BALCHEM CORP — Proxy Solicitation & Information Statement 1997

Apr 25, 1997

SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 [ X ] Filed by the registrant [ ] Filed by a party other than the registrant Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ X ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12 BALCHEM CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) [GRAPHIC-LOGO] BALCHEM CORPORATION P.O. Box 175 SLATE HILL, NEW YORK 10973 BALCHEM CAPSULET PROCESS --------------------------------- NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 27, 1997 --------------------------------- TO OUR STOCKHOLDERS: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BALCHEM CORPORATION will be held in the Board of Governors Room, 13th floor, the American Stock Exchange, 86 Trinity Place, New York, New York, on Friday, June 27, 1997 at 11:00 a.m. for the following purposes: 1. To elect three Class 2 directors of the Board of Directors to serve until the annual meeting in 2000 and one Class 1 director to serve until the annual meeting in 1998 and in each case until their respective successors have been duly elected and qualified. 2. To consider and take action upon the approval and adoption of amendments to the Stock Option Plan for Directors, as set forth herein. 3. To transact such other business as may properly come before the meeting or any adjournment thereof. Information with respect to the above matters is set forth in the Proxy Statement which accompanies this Notice. Only stockholders of record at the close of business on April 15, 1997 are entitled to notice of and to vote at the meeting or any adjournment thereof. We hope that all our stockholders who can conveniently do so will attend the meeting. Stockholders who do not expect to be able to attend the meeting are requested to fill in, date and sign the enclosed proxy and promptly return the same in the enclosed addressed envelope which requires no postage and is intended for your convenience. Stockholders who are present at the meeting may withdraw their proxies and vote in person, if they so desire. BY ORDER OF THE BOARD OF DIRECTORS Wallace J. Borker Secretary Dated: April 23, 1997 BALCHEM CORPORATION P.O. BOX 175 SLATE HILL, NEW YORK 10973 --------------------------------- PROXY STATEMENT FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS --------------------------------- Solicitation And Revocation of Proxies The solicitation of the enclosed proxy is made by the Board of Directors of Balchem Corporation (the "Company") of the holders of shares of Common Stock of the Company in connection with the Annual Meeting of Stockholders to be held on Friday, June 27, 1997. The Company has authorized two classes of stock: 2,000,000 shares of Preferred Stock, $25 par value, of which no shares have been issued, and 10,000,000 shares of Common Stock, par value $.06-2/3 per share. On April 15, 1997, the record date for determination of stockholders entitled to vote at the meeting, there were 3,153,352 shares of Common Stock outstanding and entitled to be voted at the meeting and each of these shares is entitled to one vote. Unless otherwise specified in the proxy, a proxy solicited by the Board of Directors will be voted for the four nominees set forth herein and for the approval of item 2. Abstentions will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as unvoted for purposes of determining the approval of any matter submitted to a vote of the stockholders. If a broker indicates on the proxy card that it does not have discretionary authority to vote certain shares on a particular matter, those shares will not be considered as voted for the purpose of determining the approval of such matter. Any stockholder who has given a proxy has the power to revoke it any time before the proxy is voted. The Company's address is P.O. Box 175, Slate Hill, New York 10973 and its telephone number is (914) 355-5300. The Proxy Statement and the enclosed form of Proxy are being mailed to the Company's stockholders on or about April 25, 1997. ELECTION OF DIRECTORS The Company's by-laws provide for a staggered term Board of Directors by the classification of the Board of Directors into three classes (Class 1, Class 2 and Class 3). The term of the three Class 2 directors will expire at the annual meeting of stockholders to be held in 1997. Raymond A. Reber, a Class 1 director, was elected by the Board of Directors for an interim term to fill the vacancy created by the resignation from the Board of Directors of Dr. Weiss, the former Chief Executive Officer, who has become a director emeritus. Mr. Reber's interim term will also expire at the 1997 annual meeting. The other directors will remain in office until their terms expire. Donald E. Alguire, Israel Sheinberg and Kenneth P. Mitchell will be the nominees for election as Class 2 directors and Raymond A. Reber will be the nominee as a Class 1 director. If elected, Messrs. Alguire, Sheinberg and Mitchell will serve until the annual meeting of stockholders in 2000 and Mr. Reber will serve until the annual meeting of stockholders in 1998, and in each case until their respective successors have been duly elected and qualified. It is intended that the accompanying proxy will be voted for election of said nominees. The nominees have indicated that they are willing to serve as directors if elected. If for any reason one or more of such nominees becomes unavailable for election, the proxies may be voted for a substitute nominee(s) designated by the management of the Company. Management has no reason to expect that any nominee will fail to be a candidate at the meeting and, accordingly, has not contemplated any substitute. DIRECTORS AND EXECUTIVE OFFICERS The following persons, present directors of the Company whose terms expire in June 1997, have been nominated by the Board of Directors. Class 1 Director Whose Term Expires in 1997 RAYMOND A. REBER, 54, President and Chief Executive Officer since January 1, 1997; Executive Vice President and Chief Operating Officer of the Company since January 1994; director new ventures development UOP, a joint venture of Union Carbide and Allied Signal from 1990 to 1993. Class 2 Directors Whose Terms Expires in 1997 DONALD E. ALGUIRE, 69, has been a management, financial and technical consultant d/b/a Alguire Associates since October 1, 1987. He has been a director of the Company since 1988. He was formerly President of Griffith Microsciences. ISRAEL SHEINBERG, 64, is an independent management and technical consultant d/b/a as Sheinberg Associates since 1990. He has been a director of the Company since July 1991. He was formerly executive vice president of Recognition Equipment, Inc. KENNETH P. MITCHELL, 57, is retired. He was Chief Executive Officer of Oakite Products Inc. from 1986 to 1993. He has been a director of the Company since 1993. In February 1997, he became a director of Tetra Technologies, Inc., a specialty chemical company selling products and services in the oil and gas market. The following directors will continue in office: Class 3 Directors Whose Terms Expire in 1999 JOHN E. BEEBE, 74, is retired. He was Chairman Emeritus of Scott Macon, Ltd. from August 1990 to June 1991; prior to August 1990 he had been Chairman of Scott Macon Ltd. from September 1, 1985. Mr. Beebe has been a director of the Company since 1986. FRANCIS X. McDERMOTT, 63, is retired. He was President of the Specialty Chemicals Group, Merck & Co., Inc. from 1985 through 1992. He has been a director of the Company since 1992. LEONARD J. ZWEIFLER, 68, is a dentist and Senior Partner of Kings Dental Group, and has been a director of the Company since 1969. Class 1 Directors Whose Terms Expire in 1998 PAUL F. MOSHER, 63, is retired. He was President of the Kelco Division of Merck & Co, Inc. specialty chemicals 1985-93. Mr. Mosher has served as a director of the Company since 1994. CARL R. PACIFICO, 75, has been an independent consultant in general management. He has served as a director of the Company since 1967. Executive Officers Other than Directors RAYMOND A. REBER, 54, President and Chief Executive Officer since January 1, 1997; Executive Vice President and Chief Operating Officer of the Company since 1994; director new ventures development UOP, a joint venture of Union Carbide and Allied Signal from 1990 to 1993. DINO ROSSI, 42, Vice President and Chief Financial Officer of the Company since April 1, 1996; Treasurer since June 21, 1996; January 1994-March 1996, Vice President, Finance and Administration; Norit Americas Inc., 1987-1993, Vice President, Finance and Administration, Oakite Products Inc. WAYNE STOCKLAND, 54, Vice-President-Technology of the Company since February 7, 1997; Director of Technology of the Company December 1995-January 1997; Director of Technology at Consolidated Nutrition (Acquired Supersweet Feeds) 1987-1995; Director of Research at Supersweet Feeds 1970-1986. GEORGE A. VAIL, 64, Vice President-Manufacturing of the Company since 1988. Board Meetings There were six meetings of the Board of Directors in 1996. With one exception, all of the directors attended all six meetings. One director attended five meetings. Committees The Board of Directors has established the following committees: Audit Committee: Messrs. Pacifico, Beebe and Alguire; Compensation Committee: Messrs. Mitchell, Sheinberg and Mosher; Finance Committee: Messrs. Beebe, Mitchell and Dr. Zweifler; International Committee: Messrs. Sheinberg, McDermott and Mosher; Planning/Succession Committee: Messrs. McDermott, Pacifico and Mosher; and the Stockholder Committee: Dr. Zweifler and Messrs. Beebe and Alguire. Mr. Reber is an ex-officio member of the Compensation, Planning/Succession, International and Stockholder Committees; Mr. Rossi is an ex-officio member of the Audit and Finance Committees. The Audit Committee is responsible for matters related to the choice of auditors and auditing questions. The Compensation Committee is responsible for compensation policies and incentive plans. The Finance Committee monitors the Company's financial condition and provides guidance as to external financing. The International Committee is concerned with the Company's international programs. The Planning/Succession Committee is concerned with the Company long range strategic plan and membership on the Company's Board. The Stockholder Committee is concerned with the relations between the Company and its stockholders: In 1996, each of the committees other than the Compensation Committee had one meeting. The Compensation Committee met three times. Compliance With Section 16(a) Of The Exchange Act. Based solely upon a review of filings with the Company under Rule 16a-3(d), no director or officer failed to file as required by said rule on a timely basis. Compensation of Executive Officers The following Table sets forth information concerning the earned compensation for services to the Company during the fiscal years ended December 31, 1996, 1995 and 1994 for the President of the Company, the Executive Vice-President and the Vice President and Chief Financial Officer, being the only executive officers whose total cash compensation with respect to the respective periods of such service exceeded $100,000:

Directors' Fees and Expenses In 1996, each Director of the Company received a fixed payment of $3,000, payable in bi-monthly installments, and $1,000 for his attendance at each Board of Directors meeting as his retainer, and travel expenses for attending such meetings. On April 7, 1989, the Board of Directors had adopted a Director Compensation Program effective with the organization meeting of Directors held in June 1989 which based directors' fees on approximately .44% of the previous year's pre-tax profits. Pension Plan and Certain Other Benefits The Company has a money purchase plan which covers substantially all employees. Pension plan contributions for 1996, 1995 and 1994 were $282,657, $137,556 and $111,741, respectively. The Company contributes to said pension plan yearly 3.55% of the annual W-2 reported salary for Dr. Weiss which amount is immediately and 100% vested. On retirement or termination of employment, Dr. Weiss and Mr. Reber are entitled to a lump-sum distribution of all monies and interest accrued to their respective accounts. As of January 1, 1987, the Company adopted a 401(k) savings plan which covers substantially all employees. The Company's 1996 savings plan contribution was $82,899. The Company's Board of Directors approved supplemental insurance programs for key employees, that pay certain additional retirement benefits after retirement or death to a designated beneficiary for ten years. The Company owns the insurance policies and reserves the right to modify or terminate such plan. Policies for Dr. Weiss and Mr. Vail are in effect in the aggregate amounts of $300,000 and $100,000, respectively, for a total cost of $17,060 per year. Options and Warrants In April, 1989, the Company adopted an incentive stock option plan, since amended, which was approved by the stockholders at the Company's 1989 Annual Meeting, which provides for the granting of incentive stock options, as defined under current tax laws, to officers and key employees. The stock options are exercisable at a price equal to the market value of the stock on the date of grant. For the purpose of the plan, 250,000 shares of common stock were reserved for future grant. Options may be exercised over a period of one to ten years. The plan terminated in June, 1994, five years from the date of stockholder approval. In 1994, Registrant adopted a new incentive stock option plan, since amended, which was approved by the stockholders at Registrant's 1994 Annual Meeting which provides for the granting of incentive stock options, as defined under current tax laws, to officers and key employees. The stock options are exercisable at a price equal to the market value of the stock on the date of grant. For the purpose of the plan, 187,500 shares of common stock were reserved for future grant. Options may be exercised over a period of one to ten years. The plan terminates in June, 1999, five years from the date of stockholder approval. In April, 1989, Registrant adopted a Stock Option Plan for directors of the Company, amended in 1996, which was originally approved by the stockholders at the Company 1989 Annual Meeting, which provides for granting stock options to directors and directors emeriti of the Company. The stock options are exercisable at a price equal to the market value of the stock at the close of business on the annual date of grant, which is December 31 of each year during the life of the plan. The number of options granted to each director in any year is equal to the nearest whole share of the quotient obtained by dividing the director's fee payable to such director for such year by the market value of a share of the common stock at the close of business on the date of grant. The options are exercisable over a ten-year period from the date of grant, provided at the time of exercise the optionee is still a director or director emeritus, unless the optionee dies while a director or director emeritus, in which case his legal representatives have ninety days or until the option would otherwise expire in which to exercise the option. The plan terminated in June, 1994, five years from the date of stockholder approval. The options for current directors still outstanding are set forth below. As of December 31, 1991, options as follows were granted to each director at an exercise price of $4.75. No such option has been exercised.

As of December 31, 1992, additional options as follows were granted; all at an exercise price of $4.67. No such option has been exercised.

As of December 31, 1993, additional options as follows were granted; all at an exercise price of $3.67. No such option has been exercised.

In 1994, Registrant adopted a new Stock Option Plan for directors of Registrant, amended in 1996, which was originally approved by the stockholders at Registrant's 1994 Annual Meeting, which provides for granting stock options to directors and directors emeriti of Registrant. The stock options are exercisable at a price equal to the market value of the stock at the close of business on the annual date of grant, which is December 31 of each year during the life of the plan. The number of options granted to each director in any year is equal to the nearest whole share of the quotient obtained by dividing the director's fee payable to such director for such year by the market value of a share of the common stock at the close of business on the date of grant. The options are exercisable over a ten-year period from the date of grant, provided at the time of exercise the optionee is still a director or director emeritus, unless the optionee dies while a director or director emeritus, in which case his legal representatives have ninety days or until the option would otherwise expire in which to exercise the option. The plan terminates in June, 1999, five years from the date of stockholder approval. 52,500 shares of the common stock were reserved for exercise under this plan. As of December 31, 1994, the options granted each director were as follows; all at an exercise price of $6.00. No such option has been exercised by any present director.

As of December 31, 1995, additional options were granted to each director as follows; all at an exercise price of $9.00. No such option has been exercised by any present director.

As of December 31, 1996, additional options were granted to each director as follows; all at an exercise price of $8.50. No such option has been exercised by any present director.

Security Ownership of Certain Beneficial Owners and of Management The following tables set forth the indicated information as of March 1, 1997 as to each person who is known to the Company to be the beneficial owner of more than five percent of any class of the Company's voting securities, and as to each director or nominee and all present directors and officers as a group:

APPROVAL OF THE AMENDMENT OF THE STOCK OPTION PLAN FOR DIRECTORS OF BALCHEM CORPORATION Under the present Stock Option Plan for Directors, the number of shares for which options are granted to a director (or director emeritus) in each year is a function of the director's annual fees and the stock price per share of the Company's stock at year end. The number of shares covered by the option is determined by dividing the stock price per share at year end into the total fee earned. Since the annual fees are redetermined in each year based on the Company's earnings for the prior year, the determination reflects changes in the Company's earnings but only in an indirect fashion through the change in annual fees. The Board, on the recommendation of the Compensation Committee, has determined that it would be more appropriate to directly tie-in the number of shares for which an option is granted to the changes in corporate earnings, thus freeing the determination of directors' fees from any option determining function. Under the proposed amendment, approved by the Board, but subject to stockholder approval, the number of shares for which options would be granted in any year would start with the maximum number of shares for which an option was granted in 1996, namely, 1,059 shares. The Company would grant annually to each director and director emeritus an option for that number of shares obtained by multiplying 1,059 by the percentage increase or decrease in net earnings of the Company for each year over the net earnings of approximately $1,927,000 for the year ended 1996. At the same time, in contemplation of the change, the Board has voted not to increase directors' fees for 1997 above the maximum of $9,000 paid in 1996, although based on the formula that has been used the maximum fee would have been $11,000. (See Directors' Fees and Expenses at p. 8). To accomplish the change in the Plan, Section 5 would be changed to read as follows: SECTION 5. Grant of Options. On each December 31, commencing with December 31, 1997, during the term of this agreement, each director and director emeritus ("Optionee") shall be granted options under the Plan to purchase that number of shares of Common Stock which is equal to the maximum number of shares for which options were granted in 1996, namely, 1,059, multiplied by the quotient obtained by dividing (i) the net earnings of the Corporation for the year then ended by (ii) the net earnings of the Corporation for 1996, computed to the nearest whole number of shares. The option exercise price (the "Price") shall be the reported closing price per share of the Common Stock on the last trading date of the year in which such December 31 falls. The affirmative vote of a majority of the outstanding shares of Common Stock is needed for approval of the amendment to the Plan. The Board of Directors recommends a vote in favor of approval of the amendment. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS The accounting firm of Judelson, Giordano & Siegel, P.C. was retained by the Company to audit its financial statements for the fiscal year ended December 31, 1996. Management has selected KPMG Peat Marwick LLP to audit the Company's financial statements for the year ended December 31, 1997. Representatives of the firm of Judelson, Giordano & Siegel, P.C. are expected to be present at the Annual Meeting of Stockholders with the opportunity to make a statement to the stockholders if they desire to do so and are expected to be available to respond to questions raised orally at the meeting. OTHER MATTERS At the date of this Proxy Statement, management knows of no other matters or business which will be presented to the meeting for action or consideration. Should any other matter properly come before the meeting, the persons named in the accompanying proxy will vote thereon, according to their best judgment in the interests of the Company. STOCKHOLDER PROPOSALS Proposals of stockholders of the Company intended to be submitted for a vote of the stockholders at the 1998 Annual Meeting of the Company must be received by the Company by January 14, 1998 in order to be included in the Company's 1998 Proxy Statement and Proxy. EXPENSES OF SOLICITATION The cost of soliciting proxies will be borne by the Company. In addition to the use of the mails, proxies will be solicited, personally or by telephone or telegraph, by officers, directors and regular employees of the Company. The Company will reimburse brokers and others holding stock in their names, or in the names of nominees, for their expenses in sending materials. ANNUAL REPORT The Company's Annual Report to Stockholders for the fiscal year ended December 31, 1996, including financial statements, which Annual Report is not part of this Proxy soliciting material, is being mailed to stockholders concurrently herewith. ON WRITTEN REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL HOLDER OF THE COMPANY'S COMMON STOCK AS OF APRIL 15, 1997, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996. REQUESTS SHOULD BE ADDRESSED TO SHAREHOLDER RELATIONS, BALCHEM CORPORATION, P.O. BOX 175, SLATE HILL, NEW YORK 10973. BY ORDER OF THE BOARD OF DIRECTORS Wallace J. Borker Secretary Dated: April 23, 1997 REVOCABLE PROXY BALCHEM CORPORATION [ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING TO BE HELD JUNE 27, 1997 The undersigned hereby appoints Raymond A. Reber and Wallace J. Borker, and either of them, attorneys and proxies of the undersigned with power of substitution to represent the undersigned at the Annual Meeting of Stockholders of Balchem Corporation to be held on June 27, 1997, and at any adjournments thereof, and to vote all shares of Common Stock of the Company which the undersigned is entitled to vote on all matters coming before said meeting. 1. Election of Directors Class 1 Director (For a term of one year) Raymond A. Reber Class 2 Director (For a term of three years) Donald E. Alguire Israel Sheinberg Kenneth P. Mitchell [ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT INSTRUCTION:To withhold authority to vote for any individual nominee, mark "For All Except" and write that nominee's name in the space provided below. - -------------------------------------------------------------------------------- 2. Approval of Amendment to Directors' Stock Option Plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN The proxies are directed to vote as specified and in their discretion all other matters coming before the meeting. If no direction is made, the proxy will vote FOR ALL nominees listed. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD BY JUNE 23, 1997 USING THE ENCLOSED ENVELOPE. This Proxy must be signed exactly as name appears hereon. Executors, administrators, trustees etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. Please be sure to sign and date this Proxy in the box below. _______ Date ______ Stockholder sign above ________ Co-holder (if any) sign above Detach above card, sign, date and mail in postage paid envelope provided. BALCHEM CORPORATION Should the above signed be present and elect to vote at the Meeting or at any adjournment thereof, and after notification to the Secretary of the Company at the Meeting of the stockholder's decision to terminate this Proxy, then the power of such attorneys and proxies shall be deemed terminated and of no further force and effect. The above signed acknowledges receipt from the Company prior to the execution of this Proxy, of a Notice of the Meeting, a Proxy Statement and the Company's Annual Report to Stockholders. Please sign exactly as your name appears on this proxy card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign. PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY