Document ZJ4NpBd8jKbYkoBmNM1yE57ZZ

/ <Uy?4~ c ?g a TO Cleveland, Ghlo December 2, 1959 ANNUAL METING 1959 > Initoaatim Concerning Possible Stockholder Questions. Mr. Dwight p. Joyce CCx Mr* W. C. Lighter Mr. B. V. Haecey Mr. R. D. Hamer Mr* V. Q. HiilUpfl Mr. C. S. Vomer Mr* D. E Erskine Mr* H* A. Augsburgsr lo ANNUAL MEETING PROCEDURES (a) Why not hare outside Inspectors qf Electtan? Chlo lor and our Regu lations' hath permit Inspectors to be employees. Under Ohio lest, in spectors ere charged vith definite responsibilities, which are primary to their obligations to the Coopery as eoplcyees. Our Inspectors cm thoroughly familiar vith prosy procedures and, is our opinion, better qualified than outsiders to discharge these responsibilities. (b) May I review -the list of stockholders at the meeting? Shis eaa be arrengi'd following tka meeting provided the stockholder can show that his inspection of our lists has a proper business purpose* (c) May l look at the minute boobs? (Same answer as (b) ), (d) Why not hold the Annual Meeting of Stodtholders occasionally in ether cities suck as Heir York' or Chicago? Our 'Oospcay'is an &io corpora&Ion vith its Executive Eeadjuartars In Cleveland* By holding meetings here our Directors, officers and bey employees can be present vith the least expense end disruption of regular business. We also feel Cleveland is as convenient for the majority of our Stockholders vho vish to attend and that the expense and time required for a meeting in places such as New fork is not Justified at Ibis time. 2. ABBEEQP (a) Ware any reasons given by stockholders vho voted against designation of S & B! as auditors? (To he answered closer to the meeting' date after proodles have been returned.) To date there have been no reasons given. 3. cuMUAnvE vtmm (a) Will you please explain cumulative voting* There are two principal methods for electing corporate directors. One is by cumulative voting and the other la by straight voting. Under straight voting, those shareholders vith a majority of shares entitled to vote elect the entire Board. Where cumulative voting governs the election of directors, each shareholder has the Busbar of votes which equals the nuoher of his shares multiplied by the number of directors to be elected. Any shareholder's votes mey be cast for a single director. Gift 003340 Annual Meeting 1959 2 December 2, 1959 or he say distribute them among the candidates as he sees fit* If a shareholder has 1,000 Shares and there are 10 directors to he elected, this Shareholder, under cumulative voting, will have 10,000 votes which he nay east. If he wishes, he nay east then all fcr one candidate, he can give 5,000 votes to each of two candidates, or he can give 1,000 votes to each of the 10 candidates, or he can othervise distribute then as he chooses. ko DIRECTORS (a) What Is the age of our Oldest director? 59 - of the Directors who are also officers and employees. whafc is the average age? 50* (Mr. Saith is 62, which would raise the average to 51) (b) What fees are paid to directors? $50 nesting fee coaly for inside bixectcrs; $106 meeting fee only to Mr. &rith. (c) Questions concerning the desirability of outside directors* Our Ccnpany has had no policy which'" would bar outside directors and has in fact sought and vill continue efforts to find properly Qualified non-nanagesaant nominees willing to serve on the Board. Efforts along this line cftlMnated in the election of Mr. Wil liam P. Smith, a prcnlasat Washington, D. C. attorney, as a director last year and , j whose continuation in such office la proposed, to this year's atocfcholders seating. We continue to believe that a Board composed mainly of directors thoroughly familiar with our diversified and intricate operations, and who danrote their full time end entire efforts to the Company's interests is best able to discharge the respanaibiUties^amd upon it. (A thorough analysis of the effectiveness of outside vs. inside directors by Erof. Stanley Vance of the University as Massachusetts lends support to our position, end is available in Mr. Horner's files} (d) How would a vacancy on the Board during the year be filled! 3S Board may fill, for the unarpixed tana/ any vacahcies which occur during the period between annual stockholder meetings. 5. DIVIDEHPS (a) Has ccnai&erafcloa been given to increasing (or lowering) the dividend? Our directors constantly review our dividend policy with the objective of paying the hl&est dividends poealble consistent with sound manage ment principleso Future dividends vill depend on conditions existing act the time such dividends are declared. Ho one, of course, can pre dict these conditions accurately and such factors as taxes and the need for reinvesting earnings in new facilities vill play a major part in our Board's decisions. GLD003341 Annual Meeting 1959 3 December 2, 1959 (b) Why doesn't the Company pay a stock dividend in addition to a cash `divifeana?' 'la ihe part our BoerA hao considered the advisability of declaring a steels dividend, but in the llgxt of business end aarkat conditions has not found it advisable to do so* 6. INSURANCE (a) Does the Company carry tilde insurance on its properties? Title insurance or title guarantees ham been obtained on property acquisitions undo during the past seven years* Eriar to that ties title insurance vas obtained cm substantial acquisitions share it was fait the ricks involved justified our Incurring costs involved in sucih title protection. Title insurance has not been obtained on sane <xf the prqparties acquired by the Company many years ago as ve do not expect to hove any difficulty in properly establishing our title to these properties if required to do so, and ve do not feel it would be good business at the present tine to Incur the cost of title in surance for these older properties* 7. LEGAL ACTION (a) What hind of laar suits are pending bar and against the Company at the present tins? At the srenent tl our CggSaaiy is Involved la r>inf 2k h t suits in it and/or other parties against the / actions have been filed are exposed to liabilities in excess of $10,000* The first five cases are claims against cur Company, and the balance are our claims against others* (1) Atlas Beadeg Cocpaay vs* OlAddan - Declaratory judgment action filed by Atlas io efftabiliah" t&ab its sales of IGP emulsifiers end the use thereof by its customers do not infringe our patents and that our patents are Invalid mid unenforceable* The suit also seeks an injunction restraining us Dram suing or threaten ing to sue Atlas customers for patent Infringement. We are hopeful -that our patent position througi defense of the action or settlement negotiations vill be sustained* (2) Clayton vs. (Hidden - Suit alleging infringement of Clayton's reissue patent of vegetable oil refining* We hove filed a Motion for Suntsaxy Judgment t&ich mey be heard around the first of the year* (3) 3711 35th Avenue Ctarparation ve* First Machinery Corporation and (Hidden - Action alleging 310.996 damages* which osar he increaseOo $20,000 for son-insured dotages, arising out of a fire at Elmhurst which occurred when our contractor, first Machinery Corporation, rats doing dismantling verb* We are involved because of our agreement to indemnify the plaintiff at the time of its purchase of the Klrfiurat property from us* First Machinery in turn is required to indemnify us and Its Insurance carrier is conducting the defense. GLD0033 A ?. Annual I-feeting 1959 4 December 2, 1959 (4) galccne dba Glribllla Plaza Kitchen vs (Hidden - Suit alleging $I0,006 cjasagsg arising oufc of a claim that saod and small etaaas vure found In DisrRee Oregano sold ty a Connecticut distributor. Otis is a vastly Inflated claim vhich it is hoped can be settled for a nominal sum if tbs case cannot be dismissed. (5) Zdsaaflc et al vs, Glidden - Suits by terminated employees arising cut cf discoatimtance of operations at Elmhurst and the move to Bethlehem. Damages are ashed in an attempt to pit a mcnstacy value on certain benefits vhich the plain tiffs claim they vere deprived of tor termination, of their et^Lcymest. She Zdsnck suit involves five plaintiffs, each seeking $10,000. We have received notice of similar suits filed ca behalf of 55 other employees. At the present, the amount in litigation is $$0,000, although it could be In creased to $600,000 if ail 55 other claimants seek the same smounto (6) oiidflea vs. Hellenic lines - Suit for damages by reason of Hellenic lines* failure -to carry 35,000 tons of ilmenite ere from Kcilthcttcn, India, to an east coeat U.S. port in acccrdance vith terms of four charter parties, 3S trial court ruled that these charters vere frustrated by the closure of the Sues Canal. ) We are confidant that the decision is erron eous and an appeal has been filed vhich should be heard in Deeeaibsr or January. Although the suit seeks $540,000 it is not anticipated that damages would be fined at more then $240,000 should the Circuit Court of Appeals reverse the Dis trict Court's decision. (7) caiddBit vs. Jcnss-Hettglsater and United Pacific Insurance _ Cccmagyt ' oiia&m vs. Ifflodd - ' 'Actions' iSr $l'T76.isB5 damages arising cut of faulty caartruttlaa of Elevator "A" bin vails. 3fce damages figure indudes $1,500,000 escribed to possible decreased value of the elevator. Because of our lease and Cptian .Agreement vith Central Soya, vs are not pressing for trial of the suit <xr for any settlement. Upon Central Soya's exercise of its option to purchase, ve uill be in a position to negotiate for settlement by seeking peynent of our cufc-ofpoekst losses and expenses only. (8) (Hidden vs. Saraenfc-Cyke end Rich-Coat Yaroigh Ccapaay - Suits filed in October/ 1958 to enjoin ccmpetitars from using trade marks deceptively similar to our "SHSED". The principal objective is to obtain injunctions against future use of the infringing trademarks although claims for damages in the amount of $400,000 agsiast Sargent-Garke and $100,000 against Rich-Coat (its sub sidiary) are included. Shese cases are expected to ecoe up for trial in early spring. GLD003343 Araual Meeting 1959 5 December 2, 1959 (9) Olidden vs, Smith, Auditor of Marlon County, Indians Aotions filed" iso protest $E6,'d&6 rofcroaotiva increase in assessed valuation of our Indianapolis property resulting In a deficiency assessment cn prior Tears taxes of $151,933* Our chief Interest Is in avoiding payment of the deficiency assessment* Central Soya under the lease and Option Agreement has tin main interest of avoiding an unjustified increase as to future years* Zndicap tlona ere -that county officials are willing to settle by making a proportionately Increase in the assessment fare- going collection of any deficiency judgment against us* However these cases may have to he carried tbrougi trial* Blare sore a number of minor suite involving lesser amounts* She aggregate potential liability in these actions is estimated to be less than $10,000* (b) Hew much was paid out in_settlement of litigation during the year? WoharcLt vs. Olidden alleging gg64.4ll damages for -fate teamlnBtioa rrp 4ihe gf & Hosbington end ppodacto dealer was settled by the payment of $1500* We also gave 19 $1250 of our claim against the guarantor of an account in the suit of Olidaen ys. grasp and Dagoa far the collection of $25,606 owing by a discontinued point distributor in CoCLuchia, South Carolina* We, however, have & judgment including this amount against the distributor as pert of the settlement* We also paid $934 in settlement of a lev suit In Canada brought against Olidden Limited by Ro bs and Swain for damages allegedly incurred because of a defective paint product* A nuribor of claims referred to the Legal Department have been settled to avoid litigation whan definite legal liability has been established to our satisfaction* She principal settlement in this regard has been the recent payment of $3750 to Evens and Roy Meat itSfcKfe, Yale, Michigan for damages incurred When a five^gallon can of 6lid-nia stored in a meat cooler to delay the catalyst aaploded* Other claims have been settled principally by the giving of credit XRttmrandums aggregating approximately $2000* () lew much was spent for legal fees last year? Tees totalling $62,381 ware paid, to nineteen lag firms rejresenSIog the Ccapcay on general legal matters* $18,554 of this sum related to the Hellenic Unas litigation* (Our legal fees end Legal Department costs have been consistently and substantially below fees disclosed in prooqr state ments to have been paid by companies not mvirrhalning -their own legal departments to outside counsel.) Legal fees totalling $19,966 wore incurred by our Patent Department primarily for the cervices of foreign trademark counsel. Costs of attorney services incurred by other deportments total led $12,394. GLD003344 Annual Mseting 1959 -6- December 2, 1559 (d) What RPC actions are pending? An investigation of Hrtlippiae desiccated 'coconut priding practices of cur company ana others in the field is in process. (Any questions concerning this should be referred to Mr. K. D Horner) tea ETC Inquiry into the acquisition of our Chemurgy Division by Central Soya resulted in a "no action" letter. (e) Are reserves set up for pending lew suits? Yes, if warranted, in ah amount' which realistically appraises tbs potential liability. 8. HEW IDEAS What is the Ccaronny's policy toward treatments of ideas received from outsiders? ' Offers from anyone, net an employee or oiidicteh agency eo^lcyee, who discloees ideas cr suggestions as to any new or Improved products, processes, advertising and promotion schemes, food recipes, or sirdLlnr suggestions, are lssaedl&tely referred to the Legal Department, without achnowledgsent hy tee personnel re ceiving such, if it appears our Company may be interested in any such ideas, arrangements are made for tee receipt of tee disclosures in a manner which protects our Ccopany against Plains for idea piracy or the possible conflict between tee outsider's idea and verb; or research in progress by our own personnel. Generally, we will accept such disclosures only with tee understanding that, except for any patent rights involved, we will determine tee compensation, if any, to be paid. 9* PASli&ltiff How many patents dees the Company hold? tee Coapany holds 152 U.S. and te foreign patents. During tea past fiscal year 13 U.S. patents expired and 16 U. S. Patents were granted. 20 new applications ware filed and ICO are pending. In the foreign field, 9 new patents were granted this year end 28 new explications have been filed. 10. ROYALTIES What agreements does the company have far tee (a) paomsnt and (b) receipt of royalties? (a) tee Company has licenses from acme 20 companies covering processes and products such as can coatings, resins, emulsifiers, highway marking paints, etc. for which ve paid royalties in fiscal 1959 in tee approximate amount of $99,000. Typical companies core Continental Can, 3 H, E. F. Drew, Hercules, Du Font, General Foods. GLD00335 Annual Masting 1959 - 7 Decenfcer 2, 1959 (b) The Company and 01 laden International have licensed sene 20 foreign companies in the paint, chemical aad pignaat fields from which royalties were received in fiscal 1959 in the asgrcodmafce amount of $3^0,000. The Ocsqpany also has some eight domestic licensees In chemical and food fields firaa idiich royalties were received in fiscal 1959 in the ejjpreacimate emount of $59,000. Typical companies in the foreign field are W. Bo Grace, Ishlhnra, Bipolln, Fabrics Kaclonnl, and in the domestic field are Dow Chemical, Shultan and Miami Margarine. Ho STOCK (a) What is the hook value of the Company^ ecnaon stock? August 31, 1959 - $39.29j August 31, 195# -$37.99. This closing T&HTon the HOw York Stock Exchange yesterday was $ yy. (b) Are there any -plans to sell additional ccmaan stock to raise more capital? So definite plans' at the present tine# 22o STOCKHOLDERS (a) Did yrn receive any letters that stockholders asked he read at the meeting? {Hot"as yet. You' will' be kept current.) (b) HOw many stocKholders do we have and how does this number compare with the' yeer before? August '31* 1959: 20*9931 August 31. 1953: &S,4<>5, a xeSucticnof 1412. (c) Do you believe that stockholders Should he granted special epportunities to buy Cemoany products? Such a program would be tapractical to' carry cut equitabiiy and to the best interests of stock holders and customers. (d) who is the largest Individual stockholder. excluding banks, trusts or other institutions, and vhatio the mount of his holdings? Sou are the Largest single stockholder, with 15,9^2 shares' as of October 1, 1959, reported in the Proxy Statement. We should not, however, disclose individual share ownerships at the meeting. (e) How much stock is caned ter officers end directors? 26,339 shares. (f) What is the Company^ attitude towards directors owning Company stock? Those directors ebb have held such positions for a number of years have acquired substantial stock Vinifrtwgw as disclosedin our Zxcxy Statement. Stock ownership is a matter of personal financial circumstances and Investment policy. We feel that the most i&portant qualification for a director Is sound business Judg ment and experience and not stock holdings, although we agree that It is' desirable for our directors to be substantial holders of Glidden stock. GLD003346 Annual Ifeeting 1959 -8- Daeeniber 2, 1959 13a STOCK EURCHASB TIMS (a) Hag consideration been given to a stock purchase plan far all enplcysea? Yes. Our management believes, however, that decisions as to poxccnal investaant should vest with the Individual and not: be influenced by his esgloyer. n-fy Ike STOCK OPTiaJS 3 xgo -f (toTUj p AoD (a) Have any directors exercised stock options? Yes, JOur directors 7 <P0 We eanscised! optical for th purchase cdP a total of 33J3Q- shareso Ho director has sold any oiidden stock acquired through the eaarcise l(tS of stock optionso /6~OV (b) What limit has teen pieced la gar Option Pisa cm options granted any one officer or employee? &eleaxlajan shares c^iooaa to any lic^vicfuaL in 'the initial offering under both the 1952 ELan and the pressed 1959 Plan is 2,000 shares, and the madam shares optioned is 5,000 shares to any cue individual, '" -Ti^o * 05. STOCK QgTXQH INCENTIVE FIM Approximately 5jfi of the proxies returned to date (December 2) hays con tained a vote against the proposed 1959 P3m> Bqylaagfcjcns of the vote fall into the following categories t (a} Caqpassetion considered already adequate for officers and key enplcyeoai (b) There have been no ccaaaensurste additional benefits to stock holders in the fern of increased dividends or stock dividends; (c) A belief that stock option plans actually do not provide toy Incentive since these has been no significant appreciation in market value of Glidden stock during the teens of the 1952 Plan or "real progress". 3fce following iafcasaetioa eon be used in answering questions as to the justification for the 1959 Plan, A, She purpose of the plan is to encourage key employees to acquire stock ownership in the Ccopsxy and continue in its employ, and to provide additional incentive to men of training, managerial ability and experience vpon tfioee judgnent, initiative end efforts the future success and development of the Company depends. GLD003347 Annual J&eting 1959 9 December 2, 1959 Be Granting options to key enployses provides an incentive far increasing Ccnpaoy growth, and profits which ultimately cm be expected to be reflected In increased market value of the Ccrapmy's stock* C. While there is a direct correlation between the granting of options which create profit incentives and the Ccapeny's earn ings which fora the basis tea dividends, stock received upon the exorcise of the cptions is paid for by the participants and dees not ccaoe out of profits* J>. ahe 1959 Plen is not restricted to officers or to top manageaent employees, but also and acre inpertmt will apply to younger men who are rising to key managerial positions and future respon sibility for the Company's success* E Hie Stock Option Incentive Plan is only cos naans of providing employees with incentives tea increasing profits* It is parti cularly effective however because of its tax advantages to the individual employees and because of the fact that mquisition of & proprietary interest in the Ccsupsny can be postponed until later years when an espLcyee is awe financially able to make the investment. 3Ms is particularly true of younger employees who are rising to key positions of oaregeasat responsibility* ' F* Dilation* Share is no dilution of other stockholder's equity unless there is an increase in market value of the stock after the opticas are granted, and then only to the extent of the Increase. 2Mc would presumably amount to only e few cents & share* Go Restricted stock options could sot be granted to shareholders under lew and this would not be justified cconcralcally since there is no opportunity far a stockholder who is not an aaplcyee to contribute through his own efforts to the Company's profit and future growth. H. All stockholders profit ccnraeasurstaly if as a result of granting options the incentive to key employees results in increased growth and profits and ultimately appreciation in market value of the Company's stock. RKD/aep GLD003348