
|
|
Other Annual | |
|
Stock | |
|
Underlying Stock | |
|
LTIP |
|
All Other | |
Principal Position |
|
Year | |
|
Salary | |
|
Bonus(1) | |
|
Compensation(2) | |
|
Awards(3) | |
|
Options (Shares) | |
|
Payouts |
|
Compensation(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
| |
James P. Mooney
|
|
|
2003 |
|
|
$ |
1,140,000 |
|
|
$ |
570,000 |
|
|
$ |
86,145 |
|
|
$ |
570,000 |
|
|
|
|
|
|
$ |
|
|
|
$ |
179,456 |
|
Chairman & CEO(5) |
|
|
2002 |
|
|
|
1,140,000 |
|
|
|
|
|
|
|
68,323 |
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
12,950 |
|
|
|
|
2001 |
|
|
|
785,500 |
|
|
|
1,140,000 |
|
|
|
|
|
|
|
1,776,000 |
|
|
|
10,000 |
|
|
|
|
|
|
|
274,200 |
|
Thomas R. Miklich
|
|
|
2003 |
|
|
|
475,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,523,750 |
|
CFO(5) |
|
|
2002 |
|
|
|
316,667 |
|
|
|
156,000 |
|
|
|
106,254 |
|
|
|
1,860,600 |
|
|
|
21,000 |
|
|
|
|
|
|
|
107,840 |
|
Marcus P. Bak
|
|
|
2003 |
|
|
|
243,008 |
|
|
|
120,000 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
36,645 |
|
Vice President and General Manager Nickel(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen D. Dunmead
|
|
|
2003 |
|
|
|
189,827 |
|
|
|
105,000 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
28,474 |
|
Vice President and General Manager Cobalt(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Scott
|
|
|
2003 |
|
|
|
253,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
959,744 |
|
Former Vice President,
|
|
|
2002 |
|
|
|
380,000 |
|
|
|
95,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,100 |
|
|
General Counsel & Secretary(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Amount awarded to the named executive officer under our bonus
program for key executives and middle management. |
|
(2) |
For 2003, the amount in this column reflects
Mr. Mooneys personal use of our aircraft of $49,426
and a tax gross-up related to his personal use of our aircraft
of $36,719. For 2002, the amounts in this column reflect
Mr. Mooneys personal use of our aircraft and a tax
gross-up related to an inducement payment made to
Mr. Miklich in connection with entering into his employment
agreement. |
|
(3) |
For 2003, we awarded Mr. Mooney 21,789 shares of
restricted stock. The dollar amount shown for Mr. Mooney
equals the 21,789 shares granted multiplied by the stock
price on the grant date ($26.16). Mr. Mooneys
restricted stock vested on January 11, 2005, the date upon
which he ceased to be employed by us. For 2002, pursuant to
Mr. Miklichs employment agreement with us, we awarded
him 28,000 shares of restricted stock in connection with
the commencement of his employment. The dollar amount shown for
Mr. Miklich equals the 28,000 shares granted
multiplied by the stock price on the grant date ($66.45). All of
Mr. Miklichs restricted stock vested on July 31,
2003. The dollar amount shown in this column for Mr. Mooney
for 2001 equals the number of shares of restricted stock granted
(30,000 shares) multiplied by the stock price on the grant
date ($59.20). One-third of the restricted stock awards granted
in 2001 to Mr. Mooney vested on each of December 31,
2002, December 31, 2003, and December 31, 2004. As of
December 31, 2003, Mr. Mooney held 10,000 shares
of restricted stock with a value of $592,000. |
|
(4) |
For 2003, this column includes amounts contributed under our
qualified Profit-Sharing Plan (Mr. Mooney
$30,000; Mr. Miklich $30,000;
Mr. Bak $30,000; and
Mr. Dunmead $28,474), amounts accrued under the
OM Group, Inc. Benefit Restoration Plan
(Mr. Mooney $141,000 and
Mr. Bak $6,451) and the insurance premiums paid
by us with respect to supplemental life insurance
(Mr. Mooney $8,456 and Mr. Bak
$194). For Mr. Miklich, this column also includes
$2,493,750 payable under a separation agreement in connection
with his cessation of employment us effective April 30,
2004. For Mr. Scott, this column reflects amounts payable
under a separation agreement in connection with his cessation of
employment with us effective August 5, 2003. These
separation agreements are summarized under Employment and
Separation Agreements below. |
|
(5) |
Messrs. Bak and Dunmead became executive officers on
October 23, 2003. Mr. Scott became an executive
officer on February 11, 2002, and he continued as an
executive officer until his cessation of employment with us on
August 5, 2003. Mr. Miklich joined us as an executive
officer on May 1, 2002 and ceased to be employed by us
effective April 30, 2004. Mr. Mooney ceased to be
employed by us effective January 11, 2005. |
13
Option Grants in the Last Two Fiscal Years
The following tables set forth additional information concerning
grants of stock options shown in the summary compensation tables
for fiscal years 2004 and 2003. These options to purchase our
common stock were granted to the named executive officers under
our 1998 Long-Term Incentive Compensation Plan.
Messrs. Schneebergers, Dunmeads and Baks
stock options have a 10-year term and become exercisable in
equal annual increments over the first three years following the
grant. The option price for these stock options is the closing
sale price of our common stock on the date of grant. No stock
appreciation rights were granted in 2004 or 2003.
Option Grants in 2004
|
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|
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|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
Individual Grants | |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Percentage | |
|
|
|
Potential Realizable Value | |
|
|
Number of | |
|
of Total | |
|
|
|
at Assumed Annual Rates | |
|
|
Securities | |
|
Options | |
|
|
|
of Stock Appreciation for | |
|
|
Underlying | |
|
Granted to | |
|
|
|
Option Term | |
|
|
Options | |
|
Employees | |
|
Exercise or | |
|
Expiration | |
|
| |
Name |
|
Granted | |
|
in 2004 | |
|
Base Price | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
James P. Mooney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Louis Schneeberger
|
|
|
45,000 |
|
|
|
13 |
% |
|
$ |
31.38 |
|
|
|
11/8/2014 |
|
|
$ |
885,137 |
|
|
$ |
2,243,149 |
|
Marcus P. Bak
|
|
|
30,000 |
|
|
|
9 |
% |
|
$ |
31.38 |
|
|
|
11/8/2014 |
|
|
|
592,041 |
|
|
|
1,500,349 |
|
Stephen D. Dunmead
|
|
|
30,000 |
|
|
|
9 |
% |
|
$ |
31.38 |
|
|
|
11/8/2014 |
|
|
|
592,041 |
|
|
|
1,500,349 |
|
Thomas R. Miklich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Grants in 2003
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Percentage | |
|
|
|
Potential Realizable Value | |
|
|
Number of | |
|
of Total | |
|
|
|
at Assumed Annual Rates | |
|
|
Securities | |
|
Options | |
|
|
|
of Stock Appreciation for | |
|
|
Underlying | |
|
Granted to | |
|
|
|
Option Term | |
|
|
Options | |
|
Employees | |
|
Exercise or | |
|
Expiration | |
|
| |
Name |
|
Granted | |
|
in 2003 | |
|
Base Price | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
James P. Mooney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Miklich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcus P. Bak
|
|
|
30,000 |
|
|
|
10 |
% |
|
$ |
18.22 |
|
|
|
11/3/2013 |
|
|
$ |
343,800 |
|
|
$ |
871,200 |
|
Stephen D. Dunmead
|
|
|
30,000 |
|
|
|
10 |
% |
|
$ |
18.22 |
|
|
|
11/3/2013 |
|
|
|
343,800 |
|
|
|
871,200 |
|
Michael J. Scott
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregated Option Exercises in the Last Two Fiscal Years and
Fiscal Year-End Option Values
The following two tables show information concerning the
exercise of stock options by each of the named executive
officers during 2004 and 2003 and the number and value of
unexercised stock options, whether or not exercisable, as of
December 31, 2004 and December 31, 2003, respectively.
14
2004
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
|
|
Underlying Unexercised | |
|
Value of Unexercised In-the- | |
|
|
Shares | |
|
|
|
Options at 12/31/04 | |
|
Money Options at 12/31/04(1) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercised | |
|
Realized | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
James P. Mooney
|
|
|
|
|
|
|
|
|
|
|
532,554 |
(2) |
|
|
|
|
|
$ |
2,137,001 |
|
|
|
|
|
R. Louis Schneeberger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
|
|
|
$ |
60,750 |
|
Marcus P. Bak
|
|
|
|
|
|
|
|
|
|
|
43,440 |
|
|
|
50,000 |
|
|
|
158,905 |
|
|
|
315,200 |
|
Stephen D. Dunmead
|
|
|
|
|
|
|
|
|
|
|
16,000 |
|
|
|
50,000 |
|
|
|
142,000 |
|
|
|
315,200 |
|
Thomas R. Miklich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
An option is considered in-the-money when the fair market value
of the shares is greater than the exercise price of the option. |
|
(2) |
Includes 392,554 shares subject to stock options that were
transferred in accordance with the terms of our 1998 Long-Term
Incentive Compensation Plan to a limited partnership in which
Mr. Mooney is the general partner. As of June 30,
2005, all of Mr. Mooneys exercisable options had
terminated or been exercised. |
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
|
|
Underlying Unexercised | |
|
Value of Unexercised In-the- | |
|
|
Shares | |
|
|
|
Options at 12/31/03 | |
|
Money Options at 12/31/03(2) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise | |
|
Realized(1) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
James P. Mooney
|
|
|
|
|
|
|
|
|
|
|
532,554 |
(3) |
|
|
|
|
|
$ |
1,107,751 |
|
|
|
|
|
Thomas R. Miklich
|
|
|
|
|
|
|
|
|
|
|
11,633 |
(4) |
|
|
14,000 |
|
|
|
|
|
|
|
|
|
Marcus P. Bak
|
|
|
|
|
|
|
|
|
|
|
33,440 |
|
|
|
30,000 |
|
|
|
|
|
|
$ |
239,100 |
|
Stephen D. Dunmead
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
30,000 |
|
|
|
|
|
|
|
239,100 |
|
Michael J. Scott
|
|
|
4,692 |
|
|
$ |
16,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Market value of shares at date of exercise less exercise price. |
|
(2) |
An option is considered in-the-money when the fair market value
of the shares is greater than the exercise price of the option. |
|
(3) |
Includes 392,554 shares subject to stock options that were
transferred in accordance with the terms of our 1998 Long-Term
Incentive Compensation Plan to a limited partnership in which
Mr. Mooney is the general partner. |
|
(4) |
Includes 4,622 shares subject to options granted under our
Non-Employee Director Equity Compensation Plan when
Mr. Miklich was one of our non-employee directors. All of
Mr. Miklichs stock options terminated upon his
cessation of employment with us. |
Compensation Committee Interlocks and Insider
Participation
None of the members of the Board who served on the Compensation
Committee during fiscal year 2004 or 2003 were our officers or
employees or had any relationship with us that would be required
to be disclosed by us under Item 404 of Regulation S-K
promulgated by the SEC.
Employment and Separation Agreements
|
|
|
Agreements with CEO and Current Employees Who are Named
Executive Officers in this Proxy Statement |
On May 26, 2005, we entered into an employment agreement
with Mr. Scaminace that provides for
Mr. Scaminaces employment as our President and Chief
Executive Officer for a term beginning on June 13,
15
2005 and continuing until May 31, 2008. Under the terms of
the agreement, Mr. Scaminace will receive an initial annual
base salary of $850,000 and will be eligible for an annual
bonus, which for 2005 shall be no less than $950,000.
Under the terms of his employment agreement, Mr. Scaminace
was granted an award of 166,194 shares of our restricted
common stock. The restricted common stock will vest on
May 31, 2008 if Scaminace remains employed by us on that
date. In addition, Mr. Scaminace was granted options to
purchase 254,996 shares of our common stock, of which
options for 80,001 shares will vest on May 31, 2006,
options for 85,050 shares will vest on May 31, 2007
and options for 89,945 shares will vest on May 31,
2008, if Mr. Scaminace remains employed by us on those
dates. The options vesting in 2006 have an exercise price equal
to the market price for common stock on the date of the grant
($24.89), while the remaining options were issued at exercise
prices set above the grant date market price for such common
stock ($28.67 for the options vesting in 2007 and $33.67 for the
options vesting in 2008). Finally, Mr. Scaminace is
participating in our long-term incentive compensation plans and
will receive a stock option grant for 2005 of at least
67,744 shares.
If we terminate Mr. Scaminaces employment without
cause, Mr. Scaminace is entitled to a lump sum payment
generally equal to two times the sum of his average annual base
salary and his average bonus amount.
On February 16, 2004, we entered into an employment
agreement with Mr. Schneeberger that provides for
Mr. Schneebergers employment as our Chief Financial
Officer for an initial term of one year with renewal for
successive two-year periods. Under the terms of the agreement,
Mr. Schneeberger receives a base annual salary of $350,000
that may be increased at the discretion of the Board and is
eligible for an annual bonus of up to 60% of his base salary.
Mr. Schneeberger is also eligible to participate in
OMGs long-term incentive compensation plans. The
employment agreement also contains a two-year noncompete
provision for the continental United States and a two-year
nonsolicitation provision.
If we terminate Mr. Schneeberger without cause,
Mr. Schneeberger is entitled to receive his annual salary
through the term of the agreement, and any options that would
become exercisable within twelve months of termination will vest
and become exercisable upon termination. Mr. Schneeberger
will also receive his prorated earned bonus for the year of
termination.
We have entered into change in control agreements with
Messrs. Scaminace, Schneeberger, Bak and Dunmead. The
purpose of these agreements is to reinforce and encourage the
officers continued attention and dedication to OMG and to
avoid the distraction caused by solicitations by other employers
and the uncertainty arising from the possibility of a change in
control of OMG.
Each change in control agreement provides that in the event a
change in control of OMG occurs during the term of the agreement
and the executives employment is terminated either by the
executive for good reason or by the company without cause, as
those terms are defined in the respective agreement, then the
executive shall be entitled to receive certain severance
payments, including: his full base salary through the date of
termination; his bonus for the last completed fiscal year and
the pro rated target bonus for the year of termination; a lump
sum payment equal to a multiple (three times for
Mr. Scaminace and two times for Messrs. Schneeberger,
Bak and Dunmead) of base salary, incentive compensation and
specified benefits; a cash payment equal to any unvested
interest in any of our nonqualified retirement plans or
tax-qualified pension plans; a lump sum payment for the
cancellation of all stock options held by the executive in an
amount equal to the aggregate spread between the option exercise
prices and the greater of (i) the highest price per share
paid in connection with the change in control and (ii) the
mean high and low trading prices of our stock on the NYSE on the
date of termination; and immediate vesting and redemption of all
unvested restricted stock at the greater of the measures
described above to determine the stock option payment. The
agreements also contain a one-year noncompete provision and
confidentiality and non-disparagement clauses.
16
|
|
|
Agreements with Former Employees Who are Named Executive
Officers in this Proxy Statement |
James P. Mooney was employed by us as Chief Executive Officer
until January 2005 when his employment was terminated and he
ceased to be Chief Executive Officer. Mr. Mooneys
employment agreement describes the benefits that he is entitled
to receive post-employment. The agreement provides that, if
terminated for cause, Mr. Mooney is entitled to receive his
accrued compensation up to the time of termination. If
terminated without cause, Mr. Mooney is entitled to receive
his annual monthly salary, a bonus as calculated below, and
benefits for the number of months remaining under the agreement.
The bonus would be equal to the estimated annual bonus, as
defined below, divided by twelve and then multiplied by the
number of months remaining under the term of the agreement. The
estimated annual bonus would be equal to the greater of
(i) the average of his annual incentive bonus paid by us
over the three most recent years, and (ii) seventy-five
percent of his annual base salary in effect on the date of
termination. Any restricted stock owned by Mr. Mooney will
vest if he is terminated without cause. The agreement also
contains a one-year noncompete provision for certain
geographical areas and a one-year nonsolicitation provision.
On October 17, 2003, we entered into a separation agreement
with Mr. Miklich. Under the terms of the separation
agreement, we agreed to continue to pay Mr. Miklich at the
annual rate of $475,000 until the third anniversary of his
cessation of employment and to pay him a bonus in the amount of
$356,250 on each of the first, second and third anniversary
dates of his cessation of employment. Mr. Miklich also
received the following benefits in connection with his
separation: continued participation in our health care plan for
a maximum of three years; premium payments made by us for two
life insurance policies for time periods specified in the
separation agreement; payment of a retirement benefit of
approximately $196,000 per year in the form of a single
life annuity beginning May 1, 2004; and participation in
our car program until the third anniversary of his cessation of
his employment. In addition, we guaranteed the purchase of
Mr. Miklichs primary residence. Under the terms of
the separation agreement, Mr. Miklich continued to perform
his duties as our chief financial officer through April 30,
2004 and agreed to cooperate on an ongoing basis with us and to
provide financial consulting services to us for a period of two
years from that date. All of Mr. Miklichs options to
purchase our common stock terminated upon his cessation of
employment.
Effective August 5, 2003, we entered into a separation
agreement with Mr. Scott. Under the terms of the separation
agreement, we agreed to continue to pay Mr. Scott at the
annual rate of $380,000 until December 31, 2004; to make a
single payment to Mr. Scott of $133,000 on
September 30, 2003; and to make two additional payments at
the end of 2003 and 2004, respectively, based on our financial
performance for those years. On this basis, Mr. Scott
received a payment of $190,000 for 2003 and received a payment
of $95,000 at the end of 2004. Mr. Scott continued to
participate in our life insurance plan and car program, and we
paid certain club memberships and professional expenses, in each
case until December 31, 2004, and he participates, at our
expense, in our health care plan. In addition,
Mr. Scotts account under an OMG benefit plan became
fully vested, was credited with additional credits for 2003 and
2004 based on the amounts payable under the separation
agreement, and became payable to Mr. Scott in the event of
a change of control, as defined in the separation agreement. He
also agreed to consult with us as necessary and reasonable for a
period of twelve months following cessation of employment.
Supplemental Executive Retirement Plan
We maintain a supplemental executive retirement plan for James
P. Mooney. Benefits under the plan are based upon 50% of the
average of the highest three years of Mr. Mooneys
total annual earnings during the last ten years. Earnings for
this purpose include base salary, actual annual incentive cash
compensation and any deferred cash compensation, including
401(k) plan contributions. Benefits are reduced by 50% of any
Social Security benefit, the value of Mr. Mooneys
account under other OMG benefit plans at the time of termination
of employment, and an amount reflecting a benefit paid by us
under a qualified domestic relations order with respect to
Mr. Mooney. Benefits are to be paid upon
Mr. Mooneys retirement (at a reduced level upon early
retirement), disability or death, upon a termination of
employment without cause, or a termination of employment within
two years following a change-in-control of OMG. The estimated
annual benefit payable to Mr. Mooney under the plan at
age 65 cannot be determined as benefit options have not
been chosen by Mr. Mooney.
17
Report of the Compensation Committee on Executive
Compensation
General. The compensation committee of our board of
directors is responsible for establishing the compensation
philosophy applicable to all OMG personnel and for evaluating
the performance of senior management, including the named
executive officers. The committee is composed entirely of
directors who are independent under the standards of the New
York Stock Exchange and under OMGs Corporate Governance
Principles. The current members of the committee were appointed
in 2005 and did not serve on the committee during the periods
described in this Compensation Committee Report.
Executive Compensation Philosophy. The committees
executive compensation philosophy is designed to allow OMG to
attract, retain and encourage the development of qualified and
motivated executives by providing executives with competitive
compensation, to reward individuals who achieve identified goals
for the benefit of OMG stockholders, and to promote ties between
pay and performance by emphasizing incentives that support
OMGs strategic direction and align the economic interests
of executives with those of OMG stockholders.
The total compensation of OMGs executives has been set at
levels intended to be competitive with other companies with whom
OMG competes for executive talent. The committee believes the
primary market for executives is national in scope and, as a
result, it sets pay levels to be competitive in a national
marketplace. The committee benchmarks total direct compensation
(base salary, annual bonus and long-term incentives) against an
industry peer group, including specialty chemical companies.
During 2003 and 2004, the committee determined that total direct
compensation for OMGs senior management should target the
75th percentile for industry peers. In 2005, the committee
revised the target to the 50th percentile for industry
peers. To ensure that OMGs senior management compensation
is consistent with the target level, the committee annually
compares OMGs total compensation and component pay levels
to those of its industry peer group companies.
While the committee currently targets total direct compensation
at the market median, an executives actual direct
compensation could vary significantly based on how OMGs
actual performance varies from the target results. If OMG
results are well above target performance, executives have the
opportunity to earn compensation that is well above the
markets median pay levels. Conversely, executives will
earn relatively low pay levels if OMG performance is well below
target levels.
Committee Process for Considering Executive Compensation.
In carrying out its responsibilities, the committee considers
the following factors:
|
|
|
|
|
the executive compensation philosophy as established by the
committee; |
|
|
|
the performance of executives, including as reflected by the
recommendations of senior management; |
|
|
|
OMGs business and financial performance; |
|
|
|
the general compensation policies and practices for OMG
employees; and |
|
|
|
advice received from outside compensation consultants, including
comparisons of OMG policies and practices to those of other
comparable companies. |
Components of Compensation. There are three primary
components of compensation for executives: base salary; annual
bonuses, and long-term incentive compensation in the form of
stock options or restricted stock.
Base Salary. Executive salaries are designed to
approximate market medians in order to manage fixed costs, place
appropriate emphasis on performance-based incentives and remain
sufficient to attract and retain executives. An executives
base salary is based on a variety of factors, including level of
responsibility, scope and impact of decision-making, experience
and future potential, the recommendations of the Chief Executive
Officer and internal and external compatibility. In general, the
committee currently endeavors to set base salary for OMG
executives at the 50th percentile level of industry peer
companies.
18
Annual Bonuses. OMGs executives participate in a
Bonus Program for Key Executives and Middle Management under
which the committee may award bonuses in its discretion,
considering individual performance and OMG results. The purpose
of the bonus program is to tie a portion of each
participants compensation to achievement of corporate,
business unit and individual goals. The committee currently sets
target bonuses to produce direct cash compensation (salary plus
bonus) at the 50th percentile when compared with the pay of
executives at its industry peer groups.
Long-Term Incentive Compensation. Executive officers and
other key employees may receive long-term incentive compensation
under the 1998 Long-Term Incentive Compensation Plan and the
2002 Stock Incentive Plan. The 1998 Plan provides for the award
of stock options, stock appreciation rights, restricted stock,
performance shares and phantom stock, and the 2002 Plan provides
for the award of stock options and restricted stock. The purpose
of the equity incentive plans is to provide participants with
added incentives to continue in the long-term service of OMG and
to create in participants a more direct interest in the future
success of the operations of OMG by relating incentive
compensation to increases in stockholder value. The committee
has generally chosen stock options as the main vehicle of
long-term incentive compensation for executives. These options
typically vest in equal annual installments over a three-year
period beginning one year from the date of grant, have a
ten-year term and are granted at an exercise price that is no
less than the fair market value of OMG stock on the date of
grant. The committee administers both plans, determining
recipients of awards, the types and amounts of awards to be
granted, and the conditions applicable to awards.
The committee awarded stock options grants to 30 employees in
2004 and awarded stock option grants to 30 employees in 2003.
Compensation of the Chief Executive Officer. The
committee was responsible for evaluating the performance of
Mr. Mooney and setting his compensation packages for 2003
and 2004. To assist in its evaluations, the committee retained
Hewitt Associates LLC as its independent executive compensation
consultant. Based on a variety of competitive data regarding
industry peer companies available to it, Hewitt made
recommendations to the committee as to the competitive levels of
each element of Mr. Mooneys total direct
compensation. The committee took these recommendations into
consideration in setting Mr. Mooneys compensation.
During 2003 and 2004, the committees policy was to target
total direct compensation for Mr. Mooney near the
75th percentile of comparable companies.
In setting Mr. Mooneys compensation for 2003, the
committee considered OMGs financial performance during the
previous four quarters, Mr. Mooneys personal
performance and comparative data on salaries for chief executive
officers of industry peer companies provided by Hewitt. Based on
this information, the committee set Mr. Mooneys
salary at $1,140,000.
Mr. Mooneys employment agreement provides for the
opportunity for an annual discretionary cash bonus in accordance
with the Bonus Program for Key Executives and Middle Management.
For 2003, the committee awarded Mr. Mooney a bonus equal to
100% of his 2003 base salary, to be paid half in cash and half
in OMG restricted stock. The committee departed from recent past
practice in which Mr. Mooney received all of his annual
bonus in cash. In making its bonus determination, the committee
considered the company restructuring that was completed in 2003,
including the sale of the Precious Metals Group at a favorable
price. The committee also considered information provided by
Hewitt that, if OMG had elected to bring in new management to
perform the restructuring, the market rate to employ such
management would have been substantial.
During 2004, Mr. Mooney received no adjustment in his base
salary. The committee considered Mr. Mooneys personal
performance and comparative data on salaries for chief executive
officers of industry peer companies provided by Hewitt. Based on
this information, the committee determined that
Mr. Mooneys salary level for the previous year was
sufficient and an upward annual adjustment was not appropriate.
In addition, based on Mr. Mooneys individual
performance during 2004, the committee determined not to award
an annual bonus to Mr. Mooney for 2004.
19
With the exception of the restricted stock awarded to
Mr. Mooney as part of his 2003 bonus, the committee did not
make any awards to Mr. Mooney during 2003 or 2004 under the
1998 Long-Term Incentive Compensation Plan or the 2002 Stock
Incentive Plan.
In September 2003, the committee approved a Supplemental
Executive Retirement Plan for Mr. Mooney. This Plan is
summarized under Executive Compensation
Supplemental Executive Retirement Plan in this proxy
statement. As part of its consideration and evaluation of the
Plan, the committee consulted with and received advice from
Hewitt Associates LLC with respect to competitive peer data on
retirement benefits for CEOs. As a result of its evaluation
process, the committee recommended this Plan to the Board of
Directors, which approved the Plan in January 2004.
Tax Deductibility of Executive Compensation.
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to publicly held companies for
compensation in excess of $1 million in any taxable year
paid to the chief executive officer or the four next most highly
compensated executive officers. However, compensation in excess
of $1 million is deductible if it meets the criteria for
being performance based within the meaning of
Section 162(m). Stock options granted under the 1998 Plan
and the 2002 Plan satisfy the conditions for being
performance based under Section 162(m).
Although the committee generally endeavors to award non-cash
compensation in a manner that satisfies the conditions for tax
deductibility, there may be instances in which the committee
determines it is in the best interests of OMG and its
stockholders to award compensation that is not deductible. As
such, the committee reserves the authority to award
non-deductible compensation in circumstances it deems
appropriate.
Conclusion. The committee believes that the quality and
motivation of OMGs employees, including its executives,
are critical elements of delivering long-term value to
stockholders. The committee also believes that its compensation
policies and practices are consistent with that objective, and
it will endeavor to maintain compensation policies and practices
that appropriately align executive compensation with the
interests of stockholders.
|
|
|
Compensation Committee |
|
|
Leo J. Daley, Chairman (appointed to committee on May 17,
2005) |
|
Katharine L. Plourde (appointed to committee on January 11,
2005) |
|
William Reidy (appointed to committee on January 11, 2005) |
20
Performance Comparisons
The chart set forth below compares our cumulative total
stockholder return to that of (1) the Standard &
Poors 500 Index and (2) the S&P Specialty
Chemicals Index. In all cases, the information assumes $100
invested on December 31, 1998 and is presented on a
dividends reinvested basis. The table does not forecast
performance of our common stock.
Comparison of 6-Year Cumulative Total Return
Among OM Group, Inc., The S&P 500 Index
and The S&P Specialty Chemicals Index
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OM Group, Inc. | |
|
S&P 500 Index | |
|
S&P Chemicals (Specialty) | |
|
|
| |
|
| |
|
| |
12/98
|
|
|
100.00 |
|
|
|
100.00 |
|
|
|
100.00 |
|
12/99
|
|
|
95.42 |
|
|
|
121.04 |
|
|
|
113.03 |
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12/00
|
|
|
152.91 |
|
|
|
110.02 |
|
|
|
94.17 |
|
12/01
|
|
|
186.92 |
|
|
|
96.95 |
|
|
|
100.69 |
|
12/02
|
|
|
19.57 |
|
|
|
75.52 |
|
|
|
113.37 |
|
12/03
|
|
|
74.49 |
|
|
|
97.18 |
|
|
|
135.16 |
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12/04
|
|
|
92.21 |
|
|
|
107.76 |
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|
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155.88 |
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12/31/1998 | |
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12/31/1999 | |
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12/31/2000 | |
|
12/31/2001 | |
|
12/31/2002 | |
|
12/31/2003 | |
|
12/31/2004 | |
| |
OM Group, Inc.
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|
$ |
100.00 |
|
|
$ |
95.42 |
|
|
$ |
152.91 |
|
|
$ |
186.92 |
|
|
$ |
19.57 |
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|
$ |
74.49 |
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$ |
92.21 |
|
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S&P 500 Index
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100.00 |
|
|
|
121.04 |
|
|
|
110.02 |
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|
|
96.95 |
|
|
|
75.52 |
|
|
|
97.18 |
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|
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107.76 |
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S&P Specialty Chemicals Index
|
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100.00 |
|
|
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113.03 |
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94.17 |
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100.69 |
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113.37 |
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135.16 |
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155.88 |
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21
Report of the Audit Committee
The Audit Committee has reviewed and discussed with our
management and with our independent auditors, Ernst &
Young LLP, the consolidated financial statements of OMG and its
subsidiaries as set forth in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2003 and in our
Annual Report on Form 10-K for the fiscal year ended
December 31, 2004. The Audit Committee has discussed with
Ernst & Young those matters required to be discussed by
Statement on Auditing Standards No. 61,
Communications with Audit Committees, received from
Ernst & Young the written communications required by
Independence Standards Board Standard No. 1, and discussed
with Ernst & Young its independence from us and our
management. Ernst & Young has confirmed to us that it
is in compliance with all rules, standards and policies of the
Independence Standards Board and the Securities and Exchange
Commission governing auditor independence. Based on these
reviews and discussions, the Audit Committee recommended to the
Board of Directors that the audited consolidated financial
statements for the fiscal year ended December 31, 2004 be
included in OMGs Annual Report on Form 10-K for the
fiscal year ended December 31, 2004 for filing with the
Securities and Exchange Commission, and the audited consolidated
financial statements for the fiscal year ended December 31,
2003 be included in OMGs Annual Report on Form 10-K
for the fiscal year ended December 31, 2003 for filing with
the Securities and Exchange Commission.
|
|
|
Audit Committee |
|
|
William J. Reidy, Chairman |
|
Leo J. Daley |
|
Katharine L. Plourde |
Description of Principal Accountant Fees and Services
The following table sets forth the fees paid for services
provided by Ernst & Young LLP for the fiscal years
ended December 31, 2004, 2003 and 2002. Certain amounts for
2002 have been reclassified to conform to the 2003 presentation.
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|
2004 | |
|
2003 | |
|
2002 | |
|
|
| |
|
| |
|
| |
Audit Fees
|
|
$ |
1,969,400 |
|
|
$ |
6,595,300 |
|
|
$ |
3,403,407 |
|
Audit-Related Fees
|
|
|
349,400 |
|
|
|
1,762,851 |
|
|
|
348,966 |
|
Tax Fees
|
|
|
1,497,093 |
|
|
|
2,219,534 |
|
|
|
1,993,193 |
|
All Other Fees
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|
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|
|
|
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Total
|
|
$ |
3,815,893 |
|
|
$ |
10,577,685 |
|
|
$ |
5,745,566 |
|
|
|
|
|
|
|
|
|
|
|
The following is a description of the nature of the services
related to the fees disclosed in the table above. The Audit
Committee has considered whether Ernst & Youngs
provision of non-audit services is compatible with maintaining
its independence.
These are fees for professional services rendered by
Ernst & Young for the audit of our annual consolidated
financial statements, the review of consolidated financial
statements included in our quarterly reports on Form 10-Q,
audits of foreign subsidiary financial statements required by
local statutes and services that are typically rendered in
connection with statutory and regulatory filings or engagements.
In 2003, audit fees also include fees related to the restatement
of our annual consolidated financial statements for 2002 and
2001. In 2004, audit fees also include fees related to the
finalization of the restatement process.
These are fees for assurance and related services rendered by
Ernst & Young that are reasonably related to the
performance of the audit or the review of our consolidated
financial statements that are not included as
22
audit fees. These services include employee benefit plan audits,
due diligence related to divestitures and consulting on
financial accounting and reporting.
These are fees for professional services rendered by
Ernst & Young with respect to tax compliance, tax
advice and tax planning. These services include the review of
tax returns, tax assistance in foreign jurisdictions and
consulting on tax planning matters.
These are fees for other services rendered by Ernst &
Young that do not meet the above category descriptions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James B. Mooney is our Director Sourcing and
Strategic Development and is the son of James P. Mooney, who was
our Chief Executive Officer until January 11, 2005. During
2004, James B. Mooney earned a salary of $133,100 and a bonus of
$37,993, which was paid during 2005. On November 3, 2004,
we granted James B. Mooney stock options entitling him to
acquire 10,000 shares of our common stock, which have a
10-year term and become exercisable in equal annual increments
over the first three years following grant. The exercise price
for these stock options is $31.38, per share, and none of the
shares were exercisable at December 31, 2004.
Eugene Bak, the father of Marcus Bak, our Vice President and
General Manager of the Nickel Group, retired from OMG in 2000.
Eugene Bak receives a portion of his retirement benefit in the
form of premium payments for a split-dollar dual life insurance
policy. We pay a portion of the premiums on the policy,
amounting to approximately $80,000 annually. The owner and
beneficiary of the policy is a trust established by Eugene Bak,
for which Marcus Bak serves as trustee.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires officers, directors, and persons who own more than 10%
of a registered class of equity securities to file reports of
ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish us with
copies of all Section 16(a) reports they file.
Based solely upon a review of Forms 3 and 4 (including
amendments to such forms) furnished to us during 2004 and 2003
and Forms 5 furnished with respect to 2004 and 2003, no
director, officer or beneficial owner of more than 10% of our
outstanding common stock failed to file on a timely basis during
2004, 2003 or prior fiscal years any reports required by
Section 16(a), except that Messrs. Bak, Dunmead and
Schneeberger each made one late filing reporting one stock
option grant during 2004 and Mr. Brodeur made one late
filing reporting one purchase transaction during 2003.
STOCKHOLDER PROPOSALS
FOR THE 2006 ANNUAL MEETING
Any stockholder who intends to present a proposal at the 2006
annual meeting and who wishes to have the proposal included in
our proxy statement and form of proxy for that meeting must
deliver the proposal to us at our executive offices no later
than December 1, 2005.
Any stockholder who intends to present a proposal at the 2006
annual meeting other than for inclusion in our proxy statement
and form of proxy must deliver the proposal to us at our
executive offices not later
23
than April 6, 2006, or such proposal will be untimely. If a
stockholder fails to submit the proposal by April 6, 2006,
we reserve the right to exercise discretionary voting authority
on the proposal.
SOLICITATION BY BOARD; EXPENSES OF SOLICITATION
Our Board of Directors has sent you this proxy statement. We
will pay all expenses in connection with the solicitation of the
enclosed proxy. In addition to solicitation by mail, our
officers and employees, who will receive no extra compensation
for their services, may solicit proxies by telephone, in writing
or in person. We also have retained Strategic Stock
Surveillance, LLC, a proxy soliciting firm, to assist in the
solicitation of proxies for an estimated fee of $8,500 plus
reimbursement of reasonable out-of-pocket expenses. We also will
reimburse the expenses of brokers and nominees who hold shares
in their names to furnish proxy materials to the beneficial
owners of such shares.
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|
|
OM GROUP, INC. |
|
|
Carolyn J. Buller
|
|
Secretary |
24
Exhibit A
OM GROUP, INC.
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
Adopted August 11, 2003
As Amended through October 21, 2004
The Audit Committee shall provide assistance to the Board of
Directors in fulfilling its oversight responsibilities to the
Company, its stockholders, potential stockholders, the
investment community, and others by reviewing the financial
reports and related financial information provided by the
Company to governmental agencies or the general public, the
Companys system of internal controls and the effectiveness
of its control structure, the Companys compliance with
designated laws and regulations, and the Companys
accounting, internal and external auditing and financial
reporting processes. In discharging its responsibilities, the
Committee shall:
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|
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|
|
serve as an independent and objective party to monitor the
Companys financial reporting process and internal control
system; |
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|
|
review any request of any of the directors and senior officers
for any deviation or waiver from the Companys Code of
Conduct and Ethics and, if appropriate, approve such request; |
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review and evaluate the audit procedures and results of the
Companys independent auditor and internal auditors; |
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approve, engage and terminate the independent auditor; |
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|
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review and evaluate the independent auditors
qualifications, performance and independence; |
|
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review, evaluate and approve in advance any non-audit services
the independent auditor may perform for the Company and disclose
such approved non-auditor services in periodic reports to
stockholders; |
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|
inquire of senior management of known or potential instances of
non-compliance with applicable laws, regulatory policies,
including SEC reporting requirements, and the Companys
code of conduct and ethics as they relate to the functions and
responsibilities of the Committee; |
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|
be informed by the Companys general counsel of material
litigation in which the Company is involved or in which
management believes involvement of the Company is reasonably
likely; |
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periodically inquire about and review the Companys
policies and procedures regarding the review of officers
expense reports and perquisites for compliance with proper
reporting, accounting and tax treatment. |
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maintain free and open means of communication between the Board,
the independent auditor, the internal auditors and the
management of the Company; |
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|
at least annually, review and update this charter for
consideration by the Board and perform an evaluation of the
Committee performance and function, and report to the Board the
results of such evaluation (such report may be written or
oral); and |
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|
|
such additional duties or responsibilities as the Board may
determine from time to time. |
The members of the Committee shall be appointed by the Board and
may be removed only by the Board. The Committee will have a
minimum of three members. The Committee may consult or retain
its own outside legal, accounting or other advisors and shall
determine the degree of independence from the Company
A-1
required from said advisors. The Committee shall meet at least
four times per year and report directly to the full board any
issues that arise with respect to the quality and integrity of
the Companys financial statements, the Companys
compliance with legal and/or regulatory requirements, the
performance and independence of the Companys independent
auditor or the performance of the internal audit function. The
Committee may also meet periodically by itself to discuss
matters it determines require private Committee or Board
attention. Further, the Committee shall meet separately with
management, with the internal auditors and with the independent
auditor. Half of the members of the Committee shall be a quorum
to transact business. The Committee shall maintain minutes of
each meeting and shall report on matters considered at Committee
meetings to the Board at is next regularly scheduled Board
meeting.
The Committee shall be composed entirely of independent
directors, determined in accordance with the Companys
Corporate Governance Principles and with Rule 10A-3 of the
Securities Exchange Act of 1934. The members of the Committee,
as determined by the Board, shall be financially
literate, in accordance with the requirements of the New
York Stock Exchange, and at least one member shall have
accounting or related financial management expertise.
The independent auditor shall be engaged by and accountable to
the Committee and the Board. The Committee shall have the sole
authority to engage and terminate the independent auditor, to
approve all audit engagement fees and terms, to review with the
independent auditor the nature and scope of any disclosed
relationships or professional services, and to take, or
recommend that the Board take, appropriate action to ensure the
continuing independence of the auditor. The Committee shall also
set clear policies and standards relating to the Companys
hiring of employees or former employees of the independent
auditor to ensure continued independence throughout. These
policies should take into account the pressures that may exist
for auditors consciously or subconsciously seeking employment
with the Company.
The Committee shall, on an annual basis, obtain from the
independent auditor a written disclosure delineating all of its
relationships and professional services as required by
Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees. Additionally, the Committee
will obtain and review a report of the independent auditor
describing its internal quality-control procedures, material
issues raised by the most recent internal quality-control review
of the independent auditor or an inquiry or investigation by a
governmental authority involving one or more audits carried out
by the independent auditor in the preceding five years and any
steps or procedures taken to deal with any such issues. After
reviewing the independent auditors report, the Committee
shall evaluate the auditors qualifications, performance
and independence. The Committee may consider the opinions of
management and the internal auditors of the Company in making
such evaluation. As required by law, the Committee shall assure
the regular rotation of the lead and concurring audit partner,
and consider whether there should be a regular rotation of the
independent auditor itself.
The independent auditor shall ascertain that the Committee is
made aware of, and timely report to the Committee, and upon
receipt thereof, the Committee shall review, all necessary
accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with management
and the risks of using such alternative treatments, and inform
the Committee of other material written communications between
the independent auditor and management.
The internal auditor of the Company shall directly report to the
Chief Financial Officer of the Company. The Committee will
oversee the internal auditor function and determine that the
internal auditor is establishing, maintaining and executing
appropriate audit programs, policies and procedures that govern
the examination and audit of the ledgers, records, procedures
and operations of the Company and its affiliates.
A-2
The Chief Financial Officer will consult with the Chairman of
the Audit Committee in connection with the hiring, termination
and compensation of the internal auditor.
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F. |
FINANCIAL REPORTING OVERSIGHT |
In discharging its responsibilities to oversee governmental and
public reporting of financial information, the Committee shall:
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|
review and discuss the annual audited financial statements,
footnotes and related disclosures included in the Companys
annual report to stockholders and its annual report on
Form 10-K with financial management, the independent
auditor, and the internal auditors prior to the release and
filing of such documents (including the Companys
disclosures under Managements Discussion and
Analysis of Financial Conditions and Results of
Operations) (This review shall cover discussion of all
items required by generally accepted auditing standards
regarding required communications with Committees.); |
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|
review with the independent auditor the results of its annual
examination of the financial statements, including their report
thereon, and determine its satisfaction with the disclosures and
content of the financial statements (This review shall cover
discussion of all items required by generally accepted auditing
standards regarding required communications with Committees.); |
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ascertain that the results of any internal audit activity or
regulatory reports were appropriately considered in preparing
the financial statements; |
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review and discuss the quarterly financial results and
information and the disclosures with financial management, the
independent auditor, and the internal auditors to determine that
the independent auditor does not take exception to the
disclosure and content of the financial statements on
Form 10-Q (including the Companys disclosures under
Managements Discussion and Analysis of Financial
Conditions and Results of Operations), to determine that
the results of any internal audit activity or regulatory reports
were appropriately considered in preparing the financial
statements, and to discuss any other matters required to be
communicated to the Committee by the independent auditor; |
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|
review and discuss the types of presentation and information to
be included in earnings press releases (particularly, any use of
pro forma or adjusted non-GAAP
information), and any additional financial information and
earning guidance generally provided to analysts and rating
agencies; |
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inquire of management, the internal auditors, and the
independent auditor about significant risks or exposures to risk
and discuss guidelines and policies to govern the steps
management has taken to minimize such risk to the Company; |
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review the effect of regulatory or accounting initiatives,
including off-balance sheet structures and transactions, on the
financial statements of the Company; |
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review and discuss the form and content of the certification
documents for the quarterly reports on Form 10-Q and the
annual report on Form 10-K with the internal auditors, the
independent auditor, the chief financial officer and the chief
executive officer; |
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review the basis for the disclosures made in the annual report
to stockholders under the heading Managements Report on
Internal Controls regarding the control environment of the
Company; and |
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consider, produce and approve the annual proxy disclosure
regarding the activities and report of the Committee for the
year. |
|
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G. |
LINES OF COMMUNICATION |
The internal auditors and the independent auditors shall have
the ability to communicate directly with the Chairman of the
Committee, if necessary or desired. The Committee shall provide
sufficient opportunity at its meetings for the independent
auditors and the internal auditors to meet with the members of
the Audit Committee without members of management present.
A-3
The general counsel shall report directly to the Committee about
legal compliance. The Committee may directly contact any
employee in the Company and any employee may inform the
Committee of matters involving questionable, illegal or improper
practices or transactions. The Companys Code of Conduct
and Ethics shall ensure a confidential and anonymous complaint
process.
The Committee shall establish and maintain free and open means
of communication between employees and the Committee for the
processing of complaints received by the Company regarding
questionable accounting or auditing matters, including
suspicions of fraudulent activity.
A-4
c/o National City Bank
Corporate Trust Operations
Locator 5352
P. O. Box 92301
Cleveland, OH 44101-4301
Have your proxy card available when you call the
Toll-Free number 1-888-693-8683 using a touch-tone phone,
and follow the simple instructions to record your vote.
Have your proxy card available when you access the
website http://www.cesvote.com and follow the simple
instructions to record your vote.
Please mark, sign and date your proxy card and return
it in the postage-paid envelope provided or return it to:
National City Bank, P.O. Box 535300, Pittsburgh, PA 15253.
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Vote by Telephone
Call Toll-Free using a
Touch-Tone phone:
1-888-693-8683
|
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Vote by Internet
Access the Website and
Cast your vote:
http://www.cesvote.com
|
|
Vote by Mail
Return your proxy
in the Postage-Paid
envelope provided |
Vote 24 hours a day, 7 days a week!
Your telephone or Internet vote must be received by 6:00 a.m. Eastern Daylight Time
on October 11, 2005 to be counted in the final tabulation.
If you vote by telephone or Internet, please do not send your proxy by mail.
ê Please fold and detach card at perforation before mailing. ê
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OM Group, Inc.
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proxy solicited on behalf of the Board of Directors |
The undersigned appoints Joseph M. Scaminace and R. Louis Schneeberger, or both of them, with
full power of substitution, to vote the shares of the undersigned at the Annual Meeting of
Stockholders of OM Group, Inc. to be held on October 11, 2005 and at any adjournment thereof as
follows.
If no specification is made, authority is granted to cast the vote of the undersigned for
election of the nominees below.
The Board of Directors recommends that votes be cast FOR the election of all nominees.
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Election of directors to serve terms expiring at our annual meeting in 2007:
|
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(1) Leo J. Daley
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(2) Katharine L. Plourde |
Election of directors to serve terms expiring at our annual meeting in 2008:
|
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(3) William J. Reidy
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(4) Joseph M. Scaminace |
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o
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FOR all nominees listed above
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o
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WITHHOLD AUTHORITY |
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(except as indicated to the contrary below)
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to vote for all nominees listed above |
(Instructions: if you wish to withhold authority to vote for any nominee, write that nominees
name on the line below).
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Date:
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, 2005 |
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Signatures
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Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, give your full title as
such. In case of a corporation, a duly authorized officer
should sign on its behalf. |