SCHEDULE 14A INFORMATION

          Proxy Statement Pursuant to Section 14(a) of the Securities
                     Exchange Act of 1934 (Amendment No.  )

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                             ALBEMARLE CORPORATION
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                             ALBEMARLE CORPORATION
                            330 SOUTH FOURTH STREET
                                 P.O. BOX 1335
                            RICHMOND, VIRGINIA 23210

                                     [LOGO]


                         ANNUAL MEETING OF SHAREHOLDERS

                                                                  March 24, 1997

To the Shareholders:

     We enclose our annual report describing Albemarle's operations during the
past year. We hope you read this report, which summarizes major corporate
developments during the year.

     We cordially invite you to attend the annual meeting of shareholders to be
held in the RESTORED GUN FOUNDRY BUILDING OF THE TREDEGAR IRON WORKS, 500
TREDEGAR STREET, in Richmond, Virginia, on Wednesday, April 23, 1997, at 11:00
A.M., Eastern Daylight Time. A formal notice of the meeting, together with a
proxy statement and proxy form, is enclosed with this letter. The notice points
out that you will be asked to elect a Board of Directors and approve the
designation of auditors for the coming year.

     Please read the notice and proxy statement carefully, complete the proxy
form and mail it promptly.

                                          Sincerely yours,

                                          FLOYD D. GOTTWALD, JR.
                                          CHAIRMAN OF THE BOARD
                                          CHIEF EXECUTIVE OFFICER




                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

     NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares of
Common Stock of Albemarle Corporation (the "Corporation") will be held in the
restored gun foundry building of the Tredegar Iron Works, 500 Tredegar Street,
Richmond, Virginia, on Wednesday, April 23, 1997, at 11:00 A.M. Eastern Daylight
Time, for the following purposes:

     1.  To elect a Board of Directors to serve for the ensuing year;

     2.  To approve the designation by the Board of Directors of Coopers &
         Lybrand L.L.P. as auditors for the fiscal year ending December 31,
         1997; and

     3.  To transact such other business as may properly come before the
         meeting.

     Holders of shares of Albemarle Common Stock of record at the close of
business on March 10, 1997, will be entitled to vote at the meeting.

     You are requested to fill in, sign, date and return the enclosed proxy
promptly, regardless of whether you expect to attend the meeting. A postage-paid
return envelope is enclosed for your convenience.

     If you are present at the meeting, you may vote in person even if you
already have sent in your proxy.

                                   By Order of the Board of Directors
                                   E. WHITEHEAD ELMORE, SECRETARY

March 24, 1997



                                PROXY STATEMENT
                                      FOR
                         ANNUAL MEETING OF SHAREHOLDERS
                             ALBEMARLE CORPORATION

                           TO BE HELD APRIL 23, 1997
                 APPROXIMATE DATE OF MAILING -- MARCH 24, 1997

     Proxies in the form enclosed are solicited by the Board of Directors for
the Annual Meeting of Shareholders to be held on Wednesday, April 23, 1997. Any
person giving a proxy may revoke it at any time before it is voted by delivering
another proxy, or written notice of revocation, to the Secretary of the
Corporation. A proxy, if executed and not revoked, will be voted, and, if it
contains any specific instructions, will be voted in accordance with such
instructions.

     On March 10, 1997, the date for determining shareholders entitled to vote
at the meeting, there were outstanding 55,046,183 shares of Albemarle Common
Stock. Each share of Albemarle Common Stock is entitled to one vote.

     The election of each nominee for director requires the affirmative vote of
the holders of a plurality of the shares of Albemarle Common Stock voted in the
election of directors. Votes that are withheld and shares held in street name
that are not voted in the election of directors will not be included in
determining the number of votes cast. Unless otherwise specified in the
accompanying form of proxy, it is intended that votes will be cast for the
election of all of the nominees as directors.

     The cost of the solicitation of proxies will be borne by the Corporation.
In addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Corporation. Corporate Investor
Communications, Inc., has been engaged to assist in the solicitation of proxies
from brokers, nominees, fiduciaries and other custodians. The Corporation will
pay that firm $7,000 for its services and reimburse its out-of-pocket expenses.

     The Corporation's street address is 330 South Fourth Street, Richmond,
Virginia 23219.

                             ELECTION OF DIRECTORS

     Proxies will be voted for the election as directors for the ensuing year of
the persons named below (or if for any reason unavailable, of such substitutes
as the Board of Directors may designate). The Board of Directors has no reason
to believe that any of the nominees will be unavailable.

CRAIG R. ANDERSSON; age 59; director since March 1, 1996; part-time consultant,
     having served as Vice Chairman of Aristech Chemical Corporation (specialty
     chemicals business) from January 1, 1994, until April 30, 1995, and
     President and Chief Operating Officer of Aristech Chemical Corporation
     prior thereto. Other directorship: RMI Titanium Company.

DIRK BETLEM; age 58; director since August 15, 1996; President and Chief
     Operating Officer of the Corporation since August 15, 1996, having served
     as Senior Vice President-International from April 24, 1996, to August 15,
     1996, Vice President-International from March 1, 1994, to April 24, 1996,
     Vice President-International of Ethyl Corporation from June 1, 1993, to
     March 1, 1994, and as Vice President-Imaging Systems of E.I. DuPont de
     Nemours and Company, Inc. from June 1991 to November 1992.

                                       1



FLOYD D. GOTTWALD, JR.; age 74; director since 1994; Chairman of the Board and
     Executive Committee and Chief Executive Officer of the Corporation since
     March 1, 1994; Vice Chairman of the Board of Ethyl Corporation from March
     1, 1994, until February 29, 1996, having served as Chairman of the Board
     and the Executive Committee of Ethyl Corporation from April 1992 until
     March 1, 1994, and as Chairman of the Board and Executive Committee and
     Chief Executive Officer of Ethyl Corporation prior thereto. Other
     directorship: Tredegar Industries, Inc.

JOHN D. GOTTWALD; age 42; director since 1994; President and Chief Executive
     Officer of Tredegar Industries, Inc. (plastics and aluminum business).
     Other directorship: Tredegar Industries, Inc.
 
ANDRE B. LACY; age 57; director since 1994; Chairman of the Board, Chief
     Executive Officer and President of LDI Management, Inc., Managing General
     Partner, LDI, Ltd. (industrial and investment limited partnership). Other
     directorships: Herff Jones, Inc., IPALCO Enterprises, Inc., The National
     Bank of Indianapolis, Patterson Dental Co., Tredegar Industries, Inc. and
     FinishMaster, Inc.

SEYMOUR S. PRESTON, III; age 63; director since March 1, 1996; Chairman of the
     Board and Chief Executive Officer of AAC Engineered Systems, Inc.
     (manufacturer of centrifugal, deburring and finishing machinery) since
     1994, having served as President and Chief Executive Officer of Elf Atochem
     North America, Inc. (chemicals and plastics business) prior thereto. Other
     directorship: CoreStates Bank, N.A.

EMMETT J. RICE; age 77; director since 1994; retired member of the Board of
     Governors of the Federal Reserve System. Other directorships: Tredegar
     Industries, Inc. and Jardine-Fleming China Region Fund, Inc.

CHARLES B. WALKER; age 58; director since 1994; Vice Chairman of the Board and
     Chief Financial Officer of the Corporation (and Treasurer of the
     Corporation until March 1, 1996) since March 1, 1994, having served as
     Executive Vice President and Chief Financial Officer of Ethyl Corporation
     from August 1, 1989, to March 1, 1994, and Treasurer of Ethyl Corporation
     since July 1, 1993. Other directorships: Ethyl Corporation (Vice Chairman,
     Chief Financial Officer and Treasurer) and Nations Fund Trust/Nations Fund,
     Inc.

ANNE MARIE WHITTEMORE; age 51; director since March 1, 1996; Partner of McGuire,
     Woods, Battle & Boothe, L.L.P. (law firm). Other directorships: Owens &
     Minor, Inc., USF&G Corporation, James River Corporation and T. Rowe Price
     Associates, Inc.

     In 1996, each director attended at least 75% of the aggregate of (i) the
total number of meetings of all committees of the Board on which the director
then served and (ii) the total number of meetings of the Board of Directors held
during 1996 while he or she was a member of the Board of Directors. Six meetings
of the Corporation's Board of Directors were held during 1996.

     The Corporation's executive committee currently consists of Messrs. Floyd
D. Gottwald, Jr., Walker and Betlem. The executive committee acts not only as
the executive committee of the Board of Directors but also as the Corporation's
principal management committee. During 1996, the executive committee met on
three occasions as the executive committee of the Board of Directors and on ten
occasions as the principal management committee.

     Messrs. Lacy and Preston and Mrs. Whittemore currently serve on the
Corporation's audit committee. During 1996, the audit committee met twice. The
audit committee reviews the Corporation's internal audit and financial reporting
functions and the scope and results of the audit performed by the Corporation's
independent accountants and matters relating thereto and reports thereon to the
Board of Directors. The audit committee also reviews audit fees and recommends
to the Board of Directors the engagement of the independent accountants of the
Corporation.

                                       2



     The nominating committee currently consists of Messrs. Floyd D. Gottwald,
Jr., Lacy and Rice. During 1996, the nominating committee met three times. The
nominating committee recommends candidates for election as directors and in some
cases the election of officers. The Corporation's bylaws provide that a
shareholder of the Corporation entitled to vote for the election of directors
may nominate persons for election to the Board by mailing written notice to the
Secretary of the Corporation not later than (i) with respect to an election to
be held at an annual meeting of shareholders, 60 days prior to such meeting and
(ii) with respect to an election to be held at a special meeting of shareholders
for the election of directors, the close of business on the seventh day
following the date on which notice of such meeting is first given to
shareholders. Such shareholder's notice shall include (i) the name and address
of the shareholder and of each person to be nominated, (ii) a representation
that the shareholder is a holder of record of stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate each person specified, (iii) a description of all
understandings between the shareholder and each nominee and any other person
(naming such person) pursuant to which the nomination is to be made by the
shareholder, (iv) such other information regarding each nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated by the
Board of Directors and (v) the consent of each nominee to serve as a director of
the Corporation if so elected.

     Messrs. Rice and Andersson and Mrs. Whittemore currently serve as the
Corporation's executive compensation committee. During 1996, the executive
compensation committee met on eight occasions. This committee approves the
salaries of management-level employees. It also approves all bonus awards,
certain consultant agreements and initial salaries of new management level
personnel and grants options and restricted stock under the Corporation's
Omnibus Stock Incentive Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Floyd D. Gottwald, Jr., and Bruce C. Gottwald, a director of the
Corporation until February 29, 1996, are brothers. William M. Gottwald, MD, who
is a Vice President of the Corporation and was a director of the Corporation
until February 29, 1996, and John D. Gottwald, a director of the Corporation,
are sons of Floyd D. Gottwald, Jr. Bruce C. Gottwald, Jr., a director of the
Corporation until February 29, 1996, is a son of Bruce C. Gottwald. The
Gottwalds may be deemed to be control persons of the Corporation.

                                 SECTION 16(A)
                   BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that have been
received by the Corporation, the Corporation believes that there has been
compliance with all filing requirements applicable to its officers, directors
and beneficial owners of greater than 10% of the Albemarle Common Stock, except
that (i) William M. Gottwald, MD, due to a clerical error, was late in reporting
the receipt of an option to acquire shares of Albemarle Common Stock in his
Annual Statement of Beneficial Ownership of Securities on Form 5 for 1996 filed
on February 14, 1997, which Form was amended on February 18, 1997; and (ii)
Dixie E. Goins inadvertently omitted 44 shares held in a brokerage account from
his Initial Statement of Beneficial Ownership of Securities on Form 3 filed on
March 1, 1994. Mr. Goins included such shares in his Annual Statement of
Beneficial Ownership of Securities on Form 5 for 1996.

                                       3


                                STOCK OWNERSHIP

     The following table lists any person (including any "group" as that term is
used in Section 13(d)(3) of the Exchange Act) who, to the knowledge of the
Corporation, was the beneficial owner as of December 31, 1996, of more than 5%
of the outstanding voting shares of the Corporation.

TITLE OF NAME AND ADDRESS OF NUMBER OF CLASS BENEFICIAL OWNERS SHARES PERCENT OF CLASS - ------------- ------------------------------------- ---------- ---------------- Common Stock Floyd D. Gottwald, Jr., and 18,215,869(b)(c) 33.09% Bruce C. Gottwald (a) 330 South Fourth Street P.O. Box 2189 Richmond, Virginia 23218 NationsBank Corporation and 6,425,624 11.67% related entities (d) c/o NationsBank Corporation NationsBank Plaza Charlotte, North Carolina 28255 J. P. Morgan & Co., Incorporated (e) 8,346,216 15.10% 60 Wall Street New York, New York 10260
- --------------- (a) Floyd D. Gottwald, Jr., and Bruce C. Gottwald (the "Gottwalds"), together with members of their immediate families, may be deemed to be a "group" for purposes of Section 13(d)(3) of the Exchange Act, although there is no agreement among them with respect to the acquisition, retention, disposition or voting of Albemarle Common Stock. (b) As of December 31, 1996, the Gottwalds, individually or collectively, have sole voting and investment power over all of the shares disclosed except 13,977,180 shares held by wives, children and in certain trust relationships, some of which might be deemed to be beneficially owned by the Gottwalds under the rules and regulations of the Securities and Exchange Commission, but as to which the Gottwalds disclaim beneficial ownership. Shares owned by the adult children of Floyd D. Gottwald, Jr., and Bruce C. Gottwald are included in the holdings of the Gottwalds as a group, but are not attributed to Floyd D. Gottwald, Jr., other than in this table. This amount includes 6,999 shares of Albemarle Common Stock, with respect to which the Gottwalds or members of their immediate families have the right to acquire beneficial ownership within 60 days of December 31, 1996, pursuant to the Corporation's Omnibus Stock Incentive Plan. (c) This amount includes shares owned by John D. Gottwald, a director of the Corporation, and William M. Gottwald, a Vice President of the Corporation. See the table on page 5 for information on the share ownership as of January 31, 1997, of each member of the Gottwald family who is an executive officer or director of the Corporation. This amount includes any shares owned of record by the Trustees under various employee savings plans for the benefit of the Gottwalds and the members of their immediate families. This amount does not include shares held by the Trustees of such plans for the benefit of other employees. Shares held under the Corporation's savings plan are voted by the Trustee in accordance with instructions solicited from employees participating in the plan. If a participating employee does not give the Trustee voting instructions, his shares generally are voted by the Trustee in accordance with the Board of Directors' recommendations to 4 the shareholders. Because Floyd D. Gottwald, Jr., is a director and the Chief Executive Officer of the Corporation and the Gottwalds are the largest shareholders of the Corporation, the Gottwalds may be deemed to be control persons of the Corporation and to have the capacity to control any such recommendation of the Board of Directors. (d) The NationsBank Corporation related entities are NationsBank N.A. (South), NationsBank, N.A. and NationsBank of Texas, N.A. The information contained herein with respect to NationsBank Corporation and the related entities listed herein is based on a Schedule 13G filed by such entities with the Securities and Exchange Commission. Such filing further stated that the acquisition of such shares was in the ordinary course of business and not in connection with or as a participant in any transaction having the purpose or effect of changing or influencing the control of the Corporation. The shares held by NationsBank Corporation and related entities are held in fiduciary accounts. (e) The information contained herein with respect to J.P. Morgan & Co., Incorporated is based on a Schedule 13G filed by such entity with the Securities and Exchange Commission. Such filing further stated that the acquisition of such shares was in the ordinary course of business and not in connection with or as a participant in any transaction having the purpose or effect of changing or influencing the control of the Corporation. The following table sets forth as of January 31, 1997, the beneficial ownership of Albemarle Common Stock by all directors of the Corporation, the Chief Executive Officer and the four next most highly compensated executive officers and all directors and executive officers of the Corporation as a group. Unless otherwise indicated, each person listed below has sole voting and investment power over all shares beneficially owned by him or her.
NUMBER OF SHARES NUMBER OF SHARES TOTAL NAME OF BENEFICIAL OWNER WITH SOLE VOTING WITH SHARED VOTING NUMBER PERCENT OR NUMBER OF PERSONS IN GROUP AND INVESTMENT POWER(1) AND INVESTMENT POWER OF SHARES OF CLASS(2) - ----------------------------------------- ------------------------- -------------------- --------- ------------- Craig R. Andersson 109 8,000 8,109 Thomas G. Avant 137,333 0 137,333 Dirk Betlem 60,194 0 60,194 E. Whitehead Elmore 263,160 0 263,160 Floyd D. Gottwald, Jr. 570,044 5,800,656(3) 6,370,700(2) 11.57% John D. Gottwald 117,483 7,346,881 7,464,364(2)(4) 13.56% Andre B. Lacy 15,812(5) 462,500 478,312 Seymour S. Preston, III 3,109 0 3,109 Emmett J. Rice 1,194 0 1,194 Charles B. Walker 207,421 0 207,421 Anne Marie Whittemore 8,810 2,940 11,750 Directors and executive officers as a group (11 persons) 1,384,669 7,925,607 9,310,276 16.78%
- --------------- (1) The amounts in this column include shares of Albemarle Common Stock, with respect to which certain persons have the right to acquire beneficial ownership within 60 days of January 31, 1997, pursuant to the Corporation's Omnibus Stock Incentive Plan: Mr. Avant: 121,764 shares; Mr. Betlem: 57,000 shares; Mr. Elmore: 103,878 shares; F.D. Gottwald, Jr.: 6,999 shares; Mr. Walker: 156,940 shares; and directors and executive officers as a group: 446,581 shares. (2) In accordance with the rules of the Securities and Exchange Commission some shares are attributed to more than one member of the Gottwald families, but are counted only once in the information provided for directors 5 and executive officers as a group. Except as indicated, each person or group owns less than 1% of Albemarle Corporation Common Stock. (3) Mr. Gottwald disclaims beneficial ownership of 5,800,656 of such shares. (4) Mr. Gottwald disclaims beneficial ownership of 7,346,881 of such shares. This amount includes 1,593,050 shares of Albemarle Common Stock that Mr. Gottwald may be deemed to own beneficially. Such shares constitute Mr. Gottwald's interest as a discretionary beneficiary of a trust of which he is a co-trustee. (5) Mr. Lacy disclaims beneficial ownership of 14,741 of such shares. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS The following table presents information relating to total compensation of the Chief Executive Officer and the four next most highly compensated executive officers of the Corporation for the period from January 1, 1996, through December 31, 1996.
ANNUAL COMPENSATION LONG-TERM COMPENSATION ----------------------------------------- ----------------------------- OTHER ANNUAL RESTRICTED NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS/SARS - --------------------------------- ----- ------------- -------- ------------ ------------ ------------ Floyd D. Gottwald, Jr. 1996 $665,000(1) $ 0 -- -- 0 Chairman of the Board 1995 528,500 305,000 -- -- 0 and Executive Committee, 1994 420,833(2) 265,000 -- -- 31,808(3) Chief Executive Officer Dirk Betlem 1996 $437,090(5) $181,500 -- -- 143,000 President and Chief 1995 317,372 95,000 -- -- 0 Operating Officer 1994 270,651 70,000 -- -- 57,000 Charles B. Walker 1996 $239,200(1) $122,500 $488,128(7)(8) $554,880(7) 0 Vice Chairman of the 1995 231,533 245,000 -- -- 0 Board and Chief 1994 181,667(2) 118,000 -- -- 156,940(3) Financial Officer E. Whitehead Elmore 1996 $218,400(1) $ 50,000 $244,064(7)(8) $277,440(7) 0 Senior Vice President, 1995 211,400 100,000 -- -- 0 Secretary and General 1994 168,332(2) 70,000 -- -- 103,878(3) Counsel Thomas G. Avant 1996 $220,500 $ 59,000 -- -- 0 Senior Vice President 1995 212,000 62,000 -- -- 0 1994 167,667(2) 55,000 -- -- 127,764(3)
ALL OTHER NAME AND PRINCIPAL POSITION COMPENSATION - --------------------------------- ------------ Floyd D. Gottwald, Jr. $ 4,356(4) Chairman of the Board 26,425 and Executive Committee, 10,624 Chief Executive Officer Dirk Betlem $ 12,658(6) President and Chief 4,746 Operating Officer 0 Charles B. Walker $ 11,960(9) Vice Chairman of the 11,577 Board and Chief 9,083 Financial Officer E. Whitehead Elmore $ 10,990(10) Senior Vice President, 10,260 Secretary and General 8,417 Counsel Thomas G. Avant $ 11,025(11) Senior Vice President 10,600 8,662 - --------------- (1) Floyd D. Gottwald, Jr. (for two months), Charles B. Walker and E. Whitehead Elmore also served as officers of Ethyl Corporation during 1996 and were compensated separately by Ethyl Corporation for such services. (2) Reflects salary for the ten months following the spin-off of the Corporation from Ethyl Corporation. (3) Certain of these options were granted in connection with the spin-off of the Corporation from Ethyl Corporation to replace options previously granted under Ethyl Corporation's Incentive Stock Option Plan. (4) Mr. Gottwald participated in the savings plan and the excess benefit plan of Ethyl Corporation until February 29, 1996. The amounts reflect the amounts reimbursed to Ethyl Corporation by the Corporation for the Corporation's allocable portion of his benefits under Ethyl Corporation's excess benefit plan and savings plan. (5) Mr. Betlem is compensated in Belgian francs. Each amount listed in U.S. dollars is based on the exchange rate at December 31, 1996. (6) Includes contributions to the Albemarle S.A. Savings Plan for 1996, 1995 and 1994, respectively. Each amount listed here in U.S. dollars is based on the exchange rate at December 31, 1996. 6 (7) On March 1, 1996, the Corporation sold its olefins business to Amoco Chemical Company for approximately $500 million, with a gain on the sale of $158.2 million ($94.4 million after income taxes). On the recommendation of the Chairman and Chief Executive Officer, the Executive Compensation Committee concluded that Messrs. Walker and Elmore had made special contributions in effecting the successful disposition of the olefins business and, accordingly, were entitled to special restricted stock awards under the Corporation's Omnibus Stock Incentive Plan, which were granted on May 6, 1996. The Committee also concluded that the amount of the awards should be net of taxes and should be included in the calculations of amounts payable under the Corporation's excess benefit plans. Restricted shares are forfeitable if the award recipient's employment is terminated except by reason of death, disability or a change of control. One half of the shares become non-forfeitable on the first anniversary of the date of the award and the balance become non-forfeitable on the second anniversary of the date of the award. As of December 31, 1996, Mr. Walker held a total of 23,120 shares of restricted stock with an aggregate value of $419,050 and Mr. Elmore held a total of 11,560 shares of restricted stock with an aggregate value of $209,525. Dividends are paid on the shares of restricted stock. (8) Reflects tax reimbursement in connection with the restricted stock award discussed in Note 7. (9) Mr. Walker participates in the savings plan and the excess benefit plan of Ethyl Corporation. The amounts reflect the amounts reimbursed to Ethyl Corporation by the Corporation for the Corporation's allocable portion of his benefits under Ethyl Corporation's excess benefit plan and savings plan. (10) Includes contributions to the Corporation's savings plan ($7,500, $7,500 and $5,250) and accruals in the Corporation's excess benefit plan ($3,490, $2,760 and $3,167) for 1996, 1995 and 1994, respectively. (11) Includes contributions to the Corporation's savings plan ($7,500, $7,500 and $6,162) and accruals in the Corporation's excess benefit plan ($3,525, $3,100 and $2,500) for 1996, 1995 and 1994, respectively. The following table presents information concerning stock options granted during 1996 to the Chief Executive Officer and the four next most highly compensated executive officers. OPTION GRANTS IN LAST FISCAL YEAR Each of the following options relates to Albemarle Common Stock and does not include a related stock appreciation right ("SAR").
INDIVIDUAL GRANTS POTENTIAL REALIZABLE ---------------------------------------------------------- VALUE AT ASSUMED % OF ANNUAL RATES OF STOCK TOTAL OPTIONS PRICE APPRECIATION FOR GRANTED TO EXERCISE OPTION TERM OPTIONS EMPLOYEES IN OR BASE EXPIRATION ------------------------- NAME GRANTED (#) FISCAL YEAR PRICE ($) DATE 5% ($) 10% ($) - ----------------------- ----------- ------------- --------- ---------- ---------- ---------- Floyd D. Gottwald, Jr. 0 Dirk Betlem 143,000(1) 48.81 $17.375 8/27/06 $1,562,829 $3,960,492 Charles B. Walker 0 E. Whitehead Elmore 0 Thomas G. Avant 0
- --------------- (1) These options become exercisable in 20% increments based on the attainment of certain performance objectives. In addition, the options will become exercisable for persons who are still employed by the Corporation thirty days prior to the expiration date of the option or in the event of a change in control. 7 The following table presents information concerning stock options and SAR exercises by the Chief Executive Officer and the four next most highly compensated executive officers of the Corporation and fiscal year end option/SAR values. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARs OPTIONS/SARS AT FY-END AT FY-END(3) SHARES ACQUIRED VALUE ------------------------------ ----------------------------- NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ----------------------- --------------- ------------ ------------ ------------- ----------- ------------- Floyd D. Gottwald, Jr. 7,863 $ 40,652 6,999(1) 0 $ 23,202 $ 0 Dirk Betlem 0 0 57,000(1) 143,000(2) 285,000 107,250 Charles B. Walker 0 0 156,940(1) 0 782,306 0 E. Whitehead Elmore 0 0 103,878(1) 0 540,353 0 Thomas G. Avant 6,000 58,882 121,764(1) 0 639,385 0
- --------------- (1) Each of these options relates to Albemarle Common Stock and includes a tandem SAR. (2) This option relates to Albemarle Common Stock and does not include a tandem SAR. (3) These values are based on $18.125, the closing price of Albemarle Common Stock on The New York Stock Exchange on December 31, 1996. RETIREMENT BENEFITS The following table illustrates under the Corporation's pension plan for salaried employees the estimated benefits upon retirement at age 65, determined as of December 31, 1996, to persons with specified earnings and years of pension benefit service. To the extent benefits payable at retirement exceed amounts that may be payable under applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), they will be paid under the Corporation's excess benefit or supplemental retirement plans, as applicable. This table includes the amounts that would be payable under such plans. 8 PENSION PLAN TABLE*
YEARS OF PENSION BENEFIT SERVICE AND ESTIMATED ANNUAL BENEFITS -------------------------------------------------------------------------------------- FINAL-AVERAGE EARNINGS 10 15 20 25 30 35 40 ---------------------- -------- -------- -------- -------- -------- -------- -------- $ 300,000 $ 43,895 $ 65,845 $ 87,790 $109,740 $131,690 $153,635 $175,585 350,000 51,395 77,095 102,790 128,490 154,190 179,885 205,585 400,000 58,895 88,345 117,790 147,240 176,690 206,135 235,585 450,000 66,395 99,595 132,790 165,990 199,190 232,385 265,585 500,000 73,895 110,845 147,790 184,740 221,690 258,635 295,585 550,000 81,395 122,095 162,790 203,490 244,190 284,885 325,585 600,000 88,895 133,345 177,790 222,240 266,690 311,135 355,585 650,000 96,395 144,595 192,790 240,990 289,190 337,385 385,585 700,000 103,895 155,845 207,790 259,740 311,690 363,635 415,585 750,000 111,395 167,095 222,790 278,490 334,190 389,885 445,585 800,000 118,895 178,345 237,790 297,240 356,690 416,135 475,585 850,000 126,395 189,595 252,790 315,990 379,190 442,385 505,585 900,000 133,895 200,845 267,790 334,740 401,690 468,635 535,585 950,000 141,395 212,095 282,790 353,490 424,190 494,885 565,585 1,000,000 148,895 223,345 297,790 372,240 446,690 521,135 595,585
50 -------- $219,485 256,985 294,485 331,985 369,485 406,985 444,485 481,985 519,485 556,985 594,485 631,985 669,485 706,985 744,485 * Assumes attainment of age 65 in 1996 and Social Security Covered Compensation of $27,576. The benefit formula under the pension plans is based on the participant's final-average earnings, which are defined as the average of the highest three consecutive calendar years' earnings (base pay plus 50% of incentive bonuses paid in any fiscal year) during the 10 consecutive calendar years immediately preceding the date of determination. The years of pension benefit service for certain of the executive officers named in the above compensation table as of December 31, 1996, are: Thomas G. Avant, 26; and E. Whitehead Elmore, 27. Benefits under the pension plans are computed on the basis of a life annuity with 60 months guaranteed payments. The benefits listed in the above compensation table are not subject to deduction for Social Security or other offset payments. Pension benefits payable to Messrs. Gottwald and Walker will be paid from the pension plan of Ethyl Corporation. Dirk Betlem currently is covered by the Albemarle S.A. Pension Plan (Belgium), which provides for a lump sum payment at age 65 equal to years of service times the sum of 4% of final average pay up to covered compensation plus 17.5% of the excess of final average pay over covered compensation. This amount is multiplied by 1.20 for married individuals. Mr. Betlem's accrued benefit as of December 31, 1996, determined as an annual benefit payable at age 65, is $16,079. Such amount is determined in Belgian francs. The amount shown in U.S. dollars is based on the exchange rate at December 31, 1996. EXCESS BENEFIT PLANS The Corporation maintains excess benefit plans in the form of non-qualified pension plans (the "Excess Plans") that provide eligible individuals the difference between the benefits they actually accrue under the qualified employee pension and savings plans of the Corporation and the benefits they would have accrued under such plans, but for the maximum benefit and annual addition limitations and the limitation on compensation that may be recognized thereunder, under the Code. Certain key employees may be granted additional pension service benefits equal to 4% of final pay for each year of service to the Corporation up to fifteen years, net of certain other benefits received from the Corporation, previous employers and Social Security. These benefits have been granted to Mr. Walker. All benefits under the Excess Plans vest upon a Change in Control of the Corporation, as defined in the Plans. 9 COMPENSATION OF DIRECTORS Outside directors are paid (i) $1,000 for attendance at each Board meeting and (ii) $600 for attendance at each meeting of a committee of the Board of which he was a member. In addition, each such director is paid a quarterly fee of $5,000. Employee members of the Board of Directors are not paid separately for their service on the Board or its committees. Any director retiring from the Board after age 60 with at least five years' service on the Board will receive $12,000 per year for life, payable in quarterly installments. The service requirement for this benefit may be waived in certain circumstances. Any director retiring under other circumstances will receive $12,000 per year, payable in quarterly installments, commencing no earlier than age 60, for a period not to exceed his years of service on the Board. The payment period limitation on this benefit may be waived in certain circumstances. Such retirement payments to former directors may not commence and may be discontinued under certain circumstances. On each July 1, the Corporation awards to each non-employee director that number of whole shares of Albemarle Common Stock when multiplied by the closing price of Albemarle Common Stock on the immediately preceding business day, as reported in THE WALL STREET JOURNAL, as shall as nearly as possible equal but not exceed $2,000. The shares of Albemarle Common Stock awarded under the Directors' Stock Plan are nonforfeitable and the recipient directors immediately and fully vest in Albemarle Common Stock issued under the plan. Subject only to such limitations on transfer as may be specified by applicable securities laws, directors may sell the shares received under the Directors' Stock Plan at any time. The Directors' Stock Plan provides that no awards may be made after July 1, 2004. Non-employee Directors may defer, in ten percent increments, all or part of their retainer fee and meeting fees into either a deferred cash account or a deferred stock account, or a percentage of the fees into each of the accounts, both of which are unfunded and maintained for record-keeping purposes only. Distributions under the Deferred Compensation Plan, paid in a single sum or in up to ten annual installments, cannot begin within two years of the beginning of the deferral year. The maximum aggregate number of shares of Albemarle Common Stock that may be issued under the Deferred Compensation Plan is 100,000 shares. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Executive Compensation Committee of the Corporation's Board of Directors consisted of Messrs. William W. Berry, Joseph C. Carter, Jr., and Emmett J. Rice (Chairman), until March 1, 1996, when the Board of Directors was restructured. At that time, Mr. Andersson and Mrs. Whittemore replaced Messrs. Berry and Carter on the Committee. Mr. Carter is a Senior Counsel in Hunton & Williams, which firm regularly acts as counsel to the Corporation. 10 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Committee is delegated the power to administer the compensation program of the Corporation applicable to its executive officers. Accordingly, the Committee submits this report on executive compensation to the shareholders. OVERALL OBJECTIVES The objectives of the Corporation's executive compensation program are to: o Provide balanced, competitive total compensation that will enable the Corporation to attract, motivate and retain highly qualified executives. o Provide incentives for enhancing the profitability of the Corporation by rewarding executives for meeting individual and corporate goals. o Align the financial interests of the executives closely to those of the shareholders by strongly encouraging executive ownership of Albemarle Common Stock. ELEMENTS OF THE PROGRAM The Committee believes the interests of the shareholders will be best served if the compensation program consists of cash compensation and equity ownership with an increasing portion of compensation being at risk depending upon performance. The program includes: base salary, annual bonuses in cash or cash and stock, and grants of stock options with or without SARs and restricted stock. The Committee considers all elements of the program when setting appropriate compensation. The Corporation seeks to maintain its executive compensation packages around the mid-range of those offered generally in the job markets in which the Corporation competes for talent and experience. The Corporation's stock option and restricted stock program is administered to recognize outstanding performance that consequently drives shareholder value. In December 1996, the Committee met with each of the executive officers to review the executive's 1996 goals and the extent to which the goals had been achieved. The Committee also will review 1997 corporate and executive initiatives to establish 1997 goals. COMPETITIVE MARKET The Committee uses compensation surveys provided by compensation consultants in determining the market rates for executive pay. The surveys include companies that are larger and smaller than the Corporation. Some are limited to companies in the chemical business, including, but not limited to, some of the companies included in the S&P Chemical Composite shown in the Performance Graph. References to the "market" in this Report refer to these survey data. 11 BASE SALARIES Base salaries are based on evaluations of positions and duties of each executive, market data for the position and internal equities among the positions. The Committee considers each of the individual factors but does not assign a specific value to each factor, and a subjective element is acknowledged in evaluating each executive's overall span of responsibility and control. Salaries for some executive officers for 1997 are being maintained at current levels to reflect the increased emphasis on more compensation being tied to the long-term performance of the Corporation. Total compensation for executive officers is thought to be in line with the market as described above. ANNUAL BONUSES The purpose of the annual bonus plan is to provide a means that recognizes excellence in performance measured against individual, division, department and corporate objectives and increases in shareholder value. The Committee, in its discretion, may award bonuses annually to management-level employees. Annual bonus awards are reviewed by the Committee in conjunction with senior management, and are based on evaluation of the performance, level of responsibility and leadership of the individual executive in relation to overall corporate results. The Committee does not assign a specific value to each factor. Overall awards for 1996 generally were down substantially from 1995. STOCK OPTIONS AND RESTRICTED STOCK Under the Corporation's Omnibus Stock Incentive Plan approved by the shareholders, the Committee, in its discretion, may grant options to purchase shares of Albemarle Common Stock (with or without related SARs) and restricted stock to any executive of the Corporation or any subsidiary who has contributed or can be expected to contribute to the Corporation's profits or growth. The Committee determines the amount of the grant, the term of the options and the requisite conditions for exercise and the terms of the restricted stock. During 1996, the Committee granted to three officers options (without related SARs) to purchase an aggregate of 293,000 shares of Albemarle Common Stock. The options vest when either earnings or stock price targets are met. The option awards have an exercise price equal to fair market value at the date of grant and a ten-year exercise period. They become exercisable as set forth in footnote 1 on page 7. For a discussion of restricted stock awards granted in 1996, see footnote 7 on Page 7. CEO COMPENSATION Mr. Floyd D. Gottwald, Jr., the Chief Executive Officer of the Corporation, received a base salary for 1996 of $665,000. Mr. Gottwald asked not to be considered for a bonus for 1996, placing a greater emphasis on creating shareholder value to which he is committed. Consequently, his annual compensation for 1996 was $168,000 less than 1995. The Committee believes that Mr. Gottwald has taken significant steps, including the successful disposition of the olefins business, to position the Corporation for the future. The Committee also recognizes that, as a major shareholder, the Chief Executive Officer's focus is on maximizing long-term value for the Corporation's shareholders. SECTION 162(M) Section 162(m) of the Code provides certain criteria for the tax deductibility of compensation in excess of $1 million paid to the Corporation's executive officers. To meet the criteria applicable to performance-based compensation (as defined in Section 162(m) of the Code), certain of the Corporation's benefit plans would have 12 to be amended to limit the Committee's discretion to determine individual awards based on individual performance factors and other factors as the Committee may determine, from time to time, to be relevant. The Committee believes that the flexibility on awards is an important feature of the plans and one that serves the best interests of the Corporation by allowing the Committee to recognize and motivate individual executive officers as circumstances warrant. Further, the Committee does not anticipate that there will be a significant amount of compensation subject to loss of tax deductibility. Consequently, the Committee does not propose at the present time to amend any plan to comply with the performance-based criteria. THE EXECUTIVE COMPENSATION COMMITTEE Emmett J. Rice, Chairman Craig R. Andersson Anne Marie Whittemore February 26, 1997 13 PERFORMANCE GRAPH Cumulative Total Shareholder Return* Performance From March 1, 1994, through December 31, 1996 [GRAPH GOES HERE] March 31, 1994 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Albemarle $100 $106 $150 $142 S&P 500 $100 $101 $139 $171 S&P Chem Composite $100 $103 $135 $167 *ASSUMES $100 INVESTED ON FIRST DAY OF MARCH 1994. DIVIDENDS ARE REINVESTED QUARTERLY. DESIGNATION OF AUDITORS The Board of Directors has designated Coopers & Lybrand L.L.P., certified public accountants, as the Corporation's independent auditors for fiscal year 1997, subject to shareholder approval. A representative of Coopers & Lybrand L.L.P. is expected to be present at the annual meeting with an opportunity to make a statement and to be available to respond to appropriate questions. Coopers & Lybrand L.L.P.'s principal function is to audit the consolidated financial statements of the Corporation and its subsidiaries and, in connection with that audit, to review certain related filings with the Securities and Exchange Commission and to conduct limited reviews of the financial statements included in the Corporation's quarterly reports. 14 FINANCIAL STATEMENTS A copy of the Corporation's Annual Report on Form 10-K for the year 1996, as required to be filed with the Securities and Exchange Commission, will be provided on written request without charge to any shareholder whose proxy is being solicited by the Board of Directors. The written request should be directed to: E. Whitehead Elmore, Esq. Senior Vice President, Secretary and General Counsel Albemarle Corporation 330 South Fourth Street P.O. Box 1335 Richmond, Virginia 23210 PROPOSALS FOR 1998 ANNUAL MEETING Under the regulations of the Securities and Exchange Commission, any shareholder desiring to make a proposal to be acted upon at the 1998 annual meeting of shareholders must present such proposal to the Corporation at its principal office in Richmond, Virginia, not later than November 24, 1997, in order for the proposal to be considered for inclusion in the Corporation's proxy statement. The Corporation anticipates holding the 1998 annual meeting on April 22, 1998. The Corporation's bylaws provide that, in addition to any other applicable requirements, for business to be properly brought before the annual meeting by a shareholder, the shareholder must give timely notice in writing to the Secretary of the Corporation not later than 60 days prior to the meeting. As to each matter, the notice should contain (i) a brief description of the matter and the reasons for addressing it at the annual meeting, (ii) the name, record address of and number of shares beneficially owned by the shareholder proposing such business and (iii) any material interest of the shareholder in such business. OTHER MATTERS The Board of Directors is not aware of any matters to be presented for action at the meeting other than as set forth herein. However, if any other matters properly come before the meeting, or any adjournment thereof, the person or persons voting the proxies will vote them in accordance with their best judgment. By Order of the Board of Directors E. WHITEHEAD ELMORE, SECRETARY 15 NOTICE and PROXY STATEMENT for ANNUAL MEETING of SHAREHOLDERS April 23, 1997 [LOGO] ALBEMARLE CORPORATION 330 SOUTH FOURTH STREET P.O. BOX 1335 RICHMOND, VIRGINIA 23210 PROXY ALBEMARLE CORPORATION RICHMOND, VIRGINIA PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 23, 1997 The undersigned hereby appoints Floyd D. Gottwald, Jr., and Emmett J. Rice, or either of them, with full power of substitution in each, proxies to vote all shares of the undersigned in Albemarle Corporation, at the annual meeting of shareholders to be held April 23, 1997, and at any and all adjournments thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES AND FOR PROPOSAL 2. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (Continued and to be signed on reverse side.) ALBEMARLE CORPORATION PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ] THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES AND FOR PROPOSAL 2. 1. ELECTION OF DIRECTORS: [ ] For All [ ] Withhold All [ ] For All Except Nominees: Craig R. Andersson, Dirk Betlem, Floyd D. Gottwald, Jr., John D. Gottwald, Andre B. Lacy, Seymour S. Preston, III, Emmett J. Rice, Charles B. Walker and Anne Marie Whittemore. INSTRUCTION: To withhold authority to vote FOR any such nominee(s), write the name(s) of the nominee(s) in the space provided below. - -------------------------------------------------------------------------------- 2. The proposal to approve the appointment of Coopers & Lybrand L.L.P. as the auditors for the Corporation for 1997. [ ] FOR [ ] AGAINST [ ] ABSTAIN 3. In their discretion, the Proxies are authorized to vote upon such other business and matters incident to the conduct of the meeting as may properly come before the meeting. Dated _____________________, 1997 -------------------------------------- Signature Please sign name exactly as it appears on the stock certificate. Only one of several joint owners or co-owners need sign. Fiduciaries should give full title.