SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TREDEGAR INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TREDEGAR INDUSTRIES, INC.
1100 BOULDERS PARKWAY
RICHMOND, VIRGINIA 23225
[TREDEGAR INDUSTRIES LOGO]
ANNUAL MEETING OF SHAREHOLDERS
MARCH 26, 1997
TO THE SHAREHOLDERS:
We invite you to attend the Annual Meeting of
Shareholders to be held in THE GRAND BALLROOM OF THE JEFFERSON
HOTEL, FRANKLIN & ADAMS STREETS, RICHMOND, VIRGINIA, ON
THURSDAY, MAY 22, 1997, AT 9:30 A.M., EASTERN DAYLIGHT TIME. A
formal notice of the meeting, together with a proxy statement
and proxy form, is enclosed with this letter. The notice
points out that you will be asked to elect directors and
approve the designation of auditors for the coming year.
Please read the notice and proxy statement carefully,
complete the proxy form and mail it promptly.
Sincerely yours,
/s/ JOHN D. GOTTWALD
JOHN D. GOTTWALD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TREDEGAR INDUSTRIES, INC.
1100 BOULDERS PARKWAY
RICHMOND, VIRGINIA 23225
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares of
Common Stock, no par value ("Common Stock"), of Tredegar Industries, Inc.
("Tredegar") will be held in THE GRAND BALLROOM OF THE JEFFERSON HOTEL, FRANKLIN
& ADAMS STREETS, IN RICHMOND, VIRGINIA, ON THURSDAY, MAY 22, 1997, AT 9:30 A.M.,
EASTERN DAYLIGHT TIME, for the following purposes:
1. To elect three directors to serve until the 2000 annual meeting and
until their successors are elected;
2. To approve the designation of Coopers & Lybrand L.L.P. as auditors for
the fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before the meeting.
Holders of shares of Common Stock of record at the close of business on
March 17, 1997, will be entitled to vote at the meeting.
You are requested to complete, sign, date and return the enclosed proxy
form promptly, regardless of whether you expect to attend the meeting. A
self-addressed, stamped envelope is enclosed for your convenience.
If you are present at the meeting, you may vote in person even if you have
already returned your proxy.
By Order of the Board of Directors
Nancy M. Taylor, SECRETARY
March 26, 1997
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TREDEGAR INDUSTRIES, INC.
To be held May 22, 1997
Approximate date of mailing -- March 26, 1997
Proxies in the form enclosed are solicited by the Board of Directors of
Tredegar (the "Board") for the Annual Meeting of Shareholders to be held on
Thursday, May 22, 1997. Any person giving a proxy may revoke it any time before
it is voted by voting in person at the meeting or delivering another proxy, or
written notice of revocation, to the Secretary of Tredegar. A proxy, if executed
and not revoked, will be voted and, if it contains any specific instructions,
will be voted in accordance with such instructions.
On March 17, 1997, the date for determining shareholders entitled to vote
at the meeting, there were 12,241,485 outstanding shares of Common Stock. Each
share of Common Stock is entitled to one vote.
The cost of the solicitation of proxies will be borne by Tredegar. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of Tredegar. Corporate Investor Communications,
Inc. has been engaged to assist in the solicitation of proxies from brokers,
nominees, fiduciaries and other custodians. Tredegar will pay that firm $4,500
for its services plus reimbursement for out-of-pocket expenses.
Tredegar's address is 1100 Boulders Parkway, Richmond, Virginia 23225.
ELECTION OF DIRECTORS
The Board is divided into three classes of directors as nearly equal in
number as possible, each of which serves for three years. The term of office of
one class of directors expires each year in rotation so that one class is
elected at each annual meeting for a three-year term.
The terms of three of the present directors, Messrs. Austin Brockenbrough,
III, Bruce C. Gottwald and Norman A. Scher will expire at the 1997 Annual
Meeting. Mr. Bruce C. Gottwald will retire from Tredegar's Board upon the
expiration of his current term. Mr. Austin Brockenbrough, III, Dr. William M.
Gottwald, Dr. Richard L. Morrill and Mr. Norman A. Scher have been nominated by
the Board for election at the 1997 Annual Meeting for the term expiring at the
2000 Annual Meeting of Shareholders.
The election of each nominee for director requires the affirmative vote of
the holders of a plurality of the shares of Common Stock cast in the election of
directors. Unless otherwise specified in the accompanying form of proxy, it is
intended that votes will be cast for the election of all of the nominees as
directors. Votes that are withheld and shares held in street name that are not
voted in the
1
election of directors will not be included in determining the number of votes
cast. If any of the nominees for director should be unavailable for election, a
circumstance that is not expected, the Board may either reduce the number of
directors accordingly or designate a substitute nominee in the place and stead
of the unavailable person. In the latter event, it is intended that votes in
respect of all shares for which proxies have been given will be cast for the
election of such substitute nominee.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ALL OF THE NOMINEES.
Following is certain information concerning the nominees and the directors
whose terms of office will continue after the meeting:
AUSTIN BROCKENBROUGH, III - age 60; director since 1993; Managing Director and
President of Lowe, Brockenbrough & Tattersall, Inc. (private investment
counseling firm) since 1970. Other directorship: Trustee of The Williamsburg
Investment Trust. Term expires 1997.
PHYLLIS COTHRAN - age 50; director since 1993; President and Chief Operating
Officer of Trigon Blue Cross Blue Shield ("Trigon"), a health insurance (and
related services) company, since November, 1990. Ms. Cothran will retire from
Trigon effective as of March 31, 1997. Other directorships: Central Fidelity
Banks, Inc. and Ethyl Corporation ("Ethyl"). Term expires 1999.
RICHARD W. GOODRUM - age 69; director since 1989; retired, having served
previously as Executive Vice President and Chief Operating Officer of Tredegar
from July 10, 1989 until March 31, 1996. Term expires 1999.
FLOYD D. GOTTWALD, JR. - age 74; director since 1989; Chairman of the Board and
Chief Executive Officer of Albemarle Corporation, a chemicals company
("Albemarle") since March 1, 1994; having served previously as Vice Chairman of
Ethyl, a petroleum additives company, from March 1, 1994 until February 29,
1996, and as Chairman of the Board of Ethyl from 1968 until March 1, 1994. Other
directorship: Albemarle. Term expires 1999.
JOHN D. GOTTWALD - age 42; director since 1989; President and Chief Executive
Officer of Tredegar since July 10, 1989. Other directorship: Albemarle. Term
expires 1998.
WILLIAM M. GOTTWALD - age 49; Vice President, Corporate Strategy, of Albemarle
since August, 1996; having served previously as Vice President of Ethyl from
September, 1994 until August, 1996, and as President of Whitby, Inc., a
pharmaceuticals company, from September, 1989 until September, 1994. Nominated
for term expiring 2000.
ANDRE B. LACY - age 57; director since 1989; Chairman of the Board, Chief
Executive Officer and President of LDI Management, Inc. (distribution and
manufacturing holding company), and Managing General Partner of LDI, Ltd.
(industrial and investment limited partnership) since 1986. Other directorships:
Albemarle, FinishMaster, Inc., Herff Jones, Inc., IPALCO Enterprises, Inc., The
National Bank of Indianapolis, Patterson Dental Company. Term expires 1998.
RICHARD L. MORRILL - age 57; President, University of Richmond since 1988. Other
directorships: Central Fidelity Banks, Inc. and The Williamsburg Investment
Trust. Nominated for term expiring 2000.
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EMMETT J. RICE - age 77; director since 1989; retired, former member of the
Board of Governors of the Federal Reserve System. Other directorships: Albemarle
and Jardine-Fleming China Region Fund, Inc. Term expires 1998.
NORMAN A. SCHER - age 59; director since 1989; Executive Vice President, Chief
Financial Officer and Treasurer of Tredegar since July 10, 1989. Other
directorship: DIMON, Incorporated. Term expires 1997.
There were five meetings of the Board held during 1996. All of the
directors attended at least 75% of the aggregate of the total number of meetings
of the Board held during 1996 and the total number of meetings held by all
committees of the Board on which the director then served.
Tredegar has an Executive Committee consisting of Messrs. John D. Gottwald,
Richard W. Goodrum and Norman A. Scher. Pursuant to Tredegar's By-laws, the
Executive Committee may exercise the full authority of the Board, except as
limited by the Virginia Stock Corporation Act and except with respect to the
compensation of the executive officers, which is determined by the Executive
Compensation Committee. During 1996, the Executive Committee met informally as
required as Tredegar's principal management committee.
Messrs. Austin Brockenbrough, III, Richard W. Goodrum and Andre B. Lacy
serve on Tredegar's Audit Committee. The Audit Committee met twice during 1996.
The Audit Committee reviews Tredegar's internal audit and financial reporting
functions and the scope and results of the audit performed by Tredegar's
independent accountants and matters relating thereto and reports thereon to the
Board. The Audit Committee also recommends to the Board the engagement of the
independent accountants of Tredegar.
Ms. Phyllis Cothran and Messrs. Austin Brockenbrough, III, and Emmett J.
Rice serve on Tredegar's Executive Compensation Committee. The Executive
Compensation Committee met twice during 1996. This Committee approves the
salaries and bonus awards of executive officers, and grants awards under
Tredegar's stock incentive plans. The Executive Compensation Committee is
composed of individuals who are not, and have not been for the preceding year,
eligible to participate in any stock incentive plan of Tredegar.
Messrs. John D. Gottwald, Norman A. Scher and Austin Brockenbrough, III,
serve on Tredegar's Nominating Committee. During 1996, the Nominating Committee
met formally on one occasion. The Nominating Committee makes recommendations to
the Board regarding nominees for election as directors and may make other
recommendations regarding tenure, classification and compensation of directors.
Tredegar's By-laws provide that a shareholder of Tredegar entitled to vote
for the election of directors may nominate persons for election to the Board by
mailing written notice to the Secretary of Tredegar not later than (i) with
respect to an election to be held at an annual meeting of shareholders, ninety
days prior to such meeting and (ii) with respect to an election to be held at a
special meeting of shareholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is given to shareholders. Any such shareholder's notice shall include (i) the
name and address of the shareholder and of each person to be nominated, (ii) a
representation
3
that the shareholder is a holder of record of stock of Tredegar entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate each person specified, (iii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person
(naming such person) pursuant to which the nomination is to be made by the
shareholder, (iv) such other information regarding each nominee as would be
required to be included in a proxy statement filed pursuant to the applicable
rules of the Securities and Exchange Commission had the nominee been nominated
by the Board and (v) the consent of each nominee to serve as a director of
Tredegar if so elected.
Mr. John D. Gottwald and Dr. William M. Gottwald are brothers and are sons
of Mr. Floyd D. Gottwald, Jr. Mr. Bruce C. Gottwald is the brother of Mr. Floyd
D. Gottwald, Jr., and the uncle of Mr. John D. Gottwald and Dr. William M.
Gottwald. The Gottwalds may be deemed to be control persons of Tredegar.
STOCK OWNERSHIP
The following table lists the direct or indirect beneficial ownership of
Tredegar's Common Stock by the directors, nominees and the executive officers
named in the Summary Compensation Table as of January 31, 1997, and all
directors and executive officers of Tredegar as a group as of January 31, 1997.
Security Ownership of Management
-------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES TOTAL
WITH SOLE VOTING WITH SHARED VOTING NUMBER
AND INVESTMENT AND INVESTMENT OF PERCENT OF
POWER POWER SHARES CLASS(a)
-------------------------- ------------------ --------- ----------
OUTSTANDING OPTIONS(b)
----------- ----------
DIRECTORS, NOMINEES AND
CERTAIN EXECUTIVE OFFICERS(c)
Austin Brockenbrough, III 15,000 -- 2,370 17,370(d)
Phyllis Cothran -- -- 5,700 5,700
Richard W. Goodrum 88,137 125,850 4,500 218,487 1.8%
Bruce C. Gottwald 768,880 -- 59,941 828,821(e) 6.8%
Floyd D. Gottwald, Jr. 1,128,645 -- 94,606 1,223,251(f) 10.0%
John D. Gottwald 486,446 189,600 241,671 917,717(g) 7.4%
William M. Gottwald 25,665 -- 193,187 218,852(h) 1.8%
Steven M. Johnson 12,262 38,500 2,250 53,012
Andre B. Lacy 334 -- 96,000 96,334(i)
Richard L. Morrill -- -- -- --
Douglas R. Monk 12,455 45,745 -- 58,200
Emmett J. Rice 795 -- -- 795
Anthony J. Rinaldi 25,032 51,750 1,507 78,289(j)
Norman A. Scher 22,887 132,000 60 154,947 1.3%
MANAGEMENT
All directors and executive officers
as a group (14)(k)(l) 2,587,815 700,445 462,409(m) 3,750,669(m) 28.9%(m)
4
- ---------------
(a) Except as indicated, each person or group owns less than 1% of
Tredegar's outstanding Common Stock.
(b) The number of options included for the following executive officers and
Management as a group consists of options with respect to which certain
executive officers have the right to acquire beneficial ownership within 60 days
of February 1, 1997.
(c) Certain shares may be deemed to be beneficially owned by more than one
person or group listed and are reported as being beneficially owned by each.
(d) Austin Brockenbrough, III, disclaims beneficial ownership of 2,370
shares of Common Stock.
(e) Bruce C. Gottwald disclaims beneficial ownership of 59,941 shares of
Common Stock.
(f) Floyd D. Gottwald, Jr., disclaims beneficial ownership of 94,606 shares
of Common Stock.
(g) John D. Gottwald disclaims beneficial ownership of 59,863 shares of
Common Stock.
(h) William M. Gottwald disclaims beneficial ownership of 31,340 shares of
Common Stock.
(i) Andre B. Lacy disclaims beneficial ownership of 73,222 shares of Common
Stock.
(j) Anthony J. Rinaldi disclaims beneficial ownership of 1,457 shares of
Common Stock.
(k) The directors, nominees and executive officers have sole voting and
investment power over all of the shares disclosed except for the shares listed
in the third column, which are held by or jointly with spouses, by children or
in partnerships and certain trust relationships. Any shares held under Ethyl's
or Tredegar's benefit plans for the benefit of any director, nominee or
executive officer are included in the number of shares over which the director,
nominee or executive officer has sole voting or investment power. Shares held by
the Trustees of such plans for the benefit of other employees are not included.
See Note (d) to the table "Security Ownership of Certain Beneficial Owners"
below.
(l) Voting and investment power is shared by two directors with respect to
46,665 shares. This overlap in beneficial ownership has been eliminated for
purposes of calculating the number of shares and the percentage of class owned
by Management.
(m) The above table does not include certain shares owned by adult children
and attributed to Floyd D. Gottwald, Jr., and Bruce C. Gottwald in the table
"Security Ownership of Certain Beneficial Owners" below. If such shares were
included in the above table, the total number of shares of Management would
equal 4,923,022 and the percentage owned by Management would equal 38%.
5
The following table lists any person (including any "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) who, to the
knowledge of Tredegar, was the beneficial owner as of February 1, 1997 of more
than 5% of the shares of Tredegar's Common Stock.
Security Ownership of Certain Beneficial Owners
- -------------------------------------------------------------------------------------------
NAMES AND ADDRESSES NUMBER PERCENT
OF BENEFICIAL OWNERS OF SHARES CLASS
- -------------------------------------------------- --------- -------
Floyd D. Gottwald, Jr.,
Bruce C. Gottwald, and
John D. Gottwald(a)
330 South Fourth Street
P.O. Box 2189
Richmond, VA 23217 4,095,477(b)(c) 32.9%
Wachovia Bank of North Carolina, N.A.,
as Trustee for the Savings Plan for
the Employees of Tredegar Industries, Inc.
301 North Main Street
Winston-Salem, NC 27150 1,446,037(c)(d) 11.8%
NationsBank Corporation
NationsBank, N.A. (South)
NationsBank, N.A.
NationsBank of Texas, N.A.
TradeStreet Investment Associates, Inc.
101 South Tryon Street
NationsBank Plaza
Charlotte, NC 28255(e) 746,363 6.9%(f)
- ---------------
(a) Floyd D. Gottwald, Jr., Bruce C. Gottwald and John D. Gottwald (the
"Gottwalds"), together with members of their immediate families, may be deemed
to be a "group" for purposes of Section 13(d)(3) of the Securities Exchange Act
of 1934, although there is no agreement among them with respect to the
acquisition, retention, disposition or voting of Common Stock.
(b) The Gottwalds, individually or collectively, have sole voting and
investment power over all of the shares disclosed except for 1,152,924 shares
held by their respective wives and children, and in certain trust relationships,
some of which might be deemed to be beneficially owned by the Gottwalds under
the rules and regulations of the Securities and Exchange Commission, but as to
which the Gottwalds disclaim beneficial ownership. Shares owned by the adult
children of Floyd D. Gottwald, Jr., and Bruce C. Gottwald are included in the
holdings of the Gottwalds as a group.
(c) This amount includes 71,839 shares owned of record by Wachovia Bank of
North Carolina, N.A., Winston-Salem, North Carolina ("Wachovia"), as Trustee
under the Savings Plan for the Employees of Tredegar Industries, Inc. (the
"Tredegar Savings Plan") for the benefit of John D. Gottwald.
(d) Shares held under the Tredegar Savings Plan are voted by the Trustee in
accordance with instructions solicited from employees participating in the
plans. If a participating employee does not give the Trustee voting
instructions, his shares are voted by the Trustee in accordance with the Board's
recommendations to the shareholders, so long as such vote is consistent with the
Trustee's fiduciary
6
duties. Because members of the Gottwald family are executive officers, directors
and the largest shareholders of Tredegar, they may be deemed to be control
persons of Tredegar and to have the capacity to control any such recommendation
of the Board.
(e) NationsBank Corporation, NationsBank, N.A. (South), NationsBank, N.A.,
NationsBank of Texas, N.A., TradeStreet Investment Associates, Inc.
(collectively, "NationsBank") reported as a group for purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, but stated that such report
should not be construed as an admission that those entities constitute a group.
(f) The number of shares owned is as of December 31, 1996, as reported in
the Schedule 13G filed by NationsBank and received by Tredegar on February 10,
1997.
7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by Tredegar to the
Chief Executive Officer and the four other highest paid executive officers for
services in all capacities to Tredegar for the fiscal years ended December 31,
1996, 1995 and 1994, respectively.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------------
------------------- SECURITIES ALL OTHER
NAME AND SALARY BONUS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) OPTIONS/SARS (#) ($)
- ------------------------------- ----- ------- ------- ---------------- ------------
John D. Gottwald 1996 347,167 140,000 18,000 17,824(1)
President and Chief 1995 333,000 125,000 22,500 16,882(1)
Executive Officer 1994 333,000 90,000 56,250 16,758(1)
Norman A. Scher 1996 313,000 130,000 12,000 16,022(2)
Executive Vice President, 1995 303,000 115,000 15,000 15,333(2)
Chief Financial Officer 1994 303,000 75,000 37,500 15,230(2)
and Treasurer
Steven M. Johnson 1996 204,667 75,000 6,000 10,366(3)
Vice President- 1995 178,000 50,000 7,500 8,968(3)
Corporate Development 1994 166,667 35,000 18,750 8,363(3)
Douglas R. Monk 1996 165,967 150,000(4) 6,000 8,416(5)
Vice President 1995 156,667 50,000 7,500 7,893(5)
and President of 1994 148,907 35,000 18,750 9,144(5)
Aluminum Extrusions
Anthony J. Rinaldi 1996 172,017 113,056(6) 6,000 8,726(7)
Vice President and 1995 165,500 89,399(6) 7,500 8,339(7)
President of Films Division 1994 156,500 78,309(6) 18,750 7,854(7)
- ---------------
(1) Matching contributions under the Savings Plan for the Employees of
Tredegar Industries, Inc. (the "Savings Plan") ($7,500 for 1996, 1995 and 1994)
and credit under the Savings Plan Benefit Restoration Plan (the "SPBR Plan")
($10,324 for 1996, $9,382 for 1995 and $9,258 for 1994).
(2) Matching contributions under the Savings Plan ($7,500 for 1996, 1995
and 1994) and credit under the SPBR Plan ($8,522 for 1996, $7,833 for 1995 and
$7,730 for 1994).
(3) Matching contributions under the Savings Plan ($7,500 for 1996, $6,650
for 1995 and $5,533 for 1994) and credit under the SPBR Plan ($2,866 for 1996,
$2,318 for 1995 and $2,830 for 1994).
(4) Bonus amount determined under a formula-based incentive plan adopted
for Tredegar's Aluminum Extrusion division.
(5) Matching contributions under the Savings Plan ($7,500 for 1996, $5,813
for 1995 and $4,862 for 1994) and credit under the SPBR Plan ($916 for 1996,
$2,081 for 1995 and $4,282 for 1994).
8
(6) Bonus award is determined under the Tredegar Film Products division's
incentive compensation plan. Although the full amount of the award is reported
in the above table, only a portion of the award was paid in cash to Mr. Rinaldi
for the year reported. For 1996, 1995 and 1994, Mr. Rinaldi received cash
payments of $73,539, $53,810 and $36,042, respectively, and the remaining
portion was deferred in accordance with the terms of the plan. Under Film
Products' plan, an incentive award account is established for each plan
participant and at the end of each plan year an individual award is allocated to
a participant's account. The individual award, which may be positive or
negative, is determined based on the change in the division's economic profit
added. Following the year-end award allocation, one-third of the balance in each
participant's account is paid out in cash, unless certain performance criteria
have not been met. Participants have no obligation to restore negative balances
in their accounts that may arise from a deduction for a negative award, except
to the extent of future positive incentive awards. A participant is entitled to
the cash value of his or her account upon retirement or death, with forfeiture
occurring upon the termination of employment in all other circumstances. After
giving effect to the cash incentive payment to Mr. Rinaldi made in January 1997
for the award earned in 1996, the cash value of Mr. Rinaldi's incentive award
account was $117,373. No interest is earned or paid on deferred amounts held in
participants' accounts.
(7) Matching contributions under the Savings Plan ($7,500 for 1996, $6,186
for 1995, $5,200 for 1994) and credit under the SPBR Plan ($1,226 for 1996,
$2,153 for 1995 and $2,654 for 1994).
9
STOCK OPTIONS AND SARS
The following table sets forth information with respect to stock options
granted to each of the executive officers named in the Summary Compensation
Table during the fiscal year ended December 31, 1996. There were no SARs granted
during the fiscal year ended December 31, 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/ GRANT DATE
SECURITIES SARS GRANTED VALUE(1)
UNDERLYING TO EMPLOYEES EXERCISE OR ---------------
OPTION/SARS IN FISCAL BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED (#) YEAR ($/SH) DATE PRESENT VALUE $
- ------------------ ----------- ------------ ----------- ----------- ---------------
John D. Gottwald 12,000 6% $25.125 2/21/2006 128,160
6,000 3 29.00 2/21/2006 56,460
Norman A. Scher 8,000 4 25.125 2/21/2006 85,440
4,000 2 29.00 2/21/2006 37,640
Steven M. Johnson 4,000 2 25.125 2/21/2006 42,720
2,000 1 29.00 2/21/2006 18,820
Douglas R. Monk 4,000 2 25.125 2/21/2006 42,720
2,000 1 29.00 2/21/2006 18,820
Anthony J. Rinaldi 4,000 2 25.125 2/21/2006 42,720
2,000 1 29.00 2/21/2006 18,820
- ---------------
(1) The grant date present value is an estimate based on the Black-Scholes
option pricing model. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date the
option is exercised. There is no assurance the value realized by an executive
will be at or near the value estimated by the Black-Scholes model. The
assumptions used under that model include a volatility of 23.5% based on the
one-year historical volatility of Common Stock prior to the grant date, a
risk-free rate of return of 6.13% based on the 9.4-year zero coupon U.S.
Treasury bond yield at the time of grant, a dividend yield of 1% based on the
annual dividend rate at the time of grant and an estimated option term of 9.4
years. The estimated grant date present value does not reflect any discount for
vesting, forfeiture provisions or prohibitions on transfer.
10
The following table sets forth information with respect to the exercise of
options during the last fiscal year and the fiscal year-end value of all
unexercised stock options and SARs held by the executive officers named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------- --------------- ------------ ------------------- ----------------------
John D. Gottwald(2) -0- -0- 171,600/18,000(3) 5,006,564/246,750
Norman A. Scher -0- -0- 112,083/19,917(4) 3,274,890/389,635
Steven M. Johnson 20,000 523,888 25,873/12,627(5) 743,166/265,321
Douglas R. Monk 455 5,988 33,118/12,627(6) 955,588/265,321
Anthony J. Rinaldi -0- -0- 39,123/12,627(7) 1,153,905/265,321
- ---------------
(1) Based on the closing price of $40.125 on December 31, 1996.
(2) The number of options and related SARs listed for Mr. Gottwald include
additional options and related SARs to purchase 10,350 shares of Common Stock of
Tredegar granted as compensation for incentive stock options to purchase shares
of Ethyl common stock held by Mr. Gottwald that were forfeited in connection
with the spin-off of Tredegar from Ethyl. These additional options are incentive
stock options.
(3) Of the total 189,600 options, 92,850 include a tandem SAR.
(4) Of the total 132,000 options, 67,500 include a tandem SAR.
(5) Of the total 38,500 options, 6,250 include a tandem SAR.
(6) Of the total 45,745 options, 13,495 include a tandem SAR.
(7) Of the total 51,750 options, 19,500 include a tandem SAR.
RETIREMENT BENEFITS
All of the executive officers participate in the Tredegar Industries, Inc.
Retirement Income Plan (the "Pension Plan"). The Pension Plan provides a normal
retirement benefit equal to 1.1% of the participant's final average earnings up
to his Social Security covered compensation, times his years of pension benefit
service, plus 1.5% of final average earnings in excess of covered compensation,
times his years of pension benefit service. There is no deduction for Social
Security benefits. Estimated annual benefits under the Pension Plan upon
retirement at age 65, determined as of December 31, 1996, to persons with
specified earnings and years of pension benefit service are set forth in the
table below.
11
The Internal Revenue Code limits (a) the annual retirement benefit that may
be paid under the Pension Plan and (b) the earnings that may be used in
computing a benefit. The maximum benefit and earnings limitations are adjusted
each year to reflect changes in the cost of living. For 1996, the maximum
benefit limitation was $118,631 (based on a five-year certain and life annuity)
and the earnings limitation was $150,000.
Messrs. Gottwald and Scher also participate in the Tredegar Industries,
Inc. Retirement Benefit Restoration Plan (the "Restoration Plan"). The
Restoration Plan will restore benefits that cannot be paid to them under the
Pension Plan due to the Internal Revenue Code maximum benefit limitation. The
benefit payable under the Restoration Plan is the difference between the benefit
that would have been payable under the Pension Plan, but for the Internal
Revenue Code limitation and the amount actually payable under the Pension Plan.
At this time, only Mr. Gottwald is affected by that limitation. No executive
officer receives a benefit under the Restoration Plan with respect to Pension
Plan benefits lost as a result of the maximum earnings limitation.
PENSION PLAN TABLE
(ESTIMATED ANNUAL BENEFITS PAYABLE AT RETIREMENT(1)(2))
REMUNERATION YEARS OF SERVICE(4)
(FINAL-AVERAGE ------------------------------------------------------------------------
EARNINGS)(3) 10 15 20 25 30 35 40
- ------------------------ ------ ------ ------ ------ ------ ------ ------
$125,000................ 17,647 26,470 35,294 44,117 52,941 61,764 70.588
150,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
175,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
200,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
225,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
250,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
300,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
350,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
400,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
450,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
500,000................ 21,397 32,095 42,794 53,492 64,191 74,889 85,588
- ---------------
(1) The estimated benefits assume retirement at age 65 and payment for the
lifetime of the participant, with five years' payments guaranteed (the normal
form of payment under the Pension Plan and the Restoration Plan). The table
assumes attainment of age 65 in 1996 and covered compensation of $27,576.
(2) The estimated benefit set forth in the table was determined using the
Internal Revenue Code limitation on earnings that may be used in computing a
benefit. The earnings limitation is subject to a transition rule that preserves
benefits accrued as of December 31, 1993 based on higher compensation levels.
Messrs. Gottwald and Scher have annual accrued benefits of $49,718 and $13,571,
respectively, under that transition rule.
(3) Final-Average Earnings is the average of the highest three consecutive
calendar year's earnings (base earnings plus 50% of bonuses) during the ten
consecutive years immediately preceding the date of determination. The current
compensation covered under the Pension Plan for each of the executive officers
named in the Summary Compensation Table and, in the case of Messrs. Gottwald and
12
Scher, the Restoration Plan, are: John D. Gottwald, $150,000; Norman A. Scher,
$150,000; Steven M. Johnson, $150,000; Douglas R. Monk, $150,000; and Anthony J.
Rinaldi, $150,000.
(4) The years of pension benefit service for each of the executive officers
named in the Summary Compensation Table are: John D. Gottwald, 18; Norman A.
Scher, 7; Steven M. Johnson, 7; Douglas R. Monk, 20; and Anthony J. Rinaldi, 20.
COMPENSATION OF DIRECTORS
Each member of the Board who was not an employee of Tredegar or any of its
subsidiaries was paid $1,000 for attending, in person, each of the five Board
meetings held in 1996. If a director attended a meeting telephonically, he or
she was paid $250 for such participation. In addition, each such director was
paid $500 for attendance at each meeting of a committee of the Board of which he
or she was a member, prior to May 21, 1996. Effective as of May 21, 1996, the
committee meeting fee was increased and each director was paid $750 at each
meeting of a committee of the Board of which he or she was a member. Each
chairperson of a Board committee received an additional $250 for attendance at
each meeting of his or her committee. In addition, each director was paid a
quarterly fee of $3,000 for the first quarter and $3,600 for each subsequent
quarter during 1996. Employee members of the Board are not paid separately for
their service on the Board.
CONSULTING AGREEMENT WITH RICHARD W. GOODRUM
Tredegar has entered into a consulting agreement with Richard W. Goodrum,
who retired as Executive Vice President and Chief Operating Officer of Tredegar
on March 31, 1996. Pursuant to the terms of the Consulting Agreement, Mr.
Goodrum continues to serve on Tredegar's Executive and Management Committees and
provides other services to Tredegar. As compensation for such services, Tredegar
pays Mr. Goodrum $25,000 annually. The initial term of the agreement expires on
March 31, 1997, but automatically renews for successive one-year periods unless
either party terminates the agreement at least 30 days prior to the expiration
of the then current term of the agreement.
EMPLOYMENT CONTRACT WITH NORMAN A. SCHER
Tredegar's employment agreement with Norman A. Scher was terminated
effective as of December 31, 1996. The employment agreement provided for an
annual salary of not less than $250,000 and the payment to Mr. Scher of up to
two years' salary in case of termination of employment under certain conditions
and, in case of disability, annual benefits of a specified amount. A substantial
part of such disability benefits were available under Tredegar's disability
benefit plan. The employment agreement provided that, in the event of Mr.
Scher's death, his estate would be paid an amount equal to two years' salary
less any amounts payable to his estate under any group insurance program of
Tredegar. Such benefit would have been payable to Mr. Scher's estate under
Tredegar's general group insurance program supplemented by insurance purchased
by Mr. Scher.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Tredegar's Executive Compensation Committee (the "Committee") is comprised
of three independent directors. No Committee member is a current or former
employee of Tredegar or any of its subsidiaries. The Committee's role is to
review and approve practices and policies related to compensation primarily for
executive officers, including those officers listed in this proxy statement.
COMPENSATION PHILOSOPHY
The Committee's philosophy is based on the principle that executive
compensation plans should be designed and administered to motivate and retain
highly qualified executives, with incentives linked closely to financial
performance and enhanced shareholder value. Control of all fixed costs is
critical to Tredegar's continued success. Controlling compensation costs
requires a significant portion of compensation increases to be closely linked to
performance and, therefore, variable in nature. However, Tredegar should remain
competitive with salaries.
BASE SALARIES
In determining base salaries, Tredegar identifies a reasonable range around
the average for comparable executive positions in a comparison group of
companies. Actual officer salaries are generally set within this range based on
individual performance and experience. Annual salary increases are considered.
The amount of such increases is based on a variety of factors including average
increases in comparison companies, individual performance (evaluated
subjectively), the officer's position in the pay range, Tredegar's financial
condition, and other variable components of compensation.
The comparison company group for compensation is generally not the same as
the published industry index that appears in the performance graph of this proxy
statement because index companies are not necessarily viewed as direct
competitors for executive talent. Comparison companies are chosen, and
information on pay evaluated, with the assistance of independent consultants.
The 1996 base salary for the Chief Executive Officer (CEO) was $347,167.
This salary is below the average for the comparison group.
BONUSES
Although bonus awards are generally discretionary, the bonus portion of
compensation is tied to an assessment of performance. Some division executives'
bonuses are linked directly by formula to specific division performance
measures. In such cases, economic profit added is the most widely used and most
heavily weighted measure. In other cases, a broad range of financial measures as
well as progress on strategic issues are reviewed.
In 1996, total bonuses paid to executive officers were approximately 39%
greater than the 1995 amount, reflecting significant improvement in relevant
performance measures.
The Committee awarded the CEO a bonus of $140,000 compared to $125,000 paid
the prior year. In 1996, 28.7% of the CEO's total cash compensation was
comprised of incentive cash compensation, compared with 27.3% in 1995. Both 1996
and 1995 incentive cash percentages were below market averages.
14
STOCK OPTIONS
Stock options are considered an important part of compensation at Tredegar.
As of February 1, 1997, 527 employees had stock options. Over time the stock
price reflects Management's performance. Through the options granted, Management
and shareholder interests are more closely tied.
Tredegar has three stock incentive plans (collectively the "SIP"). Each
year the Committee considers granting awards under the SIP to executive officers
and other employees and individuals providing valuable services to Tredegar or
its subsidiaries. Consistent with the objective of closely aligning executives'
interests with those of Tredegar shareholders, the SIP enables the Committee to
grant stock options, stock appreciation rights ("SARs"), and shares of
restricted stock. The Committee determines the terms and conditions of any
options, SARs, or restricted stock granted.
Executive officers as a group were granted options for 60,000 shares on a
discretionary basis in 1996, 40,000 at fair market value on the grant date
($25.125 per share) and 20,000 at above fair market value on the grant date
($29.00 per share). The CEO was granted 12,000 option shares at fair market
value and 6,000 shares at above fair market value.
CORPORATE TAX CONSIDERATIONS
A law, effective in 1994, disallows corporate tax deductions for executive
compensation in excess of $1 million for "proxy table" executives. This law,
covered in Internal Revenue Code Section 162(m), allows certain exemptions to
the deduction cap, including pay programs that depend on formulas and,
therefore, are "performance-based" rather than discretionary.
While significant parts of Tredegar's compensation program is
discretionary, the Company is not currently in danger of losing deductions under
Code Section 162(m). The Committee will carefully review any compensation plan
or action that would result in the disallowance of compensation deductions. The
Committee will consider a variety of factors, including the amount of any
deductions that may be lost.
EXECUTIVE COMPENSATION COMMITTEE:
Phyllis Cothran, Chairperson Emmett J. Rice
Austin Brockenbrough, III
February 19, 1997
ADDITIONAL INFORMATION ON COMPENSATION PAID TO TREDEGAR'S EXECUTIVE OFFICERS HAS
BEEN INCLUDED IN TREDEGAR'S ANNUAL REPORT TO SHAREHOLDERS.
15
COMPARATIVE COMPANY PERFORMANCE
The following graph compares cumulative total returns for Tredegar, the S&P
Small Cap 600t Stock Index, and the S&P Manufacturing (Diversified Industries),
a nationally recognized industry index, since December 31, 1991. The comparison
assumes $100 invested on December 31, 1991, and assumes dividend reinvestment.
[GRAPH]
FISCAL YEAR ENDED DECEMBER 31
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
TREDEGAR $100 $157 $155 $182 $342 $643
S&P SMALLCAP 600 100 121 144 137 178 216
S&P MFG. 100 108 132 136 192 264
DESIGNATION OF AUDITORS
The Board has designated Coopers & Lybrand L.L.P., certified public
accountants, as Tredegar's independent auditors for the year 1997, subject to
shareholder approval. This firm has audited Tredegar's financial statements
since Tredegar became an independent company. A representative of Coopers &
Lybrand L.L.P. is expected to be present at the meeting with an opportunity to
make a statement and to be available to respond to appropriate questions.
Coopers & Lybrand L.L.P.'s principal function is to audit the consolidated
financial statements of Tredegar and its subsidiaries and, in connection with
the audit, to review certain related filings with the
16
Securities and Exchange Commission and to conduct limited reviews of the
unaudited financial statements included in each of Tredegar's quarterly reports.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE DESIGNATION OF COOPERS
& LYBRAND L.L.P. AS AUDITORS.
PROPOSALS FOR 1998 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 1998 annual
meeting of shareholders must present such proposal to Tredegar at its principal
office in Richmond, Virginia, not later than November 30, 1997, in order for the
proposal to be considered for inclusion in Tredegar's proxy statement.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder, even if the
proposal is not to be included in Tredegar's proxy statement, Tredegar's By-laws
provide that the shareholder must give timely notice in writing to the Secretary
of Tredegar not later than ninety days prior to the meeting. As to each matter,
the notice must contain (i) a brief description of the business desired to be
brought before the annual meeting (including the specific proposal to be
presented) and the reasons for addressing it at the annual meeting, (ii) the
name of, record address of, and class and number of shares beneficially owned
by, the shareholder proposing such business, and (iii) any material interest of
the shareholder in such business.
ANNUAL REPORT ON FORM 10-K
TREDEGAR WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY
STATEMENT HAS BEEN DELIVERED, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY
OF TREDEGAR'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
REQUESTS FOR SUCH COPY SHOULD BE DIRECTED TO TREDEGAR INDUSTRIES, INC., 1100
BOULDERS PARKWAY, RICHMOND, VIRGINIA, 23225, ATTENTION: CORPORATE SECRETARY.
PROVIDED WITH THE COPY OF THE FORM 10-K WILL BE A LIST OF EXHIBITS TO THE FORM
10-K, SHOWING THE COST OF EACH. ANY OF SUCH EXHIBITS WILL BE PROVIDED UPON
PAYMENT OF THE CHARGE NOTED ON THE LIST.
OTHER MATTERS
The Board is not aware of any matters to be presented for action at the
meeting other than set forth herein. However, if any other matters properly come
before the meeting, or any adjournment thereof, the person or persons voting the
proxies will vote them in accordance with their best judgment.
By Order of the Board of Directors
Nancy M. Taylor, SECRETARY
17
NOTICE
AND
PROXY STATEMENT
FOR
ANNUAL MEETING
OF
SHAREHOLDERS
MAY 22, 1997
[TREDEGAR INDUSTRIES LOGO]
TREDEGAR INDUSTRIES, INC.
1100 Boulders Parkway
Richmond, Virginia 23225
TREDEGAR INDUSTRIES, INC.
RICHMOND, VIRGINIA
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
The undersigned hereby appoints Michael W. Giancaspro, Norman A. Scher and
Nancy M. Taylor, or any of them, with full power of substitution in each,
proxies (and if the undersigned is a proxy, substitute proxies) to vote all
shares of stock of Tredegar Industries, Inc. that the undersigned is entitled to
vote at the annual meeting of shareholders to be held on May 22, 1997, and at
any and all adjournments thereof:
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as otherwise to vote for all of the
indicated below) nominees listed below
Austin Brockenbrough, III, William M. Gottwald, Richard L. Morrill, Norman A.
Scher
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY OF SUCH NOMINEES WRITE THE
NOMINEE'S NAME ON THE LINE PROVIDED BELOW
________________________________________________________________________________
2. [ ] FOR [ ] AGAINST [ ] ABSTAIN The proposal to approve the designation
of Coopers & Lybrand L.L.P. as the
auditors for Tredegar for 1997
In their discretion, the Proxies are authorized to vote upon such other business
and matters incident to the conduct of the meeting as may properly come before
the meeting.
PLEASE SIGN AND DATE ON THE REVERSE SIDE
This Proxy is solicited on behalf of the Board of Directors. This Proxy,
when properly executed, will be voted in the manner directed herein by the
undersigned shareholder. If no direction is made, this Proxy will be voted for
Proposals 1 and 2.
Dated ___________________________, 1997
_______________________________________
Signature
Please sign name exactly as it appears
on the stock certificate. Only one of
several joint owners need sign.
Fiduciaries should give full title.
Please MARK, SIGN, DATE AND RETURN the
Proxy Card promptly using the enclosed
envelope.
