DEF 14A 1 d687171ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.    )

 

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CYTEC INDUSTRIES INC.

 

(Name of Registrant as Specified In Its Charter)

 

  

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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LOGO

CYTEC INDUSTRIES INC.

5 GARRET MOUNTAIN PLAZA

WOODLAND PARK, NJ 07424

Notice of Annual Meeting

of Common Stockholders to be held

April 22, 2014

March 11, 2014

To Our Stockholders:

We will hold our Annual Meeting of Common Stockholders at the Marriott at Glenpointe Hotel, Teaneck, New Jersey on Tuesday, April 22, 2014, at 1:00 p.m. The purpose of the meeting is (i) to elect three directors; (ii) to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2014; (iii) to approve, by non-binding vote, the compensation of our Named Executive Officers; and (iv) to transact any other business that properly comes before the meeting.

You must have been a holder of our common stock at the close of business on February 28, 2014, to be entitled to notice of and to vote at the meeting or at any postponement or adjournment.

Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting.

If you cannot attend the meeting, please promptly submit your proxy by telephone, Internet or by signing and dating the enclosed proxy card and mailing it in the enclosed envelope, which requires no postage if mailed in the United States.

By Order of the Board of Directors,

R. Smith

Secretary


LOGO

CYTEC INDUSTRIES INC.

5 GARRET MOUNTAIN PLAZA

WOODLAND PARK, NJ 07424

Proxy Statement for

Annual Meeting of Common Stockholders

to be held April 22, 2014

March 11, 2014

This proxy statement contains information relating to our Annual Meeting of Common Stockholders, which will be held on Thursday, April 22, 2014, beginning at 1:00 p.m., at the Marriott at Glenpointe Hotel, Teaneck, New Jersey 07666, and at any postponement or adjournment of that meeting. We are first sending this Proxy Statement and the enclosed form of proxy to stockholders on or about March 11, 2014. For purposes of this Proxy Statement, unless the context indicates otherwise, the use of the words “we,” “us,” “our,” “Company” and “Cytec” shall refer to Cytec Industries Inc.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on April 22, 2014: The Proxy Statement is available at www.proxyvote.com.

ABOUT THE MEETING AND THIS PROXY STATEMENT

What is the purpose of the meeting?

At the annual meeting, stockholders will vote (i) to elect three directors; (ii) to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2014; and (iii) to approve, by non-binding vote, the compensation of our Named Executive Officers. In addition, our management will be present to report on our Company and respond to questions from stockholders.

Why am I being asked to review materials on-line?

Under rules adopted by the U.S. Securities and Exchange Commission, we are furnishing proxy materials to our stockholders on the Internet, rather than mailing printed copies of those materials to each stockholder. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you requested one. Instead, the Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review the proxy materials on the Internet. If you received a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. We anticipate that the Notice of Internet Availability of Proxy Materials will be mailed to stockholders on or about March 11, 2014.

Who is entitled to vote?

Only stockholders of record at the close of business on the record date, February 28, 2014, are entitled to receive notice of the annual meeting and to vote the shares of our common stock that they held on that date at the meeting, or any postponement or adjournment of the meeting. Each outstanding share entitles its holder to cast one vote on each matter to be voted upon.

Who may attend the meeting?

All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Please note that if you hold shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date and check in at the registration desk at the meeting to obtain an admission ticket.

 

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What is a quorum?

The presence at the meeting, in person or by proxy, of the holders of a majority of our shares of common stock outstanding on the record date will constitute a quorum. A quorum is necessary for business to be conducted at the meeting. As of the record date, 35,767,137 shares of our common stock were outstanding. Proxies received, but marked as abstentions and broker non-votes, will be included in the calculation of the number of shares considered to be present at the meeting.

How do I vote?

The accompanying proxy is solicited by our Board of Directors. You may vote by Internet or telephone by following the instructions on the enclosed proxy card or you may complete and properly sign the accompanying proxy card and return it to us. If voted by any of these methods, your vote will be cast as you direct. Do not return the proxy card if you vote by Internet or telephone. Even if you plan to attend the meeting, it is desirable that you vote in advance of the meeting.

May I change my vote after I return my proxy card?

Yes. Even after you have submitted your proxy, you may change your vote at any time before the proxy is exercised by filing with our Secretary either a notice of revocation or a duly executed proxy card bearing a later date. A vote by Internet or telephone may be revoked by executing a later-dated proxy card, by subsequently voting by Internet or telephone, or by attending the annual meeting and voting in person.

How do I vote my Savings Plan shares?

If you participate in our Employee Savings and Profit Sharing Plan, Employee Savings Plan or Employee Stock Purchase Plan, shares of our common stock equivalent to the value of the common stock interest credited to your account under the respective plan will be voted automatically by the trustee in accordance with your proxy, if the proxy is received by April 17, 2014. Otherwise, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan.

What are our Board’s recommendations?

Our Board of Directors recommends that you vote (i) to elect the nominated slate of directors; (ii) to ratify the appointment of KPMG LLP to audit our 2014 consolidated financial statements; and (iii) to approve, by non-binding vote, the compensation of our Named Executive Officers. Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with this recommendation. The proxy holders will vote in accordance with their own discretion with respect to any other matter that properly comes before the meeting.

CORPORATE GOVERNANCE

Our Board of Directors seeks to ensure that our business is managed in the best long-term interests of our stockholders. Our business is conducted by our employees under the direction of our Chief Executive Officer (“CEO”) and our other officers and managers. Our Board of Directors provides oversight to the CEO and other officers and managers as it reviews and approves our major business and financial strategies. Our Board also approves significant capital projects and commitments, acquisitions, divestitures and long-term financings. Our Board is responsible for hiring and assessing the performance of the CEO and determining his compensation and, through the Compensation and Management Development Committee, the compensation of our other officers. Our Board regularly reviews succession planning strategy and plans for the CEO and other senior officers. Our Board believes it is critical that we operate in compliance with all applicable laws and to the highest ethical standard. Our Board believes that the long-term interests of our stockholders are advanced by appropriately addressing concerns of other stakeholders affected by our actions, including our employees and the communities in which we operate.

 

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A summary of certain important corporate governance practices follows:

Director Independence

A majority of our directors must be independent directors under the New York Stock Exchange (“NYSE”) Listed Company Rules. The NYSE Rules provide that no director can qualify as independent unless the Board affirmatively determines that the director has no material relationship with the listed company (either directly or as a partner, material stockholder or officer of an organization that has a relationship with us). In addition to the NYSE Rules regarding independence, our Board has adopted the following standards in determining whether a director has a material relationship with us:

 

  · the individual may not have been an employee of ours or any of our affiliates within the preceding five years;

 

  · the individual may not have within the previous five years been affiliated with or employed by an entity that has served as our auditor within the last five years;

 

  · the individual may not have been part of an interlocking directorate in which one of our executive officers serves on the compensation committee of another corporation that employs such person;

 

  · no immediate family member of the individual may fall within any of the preceding three categories; and

 

  · the individual may not have received any compensation from us within the past year other than for serving as a director.

Based on these independence standards and all of the relevant facts and circumstances, our Board determined that all of our directors are independent with the exception of Shane Fleming, our Chairman, President and CEO.

Standards and Qualifications for Directors

Our Board has established the following standards for individuals to serve on our Board of Directors:

 

  · Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders;

 

  · Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively;

 

  · Directors are required to inform our Chairman of the Board of any significant change in their personal circumstances, including a change in their principal job responsibilities or acceptance of another directorship; and

 

  · Directors are not eligible for re-election as a director on or after their 72nd birthday unless the other directors meeting in executive session approve an exception.

Our Governance Committee also considers the diversity of skills and experiences of the Board as a whole. The Committee believes it is desirable that each of the following backgrounds be represented on the Board: an audit committee financial expert; a CEO or former CEO; experience in the aerospace, chemical or other manufacturing industries; experience in safety, health and environmental issues; experience in technology; experience in industrial marketing issues; experience in global business operations; and experience in legal, regulatory and governmental affairs. The primary consideration in determining whether an existing director is qualified to serve on our Board is whether that individual meets the standards set forth above and has made an effective contribution to the Board of Directors during the preceding year. The Committee also considers the information summarized in each of the director’s individual biographies set forth under Agenda Item 1 below. The Committee particularly noted the following qualifications: Ms. Davis’ experience as a chief executive

 

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officer, her experience as a chief financial officer, her status as an audit committee financial expert, her experience in the aerospace industry and her experience as a director of other public companies; Mr. Fernandes’ experience as a chief executive officer, his experience as a senior financial officer, his experience in the chemical industry and his experience as a director of other public companies; Mr. Fleming’s experience as a Chief Executive Officer of the Company; Mr. Hoynes’ experience as a senior executive in the pharmaceutical industry and his experience in legal, government and regulatory issues; Mr. Johnson’s experience as a senior executive in technology industries, his experience with technology strategy and oversight and his experience as a director of other public companies; Ms. Lowe’s experience as a chief financial officer, her status as an audit committee financial expert and her operating experience as head of a manufacturing business; Mr. Powell’s experience in investment banking, including mergers and acquisitions, his status as an audit committee financial expert and his experience as a director of other public companies; Mr. Rabaut’s experience as a chief executive officer, his experience in private equity, his experience in the defense and aerospace industries and his experience as a director of other public companies; and Mr. Sharpe’s experience as a chief executive officer and his operations experience, including responsibility for safety, health and environmental issues. Based on all of the factors set forth above, the Governance Committee and the Board concluded that each of the directors whose term is expiring at the 2014 annual meeting of stockholders should be nominated to serve for an additional term.

Our Governance Committee typically uses the services of an executive search firm to help it to identify, evaluate and attract the best candidates for nomination as a director. Our Governance Committee will consider nominees recommended by stockholders who submit such recommendations in writing to our Secretary and include the candidate’s name, biographical data and qualifications. Stockholders recommending nominees must disclose the stockholder’s name and address, class and number of shares of our stock that are owned, the length of such ownership and any relationship between the stockholder and the nominee. Stockholders must also comply with such other procedural requirements as we may establish from time to time. The Governance Committee will review possible nominees for director suggested by stockholders generally in the same manner as those suggested by its retained search firm except that it will also consider the background of the stockholder making the recommendation, the stockholder’s reasons for suggesting a candidate and the relations between the stockholder and the suggested candidate.

Principles of Corporate Governance/Committee Charters/Codes of Ethics

We have published on our website (www.cytec.com) our Principles of Corporate Governance, the charter of each of the Audit, Compensation and Management Development, Safety, Health, Environmental and Technology and Governance Committees of our Board, as well as our Code of Conduct that applies to our directors and all employees, our Code of Ethics for Financial Executives and our Code of Ethics for Senior Executives. Any waiver of, or amendments to, the codes of ethics for directors or executive officers, including the chief executive officer, the chief financial officer and the principal accounting officer, may be approved only by our Board and any such waivers or amendments will be disclosed promptly by us by posting such waivers or amendments on our website. Additionally, the Audit Committee is informed of any waivers of the Code of Conduct for any of our employees. Copies of each of the Principles of Corporate Governance, the Committee charters and the codes of ethics referred to above are also available free of charge by writing to our Secretary, Cytec Industries Inc., Five Garret Mountain Plaza, Woodland Park, New Jersey 07424.

Board Leadership Structure and Role in Risk Oversight

Shane Fleming has been our Chairman of the Board, President and CEO since January 1, 2009. William P. Powell, Director, Chair of the Governance Committee and Audit Committee Member, has been our Lead Director since April 2013. We anticipate he will serve in this role until April 2016 based on our policy of rotating this position every three years among the chairs of the Audit, Compensation and Governance Committees.

Our independent directors met in executive session without our Chairman or management present at each regularly scheduled Board meeting during 2013. The Lead Director presides over these meetings to provide continuity and focus for these sessions. The Lead Director is responsible for (i) briefing the Chairman of the Board, as appropriate, following such executive sessions; (ii) presiding at meetings of the Board in the absence or

 

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at the request of the Chairman of the Board; (iii) acting as a liaison between the independent directors and the Chairman of the Board including with respect to matters to be covered at Board meetings; and (iv) calling additional meetings of the independent directors as appropriate in the judgment of the Lead Director. The Lead Director is also available, as necessary and appropriate, to communicate with important stockholders and may have such other responsibilities as may be designated by the Board.

The Company believes that combining the roles of Chairman of the Board, President and CEO in one person in combination with a Lead Director is currently the best governance structure for the Company because it promotes unified leadership, timely decision-making and effective management of Company resources, while also providing effective channels for board oversight and feedback from the Board and stockholders.

The Board of Directors reviews management’s assessment of material enterprise risks on an annual basis. The assessment covers certain material strategic, operational, financial/economic, political and other risks, the probability and potential impact of the risks as well and mitigating actions in place or planned. In addition, the Board reviews a similar risk assessment specific to any capital or other significant project which requires Board approval.

Stockholder and Interested Party Communications with the Board of Directors

Stockholders and interested parties may communicate directly to our Board of Directors or all of the non-management directors as a group with regard to Cytec. Any such communication may be mailed to the Cytec Compliance Office, Cytec Industries Inc., Five Garret Mountain Plaza, Woodland Park, New Jersey 07424 or submitted in any other manner described on the Compliance Office page of our web site (www.cytec.com). All such communications shall be promptly reviewed by our Compliance Office and sent to the Board of Directors or all of the non-management directors as a group, as appropriate.

OUR BOARD OF DIRECTORS AND BOARD COMMITTEES

Our Board of Directors is divided into three classes, the terms of which expire at the annual meetings in the following years:

 

2014

 

2015

 

2016

Anthony G. Fernandes

  Barry C. Johnson   Chris A. Davis

Shane D. Fleming

  Carol P. Lowe   Louis L. Hoynes, Jr.

Jerry R. Satrum

  Thomas W. Rabaut   William P. Powell

Raymond P. Sharpe

   

The Board of Directors held seven meetings during 2013 and each director attended at least seventy-five percent of the Board and respective committee meetings held while she or he was a director. All directors except for Mr. Satrum attended the 2013 Annual Meeting of Stockholders.

Committees of the Board

To increase its effectiveness and efficiency, our Board of Directors has established four committees to which it has delegated substantial responsibilities. The duties and responsibilities of our Board Committees are set forth in charters which have been approved by our Board of Directors. The charters may be viewed on our website (www.cytec.com). Set forth below is certain information about these Committees.

·              Audit Committee.    Our Audit Committee is comprised of Mses. Davis (Chair) and Lowe and Messrs. Powell and Satrum. The Audit Committee is empowered by the Board of Directors to, among other things, assist in the oversight of our: accounting and financial reporting processes and internal controls and the integrity of our financial statements; annual audit and our internal audit function; and compliance with legal and regulatory requirements as they may impact our financial statements. The Audit Committee also has direct responsibility for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm (the “auditors”).

 

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Our Board has determined that each of the members of the Audit Committee is financially literate, has a basic understanding of finance and accounting, is able to read and understand fundamental financial statements, and is an “audit committee financial expert” as defined in applicable Securities and Exchange Commission rules. Our Board has also determined that each member of the Audit Committee is an independent director, based on the listing rules of the NYSE listing rules, the exchange on which our shares of common stock are listed, the Securities and Exchange Commission’s additional independence requirements for audit committee members, and our Principles of Corporate Governance.

The Audit Committee held nine meetings during 2013. The Audit Committee’s report on its activities during 2013 appears later in this proxy statement under the caption “Audit Committee Report.”

·              Compensation and Management Development Committee.    Our Compensation and Management Development Committee is comprised of Messrs. Fernandes (Chair), Hoynes, Rabaut and Satrum. Each of its members is an independent director based on the independence standards discussed under the heading “Director Independence” and all of the relevant facts and circumstances. The Compensation Committee’s purpose is to review and approve compensation arrangements for our officers other than our CEO and to review and recommend for approval to our Board of Directors the compensation for the CEO. The Compensation Committee also approves the amount of equity awards to be awarded to our non-officers (including assistant officers) (“Non-Officers”). The Compensation Committee may delegate to our CEO the authority to allocate and award equity grants to Non-Officers up to an amount not to exceed the number approved by our Compensation Committee. This Committee also approves severance and compensation plans for our officers, authorizes incentive compensation and equity-based plans, evaluates our CEO’s and other officers’ performances against established goals and objectives, makes related recommendations, reviews risks arising from the Company’s compensation policies and practices, and reviews and, if appropriate, recommends for inclusion in our proxy statement the Compensation Discussion and Analysis section of the Company’s proxy statement. This Committee also reviews succession plans for our CEO and other executive management positions. Our Compensation and Management Development Committee held five meetings during 2013.

·               Safety, Health, Environment and Technology Committee.    In 2013 we combined our Safety, Health and Environment Committee with our Technology Committee. Our Safety, Health, Environment and Technology Committee is comprised of Ms. Lowe and Messrs. Johnson and Sharpe (Chair). This Committee reviews, monitors and, as it deems appropriate, advises our Board of Directors with respect to our policies and practices in the areas of occupational health and safety and environmental affairs, research and development of new products and technology and sustainability as it relates to these areas. The combined Safety, Health and Environment and Technology Committee held one meeting during 2013. The Safety, Health and Environment Committee and Technology Committee each held one meeting before they combined in April 2013.

·               Governance Committee.    Our Governance Committee is comprised of Messrs. Fernandes, Hoynes, Johnson, and Powell (Chair). Each of its members is an independent director based on the independence standards discussed under the heading “Director Independence” and all of the relevant facts and circumstances. This Committee was responsible for developing and recommending to the Board our Principles of Corporate Governance and is responsible for periodically reviewing and recommending changes to such principles. This Committee makes recommendations to the Board on candidates for election to our Board. The Committee also recommends committee assignments for directors and periodically reviews and recommends changes in the compensation of our directors. Our Governance Committee held three meetings during 2013.

 

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AUDIT COMMITTEE REPORT

The Audit Committee’s powers and responsibilities, and the qualifications required of each of its members, are set forth in the Audit Committee Charter (the “Charter”). The full text of the Audit Committee Charter may be viewed on the Company’s website (www.cytec.com).

Responsibilities.    This Committee meets periodically with Cytec’s auditors, internal auditors and management, including with each in executive session. Management is solely responsible for the consolidated financial statements and the financial reporting process, including the system of internal controls. Management has represented to this Committee and the Board of Directors that the consolidated financial statements discussed below were prepared in accordance with accounting principles generally accepted in the United States of America appropriate in the circumstances and necessarily include some amounts based on management’s estimates and judgments and that an evaluation was carried out under the supervision and with the participation of Cytec’s Chief Executive Officer and Chief Financial Officer of the effectiveness of Cytec’s internal control over financial reporting as of December 31, 2013. Cytec’s auditors, KPMG LLP (“KPMG”), are responsible for expressing an opinion on the conformity of these financial statements, in all material respects, with accounting principles generally accepted in the United States of America and an opinion on the effectiveness of Cytec’s internal control over financial reporting.

Independence.    This Committee pre-approves all services provided by KPMG and the related fees paid to them including audit and non-audit services, and considers the effect of such services and the related fees on KPMG’s independence. Details regarding fees paid to KPMG during the years 2013 and 2012 are set forth in this proxy statement under the caption “Fees Paid to the Auditors.” This Committee has concluded that the services provided by KPMG and the compensation therefor are compatible with maintaining KPMG’s independence.

Recommendation.    This Committee reviewed Cytec’s audited consolidated financial statements at, and for the year ended, December 31, 2013, and discussed such consolidated financial statements with management and the auditors, and recommended to the Board of Directors that such consolidated financial statements be included in Cytec’s Annual Report on Form 10-K for 2013. This recommendation was based on: this Committee’s review of the audited consolidated financial statements; discussion of the consolidated financial statements with management; discussion with KPMG of the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees; discussion with KPMG regarding KPMG’s independence as well as other matters including the written material disclosed below; receipt from KPMG of the written disclosures and letter required by the Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees; receipt from KPMG of the written disclosures and letter required by Public Company Accounting Oversight Board Auditing Standard No. 5 (An Audit of Internal Control Over Financial Reporting That is Integrated with an Audit of Financial Statements); receipt of the document entitled “KPMG-Our System of Quality Controls” and related addendum; and KPMG’s confirmation that it would issue its opinions that (i) the consolidated financial statements present fairly, in all material respects, Cytec’s financial position and the results of Cytec’s operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America; and (ii) Cytec has maintained effective internal controls over financial reporting as of December 31, 2013, in all material respects.

C.A. Davis, Chair

C.P. Lowe

W.P. Powell

J.R. Satrum

February 20, 2014

 

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AGENDA ITEM 1

ELECTION OF DIRECTORS

The Board of Directors believes that each nominee for director and each continuing director is well qualified to serve as a director of Cytec and that the board as a whole possesses the requisite experience, skills and attributes to provide effective oversight of Cytec given its current business and structure. See the section titled, “Corporate Governance-Standards and Qualifications for Directors” for specific details. In accordance with the recommendation of the Governance Committee, our Board of Directors has nominated Anthony G. Fernandes, Shane D. Fleming and Raymond P. Sharpe for election as directors for three-year terms ending at the 2017 Annual Meeting of Common Stockholders until a successor is duly elected and qualified. Mr. Satrum previously notified the Board of Directors that he intends to retire as a director and does not wish to seek reelection at our 2014 Annual Meeting of Common Stockholders. Accordingly, Mr. Satrum was not nominated for reelection and his term as a director will end when his current term expires at our 2014 Annual Meeting. The Board of Directors elected to reduce the number of directors from ten to nine following Mr. Satrum’s retirement and to reclassify Mr. Fleming from a Class II director with a term expiring in 2016 to a Class I director with a term expiring at our 2014 Annual Meeting. Each nominee is currently serving as a director. Each nominee has consented to serve if elected. The nominees’ biographies, as well as the biographies of the other directors, are set forth below.

Our Board of Directors unanimously recommends a vote for the election of each of these nominees as directors.

If at the time of the meeting any of the nominees is not available to serve as director, an event which our Board does not anticipate, the proxies will be voted for a substitute nominee or nominees designated by or at the direction of our Board, unless our Board has taken prior action to reduce the size of the Board.

Cytec’s By-laws require that in order to be elected in an uncontested election, a director nominee must receive a majority of the votes cast with respect to such nominee (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). If a nominee who is currently serving as a director is not re-elected, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” Under our By-laws, each director not elected by our stockholders shall tender his or her resignation to the Board. In that situation, our Governance Committee would make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action. Such action may include, among other things, reducing the total number of members that sit on our Board within the limitations set forth in our By-laws. The Board would act on the Governance Committee’s recommendation and publicly disclose its decision and the rationale behind such decision within 90 days from the date that the election results were certified.

 

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Board of Directors Membership

Set forth below is certain information concerning the nominees and our other directors whose terms of office will continue after the meeting.

 

LOGO    Chris A. Davis, age 63, has been our director since April 2000. Ms. Davis was a general partner of Forstmann Little & Co. (“Forstmann”) between 2005 and 2012 and was previously a Special Limited Partner since August 2001. Ms. Davis was Chairman of McLeodUSA (“McLeodUSA”), a telecommunication services provider, from August 2005 until January 2006 and was Chairman and Chief Executive Officer from April 2002 until August 2005. Prior to this, Ms. Davis was Chief Operating and Financial Officer of McLeodUSA from August 2001 until April 2002. Prior to her positions at McLeodUSA, Ms. Davis was Executive Vice President and Chief Financial and Administrative Officer of ONI Systems Corp. from May 2000. From July 1993 through April 2000, Ms. Davis was Executive Vice President and Chief Financial and Administrative Officer and a director of Gulfstream Aerospace Corp. and, upon General Dynamics Corporation’s acquisition of Gulfstream in July 1999, a vice president of General Dynamics Corporation. Before joining Gulfstream in 1993, Ms. Davis held numerous financial positions during her 17 year career at General Electric Company. McLeodUSA filed for a prepackaged plan of reorganization under Chapter 11 of the Bankruptcy Code in October 2005 and emerged from bankruptcy protection in January 2006. Ms. Davis currently serves as a director of Rockwell Collins, Inc. and at times during the past five years also served as a director of Aviall, Inc., and Wolverine Tube Inc.
LOGO    Anthony G. Fernandes, age 68, has been our director since July 2002. Mr. Fernandes was Chairman, Chief Executive Officer and President of Philip Services Corporation, an industrial services and integrated metals recovery company, from 1999 to 2002. Prior to joining Philip Services, Mr. Fernandes worked at Atlantic Richfield Company for more than 30 years, including from 1994 to 1999 as Executive Vice President and director. In addition, from 1997 to 1998 he was chairman of ARCO Chemical Co., a publicly traded company owned 80% by Atlantic Richfield. Mr. Fernandes currently serves as a director of ABM Industries Inc., Baker Hughes Corporation, and Black and Veatch.
LOGO    Shane D. Fleming, age 55, became our Chairman of the Board, President and Chief Executive Officer on January 1, 2009. Prior thereto, he was our President and Chief Operating Officer since June 2008. Mr. Fleming joined the Cytec predecessor company in 1983 in the Mining Chemicals group, and over the years held positions of increasing responsibility in the USA, Europe, Australia, and in the Asia Pacific region. Mr. Fleming currently serves as director of Valspar Corporation.
LOGO    Louis L. Hoynes, Jr., age 78, has been our director since December 1994. Until September 2004, Mr. Hoynes was elected to the Board on an annual basis by the holder of our Series C Preferred Stock. After we redeemed the Series C Preferred Stock in September 2004, Mr. Hoynes’ term automatically ended. Our Board then elected Mr. Hoynes to fill a vacancy on our Board. Mr. Hoynes was Executive Vice President and General Counsel of Wyeth until his retirement on July 1, 2003, having served in that capacity since 1990. Prior to that time he was a partner in the law firm of Willkie Farr & Gallagher.

 

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LOGO    Barry C. Johnson, age 70, has been our director since August 2003. Dr. Johnson is retired Dean of the College of Engineering at Villanova University, having served in that position from August 2002 until March 2006. Previously, he served as Chief Technology Officer of Honeywell International Inc. from July 2000 to April 2002. Before that Dr. Johnson served as Corporate Vice President of Motorola, Inc. and Chief Technology Officer for that company’s Semiconductor Product Sector. Dr. Johnson currently serves as a director of Rockwell Automation, Inc. and IDEXX Laboratories, Inc.
LOGO    Carol P. Lowe, age 48, has been our director since October 2007. Ms. Lowe currently serves as Senior Vice President and Chief Financial Officer of Sealed Air Corporation, having held that position since June 2012. Previously she was President of Carlisle FoodService Products, a subsidiary of Carlisle Companies Incorporated, a global diversified manufacturing company, and through March 31, 2011, President of Trail King Industries Inc., a subsidiary of Carlisle. Ms. Lowe served as the Vice President and Chief Financial Officer of Carlisle from 2004 until November 2008 and its Treasurer from 2002 through 2004. Prior to joining Carlisle, Ms. Lowe spent eight years at National Gypsum Company where she held various accounting and treasury positions including Treasurer. Preceding that, she spent seven years with Ernst & Young. Ms. Lowe is a Certified Public Accountant.
LOGO    William P. Powell, age 58, has been our director since our formation in December 1993. He is a founding member of 535 Partners LLC., a family office. Until March 2008, Mr. Powell was a Managing Director of Williams Street Advisors LLC, a merchant banking firm, having served in that capacity since May 2001. Prior to Williams Street, he had been Managing Director, Corporate Finance, of UBS Warburg LLC and its predecessor, Dillon, Read & Co. Inc., since January 1991. Mr. Powell currently serves as a director of CONSOL Energy, Inc.
LOGO    Thomas W. Rabaut, age 65, has been our director since February 2007. Mr. Rabaut currently serves as an Operating Executive to the Carlyle Group, a private equity firm. Prior thereto, he was President and Chief Executive Officer of United Defense Industries Inc. and its predecessors from 1994 until June 2005 when it was acquired by BAE Systems PLC. Mr. Rabaut then served as President of the Land & Armaments Group of BAE Systems until his retirement in January 2007. Mr. Rabaut currently serves as a director of Kaman Corporation and Allison Transmission Holdings Inc.
LOGO    Raymond P. Sharpe, age 65, has been our director since April 2005. He has been President and CEO of Isola Group, a privately held manufacturer of base materials for printed circuit boards since June 2004. The principal investor in Isola Group is the Texas Pacific Group. For more than ten years prior thereto, he was CEO of the Cookson Electronics Division of Cookson Group PLC., London, UK. Mr. Sharpe served as Director of Cookson Group PLC from 1995 until 2004 and as a Director of SPS Technologies Inc., a manufacturer of aerospace components, from 1994 until 2004.

 

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AGENDA ITEM 2

RATIFICATION OF THE APPOINTMENT

OF THE AUDITORS

RESOLVED, that the appointment by our Audit Committee of the firm of KPMG to audit our 2014 consolidated financial statements is hereby ratified.

Our Audit Committee has selected KPMG as the auditors to perform the audit of our financial statements for 2014. KPMG has audited our consolidated financial statements since our inception in 1993. KPMG has offices or affiliates at or near most of the locations where we operate. KPMG is an independent registered public accounting firm.

Before making its recommendation for appointment, the Audit Committee carefully considered KPMG’s qualifications. This consideration included a review of KPMG’s performance in prior years, its independence, as well as its reputation for integrity and for competence in the fields of accounting and auditing. Our Audit Committee has expressed its satisfaction with KPMG.

Representatives of KPMG will attend the Annual Meeting and may make a statement if they desire to do so. They will also be available to respond to appropriate stockholder questions.

We are asking our stockholders to ratify the appointment of KPMG as our auditors as a matter of good corporate practice because ratification is not legally required. Even if the appointment is ratified, our Audit Committee in its discretion may select different auditors at any time during the year if it determines that such a change would be in the best interests of our Company and our stockholders.

The affirmative vote of a majority of the shares of our common stock represented in person or by proxy at the Annual Meeting is required to ratify the appointment of our auditors. Because abstentions are deemed to be “shares present” at the meeting, they will have the same effect as a vote “against” this matter. If Agenda Item 2 does not pass, the appointment of auditors will be reconsidered by our Audit Committee.

Our Board of Directors unanimously recommends that stockholders vote for the proposal to ratify the Audit Committee’s appointment of KPMG as our independent registered public accounting firm for 2014.

 

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FEES PAID TO THE AUDITORS

Pre-Approval Policies and Procedures.    Our Audit Committee is required to pre-approve the audit and non-audit services performed by the auditors in order to assure that the provision of such services does not impair the auditors’ independence. Our Audit Committee specifically pre-approves all audit fees, audit-related fees, tax service fees and all other fees. Our Audit Committee has delegated authority to the Chair of the Committee to approve any services not exceeding $50,000 not specifically pre-approved by the Committee provided that disclosure of such services and fees is made to the Audit Committee at the next scheduled meeting following such approval. During the years ended December 31, 2013, and 2012, all services provided by the auditors received specific pre-approval.

In connection with the audit of the 2014 financial statements, we entered into an engagement letter with KPMG which sets forth the terms by which KPMG will perform its audit services.

Audit Fees.    The aggregate fees billed by KPMG for professional services rendered for the audit of our consolidated financial statements, and related internal control over financial reporting included in Form 10-K, review of the unaudited consolidated financial statements included in our Quarterly Reports on Form 10-Q, and for services that are normally provided by KPMG in connection with statutory and regulatory filings or engagements, including issuance of consents, for the years ended December 31, 2013, and 2012, were approximately $3.3 million and $5.1 million, respectively.

Audit-Related Fees.    The aggregate fees billed by KPMG for professional services rendered for assurance and related services that are not reported above as audit fees but were related to the audit or review of our financial statements, for the years ended December 31, 2013, and 2012, were approximately $0.2 million and $2.2, respectively.

Tax Fees.    The aggregate fees billed by KPMG related to professional services rendered in connection with tax audits, international tax compliance, and supporting other tax-related regulatory requirements primarily in the transfer pricing area, and international tax consulting and planning services,, for the years ended December 31, 2013, and 2012, were approximately $1.1 million and $0.9 million respectively.

All Other Fees.    We did not utilize KPMG for any other services during the two years ended December 31, 2013 except for approximately $10,000 in fees incurred in 2012 related to international executive services in India provided by KPMG to one of the Umeco entities acquired by the Company.

As advised in the Audit Committee Report, our Audit Committee considered whether, and concluded that, provision of these services is compatible with maintaining KPMG’s independence.

 

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AGENDA ITEM 3

ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

The Company seeks your advisory vote on our executive compensation programs giving you, the stockholder, the opportunity to express your approval or withhold approval of the compensation we pay our Named Executive Officers.

Our compensation policies and procedures are designed to support our compensation philosophy and pay competitively, focused on pay for performance with an appropriate balance between risk and reward and are strongly aligned with the long-term interests of our stockholders. As always, the Company and the Committee are committed to the ongoing review of the executive compensation programs and will take action to ensure that these programs continue to support our compensation philosophy and objectives. The Company asks that you support the compensation of our Named Executive Officers as disclosed in the Compensation Discussion and Analysis section below and the accompanying tables contained in this proxy statement. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.

The Board of Directors unanimously recommends a vote “for” the Company’s compensation of our Named Executive Officers as disclosed in the Compensation Discussion and Analysis section and the accompanying compensation tables contained in this proxy statement.

 

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CYTEC STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of January 31, 2014, the total beneficial ownership of Cytec’s Common Stock by Cytec’s directors and the five executive officers named in the Summary Compensation table (see the “Executive Compensation” portion of this proxy statement):

Beneficial Stock Ownership of Directors and Executive Officers

 

Name

  Record &
Street
Name
Shares(1)
   

+

  Savings
Plan
Shares(2)
   

+

  Deferred
Stock
Shares(3)
   

+

  Stock
Option
Shares(4)
   

=

  Total
Beneficial
Ownership
    Percent
of
Class
 

W.N. Avrin

    15,038          7,409          3,822          122,924          149,193        0.4   

C.A. Davis

    17,488              11,030          3,000          31,518        (5 ) 

D.M. Drillock

    19,413          25,751          14,257          139,874          199,295        0.6   

A.G. Fernandes

    7,941              20,691          6,000          34,632        (5 ) 

S.D. Fleming

    17,272          49,785          69,988          384,745          521,790        1.5   

L.L. Hoynes, Jr

    12,254              14,038          0          26,292        (5 ) 

B.C. Johnson

    4,747              9,945          6,000          20,692        (5 ) 

C.P. Lowe

    4,878              16,812              21,690        (5 ) 

W.P. Powell

    10,117              7,319          3,000          20,436        (5 ) 

T.W. Rabaut

    17,415              9,820              27,235        (5 ) 

J.R. Satrum

    38,229                  6,000          44,229        0.1   

R.P. Sharpe

    7,476              19,163          6,000          32,639        (5 ) 

R. Smith

    15,168          30,691          21,534          117,512          184,905        0.5   

W.G. Wood

    11,939          3,973              45,185          61,097        0.2   

All directors and officers as a group (17 persons)

    212,404          127,282          223,166          905,441          1,468,293        4.1   

 

(1) Includes for Mr. Fernandes, shares held in family trusts or foundations. Also includes for each of Ms. Davis and Messrs. Johnson, Powell and Sharpe, shares owned jointly with their spouses. Excludes for Mr. Smith, 1,000 shares for which he disclaims beneficial ownership. The total for all directors and officers as a group also includes an additional 260 shares beneficially owned by an officer’s ex-spouse.

 

(2) Represents the officers’ proportionate share of our Common Stock held by the Cytec Employees’ Savings & Profit Sharing Plan and the Cytec Supplemental Savings and Profit Sharing Plan at January 31, 2014. In the case of Mr. Smith and all directors and officers as a group, also includes shares held in an Individual Retirement Account. The total for all directors and officers as a group also includes an additional 1,895 shares beneficially owned by an officer’s ex-spouse.

 

(3) Shares issuable under our 1993 Stock Award and Incentive Plan (the “1993 Plan”) following termination of employment or, as to the directors, retirement from the Board of Directors.

 

(4) Shares which may be acquired within 60 days through the exercise of stock options, regardless of whether the exercise price is below, at or above the current market price of our common stock. Includes for Mr. Avrin, 49,409 stock options beneficially owned by his ex-spouse. The total for all directors and officers as a group also includes an additional 2,498 shares beneficially owned by an officer’s ex-spouse.

 

(5) Less than 0.1%

None of the shares reflected in the stock ownership table have been pledged as security.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on our review of copies of 141 Forms 3, 4 and 5 received by us, we believe that with respect to 2013 all filings required under Section 16(a) of the Securities Exchange Act of 1934 were filed timely.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

Title of Class

 

Name and Address

of Beneficial Owner

   Amount and
Nature
of Beneficial
Ownership
  Percent
of
Class(1)
 

Common Stock

 

Franklin Resources, Inc.; Charles B. Johnson;

Rupert H. Johnson, Jr.; and Franklin Advisers, Inc.

One Franklin Parkway

San Mateo, CA 94403

   2,647,148 Shares(2)     7.43   

Common Stock

 

FMR LLC; and Edward C. Johnson, 3d

245 Summer Street

Boston, MA 02109

   2,638,685 Shares(3)     7.41   

Common Stock

 

BlackRock, Inc.

40 East 52nd Street

New York, NY 10022

   2,611,157 Shares(4)     7.33   

Common Stock

 

William Blair & Company, LLC

222 W. Adams

Chicago, IL 60606

   2,094,162 Shares(5)     5.88   

Common Stock

 

Passport Special Opportunities Master Fund, LP;

Passport Global Long Short, LP; Passport Global Master Fund SPC Ltd; Passport Long Short Master Fund SPC Ltd; Gold Coast Capital Subsidiary VIII Limited; GFS MAP Trust Passport Long Short; Passport Holdings LLC; Passport Capital, LLC; and John H. Burbank, III
c/o Passport Capital, LLC

One Market Street, Steuart Tower Suite 2200

San Francisco, CA 94105

   2,051,881 Shares(6)     5.76   

Common Stock

 

Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

   2,050,093 Shares(7)     5.75   

 

(1) Percent of class based on shares outstanding at January 31, 2014.

 

(2) The following is based solely on an amended Schedule 13G, filed February 11, 2014 with the SEC by Franklin Resources, Inc.; Charles B. Johnson; Rupert H. Johnson, Jr.; and Franklin Advisers, Inc. which reports beneficial ownership as of December 31, 2013. Charles B. Johnson has (i) sole power to vote or direct the vote as to 340 shares, and (ii) sole power to dispose or direct the disposition of 340 shares. Rupert H. Johnson, Jr. has (i) sole power to vote or direct the vote as to 426 shares, and (ii) sole power to dispose or direct the disposition of 426 shares; Franklin Templeton Investments Australia has (i) sole power to vote or direct the vote as to 11,000 shares, and (ii) sole power to dispose or direct the disposition of 11,000 shares; Franklin Templeton Investments Japan Limited has (i) sole power to vote or direct the vote as to 7,800 shares, and (ii) sole power to dispose or direct the disposition of 7,800 shares; Fiduciary Trust Company International has (i) sole power to vote or direct the vote as to 427,242 shares, and (ii) sole power to dispose or direct the disposition of 438,532 shares; Franklin Advisors, Inc. has (i) sole power to vote or direct the vote as to 2,001,170 shares, and (ii) sole power to dispose or direct the disposition of 2,004,150 shares; Franklin Templeton Institutional has (i) sole power to vote or direct the vote as to 0 shares, and (ii) sole power to dispose or direct the disposition of 162,700 shares; and Fiduciary International, Inc. has (i) sole power to vote or direct the vote as to 22,200 shares, and (ii) sole power to dispose or direct the disposition of 22,200 shares.

 

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(3) The following is based solely on an amended Schedule 13G, filed February 14, 2014 with the SEC by FMR LLC, and Edward C. Johnson 3d which reports beneficial ownership as of December 31, 2013. Fidelity Management & Research Company (“Fidelity”), a wholly-owned subsidiary of FMR LLC and an investment adviser, is the beneficial owner of 1,861,624 shares as a result of acting as investment adviser to various investment companies. Edward C. Johnson 3d and FMR LLC, through its control of Fidelity, and the funds each has sole power to dispose of the 1,861,624 shares owned by the funds. Fidelity SelectCo, LLC (“SelectCo”), 1225 17th Street, Suite 1100, Denver, Colorado, a wholly-owned subsidiary of FMR LLC and an investment adviser is the beneficial owner of 622,579 shares as a result of acting as investment adviser to various investment companies (“SelectCo Funds”). Edward C. Johnson 3d and FMR LLC, through its control of SelectCo, and the SelectCo Funds each has sole power to dispose of 622,579 shares. Neither FMR LLC nor Edward C. Johnson 3d, Chairman of FMR LLC, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity funds, which power resides with the funds’ Boards of Trustees. Strategic Advisers, Inc. (same address as FMR LLC), a wholly-owned subsidiary of FMR LLC and an investment adviser, provides investment advisory services to individuals. As such, FMR LLC’s beneficial ownership includes 363 shares beneficially owned through Strategic Advisers, Inc. Pyramis Global Advisors Trust Company (“PGATC”), 900 Salem Street, Smithfield, Rhode Island, 02917, an indirect wholly-owned subsidiary of FMR LLC and a bank, is the beneficial owner of 153,819 shares as a result of its serving as investment manager of institutional accounts owning such shares. Edward C. Johnson 3d and FMR LLC, through its control of PGATC, each has sole dispositive power over and sole power to vote or to direct the voting of the shares owned by the institutional accounts managed by PGATC as reported above. FIL Limited (“FIL”), Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. FIL is the beneficial owner of 300 shares. Partnerships controlled predominantly by members of the family of Edward C. Johnson 3d, Chairman of FMR LLC and FIL, or trusts for their benefit, own shares of FIL voting stock.

 

(4) Based solely on an amended Schedule 13G, filed January 28, 2014 with the SEC, which reports beneficial ownership as of December 31, 2013 as (i) sole power to vote or direct the vote as to 2,383,127 shares, and (ii) sole power to dispose or direct the disposition of 2,611,157 shares.

 

(5) Based solely on an amended Schedule 13G, filed February 6, 2014 with the SEC, which reports beneficial ownership as of December 31, 2013 as (i) sole power to vote or direct the vote as to 2,094,162 shares, and (ii) sole power to dispose or direct the disposition of 2,094,162 shares.

 

(6) Based solely on a Schedule 13G, filed February 12, 2014 with the SEC, which reports beneficial ownership as of December 31, 2013, for Passport Special Opportunities Master Trust, LP as (i) shared power to vote 750,000 shares, and (ii) shared power to dispose 750,000 shares; and which reports beneficial ownership for Passport Global Long Short Fund, L.P. as (i) shared power to vote 90,764 shares, and (ii) shared power to dispose 90,764 shares; and which reports beneficial ownership for Passport Global Master Fund SPC Ltd. for an on behalf of Portfolio A – Global Strategy as (i) shared power to vote 1,000,000 shares, and (ii) shared power to dispose 1,000,000 shares; and which reports beneficial ownership for Passport Global Long Short Master Fund SPC Ltd. for an on behalf of Portfolio A as (i) shared power to vote 95,598 shares, and (ii) shared power to dispose 95,598 shares; and which reports beneficial ownership for Passport Global Long Short Master Fund SPC Ltd. for an on behalf of Portfolio B as (i) shared power to vote 66,509 shares, and (ii) shared power to dispose 66,509 shares; and which reports beneficial ownership for Gold Coast Capital Subsidiary VIII Limited as (i) sole power to vote 26,583 shares, and (ii) shared power to dispose 26,583 shares; and which reports beneficial ownership for GFS MAP Trust Passport Long Short as (i) shared power to vote 22,427 shares, and (ii) shared power to dispose 22,427 shares; and which reports beneficial ownership for Passport Capital, LLC as (i) shared power to vote 2,025,298 shares, and (ii) shared power to dispose 2,051,881 shares; and which reports beneficial ownership of Passport Holdings, LLC as (i) shared power to vote 840,764 shares, and (ii) shared power to dispose 840,764 shares; and which reports beneficial ownership for John H. Burbank, III as (i) shared power to vote 2,025,298 shares; and (ii) shared power to dispose 2,051,881 shares.

 

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(7) Based solely on an amended Schedule 13G, filed February 12, 2014 with the SEC, which reports beneficial ownership as of December 31, 2013 as (i) sole power to vote or direct the vote as to 23,057 shares, (ii) sole power to dispose of 2,029,811 shares, and (ii) shared power to dispose of 20,282 shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Under our written Policy on Transactions with Related Person, any related party transaction which would be required to be reported in the Company’s annual proxy statement under applicable laws and regulations must be approved in advance by the Governance Committee of our Board of Directors. In considering whether or not to approve such transaction, the Governance Committee shall consider the following factors: (i) is the proposed transaction in the ordinary course of business of the Company and the Related Person; (ii) are any alternate transactions available; (iii) is the transaction on terms at least as favorable to the Company as available from unrelated third parties; (iv) does the transaction pose any more risks to the Company than alternate transitions available from unrelated third parties; and (v) such other factors as the Governance Committee may consider relevant or important to its decision.

There were no transactions during 2013, and there are no currently proposed transactions, involving more than $120,000 in which Cytec was or is to be a participant and in which any executive officer or director has a direct or indirect material interest other than the compensation arrangements described in this proxy statement.

 

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides an overview of Cytec’s executive compensation program including our philosophy, key program elements, the 2013 decisions made under the program and the factors that were considered in making those decisions. The commentary in the CD&A is intended to facilitate an understanding of the data found in the accompanying compensation tables.

All of our executive officers participate in our Executive Compensation Program described in this CD&A, however, for the purposes of this CD&A, we specifically analyze and discuss the total compensation for our Named Executive Officers listed below.

Shane D. Fleming, Chairman of the Board, President and Chief Executive Officer

David M. Drillock, Vice President and Chief Financial Officer

William Wood, President, Cytec Aerospace Materials

Roy Smith, Vice President, General Counsel and Corporate Secretary

William N. Avrin, Vice President, Corporate and Business Development and President, Cytec Industrial Materials

Frank Aranzana, former President, Cytec Coating Resins.

Although Mr. Aranzana separated from the Company on April 2, 2013, with the divestiture of our Coating Resins business, we are required to discuss his compensation as he was one of the five most highly compensated officers of the Company in 2013.

Our executive compensation program is intended to drive results, recognize contributions to the success of our company and retain leadership talent. Our executive officers have shown solid leadership in improving the Company’s business portfolio and financial position and are committed to providing long term financial strength and sustainability for our stockholders.

 

I.   Highlights for fiscal year 2013

Financial and Business Performance

 

  · We completed the last major piece of our portfolio realignment plans with the sale of our Coating Resins business for $1.13 billion, including assumed liabilities.

 

  · Our total revenues in fiscal 2013 were $1.94 billion, a 13.3% increase over 2012, and our as-adjusted continuing operating margin increased to 15.1% from 14.2% in 2012. Using mostly proceeds from the sale of our Coating Resins business, we repurchased $750.1 million or approximately 10.2 million shares of our stock in 2013. Our commitment was to quickly return value to our stockholders using the proceeds from the divestiture which was accomplished.

 

  · We contributed $71.8 million to our global pension funds in 2013. Overall, our plans are essentially 100% funded, up from the 89% at year-end 2012.

 

  · We issued $400 million of ten-year 3.5% senior unsecured Notes. We applied the net proceeds to redeem approximately $328 million of higher cost debt for $366 million. This not only reduced our interest costs, but vastly improved our debt maturity profile. Our fiscal 2013 adjusted earnings per share (“EPS”), from continuing operations, as defined under the heading “2013 Executive Compensation Decisions – 2013 Annual Incentive Plan” below, was $4.80, a 39.1% increase over the prior period.

 

  · Our one-year and three-year total stockholder return is 36.1% and 78.4% respectively.

 

  · We continued with our safety improvement process. In 2013, we achieved a world class level of 0.66 Recordable Injury Frequency.

 

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  · We were recognized by the Women’s Forum of New York for our Board Diversity.

Executive Compensation

 

  · We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay” proposal) and consider the results of the vote and the views of our stockholders received in connection with the vote each year when making future compensation decisions for the Named Executive Officers. Our 2013 say-on-pay proposal returned a 96.7% vote “for” our executive compensation programs. No changes were made to our compensation programs as a result of the say-on-pay proposal vote in 2013.

 

  · We emphasize pay for performance in determining an executive officer’s compensation including individual, business unit or function and overall company performance. In demonstration of our pay for performance commitment, 65-80% of our executive officers’ target compensation is dependent on specific performance goals or the price of our stock, with inclusion of our time-based restricted stock units.

 

  · Our compensation package is a mix of short and long-term focused compensation with a substantial linkage to stock performance. We use a balance of growth and return measures, relative and absolute, in our performance plans that align with our business strategy and incorporate challenging levels of year-over-year improvement.

 

  · We benchmark industry peers as well as general manufacturing companies to ensure our pay programs are competitive in attracting, motivating and retaining the diversified, quality talent necessary for our business.

 

  · We incorporate the use of tally sheets into our annual executive officer compensation planning review.

 

  · We require all executive officers to maintain stock ownership in the Company as a multiple of base salary. Executive officers are prohibited from hedging against the economic risk of this ownership.

 

  · We do not allow re-pricing or exchange of equity awards without stockholder approval.

 

  · We conduct a risk assessment on all compensation programs annually.

 

  · We offer very limited perquisites to our U.S. executive officers and we do not provide tax gross-ups on perquisites except in connection with our general employee relocation policy. We offered Mr. Aranzana, a legal resident of Belgium, perquisites as were reasonable and customary in that country.

 

  · We have discontinued our Compensation Taxation Equalization Plan, which provides for change-in-control excise tax gross-up payments, for new participants effective January 1, 2012 and have grandfathered existing executive officers in the Plan for 5 years, ending December 31, 2016.

 

  · We have a “double-trigger” acceleration on all equity grants made on or after January 1, 2012, which includes termination upon a change in control.

 

  · We have adopted a recoupment policy to recover performance-based and equity compensation in the event a financial restatement becomes necessary as a result of errors, omissions or fraud.

 

  · All of our performance plans dependent on financial measures are intended to be compliant with section 162(m) of the Internal Revenue Code of 1986 (“IRC”).

 

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Changes to Compensation Programs for 2014

 

  · The Committee determined to remove Precision Castparts Corporation from our 2013 stated Peer Group because of the company’s significantly larger revenue size.

 

  · For the 2014 annual incentive plan, the adjusted EPS target for par payout is $5.70. The adjusted EPS target was set several months ago and is not necessarily indicative of the results the Company anticipates for the year. The adjusted EPS targets are not, and should not be, construed as EPS guidance.

 

II.   Executive Compensation Program Fundamentals

Roles and Responsibilities

The Compensation and Management Development CommitteeThe Compensation and Management Development Committee of the Company’s Board of Directors (referred to as “Committee” in this CD&A) is responsible for reviewing and approving all compensation arrangements and policies for all of our executive officers other than the CEO, and for reviewing and recommending to the independent directors of the Board, compensation arrangements for the CEO. The Committee meets at least three times annually and met five times in 2013. At a minimum, the Committee determines (a) the amount of salary adjustments, annual incentives and long-term incentives (“LTI”) awarded to executive officers; (b) the criteria for achieving annual and long-term incentive awards; and (c) whether the conditions for the payment of past awards have been met. The Committee solicits and receives feedback from the Board of Directors’ Committee Chairs on the officers’ performance as a whole against non-financial goals and the full Board for the individual performance of the CEO. To the extent these matters relate to compensation paid to the CEO, they are also approved or ratified by the independent directors of the Board. The Committee periodically reviews all of the elements of our executive compensation program to make sure they are in line with our business strategy, regulatory requirements, stockholder interests and that they remain competitive in light of changing trends, practices and market conditions and do not encourage excessive risk taking. The Committee also evaluates its own performance annually.

The Committee’s Independent Consultant – Each year the Committee retains an independent compensation consultant to provide expertise and guidance on executive compensation program design, market condition trends, regulatory requirements and best practices. The independent consultant participates in Committee meetings and is accountable to the Committee. The consultant reviews and provides objective perspectives on all proposals regarding executive compensation presented to the Committee and identifies any issues or concerns.

As part of the 2013 annual executive compensation review, the Committee retained Frederic W. Cook & Company, Inc. (“FWCook”) as their independent executive compensation consultant. To assist the Committee with compensation decisions regarding fiscal year 2013, FWCook provided the Committee with an analysis on executive compensation market trends, best practices, regulatory requirements, long term incentive trends and a comprehensive competitive review of each of our executive officers’ total direct compensation. FWCook does not provide any other services to the Company and has not had any prior relationship with any of our executive officers.

In compliance with the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”) disclosure requirements regarding the independence of compensation consultants, FWCook provided the Compensation Committee with a letter addressing each of the six independence factors. Their responses affirm the independence of FWCook and their partners, consultants, and employees who service the Compensation Committee on executive compensation matters and governance issues.

The Committee and Management – Each year, the CEO and the Vice President, Human Resources, review with the Committee the competitive compensation data and information provided by the Committee’s independent compensation consultant. Based on feedback from the Committee regarding the competitive compensation data and the CEO’s view of each executive officer’s performance, the CEO and Vice President, Human Resources recommend annual salary adjustments, annual incentive targets and annual grants of long-term

 

20


incentives for each executive officer, other than the CEO. The Committee reviews these recommendations along with the competitive benchmark data, and determines the final annual salary adjustments, annual incentive targets and annual grants of long-term incentive awards for all executive officers, other than the CEO. The Committee reviews competitive benchmark data for the CEO and the performance of the CEO and makes recommendations on the CEO’s salary and incentive awards to the independent directors of the Board. The independent directors discuss these recommendations, revise them if appropriate, and then determine the final salary adjustment, annual incentive target and annual grants of long-term incentive awards for the CEO. Except as described above, the CEO does not participate in this process. Management also reviews policies and plans that impact executive compensation and benefits and makes appropriate recommendations regarding these policies and plans to the Committee based on market competiveness, best practice and good corporate governance.

Executive Compensation Program Philosophy

The design of our executive compensation program is intended to align with the Company’s short term business objectives and long term business strategy and to pay appropriately for the level of performance achieved. This is evident in the mix of pay elements, the percent of “at-risk” pay and the actual pay that is used to compensate our executive officers.

We have a long-standing pay for performance philosophy. A number of performance factors are considered in determining an executive officer’s compensation including individual performance, performance of the business unit or function under his or her leadership and the Company’s overall performance. In demonstration of our pay-for-performance commitment to stockholders, employees and other stakeholders, 65% to 80% of our executive officers’ target compensation is dependent on specific performance goals or the price of our stock, with inclusion of our time-based restricted stock awards. We design our executive compensation programs to drive results, to recognize contributions to the success of the company, and to retain leadership talent.

The Committee targets total direct compensation at a competitive level consisting of base salaries at 5% below the median of a competitive benchmark, annual incentives as a percentage of base salary at the median of a competitive benchmark, and long-term incentives at the 62.5 percentile of a competitive benchmark for each executive officer. The Committee believes this compensation philosophy limits fixed costs and emphasizes long-term financial results that will enhance the value of the Company’s stock over time and that this compensation structure and the performance metrics utilized in determining incentive payments are likely to result in our executives earning above median compensation over the longer term only when stockholders are also enjoying positive returns on their investments. We place more weight on both performance-based compensation and long-term compensation for those executive officer positions with the broadest scope, primarily our CEO.

Executive Compensation Program Objectives

The key objectives of our executive compensation program are to:

·               Pay for Performance – A significant portion of executive compensation is allocated in long and short-term “incentive” pay which is dependent on the achievement of pre-established goals that are critical to our long-term business strategies and short-term business objectives. Pay for performance encourages our executive officers to make prudent decisions based on these pre-established goals in relationship to dynamic market changes and its implications. Pay “opportunity” is higher for goals that are exceeded, and pay is “at-risk” for goals that are not achieved or partially achieved.

·               Align our Executives’ Financial Interests with our Stockholders’ Interests – By linking a significant portion of executive pay “opportunity” to the performance of the Company’s stock price and emphasizing stock ownership through mandated requirements, we incentivize our executive officers to remain focused on the financial health of the Company and total stockholder return over the long-term.

 

21


·              Pay Competitively – Executive pay for all total direct compensation elements is set within an equitable market range based on competitive benchmarking, enabling the Company to retain highly competent, performance-oriented executives and to attract well-qualified industry talent. Providing a competitive pay program to our executive officers encourages sustained individual performance.

Executive Compensation Elements

Total Direct Compensation:    Our executive total direct compensation program has three basic elements: (i) base salary, (ii) annual incentives, and (iii) long-term incentives.

Base Salary:    The objective of base salary is to provide fixed compensation to executive officers for the performance of their core job responsibilities and duties. Annual base salary is a total direct compensation component that is not “at-risk” for our executives. Adjustments to base salaries are considered by the Committee annually based on an executive’s performance over the previous year, the overall salary budget for the U.S. and market competitive benchmark data.

Annual Incentive:    The objectives of our annual incentive plan are to reinforce annual priorities and to motivate executive officers to achieve the financial and operational performance goals that are important for the Company’s performance in the short term. The annual incentive plan for executive officers is based on the achievement of financial metrics and strategic non-financial key objectives. The Committee determines the measures and sets the target performance goals for receiving an award typically in the beginning of the relevant performance period.

Each Named Executive Officer is a member of the Company’s Executive Leadership Team. The Committee does not focus solely on specific objectives within each of the executive officer’s area of responsibility, but expects each executive officer to contribute to the Company’s overall success as a member of the executive team. At the end of each performance year, the Executive Leadership Team collectively assesses its performance in achieving corporate and business non-financial objectives and determines a percentage of target earned on this component of the annual incentive calculation. The CEO presents this assessment to the Committee for its consideration in determining the achievement factor for non-financial objectives for all executive officers, including the CEO. The Committee also reviews the corporate and business financial achievements against the targets for the year, which, together with the non-financial component, determines the combined full incentive amount for our corporate and business officers. The payout amounts under the annual cash incentive plan and all other compensation for the CEO are subject to approval by the independent directors of the Board.

Long-Term Incentives:    The objectives of our long-term incentive plan are to encourage long-term strategic decision making that is aligned with the best interests of our stockholders, focus the efforts of executive officers on multi-year results and long-term sustained performance, and to maintain a substantial portion of compensation in long-term vehicles.

Our LTI plan consists of a combination of stock options, time-based restricted stock units and a performance cash plan dependent upon the achievement of pre-established financial goals over a three year period. The Committee believes this mix of LTI awards better aligns executive and stockholder interests in a volatile market, enhances executive retention, and enables the Company to offer competitive compensation packages.

Indirect Executive Compensation

To remain competitive in attracting and retaining high level talent, we maintain indirect compensation programs in each respective country for our employees, including executive officers. In the U.S., subject to basic eligibility requirements, our broad-based plans generally include health and welfare benefits and qualified and non-qualified savings plans. We also offer our executive officers benefits under our executive plans including retirement, deferred compensation and post-employment arrangements as described below. We periodically review the competitiveness of our executive plans against our industry peers and recommend plan modifications to the Committee when appropriate.

 

22


Perquisites:    We provide limited perquisites to our executive officers generally consisting of executive physicals and financial counseling/tax preparation. We offer executive physicals to further promote our broad-based health and wellness initiatives. We provide financial counseling and tax preparation services to maximize the value of all of our benefit plans for the executive and the Company and by delegating personal finance, enable greater time efficiency and fewer distractions from corporate responsibilities. We had provided additional perquisites to our executive officer in Belgium as was reasonable and customary in that country. The value of perquisites provided to the Named Executive Officers in 2013 are set forth in column (i) of the Summary Compensation Table and the perquisites valued at $10,000 or more are generally described in the corresponding footnotes.

Retirement Plans:    We have historically provided market competitive retirement plans to our executive officers. We “froze” benefits under our defined benefits plan applicable to all non-bargaining employees in the U.S. in 2007 and, in lieu thereof, enhanced benefits under our defined contribution plan. Our executive officers in the U.S. currently participate in the same 401k Savings Plan and Supplemental Savings Plan, as other non-bargaining employees in the U.S. (subject to basic eligibility requirements).

Benefits under our Executive Supplemental Employee Retirement Plan (“ESERP”) are available only to persons first elected as an officer before April 1, 2007 (“Eligible Officers”). All Eligible Officers are entitled to certain death and disability benefits under this Plan. In the event of a change in control of Cytec, all Eligible Officers will automatically become full members of this Plan. Additionally, the Company expects that all Eligible Officers will be elected as full members of the ESERP shortly after their 55th or 59th birthday, depending on when they first were elected as an officer, and the Company accrues for Plan liabilities based on this expectation. Officers who were first elected as an officer after April 2007 are not eligible for election to or benefits under the ESERP. Actual election to membership in the ESERP is at the discretion of the Committee. The ESERP was intended to provide equivalent benefits as were or would have been available to officers under the prior parent company and to encourage the transition of executive management at an earlier retirement age by providing a benefit equal to up to five years of retirement income credits under our other defined benefit pension plans. The current estimated values of these plans are set forth in column (d) of the Pension Benefits table and general descriptions of the plans are provided in the corresponding footnotes.

Deferred Compensation Arrangements

Deferred Stock Awards:    Under Cytec’s 1993 Stock Award and Incentive Plan, the Compensation Committee may grant deferred stock awards (“Deferred Stock Awards”). The Committee has generally granted Deferred Stock Awards at an executive officer’s request in lieu of performance stock awards or restricted stock awards that would otherwise vest. Deferred Stock Awards are phantom shares of Cytec stock that accrue dividends in the form of additional shares of Deferred Stock Awards. The Deferred Stock Awards are paid in the form of an equivalent number of shares of Cytec stock after an executive retires.

Deferred Compensation Plan:    Under this plan, an executive officer may elect to defer any compensation in excess of $1 million per year to the extent it would be a non-deductible expense for the Company as a result of IRC section 162(m).

The current estimated values of the Named Executive Officer’s non-qualified deferred compensation are set forth in the Non-Qualified Deferred Compensation table.

Separation and Change in Control Arrangements

Executive Income Continuity Plan:    All executive officers are automatically members of this Plan. This plan is intended to help retain the services of our executive officers and to reinforce and encourage the continuing attention, dedication and loyalty of these executives without the distraction or concern over the possibility of involuntary or constructive termination of employment resulting from unforeseen developments, by providing income continuity for a limited period. This plan provides that members will receive a benefit on termination of their employment unless such termination is (i) on account of death, disability or retirement, (ii) by the Company for cause, or (iii) by the member without good reason (as defined in the plan). Generally, “good reason” for

 

23


termination by a member involves a reduction in compensation or other action by the Company inconsistent with the member’s status unless such action is uniformly applied to all executive officers. The benefit payable is one time annual base salary and bonus or, if the termination occurs after a change in control, three times annual base salary and bonus, subject to some exceptions. The plan also provides for certain miscellaneous payments, including relocation payments, certain legal fees, and expenses incurred in seeking new employment.

The Committee believes the Executive Income Continuity Plan addresses the risk of an executive losing his or her job, particularly during periods of uncertainty, in a manner that allows the executive to remain focused on the Company’s interests. The Committee further believes that the plan meets specific concerns of executives that are not addressed by other elements of the compensation package.

1993 Stock Award and Incentive Plan:    Unvested performance awards and restricted stock units and unexercised stock options held by an executive officer who voluntarily terminates employment with the Company, other than to retire, are immediately forfeited. Executive officers who retire typically retain a pro-rata portion of any unvested performance awards, which then continue to vest in accordance with their terms and the satisfaction of applicable performance conditions. Options and restricted stock units issued to a retiree more than eight months prior to the retirement date will continue to vest according to the original schedule and, in the case of options, remain exercisable until one year after the last un-cancelled grant fully vests.

We have revised our long-term equity award plans to include a “double-trigger” for all awards granted after January 1, 2012. The double trigger requires both a termination of employment and a change in control to trigger accelerated vesting of equity awards.

Compensation Taxation Equalization Plan:    This plan provides that we will reimburse any employee, executive officer or director for any excise tax imposed by IRC section 4999 on compensatory payments defined as an excess parachute payment under IRC section 280G, plus all other taxes imposed on the reimbursement. This Plan was restated effective January 31, 2012 to provide that the Plan shall only apply to executive officers who were elected as such prior to January 31, 2012, and that the Plan will expire for all participants on December 31, 2016.

All potential payments upon separation from the Company are provided in the Potential Payments upon Termination or Change in Control table and are generally described in the corresponding footnotes.

 

III.      2013 Executive Compensation Decisions

Competitive Benchmarking

The Compensation Committee relies on benchmark compensation data to assist in determining appropriate target base pay, target annual incentives as a percentage of base pay and target long-term incentives for each executive officer. For the 2013 compensation cycle, the Committee’s independent consultant developed competitive benchmarks using a Primary Comparator Group consisting of chemical/aerospace companies with $1-5 billion in revenue from Towers Watson’s (Towers) Executive Compensation Database and a Secondary Comparator Group consisting of general manufacturing companies with $1-5 billion in revenue from Towers’ Executive Compensation Database. The chemical/aerospace and general manufacturing companies included in Towers’ database vary from year to year. The companies included in the Primary and Secondary Comparator Groups for 2013 are listed in Exhibit A. In 2010, the Committee, in consultation with its consultant, established a 15% premium added to the benchmark data for the combined VP, Corporate and Business Development and President, Cytec Industrial Materials position to reflect the broader scope in responsibility for this position within Cytec, including various strategic enterprise initiatives and the Committee has continued this practice for 2013.

For 2013, the Committee established a new Peer Group of 24 companies in the chemical, aerospace and materials sector based on recommendations by management and the Committee’s compensation consultant. The new Peer Group is more closely aligned with our post divestiture revenue size and weighted more heavily towards aerospace and industrial growth companies in line with our current business portfolio. The Committee uses the Peer Group companies to benchmark compensation practices and policies and to measure relative total

 

24


stockholder return as a component in our performance cash plan. The Committee also considers compensation data from the Peer Group to the extent it is publicly available. The companies included in the 2013 Peer Group are listed in Exhibit A.

2013 Pay Opportunity

In determining levels of compensation opportunity for each executive officer for 2013, the Committee considered market competitive compensation data provided by its independent consultant, as well as each individual officer’s job scope, experience, value to the organization, sustained individual performance, and internal equity.

2013 Target Total Direct Compensation Mix

To support our pay for performance philosophy, the mix of total direct compensation elements for executive officers, and especially the CEO, was more heavily leveraged toward variable, performance-based compensation. The Committee determined that the CEO should have greater emphasis on variable compensation than all other executive officers because his leadership has a greater influence on the performance of the Company. The 2013 compensation elements and their approximate weightings that comprise the target total direct compensation opportunity for executive officers were:

 

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2013 Base Salary

Effective January 1, 2013, except for Mr. Aranzana, all of our executive officers received an increase in base salary of 3.0% – 4.0% based on individual 2012 performance, retention, internal equity and market competitiveness and in accordance with our general U.S. 2013 salary adjustment budget of 3.0%. The January 1, 2013 salary increases for the Named Executive Officers were:

 

Name

   Base Salary
increase effective
1/1/2013
    2013 Base Salary  

S. D. Fleming

     3.00   $ 896,100   

D. M. Drillock

     4.00   $ 454,564   

R. Smith

     3.00   $ 400,511   

W. N. Avrin

     3.50   $ 398,821   

W. Wood

     3.00   $ 353,097   

F. Aranzana*

     0.00   $ 479,166   

 

* Mr. Aranzana is located in Belgium and was paid in Euros. His base salary was converted to US$ using a 1.33 conversion rate.

 

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2013 Annual Incentive Plan

Individual executive officer incentive opportunity as a percent of base salary and the annual incentive plan design, including the metrics used and the achievement goals determined for threshold, target and stretch, were set in January, 2013.

Annual incentive targets as a percent of base salary were set by the Compensation Committee for 2013 in consideration of internal parity, retention and Cytec’s stated philosophy to align with the competitive market median. The Compensation Committee determined that a 5% increase to the annual incentive target percent of base salary over the 2012 target percent was appropriate for Mr. Wood for the 2013 performance year. Each Named Executive Officer’s annual incentive target opportunity as a percent of base salary for the 2013 performance year is shown below:

 

Name

   2013 Annual Incentive
Opportunity as a % of Base  Salary

S. D. Fleming

   100%

D. M. Drillock

   70%

R. Smith

   65%

W. N. Avrin

   60%

W. Wood

   60%

F. Aranzana

   55%

The 2013 annual incentive plan for corporate executive officers, as determined by the Committee, was based on the achievement of pre-determined targets for adjusted EPS weighted at 70%, strategic non-financial corporate objectives weighted at 30% and a net working capital multiplier of .9 to 1.1 against the overall achievement, based on the average change in days of working capital from the prior year, designed to encourage improvement in net working capital. The annual incentive plan for the business unit executive officers was based 50% on achievement of the business unit earnings before interest and taxes (“EBIT”) target, 20% on achievement of the corporate adjusted EPS target, 20% on achievement of strategic non-financial business unit objectives, 10% on achievement of the strategic non-financial corporate objectives and the net working capital multiplier .9 to 1.1 against the overall achievement. Mr. Avrin’s annual incentive plan is weighted 75% on the Corporate Officer Plan and 25% on the Industrial Materials Business Unit Plan, in alignment with dual corporate and business unit responsibilities. The Committee believed this design and these measures would incentivize our officers to increase the performance of the business and the long-term value of the Company. All of our annual incentive plans are subject to a 200% cap on the payout.

 

      2013 Annual Incentive Plan Metrics and Weighting  
      Financial     Non-Financial
Objectives
    Total Annual
Incentive Plan
Allocation
 

Plan

   Corp.
  EPS  
    Business
Unit
EBIT
    Corporate     Business        

Corporate Officers

     70       30       100

Business Unit Officers

     20     50     10     20     100

V.P. Corporate and Business Development, and President, Industrial Materials

     75% Corporate Officer Plan + 25% Business Unit Officer Plan   

ALL

    
 
 

 

 

 

 

 

Working Capital Multiplier of .90 to 1.10 will be
multiplied by the overall achievement factor as stated
below, from 2012 year-end average:

Greater than 8 days improvement = 1.10

5-8 day improvement = 1.05

0-4 days improvement = 1.0

1-5 days reversion = .95

Greater than 5 days reversion = .90

  
  
  

  

  

  

  

  

 

 

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The Committee determined increased earnings to be one of the most important measures for 2013 to reinforce the Company’s financial health and stockholder value. Adjusted EPS is a non-GAAP financial measure that is calculated by excluding special items, which are discussed as special items in our quarterly earnings releases, such as restructurings, asset impairments and gains on sales of assets, among other items. The Committee set the adjusted EPS and EBIT par target goals as part of the 2013 annual budgeting process based on the expected improved performance over 2012 and to align with our annual business plan. A threshold level for any payout was set at 80% of the par target for adjusted EPS and EBIT and the target achievement level for maximum payout was set at 120% of the par target.

The Committee believed, as in prior years, it was important to have a component in the annual incentive plan that measured cash delivery to guarantee quality earnings, maintain a healthy balance sheet and support the funding of future growth and capital projects. For the 2013 performance year, the Committee included for the net working capital goal a negative and positive multiplier against the overall performance achievement to encourage maintenance and improvement on the number of working capital days in 2012. Net working capital was defined as the number of days of trade receivables outstanding plus the number of days inventory supply on hand less the number of days of trade payables outstanding.

The adjusted EPS goals for the 2013 annual incentive plan are illustrated below.

 

     2013 Annual Incentive Plan Targets*  

Measure

   Minimum
0% Payout
     Target
100%
Payout
     Maximum
200%
Payout
 

Adjusted Earnings Per Share

   $ 4.18       $ 5.22       $ 6.26   

Net Working Capital (from 2012 year-end average)

     Greater than 8 days improvement = 1.10   
     5-8 day improvement = 1.05   
     0-4 days improvement = 1.0   
     1-5 days reversion = .95   
     Greater than 5 days reversion = .90   

 

* The targets above were set in Q1 of 2013 and adjusted in July as a result of an accounting change for our pension and other post-employment benefits.

The Committee set the non-financial objectives portion of the 2013 annual incentive plan based on input from management and the Board on critical business priorities for the year in key areas of focus for business plan success and stockholder value. The non-financial objectives the Committee set for 2013 were intended to strengthen focus on achieving growth and execution, and included safety, innovation, profitable revenue generation, operational improvements, and compliance.

The annual incentive award paid can range from 0 to 200% of the target amount based on achievement of these pre-established goals. The metrics, weightings and established goals that align with the business plan and the performance threshold/maximum payout opportunity allows us to manage the self-funding aspect of the plan and limit risk for the company.

2013 Long Term Incentive Awards

The Committee grants long-term incentives to executive officers annually. The values of long-term incentives granted to Officers in 2013 were above 2012 levels with increases in value ranging from no change up to 2.5%, with the exception of our CEO. The Committee determined that our CEO’s long-term incentive package was below our targeted market position and increased his 2013 long-term incentive package 11.2% from 2012. The Committee determined that these increases were consistent with market competitive trends and the Company’s desire for executive officers compensation packages to weigh more heavily in long-term incentives, in alignment with the Company’s long-term profitable growth strategy.

 

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The Committee uses a portfolio of long-term incentives to:

 

  · Focus the efforts of our executive officers on multi-year results and long term sustained company performance;

 

  · Encourage long-term strategic decision-making that is aligned with the best interests of our stockholders;

 

  · Maintain a substantial portion of executive total direct compensation in variable or “at-risk” pay;

 

  · Recognize long-term individual achievements and demonstrated future potential for success by providing long term value and wealth accumulation; and

 

  · Enable the Company to remain competitive with our peer companies and the general market for key talent.

Long-term incentives granted in 2013 were comprised approximately 35% by value in non-qualified stock options, 50% by value in performance cash and 15% by value in time-based restricted stock units for the CEO and approximately 45% by value in non-qualified stock options, 40% by value in performance cash and 15% by value in time-based restricted stock units for all other officers as shown below. Target opportunity and grant date fair value amounts are shown in the “Grants of Plan Based Awards” table.

 

LOGO

Stock Options:    The stock options vest in equal installments on the first three anniversaries of the date of the grant and expire ten years from date of grant. The exercise price of stock options is equal to the closing price of Cytec common stock on the date of the grant. The Committee believes that grants of stock options closely align executives’ interests with those of our stockholders because the stock options have value only if the price of the Cytec common stock increases. The Committee determined the number of stock options based on the total LTI value percentage and in accordance with the fair value of each option calculated using a binomial-lattice option valuation model and the closing price of Cytec common stock on the date of grant.

Restricted Stock Units:    The time-based RSUs will vest 100% after three years and are payable in shares of Cytec common stock. The Committee believes that time-based RSUs strengthen commitment, motivation and retention during periods of unpredictable fluctuations in the stock market and general economy and also aligns executive officers’ interests with stockholders. The Committee determined the number of RSUs based on the total LTI value percentage and the closing price of Cytec common stock on the date of grant discounted for the value of any dividends that are expected to be declared prior to the vesting date.

Performance Cash Plan:    The performance cash component of the long-term incentive award granted in January, 2013 for the three-year performance period 2013-2015 is based 30% on achievement of target adjusted EPS in 2015, 40% on achievement of target Return on Investment Capital (“ROIC”) in 2015, and 30%

 

28


achievement of relative Total Stockholder Return (“TSR”) against Cytec’s stated Peer Companies in 2013, 2014 and 2015. The Committee believes that three years is an appropriate period of time over which to provide our executive officers incentives to improve the medium term performance of the Company. The Committee has determined that the use of adjusted EPS in both the annual incentive plan and the three-year performance cash plan is appropriate to encourage short term business plan execution while at the same time managing growth and profitable revenue as well as focus on long-term business decisions, asset management and value creation.

The target for adjusted EPS for the performance period ending 2015 was set at the amount that represents 15% compounded annual growth over two years from the budgeted EPS for 2013. ROIC measures the economic returns on invested capital, linking the executive to stockholder value creation. The target for ROIC for the period ending 2015 was determined by the Committee based on the 2013 budgeted ROIC, adjusted for EPS growth at a 15% compounded annual growth rate, projected 2015 after tax earnings and a two-year average debt plus equity. The threshold and maximum payout goals for the adjusted EPS and ROIC components of the performance plan were based on 10% and 20% growth in adjusted EPS, respectively. Payout ranges from 50% for threshold target achievement for both the adjusted EPS and ROIC measure to 200% for maximum goal achievement.

The TSR component of the 2013-2015 performance cash plan is measured against the companies in the 2013 stated Peer Group in each year of the three-year performance period, weighted at 10% in each year for a total of 30% of the Plan. The payout at the end of the three-year performance period is the sum of the payout results for this metric achieved in each of the three years. This method of calculation gives equal recognition for performance in each year.

The 2013 stated Peer Group used for relative measures in our 2013-2015 performance cash plan may be re-stated over the three-year period as is necessary due to acquisition, bankruptcy, tender offer or other similar material change of any of the companies in the Peer Group. Payout in each year of the three year performance period for the TSR measure ranges from 30% for threshold target achievement of above 4th quartile to 200% for first quartile achievement of performance against peers. There will be no payout for fourth quartile performance against the Peer Group for that year.

The Committee believes that achievement of the goals set for the 2013-2015 performance cash plan is consistent with stockholder interests and the Committee’s fundamental belief that companies with increasing EPS and increasing ROIC will have an appreciating stock price and the relative TSR measure will contribute to stockholder alignment, reduce overall award volatility and recognize Company performance relative to peer companies.

The payout for the performance cash component of the long-term incentive award can range from 0 to 200% of target.

 

            2013-2015 Performance Cash Plan*  
            % Growth  

Metric

   Weight      Minimum % Growth
(for 50% Payout)
10%
     Target % Growth
(for 100% Payout)
15%
     Stretch % Growth
(for 200% payout)
20%
 

EPS

     30%         $6.32         $6.90         $7.52   

ROIC

     40%         12.8%         13.7%         14.7%   
            Ranking  
            Threshold Goal
(for 30% Payout)
     Target Goal
(for 100% Payout)
     Stretch Goal
(for 200% Payout)
 

Relative TSR

     30%         Above 25th Percentile         Median         Above 75th Percentile   

 

* The targets above were set in Q1 of 2013 and adjusted in July as a result of an accounting change for our pension and other post-employment benefits and should not be construed as financial guidance.

 

29


2013 Pay and Performance Results

Each Named Executive Officer is a member of the Company’s executive team. The Committee expects each executive officer to contribute to the Company’s overall success as a member of the executive team rather than focus solely on specific objectives within the officers’ area of responsibility.

Annual Incentive Performance Results

As a result of our performance against the annual incentive plan target goals set by the Committee in the beginning of the 2013 performance year, we achieved lower than target payout on our annual incentive plan for 2013.

Our 2013 adjusted EPS of $4.80 was below our target of $5.22, an achievement of 92.0% of our goal resulting in a payout of 71.5% for the adjusted EPS component of the Plan, weighted at 70% for a total of 50.1% payout on this metric for corporate officers. The Committee determined that the executive officers achieved pre-established corporate non-financial objectives, many of which are highlighted under the “Financial and Business Performance” section of this Proxy, at an overall achievement score of 97.5, weighted at 30% for a total payout of 29.3% on this component of the annual incentive plan.

The Company’s average net working capital for 2013 improved slightly from our 2012 year-end level, but not enough to have any effect on the overall achievement. The total overall achieved payout amount was 79.3% on the 2013 corporate annual incentive plan for both the financial and non-financial goals, as illustrated below:

 

Performance Metric   

Target

Goal

     Goal
Achievement
     Achievement
+/(-) from
Target
     Achieved
Payout
%
    Plan
Weighting
Factor
    Weighted
Achievement
Payout Factor
(% of Target)
 

Adjusted EPS

   $ 5.22       $ 4.80       -$ 0.42         71.5     70     50.1

Corp. Non-financial Goals

     100         97.5         -2.5         97.5     30     29.3
               

 

 

 

Total Plan Achievement

                  79.3

Working Capital Goal Achievement Multiplier

     0 days         0         0         multiplier of 1.00        0.0
               

 

 

 

Total Payout Percent.

                  79.3

The 2013 annual incentive plan for the Business Unit President, Aerospace Materials, was calculated based on Corporate adjusted EPS target achievement weighted at 20%, business unit EBIT target achievement weighted at 50%, and corporate and business unit non-financial objectives weighted at 10% and 20%, respectively. Mr. Wood’s achieved annual incentive payout percent of target for 2013 performance was 93.0%, based on Cytec Aerospace Materials business unit annual incentive targets and the net working capital modifier goal as illustrated below:

 

Performance Metric    Target
Goal
     Goal
Achievement
     Achievement
+/- from
Target
     Achieved
Payout %
    Plan
Weighting
Factor
    Weighted
Achievement
Payout
Factor (% of
Target)
 

Adjusted EPS

   $ 5.22       $ 4.80       -$ 0.42         71.5     20     14.3

Business Unit EBIT

   $ 185.0       $ 177.5       -$ 7.5         91.9     50     45.9

Corp. Non-financial Goals

     100         97.5         -2.5         97.5     10     9.8

Business Unit Non-financial Goals

     100         115.0         15.00         115.0     20     23.0
               

 

 

 

Total Plan Achievement

                  93.0

Working Capital Goal Achievement Multiplier

     0 days         0         0         multiplier of 1.00       0.0
               

 

 

 

Total Payout Percent

                  93.0

 

30


The business unit portion of the 2013 annual incentive plan, weighted at 25%, for the VP, Corporate and Business Development and Business Unit President, Industrial Materials, was calculated based on Corporate adjusted EPS target achievement weighted at 20%, business unit EBIT target achievement weighted at 50%, and corporate and business unit non-financial objectives weighted at 10% and 20%, respectively. The Industrial Materials business achieved annual incentive payout percent of target for 2013 performance was 47.1%, based on the business unit annual incentive targets and the net working capital modifier goal as illustrated below:

Performance Metric    Target
Goal
     Goal
Achievement
     Achievement
+/- from
Target
     Achieved
Payout %
    Plan
Weighting
Factor
    Weighted
Achievement
Payout
Factor (% of
Target)
 

Adjusted EPS

   $ 5.22       $ 4.80       -$ 0.42         71.5     20     14.3

Business Unit EBIT

   $ 31.1       $ 18.5       -$ 12.6         0     50     0.0

Corp. Non-financial Goals

     100         97.5         -2.5         97.5     10     9.8

Business Unit Non-financial Goals

     100         115.0         15.00         115.0     20     23.0
               

 

 

 

Total Plan Achievement

                  47.1

Working Capital Goal Achievement Multiplier

     0 days         0         0         multiplier of 1.00        0.0
               

 

 

 

Total Payout Percent

                  47.1

Mr. Avrin’s annual incentive payout was based 75% on the Corporate achievement and 25% on the Industrial Materials business unit achievement for a total payout of 71.3% of target.

The Committee has the discretion to negatively adjust the payouts on the financial targets under the annual incentive plan as it deems appropriate. The Committee did not use its discretion to adjust the achievement of the adjusted EPS, EBIT, net working capital or non-financial goals in determining the 2013 annual incentive amount payable.

The annual incentive amounts for the 2013 performance period paid to the Named Executive Officers, consistent with these determinations are set forth in the Summary Compensation Table. The Committee approved the annual incentives paid to all executive officers other than the CEO and the independent directors of the Board approved the annual incentive paid to the CEO.

Long Term Performance Cash Plan Results

The Performance Cash Incentive Plan for the 2011-2013 three-year performance period is based 30% on Earnings Per Share (EPS), 40% on Return on Investment Capital (ROIC) and 30% on Relative Total Shareholder Return (R-TSR) goal achievements. These goals are essential performance measures for the Company. The performance goals for the 2011-2013 performance period were established by the Committee in January, 2011.

The adjusted EPS targets for the period ending 2013 were set using 2010 actual EPS compounded at 4%, 10% and 14% over three years to derive the 50%, target and 200% achievement levels. The ROIC targets were set taking into account the projected EPS growth as mentioned above as well as projected 2013 after tax earnings and a two year average (2012 & 2013) debt + equity. The R-TSR metric was measured against our 2009 Peer Group (see appendix A).

Consistent with our solid performance against the long-term performance cash plan target goals set by the Committee in the beginning of the 2011, we achieved higher than target results for the three-year performance period ending December 31, 2013.

Our fully diluted EPS of $4.80, excluding special items, is at the 2011-2013 performance plan stretch target of $4.80, resulting in a payout of 200% for the EPS performance metric, weighted at 30% of the Plan. Our ROIC achievement of 10.4% for 2013 is above the 2011-2013 performance plan stretch target of 10.1%, resulting in a projected payout of 200% for the ROIC performance metric, weighted at 40% of the Plan. The Relative Total

 

31


Shareholder Return ranking against the companies in our 2009 Peer Group for each one-year period, (one being the lowest rank and sixteen being the highest rank) are: 2nd in 2011, 14th in 2012 and 9th in 2013, with an average ranking over the three years of 8.3, resulting in a projected payout of 96.2% for the R-TSR metric, weighted at 40% of the Plan.

The overall projected payout for the 2011-2013 performance cash plan, based on the estimated achievement against targets as outlined below, is 168.9% of target for all Officers, as illustrated below:

Performance Metric    Target
Goal
    Goal
Achievement
    Achievement
+/(-) from
Target
    Achieved
Payout
%
            Plan
Weighting
Factor
            Weighted
Achievement
Payout Factor
(% of Target)
 

Adjusted EPS

   $ 4.31      $ 4.80      $ 0.49        200.0     x         30     =         60.0

ROIC

     9.3     10.4     1.1     200.0     x         40     =         80.0

Relative TSR Rank

     8.5        8.3        -0.2        96.2     x         30     =         28.9
                  

 

 

 
                     168.9

The performance cash plan amounts for the 2011-2013 performance period paid to the Named Executive Officers, consistent with these determinations are set forth in the Summary Compensation Table. The Committee approved the performance cash incentives paid to all executive officers other than the CEO and the independent directors of the Board approved the annual incentive paid to the CEO.

Special Awards

Special awards were recommended by our Chief Executive Officer and approved by the Committee for Messrs. Drillock, Smith and Avrin in recognition of the officer team’s continued focus, hard work and dedication to the sale of our Coating Resins business through 2012 and 2013 and the achievement of this significant corporate goal while managing other multiple projects and priorities. The Committee believes this recommendation is in line with our pay for performance philosophy and is critical in driving motivation and future performance. The special award amounts paid to the Named Executive Officers are set forth in the Summary Compensation Table.

IV. Executive Compensation Program Policies

Stock Ownership Requirements

We require our executive officers to attain and hold an ownership stake in our Company that is a specified multiple of his or her salary. The ownership requirements, expressed as a multiple of the annual base salary, are provided below:

 

Position

   Current Guideline       

Chief Executive Officer

     6 x base salary      

Chief Financial Officer

     4 x base salary      

Other Executive Officers

     2.5 x base salary      

Achievement of the required stock ownership is expected within five years of election to a position requiring an increase in target ownership. We include deferred stock awards, unvested time restricted stock, and 1/3 of time restricted stock units for each full year following the grant date, as shares owned but do not include options, SARs or other unvested time restricted stock units or performance stock as shares owned.

The policy requires all executive officers not meeting their ownership guidelines to hold 100% of net shares from performance or time-based restricted stock payouts or stock option exercises until ownership requirements have been satisfied. The policy includes an automatic deferral of unvested performance and time restricted stock or units until ownership requirements have been satisfied.

As of January 31, 2014, all of our executive officers have met the Company’s stock ownership guidelines, except for two officers that have not yet been in their position for five years. None of the officers have hedged their position in Company stock.

 

32


Risk Assessment

The Committee discussed and analyzed risks associated with the Company’s compensation policies and practices for executive officers and all employees generally including, but not limited to, encouraging excessive risk, eligibility, effects on retention, balance of objectives, alignment with stockholders, affordability, possible unintended consequences and governance. The Committee also discussed this risk assessment with their independent consultant and did not identify any risks arising from these policies or practices that would likely have a material adverse effect on the Company.

Timing of Awards

The Committee generally grants LTIs to executive officers only on the date of the first meeting of the Committee each year, although the Committee may from time-to-time also grant LTIs on the date an executive officer is hired or promoted. The first meeting of the Committee each year is typically held the day before the Company’s earnings for the preceding year are released. LTIs granted to the CEO are subject to ratification by the independent directors of the Board.

Insider Trading Policy

Our securities trading policy prohibits our directors, executives and other employees from purchasing (except for the exercise of previously granted options) or selling any Cytec security or any interest in any Cytec security except during open window trading periods. The policy also prohibits buying or selling put or call options on any Cytec securitiy, “selling short” any Cytec security or any hedging against a decline in the price of Cytec securities. This policy is designed to ensure compliance with relevant SEC regulations, including insider trading rules.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million to Named Executive Officers (excluding the Chief Financial Officer) if certain conditions are not satisfied. Cytec prefers, to the extent practicable, to preserve deductibility of compensation paid to its Named Executive Officers while maintaining compensation programs that effectively attract, motivate and retain exceptional executives in a highly competitive environment.

The Company has designed its annual and long-term cash incentive and stock option awards to enable full deductibility of the payouts based on financial measures. The plans under which these awards are made have been approved by the stockholders and provide for awards that are eligible for deductibility as performance-based compensation. The Committee may use its discretion to set actual compensation below the maximum amount calculated against the relevant performance criteria. The Committee intended that the portion of the 2013 annual incentive based on adjusted EPS and EBIT and the 2015 performance cash award granted in 2013 to the Named Executive Officers would be deductible as performance-based compensation for federal income tax purposes.

While we view preserving tax deductibility as an important objective, we believe the primary purpose of our compensation program is to support our strategy and the long-term interests of our shareowners. In specific instances we have and in the future may authorize compensation arrangements that are not fully tax deductible but which promote other important objectives of our executive compensation program. Base salary, time-based restricted stock units, and non-financial elements of our executive compensation program generally do not qualify as “performance-based compensation” under IRC Section 162(m). The Company incurred a tax liability of approximately $21,000 on non-deductible compensation.

Recoupment of Compensation

The Committee has established a “claw-back” or recoupment policy, effective January 1, 2010, applicable to annual incentive compensation, performance awards, restricted stock or units and stock options granted after January 1, 2010. The policy allows the Board of Directors, if financial statements or any performance plan metric were required to be restated as a result of errors, omissions, or fraud, to recover from an executive officer (i) any portion of annual incentive or performance award payments that would not have been

 

33


made based on the restated financial statements or performance plan metric, and (ii) any restricted stock or units or any gain realized on the exercise of stock options during the period starting with the date on which the inaccurate financial statements or performance plan metric are published.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT

This Committee has reviewed and discussed with the management of Cytec the CD&A section. Based on this review and the Committee’s discussions with management, this Committee recommended that the CD&A be included in Cytec’s Proxy Statement for Cytec’s 2014 Annual Stockholder Meeting.

This Committee believes that the compensation program established for Cytec and described in the CD&A is strongly performance-driven and has contributed to retaining and motivating highly qualified executive leadership.

Compensation and Management Development Committee

A.G. Fernandes, Chair             L.L. Hoynes, Jr.             T.W. Rabaut             J.R. Satrum

February 20, 2014

 

34


SUMMARY COMPENSATION TABLE

 

Name and Principal Position
(a)

  Year
(b)
    Salary
($)
(c)
    Bonus
($)
(d)
    Stock
Awards
($)
(e)
    Option
Awards
($)
(f)
    Non-Equity
Incentive
Plan
Compensation
($)
(g)
    Change in
Pension Value
and
nonqualified
Deferred
Compensation
Earnings
($)
(h)
    All Other
Compensation

($)
(i)
    Total
($)
(j)
 

S.D. Fleming

Chairman of the Board, President,
and Chief Executive Officer

    2013      $ 896,100      $ 0      $ 482,764      $ 1,125,055      $ 2,019,582      $ 0      $ 245,288      $ 4,768,790   
    2012      $ 870,000      $ 0      $ 434,596      $ 991,418      $ 2,776,800      $ 151,818      $ 188,038      $ 5,412,670   
    2011      $ 840,480      $ 0      $ 388,338      $ 1,292,085      $ 3,371,482      $ 121,781      $ 368,432      $ 6,382,598   

D.M. Drillock

Vice President and
Chief Financial Officer

    2013      $ 454,564      $ 227,282      $ 139,988      $ 415,027      $ 699,913      $ 0      $ 146,872      $ 2,083,647   
    2012      $ 437,081      $ 0      $ 134,987      $ 407,020      $ 961,768      $ 928,944      $ 128,366      $ 2,998,166   
    2011      $ 426,420      $ 0      $ 136,140      $ 439,784      $ 1,215,861      $ 158,473      $ 89,457      $ 2,466,135   

R. Smith

Vice President, General Counsel, and Secretary

    2013      $ 400,511      $ 200,255      $ 94,979      $ 285,148      $ 502,018      $ 0      $ 117,587      $ 1,600,499   
    2012      $ 388,846      $ 0      $ 95,004      $ 285,111      $ 724,510      $ 164,577      $ 117,233      $ 1,775,281   
    2011      $ 374,791      $ 0      $ 94,793      $ 308,284      $ 844,023      $ 58,621      $ 81,435      $ 1,761,947   

W.N. Avrin

Vice President, Corporate and Business Development

    2013      $ 398,821      $ 199,410      $ 82,008      $ 241,802      $ 440,856      $ 0      $ 115,978      $ 1,478,875   
    2012      $ 385,334      $ 0      $ 82,018      $ 241,787      $ 649,170      $ 211,654      $ 111,886      $ 1,681,849   
    2011      $ 375,021      $ 0      $ 85,731      $ 272,019      $ 814,518      $ 176,235      $ 76,814      $ 1,800,338   

W. Wood

President, Aerospace Materials

    2013      $ 353,097      $ 0      $ 82,008      $ 244,989      $ 458,823      $ 0      $ 96,625      $ 1,235,542   
    2012      $ 342,813      $ 0      $ 80,016      $ 238,542      $ 605,446      $ 91,171      $ 104,609      $ 1,462,597   
    2011      $ 333,638      $ 0      $ 80,685      $ 262,958      $ 362,028      $ 71,038      $ 75,273      $ 1,185,620   

F. Aranzana1

President, Coating Resins (former)

    2013      $ 119,791      $ 240,730      $ 0      $ 0      $ 361,460      $ 0      $ 653,858      $ 1,375,840   
    2012      $ 465,079      $ 0      $ 92,026      $ 279,974      $ 744,617      $ 278,812      $ 346,966      $ 2,207,473   
    2011      $ 491,451      $ 0      $ 97,831      $ 317,366      $ 821,180      $ 86,782      $ 234,585      $ 2,049,195   

 

(1) All amounts reported for Mr. Aranzana were paid in euros and converted to U.S. dollars based on average exchange rates of US$1.33, US$1.2909, and US$1.3982 per euro for the 2013, 2012, and 2011 amounts, respectively. Mr. Aranzana separated from the Company on April 2, 2013 and remains with Cytec’s divested Coating Resins business.

 

(2) The change in pension value was negative for all of our U.S. based NEO’s for 2013. The decrease was the result of an increase in the discount rate required to be used to calculate the present value of the pension benefits. The decrease in pension value is as follows:

 

Name

   Actual Change in
Pension Value
 

S. D. Fleming

   -$ 80,539   

D. M. Drillock

   -$ 100,537   

R. Smith

   -$ 44,438   

W.N. Avrin

   -$ 91,863   

W. Wood

   -$ 53,720   

The amounts reported in column (c) of the Summary Compensation Table represent the base salary of each of the Named Executive Officers during the periods reported prior to any deferrals of income by such executive officers under the terms of our existing retirement plans.

The amounts reported in column (d) of the Summary Compensation Table for 2013 represent a special award paid to Messrs. Drillock, Smith, and Avrin in recognition of continued focus, hard work and dedication in the sale of our Coating Resins business during 2012 and 2013 and the achievement of this significant corporate goal while managing other multiple projects and priorities. The amount reported in column (d) of the Summary Compensation Table for 2013 represent a retention bonus offered to Mr. Aranzana in 2012 and paid after the close of sale of Cytec’s Coating Resins business in 2013.

 

35


The amounts reported in column (e) of the Summary Compensation Table represent the fair market value of the restricted stock units on the date of grant. Upon his separation from the Company, Mr. Aranzana forfeited his unvested restricted stock units granted in 2011 and 2012. Mr. Aranzana received a cash payment of the fair market value of the forfeited restricted stock units after the close of sale of our Coating Resins business and his subsequent separation from the Company. These amounts are reported in column (i) of the Summary Compensation Table. Mr. Aranzana did not receive a restricted stock unit grant in 2013.

The amounts reported in column (f) of the Summary Compensation Table represent the fair value of the options on the date of grant. The fair value of each option is estimated using a binomial-lattice option valuation model. The assumptions made in this valuation are incorporated by the reference from footnote 5 to our Consolidated Financial Statements for each year ending December 31. Mr. Aranzana forfeited one-third of the options granted to him in 2011 and two-thirds of the options granted to him in 2012. Mr. Aranzana received a cash payment of the value of the forfeited options based on the closing price of Cytec stock on the day of the close of sale of our Coating Resins business and his subsequent separation from the Company. These amounts are reported in column (i) of the Summary Compensation Table. Mr. Aranzana did not receive a stock option grant in 2013.

The amounts reported in column (g) each year represent amounts paid under our annual incentive plan and our performance awards granted in 2011, 2010 and 2009. Mr. Aranzana received a pro-rated amount of 1/4 of his annual incentive target for the three months he was an employee of the Company in 2013. All amounts reported under column (g) are prior to any income deferrals for each of the periods reported.

Our 2013 annual incentive plan is generally described under the heading “2013 Pay and Performance Results—Annual Incentive Performance Results” above and the 2011- 2013 long-term performance cash plan is generally described under the heading “2013 Pay and Performance Results—2011-2013 Long Term Performance Cash Plan Results”. The annual incentive target amounts for 2013 are shown in the “Grants of Plan-Based Awards” table below. The long term 2011-2013 performance cash target amounts for the performance period ending December 31, 2013 are shown in the table below. The amounts paid to the Named Executive Officer’s under each of these performance plans for the performance periods ending December 31, 2013 are:

 

Name

   2013 Annual Incentive
Plan Earnings
     2011-2013
Performance Cash
Plan  Target Payout
     2011-2013
Performance Cash
Plan Earnings
     Total 2013  Non-Equity
Performance
Compensation
 

S.D. Fleming

   $ 710,607       $ 775,000       $ 1,308,975       $ 2,019,582   

D.M. Drillock

   $ 252,328       $ 265,000       $ 447,585       $ 699,913   

R. Smith

   $ 206,443       $ 175,000       $ 295,575       $ 502,018   

W.N. Avrin

   $ 170,616       $ 160,000       $ 270,240       $ 440,856   

W. Wood

   $ 197,028       $ 155,000       $ 261,795       $ 458,823   

F. Aranzana

   $ 65,885       $ 175,000       $ 295,575       $ 361,460   

 

36


The amounts reported in column (h) of the Summary Compensation Table represent the aggregate change in the actuarial present value of each Named Executive Officer’s accumulated benefit under all of our defined benefit plans during the periods reported, including results of changes in actuarial assumptions. The actuarial present value of each Named Executive Officer’s accumulated benefit under each of our defined benefit plans at December 31, 2013, is set forth in the Pension Benefits table below. Mr. Drillock turned 55 in 2012 and was subsequently elected to the ESERP by the Committee. Mr. Drillock’s transition credits, earned under the Company’s frozen Salaried Plan and payable under the Company’s “Savings Plan” as described below, will expire eight months earlier than if he had not been elected to the ESERP. The amounts reported for 2013 in column (i) of the Summary Compensation Table include matching contributions and transition benefits paid by the Company under the terms of our Savings Plan (as described below) and Supplemental Savings Plan (as described below the Non-Qualified Deferred Compensation table) with respect to deferrals by the U.S. executive officers in 2013 as follows:

 

Name

   Matching
Contributions
     Transition
Benefits
     Profit
Sharing
Contributions
     Total
Company
Contributions
 

S.D. Fleming

   $ 67,500       $ 110,578       $ 60,909       $ 238,987   

D.M. Drillock

   $ 51,306       $ 64,355       $ 29,910       $ 145,571   

R. Smith

   $ 38,631       $ 49,262       $ 28,394       $ 116,286   

W.N. Avrin

   $ 30,713       $ 52,798       $ 24,956       $ 108,467   

W. Wood

   $ 35,564       $ 34,223       $ 22,269       $ 92,056   

Savings Plan:    The Savings Plan provides for Company profit sharing contributions of 3% of annual pay and additional matching contributions of up to 6% of annual pay. The plan also provides for a ten-year transition benefit ranging from 1% to 10% of an employee’s annual pay per year for all participants in the Savings Plan with more than 10 years of service on the Frozen Date of the Salaried Plan (described under the Pension Benefits table) other than any employee who has been elected as a full member of the ESERP and has reached age 60. The transition benefit is intended to compensate long service employees for a limited period for the loss of the accrual of future benefits under the Salaried Plan.

The amounts reported in column (i) also include the values of perquisites and personal benefits provided to each Named Executive Officer who received more than $10,000 in perquisites and personal benefits in 2013 as follows: Mr. Aranzana’s perquisites and personal benefits in connection with his assignment in Belgium include tax preparation ($18,865). The amounts reported for Mr. Aranzana were determined in accordance with our international mobility policy described below and which are generally applicable to all employees relocated across international borders. As is reasonable and customary in Belgium, other perquisites and personal benefits for Mr. Aranzana include a reimbursement of small business expenses ($1,137), meal allowance ($448), company car and fuel ($6,842) and vacation pay ($3,128).

Relocation and Expatriation Packages:    We have an international mobility policy, which includes programs, procedures and processes for long-term assignments, short-term or limited duration assignments and permanent relocation. These policies cover the various aspects of moving, compensation and reimbursement methods and are designed to strike a balance between the costs in the employee’s home country and costs of the new location. For the duration of the assignment, the relocated employee continues to follow as much as possible the home location compensation rules and benefit schedules. This approach facilitates the reintegration process at the conclusion of the assignment. We compare compensation and living expenses to norms and make adjustments or allowances for such factors as sale of home, differences in housing and living costs and differing tax structures.

 

37


GRANTS OF PLAN-BASED AWARDS

 

          Estimated Future Payouts  Under
Non-Equity Incentive Plan Awards
    All Other
Stock
Awards:

Number of
Shares of
Stock or
Units
(#)
(i)
    All Other
Option
Awards:

Number of
Securities
Underlying
Options
(#)
(j)
    Exercise
or Base
Price of
Option
Awards
($/sh)
(k)
    Grant
Date Fair
Value of
Stock and
Option
Awards
($)
(l)
 

Name
(a)

  Grant Date
(b)
    Threshold
($)
(c)
    Target
($)
(d)
    Maximum
($)
(e)
         

S.D. Fleming

    1/30/2013   $ 0      $ 896,100      $ 1,792,200           
    1/30/2013 **    $ 0      $ 1,600,000      $ 3,200,000           
    1/30/2013                42,359      $ 73.07      $ 1,125,055   
    1/30/2013              6,811        $ 73.07      $ 482,764   

D.M. Drillock

    1/30/2013   $ 0      $ 318,195      $ 636,390           
    1/30/2013 **    $ 0      $ 370,000      $ 740,000           
    1/30/2013                15,626      $ 73.07      $ 415,027   
    1/30/2013              1,975        $ 73.07      $ 139,988   

R. Smith

    1/30/2013   $ 0      $ 260,332      $ 520,664           
    1/30/2013 **    $ 0      $ 250,000      $ 500,000           
    1/30/2013                10,736      $ 73.07      $ 285,148   
    1/30/2013              1,340        $ 73.07      $ 94,979   

W.N. Avrin

    1/30/2013   $ 0      $ 239,293      $ 478,585           

.

    1/30/2013 **    $ 0      $ 225,000      $ 450,000           
    1/30/2013                9,104      $ 73.07      $ 241,802   
    1/30/2013              1,157        $ 73.07      $ 82,008   

W.Wood

    1/30/2013   $ 0      $ 211,858      $ 423,716           
    1/30/2013 **    $ 0      $ 215,000      $ 430,000           
    1/30/2013              $ 9,224      $ 73.07      $ 244,989   
    1/30/2013              1,157        $ 73.07      $ 82,008   

F. Aranzana

    1/30/2013   $ 0      $ 263,541      $ 527,082           

 

* Target amount for annual incentive award for the 2013 performance period. Plan amounts granted to Mr. Aranzana were based in euros and converted based on an exchange rate of US$1.33 per euro.

 

** Target amount for performance cash award for the 2013-2015 performance period.

At its January 30, 2013, meeting, the Committee finalized annual incentive targets for the performance period ending in 2013 and granted LTIs to each of the Named Executive Officers consisting of stock options, time-based restricted stock units and a performance award payable in cash for the performance period ending 2015.

The target amounts for annual incentive awards for the 2013 performance period are set forth in column (d) of the table above. The actual amounts paid for the 2013 performance year with respect to these awards are set forth in column (g) of the Summary Compensation Table.

The aggregate fair value of the stock options granted to each of the Named Executive Officers determined as of the date of grant is set forth in column (l) above. The fair value of each option is estimated using a binomial-lattice option valuation model. The assumptions made in this valuation are incorporated by the reference from footnote 5 to our Consolidated Financial Statements for the year ended December 31, 2013.

The performance awards and the stock options were granted under the provisions of our 1993 Stock Award and Incentive Plan (the “1993 Plan”).

 

38


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

     Option Awards      Stock Awards  

Name
(a)

   Number of
Securities
Underlying
Unexercised
Options(#)
Exercisable(1)
(b)
     Number of
Securities
Underlying
Unexercised
Options  (#)
Unexercisable(2)
(c)
     Option
Exercise
Price($)
(e)
     Option
Expiration
Date
(f)
     Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(#)
(i)
     Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested($)
(j)
 

S.D. Fleming

     0         42,359       $ 73.07         1/29/2023         6,811       $ 634,513   
     16,598         33,197       $ 50.33         1/29/2022         8,902       $ 829,310   
     41,353         20,677       $ 51.49         1/25/2021         7,542       $ 702,613   
     82,150         0       $ 37.59         1/26/2020         
     100,000         0       $ 22.45         1/27/2019         
     11,250         0       $ 55.10         6/26/2018         
     25,000         0       $ 52.48         1/28/2018         
     20,000         0       $ 58.22         1/30/2017         
     22,000         0       $ 49.49         2/7/2016         
     15,000         0       $ 47.59         1/18/2015         

D.M. Drillock

     0         15,626       $ 73.07         1/29/2023         1,975       $ 183,991   
     6,814         13,629       $ 50.33         1/29/2022         2,765       $ 257,587   
     14,075         7,038       $ 51.49         1/25/2021         2,644       $ 246,315   
     27,925         0       $ 37.59         1/26/2020         
     25,000         0       $ 52.48         1/28/2018         
     10,000         0       $ 58.80         5/29/2017         
     10,000         0       $ 58.22         1/30/2017         
     12,000         0       $ 49.49         2/7/2016         
     15,000         0       $ 47.59         1/18/2015         

R. Smith

     0         10,736       $ 73.07         1/29/2023         1,340       $ 124,834   
     4,773         9,547       $ 50.33         1/29/2022         1,946       $ 181,289   
     9,866         4,934       $ 51.49         1/25/2021         1,841       $ 171,508   
     19,350         0       $ 37.59         1/26/2020         
     20,000         0       $ 22.45         1/27/2019         
     18,250         0       $ 52.48         1/28/2018         
     13,500         0       $ 58.22         1/30/2017         
     15,000         0       $ 49.49         2/7/2016         
     3,488         0       $ 47.59         1/18/2015         

W.N. Avrin

     0         9,104       $ 73.07         1/29/2023         1,157       $ 107,786   
     4,048         8,096       $ 50.33         1/29/2022         1,680       $ 156,509   
     8,706         4,353       $ 51.49         1/25/2021         1,665       $ 155,111   
     17,625         0       $ 37.59         1/26/2020         
     24,200         0       $ 22.45         1/27/2019         
     18,250         0       $ 52.48         1/28/2018         
     13,500         0       $ 58.22         1/30/2017         
     15,000         0       $ 49.49         2/7/2016         
     10,160         0       $ 47.59         1/18/2015         

W.Wood

     0         9,224       $ 73.07         1/29/2023         1,157       $ 107,786   
     3,993         7,988       $ 50.33         1/29/2022         1,639       $ 152,689   
     8,416         4,208       $ 51.49         1/25/2021         1,567       $ 145,982   
     5,000         0       $ 48.64         4/21/2020         
     8,500         0       $ 52.48         1/28/2018         
     8,000         0       $ 58.22         1/30/2017         

F. Aranzana

     0         0         n/a         n/a         0       $ 0   

 

39


 

(1) All exercisable options are fully vested.

 

(2) The options shown in this column have the following vesting dates: (a) the options with an exercise price of $51.49 vested on January 26, 2014; (b) one-half of the options with an exercise price of $50.33 vested on January 30, 2014, and the other half will vest on January 30, 2015; (c) one-third of the options with an exercise price of $73.07 vested on January 30, 2014, one-third will vest on January 30, 2015, and the final third will vest on January 30, 2016.

All of the securities reported for Messrs. Fleming, Drillock, Smith, Avrin, and Wood in columns (b) and (c) of the Outstanding Equity Awards table represent stock options with the exception of the securities expiring from January 1, 2016, through December 31, 2018, which are stock-settled SARs. The unvested equity awards reported in column (i) represent restricted stock units that had not vested as of December 31, 2013. The value of the unvested equity incentive awards set forth in column (j) above was determined using the closing price of Cytec common stock, $93.16, on December 31, 2013.

OPTION EXERCISES AND STOCK VESTED

 

      Option Awards      Stock Awards  

Name
(a)

   Number of Shares
Acquired
on Exercise
(#)
(b)
     Value Realized on
Exercise
($)
(c)
     Number of Shares
Acquired on Vesting
(#)
(d)
     Value Realized on
Vesting
($)
(e)
 

S.D. Fleming

     0       $ 0         9,286       $ 698,772   

D.M. Drillock

     0       $ 0         3,286       $ 247,272   

R. Smith

     22,512       $ 860,674         2,286       $ 172,022   

W.N. Avrin

     29,840       $ 1,033,144         2,143       $ 161,261   

W. Wood

     26,600       $ 1,191,357         1,650       $ 124,163   

F. Aranzana

     21,250       $ 663,228         2,429       $ 182,782   

Columns (b) and (c) in the Option Exercises and Stock Vested table set forth the number of options exercised during 2013 by each of the Named Executive Officers and the pre-tax value realized on exercise. Column (d) of the table sets forth the number of shares of restricted stock units that vested during 2013 (or would have vested if they had not been voided in return for a Deferred Stock Award) in the name of each Named Executive Officer.

 

40


PENSION BENEFITS

 

Name
(a)

   Plan Name
(b)
   Number of Years
Credited Service
(#)
(c)
     Present Value of
Accumulated Benefit
($)
(e)
 

S.D. Fleming

   Past Service Plan      11       $ 129,091   
   Salaried Plan      20       $ 484,097   
   Supplemental Plan      20       $ 212,139   

D.M. Drillock

   Past Service Plan      15       $ 261,564   
   Salaried Plan      20       $ 602,961   
   Supplemental Plan      20       $ 266,468   
   Executive Supplemental Plan      5       $ 730,714   

R. Smith

   Salaried Plan      20       $ 350,252   
   Supplemental Plan      20       $ 106,342   

W.N. Avrin

   Past Service Plan      16       $ 366,005   
   Salaried Plan      20       $ 594,782   
   Supplemental Plan      20       $ 390,695   

W. Wood

   Salaried Plan      29       $ 392,904   
   Supplemental Plan      29       $ 47,972   

The table above shows the present value of the accumulated benefits at December 31, 2013, for each of the Named Executive Officers under our defined benefit retirement plans. The table assumes that each Named Executive Officer (U.S.) retires at the earliest age at which he is entitled to retire without any reduction in benefits for retiring before the normal retirement age of 65 for all the plans as of December 31, 2013. Under the terms of the Past Service Plan, the Salaried Plan and the Supplemental Plan, participants whose age plus years of service is at least 65, with at least 20 years of service, may retire at age 62 without any reduction in benefits for their early retirement. All of the Named Executive Officers (U.S.) met this condition at December 31, 2013. All of the plans are described below.

Mr. Drillock retained eligibility for benefits under the ESERP on a grandfathered basis and was elected to membership shortly after his 55th birthday in 2013, as described under the “Indirect Compensation – Retirement Plans” section. Mr. Drillock’s transition credits, earned under the Company’s frozen Salaried Plan and payable under the Company’s “Savings Plan” as described on below, will expire eight months earlier than if he had not been elected to the ESERP. As a result of his election, he is eligible to retire at age 60 without any reduction in benefits.

The valuation method and all material assumptions applied in quantifying the present value of the accumulated benefit are incorporated by reference from footnote 14 to our Consolidated Financial Statements for the year ended December 31, 2013.

Also under the terms of the Past Service Plan, the Salaried Plan and the Supplemental Plan, participants whose age plus years of service is at least 65, may retire as early as age 55 with reduced benefits. Because the reduction in benefits is less than actuarially required, the present value of the accumulated benefits under these plans as shown in column (d) of the Pension Benefits table is less than the present value of the accumulated benefit to each of the Named Executive Officers shown in column (b) of the Potential Payments Upon Termination or Change in Control table, which assumes the Officer retired on December 31, 2013.

Past Service Plan:    This plan is a qualified plan that provides an annual defined pension benefit upon retirement for all Cytec employees who transferred from American Cyanamid Company (“Cyanamid”) in connection with the spin-off of Cytec from Cyanamid relating to their years of service recognized by Cyanamid.

 

41


The benefit in general is equal to 1.67% of an employee’s final average pay at Cyanamid multiplied by their years of service at Cyanamid less a social security offset. Benefits under this plan are subject to reduction for early retirement and are also subject to applicable limitations under IRS regulations.

The Salaried Plan:    This plan is a qualified plan that provides all U.S. salaried and nonbargained hourly employees an annual defined pension benefit upon retirement which is made up of the sum of two components: (i) a benefit which, in general, is equal to 1.33% of the employee’s base salary plus actual annual bonus (up to one-third of base salary) for each year of service at Cytec before January 1, 2008, plus (ii) a roll-up benefit based on credited service recognized by Cyanamid. The roll-up benefit was instituted to partly compensate employees for lower pension accruals at Cytec compared to those they would have received if they had remained at Cyanamid and, in general, is equal to 1.67% of the retiree’s average base salary plus actual annual bonus (up to one-third of base salary) during the highest five of the last ten years of service from 1994 through 2003 times the number of years of service at Cyanamid, less amounts payable under the Past Service Plan and subject to certain adjustments including a social security offset. Benefits under this plan are subject to reduction for early retirement and are also subject to applicable limitations under IRS regulations.

Supplemental Plan:    Under Section 401(a)(17) of the I Code, a qualified plan may not include a pension benefit on any individual’s earnings in excess of an annual amount as specified from time-to-time, currently $255,000 per year. This plan is a non-qualified plan for all employees whose earnings in any year exceeded the 401(a)(17) limit that provides a benefit equal to the benefits that would be payable under the Past Service Plan and the Salaried Plan without regard to the limitations under Section 401(a)(17) and Section 415 of the Internal Revenue Code less any amounts payable to the executive officer under the Past Service Plan, the Salaried Plan and the Excess Plan.

We froze the Salaried Plan effective December 31, 2007 (the “Frozen Date”). As a result, no further benefits will accrue after the Frozen Date under any of the Past Service Plan, the Salaried Plan, or the Supplemental Plan, although all employees including the Named Executive Officers will continue to be credited with service for purposes of early retirement and certain other benefits. The value for each of the Named Executive Officers of these plans is set forth in the Pension Benefits table Commencing January 1, 2008, we offered non-bargaining employees participation in the Savings Plan in place of the Salaried Plan as described more fully below. We believed that the change from a defined benefit plan to a defined contribution plan would help reduce the volatility of our earnings as pension liabilities are subject to large swings with changes in the discount rate, return on asset rate and other assumptions.

ESERP:    This plan is applicable only to persons who were elected as an executive officer before April 1, 2007. The benefits payable under this non-qualified plan are calculated in the same manner as the benefits payable under the Salaried Plan except that (i) no IRS limitations on the annual salary covered or annual benefits payable apply, (ii) benefits are calculated on annual salary and target bonus rather than annual salary and actual bonus up to 1/3 of annual salary, (iii) the roll-up benefit in the Salaried Plan is also calculated using target bonus rather than actual bonus up to 1/3 of annual salary, (iv) there is no reduction for commencing benefits at age 60, or as early as age 55 with the approval of the Compensation Committee or after a change in control, and (v) members are credited with up to five additional years of service through age 65 at their final annual salary and target bonus. The benefits payable under this plan are offset by benefits payable under the Past Service Plan, the Salaried Plan, the Excess Plan and the Supplemental Plan. Benefits under this plan are available only to eligible employees who have been elected as members of the Plan by the Compensation Committee, except that all eligible executive officers are entitled to certain death and disability benefits. In the event of a change in control of Cytec, all persons elected as executive officers prior to April 1, 2007, will automatically be elected as full members of this Plan. This plan was intended to provide equivalent benefits as were or would have been available to executive officers under the Cyanamid Executive Retirement Plan and to encourage the transition of executive management at an earlier age by providing a benefit equal to up to five years of retirement income credits under our other defined benefit pension plans.

 

42


NON-QUALIFIED DEFERRED COMPENSATION

 

Name
(a)

   Executive
Contributions
in Last FY
($)
(b)
     Registrant
Contributions
in Last FY
($)
(c)
     Aggregate
Earnings
in Last FY
($)
(d)
     Aggregate
Balance at
Last FYE
($)
(f)
 

S.D. Fleming

           

Supplemental Savings

   $ 89,610       $ 202,012       $ 789,761       $ 3,268,122   

Deferred Stock

   $ 698,772       $ 0       $ 1,487,659       $ 5,817,471   

D.M. Drillock

           

Supplemental Savings

   $ 54,548       $ 105,871       $ 25,688       $ 712,687   

Deferred Stock

   $ 0       $ 0       $ 353,267       $ 1,328,217   

R. Smith

           

Supplemental Savings

   $ 220,841       $ 76,768       $ 359,711       $ 1,919,635   

Deferred Stock

   $ 172,022       $ 0       $ 473,261       $ 1,834,555   

W.N. Avrin

           

Supplemental Savings

   $ 39,096       $ 68,767       $ 206,875       $ 1,062,308   

Deferred Stock

   $ 161,261       $ 0       $ 39,688       $ 200,949   

W. Wood

           

Supplemental Savings

   $ 93,292       $ 54,556       $ 109,152       $ 731,188   

Deferred Stock

   $ 0       $ 0       $ 0       $ 0   

F. Aranzana

           

Allianz Supplemental

   $ 0       $ 0       $ 0       $ 0   

Deferred Stock

   $ 0       $ 0       $ 0       $ 0   

The amounts reported in column (b) consist of contributions by the U.S. Named Executive Officer to the supplemental savings plan which are included in the amounts reported in column (c) and (g) of the Summary Compensation table. Registrant Contributions reported in column (c) of the table above are matching contributions and transition benefits we paid for the benefit of the U.S. Named Executive Officers under the terms of the Supplemental Savings Plan. These plans are described below and all of these amounts are reflected in column (i) of the Summary Compensation Table.

Aggregate earnings during 2013 on non-qualified deferred compensation reported in column (d) of the table above were calculated by valuing each Named Executive Officer’s hypothetical investments in the Supplemental Savings Plan and his Deferred Stock Awards at December 31, 2013, less the value of his hypothetical investments and Deferred Stock Awards at December 31, 2012, less any executive and registrant contributions during 2013.

Supplemental Savings Plan:    Benefits under the Savings Plan are limited by various IRS regulations on the salary covered and maximum annual contributions. We offer participation in a supplemental savings plan to all U.S. employees whose benefits under the Savings Plan are limited by IRS regulations. The Supplemental Savings Plan is designed to provide similar benefits to those available under the Savings Plan except that the maximum contribution is limited to 43% of a participant’s annual salary, 50% of a participant’s annual bonus payout and 50% of a participant’s performance cash payout. Contributions to the Supplemental Savings Plan are held in trust for the benefit of the participants, though the trust fund would be subject to the claims of our creditors. We invest the funds held in trust in actual mutual funds that correspond with various hypothetical investment accounts selected by the participants. Accordingly, the investment returns earned by participants are supported by actual underlying investments made by us. The hypothetical investments available to participants are generally the same as the investment alternatives available under the Savings Plan.

 

43


POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

Name
(a)

   Voluntary or
Termination by
Company for
“Cause”
(b)
     Resignation
by Executive for
“Good Reason”;
Termination by
Company without
“Cause”
(c)
     Death
(d)
     Disability
(e)
     Change in
Control
(f)
 

S.D. Fleming

              

Cash Severance

      $ 2,245,545             $ 6,736,636   

Accelerated Vesting of LTIs

         $ 6,806,838       $ 6,806,838       $ 11,418,838   

Present Value of Retirement Benefits

   $ 1,034,811       $ 1,034,811       $ 1,633,616       $ 3,332,276       $ 3,332,276   

Benefits Continuation

      $ 44,918             $ 44,918   

280G Excise Tax Gross Up

               $ 9,530,232   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,034,811       $ 3,325,274       $ 8,440,454       $ 10,139,114       $ 31,062,900   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

D.M. Drillock

              

Cash Severance

      $ 935,891             $ 2,807,674   

Accelerated Vesting of LTIs

         $ 2,243,462       $ 2,243,462       $ 3,342,795   

Present Value of Retirement Benefits

   $ 2,277,318       $ 2,277,318       $ 1,237,307       $ 2,530,775       $ 2,530,775   

Benefits Continuation

      $ 25,027             $ 25,027   

280G Excise Tax Gross Up

               $ 2,174,235   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,277,318       $ 3,238,236       $ 3,480,769       $ 4,774,237       $ 10,880,506   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

R. Smith

              

Cash Severance

      $ 792,138             $ 2,376,415   

Accelerated Vesting of LTIs

         $ 1,557,773       $ 1,557,773       $ 2,307,773   

Present Value of Retirement Benefits

   $ 572,431       $ 572,431       $ 682,137       $ 1,392,231       $ 1,392,231   

Benefits Continuation

      $ 35,881             $ 35,881   

280G Excise Tax Gross Up

               $ 2,300,636   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 572,431       $ 1,400,450       $ 2,239,910       $ 2,950,004       $ 8,412,936   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

W.N. Avrin

              

Cash Severance

      $ 760,392             $ 2,281,175   

Accelerated Vesting of LTIs

         $ 1,355,447       $ 1,355,447       $ 2,030,447   

Present Value of Retirement Benefits

   $ 1,543,772       $ 1,543,772       $ 1,318,230       $ 2,700,290       $ 2,700,290   

Benefits Continuation

      $ 25,044             $ 25,044   

280G Excise Tax Gross Up

               $ 2,278,957   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,543,772       $ 2,329,208       $ 2,673,677       $ 4,055,737       $ 9,315,913   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

W. Wood

              

Cash Severance

      $ 656,663             $ 1,969,988   

Accelerated Vesting of LTIs

         $ 1,320,879       $ 1,320,879       $ 1,959,212   

Present Value of Retirement Benefits

   $ 599,619       $ 599,619       $ 298,937       $ 815,852       $ 815,852   

Benefits Continuation

      $ 44,332             $ 44,332   

280G Excise Tax Gross Up

               $ 1,506,777   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 599,619       $ 1,300,614       $ 1,619,816       $ 2,136,731       $ 6,296,161   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

F. Aranzana(1)

   $ 0       $ 0       $ 0       $ 0       $ 0   

 

The values in this table were calculated assuming that termination of the Named Executive Officers occurred on December 31, 2013.

 

(1) Mr. Aranzana separated from the Company on April 2, 2013, with the divestiture of our Coating Resins business. All amounts paid to Mr. Aranzana in 2013 are set forth in the Summary Compensation Table.

On termination of employment of any of our U.S. employees, including any of the Named Executive Officers, for any reason, the employee is entitled to receive his unpaid base salary through the date of termination, compensation for any vacation days accrued in the year of his termination but not taken, his vested retirement benefits accrued under our retirement plans, any vested non-qualified deferred compensation account

 

44


balances and to exercise his then exercisable options and SARs. These benefits are called the Basic Termination Benefits. The value of each executive officer’s non-qualified deferred compensation balance is set forth in column (e) of the Non-Qualified Deferred Compensation table. The present value of an employee’s vested retirement benefits on the date of his termination depends on the reasons for his termination and is described further below.

If we terminate employment of a Named Executive Officer for Cause as defined in the Executive Income Continuity Plan, or if a Named Executive Officer terminates his employment voluntarily and without Good Reason as defined in the Executive Income Continuity Plan, the Named Executive Officer is entitled only to the Basic Termination Benefits. The present value of each Named Executive Officer’s accumulated retirement benefits in this circumstance is set forth in column (b) of the Potential Payments on Termination or Change in Control table.

If we terminate the employment of a Named Executive Officer without Cause or if a Named Executive Officer terminates his employment for “Good Reason,” the executive is entitled to receive the Basic Termination Benefits plus (i) severance of one year of base salary and the greater of his target annual incentive award calculated on his current base salary or the average percent payout on his target annual incentive during the two preceding years multiplied by his target annual incentive award, and (ii) continuation for two years of all employee benefit plans and programs other than retirement benefit plans and disability benefits. The amounts of these additional benefits for each of the Named Executive Officers are set forth in column (c) of the Potential Payments upon Termination or Change in Control table. These additional payments are payable under the terms of our Executive Income Continuity Plan. These additional amounts are not payable unless the Named Executive Officer waives all claims against us arising out of termination of his employment or for any period after the Named Executive Officer violates the term of his non-compete agreement with us.

In the event of the death of an executive officer, the estate of the Named Executive Officer would be entitled to receive his Basic Termination Benefits. In lieu of the Named Executive Officer receiving benefits under our retirement plans, the spouse of any Named Executive Officer would be entitled to receive a benefit under our retirement plans. For executive officers eligible for the ESERP whose age plus years of service equals at least 65, the spouse’s benefit would be calculated as if the Named Executive Officer had been elected a full member of the ESERP with five years of projected service, elected a joint and 50% survivor annuity option, had retired on the date of his death and had survived to age 60. The present value of this benefit is set forth in the retirement benefits row of column (d) of the Potential Payments upon Termination or Change in Control table. The Named Executive Officer’s estate would also be entitled to retain his unvested RSUs and his nonexercisable stock options and SARs which would remain exercisable in accordance with their terms for a minimum period until one year after the date the last such option or SAR became exercisable. His estate would also be entitled to retain all of the Performance Awards granted to him in 2011, 2/3 of the Performance Award granted to him in 2012 and 1/3 of the Performance Award granted to him in 2013, and would receive payment on those portions of the award if and when the performance condition for those awards were satisfied for the 2013, 2014 and 2015 performance periods, respectively. The aggregate value of (i) the unvested RSUs valued at the closing price of our common stock at December 31, 2013, the currently non-exercisable options and SARs (valued at the difference between the closing price of our common stock at December 31, 2013, and the exercise price of the awards); and (ii) the Performance Awards (valued as if the target conditions for 100% vesting were met without any discount for the delays until the vesting date) is set forth in the accelerated vesting of LTIs row of column (d) in the Potential Payments Upon Termination or Change in Control table.

In the event employment of a Named Executive Officer is terminated by reason of his total and permanent disability, as defined in the Salaried Plan, the Named Executive Officer would be entitled to receive exactly the same amounts as his estate would have received in the event of his death except with respect to his retirement benefits. Under the terms of the ESERP, on his total and permanent disability the Named Executive Officer would be entitled to receive on a current basis his annual pension benefit under the retirement plans without any actuarial reduction. The present value of this benefit is set forth in the Present Value of Retirement Benefits row of column (e) of the Potential Payments Upon Termination or Change in Control table.

 

45


Under our Executive Income Continuity Plan, if, after a change in control, a Named Executive Officer terminates his employment for Good Reason or has his employment terminated by the Company without Cause, he will be entitled to (i) receive severance of three year’s base salary and the greater of three times his target annual incentive award calculated on his then current base salary or the average percentage payout on his target annual incentive award during the two preceding years multiplied by his target annual incentive award; and (ii) continuation for two years of all employee benefit plans and programs other than retirement benefit plans and disability benefits. The amounts of these benefits are set forth in the Cash Severance and Benefits Continuation rows of column (f) of the Potential Payment upon Termination or Change in Control table. Additionally, upon a change in control, under the terms of the 1993 Plan and the awards made thereunder, prior to January 1, 2012, all Performance Cash would vest in the name of each executive as if the 200% target conditions had been met, all unvested RSUs would vest and all unexercisable stock options would vest and be exercisable. For awards on or after January 1, 2012, the accelerated vesting would only be triggered if there was a termination of employment other than for “cause” or if the Named Executive Officer terminated for “good reason” as defined in the 1993 Plan or any award agreement made thereunder. The aggregate value of these benefits is set forth in the Accelerated vesting of LTIs row of column (f) of the Potential Payment Upon Termination or Change in Control table.

Under the ESERP, on a change in control, each of the Named Executive Officers would become a full member of the ESERP entitled to five additional years of service. Additionally, if the Named Executive Officer’s employment was thereafter terminated by the Company without cause or by the executive for Good Reason, the executive would be entitled to receive retirement benefits at age 55 without any actuarial reduction. To the extent the present value of this benefit exceeds the present value of the benefits payable to the Named Executive Officers under the qualified plans, it will be paid to the executive officers in a lump sum calculated using discount rates and assumptions specified in the ESERP. The present value of each Named Executive Officer’s accumulated retirement benefits in this circumstance is set forth in column (f) of the Potential Payments on Termination or Change in Control table.

The 280G Excise Tax Gross Up line for each of the Named Executive Officers shows the amount that would be payable to each executive officer under our Compensation Taxation Equalization Plan if the Named Executive Officer were terminated without Cause on December 31, 2013, after a change in control of the Company. This Plan was amended and restated effective January 31, 2012 to provide that the Plan shall only apply to executive officers who were elected as such prior to January 31, 2012, and that the Plan will expire for all participants on December 31, 2016.

DIRECTOR COMPENSATION

 

Name
(a)

   Fees Earned or
Paid in Cash
($)
(b)
     Stock Awards
($)
(c)
     All
Other
Compensation
($)
(g)
     Total
($)
(h)
 

C.A. Davis

   $ 92,500       $ 85,000       $ 1,879       $ 179,379   

A.G. Fernandes

   $ 100,989       $ 85,000       $ 1,879       $ 187,868   

L.L. Hoynes

   $ 13,000       $ 160,000       $ 1,879       $ 174,879   

B.C. Johnson

   $ 86,510       $ 85,000       $ 1,879       $ 173,388   

C.P. Lowe

   $ 15,000       $ 160,000       $ 1,879       $ 176,879   

W.P. Powell

   $ 109,011       $ 85,000       $ 1,879       $ 195,890   

T. Rabaut

   $ 8,000       $ 160,000       $ 1,879       $ 169,879   

J.R. Satrum

   $ 93,000       $ 85,000       $ 1,879       $ 179,879   

R. P. Sharpe

   $ 11,480       $ 160,000       $ 2,283       $ 173,763   

In connection with our policy to rotate the position of Lead director every third year, Mr. Powell replaced Mr. Fernandes as Lead director on April 18, 2013.

A competitive market review of non-employee Director compensation was conducted by Semler Brossy Consulting Group, LLC (“Semler Bossy”) for the Governance Committee of Cytec’s Board of Directors. Based

 

46


on the market review, the Governance Committee recommended and the Board of Directors approved a $10,000 increase in the restricted stock portion of the annual retainer fee, increases to the chair and member fees for the Audit Committee and the Compensation and Management Development Committee, and new committee member fees for all other Committees of the Board to reflect a market competitive compensation package. All changes to the Directors’ compensation packages were effective January 1, 2013. The previous increase was effective January 1, 2011.

Annual Retainer Fee:    Each director’s annual cash retainer for 2013 was $75,000. Our Lead Director of the Board was paid an additional retainer fee of $20,000. The Chairs of Committees of the Board received retainer fees of $10,000 for such service, or $15,000, increased for 2013 from $12,000, in the case of the Chair of the Compensation and Management Development Committee or $17,500, increased for 2013 from $15,000, in the case of the Chairperson of the Audit Committee. Each member of a Committee of the Board received an annual member retainer fee of $5,000, adopted in 2013 for the Governance and the Safety, Health, Environment and Technology Committees or $10,000 in the case of the Audit Committee and $8,000 in the case of the Compensation and Management Development Committee, increased for 2013 from $8,000 and $7,000, respectively. Annual retainer fees are paid in four quarterly installments in arrears and are prorated if a director serves for only part of a calendar year. Directors may elect to receive their annual retainer fee in the form of a deferred stock award. A deferred stock award represents a phantom grant of Cytec’s common stock and is awarded under the 1993 Stock Plan. Dividend equivalents are paid on deferred stock awards in the form of additional deferred stock awards. Once a director is no longer serving as a director, the deferred stock award is paid to the director in actual shares of our common stock either in a lump sum or over a period of up to 15 years depending on the director’s election. The $75,000 Annual Retainer fee is reflected in column (b) above for the five directors who received this fee in cash for all or part of 2013 and in column (c) of the table above for the four directors who received all or part of the fee in the form of a deferred stock award. Column (g) reflects cash dividends paid on each director’s unvested restricted stock awards.

Restricted Stock Award:    For 2013, each director received an annual grant of restricted stock of $85,000 in value, increased from $75,000 for 2013. These awards are made pursuant to the 1993 Plan. The number of shares of restricted stock awarded is determined using the closing price of Cytec’s common stock on the date the award is granted. The restricted stock awards vest on the third anniversary of the grant date if the recipient has not resigned from our Board or refused to stand for re-election. Directors may elect to defer vesting their restricted stock by receiving a deferred stock award of equivalent value. The value at grant of the annual restricted stock award is reflected in column (c) above for all directors who received this grant in 2013.

In accordance with the 1993 Plan, we also grant each new director a restricted stock award for $75,000 in value of on the date he or she joins the Board. This restricted stock award also vests on the third anniversary of the grant date if the recipient has not resigned from our Board or refused to stand for re-election.

At December 31, 2013, directors held unvested restricted stock awards as follows: Ms. Davis, 3,718 shares; Mr. Fernandes, 3,718 shares; Mr. Hoynes, 3,718 shares; Mr. Johnson, 3,718 shares; Ms. Lowe, 3,718 shares; Mr. Powell, 3,718 shares; Mr. Rabaut, 3,718 shares; Mr. Satrum, 3,718 shares and Mr. Sharpe, 4,527 shares. At December 31, 2013, directors held the following options to purchase our stock: Ms. Davis, 3,000 shares; Mr. Fernandes, 6,000 shares; Mr. Johnson, 6,000 shares; Mr. Powell, 3,000 shares; Mr. Satrum, 6,000 shares and Mr. Sharpe, 6,000 shares.

We require each director to attain and hold an ownership stake in our Company having a value equal to five times the annual cash retainer fee of $75,000. We believe this requirement helps to align directors’ interests with those of stockholders. Directors must achieve the required ownership within the later of five years from their initial election to the Board or January 1, 2013, two years from the date we increased the annual cash retainer fee to $75,000. We include deferred stock awards and restricted stock awards as shares owned by a director even if the vesting condition has not yet been satisfied.

The compensation program described above does not apply to our affiliated directors. Mr. Fleming, our Chairman, President and CEO, does not receive any additional compensation for serving as director and Chairman of the Board. The compensation he receives as an executive officer is set forth in the Summary Compensation Table.

 

47


TIMELY SUBMISSION OF STOCKHOLDER PROPOSALS

We expect to hold the 2015 annual meeting of stockholders on April 16, 2015. Proposals which stockholders intend to present at such meeting must be received by us at our executive offices in Woodland Park, New Jersey, by November 11, 2014, for inclusion in our notice, proxy statement and proxy relating to that meeting. In addition, our By-Laws provide that in order for any business not specified in the notice of meeting to be properly brought before a stockholders’ meeting by a stockholder, the stockholder must have given written notice to our Secretary which must be received at our principal office not less than 60 nor more than 90 days prior to the meeting. (If less than 75 days’ notice or public disclosure of the date of the meeting was given, then such notice must be received by the close of business on the 15th day following the date of notice or public disclosure of the date of the meeting). The notice must describe the business desired to be brought before the meeting, the name, record address and number and class and series of shares owned by the stockholder and any material interest of the stockholder in such business.

ATTENDANCE AT ANNUAL MEETING

The 2014 Annual Meeting of Stockholders will be held at 1:00 p.m. on April 22, 2014, at the Marriott Glenpointe Hotel, Teaneck, NJ 07666. Admission to the meeting is limited to our stockholders or their designated representatives (including “street name” stockholders who can show that they beneficially owned our common stock on the record date). One admission ticket to the meeting is attached to the proxy sent to each stockholder. If you intend to attend the meeting, please detach and retain the admission ticket and check the “will attend” box on the form of proxy itself to validate the admission ticket. Only ticket-holders will be admitted to the Annual Meeting.

OTHER MATTERS

We will pay the cost of soliciting proxies, including reimbursement of banks, brokerage firms, custodians, nominees and fiduciaries for their expenses in sending proxy material to the beneficial owners of common stock. In addition to the use of the mail, proxies may be solicited by our employees personally, by telephone, by telefax or by electronic communication. We have engaged Okapi Partners LLC to assist in the solicitation of proxies at a fee estimated to be $6,500 plus reimbursement of its outside expenses.

If any further business not described in this proxy statement properly comes before the meeting, the persons named in the enclosed form of proxy will vote, in their discretion, as recommended by our Board of Directors or, if no recommendation is given, all in accordance with their best judgment. We did not have notice, in accordance with the By-Law described under “Timely Submission of Stockholder Proposals” of any additional matter intended to be brought before the meeting.

R. Smith

Secretary

 

The Compensation and Management Development Committee Report and the Audit Committee Report that appear in this proxy statement do not constitute soliciting material and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporates the information by reference, and shall not otherwise be deemed “filed” under said Acts.

 

48


Exhibit A

Peer Groups used for 2013 Compensation Program

2009 Peer Group

 

Air Products & Chemicals Inc.

 

Celanese Corporation

  The Lubrizol Corporation*

Albemarle Corporation

 

Eastman Chemical Company

  Rockwell Collins Inc.

Alliant Techsystems Inc.

 

FMC Corporation.

  Rockwood Holdings, Inc.

Arch Chemicals Inc.*

 

Goodrich Corporation*

  RPM International Inc.

Ashland Inc.

 

H. B. Fuller Company

  Spirit Aerosystems Holdings, Inc.

Cabot Corporation

 

Hexcel Corporation

  The Valspar Corporation

 

(*) Eliminated from 18-Company Peer Group due to M&A activity.

 

2013 Peer Group Companies

 

AAR Corporation

 

Curtis-Wright Corporation

  Kraton Performance Polymers

Albemarle Corporation

 

Esterline Technologies Corp.

  OM Group, Inc.

Alliant Techsystems Inc.

 

Ferro Corporation

  PolyOne Corporation

ASchulman Inc.

 

FMC Corporation.

  Precision Castparts Corporation*

BE Aerospace Inc.

 

H. B. Fuller Company

  Rockwood Holdings, Inc.

Barnes Group Inc.

 

Hexcel Corporation

  Spirit Aerosystems Holdings, Inc.

Cabot Corporation

 

Kamen Corporation

  SPX Corporation

Crane Corporation

 

Koppers Holdings Inc.

  Teledyne Technologies, Inc.

 

(*) Eliminated from the Peer Group in 2014 because of a significantly larger revenue size.

 

Chemical/Aerospace Industry Companies (Primary Comparator Group)

 

Alliant Techsystems Inc.

 

H. B. Fuller

  Rockwell Collins

Americas Styrenics

 

Hexcel

  Savannah River Nuclear Solutions

Chemtura

 

International Flavors & Fragrances

  Spirit AeroSystems Holdings, Inc.

Curtiss-Wright

 

Nobel Energy

  Stephan Company

Esterline Technologies

 

OMNOVA Solutions

  Tronox

GenCorp

 

PolyOne

  Westlake Chemicals

 

General Manufacturing Industry Companies (Primary Comparator Group)

 

A.O. Smith

 

AMETEK

  Actuant

Alliant Techsystems

 

Americas Styrenics

  Arch Coal

Armstrong World Industries

 

Barnes Group

  Beam

Bob Evans Farms

 

Brembo

  Brunswick

CareFusion

 

Carpenter Technology

  Century Aluminium

Chemtura

 

Chiquita Brands

  Cloud Peak Energy

Cooper Standard Automotive

 

Cott Corporation

  Covance

Curtiss-Wright

 

Deckers Outdoor

  Dentsply

Donaldson Company

 

EnPro Industries

  Esterling Technologies

Exterran

 

Flowers Foods

  Fortune Brands Home & Security

Green Mountain Coffee Roasters

 

Greif

  H.B. Fuller

HNI

 

Hanesbrands

  Harman International Industries

Harsco

 

Hasbro

  Hexcel

IDEXX Laboratories

 

ITT Corporation

  Imerys

International Flavor & Fragnaces

 

J.M. Smucker

  Jack in the Box

K. Hovanian Companies LLC

 

KB Home

  Kennametal

Kinross Gold

 

Leggett and Platt

  Life Technologies

Lincoln Electric

 

Magellan Midstream Partners

  Manitowoc

Martin Marietta Materials

 

McJunkin Red Man

  Mine Safety Appliances

Molson Coors Brewing

 

Noble Energy

  Nu Skin Enterprises

 

A-1


OMNOVA Solutions

 

P.F. Chang’s China Bistro

  Pall Corporation

Polaris Industries

 

PolyOne

  PulteGroup

Ralcorp Holdings

 

Rayonier

  Revlon

Rockwell Collins

 

Savannah River Nuclear Solutions

  Scotts Miracle-Gro

Sensata Technologies

 

Sigma-Aldrich

  Snap-on

Sonoco Products

 

Spirit AeroSystems

  Steelcase

Stepan Company

 

Toro

  Tower International

Trinity Industries

 

Tronox

  Tupperware Brands

USG Corporation

 

Valmont Industries

  Vulcan Materials

Walter Energy

 

West Pharmaceutical Services

  Westlake Chemical

Xylem

   

 

A-2


 

 

 

CYTEC INDUSTRIES INC.

FIVE GARRET MOUNTAIN PLAZA

WOODLAND PARK, NJ 07424

 

WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.

 

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

 

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

 

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

 

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

Your Internet or telephone vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card.

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

M67084-P46697                         KEEP THIS PORTION FOR YOUR RECORDS

 

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

                                                         
CYTEC INDUSTRIES INC.                
   

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED:

         
   

 

1.

  ELECTION OF DIRECTORS - Term(s) to expire at 2017 Annual Meeting.              
     

 

Nominees:

 

 

For

 

 

Against

 

 

Abstain

             
     

 

1a. 

    Anthony G. Fernandes     ¨   ¨   ¨                
     

 

1b. 

    Shane D. Fleming     ¨   ¨   ¨                
     

 

1c. 

    Raymond P. Sharpe     ¨   ¨   ¨                
   

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.

  For   Against   Abstain    
   

 

2.

 

 

RATIFICATION OF KPMG LLP AS THE COMPANY’S AUDITORS FOR 2014.

 

 

¨

 

 

¨

 

 

¨

   
   

 

3.

 

 

APPROVE, BY NON-BINDING VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

 

¨

 

 

¨

 

 

¨

   
           
           
           
           
   

 

For address changes and/or comments, please check this box and write them on the back where indicated.

 

 

¨

               
   

 

Please indicate if you plan to attend this meeting.

 

 

¨

 

 

¨

                 
                     Yes   No                                 
   

 

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.

    B. Authorized Signatures - This section must be complete for your vote to be counted. - Date and Sign Below
    (NOTE: Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name by authorized officer. If a partnership, please sign in partnership name by authorized person.)
                               
                                             
                                             
    Signature [PLEASE SIGN WITHIN BOX]       Date                       Signature (Joint Owners)                       Date                        


      

DIRECTIONS:

The Marriott at Glenpointe is located at 100 Frank W. Burr Boulevard in Teaneck, New Jersey with direct access to Routes I-95 and I-80

 

  Admission Ticket     

FROM NEW YORK/GEORGE WASHINGTON BRIDGE:

Take Route I-95/I-80 local lanes to Exit 70 Teaneck.

 

 

CYTEC INDUSTRIES INC.

Annual Meeting

of

Common Stockholders

April 22, 2014

1:00 p.m.

Montclair Room - 2nd Floor

Marriott at Glenpointe

Teaneck, NJ 07666

  

 

FROM THE LINCOLN TUNNEL AND N.J. TURNPIKE:

Take the New Jersey Turnpike North to Exit 18W. Go straight through the toll plaza and follow signs for I-95 North. Stay in the local lanes to Exit 70. After exiting, follow signs for Teaneck/Exit 70B. The Hotel is on the right.

 

FROM ROUTE 4:

Take the Teaneck Road/Ridgefield Park Exit. Stay on Teaneck Road until you reach Degraw Avenue (5 traffic lights), and make a left. The Hotel is on the left at the next traffic light.

 

FROM THE GARDEN STATE PARKWAY & ROUTE 80 EAST:

Exit off the Garden State Parkway at Exit 159. Follow signs for Route I-80 East, stay in local lanes to Exit 70 then 70B-Teaneck. The Hotel will be on your right after crossing over the highway.

 

FROM TETERBORO AIRPORT:

Follow signs for Route I-80 East, local lanes to Exit 70 Teaneck to Exit 70B.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.

 

 

M67085-P46697

 

 

CYTEC INDUSTRIES INC.

ANNUAL MEETING OF COMMON STOCKHOLDERS

April 22, 2014

THIS PROXY IS SOLICITED ON BEHALF OF

THE COMPANY’S BOARD OF DIRECTORS

   

 

The undersigned hereby appoints S. Fleming, D.M. Drillock and R. Smith, and each of them jointly and severally, Proxies with full power of substitution, to vote as designated on the reverse side and, in their discretion, upon such other business as may properly come before the meeting, all shares of common stock of Cytec Industries Inc. held of record by the undersigned on February 28, 2014, at the Annual Meeting of Common Stockholders to be held on April 22, 2014, or any adjournment thereof.

 

If you are a participant in the Cytec Industries Inc. Employee Savings and Profit Sharing Plan, Employee Stock Purchase Plan or Employee Savings Plan, this proxy constitutes your direction to the Trustee of such plan to vote as directed on the reverse side the proportionate interest in the shares of common stock held in the plan. In order for the Trustee to receive your direction in time to vote, your proxy must be received by April 17, 2014. If your proxy is not received by April 17, 2014, the share equivalents credited to your account will be voted by the Trustee in the same proportion that it votes share equivalents for which it receives timely instructions from all plan participants.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ITEMS IDENTIFIED ON THE REVERSE SIDE. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO DIRECTION IS GIVEN IN THE SPACE PROVIDED ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED “FOR” EACH OF THE ITEMS.

 

   
         

 

Address Changes/Comments:

 

 

 

         
       

 

         
         

 

                

         
   

 

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)

 

(Continued on reverse side)