UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Ethyl Corp.
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(Name of Registrant as Specified In Its Charter)
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Notes:
[LOGO OF ETHYL]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares of
common stock, $1.00 par value ("Ethyl Common Stock"), of Ethyl Corporation
(the "Corporation") will be held in the restored gun foundry building of the
Tredegar Iron Works, 500 Tredegar Street, Richmond, Virginia, on Wednesday,
May 30, 2001, at 11:00 A.M., Eastern Daylight Time, for the following
purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To approve the designation by the Board of Directors of
PricewaterhouseCoopers LLP as auditors for the fiscal year ending
December 31, 2001; and
3. To transact such other business as may properly come before the meeting.
Holders of shares of Ethyl Common Stock of record at the close of business
on March 27, 2001, will be entitled to vote at the meeting.
You are requested to fill in, sign, date and return the enclosed proxy
promptly, regardless of whether you expect to attend the meeting. A postage-
paid return envelope is enclosed for your convenience.
If you are present at the meeting, you may vote in person even if you
already have sent in your proxy.
By Order of the Board of Directors
M. Rudolph West, Secretary
April 24, 2001
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
ETHYL CORPORATION
To be held May 30, 2001
Approximate date of mailing--April 24, 2001
Proxies in the form enclosed are solicited by the Board of Directors for the
Annual Meeting of Shareholders to be held on Wednesday, May 30, 2001. Any
person giving a proxy may revoke it at any time before it is voted by
delivering another proxy, or written notice of revocation, to the Secretary of
the Corporation at the Corporation's address listed below. A proxy, if
executed and not revoked, will be voted, and, if it contains any specific
instructions, will be voted in accordance with such instructions.
On March 27, 2001, the date for determining shareholders entitled to vote at
the meeting, there were outstanding 83,454,650 shares of Ethyl Common Stock.
Each share of Ethyl Common Stock is entitled to one vote. The holders of a
majority of the shares of Ethyl Common Stock issued and outstanding as of the
close of business on March 27, 2001 will constitute a quorum at the meeting.
The election of each nominee for director requires the affirmative vote of
the holders of a plurality of the shares of Ethyl Common Stock voted in the
election of directors. Votes that are withheld and shares held in street name
that are not voted in the election of directors will not be included in
determining the number of votes cast. Unless otherwise specified in the
accompanying form of proxy, it is intended that votes will be cast for the
election of all of the nominees as directors.
The cost of the solicitation of proxies will be borne by the Corporation. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Corporation. Corporate Investor
Communications, Inc. has been engaged to assist in the solicitation of
proxies. The Corporation will pay that firm $7,000 for its services and
reimburse its out-of-pocket expenses.
The Corporation's street address is 330 South Fourth Street, Richmond,
Virginia 23219.
ELECTION OF DIRECTORS
Proxies will be voted for the election as directors for the ensuing year of
the persons named below (or if for any reason unavailable, of such substitutes
as the Board of Directors may designate). Each of the nominees presently is
serving as a director. The Board has no reason to believe that any of the
nominees will be unavailable.
William W. Berry; age 68; director since 1983; Chairman of the Board of New
England Independent System Operator (regional manager of electric bulk
power generation and transmission systems) since June 1997, having served
as an independent consultant from 1992-1997. Other directorship: Universal
Corporation.
Phyllis L. Cothran; age 54; director since 1995; retired, having served as
President and Chief Operating Officer of Trigon Healthcare, Inc., formerly
Blue Cross and Blue Shield of Virginia, (health insurance company) from
November 1990 to March 1997. Other directorship: Tredegar Corporation.
Bruce C. Gottwald; age 67; director since 1962; Chairman of the Board,
Chairman of the Executive Committee and Chief Executive Officer of the
Corporation since March 1, 1994. Other directorship: CSX Corporation.
Thomas E. Gottwald; age 40; director since 1994; President and Chief Operating
Officer of the Corporation since March 1, 1994.
1
Gilbert M. Grosvenor; age 69; director since 1985; Chairman of the Board of
Trustees of the National Geographic Society (magazine publisher and
scientific society), having served as Chief Executive Officer of the
National Geographic Society from 1980-1996. Other directorships: Saul
Centers, Inc., Marriott International, Inc. and Chevy Chase Bank, F.S.B.
Sidney Buford Scott; age 68; director since 1959; Chairman of the Board of
Scott & Stringfellow, Inc. (investment bankers and brokers).
Charles B. Walker; age 62; director since 1989; Vice Chairman of the Board and
Chief Financial Officer of Albemarle Corporation (specialty chemicals
company) since 1994; Former Vice Chairman of the Board from March 1, 1994
until January 31, 1998, and Chief Financial Officer and Treasurer of the
Corporation from March 1, 1994 until October 1, 1997, having served as
Treasurer of the Corporation since July 1, 1993. Other directorships:
Albemarle Corporation and Nations Fund Trust/Nations Fund, Inc.
In 2000, each director attended at least 75% of the aggregate of (i) the
total number of meetings of all committees of the Board on which the director
then served and (ii) the total number of meetings of the Board of Directors.
Seven meetings of the Corporation's Board of Directors were held during 2000.
The Corporation's executive committee currently consists of Messrs. Bruce C.
Gottwald, Berry, Thomas E. Gottwald and Scott. During 2000, the executive
committee did not meet.
Ms. Cothran and Messrs. Berry, Grosvenor and Scott currently serve on the
Corporation's audit committee. During 2000, the audit committee met on six
occasions. The audit committee reviews the Corporation's internal audit and
financial reporting functions and the scope and results of the audit performed
by the Corporation's independent accountants and matters relating thereto and
reports thereon to the Board of Directors. The audit committee also reviews
audit fees and recommends to the Board of Directors the engagement of the
independent accountants of the Corporation. All the members of the audit
committee are "independent" directors as defined by the rules of The New York
Stock Exchange, the exchange on which shares of Ethyl Common Stock are listed.
The Corporation's nominating committee currently consists of Messrs.
Grosvenor, Berry and Bruce C. Gottwald. The nominating committee did not meet
during 2000. The nominating committee recommends candidates for election as
directors and in some cases the election of officers. The Corporation's bylaws
provide that a shareholder of the Corporation entitled to vote for the
election of directors may nominate persons for election to the Board by
mailing written notice to the Secretary of the Corporation not later than (i)
with respect to an election to be held at an annual meeting of shareholders,
60 days prior to such meeting, and (ii) with respect to an election to be held
at a special meeting of shareholders for the election of directors, the close
of business on the seventh day following the date on which notice of such
meeting is first given to shareholders. Such shareholder's notice shall
include (i) the name and address of the shareholder and of each person to be
nominated, (ii) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate each person specified,
(iii) a description of all understandings between the shareholder and each
nominee and any other person (naming such person) pursuant to which the
nomination is to be made by the shareholder, (iv) such other information
regarding each nominee as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated by the Board of Directors and (v)
the consent of each nominee to serve as a director of the Corporation if so
elected.
Messrs. Berry, Grosvenor and Scott and Ms. Cothran currently serve as the
Corporation's bonus, salary and stock option committee. During 2000, the
bonus, salary and stock option committee met on five occasions. This committee
approves the salaries of management-level employees. It also approves all
bonus awards, certain consultant agreements and initial salaries of new
management-level personnel and grants options under the Corporation's
incentive stock option plan (the "Incentive Stock Option Plan").
2
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Thomas E. Gottwald, President and director of the Corporation, is a son of
Bruce C. Gottwald. The members of the family of Bruce C. Gottwald may be
deemed to be control persons of the Corporation.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that have
been received by the Corporation, the Corporation believes that there has been
compliance with all filing requirements applicable to its officers, directors
and beneficial owners of greater than 10% of Ethyl Common Stock, except that
Mr. Scott inadvertently did not report in a timely manner the sale of shares
owned by his wife, which he subsequently reported on a Form 5.
STOCK OWNERSHIP
The following table lists any person (including any "group" as that term is
used in Section 13(d)(3) of the Exchange Act) who, to the knowledge of the
Corporation, was the beneficial owner as of December 31, 2000, of more than 5%
of the outstanding voting shares of the Corporation.
Percent
Title of Name and Address of Number of
Class Beneficial Owners of Shares Class
-------- ------------------- --------- -------
Common Stock Floyd D. Gottwald, Jr., and 21,002,330(b)(c) 25.17%
Bruce C. Gottwald (a)
330 South Fourth Street
P.O. Box 2189
Richmond, Virginia 23219
--------
(a) Floyd D. Gottwald, Jr. and Bruce C. Gottwald, who are brothers, may be
deemed to be a "group" for purposes of Section 13(d)(3) of the Exchange
Act, although there is no agreement between them with respect to the
acquisition, retention, disposition or voting of Ethyl Common Stock.
(b) As of December 31, 2000, Floyd D. Gottwald, Jr. and Bruce C. Gottwald had
sole voting and investment power over all of the shares disclosed except
11,260,472 shares held by their wives, adult sons and in certain trust
relationships as to which they disclaim beneficial ownership. This amount
includes an aggregate of 4,272,607 shares of Ethyl Common Stock
beneficially owned by the adult sons of Floyd D. Gottwald, Jr. and an
aggregate of 4,647,269 shares of Ethyl Common stock beneficially owned by
the adult sons of Bruce C. Gottwald. Floyd D. Gottwald, Jr., Bruce C.
Gottwald and their adult sons have no agreement with respect to the
acquisition, retention, disposition or voting of Ethyl Common Stock.
(c) This amount includes any shares owned of record by Merrill Lynch, Pierce,
Fenner & Smith Incorporated as Trustee under the Corporation's savings
plan for the benefit of Bruce C. Gottwald and Thomas E. Gottwald. This
amount does not include shares held by the Trustee of such plan for the
benefit of employees of the Corporation other than Bruce C. Gottwald and
Thomas E. Gottwald. Shares held under the Corporation's savings plan are
voted by the Trustee in accordance with instructions solicited from
employees participating in the plan. If a participating employee does not
give the Trustee voting instructions, his or her shares generally are
voted by the Trustee in accordance with the Board's recommendations to the
shareholders. Because members of the family of Bruce C. Gottwald are
executive officers and directors of the Corporation and are the largest
shareholders of the Corporation, they may be deemed to be control persons
of the Corporation and to have the capacity to control any such
recommendation of the Board of Directors.
3
The following table sets forth as of January 31, 2001, the beneficial
ownership of Ethyl Common Stock by all directors of the Corporation, the Chief
Executive Officer and the four next most highly compensated executive officers
(the "Named Executive Officers") and all directors and officers of the
Corporation as a group. Unless otherwise indicated, each person listed below
has sole voting and investment power over all shares beneficially owned by him
or her.
Name of
Beneficial
Owner or
Number of Number of Shares Number of Shares Total
Persons in with Sole Voting with Shared Voting Number Percent
Group and Investment Power/1/ and Investment Power of Shares of Class/2/
---------- ----------------------- --------------------- ---------- -----------
William
W. Berry 4,314 2,146/3/ 6,460
Phyllis
L.
Cothran 4,881 0 4,881
Bruce C.
Gottwald 4,987,224 620,985/4/ 5,608,209 6.72%
Thomas E.
Gottwald 595,440 3,215,681/5/ 3,811,121 4.56%
Gilbert
M.
Grosvenor 4,804 0 4,804
Alexander
McLean 29,462 0 29,462
Henry C.
Page,
Jr. 71,888 0 71,888
Newton A.
Perry 50,261 0 50,261
Sidney
Buford
Scott 65,104 0 65,104
Charles
B.
Walker 178,204 0 178,204
Directors
and
officers
as a
group
(22
persons) 6,344,484 3,851,096 10,217,500 12.19%
--------
/1/The amounts in this column include shares of Ethyl Common Stock with
respect to which certain persons had the right to acquire beneficial
ownership within 60 days of January 31, 2001, pursuant to the Incentive
Stock Option Plan: Thomas E. Gottwald: 80,000 shares; Alexander McLean:
10,000 shares; Henry C. Page, Jr.: 33,330; Newton A. Perry: 32,208 shares;
Charles B. Walker: 118,452 shares; and directors and officers as a group:
381,250 shares.
/2/Except as indicated, each person or group owns less than 1% of Ethyl
Common Stock.
/3/Mr. Berry disclaims beneficial ownership of all 2,146 of such shares.
/4/Mr. Bruce C. Gottwald disclaims beneficial ownership of all 620,985 of
such shares.
/5/Mr. Thomas E. Gottwald disclaims beneficial ownership of all 3,215,681 of
such shares. This amount includes 3,186,101 shares of Ethyl Common Stock
that Mr. Gottwald may be deemed to own beneficially. Such shares constitute
Mr. Gottwald's interest as beneficiary of a trust of which he is a co-
trustee.
4
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table presents information relating to total compensation of
the Named Executive Officers for the fiscal years ended December 31, 2000, 1999
and 1998.
Long-Term
Annual Compensation Compensation
------------------------------ ---------------------
Name and Principal Other Annual Restricted Options/ All Other
Position Year Salary Bonus Compensation Stock Awards SARs Compensation
------------------ ---- -------- -------- ------------ ------------ -------- ------------
Bruce C. Gottwald 2000 $770,000 $ -- $ -- $ -- -- $38,500/1/
Chairman of the Board
and 1999 770,000 -- -- -- -- 38,500
Chief Executive Officer 1998 770,000 -- -- -- -- 38,500
Thomas E. Gottwald 2000 $411,800 $ -- $ -- $ -- -- $20,590/2/
President and 1999 396,000 -- -- -- -- 19,800
Chief Operating Officer 1998 396,000 100,000 -- -- -- 19,800
Henry C. Page, Jr. 2000 $273,400 $ -- $ -- $ -- -- $13,670/3/
Vice President--Human 1999 273,400 35,000 -- -- -- 13,670
Resources and External
Affairs 1998 262,900 35,000 -- -- -- 13,145
Newton A. Perry 2000 $260,000 $ -- $ -- $ -- -- $13,000/4/
Senior Vice President 1999 252,500 75,000 -- -- -- 12,625
Antiknocks 1998 250,000 150,000 -- -- -- 12,500
Alexander McLean 2000 $246,800 $ -- $ -- $ -- -- $12,340/5/
Senior Vice President 1999 239,675 75,000 -- -- -- 11,984
Petroleum Additives 1998 237,300 50,000 -- -- -- 9,835
--------
/1/Includes contributions to the Corporation's savings plan ($8,500, $8,000
and $8,000) and accruals in the Corporation's excess benefit plan ($30,000,
$30,500 and $30,500) for 2000, 1999 and 1998, respectively.
/2/Includes contributions to the Corporation's savings plan ($8,500, $8,000
and $8,000) and accruals in the Corporation's excess benefit plan ($12,090,
$11,800 and $11,800) for 2000, 1999 and 1998, respectively.
/3/Includes contributions to the Corporation's savings plan ($8,500, $8,000
and $8,000) for 2000, 1999 and 1998, respectively, and accruals in the
Corporation's excess benefit plan ($5,170, $5,670 and $5,145) for 2000, 1999
and 1998, respectively.
/4/Includes contributions to the Corporation's savings plan ($8,500, $8,000
and $8,000) for 2000, 1999 and 1998, respectively, and accruals in the
Corporation's excess benefit plan ($4,500, $4,625 and $4,500) for 2000, 1999
and 1998, respectively.
/5/Includes contributions to the Corporation's savings plan ($8,500, $8,000
and $8,000) for 2000, 1999 and 1998, respectively, and accruals in the
Corporation's excess benefit plan ($3,840, $3,984 and $1,835) for 2000, 1999
and 1998, respectively.
5
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no option or stock appreciation right ("SAR") grants to the Named
Executive Officers during the last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUE
The following table presents information concerning stock option and SAR
exercises by the Named Executive Officers and fiscal year end option/SAR
values.
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/
Options/SARs at FY-End (#) SARs at FY-End ($)/1/
Shares Acquired Value -------------------------- -------------------------
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- -------------- ----------- -------------
Bruce C. Gottwald 0 $0 0 0 $0 $0
Thomas E. Gottwald 0 0 80,000/2/ 320,000/2/ 0 0
Henry C. Page, Jr. 0 0 33,330/2/ 80,000/2/ 0 0
Newton A. Perry 0 0 32,208/2/ 80,000/2/ 0 0
Alexander McLean 0 0 10,000/2/ 115,000/2/ 0 0
--------
/1/These values are based on $1.4375, the closing price of Ethyl Common Stock
on the New York Stock Exchange on December 29, 2000.
/2/Each of these options relates to Ethyl Common Stock and includes a tandem
SAR.
RETIREMENT BENEFITS
The following table illustrates under the Corporation's pension plan for
salaried employees the estimated benefits upon retirement at age 65,
determined as of December 31, 2000, to persons with specified earnings and
years of pension benefit service. To the extent benefits payable at retirement
exceed amounts that may be payable under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), they will be paid under the
Corporation's excess benefit or supplemental retirement plans, as applicable.
This table includes the amounts that would be payable under such plans.
Pension Plan Table*
Years of Pension Benefit Service and Estimated Annual Benefits
-----------------------------------------------------------------------
Final Average
Earnings 10 15 20 25 30 35 40 45
------------- -------- -------- -------- -------- -------- -------- -------- --------
$ 300,000 $ 43,600 $ 65,395 $ 87,195 $108,990 $130,790 $152,590 $174,385 $196,185
$ 350,000 51,100 76,645 102,195 127,740 153,290 178,840 204,385 229,935
$ 400,000 58,600 87,895 117,195 146,490 175,790 205,090 234,385 263,685
$ 450,000 66,100 99,145 132,195 165,240 198,290 231,340 264,385 297,435
$ 500,000 73,600 110,395 147,195 183,990 220,790 257,590 294,385 331,185
$ 550,000 81,100 121,645 162,195 202,740 243,290 283,840 324,385 364,935
$ 600,000 88,600 132,895 177,195 221,490 265,790 310,090 354,385 398,685
$ 650,000 96,100 144,145 192,195 240,240 288,290 336,340 384,385 432,435
$ 700,000 103,600 155,395 207,195 258,990 310,790 362,590 414,385 466,185
$ 750,000 111,100 166,645 222,195 277,740 333,290 388,840 444,385 499,935
$ 800,000 118,600 177,895 237,195 296,490 355,790 415,090 474,385 533,685
$ 850,000 126,100 189,145 252,195 315,240 378,290 441,340 504,385 567,435
$ 900,000 133,600 200,395 267,195 333,990 400,790 467,590 534,385 601,185
$ 950,000 141,100 211,645 282,195 352,740 423,290 493,840 564,385 634,935
$1,000,000 148,600 222,895 297,195 371,490 445,790 520,090 594,385 668,685
--------
*Assumes attainment of age 65 in 2000 and Social Security Covered
Compensation of $35,100.
6
The benefit formula under the pension plans is based on the participant's
final-average earnings, which are defined as the average of the highest three
consecutive calendar years' earnings (base pay plus 50% of incentive bonuses
paid in any fiscal year) during the 10 consecutive calendar years immediately
preceding the date of determination. The years of pension benefit service for
each of the executive officers named in the above compensation table as of
December 31, 2000, are: Bruce C. Gottwald, 45; Thomas E. Gottwald, 9;
Henry C. Page, Jr., 18; Newton A. Perry, 32; and Alexander McLean, 12.
Benefits under the pension plans are computed on the basis of a life annuity
with 60 months guaranteed payments. The benefits listed in the above
compensation table are not subject to deduction for Social Security or other
offset payments.
Mr. McLean, who was previously employed by Ethyl Petroleum Additives
Limited, a subsidiary of the Corporation located in the United Kingdom, also
participated in the Ethyl Petroleum Additives Limited Pension Plan (the
"Additives Plan"). The formula under the Additives Plan is equal to 1.6667%
times pensionable salary times years of service. Mr. McLean has 7.833 years of
service under that plan. This accrued benefit as of April 30, 1997, is $47,028
per year, payable at age 65. This amount has been converted from British
pounds to U.S. dollars at the conversion rate of 1(Pounds):$1.4897 as of
December 29, 2000. The amount payable under the Additives Plan is offset from
the amount payable under the pension plan described above.
EXCESS BENEFIT PLANS
The Corporation maintains excess benefit plans (the "Excess Plans") in the
form of nonqualified pension plans that provide eligible individuals the
difference between the benefits they actually accrue under the qualified
employee pension and savings plans of the Corporation and the benefits they
would have accrued under such plans but for the maximum benefit and annual
addition limitations and the limitation on compensation that may be recognized
thereunder under the Code. All benefits under the Excess Plans vest upon a
Change in Control of the Corporation, as defined in the Excess Plans.
Participants in the Excess Plans receive their benefits in the form elected
under the qualified employee pension plans of the Corporation or under certain
circumstances in a lump sum payment.
Mr. Walker, who retired as an officer and employee of the Corporation on
January 31, 1998, will receive a series of payments that are equivalent to the
present value of his accrued benefits under the Excess Plans plus any earnings
on the funds designed for such payments. This arrangement is in lieu of any
benefits under the Excess Plans.
COMPENSATION OF DIRECTORS
Each non-employee director is paid (i) $1,000 for attendance at each Board
meeting and (ii) $600 for attendance at each meeting of a committee of the
Board of which he or she is a member. In addition, each such director has been
paid a quarterly fee of $5,000. Effective April 1, 2001, the quarterly fee
will be $3,000. Employee members of the Board of Directors are not paid
separately for their service on the Board or its committees.
Any director retiring from the Board after age 60 with at least five years'
service on the Board will receive $12,000 per year for life, payable in
quarterly installments. The service requirement for this benefit may be waived
under certain circumstances. Any director retiring under other circumstances
will receive $12,000 per year, payable in quarterly installments, commencing
no earlier than age 60, for a period not to exceed his years of service on the
Board. The payment period limitation on this benefit may be waived in certain
circumstances. Such retirement payments to former directors may be
discontinued under certain circumstances.
7
Under the Directors' Stock Plan, on each July 1, each non-employee director
is awarded that number of whole shares of Ethyl Common Stock that, when
multiplied by the closing price of Ethyl Common Stock on the immediately
preceding business day, as reported in The Wall Street Journal, shall as
nearly as possible equal but not exceed $2,000. The shares of Ethyl Common
Stock awarded under the Directors' Stock Plan are nonforfeitable and the
recipient directors immediately and fully vest in Ethyl Common Stock issued
under the Director's Stock Plan. Subject only to such limitations on transfer
as may be specified by applicable securities laws, directors may sell their
shares under the Directors' Stock Plan at any time. The Directors' Stock Plan
provides that no awards may be made after July 1, 2001.
Non-employee directors may defer, in ten percent increments, all or part of
their retainer fee and meeting fees into either a deferred cash account or a
deferred stock account (the "Deferred Compensation Plan"), or a percentage of
the fees into each of the accounts, both of which are unfunded and maintained
for recordkeeping purposes only. Distributions under the Deferred Compensation
Plan, paid in a single sum or in up to ten annual installments, cannot begin
within two years of the beginning of the deferral year. The maximum aggregate
number of shares of Ethyl Common Stock that may be issued under the Deferred
Compensation Plan is 100,000 shares.
8
BONUS, SALARY AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Bonus, Salary and Stock Option Committee of the Board of Directors (the
"Committee"), which performs the function of a compensation committee,
consists of Messrs. Berry (Chairman), Grosvenor and Scott and Ms. Cothran. The
Committee is delegated the power to administer the compensation program of the
Corporation applicable to its executive officers, including the Chief
Executive Officer. Accordingly, the Committee submits this report on executive
compensation to the shareholders.
Overall Objectives
The objectives of the Corporation's executive compensation program are to:
. Provide balanced, competitive total compensation that will enable the
Corporation to attract, motivate and retain highly qualified executives;
. Provide incentives for enhancing the profitability of the Corporation by
rewarding executives for meeting individual and corporate goals; and
. Align the financial interests of the executives closely to those of the
shareholders by encouraging executive ownership of Ethyl Common Stock.
Elements of the Program
The Committee believes the interests of the shareholders will be best served
if the compensation program consists of cash compensation and equity
ownership, with a significant portion of compensation depending upon
performance. The program includes: base salary, annual bonuses in cash or cash
and stock, and stock options with performance vesting and SARs. The Committee
considers all elements of the program when setting appropriate compensation.
The Corporation seeks to maintain its executive compensation packages around
the mid-range of those offered generally in the job markets in which the
Corporation competes for talent and experience.
Because of the extremely difficult market conditions that the Corporation
has experienced in the last several years and the low trading pricing of Ethyl
Common Stock, the Committee has not been awarding any stock options. More
recently the Corporation has been concentrating on streamlining operations
with the focus of employment and compensation decisions directed at reducing
costs.
Competitive Market
The Corporation has used compensation surveys provided by compensation
consultants in determining the market for executive pay. The surveys include
companies that are larger and smaller than the Corporation. Some of the
surveys are limited to companies in the petroleum or chemical businesses,
including, but not limited to, companies shown on the Performance Graph. Other
surveys include companies in other industries. References to the "market" in
this report refer to the survey data.
Base Salaries
Base salaries have been based on evaluations of past and current Corporation
operating profits and individual contribution to the Corporation's success,
market data for comparable positions and salary levels of the Corporation's
peer group companies and alignment of salary and organization within the
Corporation. The Committee considers each of the individual factors but does
not assign a specific value to each factor, and a subjective element is
acknowledged in evaluating each executive's contribution. Salary survey data
from the Corporation's peer group companies indicated the Corporation's
executive level compensation to be within the ranges of compensation offered
by peer group companies.
9
Annual Bonuses
The annual bonus program has been designed to motivate and reward
performance measured against individual, division, department and corporate
objectives. Annual bonus awards are determined by the Committee in conjunction
with senior management, and are based on evaluation of the performance, level
of responsibility and leadership of the individual executive in relation to
overall corporate results. For 2000, no bonuses were paid to any of the
executive officers.
Stock Options
Under the Incentive Stock Option Plan approved by the shareholders, the
Committee, in its discretion, may grant options to purchase shares of Ethyl
Common Stock (with or without related SARs) to any executive of the
Corporation or any subsidiary who has contributed or can be expected to
contribute to the Corporation's profits and growth. The Committee determines
the amount of the grant, the term of the options and the requisite conditions
for exercise. The Committee did not grant any options under the Incentive
Stock Option Plan during 2000.
CEO Compensation
In keeping with the objective of improving long-term performance and
shareholder value, the Chief Executive Officer, as a major shareholder,
strongly advocates pay for performance. The CEO asked not to be considered for
a salary increase and the Committee concurred with his recommendation.
Compensation survey data places the CEO's total compensation for 2000 within
the range of the size-adjusted median of companies surveyed by the
Corporation's compensation consultants.
The Committee believes that the CEO continues to take necessary strategic
steps to position the Corporation for the future in an extremely difficult
competitive environment. As with the other executive officers, he did not
receive a bonus for 2000.
Section 162(m)
Section 162(m) of the Code provides certain criteria for the tax
deductibility of compensation in excess of $1 million paid to the
Corporation's executive officers. To meet the criteria applicable to
performance-based compensation (as defined in Section 162(m) of the Code),
certain of the Corporation's benefit plans would have to be amended to limit
the Committee's discretion to determine individual awards based on individual
performance factors and other factors as the Committee may determine, from
time to time, to be relevant.
The Committee believes that the flexibility on awards is an important
feature of the plans and one that serves the best interests of the Corporation
by allowing the Committee to recognize and motivate individual executive
officers as circumstances warrant. Further, the Committee currently does not
anticipate that there will be any compensation subject to the loss of tax
deductibility. Consequently, the Committee does not propose at the present
time to amend any plan to comply with the performance-based criteria.
THE BONUS, SALARY AND STOCK OPTION
COMMITTEE
William W. Berry, Chairman
Gilbert M. Grosvenor
Sidney Buford Scott
Phyllis L. Cothran
March 19, 2001
10
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
composed of four independent directors and operates under a written charter
adopted by the Board of Directors, a copy of which is attached to this proxy
statement as Appendix A. The Audit Committee reviews audit fees and recommends
to the Board of Directors, subject to shareholder ratification, the selection
of the Corporation's independent accountants. Management is responsible for
the Corporation's internal controls and the financial reporting process. The
independent accountants are responsible for performing an independent audit of
the Corporation's consolidated financial statements in accordance with
generally accepted auditing standards and for issuing a report thereon. The
Audit Committee's responsibility is to monitor and oversee these processes and
to report thereon to the Board of Directors. In this context, the Audit
Committee has met and held discussions with management and
PricewaterhouseCoopers LLP, the Corporation's independent accountants.
Management represented to the Audit Committee that the Corporation's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and
PricewaterhouseCoopers.
The Audit Committee has discussed with PricewaterhouseCoopers the matters
required to be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Accounting Standards), including the scope of
the auditor's responsibilities, significant accounting adjustments and any
disagreements with management.
The Audit Committee also has received the written disclosures and the letter
from PricewaterhouseCoopers relating to the independence of that firm as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and has discussed with
PricewaterhouseCoopers that firm's independence from the Corporation.
Based upon the Audit Committee's discussions with management and
PricewaterhouseCoopers and the Audit Committee's review of the representation
of management and the report of PricewaterhouseCoopers to the Audit Committee,
the Audit Committee recommended that the Board of Directors include the
audited consolidated financial statements in the Corporation's Annual Report
on Form 10-K for the year ended December 31, 2000 filed with the Securities
and Exchange Commission.
During the fiscal year ended December 31, 2000, PricewaterhouseCoopers
billed the Corporation the fees set forth below in connection with services
rendered by that firm to the Corporation.
Audit Fees. For professional services rendered by PricewaterhouseCoopers for
the audit of the Corporation's annual financial statements for the fiscal year
ended December 31, 2000, and the reviews of the financial statements included
in the Corporation's Quarterly Reports on Form 10-Q for the fiscal year ended
December 31, 2000, PricewaterhouseCoopers billed the Corporation fees in the
aggregate amount of $608,000.
Financial Information Systems Design and Implementation Fees. For the fiscal
year ended December 31, 2000, PricewaterhouseCoopers rendered professional
services to the Corporation in connection with (i) directly or indirectly
operating, or supervising the operation of the Corporation's information
system or managing the Corporation's local area network, (ii) designing or
implementing a hardware or software system that aggregates source data
underlying the Corporation's financial statements or generates information
that is significant to the Corporation's financial statements taken as a whole
and (iii) assessing, designing and implementing internal accounting controls
and risk management controls. PricewaterhouseCoopers billed the Corporation
fees in the aggregate amount of $133,600 for the services described above.
All Other Fees. For professional services other than those described above
for the fiscal year ended December 31, 2000, PricewaterhouseCoopers billed the
Corporation fees in the aggregate amount of $333,800. This amount includes an
aggregate amount of $117,000 that PricewaterhouseCoopers billed for services
rendered
11
in connection with the performance of internal audit procedures for the
Corporation. In addition to performing an independent audit of the
Corporation's consolidated financial statements, PricewaterhouseCoopers has
been engaged by the Corporation to conduct internal audit projects under the
direction of the Corporation.
The Audit Committee has considered whether the provision of services
described above under "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" is compatible with maintaining the independence of
PricewaterhouseCoopers.
THE AUDIT COMMITTEE
Phyllis L. Cothran, Chairman
William W. Berry
Gilbert M. Grosvenor
Sidney Buford Scott
March 26, 2001
12
[GRAPH]
-------------------------------------------------------------------------------
Ethyl Chemical The Lubrizol
Date Corporation S&P 500 Composite Corporation
-------------------------------------------------------------------------------
December 1995 $100.00 $100.00 $100.00 $100.00
December 1996 $ 80.92 $122.90 $124.57 $115.38
December 1997 $ 68.78 $163.85 $151.56 $140.94
December 1998 $ 52.61 $210.58 $142.08 $101.69
December 1999 $ 34.70 $254.83 $166.20 $127.14
December 2000 $ 14.91 $231.62 $152.19 $110.86
*Assumes $100 invested on last day of December 1995. Dividends are
reinvested quarterly.
The Corporation included a comparison with The Lubrizol Corporation, which is
the only other corporation listed on The New York Stock Exchange with lubricant
additives as a primary business.
13
DESIGNATION OF AUDITORS
The Board of Directors has designated PricewaterhouseCoopers LLP, certified
public accountants, as the Corporation's independent auditors for the year
2001, subject to shareholder approval. Coopers & Lybrand, L.L.P., which was
the predecessor of PricewaterhouseCoopers, has audited the Corporation's
financial statements since 1962 and those of the former Ethyl Corporation
(Delaware) from 1947 to 1962. A representative of PricewaterhouseCoopers is
expected to be present at the annual meeting with an opportunity to make a
statement and to be available to respond to appropriate questions.
PricewaterhouseCoopers' principal function is to audit the consolidated
financial statements of the Corporation and its subsidiaries and, in
connection with that audit, to review certain related filings with the
Securities and Exchange Commission and to conduct limited reviews of the
financial statements included in the Corporation's quarterly reports.
PROPOSALS FOR 2002 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 2002 annual
meeting of shareholders must present such proposal to the Corporation at its
principal office in Richmond, Virginia, not later than December 26, 2001, in
order for the proposal to be considered for inclusion in the Corporation's
proxy statement. The Corporation anticipates holding the 2002 annual meeting
on Thursday, April 25, 2002.
The Corporation's bylaws provide that, in addition to any other applicable
requirements, for business to be properly brought before the annual meeting by
a shareholder, the shareholder must give timely notice in writing to the
Secretary of the Corporation not later than 60 days prior to the meeting. As
to each matter, the notice should contain (i) a brief description of the
matter and the reasons for addressing it at the annual meeting, (ii) the name,
record address of and number of shares beneficially owned by the shareholder
proposing such business and (iii) any material interest of the shareholder in
such business.
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented for
action at the meeting other than as set forth herein. However, if any other
matters properly come before the meeting, or any adjournment thereof, the
person or persons voting the proxies will vote them in accordance with their
best judgment.
By Order of the Board of Directors
M. Rudolph West, Secretary
14
Appendix A
Ethyl Corporation
Audit Committee Charter
Introduction
The Board of Directors ("Board") continuously reviews current trends and
best practice in relation to corporate governance. The Board has constituted
an Audit Committee to assist the Board in fulfilling its responsibilities in
the following areas:
. Effective management of financial risks;
. Reliable management and financial reporting processes;
. Compliance with laws and regulations; and
. Maintenance of an effective and efficient audit.
This Charter sets out the specific responsibilities delegated by the Board
to the Audit Committee and details the manner in which the Audit Committee
will operate.
Responsibilities
Effective Management of Financial Risks
To be aware of the current areas of greatest financial risk and that
management is effectively assessing and managing the risks.
To satisfy itself that effective systems of accounting and internal control
are established and maintained to manage financial risk.
To satisfy itself regarding the integrity and prudence of management control
systems, including the review of policies and/or practices.
To inform the Board of any matters that may significantly impact the
financial condition or affairs of the company, and help assess the related
risks and planned actions to manage those risks, including specific project
reviews of returns on investment and capital employed at appropriate periods
of 1-3-5 years following the approval of projects.
Reliable Management and Financial Reporting Processes
To review and assess the adequacy of management reporting to the Board in
terms of the quantity, quality and timing of financial information, as well as
related financial disclosures and decisions, necessary to understand and
report internally and externally on the company's operations and financial
condition.
To review the entity's accounting policies and practices in the light of
evolving requirements of accounting principles in accordance with Generally
Accepted Accounting Practices in the US, the Securities and Exchange
Commission (SEC), and the American Institute of Certified Public Accountants
(AICPA), and other relevant requirements.
To review, or cause the Committee or the Chairman of the Committee to
review, with the financial management of the Corporation and the Corporation's
independent accountants the financial statements prior to the public release
of the Corporation's earnings.
To discuss with the independent accountants the matters required to be
discussed by the Generally Accepted Auditing Standards (SAS No. 61) relating
to the conduct of the audit.
A-1
To include in the Corporation's proxy or information statements relating to
annual meetings of shareholders at which directors are to be elected (or
special meetings or written consent in lieu of such meetings), a report of the
Audit Committee that complies with the SEC's regulations for such reports.
To review filings made with SEC and other published documents containing the
Corporation's financial statements and consider whether the information
contained in such documents is consistent with the information contained in
the Corporation's internal financial statements.
Compliance with Laws and Regulations
To be updated with developments and changes in the law relating to the
responsibilities and liabilities of Directors and to monitor and review the
extent to which the Board is meeting its obligations.
To monitor developments and changes in the various rules, regulations and
laws which relate generally to the entity's business operations and to monitor
and review the extent to which the entity is complying with such laws.
Maintenance of Effective and Efficient Audit Processes
To recommend to the Board the appointment of external auditors, recognizing
that the external auditor is ultimately accountable to the Board of Directors.
To review the appointment, replacement, reassignment, or dismissal of the
members of the Corporation's internal auditing department.
To review the efficiency and effectiveness of both the internal and external
auditors in relation to their respective responsibilities.
To monitor that there have been no unjustified restrictions or limitations
placed on the auditors.
To assess that the scope of the audits (external and internal) are adequate,
ensuring emphasis is placed on areas where the Audit Committee, management or
the auditors believe special emphasis is necessary.
To review and assess the findings of the internal and external auditors and
the planned actions and timetable proposed by management in response to the
findings.
Other Responsibilities
To discuss and review with the Corporation's independent accountants their
ultimate accountability to the Board and the Audit Committee.
To ensure that the Corporation's independent accountants submit on a
periodic basis to the Audit Committee a formal written statement delineating
all relationships between the independent accountants and the Corporation as
required by the Independence Standards Board.
To engage actively in a dialogue with the Corporation's independent
accountants with respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent accountants and
recommend that the Board take appropriate action in response to the
independent accountants' report to satisfy itself of the independent
accountants' independence.
To report any matter identified during the course of carrying out its duties
that the Audit Committee considers should be brought to the attention of the
Board.
To perform or undertake on behalf of the Board any such other tasks or
actions as the Board may from time to time authorize.
A-2
Administration Matters
Membership and Attendance at Meetings
The Audit Committee will comprise four members of the Board, each of whom
shall be an Independent Director in accordance with the Rules of the New York
Stock Exchange. All members of the Audit Committee shall have a requisite
working familiarity with basic finance and accounting practices in compliance
with the Rules of the New York Stock Exchange. In addition, at least one
member of the Committee will have accounting or related financial management
expertise. A quorum shall be three.
The members of the Audit Committee shall be elected by the Board annually
and shall serve for one year or until their successors are elected and
qualified. The members of the Audit Committee may designate a Chairman by
majority vote of the full Audit Committee.
The Audit Committee may invite such other persons (e.g., Chief Financial
Officer, Corporate Controller, Director of Business Assurance) as it deems
appropriate.
Internal and external audit shall normally make presentations to the Audit
Committee at its meetings.
The Secretary of the Audit Committee shall be the Secretary of the entity or
such other person as nominated by the Board.
Meetings
Face to face or telephonic meetings shall be held at least four times a year
or more frequently as circumstances dictate. Special meetings of the Audit
Committee may be convened as required. The internal or external auditors may
request a meeting if they consider that one is necessary.
The proceedings of these meetings will be documented in minutes.
It is expected that regular reports will be received on matters to be
defined by the Audit Committee but are likely to include:
. Internal audit reports
. Compliance certifications
. Security and fraud reports
. External audit reports
. Significant SEC and IRS communications
. Annual Audit Committee Charter review
The Audit Committee shall meet at least annually with the Corporation's
management, the members of the Corporation's internal auditing department and
the Corporation's independent accountants in executive sessions to discuss any
matters that the Audit Committee or each of these groups believe should be
discussed privately.
Board Reporting
The Audit Committee should report to the Board as necessary and should
report annually to the Board summarizing the activities of the Audit Committee
during the previous financial year.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
accountant. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent accountants or to assure compliance with laws and regulations.
A-3
ETHYL CORPORATION
Richmond, Virginia
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 2001
The undersigned hereby appoints Bruce C. Gottwald and Sidney Buford Scott, or
either of them, with full power of substitution in each, proxies to vote all
shares of the undersigned in Ethyl Corporation, at the annual meeting of
shareholders to be held May 30, 2001, and at any and all adjournments or
postponements thereof:
1. ELECTION OF DIRECTORS: [ ] FOR all nominees [ ] WITHHOLD
(except as indicated AUTHORITY
to the contrary below) to vote for all nominees
listed below
William W. Berry, Phyllis L. Cothran, Bruce C. Gottwald, Thomas E. Gottwald,
Gilbert M. Grosvenor, Sidney Buford Scott and Charles B. Walker.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY SUCH NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) IN THE SPACE PROVIDED BELOW.)
______________________________________________________________________________
2. The proposal to approve the appointment of PricewaterhouseCoopers LLP as
the auditors for the Corporation for 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business and matters incident to the conduct of the meeting as may properly
come before the meeting.
This Proxy is solicited on behalf of the Board of Directors. This Proxy when
properly executed will be voted as specified. If no specification is made, this
Proxy will be voted FOR all nominees and FOR Proposal 2.
Dated _____________________, 2001
____________________________________
Please sign name exactly as it appears on the stock
certificate. Only one of several joint owners or
co-owners need sign. Fiduciaries should give full
title.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.