Preliminary Proxy Statement

RNS Number:8929L
Hercules Inc
03 June 2003

Release on Receipt

03-09-S






              HERCULES FILES PRELIMINARY PROXY STATEMENT WITH SEC


  * Nominates Four Exceptional Independent Directors for Election at Annual
    Meeting


  * Strengthens Corporate Governance: Empowers Shareholders Through Changes To
    Rights Plan, Names Lead Director, Moves To Expense Stock Options


  * Urges Shareholders To Continue To Support Successful Two-Year Turnaround
    And Stop Heyman From Gaining Control of Hercules Without Paying Anything To
    Shareholders




WILMINGTON, DE, JUNE 3, 2003 - Hercules Incorporated (NYSE: HPC) today filed its
preliminary proxy statement with the Securities and Exchange Commission,
proposing its slate of directors for election at the Annual Meeting of
Shareholders, which has been set for July 25, 2003. The Company also announced
actions to further strengthen its corporate governance and urged shareholders to
support the Company's successful two-year turnaround by rejecting the efforts of
dissident director Samuel J. Heyman to place his hand-picked nominees on
Hercules' Board, which would give him control of the Company without paying
anything to Hercules shareholders.


Dr. William H. Joyce, Chairman and Chief Executive Officer of Hercules, stated,
"We have nominated four exceptional, highly qualified individuals for election
to the Hercules Board. These independent directors - who have a wealth of
business and financial expertise - will complement our existing Board, which
includes several current and former CEOs of chemical companies. We are confident
they will faithfully represent the interests of all shareholders - and help us
build on the excellent progress we have made since 2001 in executing our
business plan."


Since 2001, Hercules has taken concerted actions that have turned the Company
around, restoring its financial health, putting it in a much stronger operating
position and creating a solid platform for future growth. Key to the plan was
the improvement and subsequent sale of part of BetzDearborn, the Water Treatment
business, to GE Specialty Materials for $1.8 billion in cash in April 2002. This
sale allowed Hercules to pay off more than $1.6 billion in debt, significantly
strengthening its balance sheet. Hercules also embarked on an intensive Work
Process Redesign program - improving how it conducts business and increasing its
competitive advantage - which has resulted in approximately $160 million of
ongoing annual cost savings. The Company's actions have led to improved
financial results, with growth in both sales and operating profits from ongoing
businesses far outpacing the average performance of its chemical industry peers.


Hercules Director Nominees


The four Hercules director nominees standing for election at the 2003 Annual
Meeting will bring substantial knowledge, experience and skills to the Hercules
Board. They are:


  * Patrick Duff. Mr. Duff, who served as a Senior Managing Director and a
    member of the Management Committee at Tiger Management from 1989 to 1993,
    brings a strong and unique shareholder perspective and tremendous knowledge
    of investing from his experience at a major investment fund. Mr. Duff is a
    licensed Certified Public Accountant and a Chartered Financial Analyst.


  * Thomas P. Gerrity. Dr. Gerrity, who served as Dean of The Wharton School
    of the University of Pennsylvania, one of the nation's leading business
    schools, and was previously a CEO and founder of a leading consulting firm
    in business reengineering and information technology strategy, brings
    enormous knowledge, experience and international contacts to the Hercules
    Board. Dr. Gerrity is the Chairman of the audit committee of a $14 billion S
    &P 500 company.


  * John K. Wulff. Mr. Wulff, who is a member of the Financial Accounting
    Standards Board, a former CFO of a Dow Industrial 30 company and partner of
    a major accounting firm, brings extensive financial and accounting expertise
    to the Board.


  * Joe B. Wyatt. Mr. Wyatt, who has served as Chancellor and CEO of
    Vanderbilt University, brings strong expertise in the areas of research and
    information systems. Mr. Wyatt also has long-term experience as Chairman of
    the audit committee of a successful public company. Mr. Wyatt has been a
    Hercules director since 2001.


Corporate Governance Initiatives


In consultation with shareholders, Hercules has taken steps to further
strengthen its corporate governance. Among other initiatives, the Company is:


  * Adding shareholder-empowering features to the Company's rights agreement.
    These amendments include:


  * A "qualified offer" provision, under which the Company would be obligated
    to bring a vote to shareholders within 120 days if a bona fide, non-coercive
    premium offer (at least 20%) is made by a serious acquirer


  * Allowing "qualified institutional investors" to own just below 20% (up
    from 10% currently) without triggering the plan


  * A three-year independent director evaluation (TIDE) provision, which calls
    for a review of the plan at least every three years by the Corporate
    Governance, Nominating and Ethics Committee.


  * Naming a Lead Director.


  * Adopting a policy of expensing stock options, beginning in 2003.


  * Requiring director compensation be at least 50% in stock and/or options
    that must be retained until directors leave the Board, and establishing
    minimum stock ownership requirements for directors.


Dr. Joyce added, "These initiatives reflect our commitment to
shareholder-focused corporate governance. We have empowered shareholders with
amendments to the rights plan that we believe make the modified plan even better
for shareholders than eliminating it. Shareholders get the best of both worlds:
they are protected from abusive takeover tactics and will be able to vote to
accept or reject any non-coercive qualified offer made by a serious acquirer -
since the plan requires a shareholder referendum on a qualified offer. However,
while we believe this plan is better for shareholders than no plan, if a
majority of shareholders decide that they would rather eliminate the rights plan
- and voice that opinion by voting for the precatory shareholder proposal - the
Board will honor that decision."


Proxy Contest


A dissident group led by Sam Heyman and International Specialty Products, Inc.,
a company he controls, is seeking to take control of Hercules' Board of
Directors and has proposed its own slate of nominees for election at the Annual
Meeting of Shareholders.


Dr. Joyce stated, "Over the past two years, we have taken concerted actions that
have turned Hercules around - we have a significantly stronger balance sheet and
our businesses are generating strong cash flow. Yet, despite this great
progress, Sam Heyman is trying to seize control of the Company without paying
shareholders anything. Instead of offering constructive plans to further build
on our successes, he has attacked sound strategic decisions such as the $1.8
billion sale of part of BetzDearborn, disparaged management and been generally
disruptive as we continue to work to improve Hercules and deliver increased
shareholder value. Sam Heyman is clearly looking out for his own interests, and
we urge shareholders to disregard his self-serving rhetoric and reject the slate
of nominees that he has hand-picked, paid, and indemnified."


                                     # # #




Hercules manufactures and markets chemical specialties globally for making a
variety of products for home, office and industrial markets. For more
information, visit the Hercules website at www.herc.com.


This news release includes forward-looking statements, as defined in the Private
Securities Litigation Reform Act of 1995, reflecting management's current
analysis and expectations, based on what management believes to be reasonable
assumptions. Forward-looking statements may involve known and unknown risks,
uncertainties and other factors, which may cause the actual results to differ
materially from those projected, stated or implied, depending on such factors
as: the outcome of the proxy contest; ability to generate cash, ability to raise
capital, ability to refinance, the result of the pursuit of strategic
alternatives, ability to execute work process redesign and reduce costs,
business climate, business performance, economic and competitive uncertainties,
higher manufacturing costs, reduced level of customer orders, changes in
strategies, risks in developing new products and technologies, environmental and
safety regulations and clean-up costs, foreign exchange rates, the impact of
changes in the value of pension fund assets and liabilities, changes in
generally accepted accounting principles, adverse legal and regulatory
developments, including increases in the number or financial exposures of
claims, lawsuits, settlements or judgments, or the inability to eliminate or
reduce such financial exposures by collecting indemnity payments from insurers,
the impact of increased accruals and reserves for such exposures, and adverse
changes in economic and political climates around the world, including terrorist
activities and international hostilities. Accordingly, there can be no assurance
that the Company will meet future results, performance or achievements expressed
or implied by such forward-looking statements. As appropriate, additional
factors are contained in other reports filed by the Company with the Securities
and Exchange Commission. This paragraph is included to provide safe harbor for
forward-looking statements, which are not generally required to be publicly
revised as circumstances change, and which the Company does not intend to
update.


Hercules filed a preliminary proxy statement with the Securities and Exchange
Commission on June 3, 2003, in connection with its 2003 annual meeting of
shareholders. Information regarding the identity of the persons who may, under
SEC rules, be deemed to be participants in the solicitation by Hercules of its
shareholders for the 2003 annual meeting, and the participants' interests in the
solicitation, are set forth in the preliminary proxy statement. Hercules will be
filing a definitive proxy statement and other relevant documents. WE URGE
INVESTORS TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS THAT HERCULES WILL FILE WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Security holders will be able to obtain a free copy of
the proxy statement and other related documents filed by Hercules at the SEC's
website at www.sec.gov. When available, the definitive proxy statement and other
related documents may also be obtained from Hercules free of charge by
contacting Helen Calhoun, Hercules Incorporated, Hercules Plaza, 1313 North
Market Street, Wilmington, DE 19894-0001, tel. [phone].



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