2006
Proxy
Statement
|
Invitation
to 2006
Annual
Meeting
of
Shareholders
|
· |
Take
Interstate 95 South to Wilmington (do not take I-495 - follow I-95
signs
for Wilmington).
|
· |
Take
Exit 7B, which is Delaware Avenue/Route
52.
|
· |
Stay
to the left as you come up grade to traffic light. Turn left onto
Delaware
Avenue and take center lane. There is a sign marked "Business District
52
South."
|
· |
You
will pass seven streets - Adams, Jefferson, Washington, West, Tatnall,
Orange and Shipley. After crossing over Orange Street, the Hotel
DuPont
will be on your right. Get into the left
lane.
|
· |
The
next street is Market Street. Turn left.
|
· |
Proceed
down Market Street crossing over 12th
and 13th
Streets (traffic lights at each corner). Hercules Plaza is at
13th
Street and will be on your left. Hercules Plaza is a twelve-story
granite/glass building with green tinted
windows.
|
· |
Stay
to the far left lane as you exit the Delaware Memorial Bridge. Stay
left
heading toward sign stating Wilmington Delaware Turnpike - Baltimore
- 295
- 95 - 495.
|
· |
Bear
to the right heading for Interstate 95
North.
|
· |
Take
the center lane as it will narrow to two lanes past Exit 6 (Martin
Luther
King Boulevard).
|
· |
Take
Exit 7, Delaware Avenue. Stay to the right as you come up grade to
traffic
light. You are on Adams Street - continue straight ahead to dead
end
(about 3 blocks) to Delaware Avenue. Turn right onto Delaware Avenue
and
take center lane. You will pass under sign "Business District 52
South."
Pass five streets - Jefferson, Washington, West, Tatnall and Orange.
|
· |
After
crossing over Orange Street, the Hotel DuPont will be on your right.
Get
into the left lane.
|
· |
Turn
left onto Market Street. Pass 12th
and 13th
Streets (traffic lights at each). Hercules Plaza is at 13th
Street and will be on your left. Hercules Plaza is a twelve-story
granite/glass building with green tinted
windows.
|
· |
Take
the Blue Route to Interstate 95 South to Wilmington.
|
· |
Follow
the above directions for traveling from
Philadelphia.
|
· |
Take
Interstate 95 North to Wilmington. Take Exit 7, which is Delaware
Avenue/Route 52.
|
· |
Stay
to the right as you come up grade to traffic light. You are on Adams
Street - continue straight ahead to dead end (about 3 blocks) to
Delaware
Avenue. Turn right on to Delaware Avenue and take center lane. You
will
pass under sign "Business District 52 South." Pass five streets -
Jefferson, Washington, West, Tatnall and Orange.
|
· |
After
crossing over Orange Street, the Hotel DuPont will be on your right.
Get
into the left lane.
|
· |
Turn
left onto Market Street. Pass 12th
and 13th
Streets (traffic lights at each). Hercules Plaza is at 13th
Street and will be on your left. Hercules Plaza is a twelve-story
granite/glass building with green tinted
windows.
|
· |
The
Wilmington Train Station is located between King and French Streets
on
Front Street.
|
· |
Hercules
Plaza is at Market and 13th Streets, 12 blocks north of the station.
Cabs
are usually available at the station.
|
· |
Hercules
Plaza is on the NW corner of Market and 13th
Streets. Hercules Plaza is a twelve-story granite/glass building
with
green tinted windows.
|
· |
After
you enter the building, follow the posted signs to the meeting room
located in the Lower Atrium.
|
1. |
Election
of each of the following two director nominees: Messrs. Gerrity
and Wyatt, each for a three-year term expiring at the 2009 Annual
Meeting
of Shareholders (Proposal No. 1);
|
2. |
Ratification
of the appointment of BDO Seidman, LLP as Hercules’ independent registered
public accountants for 2006 (Proposal No. 2);
and
|
3. |
Shareholder
proposal concerning the election of each director annually (Proposal
No.
3).
|
THE
2006 ANNUAL MEETING OF SHAREHOLDERS
|
1
|
Who
is Entitled to Vote
|
1
|
How
You May Vote
|
1
|
Annual
Meeting Admission Procedures
|
1
|
Vote
Required and Voting Procedures
|
3
|
Revocation
of Proxy
|
3
|
Hercules
Incorporated Savings and Investment Plan
|
4
|
Annual
Report
|
4
|
Shareholder
Proposals
|
4
|
Nomination
of Directors
|
4
|
Shareholder
Nomination of Directors
|
5
|
Shareholder
and Interested Party Communication with the Board of
Directors
|
5
|
Hercules’
Website: www.herc.com
|
6
|
PROPOSAL
NO. 1 — Election of Hercules Directors
|
6
|
Hercules
Nominees for Directors
|
7
|
Directors
Continuing in Office
|
8
|
Director
Retiring from Office
|
10
|
Board
of Directors and its Committees
|
10
|
Compensation
of Employee Directors
|
12
|
Compensation
of Non-Employee Directors
|
12
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
|
15
|
PROPOSAL
NO. 2 — Ratification of the Appointment of BDO Seidman, LLP as Independent
Registered
Public Accountants for 2006
|
16
|
PROPOSAL
NO. 3 - Shareholder Proposal
|
17
|
OTHER
MATTERS
|
20
|
AUDIT
COMMITTEE REPORT
|
21
|
Fees
of Independent Registered Public Accountants
|
22
|
HUMAN
RESOURCES COMMITTEE REPORT
|
25
|
Employment
Agreements and Employment of Executive
Officers
|
30
|
HUMAN
RESOURCES COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
|
32
|
FIVE-YEAR
PERFORMANCE COMPARISON
|
33
|
BENEFICIAL
OWNERSHIP OF COMMON STOCK
|
34
|
COMPENSATION
OF EXECUTIVE OFFICERS
|
36
|
Equity
Compensation Plan Information
|
39
|
Option
Grants in Last Fiscal Year
|
40
|
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
|
41
|
Long-Term
Incentive Plan (LTICP) Awards in Last Fiscal
Year
|
41
|
Pension
Plans
|
42
|
METHOD
AND COST OF PROXY SOLICITATION
|
43
|
· |
To
vote your proxy by mail, mark your selections on the enclosed proxy
card,
date and sign your name exactly as it appears on your proxy card,
and
return your proxy card in the enclosed envelope.
|
· |
To
vote by telephone, dial 1-866-540-5760, have your proxy card in hand
when
you call and follow the voice prompts.
|
· |
To
vote by Internet, log on to http://www.proxyvoting.com/herc and
have your proxy card in hand when you access the
website.
|
· |
a
letter from your bank or broker stating that you owned your shares
as of
the Record Date;
|
· |
a
brokerage account statement indicating that you owned your shares
as of
the Record Date; or
|
· |
a
copy of the voting instruction card provided by your broker indicating
that you owned your shares as of the Record
Date.
|
· |
a
validly executed proxy naming you as the proxy holder, signed by
a
Hercules shareholder who owned Hercules shares as of the Record Date;
|
· |
valid
government-issued personal identification with a picture (such as
a
driver’s license or passport); and
|
· |
if
the shareholder whose proxy you hold was not a record holder of Hercules
shares as of the Record Date, proof of the shareholder’s ownership of
Hercules shares as of the Record Date, in the form of a letter or
statement from a bank, broker, or other nominee or the voting instruction
card provided by the broker, in each case, indicating that the shareholder
owned those shares as of the Record Date.
|
· |
FOR
the election of each of the two director nominees (Proposal No. 1);
|
· |
FOR
the ratification of the appointment of BDO Seidman, LLP as Hercules’
independent registered public accountants for 2006 (Proposal No.
2); and
|
· |
AGAINST
the shareholder proposal concerning the election of each director
annually
(Proposal No. 3).
|
· |
to
vote “for” or “withhold” authority for one or more of the director
nominees (see Proposal No. 1);
|
· |
to
vote “for” or “against,” or to “abstain” from voting on, the proposal
concerning the ratification of the appointment of BDO Seidman, LLP
as
Hercules’ independent registered public accountants for 2006 (see Proposal
No. 2); or
|
· |
to
vote “for” or “against,” or to “abstain” from voting on, the shareholder
proposal concerning the election of each director annually (see Proposal
No. 3).
|
· |
the
name, residence and business address of the nominating
shareholder;
|
· |
a
representation that the shareholder is a record holder of Hercules
stock
or holds Hercules stock through a bank, broker or other nominee and
the
number of shares held;
|
· |
information
regarding each nominee which would be required to be included in
a proxy
statement;
|
· |
a
description of any arrangements or understandings between and among
the
shareholder and each and every nominee;
and
|
· |
the
written consent of each nominee to serve as a director, if
elected.
|
Director
|
Audit
Committee
|
Human
Resources
Committee
|
Emergency
Committee
|
Finance
Committee
|
Corporate
Governance, Nominating
and
Ethics
Committee
|
Respon-
sible
Care
Committee
|
Anna
C. Catalano
|
X
|
X
|
X
|
|||
Patrick
Duff
|
C
|
X
|
X
|
X
|
||
Thomas
P. Gerrity
|
X
|
X
|
X
|
|||
John
C. Hunter, III
|
X
|
X
|
C
|
X
|
||
Burton
M. Joyce
|
X
|
X
|
X
|
|||
Robert
D. Kennedy
|
X
|
X
|
X
|
C
|
||
Jeffrey
M. Lipton
|
C
|
X
|
X
|
X
|
||
Craig
A. Rogerson
|
C
|
|||||
John
K. Wulff
|
X
|
X
|
X
|
X
|
||
Joe
B. Wyatt
|
X
|
X
|
C
|
X
|
||
Number
of Meetings in 2005
|
17
|
3
|
0
|
4
|
5
|
4
|
Director
|
Retainer
$
|
Attended
Meeting
Fees
$ (1)
|
Chair
Fees $
|
Stock
Awards
|
#
of
Stock
Options
for 2005
|
Other
Stock Base Grants(2)
|
|||||||||||||
A.C.
Catalano*
|
21,538
|
9,600
|
0
|
4,421
|
3,000
|
3,350
|
|||||||||||||
P.
Duff
|
40,000
|
41,400
|
7,500
|
4,421
|
3,000
|
||||||||||||||
T.P.
Gerrity
|
40,000
|
14,400
|
0
|
4,421
|
3,000
|
||||||||||||||
J.C.
Hunter
|
40,000
|
42,000
|
5,000
|
4,421
|
3,000
|
||||||||||||||
B.M.
Joyce*
|
21,538
|
12,000
|
0
|
4,421
|
3,000
|
3,350
|
|||||||||||||
R.D.
Kennedy
|
40,000
|
36,800
|
5,000
|
4,421
|
3,000
|
||||||||||||||
J.M.
Lipton
|
40,000
|
16,800
|
7,500
|
4,421
|
3,000
|
||||||||||||||
J.K.
Wulff
|
40,000
|
20,400
|
50,000(3)
|
|
4,421
|
3,000
|
|||||||||||||
J.B.
Wyatt
|
40,000
|
17,800
|
5,000
|
4,421
|
3,000
|
(3)
In
February 2005, the Board approved continuing the position of Non-Executive
Chairman of the Board currently held by Mr. Wulff. In light of
the
personal commitment required as Non-Executive Chairman, the Board
approved
additional annual compensation of $50,000 payable in cash or in
equivalent
restricted stock units ("RSUs") to Mr. Wulff as long as he remains
Non-Executive Chairman.
|
· |
The
Corporate Library (TCL) a
pro-investor research firm rated our
company:
|
· |
We
were allowed to vote on individual directors only once in 3 years
-
Accountability concern.
|
· |
Furthermore
our directors can be re-elected with only one yes-vote from our 100
million shares under plurality voting.
|
· |
We
would have to marshal an awesome 80% shareholder vote to make certain
key
governance improvements - Entrenchment
concern.
|
· |
Cumulative
voting was not allowed.
|
· |
Our
directors and managers were still protected by a poison pill in spite
of
80% shareholder support for a 2003 shareholder proposal to redeem
or vote
their poison pill.
|
· |
Plus
this poison pill has a low 10% trigger.
|
· |
Five
of our outside directors reported non-director links to our company
-
Conflict of interest concern.
|
· |
Mr.
Kennedy was rated a “problem director” by The Corporate Library due to his
involvement with the Kmart board, which filed for Chapter 11 Bankruptcy
in
2002.
|
· |
We
do not have a poison pill.
|
· |
Hercules
has a Corporate Governance Quotient industry ranking in the top
ten
percent under the rating system of Institutional Shareholder Services
(a
well known and reputable firm in corporate
governance).
|
· |
Hercules
was one of the first companies to have a true majority voting requirement
for election of directors.
|
· |
All
directors are independent except for the Chief Executive
Officer.
|
· |
The
positions of Chairman of the Board and Chief Executive Officer are
separate.
|
· |
The
non-executive Chairman is an outside
director.
|
· |
There
are annual reviews of our Corporate Governance Guidelines and related
matters such as Board performance and director
independence.
|
· |
The
Classified Board Works.
|
· |
Provides
Stability and Preserves Board Experience and
Expertise.
|
· |
Helps
Prevent an Opportunist From Gaining Immediate Control of Hercules
on Terms
Unfavorable to All Shareholders.
|
· |
Ensures
Time for an Appropriate Evaluation Process in a Change of Control
Situation.
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Audit
|
$
|
2.9
|
$
|
7.9
|
|||
Audit
Related
|
0.5
|
0.4
|
|||||
Tax
|
--
|
0.4
|
|||||
All
Other
|
--
|
--
|
|||||
$
|
3.4
|
$
|
8.7
|
Audit
Committee
|
P.
Duff (Chair)
|
J.C.
Hunter, III
|
B.
M. Joyce
|
R.
D. Kennedy
|
· |
Legally
Prohibited/Restricted Services - Those services which our auditor
may not
provide by statute.
|
· |
Additional
Prohibited Services - Those services which our auditor may legally
provide, but which we will not obtain from our
auditor.
|
· |
Permitted
Services - Those services which our auditor may provide if pre-approved
by
the Audit Committee.
|
· |
Bookkeeping
or other services related to the accounting records or financial
statements of the audit client
|
· |
Financial
information systems design and
implementation
|
· |
Appraisal
or valuation services, fairness opinions or contribution-in-kind
reports
|
· |
Actuarial
services
|
· |
Internal
audit outsourcing activities
|
· |
Management
functions or human resources
|
· |
Broker
or dealer, investment adviser or investment banking
services
|
· |
Legal
services and expert services unrelated to the
audit
|
· |
Any
other service that the Public Company Accounting Oversight Board
determines by regulation is
impermissible
|
· |
Large-scale
Information System Design and Implementation
Services
|
· |
Tax
Shelters
|
§ Services
related to SEC filings
§ Accounting
and financial reporting consultations
§ Carve-out
audits
§ Statutory
audits
§ Agreed-upon
audit procedures performed to comply with a contract between
Hercules
and a third party
|
§ Acquisition
and divestiture-related due diligence and transaction
services
§ Fraud
and forensic investigations
§ Dispute
resolution and litigation support
§ Benefit
plan audits
|
· |
Tax
return preparation, review, consultation and
assistance
|
· |
Tax
audit support
|
· |
Tax
planning on acquisition/divestiture structuring, dividend planning,
etc.
|
· |
Tax
consulting
|
· |
Expatriate
tax services
|
· |
Transfer
pricing tax services
|
Target
Incentive %
|
Actual
Payout $
|
Payout
as % of Base Salary
|
||||||||
C.
A. Rogerson
|
90%
of Base
|
618,750
|
99
|
%
|
||||||
F.
G. Aanonsen
|
50%
of Competitive Base
|
121,500
|
46
|
%
|
||||||
E.
V. Carrington
|
50%
of Competitive Base
|
121,500
|
46
|
%
|
||||||
R.
G. Dahlen
|
50%
of Competitive Base
|
139,500
|
46
|
%
|
||||||
P.
C. Raymond
|
50%
of Base
|
90,000
|
30
|
%
|
||||||
A.
A. Spizzo
|
45%
of Competitive Base(1)
|
|
184,250
|
57
|
%
|
1. |
Change
in Control:
In
the event of a defined Change in Control, the following executive
officers
employment would be subject to the Change in Control Agreements which
have
been heretofore filed with the SEC. These Agreements provide that,
if
following the Change in Control event, any of the officers positions
are
materially changed or compensation reduced, compensation [including
base
salary and the greater of the annual variable incentive target (MICP)
or
the most recent MICP received] will be paid for periods of two to
three
years depending on the specific agreement. However, the Agreements
for
Messrs. Carrington and Dahlen do not require a material change of
position
or a reduction of compensation to trigger such agreement. A number
of Agreements also provide for crediting of service and age, equal
to the
indemnity period, under the Hercules Pension Plan.
|
Executive
Officer
|
Indemnity
Period
|
Crediting
of Service?
|
|||||
Fred
G. Aanonsen
|
3
years
|
Yes
|
|||||
Edward
V. Carrington
|
2
years
|
No
|
|||||
Richard
G. Dahlen
|
2
years
|
No
|
|||||
Israel
J. Floyd
|
3
years
|
Yes
|
|||||
Craig
A. Rogerson
|
3
years
|
Yes
|
|||||
Stuart
C. Shears
|
3
years
|
Yes
|
|||||
Allen
A. Spizzo
|
3
years
|
Yes
|
2. |
Position
Elimination.
Like all U.S. salaried employees, an executive officer whose position
is
eliminated and who is not offered other employment by Hercules may
become
eligible for severance benefits in accordance with the Severance
Pay Plan.
Benefits are based on credited service accruing at the rate of two
weeks
of base salary for each year of credited service up to a maximum
of 52
weeks of base salary. Additionally, impacted individuals are eligible
for
three months of welfare benefit plan continuation and outplacement
assistance.
|
3. |
Termination
for Other Reasons.
Normally no indemnity is payable. However, management may elect to
provide
special indemnity using the Severance Pay Plan as a guideline in
special
situations where the reason for termination is considered to be non
fault
such as position competency changes, unusual job changes, etc.
|
Name
|
Executive’s
Contributions in 2005
($)(1)
|
Employer’s
Contributions in 2005
($)(2)
|
Interest
Credited in 2005
($)
|
Year-End
Balance
($)
|
|||||||||
C.
A. Rogerson
|
52,175
|
26,788
|
7,420
|
175,024
|
|||||||||
F.
G. Aanonsen
|
14,107
|
15,805
|
5,870
|
120,810
|
|||||||||
E.
V. Carrington
|
0
|
0
|
1,391
|
23,377
|
|||||||||
R.
G. Dahlen
|
19,289
|
9,502
|
479
|
29,140
|
|||||||||
P.
C. Raymond
|
6,000
|
3,750
|
53
|
9,803
|
|||||||||
A.
A. Spizzo
|
0
|
0
|
3,264
|
54,871
|
“Perk”
|
Approximate
Value
|
Eligibility
|
Garage
Parking
|
$2,000/year
|
All
Executive Officers
|
Pool
Car/Driver
|
$54,000/year
|
CEO
(occasional use
|
(including
tax gross up)
|
for
commuting only)
|
Human
Resources Committee
|
J.
M. Lipton (Chair)
|
A.
C. Catalano
|
T.
P. Gerrity
|
J.
K. Wulff
|
J.
B. Wyatt
|
INDEXED
RETURNS
|
|||||||||||||||||||
Base
|
Years
Ending
|
||||||||||||||||||
Period
|
|||||||||||||||||||
Company
/ Index
|
Dec00
|
Dec01
|
Dec02
|
Dec03
|
Dec04
|
Dec05
|
|||||||||||||
HERCULES
INC
|
100
|
52.46
|
46.16
|
64.00
|
77.90
|
59.28
|
|||||||||||||
S&P
500 INDEX
|
100
|
88.11
|
68.64
|
88.33
|
97.94
|
102.75
|
|||||||||||||
S&P
500 CHEMICALS
|
100
|
98.89
|
99.58
|
126.00
|
150.66
|
149.72
|
· |
beneficial
owners of more than five percent of Hercules common
stock;
|
· |
each
Hercules director and nominee for
director;
|
· |
each
of the executive officers named in the Compensation of Executive
Officers
Table set forth under “Compensation of Executive Officers”;
and
|
· |
all
directors, nominees and executive officers of Hercules as a
group.
|
Name
|
Shares
Beneficially
Owned(1)
|
Options
Exercisable
Within 60 Days
|
Percent
of Shares(2)
|
|||||||
5%
Shareholders
|
||||||||||
Gabelli
Asset Management Inc. (3)
One
Corporate Center
Rye, New York 10580
|
8,296,407
|
-
|
7.4
|
%
|
||||||
Sasco
Capital, Inc. (4)
10 Sasco Hill Road
Fairfield,
Connecticut 06824
|
7,591,028
|
-
|
6.7
|
%
|
||||||
T.
Rowe Price Associates, Inc. (5)
100 E. Pratt Street
Baltimore, Maryland 21202
|
6,856,277
|
-
|
6.0
|
%
|
||||||
Directors
and Officers
|
||||||||||
C.
A. Rogerson, Director and Officer
|
503,854
|
209,892
|
*
|
|||||||
F.
G. Aanonsen, Officer
|
96,618
|
85,500
|
*
|
|||||||
E.
V. Carrington, Officer
|
86,150
|
85,500
|
*
|
|||||||
A.
C. Catalano, Director
|
7,771
|
0
|
*
|
|||||||
R.
G. Dahlen, Officer
|
117,350
|
85,500
|
*
|
|||||||
P.
Duff, Director
|
79,955
|
6,000
|
*
|
|||||||
T.
P. Gerrity, Director
|
14,545
|
6,000
|
*
|
|||||||
J.
C. Hunter, III, Director
|
21,529
|
6,000
|
*
|
|||||||
B.
M. Joyce, Director
|
15,511
|
0
|
*
|
|||||||
R.
D. Kennedy, Director
|
36,689
|
12,000
|
*
|
|||||||
J.
M. Lipton, Director
|
51,574
|
12,000
|
*
|
|||||||
J.
E. Panichella, Officer
|
28,641
|
0
|
*
|
|||||||
P.
C. Raymond, Officer
|
54,116
|
0
|
*
|
|||||||
A.
A. Spizzo, Officer
|
137,160
|
101,150
|
*
|
|||||||
J.
K. Wulff, Director
|
67,127
|
6,000
|
*
|
|||||||
J.
B. Wyatt, Director
|
28,882
|
12,000
|
*
|
|||||||
All
directors and executive officers as a group
|
1,482,938
|
891,042
|
2.1
|
%
|
*
|
Less
than 1% of the outstanding Hercules common
shares.
|
(1)
|
Includes
shares acquired by officers pursuant to our Management Incentive
Compensation Plan, or MICP, under which award amounts for above-target
performance may be used by the participant to purchase restricted
stock at
85% of the fair market value through our Long Term Incentive Compensation
Plan, or LTICP. The above table includes the following shares that
were
purchased in 2001 and 2002 pursuant to the MICP: C. A. Rogerson,
27,750;
and E. V. Carrington, 19,438. Restrictions and forfeiture risks
are
specified under the LTICP. Also included are: (1)
2003, 2004, 2005 and 2006 annual long-term incentive grants: C. A.
Rogerson, 449,951; F. G. Aanonsen, 81,792; E. V. Carrington, 64,994;
R. G.
Dahlen, 99,193; J. E. Panichella, 28,641; P. C. Raymond, 52,850;
and A. A.
Spizzo, 118,028; and all executive officers as a group, 984,023;
and
(2) shares owned in the Hercules Savings and Investments Plan as of
March 17, 2006: C. A. Rogerson, 2,868; F. G. Aanonsen, 2,410; E.
V.
Carrington, 1,708; R. G. Dahlen, 5,525; P. C. Raymond, 1,266; and
A. A. Spizzo, 4,786 and all directors and executive officers as a
group, 27,573. The total number of shares with restrictions and
forfeiture
risks for all directors and executive officers is 1,254,394. Owners
have
the same voting and dividend rights as other shareholders of Hercules,
but
no right to sell or transfer. Non-employee directors and named
executive
officers have restricted stock units, or RSUs, representing the
following
numbers of shares: A. C. Catalano, 5,521; P. Duff, 12,295; T. P.
Gerrity,
12,295; J. C. Hunter, 13,034; B. M. Joyce, 5,521; R. D. Kennedy,
14,012;
J. M. Lipton, 14,012; C.A. Rogerson, 10,000; J. K. Wulff, 24,386;
and J.
B. Wyatt, 14,012. Non-employee directors and named executive officers
do not have any current voting rights or the right to dispose of
these
RSUs, although they may receive actual shares with respect to certain
RSUs
when they leave the Board or Hercules. Further discussion of these
RSU
grants can be found in Proposal No. 1 of this proxy statement under
“Board
of Directors —Compensation of
Directors.”
|
(2) |
Based
on public filings for 5% shareholders and on 112,859,768 shares
outstanding on March 17, 2006 for Directors and Officers.
|
(3) |
Share
holding as of September 30, 2004, as reported on Amendment No. 12
to
Schedule 13D filed by Gabelli Asset Management Inc. on November 23,
2004.
|
(4) |
Share
holding as of December 31, 2005, as reported on Amendment No. 1 to
the
Schedule 13G filed by Sasco Capital, Inc. on February 3,
2006.
|
(5) |
Share
holding as of September 30, 2004, as reported on Amendment No. 12
to
Schedule 13D filed by Gabelli Asset Management Inc. on November 23,
2004.
|
Annual
Compensation
|
Long
Term Compensation
|
||||||||||||||||||||||||
Awards
|
Payouts
|
||||||||||||||||||||||||
Name
and Principal Position
|
Year
|
Salary
($)
|
Variable
Compen-
sation
($)(2)
|
Other
Annual
Compen-
sation
($)(3)
|
Restricted
Stock
Awards
($)(4)
|
Securities
Underlying
Options
|
Long-Term
Incentive
Payouts
($)
|
All
Other
Compen-
sation
($)(5)
|
|||||||||||||||||
C.
A. Rogerson(1)
President
and Chief Executive
Officer
|
2005
2004
2003
|
604,174
500,004
287,880
|
618,750
498,750
225,000
|
56,311
697
5,587
|
949,986
2,999,990
681,320
|
197,229
0
0
|
0
0
0
|
40,507
21,578
19,689
|
|||||||||||||||||
F.
G. Aanonsen(1)
Vice
President
and
Controller
|
2005
2004
2003
|
264,173
260,000
260,000
|
121,500
175,000
175,695
|
10,768
0
5,633
|
215,999
262,074
262,340
|
0
0
0
|
0
0
0
|
30,611
27,873
16,931
|
|||||||||||||||||
E.
V. Carrington(1)
Vice
President,
Human
Resources
|
2005
2004
2003
|
264,840
264,000
264,000
|
121,500
155,000
156,825
|
1,950
0
0
|
215,999
221,757
221,980
|
0
0
0
|
0
0
0
|
4,518
4,266
9,750
|
|||||||||||||||||
R.
G. Dahlen(1)
Chief
Legal Officer
|
2005
2004
2003
|
305,000
300,000
300,000
|
139,500
225,000
203,873
|
1,950
0
0
|
309,996
352,799
353,150
|
0
0
0
|
0
0
0
|
19,734
19,552
17,242
|
|||||||||||||||||
J.
E. Panichella(6)
President,
Aqualon Division
(Hired
1/3/2006)
|
2005
2004
2003
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
|||||||||||||||||
P.
C. Raymond
President,
Paper Technologies
&
Ventures Group
(Hired
1/31/2005)
|
2005
2004
2003
|
276,190
0
0
|
90,000
0
0
|
660,780
0
0
|
557,644
0
0
|
0
0
0
|
0
0
0
|
11,467
0
0
|
|||||||||||||||||
A.
A. Spizzo(1)
Vice
President and Chief
Financial
Officer
|
2005
2004
2003
|
320,840
280,002
220,008
|
184,250
190,000
149,175
|
1,950
0
0
|
369,992
415,202
262,340
|
0
0
0
|
0
0
0
|
13,204
80,265
8,485
|
(4)
|
These values are determined by multiplying the number of shares
of
restricted stock awarded by the closing market price of Hercules
common
stock on the
date of grant.
|
Purchased
Shares Using Above Target MICP Awards(a)
|
Accumulated
Restricted Stock Grant(b)
|
||||||||||||
Aggregate
Restricted Shares
|
12/31/2005
Net
Value
|
Aggregate
Restricted Shares
|
12/31/2005
Net
Value
|
||||||||||
C.
A. Rogerson
|
27,750
|
96,632
|
365,843
|
4,134,026
|
|||||||||
F.
G. Aanonsen
|
17,009
|
72,203
|
62,971
|
711,572
|
|||||||||
E.
V. Carrington
|
19,438
|
68,653
|
55,583
|
628,088
|
|||||||||
R.
G. Dahlen
|
15,450
|
65,585
|
86,100
|
972,930
|
|||||||||
P.
C. Raymond
|
0
|
0
|
38,529
|
435,378
|
|||||||||
A.
A. Spizzo
|
14,457
|
61,370
|
86,605
|
978,637
|
(a) |
Consideration
used to purchase these shares is included in the Variable Compensation
column.
|
(b) |
These
shares are reported in the Restricted Stock Awards
column.
|
(a)
|
(b)
|
(c)
|
||||||||
Plan
Category
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in column (a))
|
|||||||
Equity
compensation
plans
approved by
security
holders(1)
|
9,724,127(1)(2)
|
|
$
|
24.08
|
7,726,070
|
|||||
Equity
compensation
plans
not approved by security
holders(3)
|
N/A
|
N/A
|
N/A
|
|||||||
Total
|
9,724,127
|
$
|
24.08
|
7,726,070
|
(1) |
Includes
4,253,080 options with exercise prices in excess of the weighted
average
price of $24.08.
|
(2) |
Includes
options to purchase 1,561,544 shares that were not vested at December
31,
2005.
|
(3) |
There
are no equity compensation plans that have not been approved by our
shareholders.
|
Name
|
No.
of Securities Underlying Options Granted
|
Percent
of Total Options Granted to Employees
|
Exercise
or Base Price ($/Sh)
|
Expiration
Date
|
Grant
Value Date
|
Grant
Date Value(1)
|
||||||||||||||||
C.
A. Rogerson
|
197,229
|
(2
|
)
|
100
|
%
|
14.45
|
2/18/2015
|
2/18/2005
|
$
|
1,050,106
|
||||||||||||
F.
G. Aanonsen
|
0
|
|||||||||||||||||||||
E.
V. Carrington
|
0
|
|||||||||||||||||||||
R.
G. Dahlen
|
0
|
|||||||||||||||||||||
P.
C. Raymond
|
0
|
|||||||||||||||||||||
A.
A. Spizzo
|
0
|
(1) |
The
Black-Scholes option-pricing model was used to determine the fair
value of
employee stock options in the table above as of the date of the grant.
No
adjustments for risk of forfeiture have been made. Significant assumptions
are as follows:
|
|
No.
of Securities Underlying Unexercised Options at Year-End
|
Value
of Unexercised In-The-Money Options at Year-End
|
|||||||||||||||||
No.
of Shares
on
ExerciseAcquired
|
Value
Realized
|
Exercisable
|
Unexercisable
|
Exercisable
($)
|
Unexercisable
($)
|
||||||||||||||
C.
A. Rogerson
|
0
|
0
|
131,000
|
197,229
|
710
|
0
|
|||||||||||||
F.
G. Aanonsen
|
0
|
0
|
85,500
|
0
|
710
|
0
|
|||||||||||||
E.
V. Carrington
|
0
|
0
|
85,500
|
0
|
710
|
0
|
|||||||||||||
R.
G. Dahlen
|
0
|
0
|
85,500
|
0
|
710
|
0
|
|||||||||||||
P.
C. Raymond
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||
A.
A. Spizzo
|
0
|
0
|
101,150
|
4,200
|
500
|
0
|
Number
of Shares,
|
Performance
or Other Period Until
|
Estimated
Future Payouts under Non-Stock Price-Based Plans
|
||||||||||||||
Name
|
Units
or Other Rights(1)
|
Maturities
or Payout
|
Threshold
|
Target
(# of Shares)
|
Maximum
|
|||||||||||
C.
A. Rogerson
|
65,743
|
(2)
|
|
N/A
|
65,743
|
N/A
|
||||||||||
C.
A. Rogerson
|
197,229
|
(3)
|
|
N/A
|
N/A
|
N/A
|
||||||||||
F.
G. Aanonsen
|
14,948
|
(2)
|
|
N/A
|
14,948
|
N/A
|
||||||||||
E.
V. Carrington
|
14,948
|
(2)
|
|
N/A
|
14,948
|
N/A
|
||||||||||
R.
G. Dahlen
|
21,453
|
(2)
|
|
N/A
|
21,453
|
N/A
|
||||||||||
P.
C. Raymond
|
15,000
|
(4)
|
|
N/A
|
15,000
|
N/A
|
||||||||||
P.
C. Raymond
|
23,529
|
(2)
|
|
N/A
|
23,529
|
N/A
|
||||||||||
A.
A. Spizzo
|
25,605
|
(2)
|
|
N/A
|
25,605
|
N/A
|
(1) |
Represents
awards of Hercules restricted stock shares and stock
options.
|
(2) |
Normal
vesting is five years. Share price fluctuation could delay or accelerate
vesting as early as three years or as late as seven
years.
|
(3) |
Grant
of stock options. 40% vest on February 20, 2006, 40% vest on February
19,
2007, and 20% vest on February 18, 2008.
|
(4) |
5,000
vest on January 31, 2006, 5,000 vest on January 31, 2007, and 5,000
vest
on January 31, 2008.
|
REMUNERATION
|
15
YEARS
|
20
YEARS
|
25
YEARS
|
30
YEARS
|
35
YEARS
|
|||||||||||
|
|
|||||||||||||||
$
200,000
|
$
|
45,300
|
$
|
60,400
|
$
|
75,500
|
$
|
90,600
|
$
|
105,700
|
||||||
250,000
|
57,300
|
76,400
|
95,500
|
114,600
|
133,700
|
|||||||||||
300,000
|
69,300
|
92,400
|
115,500
|
138,600
|
161,700
|
|||||||||||
350,000
|
81,300
|
108,400
|
135,500
|
162,600
|
189,700
|
|||||||||||
400,000
|
93,300
|
124,400
|
155,500
|
186,600
|
217,700
|
|||||||||||
450,000
|
105,300
|
140,400
|
175,500
|
210,600
|
245,700
|
|||||||||||
500,000
|
117,300
|
156,400
|
195,500
|
234,600
|
273,700
|
|||||||||||
550,000
|
129,300
|
172,400
|
215,500
|
258,600
|
301,700
|
|||||||||||
600,000
|
141,300
|
188,400
|
235,500
|
282,600
|
329,700
|
|||||||||||
700,000
|
165,300
|
220,400
|
275,500
|
330,600
|
385,700
|
|||||||||||
800,000
|
189,300
|
252,400
|
315,500
|
378,600
|
441,700
|
|||||||||||
900,000
|
213,300
|
284,400
|
355,500
|
426,600
|
497,700
|
|||||||||||
1,000,000
|
237,300
|
316,400
|
395,500
|
474,600
|
553,700
|
|||||||||||
1,500,000
|
357,300
|
476,400
|
595,500
|
714,600
|
833,700
|
|||||||||||
2,000,000
|
477,300
|
636,400
|
795,500
|
954,600
|
1,113,700
|
FOR
|
WITHHOLD
|
[
]
|
[
]
|
FOR
|
AGAINST
|
ABSTAIN
|
[
]
|
[
]
|
[
]
|
FOR
|
AGAINST
|
ABSTAIN
|
[
]
|
[
]
|
[
]
|
Mark
here if your address has changed and provide us with your new address
in
the space provided to the right: [ ]
|
New
Address:
___________________________________________
___________________________________________
___________________________________________
|