UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

Filed by the Registrant x                            Filed by a Party other than the Registrant ¨

Check the appropriate box:

ALBEMARLE CORPORATION

(Name of Registrant as Specified in its Charter)

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

Payment of Filing Fee (Check the appropriate box):

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Albemarle Corporation will be held at the Pavilion at the Lod Cook Conference Center, 3848 West Lakeshore Drive, Baton Rouge, Louisiana, on Wednesday, April 30, 2008, at 10:00 a.m., Central Daylight Time, for the following purposes:

Holders of shares of Albemarle Corporation common stock of record at the close of business on February 21, 2008, will be entitled to vote at the meeting.

You are requested to vote your shares promptly by completing, signing, dating and returning the enclosed proxy card in the self-addressed, stamped envelope provided, or by telephone or over the Internet, regardless of whether you expect to attend the meeting.

If you are present at the meeting, you may vote in person even if you already have voted your proxy by mail, by telephone or over the Internet.

Seating at the meeting will be on a first-come, first-served basis. To ensure that you have a seat, please arrive early. Refreshments will be served prior to the start of the meeting.

By Order of the Board of Directors

Luther C. Kissam, IV, Secretary

March 12, 2008

PROXY STATEMENT

FOR ANNUAL MEETING OF SHAREHOLDERS

ALBEMARLE CORPORATION

TO BE HELD APRIL 30, 2008

APPROXIMATE DATE OF MAILING – MARCH 21, 2008

This Proxy Statement sets forth certain information with respect to the accompanying proxy to be used at the Annual Meeting (the “Meeting”) of Shareholders of Albemarle Corporation, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting. The Board of Directors has designated the Lod Cook Conference Center, 3848 West Lakeshore Drive, Baton Rouge, Louisiana as the place of the Meeting. The Meeting will be called to order at 10:00 a.m., Central Daylight Time, on Wednesday, April 30, 2008.

The Board of Directors solicits this proxy and urges you to vote immediately. Unless the context otherwise indicates, reference to “Albemarle,” “we,” “us,” “our” or “the Company” means Albemarle Corporation.

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (the “2007 Annual Report”), is being mailed concurrently with this Proxy Statement to our shareholders. Our 2007 Annual Report is not incorporated into this Proxy Statement and shall not be considered a part of this Proxy Statement or soliciting materials.

QUESTIONS AND ANSWERS FOR ANNUAL MEETING

We are providing this Proxy Statement and related proxy card to our shareholders in connection with the solicitation by the Board of Directors of proxies to be voted at the Meeting. A proxy, if duly executed and not revoked, will be voted and, if it contains any specific instructions, will be voted in accordance with those instructions.

Registered shareholders and participants in plans holding shares of Common Stock are urged to deliver proxies and voting instructions by calling the toll-free telephone number, by using the Internet or by completing and mailing the enclosed proxy card or voting instruction. The telephone and Internet voting procedures are designed to authenticate shareholders’ and plan participants’ identities, to allow shareholders and plan participants to give their proxies or voting instructions and to confirm that such instructions have been recorded properly. Instructions for voting by telephone or over the Internet are set forth on the enclosed proxy card or voting instruction. Registered shareholders and plan participants may also send their proxies or voting instructions by completing, signing and dating the enclosed proxy card or voting instruction and returning it as promptly as possible in the enclosed postage-paid envelope.

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Shareholders who hold Common Stock through banks, brokers or other nominees (street name shareholders) who wish to vote at the Meeting should be provided voting instructions from the institution that holds their shares. If this has not occurred, please contact the institution that holds your shares. Street name shareholders may also be eligible to vote their shares electronically by following the voting instructions provided by the bank, broker or other nominee that holds the shares, using either the toll-free telephone number or the Internet address provided on the voting instruction, or otherwise complete, date and sign the voting instruction and return it promptly in the enclosed pre-paid envelope.

The deadline for voting electronically through the Internet or by telephone is 11:59 p.m., Eastern Time, on April 29, 2008.

If you voted by telephone or over the Internet, you can also revoke your vote by any of these methods or you can change your vote by voting again by telephone or over the Internet. If you decide to vote by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number found on the proxy card in the event that you decide later to change or revoke your proxy by telephone or over the Internet. Your attendance at the Meeting will not itself revoke a proxy.

If you are a shareholder whose stock is held in street name with a bank, broker or other nominee, you must follow the instructions found on the voting instruction card provided by the bank, broker or other nominee, or contact your bank, broker or other nominee in order to change or revoke your previously given proxy.

As to any other business that may properly come before the Meeting, the persons named in the enclosed proxy card or voting instruction will vote the shares of Common Stock represented by the proxy in the manner as the Board of Directors may recommend, or otherwise in the proxy holders’ discretion. The Board of Directors does not presently know of any other such business.

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If you are a shareholder whose shares of Common Stock are held in street name, which means that your shares are registered in the name of your bank, broker or other nominee, your bank, broker or other nominee may or may not vote your shares in its discretion if you have not provided voting instructions to the bank, broker or its nominee. Whether the bank, broker or other nominee may vote your shares depends on the proposals before the Meeting. Under the rules of the New York Stock Exchange, or NYSE, your broker may vote your shares in its discretion on “routine matters.” Based on the rules of the NYSE, we believe that the election of directors and the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm are routine matters for which brokerage firms may vote on behalf of their clients if no voting instructions are provided. Therefore, if you are a shareholder whose shares of Common Stock are held in street name with a bank, broker or other nominee and you do not return your voting instruction card, your bank, broker or other nominee may vote your shares (1) “FOR” the election of the director nominees named in the Proxy Statement and (2) “FOR” the ratification of the appointment by the Audit Committee of PricewaterhouseCoopers LLP as our independent registered public accounting firm.

The rules of the NYSE, however, do not permit your bank, broker or other nominee to vote your shares on proposals that are not considered “routine.” When a proposal is not a routine matter and your bank, broker or other nominee has not received your voting instructions with respect to that proposal, your bank, broker or other nominee cannot vote your shares on that proposal. Based on the rules of the NYSE, we believe that the approval of the 2008 Incentive Plan and the approval of the 2008 Directors Plan are not routine matters and if your bank, broker or other nominee has not received your voting instructions with respect to either the 2008 Incentive Plan or the 2008 Directors Plan, your bank, broker or other nominee cannot vote your shares on the proposal to approve the 2008 Incentive Plan or the proposal to approve the 2008 Directors Plan, as the case may be. This is called a “broker non-vote.”

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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 30, 2008.

The Proxy Statement and the 2007 Annual Report are both available free of charge at http://www.albemarle.com/ Investor_information/Financial_information/Annual_reports/. In addition, a copy of the 2007 Annual Report is enclosed. We will provide without charge to each person to whom this Proxy Statement has been delivered, on the request of any such person, additional copies of the 2007 Annual Report, including the financial statements and financial statement schedules. Requests should be directed to our investor relations department as described below:

Albemarle Corporation

451 Florida Street

Baton Rouge, Louisiana 70801

Attention: Investor Relations

Telephone: (225) 388-7402

We make available free of charge through our Internet website (http://www.albemarle.com/Investor_information/) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), as well as reports on Forms 3, 4 and 5 filed pursuant to Section 16 of the Exchange Act, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the Securities and Exchange Commission. The information on our Internet website is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the Securities and Exchange Commission.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Corporate Governance and Social Responsibility Committee has recommended to the Board of Directors, and the Board of Directors has approved, the persons named below as nominees for election to the Board of Directors. Each of the nominees presently serves as a director. Proxies will be voted for the election of the persons named below (or if for any reason such persons are unavailable, of such substitutes as the Board of Directors may designate) as directors for the ensuing year. The Board of Directors has no reason to believe that any of the nominees will be unavailable. Set forth below is certain information about the nominees for election to the Board of Directors as of March 1, 2008.

Mark C. Rohr; age 56; director since 2001; President and Chief Executive Officer since October 1, 2002, having previously served as our President and Chief Operating Officer from January 1, 2000 through September 30, 2002, and our Executive Vice President from March 22, 1999 through December 31, 1999, and Senior Vice President, Specialty Chemicals, of Occidental Chemical Corporation (chemical manufacturer with interests in basic chemicals, vinyls, petrochemicals and specialty products and a subsidiary of Occidental Petroleum Corporation) prior thereto. Other directorships: Celanese Corporation (industrial chemicals producer).

J. Alfred Broaddus, Jr.; age 68; director since 2004; retired, having previously served as President of the Federal Reserve Bank of Richmond until July 31, 2004. Other directorships: Markel Corporation (markets and underwrites specialty insurance products and programs for a variety of niche markets), Owens & Minor, Inc. (distributor of national name-brand medical and surgical supplies and a healthcare supply chain management company) and T. Rowe Price Group, Inc. (global investment management firm).

William M. Gottwald; age 60; director since 1999; Chairman of the Board of Directors since March 28, 2001, having previously served as our Vice President, Corporate Strategy. Other directorship: Tredegar Corporation.

R. William Ide III; age 67; director since December 16, 2005; Partner of McKenna Long & Aldridge LLP (law firm), having previously served as Senior Vice President, General Counsel of Monsanto Corporation. Other directorships: AFC Enterprises, Inc. (the franchisor and operator of Popeyes^® Chicken & Biscuits).

Richard L. Morrill; age 68; director since 2002; Chancellor of the University of Richmond since July 1, 1998, having previously served as Distinguished University Professor of Ethics and Democratic Values from July 1, 1998 until June 1, 2004, and as President of the University of Richmond. Other directorship: Tredegar Corporation (Chairman of the Board).

John Sherman, Jr.; age 62; director since 2003; retired, having previously served as Vice Chairman of Scott & Stringfellow, Inc. (regional brokerage) from September 1, 2002 through December 31, 2005 and as President and Chief Executive Officer of Scott & Stringfellow prior thereto.

Charles E. Stewart; age 72; director since 1997; consultant, having previously served as Executive Vice President of Occidental Chemical Corporation.

Harriet Tee Taggart, age 59; director since February 7, 2007; consultant, having previously served until December 2006 as a Partner of Wellington Management LLC (investment management firm). Ms. Taggart was global sector equity portfolio manager and global industry analyst for the chemicals and related industries at Wellington Management. Other directorship: The Lubrizol Corporation (a specialty chemical company).

Anne Marie Whittemore; age 61; director since 1996; Partner of McGuireWoods LLP (law firm). Other directorships: Owens & Minor, Inc. and T. Rowe Price Group, Inc.

Mr. Floyd D. Gottwald, Jr. has served as our Director Emeritus and Chairman Emeritus since April 11, 2007. As Director Emeritus and Chairman Emeritus, Mr. Floyd D. Gottwald, Jr. neither attends nor votes at Board of Directors meetings. Mr. Floyd D. Gottwald, Jr. does not receive any compensation for service as Director Emeritus and Chairman Emeritus.

Mr. Seymour S. Preston III will retire from the Board of Directors upon the expiration of his current term at the Meeting and he is therefore not being nominated for reelection.

The Board of Directors recommends that shareholders vote “FOR” all of the nominees listed above.

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Board of Directors

We are managed under the direction of the Board of Directors, which has adopted Corporate Governance Guidelines to set forth certain corporate governance practices. The Corporate Governance Guidelines are available on our website at http://www.albemarle.com/Investor_information/Corporate_information/Corporate_governance/.

Independence of Directors

The Board of Directors has determined that Messrs. Broaddus, Ide, Morrill, Sherman and Stewart and Ms. Taggart and Ms. Whittemore are “independent” directors within the listing standards of the NYSE and the independence standards of our Corporate Governance Guidelines, which are set forth below.

As set forth in our Corporate Governance Guidelines, in order for a director to be considered “independent” by the Board of Directors, he or she must (1) be free of any relationship that, applying the rules of the NYSE, would preclude a finding of independence and (2) not have any material relationship (either directly or as a partner, shareholder or officer of an organization) with us or any of our affiliates or any executive officer of us or any of our affiliates. In evaluating the materiality of any such relationship, the Board of Directors takes into consideration whether disclosure of the relationship would be required by the proxy rules under the Exchange Act. If disclosure of the relationship is required, the Board of Directors must make a determination that the relationship is not material as a prerequisite to finding that the director is “independent.”

Board of Directors Meetings

The Board of Directors meets on a regularly scheduled basis during the year to review significant developments affecting us and to act on matters requiring Board of Directors’ approval, and may hold special meetings between scheduled meetings when appropriate. During 2007, the Board of Directors held seven meetings. During 2007, each of the directors attended over 75% of the aggregate of (1) the total number of meetings of all committees of the Board of Directors on which the director then served and (2) the total number of meetings of the Board of Directors.

Meetings of Non-Management Directors; Presiding Director

Executive sessions of the independent members of the Board of Directors and executive sessions of the non-management members of the Board of Directors were held regularly in conjunction with scheduled Board meetings in 2007. The Chairman of the Corporate Governance and Social Responsibility Committee presides at the executive session of the non-management directors, as provided in our Corporate Governance Guidelines. Shareholders and other interested persons may contact the Chairman of the Corporate Governance and Social Responsibility Committee or the non-management members of the Board of Directors as a group through the method described in “Questions and Answers — How do I communicate with the Board of Directors?” on page 5.

Attendance at Annual Meeting

As set forth in our Corporate Governance Guidelines, we expect all directors to attend the annual meeting of shareholders each year. All directors attended last year’s annual meeting of shareholders.

Director Continuing Education

We encourage directors to attend director continuing education programs. Typically, director education programs focus on issues and current trends affecting directors of publicly-held companies. We reimburse our directors for tuition and expenses associated with attending these programs. In 2007, five of our independent directors attended director continuing education programs accredited by ISS Governance Services.

Committees of the Board of Directors

The Board of Directors has established various committees to assist it with the performance of its responsibilities. These committees and their current members are described below.

Audit Committee

Messrs. Broaddus (Chairman), Preston (Vice Chairman), Sherman and Stewart and Ms. Taggart currently serve on our Audit Committee. The Audit Committee operates under a written charter adopted by the Board of Directors and is available on our Internet website. See “Questions and Answers — Where can I find the corporate governance materials?” on page 5. During 2007, the Audit Committee met on 14 occasions. The Board of Directors has determined that the members of the Audit Committee are “independent” within the meaning of the enhanced

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independence standards for audit committee members in the Exchange Act and the rules thereunder, as incorporated into the listing standards of the NYSE, and the independence standards of our Corporate Governance Guidelines. The Board of Directors has further determined that each of the members of the Audit Committee is financially literate and that, as required by the NYSE listing standards, at least one member of the Audit Committee has accounting or related financial management expertise, as such terms are interpreted by the Board in its business judgment. The Board of Directors has also determined that each of Messrs. Sherman and Preston is an “audit committee financial expert,” as that term is defined in the rules promulgated by the Securities and Exchange Commission under the Sarbanes-Oxley Act of 2002. For a description of the Audit Committee’s function, see the Audit Committee Report beginning on page 39.

Executive Compensation Committee

Messrs. Morrill (Chairman), Ide, Preston and Sherman and Ms. Whittemore currently serve on our Executive Compensation Committee. The Executive Compensation Committee operates under a written charter adopted by the Board of Directors, which is available on our Internet website. See “Questions and Answers — Where can I find the corporate governance materials?” on page 5. The Board of Directors has determined that all of the members of the Executive Compensation Committee are (i) “independent” within the meaning of the listing standards of the NYSE and the independence standards of our Corporate Governance Guidelines, (ii) “non-employee directors” (within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended) and (iii) “outside directors” (within the meaning of Section 162(m) of the Internal Revenue Code). The Executive Compensation Committee’s primary role is to develop and oversee the implementation of our philosophy with respect to the compensation of our executive officers and other key employees, including the named executive officers listed in this Proxy Statement. The Executive Compensation Committee has the overall responsibility of evaluating the performance of and determining the compensation of the Chief Executive Officer and approving the compensation structure for senior management and other key employees. In performing these duties during 2007, the Executive Compensation Committee met on eight occasions.

The Executive Compensation Committee also approves cash incentive awards, certain consultant agreements and initial compensation packages of new executive-level personnel and may grant stock options, stock appreciation rights (“SARs”), performance units, restricted stock and cash incentive awards under our 2003 Incentive Plan (the “2003 Incentive Plan”). If the shareholders approve the Albemarle Corporation 2008 Incentive Plan (the “2008 Incentive Plan”) at the Meeting, then the 2003 Incentive Plan shall be terminated and replaced by the 2008 Incentive Plan.

The Executive Compensation Committee reviews and approves the performance, compensation and annual performance goals of the Chief Executive Officer with input from both the full Board and the Chief Executive Officer’s self evaluation. The Executive Compensation Committee approves the compensation of the other named executive officers, following discussions with each of them and based upon the evaluation and recommendation of the Chief Executive Officer for those executives who are his direct reports. The Executive Compensation Committee retains Pearl Meyer & Partners (“Pearl Meyer”) as the Executive Compensation Committee’s outside independent compensation consultant to provide competitive information concerning compensation and to assist in designing compensation plans. The Executive Compensation Committee periodically meets individually with members of senior management in order to assess progress toward meeting long-term objectives approved by the Board of Directors. The Executive Compensation Committee reports regularly to the Board of Directors on matters relating to the Executive Compensation Committee’s responsibilities. In addition, the Executive Compensation Committee follows regulatory and legislative developments and considers corporate governance best practices in performing its duties. For additional information with respect to the Executive Compensation Committee, please see “Compensation Discussion and Analysis” beginning on page 15.

Executive Compensation Committee Interlocks and Insider Participation

No member of the Executive Compensation Committee was at any time an officer or employee of us, or is related to any other member of the Executive Compensation Committee, any other member of the Board of Directors or any executive officer of us.

Corporate Governance and Social Responsibility Committee

Messrs. Stewart (Chairman), Ide and Morrill and Ms. Taggart and Ms. Whittemore currently serve on our Corporate Governance and Social Responsibility Committee. The Corporate Governance and Social Responsibility Committee operates under a written charter adopted by the Board of Directors, which is available on our Internet

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website. See “Questions and Answers — Where can I find the corporate governance materials?” on page 5. The Board of Directors has determined that all of the members of the Corporate Governance and Social Responsibility Committee are “independent” within the meaning of the listing standards of the NYSE and the independence standards of our Corporate Governance Guidelines. During 2007, the Corporate Governance and Social Responsibility Committee met on five occasions. The Corporate Governance and Social Responsibility Committee assists the Board of Directors on all matters relating to the selection, qualification and compensation of members of the Board of Directors, as well as matters relating to the duties of the members of the Board of Directors. The Corporate Governance and Social Responsibility Committee also assists the Board of Directors with oversight of corporate governance, including the enhancement of our global reputation, our corporate social responsibility, and the stewardship and sustainability of our products. The Corporate Governance and Social Responsibility Committee administers the 2006 Stock Compensation Plan for Non-Employee Directors (the “2006 Directors Plan”) and will administer the 2008 Directors Plan if it is approved by the shareholders at this Meeting.

Director Candidate Recommendations and Nominations by Shareholders. The Corporate Governance and Social Responsibility Committee’s charter provides that the Corporate Governance and Social Responsibility Committee will consider director candidate recommendations by shareholders. Shareholders should submit any such recommendations to the Corporate Governance and Social Responsibility Committee through the method described in “Questions and Answers — How do I communicate with the Board of Directors?” on page 5. In addition, in accordance with our bylaws, any shareholder entitled to vote for the election of directors may nominate persons for election to the Board of Directors if such shareholder complies with the procedures set forth in the bylaws and summarized in “Shareholder Proposals” on page 47.

Corporate Governance and Social Responsibility Committee Process for Identifying and Evaluating Director Candidates. The Corporate Governance and Social Responsibility Committee identifies and evaluates all director candidates in accordance with the director qualification standards described in the Corporate Governance Guidelines. The Corporate Governance and Social Responsibility Committee evaluates any candidate’s qualifications to serve as a member of the Board of Directors based on the background and expertise of individual Board members as well as the background and expertise of the Board as a whole. In addition, the Corporate Governance and Social Responsibility Committee will evaluate a candidate’s independence and his or her background and expertise in the context of the Board’s needs. There are no differences in the manner in which the Corporate Governance and Social Responsibility Committee evaluates director candidates based on whether the candidate is recommended by a shareholder.

Sources for New Nominees. We did not utilize any third party search firms to assist in identifying potential director candidates during 2007. The Corporate Governance and Social Responsibility Committee did not receive any recommendations from any shareholders in connection with the Meeting.

Compensation of Directors

In 2007, non-employee directors were paid $15,800 per quarter ($63,200 per year). In addition, in accordance with the 2006 Directors Plan, non-employee directors received for service as a director 200 shares of Albemarle common stock per quarter for the first three quarters of 2007 and 400 shares of Albemarle common stock for the fourth quarter of 2007. Non-employee directors also received an additional amount based on their committee service: Audit Committee members received $2,250 per quarter ($9,000 per year) and the Chairman of the Audit Committee received an additional $2,250 per quarter ($9,000 per year); Executive Compensation Committee members received $2,250 per quarter ($9,000 per year) and the Chairman of the Executive Compensation Committee received an additional $2,250 per quarter ($9,000 per year); and Corporate Governance and Social Responsibility members received $1,250 per quarter ($5,000 per year) and the Chairman of the Corporate Governance and Social Responsibility Committee received an additional $750 per quarter ($3,000 per year). In addition, we reimbursed each of our non-employee directors for reasonable travel expenses incurred in connection with attending Board and Board Committee meetings. Employee members of the Board of Directors were not paid separately for service on the Board. In addition, we match up to $2,500 for director charitable giving.

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The following table presents information relating to total compensation of the directors for the fiscal year ended December 31, 2007.

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Deferred Compensation

Non-employee directors may defer, in 10% increments, all or part of their retainer fee, quarterly fees and/or meeting fees into either a deferred cash account or a deferred stock account (the “Deferred Compensation Plan”), or a percentage of the fees into each of the accounts, in 10% increments, both of which are unfunded and maintained for record-keeping purposes only. Distributions under the Deferred Compensation Plan will be paid in a single sum unless the participant specifies installment payments over a period up to 10 years. Deferred cash account amounts are paid in the form of cash and deferred stock account amounts are paid in whole shares of stock. Unless otherwise elected by the participant, distributions will begin on February 15 following the earlier of the participant’s attainment of age 65 or ceasing to be a director. The maximum aggregate number of shares of Common Stock that may be issued under the Deferred Compensation Plan is 200,000 shares. Messrs. Preston, Sherman and Stewart have elected to defer all or a part of their retainer fees and/or meeting fees into the deferred cash account and, as of December 31, 2007, had accumulated $288,517, $44,835, and $79,929, respectively. Messrs. Broaddus, Ide, Morrill and Sherman have elected to defer all or a part of their retainer fees and/or meeting fees into the deferred stock account and, as of December 31, 2007, had accumulated 4,510, 6,294, 2,215 and 5,033 phantom shares, respectively, representing an equivalent number of shares of Common Stock under the Deferred Compensation Plan.

Stock Ownership Requirements

Under our policy for stock ownership by non-employee directors, all non-employee directors are to achieve ownership of Common Stock equal to the lesser of 5,000 shares, or $150,000 value, after five years of service as a director. Currently, all of our non-employee directors with at least five years of service satisfy these stock ownership requirements.

2006 Stock Compensation Plan for Non-Employee Directors

On April 19, 2006, our shareholders approved the 2006 Directors Plan. The 2006 Directors Plan provides for the grant of shares of Common Stock to each non-employee who is a director on the effective date of the Non-Employee Director Stock Plan or who thereafter becomes a director (each, a “participant”). The Board of Directors has the authority to increase the amount of shares of Common Stock issued to each participant during the calendar year, but in no event shall more than 2,000 shares of Common Stock be issued to a participant during any calendar year. In the event of a change in capital, shares of capital stock, or any special distribution to our shareholders, the Board of Directors will make equitable adjustments in the number of shares of Common Stock that have been, or thereafter may be, granted to participants. The maximum aggregate number of shares of Common Stock that may be issued under the 2006 Directors Plan is 150,000 shares.

The Board of Directors may amend, suspend or terminate the 2006 Directors Plan, but no such amendment shall (1) increase the number of shares of Common Stock that may be granted to any participant (except as described above) or (2) increase the total number of shares of Common Stock that may be granted under the 2006 Directors Plan; provided, however, that the 2006 Directors Plan may not be amended more than once every six months other than to comply with changes in the Internal Revenue Code of 1986, as amended (the “Code”), or any rules or regulations promulgated thereunder. Any amendment of the 2006 Directors Plan must comply with the rules of the NYSE.

Our Corporate Governance and Social Responsibility Committee administers the 2006 Directors Plan. The Corporate Governance and Social Responsibility Committee interprets all provisions of the 2006 Directors Plan, establishes administrative regulations to further the purpose of the 2006 Directors Plan and takes any other action necessary for the proper operation of the 2006 Directors Plan. All decisions and acts of the Corporate Governance and Social Responsibility Committee shall be final and binding.

If the shareholders approve the 2008 Directors Plan at the Meeting, then the 2006 Directors Plan will be terminated and replaced by the 2008 Directors Plan. See “Proposal 2 — Approval of the Albemarle Corporation 2008 Incentive Plan” beginning on page 41.

Retirement Compensation

Any director who became a member of the Board of Directors on or before October 27, 1999 and retires from the Board after age 60 with at least five years of service on the Board of Directors will receive, commencing with retirement from the Board of Directors, $12,000 per year for life, payable in quarterly installments. The following current directors will be eligible for this benefit upon their retirement after age 60: Messrs. Stewart and

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Preston, Ms. Whittemore and Mr. William M. Gottwald. The payment period limitation on this benefit may be waived in certain circumstances. In addition, such retirement payments to former directors may not commence and may be discontinued under certain circumstances. Retirement benefits are not available to any director who became a member of the Board of Directors after October 27, 1999.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Board of Directors has adopted a written related person transaction policy that governs the review, approval or ratification of covered related person transactions. The Audit Committee manages this policy. The policy generally provides that we may enter into a related person transaction only if the Audit Committee approves or ratifies such transaction in accordance with the guidelines set forth in the policy and if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party; or the transaction is approved by the disinterested members of the Board of Directors; or the transaction involves compensation approved by our Compensation Committee.

In the event our management determines to recommend a related person transaction to the Audit Committee, such transaction must be presented to the Audit Committee for approval. After review, the Audit Committee will approve or disapprove such transaction and at each subsequently scheduled Audit Committee meeting, our management will update the Audit Committee as to any material change to the proposed related person transaction. In those instances in which our general counsel, in consultation with our Chief Executive Officer or the Chief Financial Officer, determines that it is not practicable or desirable for us to wait until the Audit Committee meeting, the Chair of the Audit Committee has delegated authority to act on behalf of the Audit Committee. The Audit Committee (or the Chair) approves only those related person transactions that it determines in good faith to be in our best interests and the best interests of our shareholders. To the extent that the Board of Directors has approved a standing resolution with respect to the repurchase of outstanding shares of Common Stock, the Audit Committee has pre-approved the repurchase of shares of Common Stock from related persons, provided that the compliance officer determines that such repurchase is in compliance with such standing resolution and the terms offered to the related persons are no less favorable to us than those that could be obtained in arm’s length dealings with an unrelated third party.

For purposes of this policy, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and the amount involved exceeds $120,000 and in which any related person had, has or will have a direct or indirect material interest. For purposes of determining whether a transaction is a related person transaction, the Audit Committee relies upon Item 404 of Regulation S-K, promulgated under the Exchange Act.

A “related person” is (i) any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of us or a nominee to become a director, (ii) any person who is known to be the beneficial owner of more than 5% of any class of our voting securities, (iii) any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner and (iv) any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

On May 1, 2007, pursuant to a Stock Purchase Agreement, dated as of April 25, 2007, with each of Messrs. William M. Gottwald and John D. Gottwald, we purchased an aggregate of 100,000 shares of Common Stock from Mr. William M. Gottwald and an aggregate of 400,000 shares of Common Stock from Mr. John D. Gottwald, each at a purchase price of $43.36 per share.

On December 10, 2007, pursuant to a Stock Purchase Agreement, dated as of November 30, 2007, with each of Mr. Floyd D. Gottwald, Jr. and Westham Partners, L.P., we purchased an aggregate of 120,000 shares of Common Stock from Mr. Floyd D. Gottwald, Jr. and an aggregate of 1,000,000 shares of Common Stock from Westham Partners, L.P., each at a purchase price of $43.9758 per share of Common Stock. Conagret Corporation is the general partner of Westham Partners L.P. Mr. William M. Gottwald is the president of Conagret Corporation.

On February 8, 2008, pursuant to a Stock Purchase Agreement, dated as of February 5, 2008, with each of (i) Messrs. William M. Gottwald, John D. Gottwald and James T. Gottwald as Trustees of Floyd, Jr.’s Trust (the “Trust”) under the will of Floyd D. Gottwald, (ii) Mr. Floyd D. Gottwald, Jr. and (iii) Westham Partners, L.P., we

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purchased an aggregate of 3,000,000 shares of Common Stock from the Trust, an aggregate of 300,000 shares of Common Stock from Mr. Floyd D. Gottwald, Jr., and an aggregate of 700,000 shares of Common Stock from Westham Partners, L.P., each at a price equal to $37.2174 per share of Common Stock.

SECTION 16(A)

BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely on our review of the forms required by Section 16(a) of the Exchange Act that have been received by us, we believe there has been compliance with all filing requirements applicable to our officers, directors and beneficial owners of greater than 10% of Common Stock, except that John G. Dabkowski, Ronald R. Gardner and Anthony S. Parnell each filed a single late Form 4 due to administrative oversight.

STOCK OWNERSHIP

Principal Shareholders

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 our knowledge, was the beneficial owner, as of February 27, 2008, of more than 5% of our outstanding voting shares.

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Directors and Executive Officers

The following table sets forth as of February 27, 2008, the beneficial ownership of Common Stock by each director of the Company, the executive officers named in the Summary Compensation Table on page 22, and all directors and executive officers of the Company as a group.

Stock Ownership Guidelines

Our policy is that all non-employee directors own stock equal to the lesser of 5,000 shares of Common Stock or $150,000 in value after five years of service as a director. We also have stock ownership guidelines that require our named executive officers to maintain direct share ownership equal to 60% of the first two performance unit grants beginning in 2004. New officers after 2004 are required to maintain direct share ownership equal to 60% of the first two grants they receive after becoming an officer. For additional information with respect to our stock ownership guidelines, please see “Compensation Discussion and Analysis” beginning on page 15.

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COMPENSATION DISCUSSION AND ANALYSIS

General Philosophy. Albemarle’s compensation philosophy is to:

When establishing what is competitive for the Company, the Committee generally considers the median of data from a comparator group in addition to survey information from nationally recognized compensation surveys.

Compensation Program Success

The Executive Compensation Committee (the “Committee”) believes our executive compensation plans have been extremely successful in attracting, retaining and motivating our high-performing executives. The Committee believes the Company has performed at high levels in recent years and that our executive compensation plans have contributed to this success.

As the Committee reviews each element, level and mix of executive compensation, the Committee considers the performance of existing plans against the potential opportunities and headwinds facing the Company. Accordingly, the Committee seeks to maintain programs that work.

Compensation Governance. The Committee is responsible for executive compensation. The Chief Executive Officer, the Vice President, Human Resources and counsel may attend Committee meetings and make recommendations regarding plan design and levels of compensation. However, only Committee members are allowed to vote on decisions made regarding executive compensation.

The Committee engages a compensation consultant to assist in gathering and analyzing data, advising the Committee on compensation standards and trends, and assisting in the implementation of policies and programs. The consultant’s role is to provide independent advice and counsel. Mercer Human Resources Consulting served in this role until August of 2007 when the Committee engaged Pearl Meyer & Partners. The consultant reports directly to the Chair of the Committee and may not work with management without the Chair’s permission. The Committee meets with the consultant, without management present, to discuss our compensation programs. The consultant may provide consulting advice to management outside the scope of executive compensation. All work completed by the consultant, whether for the Committee or management, is subject to the approval of the Committee. The Committee does not delegate authority to its outside advisor or to other parties.

While the Committee will ask for advice and recommendations from management and the consultant, the Committee is responsible for executive compensation and as such:

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Comparator Group Analysis. In setting 2007 salaries, incentive opportunities and total compensation, the Committee considered levels of compensation paid to the following group of chemical companies (the “Comparator Group”):

The Committee, with input from management and the consultant, annually reviews the companies included in the Comparator Group and may add or eliminate companies based on their size and industry focus.

The Committee has not established target levels of compensation relative to the Comparator Group or survey data. The Committee does not have a rigid or formulaic process to set pay levels. In setting compensation levels, the Committee uses its judgment and considers:

Components of Compensation

The Company provides executive officers with the components of compensation discussed below. The Committee annually reviews the total of all elements of compensation (and post employment payments), the levels of individual components and the overall compensation component mix. The Committee generally manages individual components of compensation and target total compensation relative to the median of the competitive data. However, as described above, the Committee considers other factors. For 2007, the Committee believed the mix of fixed salary and benefits when added to the potential variability of the annual and long term incentive provided an appropriate mix of financial security, risk and reward. The Committee does not consider the actual amounts earned under the incentive plans when setting the future mix or levels of the various components of compensation. Based on its review, the Committee believes total compensation for each of the named executive officers is reasonable and not excessive.

Base Salaries. Base salary provides an executive officer with a basic level of financial security. Base salary increases (other than for the Chief Executive Officer and Chairman) are recommended by our Chief Executive Officer and subject to review and approval by the Committee and the Board. Base salary increases for our Chief Executive Officer are determined by the Committee and approved by the Board. Base salary increases for the Chairman are determined and approved by the Committee. Effective as of January 1, 2007, the Committee approved the following adjustments and resulting base salaries for the named executive officers:

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The executive officers were provided with salary adjustments larger than the median adjustment provided to other employees. This is reflective of the executives’ base salaries being below the median of the competitive data and our executives’ continued outstanding performance, both individually and as a team. Some of our executive officers, after these adjustments, remain below the median of the competitive data. The Committee will continue to act to adjust the salaries of executive officers if their position relative to the competitive market remains below the median and their performance remains outstanding. The Committee is satisfied that each executive officer’s salary, relative to each other, is reasonable and appropriate based on each executive’s responsibilities and performance.

Annual Incentive Plan. The purpose of the annual incentive plan is to reward achievement of annual goals and objectives. Each year, management proposes and the full Board, after ensuring the annual goals and objectives are sufficiently robust, approves the annual goals and objectives. By using goals and objectives thoroughly reviewed by the Board, the Committee rewards participants for achieving performance levels that management has identified and the Board has agreed are key to creating and sustaining shareholder value.

Key features of the annual incentive award include the following:

The Committee, with the input of management, determines how much of the annual incentive will be earned for achievement of each of the various goals and objectives. For 2007, the Committee established the following mix of performance measures:

The actual targets for each criterion are set by the Committee, taking into consideration our expected performance based upon our business plan and recommendations from management. Net income before special items is defined as net income after tax as reported in our financial disclosures excluding declared special items, if any, as reported throughout the year. Working capital is the difference between current assets and current liabilities as reflected on our balance sheet.

The following table summarizes the threshold, target and superior levels for the annual net income before special items and reduction in working capital metrics for 2007 and the 2007 results. Awards for performance between the identified points are interpolated.

Why did the Committee choose these performance metrics? The Committee chose these performance targets to align the annual incentive plan with our 2007 goals and objectives as established by management and the Board. The Committee chose the relative weights of the performance measures based on the Committee’s desire to emphasize financial results (increasing net income year over year and a reduction in working capital) while maintaining a focus on non-financial initiatives.

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The Committee may take into account extraordinary, unusual or infrequently occurring events and transactions to adjust the performance goals used to determine whether or not the annual cash incentive components are met. For example, the Committee may take into account effects of items that were not foreseen or contemplated when the performance goals were set, such as mergers, corporate restructurings, stock splits, or other exceptional, one-time or non-recurring events by backing out the impact of such events on the performance goals being measured.

We believe annual net income before special items and reduction in working capital are appropriate and effective measures of annual Company-wide performance. The threshold level for each performance measure was set based on a level of performance that was believed to be achievable. The target level for each performance measure was set based on a level of performance that was believed to be aggressive, but obtainable. The maximum level for each performance measure was set based on a level of performance that was believed to be realizable, but only as a result of exceptional performance.

We believe financial measures are important but not sufficient to fully assess Company-wide performance. Health, safety and environmental performance consisting of measures to achieve superior personnel safety and environmental performance are key measures. Strategic sustainability goals in areas of strategic concern to the Company are also key measures for annual performance. These included measures of corporate governance, enterprise risk management, emission reductions, sustainability vision communications and reporting, corporate citizenship, consumer advocacy, and people development. Targets and maximum level performance goals are set for each metric with the same philosophy of establishing aggressive, but obtainable performance levels to achieve target level and realizable, but exceptional performance required to achieve the maximum level.

How much can the named executive officers earn? Named executive officers may earn 60% of their salary (80% for the CEO) for achieving target performance levels. At threshold performance, executives earn no incentive. For superior performance, executive officers may earn up to two times target or 120% of salary. Performance between threshold, target and superior is prorated.

The CEO’s maximum is limited by the terms of the plan to $1 million or 121% of his salary. The $1 million limit was set when Albemarle was a substantially smaller company. The Committee does not believe this limit is reasonable and has proposed in the new 2008 Incentive Plan (Proposal 2 in this Proxy Statement) to eliminate this limit. Had the limit not existed, the Chief Executive Officer would have been able to earn up to two times target or 160% of salary. If the new 2008 Incentive Plan is approved by shareholders, the CEO’s maximum opportunity will be two times target as applies to other named executives.

The Committee generally sets the annual incentive opportunity near the median of data from the Comparator Group and survey information. The Committee believes these amounts are competitive and provide an appropriate level of opportunity and reward.

For 2007, the Company achieved an above target but less than superior level of annual net income, but did not reduce working capital. The Committee determined that the Company achieved a below threshold level of performance on Health, Safety and Environmental goals, but an above target level of performance on Strategic Sustainability performance measures. For 2007, the Committee elected to award additional discretionary incentive payments to Messrs. Rohr, Steitz, Kissam and Gottwald to recognize the outstanding contributions of each executive. Based on these results, the Committee awarded the following annual cash incentive awards that were paid in the first quarter of 2008:

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The Long-Term Incentive Plan

We believe it is important to provide our named executive officers with a long-term incentive to promote retention, incent sustainable growth and long-term value creation, and to further align the interests of our named executive officers with those of our shareholders. The Committee grants performance unit awards every other year with a two-year performance period. Performance unit awards are both “performance based” and “time based.” In order for the award to be earned, the Company must achieve certain financial performance. Half of the amount earned vests at the end of the performance period, the other half vests a year later. Upon vesting, awards are paid in stock, net of share withholding for taxes.

The Committee has used an every other year grant methodology since 2004 and has continued it in 2008. The Committee believes granting performance units every other year reflects the long-term nature of the program. The Committee has thoroughly considered the success of the current plan design and a variety of potential changes including annual grants and different performance periods. However, the Committee determined that an every other year grant methodology with a two-year performance period best meets the objectives of the long-term incentive plan.

The Committee granted performance unit awards in 2006 (no awards were granted in 2007) as follows:

The Committee generally considers the median of data from the Comparator Group and survey information when setting the long-term incentive opportunity. The Committee believes these amounts are competitive and provide an appropriate level of opportunity and reward.

The performance goals require achievement of financial goals over the 2006 and 2007 calendar years and are based on average annual net income before special items. The following table reflects the goals for this award at the respective earned award levels:

We believe average net income before special items for the two-year period is an appropriate and effective measure of Company-wide performance. At grant, the threshold level of performance was set based on continuing the level of performance achieved in 2005 and was believed to be achievable. The target level of performance was set based on a 7% compound growth in net income that was believed to be aggressive, but obtainable. The maximum level of performance was set based on a 14% compounded growth in net income that was believed to be realizable, but only with exceptional performance.

Actual performance was outstanding, with average annual net income exceeding $140 million over the performance period with our stock price (on an adjusted basis) increasing from $21 to $41. As a result, one half of the award based on superior performance was vested and paid in the first quarter of 2008; the remaining half will vest and be paid in January 2009.

The Committee considers the performance unit plan a success. The 2006 grant was the second two-year performance cycle grant of performance units. The first grant was made in 2004. Half of the 2004 grant, earned over the 2004 – 2005 performance period, was vested and paid in 2006 and the remaining balance vested and was paid at the beginning of 2007.

In 2008, the Committee granted performance units using the same general structure and performance measures with a performance period of 2008 and 2009.

Restricted Stock Grants

In 2007, the Committee granted certain executive officers restricted stock. The Committee made these grants to support long-term retention of Messrs. Rohr, Steitz, Kissam and Diemer. Each grant begins vesting after three years and vests in equal amounts after the third, fourth and fifth anniversaries of the date of grant. Mr. Rohr’s

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award may fully vest upon his retirement under the terms of our defined benefit retirement plan if sooner than five years, but only if he retires after the third anniversary of the date of grant. If an executive terminates employment prior to full vesting, except as noted above for Mr. Rohr, any nonvested portion of the grant will be forfeited. In establishing these grants, the Committee considered the performance achievements of the Corporation through the leadership of this executive team, the nature of and competitive environment for top talent, and the strategic needs of the Corporation.

Benefits

The Company provides executive officers with the same benefits provided other Albemarle employees including:

Executive Deferred Compensation Plan (EDCP). We maintain a deferred compensation plan which covers executives who are limited in how much they can contribute to tax qualified deferred compensation plans. We maintain this plan because we want to encourage executives to save for their retirement. The plan design is intended to mirror what they would have been able to save, including employer contributions absent any statutory limitations. A participant in the EDCP may defer up to 50% of base salary and/or up to 100% of each cash incentive award.

Defined Benefit Plan. Until April 1, 2004, we maintained a traditional defined benefit pension plan. In 2004, we implemented a new defined contribution retirement benefit for all non-represented employees hired on or after April 1, 2004 and limited participation in the defined benefit pension plan to then current participants. Each of our named executive officers, except Mr. Diemer, participates in the defined benefit pension plan. We maintain a supplemental executive retirement plan (“SERP”) to provide participants with the difference between (a) the benefits they would actually accrue under the qualified defined benefit plan but for the maximum benefit limitations under the Internal Revenue Code, and (b) the statutory limitation of the Internal Revenue Code on compensation that may be recognized under the qualified plan. Certain provisions of the SERP also permit the Committee to award key executives additional pension credits related to offset reduction in defined benefit pension as a mid-career hire. This provision was also limited to then current participants in 2004 concurrent with the defined benefit plan changes.

Perquisites. In general, we do not provide our executives with many of the types of perquisites that other companies may offer their executives, such as personal use of the corporate jet or vehicle allowances. For business purposes it may be appropriate for senior management to belong to a golf or social club so that the executives have an appropriate entertainment forum for customers and appropriate interaction with their communities. In such cases, the Committee approves each executive’s eligibility for reimbursement of fees.

Post Termination Payments

Severance Benefit and Change in Control Benefits. We believe that we should provide reasonable severance benefits in the event an executive’s position is eliminated. Severance benefits for executive officers reflect the fact that it may be difficult to find comparable employment within a short period of time. In addition, our senior management and key employees have built our Company into the successful enterprise that it is today, and we believe it is important to provide reasonable protection for them in the event of a change in control and potential loss of employment. It is our belief that the interests of shareholders will be best served if the interests of our senior management are aligned by virtue of this protection. We also believe our arrangement facilitates the recruitment of talented executives by providing protections in the event we are acquired. We believe relative to the overall value of any potential transaction, these potential post-termination change in control benefits are reasonable.

Pursuant to the philosophy above, the Company maintains a plan to provide severance payments to certain of our employees upon either (i) a termination of employment without cause in the absence of a change in control by reason of the elimination of the employee’s position or a change to our organizational structure which results in a redesign of work processes and individual responsibilities affecting two or more individuals, subject to certain exceptions, or (ii) termination of employment by the Company without cause following a change in control, a so-called change in control double-trigger.

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In addition, the Committee maintains additional severance compensation agreements with Messrs. Rohr, Steitz, Diemer and Kissam that expire December 31, 2008. These agreements provide severance payments in the event of involuntary terminations after a change of control which are not covered by the above severance plan. We do not have an additional severance compensation agreement with Mr. William M. Gottwald.

The Committee annually reviews the post-employment compensation arrangements. The Committee has determined that both the terms and the payout levels are appropriate to accomplish the stated objective of each arrangement. The Committee considers each of the arrangements described above as part of the analysis it conducted regarding all elements of compensation for each of our named executive officers and determined the reasonableness of each individual element of compensation (including post-employment compensation arrangements) and of the named executive officers’ compensation package as a whole. The Committee also considered the non-competition agreement that the Company would receive from the named executive officer in exchange for any post-employment termination benefits. The Committee believes that these arrangements are generally consistent with those arrangements being offered by the Comparator Group companies and other companies of similar size and complexity. As a result, the Committee believes that the payout amounts under each arrangement are necessary to remain competitive in attracting and retaining executive talent and are reasonable compared to the benefits they provide to us.

As part of its analysis, the Committee annually projects potential severance payments including a tax gross up. The current arrangements provide a tax gross up in the event an excise tax is imposed on change in control payments. We currently cap gross up payments to $5 million for the Chief Executive Officer and $3 million for any other executive. When establishing the mix, levels and design of the various components of compensation, the Committee considers their impact on the potential for a tax gross up with the intent of reducing any potential gross up.

For additional information with respect to these arrangements, please see “Compensation of Executive Officers — Agreements with Executive Officers and Other Potential Payments Upon Termination or a Change in Control” beginning on page 35.

Stock Ownership Guidelines. To further align the interests of members of management with our shareholders, the Company has stock ownership guidelines that require the accumulation and retention of our Common Stock. The guidelines require our named executive officers to maintain direct share ownership equal to 60% of the first two performance units grants beginning in 2004. New officers after 2004 are required to maintain direct share ownership equal to 60% of the first two grants they receive after becoming an officer. The following table provides the number of shares of Common Stock that each of our named executive officers must own:

Each of the named executive officers met their respective stock ownership guidelines in 2007.

Deductibility of Compensation. In determining the total compensation of each named executive officer, the Committee considers the tax deductibility of compensation. The Committee believes it is in our best interests and that of our shareholders to provide compensation that is deductible by the Company. While the Committee intends that all compensation be deductible, there may be instances where potentially non-deducible compensation is provided to reward executives consistent with our compensation philosophy for each compensation element.

EXECUTIVE COMPENSATION COMMITTEE REPORT

The Executive Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this Proxy Statement with management and, based on such review and discussion, recommends to the Board of Directors that it be included in this Proxy Statement.

EXECUTIVE COMPENSATION COMMITTEE

Richard L. Morrill, Chairman

R. William Ide

Seymour S. Preston III

John Sherman, Jr.

Anne Marie Whittemore

February 26, 2008

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COMPENSATION OF EXECUTIVE OFFICERS

Total Compensation of Our Named Executive Officers

The following table presents information relating to total compensation of our President and Chief Executive Officer, our Senior Vice President and Chief Financial Officer and our three other highest paid executive officers (the “named executive officers”) for the fiscal years ended December 31, 2007 and 2006.

SUMMARY COMPENSATION TABLE

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Grants of Plan-Based Awards

The 2003 Incentive Plan serves as the core program for the performance-based compensation components of our named executive officers’ total compensation. In early 2003, our shareholders approved the 2003 Incentive Plan which defines the incentive arrangements for eligible participants and:

With the exception of significant promotions and new hires, generally equity awards are made at the first meeting of the Executive Compensation Committee each year following the availability of the financial results for the prior year. The Executive Compensation Committee’s schedule is determined several months in advance, and the proximity of any awards to earnings announcements or other market events is coincidental. Our last grant of performance unit awards was in February 2008 for the calendar year 2008 and 2009 periods. We did not make any performance unit grants in 2007. This timing was selected because it enables us to consider our prior year performance and the participants and our expectations for the next two-year period.

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The following table presents information regarding grants of plan-based awards to our named executive officers during the fiscal year ended December 31, 2007.

GRANTS OF PLAN-BASED AWARDS

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Outstanding Equity Awards at Fiscal Year-End

The following table presents information concerning the number and value of unexercised options, SARs and similar instruments, nonvested stock (including restricted stock, restricted stock units or other similar instruments) and incentive plan awards for the named executive officers outstanding as of the end of the fiscal year ended December 31, 2007.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

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Option Exercises and Stock Vested

The following table presents information concerning the exercise of stock options, SARs and similar instruments and the vesting of stock (including restricted stock, restricted stock units and similar instruments) for the named executive officers during the fiscal year ended December 31, 2007.

OPTION EXERCISES AND STOCK VESTED

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