SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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14a-6(e)(2))
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240.14a-12
SEALED AIR CORPORATION
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(Name of Registrant as Specified In Its Charter)
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[SEALED AIR CORPORATION LOGO]
March 31, 1999
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Sealed Air Corporation scheduled to be held on Friday, May 21, 1999 at 10:00
a.m. at the Saddle Brook Marriott, Garden State Parkway at I-80, Saddle Brook,
New Jersey 07663-5894. Your Board of Directors and senior management look
forward to greeting you personally at the meeting.
At this meeting, you will be asked to vote on certain amendments to the
Company's Charter to repeal certain provisions that inhibit the exercise by the
stockholders of their rights to influence the Company's corporate governance.
The repeal of these provisions requires the affirmative vote of more than 80%
of the Company's stock, so it is particularly important that you vote in favor
of these amendments.
You will also be asked to elect four directors and to ratify the selection
of KPMG LLP as the Company's auditors for 1999. These proposals are important,
and we urge you to vote in favor of them.
Regardless of the number of shares of Common Stock or Preferred Stock you
own, it is important that they be represented and voted at the meeting. You may
vote your shares by signing, dating and mailing the enclosed proxy in the
return envelope provided. Stockholders of record also have the new options of
voting by telephone or via the Internet. Instructions for voting by telephone
and via the Internet are set forth in the attached Proxy Statement and on your
proxy card. Your prompt cooperation is appreciated.
On behalf of your Board of Directors, we thank you for your continued
support.
Sincerely,
/s/ T.J. Dermot Dunphy
-------------------------------
T. J. DERMOT DUNPHY
Chairman of the Board and
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1999
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The Annual Meeting of Stockholders of Sealed Air Corporation, a Delaware
corporation (the "Company"), will be held on May 21, 1999 at 10:00 a.m. local
time, at the Saddle Brook Marriott, Garden State Parkway at I-80, Saddle Brook,
New Jersey 07663-5894, for the following purposes:
1. to consider and act upon proposed amendments to the Company's Amended
and Restated Certificate of Incorporation that would repeal certain
provisions of the Certificate of Incorporation. These amendments
require the affirmative vote of 80% in voting power of the Company's
capital stock, and the provisions proposed to be repealed are as
follows:
(a) provisions requiring a classified board and removal of directors
only for cause;
(b) a provision prohibiting stockholder action by written consent; and
(c) a provision requiring 80% stockholder vote to amend the Company's
by-laws;
2. to elect four directors of the Company as Class I directors;
3. to ratify the appointment of KPMG LLP as the independent auditors of
the Company for the fiscal year ending December 31, 1999; and
4. to transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 24, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
A copy of the Company's 1998 Annual Report to Stockholders has been sent
to all stockholders of record. Additional copies are available upon request.
The Company invites you to attend the meeting so that management can
review the past year with you, listen to your suggestions, and answer any
questions you may have. In any event, because it is important that as many
stockholders as possible be represented at the meeting, please review the
attached Proxy Statement promptly and then complete and return the enclosed
proxy in the accompanying post-paid, addressed envelope, or vote by telephone
or via the Internet by following the instructions for voting set forth in the
attached Proxy Statement and on your proxy card. If you attend the meeting, you
may vote your shares personally even though you have previously voted by mail,
telephone or via the Internet.
By Order of the Board of Directors
H. KATHERINE WHITE
Secretary
Saddle Brook, New Jersey
March 31, 1999
CONTENTS
PAGE
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General Information ................................................... 1
Voting Procedures ..................................................... 1
The Merger and Related Transactions ................................... 3
Management ............................................................ 3
Voting Securities ..................................................... 4
Repeal of Supermajority Provisions of the Company's Charter ........... 7
Section 16(a) Beneficial Ownership Reporting Compliance ............... 8
Election of Directors ................................................. 8
Committees of the Board of Directors .................................. 11
Current Committees of the Board of Directors ......................... 11
Committees Prior to the Merger ....................................... 11
Compensation Committee Interlocks and Insider Participation .......... 12
Directors' Compensation ............................................... 13
Current Directors' Compensation ...................................... 13
Directors' Compensation Prior to the Merger .......................... 13
Executive Compensation ................................................ 14
Summary Compensation Table ........................................... 14
Report of the Company's Organization and Compensation Committee
on Executive Compensation .......................................... 16
Common Stock Performance Comparisons .................................. 20
Selection of Auditors ................................................. 21
Change of Auditors in 1998 ........................................... 21
Stockholder Proposals for the 2000 Annual Meeting ..................... 21
Other Matters ......................................................... 22
Annex A -- Proposed Amendments to the Company's Charter ............... A-1
SEALED AIR CORPORATION
PARK 80 EAST
SADDLE BROOK, NEW JERSEY 07663-5291
PROXY STATEMENT
DATED MARCH 31, 1999
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FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1999
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GENERAL INFORMATION
This Proxy Statement is being furnished to the holders of the Common Stock
and Preferred Stock (as defined below) of Sealed Air Corporation (the
"Company"), a Delaware corporation, in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders (the "Annual Meeting") to
be held at the Saddle Brook Marriott, Garden State Parkway at I-80, Saddle
Brook, New Jersey 07663-5894 at 10:00 a.m. local time on May 21, 1999, and at
any adjournments thereof. The enclosed proxy is being solicited by the Board of
Directors of the Company. This Proxy Statement and the enclosed proxy are first
being mailed to stockholders on or about March 31, 1999.
VOTING PROCEDURES
Your vote is very important. Stockholders of record may vote by telephone,
via the Internet or by mail. A toll-free telephone number and web site address
are included on the proxy card. If you chose to vote by mail, a postage paid
envelope is provided. You may save the Company the expense of a second mailing
if you vote promptly.
Voting by Telephone
Stockholders of record may vote by using the toll-free number listed on
the proxy card. Telephone voting is available 24 hours a day. Easy-to-follow
voice prompts allow you to vote your shares and confirm that your instructions
have been properly recorded. Our telephone voting procedures are designed to
authenticate stockholders by using individual control numbers provided on each
proxy card. If you vote by telephone, you do not need to return your proxy
card. Please see the proxy card for specific instructions.
Voting via the Internet
Stockholders of record may also vote via the Internet as instructed on the
proxy card. Internet voting is available 24 hours a day. As with telephone
voting, you will be given the opportunity to confirm that your instructions
have been properly recorded. Our Internet voting procedures are designed to
authenticate stockholders by using individual control numbers provided on each
proxy card. If you vote via the Internet, you do not need to return your proxy
card. Please see the proxy card for specific instructions.
Voting by Mail
If you chose to vote by mail, simply mark your proxy card, sign and date
it, and return it in the postage-paid envelope provided. If you sign, date and
mail your proxy card without indicating how you want to vote, your proxy will
be voted as recommended by the Board of Directors.
If You Wish to Revoke Your Proxy
Whether you vote by telephone, via the Internet, or by mail, you may later
revoke your proxy at any time before it is exercised by: (i) submitting a
properly signed proxy with a later date; (ii) voting by telephone or via the
Internet at a later time, or (iii) voting in person at the Annual Meeting.
Voting at the Annual Meeting
The method by which you vote will not limit your right to vote at the
Annual Meeting if you decide to attend in person. Any stockholder of record may
vote in person at the Annual Meeting whether or not he or she has previously
returned a proxy card or voted by telephone or via the Internet. If your shares
are held in the name of a bank, broker, or other holder of record, you must
obtain a written proxy, executed in your favor, from the holder of record to be
able to vote at the meeting. If you hold shares in the Company's Profit-Sharing
Plan or the Company's Thrift Plan for Cryovac Employees, you cannot vote those
shares in person at the Annual Meeting (see "Voting by Plan Participants"
below).
All shares that have been properly voted, whether by telephone, Internet
or mail, and not revoked, will be treated as being present for the purpose of
determining the presence of a quorum at the Annual Meeting. and will be voted
at the annual meeting.
Voting on Other Matters
If any other matters are properly presented for consideration at the
Annual Meeting, the persons named in the proxy will have the discretion to vote
on those matters for you. The Company does not know of any other matters to be
presented for consideration at the Annual Meeting.
Voting Policies
Regardless of whether you vote by telephone, via the Internet or by mail,
if you specify the manner in which your shares are to be voted on a matter, the
shares represented by your proxy will be voted in accordance with your
specification. If you do not make such a voting specification, your shares will
be voted in the manner recommended by the Board of Directors as shown in this
Proxy Statement and on the proxy.
Under the rules of the New York Stock Exchange, Inc., brokers who hold
shares in street name for customers have the authority to vote on certain items
when they have not received instructions from their customers who are the
beneficial owners of such shares. The Company understands that, unless
instructed to the contrary by the beneficial owners of shares held in street
name, brokers may exercise such authority to vote on the election of directors
and the ratification of the appointment of the Company's auditors. However,
brokers may not exercise such discretionary voting authority with respect to
the proposed amendments to the Company's Amended and Restated Certificate of
Incorporation (the "Company's Charter"). Stockholders holding shares in street
name or otherwise through a broker who desire to vote in favor of the proposed
amendments to the Company's Charter must provide their broker with instructions
to vote their shares in favor of such matter. Proxies returned by mail,
telephone or Internet that are voted to abstain (including proxies containing
broker non-votes) on any matter to be acted upon by the stockholders will be
treated as present at the meeting for the purpose of determining a quorum.
Abstentions, but not broker non-votes, will be counted as votes cast on such
matters.
Voting by Plan Participants
For each participant in the Company's Profit-Sharing Plan, the proxy also
serves as a voting instruction card permitting the participant to provide
voting instructions to Fidelity Management Trust Company ("Fidelity"), trustee
for the Profit-Sharing Plan, for the shares of Common Stock allocated to his or
her account in such Plan. For each participant in the Company's Thrift Plan for
Cryovac Employees, the proxy also serves as a voting instruction card
permitting the participant to provide voting instructions to Fidelity, trustee
for the Thrift Plan for Cryovac Employees, for the shares of Common Stock and
Preferred Stock allocated to his or her account in such Plan. Telephone and
Internet voting are also available to Plan participants. Fidelity will vote
such allocated shares in each Plan as directed by each participant who provides
voting instructions to it on or before May 17, 1999. The terms of each such
Plan provide that shares allocated to the accounts of participants who do not
provide timely voting instructions will be voted by Fidelity in the same
proportion as shares are voted on behalf of participants who provide timely
voting instructions.
2
THE MERGER AND RELATED TRANSACTIONS
Until March 31, 1998, the Company was named W. R. Grace & Co. References
in this Proxy Statement to "Old Grace" refer to the Company prior to March 31,
1998. On March 31, 1998, the Company and Sealed Air Corporation (US), a
Delaware corporation formerly known as Sealed Air Corporation ("Old Sealed
Air"), completed a series of related transactions as a result of which, among
other things:
(a) The Company's specialty chemicals business was separated from its
packaging business, the packaging business ("Cryovac") was contributed to
one group of wholly owned subsidiaries, and the specialty chemicals
business was contributed to another group of wholly owned subsidiaries
("New Grace"), pursuant to a Distribution Agreement dated as of March 30,
1998 among the Company, W. R. Grace & Co.-Conn. and New Grace. The Company
then distributed all of the outstanding shares of common stock of New Grace
to the Company's stockholders at that time, and those stockholders became
stockholders of New Grace, which is now a separate publicly owned
corporation. These transactions are referred to in this Proxy Statement as
the "Reorganization."
(b) The Company recapitalized its outstanding shares of common stock, par
value $0.01 per share ("Old Grace Common Stock"), into the Common Stock and
the Preferred Stock (the "Recapitalization").
(c) A subsidiary of the Company merged into Old Sealed Air, with Old
Sealed Air being the surviving corporation (the "Merger"), pursuant to an
Agreement and Plan of Merger dated as of August 14, 1997 among the Company,
Old Sealed Air and such subsidiary (the "Merger Agreement").
As a result of these transactions, New Grace became a separate publicly
owned corporation named W. R. Grace & Co., which was managed by the former
management of the Company, and the Company, which now operates the businesses
of Old Sealed Air and Cryovac and is managed primarily by the former management
of Old Sealed Air, was renamed Sealed Air Corporation.
In the Recapitalization, the outstanding shares of Old Grace Common Stock
were converted into approximately 40,648,000 shares of Common Stock and
36,000,000 shares of Preferred Stock, and pursuant to the Merger Agreement,
each of the 42,624,246 shares of the common stock, par value $0.01 per share,
of Old Sealed Air ("Old Sealed Air Common Stock") outstanding on March 31, 1998
was converted into one share of the Common Stock of the Company. In addition,
outstanding options to purchase Old Grace Common Stock that were held by
Cryovac's employees were converted into options to purchase approximately
489,000 shares of the Company's Common Stock.
MANAGEMENT
Upon the completion of the Merger on March 31, 1998, in accordance with
the Merger Agreement, all of the directors of the Company other than Hank
Brown, Christopher Cheng, Virginia A. Kamsky and John E. Phipps resigned as
directors of the Company. These four remaining directors then elected as
additional directors in the classes set forth below under "Election of
Directors" the seven persons who were serving as directors of Old Sealed Air
immediately prior to the Merger. The Board also elected T. J. Dermot Dunphy,
the Chairman of the Board and Chief Executive Officer of Old Sealed Air, as its
Chairman.
In addition, in accordance with the Merger Agreement, all of the persons
who had served as executive officers of the Company prior to the Merger, other
than Gary Kaenzig, resigned effective upon the completion of the Merger. All
the executive officers of Old Sealed Air immediately prior to the Merger as
well as certain executives of Cryovac have been appointed by the Board to be
executive officers of the Company since the Merger. Also, on July 1, 1998,
Daniel S. Van Riper, who had previously been a partner of KPMG LLP, was
appointed Senior Vice President and Chief Financial Officer of the Company.
3
VOTING SECURITIES
The voting securities of the Company are the outstanding shares of its
common stock, par value $0.10 per share ("Common Stock"), and its Series A
convertible preferred stock, par value $0.10 per share ("Preferred Stock"). As
of the close of business on March 24, 1999, 83,486,552 shares of Common Stock
were issued and outstanding, each of which is entitled to one vote at the
Annual Meeting. As of the close of business on March 24, 1999, 35,819,125
shares of Preferred Stock were issued and outstanding, each of which is
entitled to 0.885 votes at the Annual Meeting, with the Preferred Stock being
entitled to an aggregate of 31,699,926 votes at the Annual Meeting. Only
holders of record of Common Stock and Preferred Stock at the close of business
on March 24, 1999 will be entitled to notice of and to vote at the Annual
Meeting. A list of those stockholders will be kept at the Company's principal
office at Park 80 East, Saddle Brook, New Jersey for a period of ten days prior
to the meeting.
A majority in voting power of the outstanding shares of Common Stock and
Preferred Stock present in person or represented by proxy will constitute a
quorum for the transaction of business at the Annual Meeting. The proposed
amendments to the Company's Charter must be approved by the affirmative vote of
at least 80 percent of the combined voting power of the shares of Common Stock
and Preferred Stock. The directors are elected by a plurality of the votes cast
in the election, and the ratification of the appointment of auditors and any
other matters to be considered at the Annual Meeting must be approved by the
affirmative vote of the holders of a majority of the combined voting power of
the shares of Common Stock and Preferred Stock present in person or represented
by proxy at the Annual Meeting.
The following table sets forth, as of the date indicated in the applicable
Schedule 13G with respect to each person identified as having filed a Schedule
13G and as of March 15, 1999 with respect to each current director, nominee for
election as a director and current executive officer, the number and percentage
of outstanding shares of Common Stock and Preferred Stock (i) beneficially
owned by each person known to the Company to be the beneficial owner of more
than five percent of the then outstanding shares of each such class, (ii)
beneficially owned, directly or indirectly, by each current director, nominee
for election as a director and by each of the current executive officers of the
Company named in the Summary Compensation Table set forth below, and (iii)
beneficially owned, directly or indirectly, by all directors and executive
officers of the Company as a group.
SHARES OF PERCENTAGE
CLASS OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED SHARES IN CLASS
---------------- ------------------ ----------------
COMMON STOCK:
FMR Corp.(1) ......................... 4,696,975 5.5
82 Devonshire Street
Boston, Massachusetts 02109-3614
Tiger Management L.L.C. and
Tiger Performance L.L.C.(2) ......... 14,080,870 16.9
101 Park Avenue
New York, New York 10178
Hank Brown ........................... 4,504 (4)(5) *
Leonard R. Byrne ..................... 17,030 (4)(6)(7)(8) *
John K. Castle ....................... 20,136 *
Christopher Cheng .................... 1,676 (4)(5) *
Lawrence R. Codey .................... 17,200 (5) *
Bruce A. Cruikshank .................. 168,137 (7) *
T. J. Dermot Dunphy .................. 1,174,857 (4)(5)(7) 1.4
Charles F. Farrell, Jr ............... 24,600 (5) *
David Freeman ........................ 6,800 *
William V. Hickey .................... 317,302 (4)(7) *
J. Gary Kaenzig, Jr .................. 59,630 (4)(5)(6)(7)(8) *
Virginia A. Kamsky ................... 4,212 (4) *
4
SHARES OF PERCENTAGE
CLASS OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED SHARES IN CLASS
---------------- ------------------ ---------------
Alan H. Miller ................................. 504,710 (5) *
John E. Phipps ................................. 37,277 (4)(5) *
Robert L. San Soucie ........................... 10,100 (5) *
All directors and executive officers as a group
(30 persons) .................................. 3,050,249 (4)(6)(7) 3.7
(8)(9)
SERIES A CONVERTIBLE PREFERRED STOCK:
FMR Corp.(1) ................................... 2,382,260 6.7
82 Devonshire Street
Boston, Massachusetts 02109-3614
Lincoln Capital Management Company (3) ......... 3,346,800 9.3
200 South Wacker Drive, Suite 2100
Chicago, Illinois 60606
Hank Brown ..................................... 2,762 (10) *
Leonard R. Byrne ............................... 5 (8)
Christopher Cheng .............................. 236 (10) *
T.J. Dermot Dunphy ............................. 4,000 *
William V. Hickey .............................. 136 *
J. Gary Kaenzig, Jr. ........................... 2,726 (8)(10) *
Virginia A. Kamsky ............................. 1,496 *
John E. Phipps ................................. 15,931 (10) *
All directors and executive officers as a group
(30 persons) .................................. 27,497 (8)(10) *
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* Less than 1%.
(1) The ownership information set forth in the table is based on information
contained in Amendment No. 2 to Schedule 13G dated February 1, 1999 filed
with the Securities and Exchange Commission (the "SEC") by FMR Corp.
("FMR"), which indicated that FMR had sole voting power as to 934,556
shares and sole dispositive power as to 4,696,975 shares of Common Stock.
The number of shares of Common Stock beneficially owned includes the
right to acquire approximately 2,107,342 shares of Common Stock upon
conversion of shares of Preferred Stock.
(2) The ownership information set forth in the table is based on information
contained in a Amendment No. 2 to Schedule 13G dated February 12, 1999
filed with the SEC by Tiger Management L.L.C., Tiger Performance L.L.C.
and Julian H. Robertson, Jr. (collectively, "Tiger") with respect to the
ownership of shares of Common Stock which indicated that Tiger had shared
voting power and shared dispositive power as to 14,080,870 shares of
Common Stock.
(3) The ownership information set forth in the table is based on information
contained in a Schedule 13G dated February 11, 1999 filed with the SEC by
Lincoln Capital Management Company ("Lincoln") with respect to the
ownership of shares of Preferred Stock, which indicated that Lincoln had
sole voting power as to 1,650,565 shares of Preferred Stock and sole
dispositive power as to 3,346,800 shares of Preferred Stock. The number
of shares beneficially owned includes the right to acquire 2,961,918
shares of Common Stock upon conversion of shares of Preferred Stock.
(4) The number of shares of Common Stock listed for Messrs. Brown, Byrne,
Cheng, Dunphy, Hickey, Kaenzig and Phipps, for Ms. Kamsky and for all
directors and executive officers as a group includes the right to acquire
2,444, 4, 209, 3,540, 120, 2,412, 14,099, 1,324 and 24,333 shares of
Common Stock, respectively, upon conversion of shares of Preferred Stock.
5
(5) The number of shares of Common Stock held by Messrs. Brown, Cheng,
Kaenzig and Phipps includes 250, 75, 5,163, and 2,237 shares,
respectively, held by trusts of which they are beneficiaries. The number
of shares of Common Stock held by Mr. Dunphy includes 82,600 shares held
by him as custodian for certain of his children and 29,250 shares held by
a charitable foundation for which he shares voting and investment power.
The number of shares of Common Stock held by Mr. Farrell includes 15,200
shares held in a revocable retirement trust of which he is the trustee
and sole beneficiary. The number of shares of Common Stock held by Mr.
Phipps includes 9,352 shares held by trusts over which he shares voting
and investment power, and 4,824 shares held in trust for his wife. Mr.
San Soucie shares investment and voting power as to 620 of the shares of
Common Stock beneficially owned by him with his wife. The number of
shares of Common Stock listed for Mr. Codey includes 200 shares held by
his daughter, for which he disclaims beneficial ownership. The number of
shares of Common Stock listed for Mr. Miller includes 3,500 shares held
by his wife, for which he has not made an admission of beneficial
ownership.
(6) The number of shares of Common Stock listed for all directors and
executive officers as a group includes the right to acquire 30,000 shares
under the Company's Contingent Stock Plan. The number of shares of Common
Stock listed for Messrs. Byrne and Kaenzig and all directors and
executive officers as a group includes the right to acquire 4,644, 28,041
and 73,644 shares, respectively, upon exercise of options granted by Old
Grace.
(7) This figure includes approximately 127, 20,537, 67,467, 13,429, 127, and
222,427 shares of Common Stock held in the Company's Profit-Sharing Plan
trust fund with respect to which Messrs. Byrne, Cruikshank, Dunphy,
Hickey and Kaenzig and the executive officers of the Company who
participate in such Plan as a group, respectively, may, by virtue of
their participation in such Plan, be deemed to be beneficial owners. As
of March 15, 1999, approximately 2,868,275 shares of Common Stock were
held in the trust fund under such Plan, constituting approximately 3.4%
of the outstanding shares of Common Stock.
(8) The number of shares of Common Stock listed for Mr. Byrne, Mr. Kaenzig
and for all directors and executive officers as a group, respectively,
includes approximately 5, 387 and 1,923 shares, respectively, held in the
trust fund for the Company's Thrift Plan for Cryovac Employees. The
number of shares of Preferred Stock listed for Mr. Byrne, Mr. Kaenzig and
for all directors and executive officers as a group, respectively,
includes approximately 5, 5 and 215 shares of Preferred Stock,
respectively, held in the trust fund for the Company's Thrift Plan for
Cryovac Employees. As of March 15, 1999, approximately 672,693 shares of
Common Stock and approximately 396,058 shares of Preferred Stock were
held in the trust fund for such Plan, constituting approximately 1% and
1.1%, respectively, of the outstanding shares of such classes.
(9) This figure includes, without duplication, all of the outstanding shares
of Common Stock referred to in notes 4 through 8 above as well as 14,400
shares for which voting and investment power is shared by executive
officers of the Company and 3,597 shares held by or for family members of
executive officers of the Company who are not named in the above table.
(10) The number of shares of Preferred Stock held by Messrs. Brown, Cheng,
Kaenzig and Phipps and all directors and executive officers as a group
includes 221, 66, 2,721, 1,982 and 4,990 shares of Preferred Stock,
respectively, held by trusts of which they are beneficiaries. The number
of shares of Preferred Stock held by Mr. Phipps includes 8,288 shares of
Preferred Stock held by trusts over which he shares voting and investment
power, and 4,275 shares held in trust for his wife.
6
REPEAL OF SUPERMAJORITY PROVISIONS
OF THE COMPANY'S CHARTER
At a special meeting of stockholders held on March 20, 1998 to approve the
Merger and again at the 1998 Annual Meeting of stockholders, the Company sought
the approval of its stockholders to repeal certain provisions of the Company's
Charter that are described below. Although over 98% of the shares voted were
voted in favor of the proposal to repeal such provisions at both meetings, the
proposal nevertheless did not receive the required 80% affirmative vote for
their repeal. These provisions, which are referred to below as the
"Supermajority Provisions," cannot be amended or repealed without the
affirmative vote of stockholders owning at least 80% of the combined voting
power of the outstanding Common Stock and Preferred Stock. The provisions limit
the ability of the holders of the Company's Common and Preferred Stock to
influence the corporate governance of the Company and to take certain actions
that they would otherwise be permitted to take under Delaware law. The Board of
Directors believes that the absence of provisions such as the Supermajority
Provisions in its charter was an important part of the culture and success of
Old Sealed Air prior to the Merger, and that the repeal of the Supermajority
Provisions would be similarly beneficial to the Company.
The Supermajority Provisions proposed to be repealed now provide that:
(a) the directors of the Company, other than those who may be elected by
the holders of any class or series of Preferred Stock or other capital
stock as set forth in the Company's Charter, are to be divided into three
classes, as nearly equal in number as possible, with the members of each
class of directors to be elected for terms of three years, and directors of
the Company may be removed by the stockholders only for cause, subject to
the rights of the holders of any class or series of Preferred Stock or
other capital stock as set forth in the Company's Charter;
(b) subject to the rights of the holders of any class or series of
Preferred Stock or other capital stock to elect additional directors under
specific circumstances, actions of the stockholders by written consent
pursuant to Delaware law are prohibited; and
(c) although the stockholders have the authority to amend or repeal the
by-laws of the Company, they may not exercise this right unless any such
proposed amendment or repeal is approved by stockholders with at least 80%
of the voting power of the outstanding voting securities, voting as a
single class.
The election of directors is the primary avenue for stockholders to
influence corporate policies and to hold management accountable for its
implementation of those policies. The Company's management and its Board of
Directors believe that the accountability of the Board of Directors to the
stockholders is enhanced when the directors are required to stand for annual
election. A classified board, one of the Supermajority Provisions, deprives the
stockholders of the ability to express their evaluation of the performance of
the whole Board of Directors annually by granting staggered three-year terms to
the directors. In keeping with the goal of maximizing director accountability
to the stockholders, the Board of Directors has determined that having all of
the Company's directors elected annually, as was the case for Old Sealed Air
prior to the Merger, would best serve the interests of the Company and its
stockholders.
Although the authority of the stockholders to amend or repeal by-laws of a
publicly owned corporation such as the Company is rarely exercised, the ability
to exercise that right by a majority of the voting power is an important
element of corporate governance, as are the rights of the stockholders under
Delaware law to act by written consent and to remove directors, with or without
cause.
For the reasons set forth above, the Company believes that the
Supermajority Provisions should be repealed. The forms of Articles SEVENTH,
FIFTEENTH and SIXTEENTH of the Company's Charter attached to this Proxy
Statement in Annex A illustrate how these provisions of the Company's Charter
would read if the Supermajority Provisions were repealed. Also included in
Annex A is a marked version, indicating the changes that would be made to the
existing provisions of the Company's Charter if the Supermajority Provisions
were repealed.
7
If all Supermajority Provisions are repealed:
(a) Article SIXTEENTH of the Company's Charter will be amended in its
entirety, thereby eliminating the provisions of the Company's Charter
providing for the classification of the Board of Directors and prohibiting
the removal of directors other than for cause (item 3 on the proxy card);
(b) the stockholders will be entitled to act by written consent in lieu
of a meeting (item 4 on the proxy card); and
(c) the stockholders will, as provided by the by-laws of the Company, be
entitled to adopt, amend or repeal the Company's by-laws by the affirmative
vote of a majority of the voting power of the then outstanding shares of
Common Stock and Preferred Stock (item 5 on the proxy card).
If the repeal of the Supermajority Provision calling for a classified
board is approved, in order to provide for an orderly transition, the Class I
Directors who are standing for election at the Annual Meeting will be elected
to three-year terms ending at the 2002 Annual Meeting. The terms of the Class
II Directors will continue until the 2000 Annual Meeting, and the terms of the
Class III Directors will continue until the 2001 Annual Meeting. After the end
of their respective terms, each of these directors will stand for re-election
for one-year terms.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THESE PROPOSALS.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), requires the Company's executive officers and
directors and any persons owning ten percent or more of the Company's Common or
Preferred Stock to file reports with the Securities and Exchange Commission to
report their beneficial ownership of and transactions in the Company's
securities and to furnish the Company with copies of such reports. Based upon a
review of such reports filed with the Company, along with written
representations from certain executive officers and directors that no such
reports were required during 1998, the Company believes that all such reports
were timely filed during 1998, except as follows: the transactions pursuant to
which the shares of Old Grace Common Stock issued to Mr. Brown, Mr. Cheng, Ms.
Kamsky, and Mr. Phipps as non-employee directors of Old Grace in payment of
their annual retainer for 1997 were converted into shares of Common Stock and
Preferred Stock at the time of the Merger were reported late; Mr. Byrne
reported late an open-market purchase during June 1998 of 750 shares of Common
Stock; Mr. Farrell reported late an open-market purchase during May 1998 of
1,000 shares of Common Stock; and Mr. Miller reported late two open-market
purchases totaling 800 shares of Common Stock by his wife through her separate
brokerage account during September and October 1998. Mr Miller's report noted
that such filing should not be deemed an admission by Mr. Miller that he was
the beneficial owner of such shares purchased by his wife for the purposes of
Section 16(a) under the Securities Exchange Act.
ELECTION OF DIRECTORS
As noted above, the Company's Charter currently divides the Board of
Directors into three classes serving staggered terms of three years. Currently,
there are four directors in Class I, four directors in Class II, and three
directors in Class III.
The Class II Directors have a term of office that continues until the 2000
Annual Meeting, and the Class III Directors have a term of office that
continues until the 2001 Annual Meeting. The current Class I Directors, who
have a term of office that expires at the 1999 Annual Meeting, have been
nominated by the Board of Directors to be elected to serve until the 2002
Annual Meeting. As noted above, if the proposal to repeal the Supermajority
Provision of the Company's Charter calling for a classified board is approved
by the stockholders, these directors will thereafter stand for re-election for
one-year terms and until their successors are elected and qualified.
Shares of Common Stock or Preferred Stock represented by a duly executed
proxy that is received by the Company will be voted in favor of the election as
directors of the nominees for election as Class
8
I Directors named below unless otherwise specified in the proxy. If any nominee
becomes unavailable for any reason or if a vacancy should occur before the
election (which events are not anticipated), the shares represented by a duly
executed proxy may be voted in favor of such other person as may be determined
by the holders of such proxies.
The information appearing in the following table sets forth for each
nominee as a Class I Director and for each continuing Class II or Class III
Director his or her business experience for the past five years, the year in
which he or she first became a director of the Company or of Old Sealed Air (as
indicated in footnotes to the table), and his or her age as of March 15, 1999.
Prior to the Merger (during the first quarter of 1998), the Board of
Directors of Old Grace held two meetings and the Board of Directors of Old
Sealed Air held one meeting, and during the remainder of 1998, the Board of
Directors of the Company held six meetings (excluding in each case actions by
unanimous written consent).
Each current member of the Board of Directors of the Company attended at
least 75 percent of the aggregate number of meetings of the Board of Directors
of the Company and of the committees of such Board on which he or she served
during 1998.
DIRECTOR
NAME BUSINESS EXPERIENCE SINCE AGE
---- ------------------- ----- ---
NOMINEES FOR ELECTION--CLASS I DIRECTORS--TERMS EXPIRING IN 2002
Hank Brown(2) .................. President of the University of Northern Colorado since 1997 59
July 1998. Formerly Director of the Center for Public Policy
at the University of Denver from January 1997 until
July 1998 and a United States Senator from 1991 until
January 1997. Director of U.S. West.
John K. Castle(1) .............. Chairman and Chief Executive Officer of Castle Harlan, Inc., 1971 58
a merchant banking firm, and of Branford Castle, Inc., a
holding company. Director of Commemorative Brands, Inc.,
Morton's Restaurant Group, Inc., Statia Terminals
International, N.V. and Universal Compression, Inc.
Charles F. Farrell, Jr.(1) ..... President of Crystal Creek Partners, an investment 1971 68
management and business consulting firm.
Alan H. Miller(1) .............. Private investor. Until his retirement in December 1994, 1984 65
President and Chief Executive Officer of Laird, Inc., a
manufacturer of specialty folding cartons and special
commercial printing and a distributor of rigid plastics.
Director of The Laird Group PLC (listed on the London
Stock Exchange).
DIRECTORS CONTINUING IN OFFICE--CLASS II DIRECTORS--TERMS EXPIRING IN 2000
Christopher Cheng(2) ........... Chairman and Managing Director of the Wing Tai Group of 1997 50
Companies, a garment manufacturer based in Hong Kong,
and Chairman of USI Holdings Ltd., a diverse holding
company with interests in garment manufacturing, property
development, hospitality and telecommunications. Director
of The New World Infrastructure Limited (listed on the
Hong Kong Stock Exchange) and The Gieves Group PLC
(listed on the London Stock Exchange).
T. J. Dermot Dunphy(1) ......... Chairman of the Board and Chief Executive Officer of the 1969 66
Company. Director of Public Service Enterprise Group
Incorporated, Summit Bancorp and Summit Bank.
9
DIRECTOR
NAME BUSINESS EXPERIENCE SINCE AGE
---- ------------------- ----- ---
Virginia A. Kamsky(2) ....... Founder, Chairman and Chief Executive Officer of Kamsky 1990 45
Associates Inc., an advisory, consultancy and investment firm
specializing in The People's Republic of China.
John E. Phipps(2) ........... Private investor. General partner of Phipps Ventures and 1975 66
Director of Bessemer Group, Bessemer Securities
Corporation, Bessemer Trust Company, Bessemer Trust
Company of Florida and Bessemer Trust Company, N.A.
DIRECTORS CONTINUING IN OFFICE--CLASS III DIRECTORS--TERMS EXPIRING IN 2001
Lawrence R. Codey(1) ........ President and Chief Operating Officer of Public Service 1993 54
Electric and Gas Company, a public utility. Director of Public
Service Enterprise Group Incorporated, The Trust Company
of New Jersey and United Water Resources, Inc.
David Freeman(1) ............ Chairman and Chief Executive Officer of Loctite Corporation, 1993 54
a manufacturer of adhesives and sealants. He has held senior
management positions with Loctite Corporation for more
than five years. Director of Lydall, Inc. and MECH Financial
Inc.
Robert L. San Soucie(1) ..... President and Chief Executive Officer of The Math Learning 1971 71
Center, a non-profit educational organization, since
September 1997. Previously Managing Director and President
of MRV Financial Associates, a financial and management
consulting firm.
- ----------
(1) Director of Old Sealed Air since the year indicated; became a director of
the Company in 1998.
(2) Director of the Company since the year indicated.
10
COMMITTEES OF THE BOARD OF DIRECTORS
Set forth below is a description of the current committees of the Board of
Directors and those that were maintained by Old Grace and Old Sealed Air prior
to the Merger.
CURRENT COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors currently maintains an Audit Committee
(the "Audit Committee") and an Organization and Compensation Committee (the
"Organization and Compensation Committee"). The members of such committees are
directors who are neither officers nor employees of the Company. These
committees have substantially the same responsibilities as the corresponding
committees previously maintained by Old Sealed Air. The Board of Directors has
not established a nominating committee.
The principal responsibilities of the Audit Committee are to advise the
Board of Directors as to the selection of auditors, to confer with the firm
appointed to audit the books and accounts of the Company and its subsidiaries
and to determine, and from time to time report to the Board of Directors upon,
the scope of such auditing. The members of the Audit Committee since the Merger
are Messrs. Brown, Cheng, Codey, Farrell and San Soucie (Chairman). The Audit
Committee held three meetings in 1998 following the Merger.
The principal responsibilities of the Organization and Compensation
Committee are to determine the compensation of the officers of the Company and
of the other employees of the Company or any of its domestic subsidiaries with
a base annual salary of $150,000 or more, to administer the Company's
Contingent Stock Plan and option plans and to authorize the issuance of shares
of the Company's Common Stock under the Contingent Stock Plan, to perform the
duties and responsibilities of the Board of Directors under the Company's
Profit-Sharing Plan (except the authority to determine the amount of the
Company's annual contribution to such Plan) and the other tax-qualified
retirement plans sponsored by the Company, and to consider and advise the Board
of Directors from time to time with respect to the organization and structure
of the management of the Company. The members of the Organization and
Compensation Committee since the Merger are Messrs. Castle, Freeman, Miller
(Chairman), Phipps and Ms. Kamsky. The Organization and Compensation Committee
held five meetings in 1998 following the Merger (excluding actions by unanimous
written consent.)
COMMITTEES PRIOR TO THE MERGER
Prior to the Merger, Old Grace maintained an Audit Committee, a
Compensation, Employee Benefits and Stock Incentive Committee, a Nominating
Committee and a Committee on Corporate Responsibility. These committees were
replaced by the committees described above after the Merger.
Old Grace's Audit Committee was responsible for reviewing the financial
information that the Company provided to stockholders and others, the Company's
internal controls, and its auditing, accounting and financial reporting
processes generally. This Committee's specific responsibilities included (a)
recommending to the Board the selection of independent certified public
accountants to audit the annual financial statements of the Company and its
consolidated subsidiaries, (b) reviewing the annual financial statements, and
(c) meeting with the Company's senior financial officers, internal auditors and
independent certified public accountants to review the scope and results of the
audit and other matters regarding the Company's accounting, financial reporting
and internal control systems. Messrs. Brown and Cheng and Ms. Kamsky were
members of this committee, which met twice during the first quarter of 1998.
Old Grace's Compensation, Employee Benefits and Stock Incentive Committee
(the "Old Grace Compensation Committee") made recommendations to the Board with
respect to the salary and annual and long-term incentive compensation of
certain officers and other high-level employees, as well as the Company's
benefit plans, programs and arrangements generally. This Committee also
administered the Company's stock incentive plans, determining the recipients
and terms of stock incentives. Mr. Phipps was a member of such committee, which
met three times during the first quarter of 1998.
11
The Nominating Committee of Old Grace recommended to the Board candidates
for nomination as directors of the Company. Mr. Phipps chaired that committee,
which did not meet during the first quarter of 1998.
The Committee on Corporate Responsibility of Old Grace advised management
on the Company's role in the public sector and its responsibility with respect
to matters of public policy. Messrs. Brown and Cheng and Ms. Kamsky were
members of such committee, which did not meet during the first quarter of 1998.
During such quarter, Old Sealed Air also maintained an Audit Committee,
the members of which were Messrs. Codey, Farrell and San Soucie (Chairman),
which met once in 1998 prior to the Merger, and an Organization and
Compensation Committee, the members of which were Messrs. Castle, Freeman and
Miller (Chairman), which met twice in 1998 prior to the Merger.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Organization and Compensation Committee has
been an officer or employee of the Company or any of its subsidiaries. Until
the end of 1983, Mr. Miller was the President of Cellu-Products Company, a
corporation that Old Sealed Air acquired in October 1983.
Mr. Dunphy is a member of the Organization and Compensation Committee of
the Board of Directors of Public Service Enterprise Group Incorporated, the
parent company of Public Service Electric and Gas Company. Such committee
administers the compensation program for executive officers of Public Service
Electric and Gas Company. Mr. Codey is the President and Chief Operating
Officer of Public Service Electric and Gas Company.
12
DIRECTORS' COMPENSATION
Set forth below are descriptions of the Company's current non-employee
directors' compensation program as well as of the program that was in effect
for non-employee directors of the Company prior to the Merger.
CURRENT DIRECTORS' COMPENSATION
Each member of the Board of Directors who is neither an officer nor an
employee of the Company (each a "non-employee director") receives an annual
retainer fee for serving as a director. During 1998, the Company paid such
retainer in the form of an annual grant of 1,200 shares of the Company's Common
Stock to each eligible director. Such grant was made under the Restricted Stock
Plan for Non-Employee Directors (the "Directors Stock Plan").
Shares of Common Stock issued under the Directors Stock Plan may not be
sold, transferred or encumbered while the director serves on the Board of
Directors, except that Non-Employee Directors may make gifts of shares issued
under the Directors Stock Plan to certain family members or to trusts or other
forms of indirect ownership so long as the Non-Employee Director would be
deemed a beneficial owner of the shares with a direct or indirect pecuniary
interest in the shares and would retain voting and investment control over the
shares while the Non-Employee Director remains a director of the Company.
During this period, the director is entitled to receive any dividends or other
distributions in respect of such shares and has voting rights in respect of
such shares. The restrictions on the disposition of shares issued pursuant to
the Directors Stock Plan terminate upon the occurrence of any of certain events
related to a change of control of the Company that are specified in the
Directors Stock Plan.
In addition, each member of the Audit Committee and the Organization and
Compensation Committee receives a retainer fee of $2,000 per year for serving
as a member of such committee. The chairman of each such committee receives an
additional retainer fee of $2,000 per year for serving as such. Each
non-employee director also receives a fee of $1,000 for each Board or committee
meeting attended. These fees are paid in cash in quarterly installments. All
directors are reimbursed for expenses incurred in attending Board or committee
meetings.
DIRECTORS' COMPENSATION PRIOR TO THE MERGER
The compensation program for non-employee directors of Old Sealed Air
during the first quarter of 1998 was substantially the same as the current
compensation program for non-employee directors of the Company.
Under the compensation program for non-employee directors of Old Grace
that was in effect prior to the Merger, (a) each non-employee director was
entitled to receive an annual retainer of $50,000, of which $35,000 was in the
form of Old Grace Common Stock, and the balance was in cash or Old Grace Common
Stock, at the election of the director, (b) each committee chair received an
additional annual retainer of $3,000 in cash or Old Grace Common Stock, at the
election of the director, and (c) each non-employee director received $2,000
for each Board meeting and $1,000 for each committee meeting attended (except
that committee chairs received $1,200 per committee meeting), in cash or Old
Grace Common Stock, at the election of the director. Each of Messrs. Brown,
Cheng and Phipps and Ms. Kamsky participated in this compensation program
before the Merger.
A non-employee director of Old Grace could defer payment of all or part of
the fees received for attending Board and committee meetings and/or the cash
retainers (or cash portions of the retainers) referred to above. The deferred
cash (plus an interest equivalent) was payable to the director or his or her
heirs or beneficiaries in a lump sum or in quarterly installments over two to
20 years following a date specified by the director (but in no event earlier
than the director's termination from service). The interest equivalent on
deferred cash was computed at the higher of (a) the prime rate plus two
percentage points or (b) 120% of the prime rate, in either case compounded
semiannually. The portion of the annual retainer payable in Old Grace Common
Stock could be deferred and held, and the balance of the annual retainer or
other retainers and/or fees a director elected to receive in the form of Old
Grace Common Stock was
13
deferred and held, in a deferred compensation trust established by the Company.
In connection with the Merger, New Grace assumed responsibility for all
deferred compensation payable to the directors and has treated the transition
of such program to New Grace as the termination from service of Messrs. Brown,
Cheng and Phipps and Ms. Kamsky.
Non-employee directors of Old Grace were also reimbursed for expenses they
incurred in attending Board and committee meetings. Old Grace also maintained
business travel accident insurance coverage for them. In addition, non-employee
directors could receive $1,000 per day for work performed at the request of Old
Grace.
Legal Proceedings; Indemnification. Certain former officers and directors
of Old Grace, including Ms. Kamsky and Mr. Phipps, are defendants in or may
otherwise be involved in certain stockholder or other litigation that was
pending against Old Grace prior to the Merger. Under the terms of the Merger
Agreement, New Grace has retained financial responsibility for any liabilities
incurred by the Company or its directors or executive officers as a result of
such legal proceedings.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
------------------------------------- --------------------------------------
AWARDS PAYOUTS
------------------------- ------------
NO. OF
SHARES
OTHER CONTINGENT UNDERLYING ALL OTHER
NAME AND ANNUAL STOCK OPTIONS LTIP COMPENSATION
PRINCIPAL POSITION* YEAR SALARY BONUS COMPENSATION AWARDS(2) GRANTED(3) PAYOUTS(4) (5)
- ------------------- ----- ---------- ---------- -------------- ------------ ------------ ------------ -------------
T. J. Dermot Dunphy ........... 1998 $450,000 $ -0- $ 3,600 $5,150,000 $27,100
Chairman of the Board and 1997 360,000 390,000 3,600 2,733,750 30,250
Chief Executive Officer 1996 360,000 390,000 3,600 29,000
William V. Hickey ............. 1998 306,250 -0- 3,600 2,575,000 20,700
President and 1997 250,000 225,000 3,600 1,366,875 23,850
Chief Operating Officer 1996 222,500 200,000 3,600 22,600
J. Gary Kaenzig, Jr. .......... 1998 314,300 260,000 45,603 1,512,813 $789,262 65,504
Executive Vice President 1997 298,667 165,000 15,758 16,166 298,856 19,468
1996 252,817 100,000 57,970 237,431 20,058
Bruce A. Cruikshank ........... 1998 204,167 85,000 3,600 643,750 20,500
Senior Vice President 1997 171,400 80,000 3,600 23,650
1996 163,500 65,000 3,600 396,000 22,400
Leonard R. Byrne .............. 1998 214,500 178,300 740,313 498,259 26,472
Vice President 1997 205,833 80,000 5,966 298,856 9,128
1996 185,068 70,000 7,967 127,221 8,519
- ----------
* Before the Merger, Messrs. Dunphy, Hickey and Cruikshank were executive
officers of Old Sealed Air, Mr. Kaenzig was an executive officer of Old
Grace, and Mr. Byrne was an executive of Cryovac.
(1) Annual compensation includes compensation paid by Old Sealed Air or Old
Grace, as the case may be, for 1996, 1997 and the first quarter of 1998
and by the Company from March 31, 1998 through the end of 1998. In 1998,
the "bonus" column includes a special one-time bonus of $100,000 paid to
each of Messrs. Kaenzig and Byrne by Old Grace in connection with the
Reorganization, Recapitalization and Merger. Perquisites, other personal
benefits, securities and property paid or accrued during each year not
otherwise reported did not exceed for any named executive officer the
lesser of $50,000 or 10% of the annual compensation reported in the
Summary Compensation Table for that individual.
(2) Represents the fair market value on the date of an award of Common Stock
made under Sealed Air's Contingent Stock Plan (for shares awarded in
1998) or under Old Sealed Air's contingent stock plan (for shares awarded
prior to 1998) after deducting the purchase price of the shares covered
by such award. The total number of unvested shares held by each of the
named executive officers as of December 31, 1998 is set forth in the
following table, and the fair market values of such unvested shares
14
as of such date are as follows: Mr. Dunphy -- $7,148,750, Mr. Hickey --
$5,667,938, Mr. Kaenzig -- $1,199,969, Mr. Cruikshank -- $1,123,375, and
Mr. Byrne -- $587,219. As of such date, such awards, all of which were
granted with an original vesting period of three years, which has been
extended in certain cases, vest as follows:
1999 2000 2001
--------- -------- ---------
T.J. Dermot Dunphy ............ -0- 60,000 80,000
William V. Hickey ............. 41,000 30,000 40,000
J. Gary Kaenzig, Jr. .......... -0- -0- 23,500
Bruce A. Cruikshank ........... 12,000 -0- 10,000
Leonard R. Byrne .............. -0- -0- 11,500
During the vesting period, recipients of awards are entitled to receive
any dividends or other distributions with respect to the unvested shares
they hold.
(3) The amounts shown in this column are expressed in shares of the Company's
Common Stock. They reflect adjustments in the number of shares covered
and the exercise price due to the Reorganization and the Merger (see
"Stock Options") as well as prior adjustments made by Old Grace.
(4) The amounts in this column represent awards under Old Grace's Long-Term
Incentive Program (see "LTIP"), which the Company discontinued at the
time of the Merger.
(5) The amounts in this column for 1998 include, for each of the named
executive officers, company contributions to Sealed Air's Profit-Sharing
Plan in the amount of $12,800 per person. In addition, for Messrs.
Dunphy, Hickey and Cruikshank, the 1998 amounts include premiums paid by
the Company for supplemental universal life insurance policies owned by
such persons, as follows: Mr. Dunphy: $9,500, Mr. Hickey: $3,100, and Mr.
Cruikshank: $2,900; and company matching contributions under Sealed Air's
Thrift and Tax-Deferred Savings Plan in the amount of $4,800 for each of
such persons. In addition, for Messrs. Kaenzig and Byrne, the 1998
amounts include the actuarially determined value of company-paid premiums
on "split-dollar" life insurance, as follows: Mr. Kaenzig: $4,381, and
Mr. Byrne: $4,617; premiums paid for personal liability insurance, as
follows, Mr. Kaenzig: $2,501, and Mr. Byrne: $4,255; company matching
contributions to the Sealed Air Thrift Plan for Cryovac Employees and,
before the Merger, to Old Grace's Salaried Employees Savings and
Investment Plan (the "Savings Plan") as follows: Mr. Kaenzig: $4,800, and
Mr. Byrne: $4,800; payment to Mr. Kaenzig of $2,507 because his personal
or company contributions to the Savings Plan would be subject to
limitations under federal income tax law; and $38,515 earned by Mr.
Kaenzig on LTIP compensation.
Stock Options. Before the Reorganization and Merger, Messrs. Kaenzig and
Byrne participated in stock incentive plans maintained by Old Grace. Under the
terms of those plans, options were granted at an exercise price equal to the
fair market value of Old Grace Common Stock on the date of grant, became
exercisable in three approximately equal annual installments beginning one year
after the date of grant or upon the earlier occurrence of a "change in control"
and had terms of up to ten years and one month.
Upon the Reorganization and the Merger, the Company terminated these plans
except with respect to outstanding options held by Cryovac employees, including
Messrs. Kaenzig and Byrne, at the time of the Merger. Such options became
options to purchase Common Stock of the Company, and the number of shares
covered by and exercise prices of such options were adjusted at the time of the
Merger to preserve their economic value. The following table contains
information concerning stock options exercised in 1998, all of which were
exercised prior to the Merger, including the "value realized" upon exercise
(the difference between the total purchase price of the options exercised and
the market value at the date of exercise of the shares acquired). The table
also shows the value of unexercised "in-the-money" options held at December 31,
1998 (the difference between the aggregate purchase price of all such options
held and the market value of the shares of Common Stock covered by such options
at December 31, 1998).
NO. OF SHARES
OF SEALED AIR
NO. OF SHARES OF COMMON STOCK VALUE OF UNEXERCISED
OLD GRACE VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
COMMON STOCK REALIZED OPTIONS AT 12/31/98 OPTIONS AT 12/31/98
NAME ACQUIRED ON EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------------- ---------------------- ------------- --------------------------- --------------------------
J. G. Kaenzig, Jr. ......... 58,328 $2,247,578 14,020/19,410 $142,451/190,293
L. R. Byrne ................ 22,769 1,074,200 0/6,633 0/64,416
LTIP. Under Old Grace's LTIP as in effect prior to the Reorganization and
the Merger, executive officers and other senior managers (including Messrs.
Kaenzig and Byrne) were granted contingent "Performance Units" under which
awards could be earned based on shareholder value performance (measured by
appreciation in the price of Old Grace Common Stock and dividends paid), as
compared
15
to that of the companies in the Standard & Poor's Industrials Index during a
three-year "Performance Period." The LTIP was discontinued prior to the Merger,
and 1998 LTIP payouts include awards for the 1995-1997 Performance Period, plus
pro rata portions of awards for the 1996-1998 Performance Period and the
1997-1999 Performance Period. LTIP payouts could be made in cash or in shares
of Old Grace Common Stock.
Cash payments of LTIP awards could be deferred, earning interest
equivalents computed at the prime rate, compounded semiannually. Upon the
Merger, the Company assumed responsibility for deferred cash payments for LTIP
awards for Cryovac employees, including Messrs. Kaenzig and Byrne. Payments
made in Old Grace Common Stock could also be deferred by means of a deferred
compensation trust established by old Grace; a new compensation trust for the
benefit of Mr. Kaenzig was established by the Company following the Merger to
hold deferred LTIP payments that had been made in Old Grace Common Stock and
exchanged into shares of Common Stock and Preferred Stock in the
Recapitalization. Deferred amounts are generally payable to the participant
following termination of employment.
Pension Arrangements. Prior to the Reorganization and the Merger, Old
Grace maintained its Retirement Plan for Salaried Employees (the "Grace
Salaried Plan"), in which Messrs. Kaenzig and Byrne participated. Upon the
effectiveness of the Merger, the participation of employees of Cryovac
(including Messrs. Kaenzig and Byrne) in the Grace Salaried Plan terminated,
except for the right to receive pension benefits vested as of the date of the
Merger. Annualized vested pension benefits at age 65 under the Grace Salaried
Plan for Messrs. Kaenzig and Byrne are $79,104 and $78,362, respectively.
Old Grace also had a Supplemental Executive Retirement Plan in which
Messrs. Kaenzig and Byrne participated under which a covered employee would
receive the full pension to which he or she would be entitled in the absence of
certain limits imposed under federal income tax law. Upon the effectiveness of
the Merger, the participation of employees of Cryovac (including Messrs.
Kaenzig and Byrne) in this plan terminated except for the right to receive
retirement benefits vested as of the date of the Merger. Annualized vested
pension benefits at age 65 under this supplemental plan for Messrs. Kaenzig and
Byrne are $93,807 and $58,850, respectively.
REPORT OF THE COMPANY'S ORGANIZATION AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
The following report of the Company's Organization and Compensation
Committee sets forth information about the Company's executive compensation
program and the 1998 compensation of the executive officers of the Company
named in the Summary Compensation Table included in this Proxy Statement.
Compensation Philosophy
The Company's executive compensation program consists of salaries, annual
bonuses tied to performance, and awards under the Company's Contingent Stock
Plan. The Company's executive compensation philosophy is to provide salaries
that are modest when compared with manufacturing companies of comparable size
and annual bonuses that are higher than those provided by such companies. The
Company also makes substantial awards of its common stock under its Contingent
Stock Plan as long-term incentive compensation to its executives when the
Committee feels such awards are appropriate. In reaching its decisions, the
Committee is guided by its own judgment and those sources of information
(including compensation surveys) that the Committee considers reliable. The
Company's executive compensation program and philosophy are substantially the
same as those of Old Sealed Air.
This program is designed to provide appropriate incentives toward
achieving the Company's annual and long-term strategic objectives, to support a
performance-oriented environment based on the attainment of goals and
objectives intended to benefit the Company and its stockholders, to create an
identity of interests between the Company's executives and its stockholders,
and to attract, retain and motivate key executives. The Committee believes that
this program effectively provides these incentives as shown by the long-term
record of growth and enhancement of stockholder value achieved by Old Sealed
Air.
16
Salaries and Annual Bonuses
The Committee is responsible for setting the compensation of the Company's
executive officers, including the executive officers listed in the Summary
Compensation Table set forth above, and other employees of the Company or any
of its domestic subsidiaries with base salaries of $150,000 or more. The
Committee conducts an annual compensation review during the first quarter of
the year. The Chief Executive Officer of the Company submits salary and bonus
recommendations to the Committee for the other executive officers and employees
whose compensation is set by the Committee. Following a review of those
recommendations, the Committee approves cash bonuses for the prior year and
salary rates and cash bonus objectives for the current year for the other
executive officers and employees with such modifications to the Chief Executive
Officer's recommendations as the Committee considers appropriate. Also, the
Committee may adjust salaries for specific executive officers or employees at
other times during the year when there are significant changes in the
responsibility of such officers or employees.
The Committee bases its decisions on adjustments to salary and cash bonus
objectives principally on changes in the responsibilities of the particular
executive and on the Committee's evaluation of the market demand for executives
of the capability and experience employed by the Company in relation to the
total compensation paid to the particular executive. The Committee sets annual
cash bonus objectives at a level that links a substantial portion of each
individual's annual cash compensation to attaining the performance objectives
discussed below in order to provide appropriate incentives to attaining such
objectives.
Cash bonuses are determined based upon the attainment of corporate and
individualized performance objectives for the year in question. The Committee
does not apply a fixed weight to corporate or individual performance goals in
deciding the amount of cash bonuses, although the Committee generally places
greater emphasis on financial performance than on other personal performance
objectives. The principal measure of corporate performance used to establish
annual cash bonuses is the extent to which the Company achieved its business
plan for the year in question. Such business plan is developed by management
and approved by the Board of Directors before the beginning of such year. The
Committee does not rely exclusively on any single measure of financial
performance to measure achievement of the Company's business plan. However, the
greatest weight is given to the achievement of budgeted targets for net sales,
operating profit, net earnings, and measures of expense control and balance
sheet management such as earnings before taxes, interest, depreciation and
amortization (commonly called "EBITDA"). The Company does not make its business
plans public. Accordingly, the specific financial targets upon which annual
cash bonus objectives are based are not publicly available. Executives other
than the Chief Executive Officer are also evaluated based upon their attainment
of individualized management objectives within their particular areas of
responsibility.
During the first quarter of 1998, the Organization and Compensation
Committee of Old Sealed Air conducted a compensation review for the officers of
Old Sealed Air, including Messrs. Hickey and Cruikshank, in connection with
which the Company's Chief Executive Officer submitted recommendations to that
Committee for 1997 cash bonuses, 1998 salary adjustments and 1998 cash bonus
objectives, and that Committee approved such recommendations. Performance goals
and 1998 cash bonus objectives were established for Messrs. Kaenzig and Byrne
following the Merger.
Cash bonuses for 1998 for Messrs. Kaenzig, Cruikshank and Byrne were
determined by the Committee during the first quarter of 1999. These bonuses
reflected recognition of the role of certain of such officers in the Merger and
the Committee's evaluation of each officer's degree of attainment of other
performance goals for 1998. These bonuses also reflect the fact that Sealed Air
did not achieve its principal financial objectives during 1998. The bonuses do,
however, recognize that certain product lines and geographical areas of the
business achieved their 1998 financial objectives. Officers with specific
responsibility for these areas of the business received somewhat higher
bonuses. The Committee also approved 1999 salary adjustments and 1999 cash
bonus objectives for Messrs. Kaenzig, Cruikshank and Byrne during the first
quarter of 1999.
Compensation of the Chief Executive Officer
The Organization and Compensation Committee of the Company evaluates the
performance of the Chief Executive Officer, reviews its evaluation with him,
and based on that evaluation and review decides his compensation and
performance and bonus objectives. The Organization and Compensation Committee
and the Chief Executive Officer believe that his cash compensation should be
weighted somewhat
17
toward annual incentive compensation in the form of cash bonuses rather than
salary but that, on an overall basis, his compensation should be weighted more
heavily toward long-term incentive compensation derived from equity ownership
in the Company through its Contingent Stock Plan. Consistent with such
philosophy, Mr. Dunphy's salary remained at the same rate from 1991 thru 1997.
However, in reflection of the major increase in the scale of the Company's
business following the Merger, Mr. Dunphy's annual base salary was increased in
April 1998 to $480,000. His base salary, which will remain unchanged in 1999,
continues to be low for a business of the Company's size.
During the first quarter of 1999, the Organization and Compensation
Committee and the Chief Executive Officer decided that, because of the
Company's failure to achieve its principal financial goals in 1998, he should
not receive a cash bonus for 1998. However, the Committee will consider later
in 1999 making an award under the Contingent Stock Plan to Mr. Dunphy to both
reward and motivate his continued leadership in providing strategic direction
to the Company in integrating the Cryovac business with Old Sealed Air, in
developing and maintaining an effective management team for the Company and in
communicating and implementing a strong corporate culture and vision within and
outside the Company.
Compensation of the Chief Operating Officer
During the first quarter of 1999, the Organization and Compensation
Committee assessed Mr. Hickey's performance in the same manner as Mr. Dunphy's.
Specifically, because the Company had failed to achieve its financial
objectives during 1998, the Committee decided not to award Mr. Hickey a cash
bonus. The Committee also decided to make no change in Mr. Hickey's base salary
in 1999. However, the Committee gave a high rating to Mr. Hickey's ability and
energy in sharing the leadership role in the business with the Chief Executive
Officer and will also consider later in 1999 making an award under the
Contingent Stock Plan to Mr. Hickey.
Contingent Stock Plan
The Company's Contingent Stock Plan, which is substantially the same as
the contingent stock plan of Old Sealed Air, established in 1976, is intended
to provide an effective method of motivating performance of key employees,
including executive officers of the Company, and of creating an identity of
interests in participating employees with the interests of the stockholders.
The Plan provides for the award of shares of Common Stock to such key employees
of the Company or any of its subsidiaries as the Committee determines to be
eligible for awards. It is expected that recipients of awards will retain a
substantial portion of the shares awarded to them to foster an identity of
interests with the stockholders of the Company.
Shares of Common Stock issued under this Plan are subject to an option in
favor of the Company for three years after they are awarded, or such other
period as may be determined by the Committee, to repurchase the shares upon
payment of an amount equal to the price at which such shares were issued, which
has always been $1.00 per share. This option is exercisable by the Company only
upon the termination of an employee's employment during such period other than
as a result of death or total disability. Such option terminates upon the
occurrence of any of certain events related to change of control of the Company
specified in the Plan. Shares of Common Stock issued pursuant to this Plan may
not be sold, transferred or encumbered by the employee while the Company's
option to repurchase the shares remains in effect. In connection with the
Merger, the contingent stock plan of Old Sealed Air was amended to provide that
the Merger would not constitute a change of control that would terminate the
Company's repurchase option with respect to the shares of the Company's Common
Stock issued under that plan before the Merger.
Awards are made under the Contingent Stock Plan both to reward short-term
performance with equity-based compensation and to motivate the recipient's
long-term performance. The Organization and Compensation Committee does not
intend to follow the practice of making annual or other periodic awards to
individuals who are determined to be eligible to participate in the Plan.
However, the Organization and Compensation Committee regularly reviews the
stock ownership of key employees and, when it deems it appropriate, makes
awards under the Plan to reflect the contributions of those individuals to
specific Company achievements and to provide motivation toward the achievement
of additional strategic objectives. During 1998, all of the executive officers
named in the Summary Compensation Table received awards under the Plan.
18
Compliance with Section 162(m) of the Internal Revenue Code
Awards under the Company's Contingent Stock Plan are not subject to the
attainment of pre-established objective performance goals. Thus, compensation
associated with awards under such Plan to the executive officers named in the
Summary Compensation Table, when taken together with their other annual
compensation, could become subject to the limitations of Section 162(m) of the
Internal Revenue Code of 1986, as amended, under which the Company can deduct
for federal tax purposes no more than $1 million of annual compensation paid to
any such executive officer.
The Organization and Compensation Committee's policy is to structure
executive compensation to be deductible without limitation where doing so would
further the purposes of the Company's executive compensation program. Thus, the
Organization and Compensation Committee can authorize extensions of vesting
dates for awards under the Company's Contingent Stock Plan. However, the
Organization and Compensation Committee believes that compensation of its
executive officers can not always be based upon fixed formulas and that the
prudent use of discretion in determining compensation will sometimes be in the
best interests of the Company and its stockholders. In some cases, the
Organization and Compensation Committee in the exercise of such discretion may
approve executive compensation that is not fully deductible. In 1998, over $2
million in annual compensation received by Mr. Dunphy was not deductible by the
Company under Section 162(m). Such non-deductible compensation was associated
with the expiration of the Company's repurchase option on Common Stock awarded
under Old Sealed Air's contingent stock plan.
Stock Performance
While the Organization and Compensation Committee takes note of the
performance of the Company's Common Stock in its compensation decisions, it
does not consider such performance to be a principal determinant in making such
decisions, since total return to stockholders as reflected in the performance
of the Company's stock price is subject to factors affecting the securities
markets that are unrelated to the Company's performance.
Since management compensation is based upon factors relating to the
Company's growth and profitability and the contributions of each of its
executives to the achievement of the Company's objectives, the Organization and
Compensation Committee believes that appropriate incentives are provided to
align management's interests with the long-term growth and development of the
Company and the interests of its stockholders. The Organization and
Compensation Committee also believes that there are many ways in which its
executive officers and other executives contribute to building a successful
company. While the results of those efforts could eventually appear in the
financial statements or be reflected in the Company's stock price, many
long-term strategic decisions made in pursuing the Company's growth and
development may have little visible impact in the short term.
The Organization and Compensation Committee notes that the cumulative
five-year total return on an investment in Old Sealed Air Common Stock made on
December 31, 1993, after giving effect to the conversion into an equivalent
number of shares of Common Stock of the Company in the Merger, exceeded that of
both the Standard & Poor's 500 Stock Index and the other indices shown in the
performance table appearing below. Stockholders of the Company who held shares
of Old Sealed Air Common Stock, converted into shares of the Common Stock of
the Company in the Merger, throughout the period had a total return of 223% (or
an annual compounded return of 26%). This total return compares to a five-year
total return of 191% (or an annual compounded return of 24%) for the Standard &
Poor's 500 Stock Index, a five-year total return of 87% (or an annual
compounded return of 13%) for the manufacturing (specialized) segment of such
index and a five-year total return of 51% (or an annual compounded return of
9%) for the composite of the chemicals (specialty) segment and the containers
(paper) segment of such index shown in the performance table appearing below.
Organization and Compensation Committee
Alan H. Miller, Chairman Virginia A. Kamsky
John K. Castle John E. Phipps
David Freeman
19
COMMON STOCK PERFORMANCE COMPARISONS
The following graph shows, for the five years ended December 31, 1998, the
cumulative total return on an investment of $100 assumed to have been made on
December 31, 1993 in Old Sealed Air Common Stock (trading symbol: SEE), after
giving effect to a two-for-one stock split effected in 1995 for all periods
presented and to the conversion of each share of Old Sealed Air Common Stock
into one share of the Company's Common Stock in the Merger. The graph compares
such return with that of comparable investments assumed to have been made on
such date in (a) the Standard & Poor's 500 Stock Index, and (b) the
manufacturing (specialized) segment of such index, the published Standard &
Poor's market segment in which the Company has been included following the
Merger. The graph also shows a comparison of such return with an arithmetic
average of the chemicals (specialty) segment and the containers (paper) segment
of such index, the two published Standard & Poor's market segments with which
Old Sealed Air was usually compared by the investment community, which was the
index used by Old Sealed Air before the Merger.
Total return for each assumed investment assumes the reinvestment of all
dividends on December 31 of the year in which such dividends were paid. Neither
Old Sealed Air nor, since the Merger, the Company has paid any cash dividends
on its common stock during this five-year period.
Since the Merger, the Company's Common Stock and Preferred Stock have been
listed on the New York Stock Exchange (trading symbols: SEE and SEE PrA,
respectively).
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
SAC (SEE) $100.00 $114.62 $177.08 $263.24 $390.51 $322.92
Composite Containers (Paper)/Chemicals (Specialty) $100.00 $104.61 $107.50 $126.36 $136.68 $151.24
Composite S&P 500 $100.00 $101.29 $138.88 $170.38 $226.77 $291.04
Manufacturing (Specialized) $100.00 $106.85 $148.43 $165.60 $203.06 $187.15
20
SELECTION OF AUDITORS
The Company, after authorization by the Board of Directors, has engaged
KPMG LLP ("KPMG") as its independent accountants to examine and report on the
Company's financial statements for the fiscal year ending December 31, 1999,
subject to ratification of such engagement by the stockholders at the Annual
Meeting. KPMG has acted as the auditors for Old Sealed Air since 1963 and for
the Company since April 2, 1998 and is considered well qualified. Proxies
received in response to this solicitation will, in the absence of contrary
specification, be voted in favor of ratification of such appointment.
A representative of KPMG is expected to be present at the Annual Meeting.
Such representative will have the opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
CHANGE OF AUDITORS IN 1998
On April 2, 1998, after the Merger, upon approval by the Board of
Directors, the Company engaged KPMG as its independent accountants to examine
and report on the Company's financial statements for the fiscal year ending
December 31, 1998. The stockholders ratified such engagement at the Company's
1998 Annual Meeting. Old Sealed Air had consulted with KPMG concerning the
accounting treatment of the Merger. In accordance with the advice of KPMG, the
Merger was treated as a purchase by the Company of Old Sealed Air.
On April 2, 1998, the Company dismissed Price Waterhouse LLP, now named
PricewaterhouseCoopers LLP ("PWC"), as its independent accountants for the
fiscal year ending December 31, 1998. The reports of PWC on the financial
statements of the Company for the fiscal years ended December 31, 1996 and 1997
contained no adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles. In connection
with the audits conducted by PWC for the fiscal years ended December 31, 1996
and 1997 and through April 2, 1998, the Company had no disagreements with PWC
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of PWC, would have caused them to make reference
thereto in their report on the financial statements for such years and periods.
During the years ended December 31, 1996 and 1997 and through April 2, 1998,
there were no reportable events (as defined in the SEC's Regulation S-K, Item
304(a)(1)(v)). On April 2, 1998, the Company requested that PWC furnish it with
a letter addressed to the SEC stating whether or not PWC agreed with the above
statements. Copies of such letters dated April 2, 1998 and April 24, 1998 were
filed as Exhibits to the Current Report on Form 8-K, Date of Report April 2,
1998, filed by the Company with the SEC on April 6, 1998, as amended by Form
8-K/A filed with the SEC on April 29, 1998. Prior to the Merger, the Company
consulted with PWC concerning the accounting treatment of the Merger. In
accordance with the advice of PWC, the Merger was treated as a purchase by the
Company of Old Sealed Air.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
In order for stockholder proposals for the 2000 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's Proxy Statement,
they must be received by the Company at its principal office in Saddle Brook,
New Jersey, directed to the attention of the Secretary, no later than December
2, 1999. If any stockholder fails to notify the Company on or before February
14, 2000 of a proposal to be presented at the 2000 Annual Meeting, management
may use its discretionary voting authority to vote on such proposal even if the
matter is not discussed in the Company's Proxy Statement for the 2000 Annual
Meeting.
21
OTHER MATTERS
The expenses of preparing, printing and mailing this notice of meeting and
proxy material and all other expenses of soliciting proxies will be borne by
the Company. Corporate Investor Communications, Inc., Carlstadt, New Jersey
("CIC"), will solicit proxies by personal interview, mail, telephone,
facsimile, Internet or other means of electronic transmission and will request
brokerage houses, banks and other custodians, nominees and fiduciaries to
forward soliciting material to the beneficial owners of the Common Stock or
Preferred Stock held of record by such persons. The Company will pay CIC a fee
of $17,000 covering its services and will reimburse CIC for payments made to
brokers and other nominees for their expenses in forwarding soliciting
material. In addition, directors, officers and employees of the Company, who
will receive no compensation in addition to their regular salary, if any, may
solicit proxies by personal interview, mail, telephone, facsimile, Internet or
other means of electronic transmission.
The Company does not know of any matters to be presented at the meeting
other than those set forth in this Proxy Statement. However, if any other
matters come before the meeting, it is intended that the holders of the proxies
may use their discretion in voting thereon.
By Order of the Board of Directors
H. KATHERINE WHITE
Secretary
Saddle Brook, New Jersey
March 31, 1999
22
ANNEX A
PROPOSED AMENDMENTS
TO THE COMPANY'S CHARTER
The following sets forth how Articles SEVENTH, FIFTEENTH and SIXTEENTH of
the Amended and Restated Certificate of Incorporation of the Company (the
"Company's Charter") shall read if approved by the stockholders at the Annual
Meeting. The Company is referred to below as the "Corporation".
I. ARTICLE SEVENTH SHALL BE AMENDED TO READ AS FOLLOWS:
SEVENTH: In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
A. To adopt, amend or repeal the by-laws of the Corporation;
B. To authorize and cause to be executed mortgages and liens, with or
without limit as to amount, upon the real and personal property of the
Corporation;
C. To authorize the guaranty by the Corporation of securities, evidences
of indebtedness and obligations of other persons, corporations and business
entities;
D. By resolution adopted by a majority of the whole board, to designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation, which, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the
Board of Directors. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. The members of any
such committee present at any meeting and not disqualified from voting may,
whether or not they constitute a quorum, unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any absent
or disqualified member.
All corporate powers of the Corporation shall be exercised by the Board of
Directors except as otherwise provided herein or by law.
II. ARTICLE FIFTEENTH SHALL BE AMENDED TO READ AS FOLLOWS:
FIFTEENTH: Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Amended and
Restated Certificate of Incorporation to elect additional directors under
specific circumstances, whenever the vote of stockholders at a meeting thereof
is required or permitted to be taken for or in connection with any corporate
action, the meeting and vote of stockholders may be dispensed with if a written
consent to such corporate action is signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted; provided that prompt notice must be given to
all stockholders of the taking of corporate action without a meeting and by
less than unanimous written consent.
III. ARTICLE SIXTEENTH SHALL BE AMENDED TO READ AS FOLLOWS:
SIXTEENTH: Each director, other than those who may be elected by the
holders of any series of Preferred Stock or any other series or class of stock
as set forth in this Amended and Restated Certificate of Incorporation, shall
hold office until a successor is elected at the next succeeding annual meeting
of stockholders and qualified or until such director's earlier resignation or
removal. Regardless of the foregoing sentence, in the case of directors
designated as Class I directors elected at the annual meeting
A-1
of stockholders held in 1999, such directors shall hold office until a
successor is elected at the annual meeting of stockholders held in 2002 and
qualified or until such director's earlier resignation or removal, and in the
case of directors designated as Class III directors prior to the annual meeting
of stockholders held in 1999, such directors shall hold office until a
successor is elected at the annual meeting of stockholders held in 2001 and
qualified or until such director's earlier resignation or removal.
"MARKED VERSION" OF PROPOSED AMENDMENTS TO THE COMPANY'S CHARTER.
The following "marked version" illustrates the changes that would be made
to the existing Articles SEVENTH, FIFTEENTH and SIXTEENTH of the Company's
Charter if approved by the stockholders at the Annual Meeting. Language that
would be added is in italics and language that would be deleted is struck out.
I. CHANGES THAT WOULD BE MADE TO EXISTING ARTICLE SEVENTH:
SEVENTH: In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
A. To adopt, amend or repeal the by-laws of the Corporation; [strike-outs
begin] provided, however, that the by-laws adopted by the Board of Directors
under the powers hereby conferred may be amended or repealed by the Board of
Directors or by the stockholders having voting power with respect thereto,
provided further that in the case of amendments by stockholders, the
affirmative vote of the holders of at least 80 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required to alter, amend or repeal any provision of the by-laws; [strike-outs
end]
B. To authorize and cause to be executed mortgages and liens, with or
without limit as to amount, upon the real and personal property of the
Corporation;
C. To authorize the guaranty by the Corporation of securities, evidences
of indebtedness and obligations of other persons, corporations and business
entities;
D. By resolution adopted by a majority of the whole board, to designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation, which, to the extent provided in the resolution,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation and may authorize the
seal of the Corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The members of any such committee present at any meeting and not
disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member.
All corporate powers of the Corporation shall be exercised by the Board of
Directors except as otherwise provided herein or by law. [strike-outs begin]
Notwithstanding anything contained in this Amended and Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend, repeal or adopt any
provision inconsistent with paragraph A of this ARTICLE SEVENTH. [strike-outs
end]
II. CHANGES THAT WOULD BE MADE TO EXISTING ARTICLE FIFTEENTH:
FIFTEENTH: Subject to the rights of the holders of any series of
Preferred Stock or any other series or class of stock as set forth in this
Amended and Restated Certificate of Incorporation to elect additional directors
under specific circumstances, [strike-outs begin] any action required or
permitted to be taken by the stockholders of the Corporation must be effected
at a duly called annual or special meeting of stockholders of the Corporation
and may not be effected by any consent in writing in lieu of a meeting of such
stockholders. Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of at least
80 percent of the voting power of the then
A-2
outstanding Voting Stock, voting together as a single class, shall be required
to amend, repeal or adopt any provision inconsistent with this ARTICLE
FIFTEENTH [strike-outs end][italics begin] whenever the vote of stockholders at
a meeting thereof is required or permitted to be taken for or in connection
with any corporate action, the meeting and vote of stockholders may be
dispensed with if a written consent to such corporate action is signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted; provided that
prompt notice must be given to all stockholders of the taking of corporate
action without a meeting and by less than unanimous written consent. [italics
end]
III. CHANGES THAT WOULD BE MADE TO EXISTING ARTICLE SIXTEENTH:
SIXTEENTH: [strike-outs begin] Subject to the rights of the holders of any
series of Preferred Stock or any other series or class of stock as set forth in
this Amended and Restated Certificate of Incorporation to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be fixed, and may be increased or decreased from time to
time, in such manner as may be prescribed by the by-laws.
Unless and except to the extent that the by-laws of the Corporation shall
so require, the election of directors of the Corporation need not be by written
ballot.
The directors, other than those who may be elected by the holders of any
series of Preferred Stock many other series or class of stock as set forth in
this Amended and Restated Certificate of Incorporation, shall be divided into
three classes, to nearly equal in number as possible. One class of directors
shall be initially elected for a term expiring at the annual meeting of
stockholders to be held in 1997, another class shall be initially elected of
for expiring at the annual meeting of stocholders to be held in 1998 and
another class shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 1999. Members of each class shall hold
office until their successors are elected and qualified. At each succeedding
annual meeting of the stockholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast at such meeting to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election.
Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in this Amended and Restated
Certificate of Incorporation to elect additional directors under specified
circumstances any director may be removed from office at any time by the
shareholders but only for cause.
Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class shall be required to amend,
repeal or adopt any provision inconsistent with this ARTICLE SIXTEENTH.
[strike-outs end] [italics begin]
Each director, other than those who may be elected by the holders of any
series of Preferred Stock or any other series or class of stock as set forth in
this Amended and Restated Certificate of Incorporation, shall hold office until
a successor is elected at the next succeeding annual meeting of stockholders
and qualified or until such director's earlier resignation or removal.
Regardless of the foregoing sentence, in the case of directors designated as
Class I directors elected at the annual meeting of stockholders held in 1999,
such directors shall hold office until a successor is elected at the annual
meeting of stockholders held in 2002 and qualified or until such director's
earlier resignation or removal, and in the case of directors designated as
Class III directors prior to the annual meeting of stockholders held in 1999,
such directors shall hold office until a successor is elected at the annual
meeting of stockholders held in 2001 and qualified or until such director's
earlier resignation or removal. [italics end]
A-3
[SEALED AIR CORPORATION LOGO]
March 31, 1999
Dear Fellow Stockholder:
Enclosed with this letter is our proxy material in connection with the
Annual Meeting of Stockholders of Sealed Air Corporation to be held on May 21,
1999. In addition to the proposals to elect members of your Board of Directors
and to ratify the selection of auditors, you are being asked to repeal three
provisions in the Company's Charter that were inherited from W.R. Grace & Co.
when the Sealed Air and Cryovac businesses were merged in March 1998. THESE
PROVISIONS LIMIT YOUR ABILITY AS A STOCKHOLDER TO TAKE CERTAIN ACTIONS
OTHERWISE PERMITTED UNDER DELAWARE LAW.
YOUR BOARD RECOMMENDS THAT YOU VOTE FOR THE REPEAL OF THESE PROVISIONS:
a) Provisions requiring a classified board and removal of directors only
for cause (item 3 on your proxy card):
Repeal of these provisions will restore to shareholders the right to elect
the entire board at each annual meeting of stockholders thereby enhancing
the accountability of the Board of Directors to the stockholders. The
election of directors is the primary avenue for stockholders to influence
corporate policies and to hold management accountable for its
implementation of those policies. WE BELIEVE THAT THE BEST INTERESTS OF
STOCKHOLDERS ARE SERVED BY ELECTING ALL DIRECTORS ANNUALLY.
b) A provision prohibiting stockholder action by written consent (item 4
on your proxy card):
Repeal of this provision will enable stockholders to take action by written
consent -- that is, stockholders would have the right to take action by
obtaining the necessary number of signed written consents without waiting
for the next annual meeting of the stockholders. REPEAL OF THIS PROVISION
WOULD GIVE STOCKHOLDERS ADDITIONAL MEANS TO EXERCISE THEIR RIGHTS THROUGH
THE CORPORATE GOVERNANCE PROCESS.
c) A provision requiring 80% stockholder vote to amend the Company's
by-laws (item 5 on your proxy card):
The requirement to obtain the affirmative votes of 80% of the voting power
of the Company's stock in order to amend the Company's by-laws presents a
high hurdle for stockholders. As a practical matter, the Company never
receives the vote of 100% of the voting power on any issue. This means that
more than 80% of stockholders voting on an issue must agree before a
proposal can pass. THE COMPANY RECOMMENDS THAT THE 80% REQUIREMENT BE
REMOVED TO ENABLE AMENDMENTS TO THE COMPANY'S BY-LAWS TO BE MORE READILY
APPROVED BY THE COMPANY'S STOCKHOLDERS.
THE BOARD OF DIRECTORS BELIEVES THAT THESE PROVISIONS ARE NOT IN YOUR BEST
INTERESTS AND THAT YOU SHOULD VOTE TO REPEAL THESE PROVISIONS.
The repeal of these inherited provisions requires the affirmative vote of
at least 80% of the combined voting power of the Company's stock, so it is
particularly important that you vote in favor of these amendments. The Company
strongly believes in the stockholder's right to influence the Company's future.
At this year's Annual Meeting, the Company again seeks your support to repeal
these inherited provisions.
Regardless of the number of shares of Common Stock or Preferred Stock you
own, it is important that they be represented and voted at the meeting. PLEASE
PROMPTLY SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE RETURN ENVELOPE PROVIDED
OR VOTE BY TELEPHONE OR VIA THE INTERNET BY FOLLOWING THE INSTRUCTIONS FOR
VOTING SET FORTH IN THE ATTACHED PROXY STATEMENT AND ON YOUR PROXY CARD. Your
prompt cooperation is appreciated.
On behalf of your Board of Directors, we thank you for your continued
support.
Sincerely,
/s/ T.J. Dermot Dunphy
----------------------------------
T.J. DERMOT DUNPHY
Chairman of the Board and
Chief Executive Officer
PLEASE VOTE YOUR PROXY TODAY
YOUR VOTE IS IMPORTANT!
X
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
2905
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL CLASS I DIRECTORS
AND FOR PROPOSALS 2 THROUGH 5. IF NO CHOICE IS SPECIFIED, THIS PROXY WHEN
PROPERLY SIGNED AND RETURNED WILL BE VOTED FOR ELECTION OF ALL CLASS I
DIRECTORS AND FOR PROPOSALS 2 THROUGH 5. PLEASE DATE AND SIGN AND RETURN THIS
PROXY PROMPTLY.
1. Election of Class I Directors.
(See reverse)
FOR WITHHELD
For, except vote withheld from the following nominee(s):
2. Ratification of the appointment of KPMG LLP as the independent auditors for
the year ending December 31, 1999.
FOR AGAINST ABSTAIN
AMENDMENTS OF CERTIFICATE OF INCORPORATION
TO REPEAL SUPERMAJORITY PROVISIONS:
FOR AGAINST ABSTAIN
3. Repeal classified board and removal only for cause.
4. Repeal prohibition of stockholder action by written consent.
5. Repeal supermajority requirements for stockholder amendments to by-laws.
6. In accordance with the Proxy Committee's discretion, upon such other
matters as may properly come before the meeting.
Please mark this box if you plan to attend the Annual Meeting.
The signer hereby revokes all proxies previously given by the signer to vote at
the 1999 Annual Meeting and any adjournments and acknowledges receipt of the
Proxy Statement dated March 31, 1999.
- -------------------------------------------------------------------------------
SIGNATURE (S) DATE
- -------------------------------------------------------------------------------
NOTE: Please sign EXACTLY as name appears above. When signing on behalf of a
corporation, estate, trust or other stockholder, please give its full name
and state your full title or capacity or otherwise indicate that you are
authorized to sign.
FOLD AND DETACH HERE
If voting by telephone or via the Internet, please see instructions below.
YOU CAN NOW VOTE YOUR SHARES BY TELEPHONE OR VIA THE INTERNET
Sealed Air Corporation
Dear Stockholder,
We encourage you to take advantage of two new convenient ways to vote your
shares. You may now vote your shares by telephone or via the Internet
twenty-four hours a day, seven days a week. This eliminates the need to return
the proxy card.
TO VOTE BY TELEPHONE:
1. If you have a touch-tone telephone, call 1-800-OK2-VOTE. This is a TOLL-FREE
number. You may call 24 hours a day until May 21, 1999 at 9:00 a.m. local
time in New Jersey. Outside of the U.S. and Canada call 1-201-324-0377.
2. Enter your Control Number, which is located in the box above.
3. To vote as the Board of Directors recommends on ALL proposals, press 1. If
you wish to vote on each proposal separately, press 2 and follow the recorded
instructions.
4. Following voting, also confirm if you plan to attend the meeting in Saddle
Brook, New Jersey.
Your vote on all proposals will be repeated and you will have an opportunity to
confirm it
TO VOTE VIA THE INTERNET:
1. Go to the following website: http://www.vote-by-net.com. You may vote 24
hours a day through May 20, 1999.
2. Enter your Control Number, which is located in the box above.
3. Follow the on-line instructions on your computer screen.
Your telephone or Internet vote authorizes the named proxies in the same manner
as if you marked, signed, dated and returned the proxy card.
IF YOU VOTE BY MAIL OR VIA THE INTERNET, YOU DO NOT NEED TO MAIL BACK YOUR PROXY
CARD.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
P
R
O
X
Y
SEALED AIR CORPORATION PROXY/VOTING INSTRUCTION CARD
FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints William V. Hickey, Daniel S. Van Riper and H.
Katherine White, or a majority of them as shall act (or if only one shall act,
then that one) (the "Proxy Committee"), proxies with power of substitution to
act and vote at the Annual Meeting of Stockholders of Sealed Air Corporation
(the "1999 Annual Meeting") to be held at 10:00 a.m. local time on May 21, 1999
at the Saddle Brook Marriott, Garden State Parkway at I-80, Saddle Brook, New
Jersey 07663-5894 and at any adjournments thereof. The Proxy Committee is
directed to vote as indicated on the reverse side and in their discretion upon
any other matters that may properly come before the 1999 Annual Meeting.
If the undersigned is a participant in Sealed Air Corporation's Profit-Sharing
Plan or its Thrift Plan for Cryovac Employees and has stock of Sealed Air
Corporation allocated to his or her account, then the undersigned instructs the
trustee of such plan to vote such shares of stock, in person or by proxy, in
accordance with the instructions on the reverse side at the 1999 Annual Meeting
and any adjournments thereof and in their discretion upon any other matters that
may properly come before the 1999 Annual Meeting. The terms of each plan provide
that shares for which no voting instructions are received will be voted in the
same proportion as shares are voted for participants who provide voting
instructions.
Election of Class I Directors,
Nominees:
01. Hank Brown
02. John K. Castle
03. Charles F. Farrell, Jr.
04. Alan H. Miller
Comments:
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
PLEASE MARK, DATE AND SIGN YOUR PROXY ON THE REVERSE SIDE AND MAIL IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED. THE PROXY COMMITTEE CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD (OR UNLESS YOU VOTE PROPERLY BY
TELEPHONE OR VIA THE INTERNET). THIS PROXY WILL BE VOTED AS INDICATED ON THE
REVERSE SIDE.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
