<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_]Confidential, for Use of
the Commission Only (as
permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Apex Silver Mines Limited
(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):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[COMPANY LOGO APPEARS HERE]
APEX SILVER MINES LIMITED
Caledonian House, Jennett Street,
George Town, Grand Cayman,
Cayman Islands, British West Indies
Notice of Annual Meeting of Shareholders
To be held May 4, 1999
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Apex
Silver Mines Limited (the "Company") will be held at Le Parker Meridien, Salon
Rivoli, 118 West 57th Street, New York, New York 10019, on Tuesday, May 4,
1999 at 4:00 p.m., New York City Time, for the following purposes:
1. To elect three (3) directors to hold office until the 2002 Annual
Meeting of Shareholders or until their successors are elected;
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the current fiscal year; and
3. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on March 31, 1999 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting or any adjournments or postponements
thereof.
The Annual Report of the Company for the fiscal year ended December 31,
1998, including financial statements, is being mailed with this proxy
statement to all of the Company's shareholders and your Board of Directors
urges you to read it.
By order of the Board of Directors
April 6, 1999
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF SHAREHOLDERS, PLEASE
SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT
YOU EXPECT TO ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY
REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.
<PAGE>
APEX SILVER MINES LIMITED
Caledonian House, Jennett Street,
George Town, Grand Cayman,
Cayman Islands, British West Indies
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1999
---------------------
To Our Shareholders:
This Proxy Statement is furnished to the shareholders of Apex Silver Mines
Limited (the "Company") in connection with the solicitation of proxies by the
board of directors of the Company to be voted at the Annual Meeting of
Shareholders of the Company (the "Meeting") to be held on May 4, 1999, or any
postponements or adjournments thereof. The Meeting is being held for the
purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. This Proxy Statement, the accompanying proxy card and the Notice
of Annual Meeting are first being mailed to shareholders of the Company on or
about April 6, 1999.
Only holders of the Company's ordinary shares, par value $0.01 per share
(the "Ordinary Shares"), at the close of business on March 31, 1999 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, 26,248,320 Ordinary Shares were issued, outstanding and entitled
to vote. Each Ordinary Share outstanding on the Record Date is entitled to one
vote. The holders of a majority of the Ordinary Shares of the Company issued
and outstanding and entitled to vote at the Meeting, present in person or by
proxy, constitutes a quorum.
If a shareholder abstains from voting on any matter, the Company intends to
count the abstention as present for purposes of determining whether a quorum
is present at the Meeting for the transaction of business. Unless contrary
instructions are indicated on a proxy, the Ordinary Shares represented by such
proxy will be voted FOR proposals 1 and 2. Additionally, the Company intends
to count broker "non-votes" as present for purposes of determining the
presence or absence of a quorum for the transaction of business. A non-vote
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner. Non-votes are not tabulated for purposes of determining
whether a proposal has been approved. Abstention from voting with respect to
proposals are treated as votes against the particular proposal.
Any proxy may be revoked at any time before it is voted by written notice to
the Chairman, by receipt of a proxy properly signed and dated subsequent to an
earlier proxy, or by revocation of a written proxy by request in person at the
Meeting; but if not revoked, the Ordinary Shares represented by such proxy
will be voted.
The cost of this proxy solicitation will be borne by the Company. In
addition to solicitation by mail, officers, directors and employees of the
Company may solicit proxies by telephone, telegraph or in person. Although no
compensation will be paid for such solicitation of proxies, the Company may
also request banks and brokers to solicit their customers who have a
beneficial interest in the Company's Ordinary Shares registered in the names
of nominees and will reimburse such banks and brokers for their reasonable
out-of-pocket expenses. In addition, the Company has engaged the American
Stock Transfer and Trust Company to assist in such solicitation as part of its
transfer agency services.
1
<PAGE>
Security Ownership of Principal Shareholders and Management
The following table includes information as of March 1, 1999, except as
otherwise indicated, concerning the beneficial ownership of the Ordinary
Shares by (i) each person known by the Company to beneficially hold five
percent or more of the outstanding Ordinary Shares, (ii) each director of the
Company, (iii) each executive officer of Apex Silver Mines Corporation ("Apex
Corporation") named in the table set forth under "Executive Compensation and
Other Information," and (iv) all such executive officers of Apex Corporation
and directors of the Company as a group. The Company has no executive
officers. The Company has entered into a management services agreement
pursuant to which it has engaged Apex Corporation, a wholly owned subsidiary
of the Company, to provide a broad range of corporate management and advisory
services. Except as otherwise noted, the Company believes that all of the
persons and groups shown below, based on information furnished by such owners,
have sole voting and investment power with respect to the Ordinary Shares
indicated.
<TABLE>
<CAPTION>
Beneficial Ownership
--------------------
Number Percentage
--------- ----------
<S> <C> <C>
Directors and 5% Shareholders of the Company and Executive Officers
of Apex
Corporation
Quantum Industrial Partners LDC (1)....................... 3,405,070 12.9%
Geosor Corporation (2).................................... 1,021,521 3.89%
Moore Global Investments Ltd./Remington Investment Strate-
gies L.P. (3)............................................ 2,817,600 10.73%
Michael Comninos (4)(5)................................... 16,855 *
Harry M. Conger (4)....................................... 30,480 *
Marcel F. DeGuire (4)(6).................................. 51,287 *
Eduardo S. Elsztain (4)(7)................................ 1,769,619 6.74%
David Sean Hanna (4)...................................... 12,855 *
Ove Hoegh (4)............................................. 12,855 *
Keith R. Hulley (4)(6).................................... 99,485 *
Thomas S. Kaplan (8)...................................... 6,674,979 25.43%
Richard Katz (4).......................................... 12,855 *
Mark A. Lettes (4)(6)..................................... 17,206 *
Douglas M. Smith (4)(6)................................... 25,644 *
Paul Soros (4)(9)......................................... 353,362 1.35%
Directors of the Company and Officers of Apex Corporation,
as a group............................................... 9,077,482 34.58%
</TABLE>
- --------
* The percentage of Ordinary Shares beneficially owned is less than 1%.
(1) The address of Quantum Industrial Partners LDC ("Quantum Industrial") is
Kava Flambovan 9, Willemstad, Curacao, Netherland Antilles. Quantum
Industrial is an exempted limited duration company formed under the laws
of the Cayman Islands. QIH Management Investor, L.P. ("QIHMI"), an
investment advisory firm organized as a Delaware limited partnership, is
a minority shareholder of, and is vested with investment discretion with
respect to portfolio assets held for the account of Quantum Industrial.
The sole general partner of QIHMI is QIH Management, Inc. ("QIH
Management"), a corporation formed under the laws of the State of
Delaware. Mr. George Soros, the sole shareholder of QIH Management, has
entered into an agreement with Soros Fund Management LLC ("SFM LLC"), a
limited liability company formed under the laws of the State of Delaware,
pursuant to which Mr. George Soros has, among other things, agreed to use
his best efforts to cause QIH Management to act at the direction of SFM
LLC (the "QIP Contract"). Mr. George Soros is Chairman of SFM LLC, and as
a result of such position and the QIP Contract, may be deemed the
beneficial owner of shares held for the account of Quantum Industrial.
Mr. Stanley F. Druckenmiller, the Lead Portfolio Manager and a member of
the Management Committee of SFM LLC, by virtue of such position as Lead
Portfolio Manager and the QIP Contract, also may be deemed the beneficial
owner of shares held for the account of Quantum Industrial. The number of
Ordinary Shares shown does not include Ordinary Shares held by Geosor
Corporation (see footnote 2).
2
<PAGE>
(2) Geosor Corporation ("Geosor"), a New York corporation with an address of
888 7th Avenue, New York, New York 10106, is the registered owner of
1,021,521 Ordinary Shares. Geosor is wholly owned by Mr. George Soros. The
number of Ordinary Shares shown does not include Ordinary Shares held by
Quantum Industrial (see footnote 1).
(3) The address of Moore Global Investments Ltd./Remington Investment
Strategies L.P. is 1251 Avenue of the Americas, 53rd Floor, New York, New
York 10020. Moore Capital Management, Inc., a Connecticut corporation, is
vested with investment discretion with respect to portfolio assets held
for the account of Moore Global Investments, Ltd. ("MGI"). Moore Capital
Advisors, L.L.C., a New York limited liability company ("Moore Capital
Advisors"), is the sole general partner of Remington Investment
Strategies, L.P. ("Remington"). Mr. Louis M. Bacon is the majority
shareholder of Moore Capital Management, Inc. and is the majority equity
holder of Moore Capital Advisors. As a result, Mr. Bacon may be deemed to
be the indirect beneficial owner of the aggregate 2,817,600 shares held
by MGI and Remington.
(4) Amounts shown include Ordinary Shares subject to options exercisable
within 60 days: 12,885 Ordinary Shares for Mr. Comninos; 28,480 Ordinary
Shares for Mr. Conger; 46,875 Ordinary Shares for Mr. DeGuire; 12,855
Ordinary Shares for Mr. Elsztain; 12,855 Ordinary Shares for Mr. Hanna;
12,855 Ordinary Shares for Mr. Hoegh; 93,000 Ordinary Shares for Mr.
Hulley; 12,855 Ordinary Shares for Mr. Katz; 15,626 Ordinary Shares for
Mr. Lettes; 23,438 Ordinary Shares for Mr. Smith; and 12,855 Ordinary
Shares for Mr. Soros.
(5) Mr. Comninos is the registered owner jointly with Ann Comninos of 4,000
Ordinary Shares.
(6) Amounts shown include restricted Ordinary Shares: 4,412 restricted
Ordinary Shares for Mr. DeGuire; 5,735 restricted Ordinary Shares for Mr.
Hulley; 2,206 restricted Ordinary Shares for Mr. Lettes; and 2,206
restricted Ordinary Shares for Mr. Smith.
(7) Mr. Elsztain is the registered owner of 25,000 Ordinary Shares. Mr.
Elsztain is the Chairman and majority shareholder of Consultores Asset
Management, S.A. ("Consultores"), the owner of 62,974 Ordinary Shares.
Consultores is the sole owner of Consultores Management Company Limited
("Consultores Management"), a company formed under the laws of the Isle
of Man. Consultores Management is the manager of Quantum Dolphin Limited,
a private open-end investment fund formed under the laws of the Isle of
Man, which is the registered owner of 1,668,790 Ordinary Shares.
(8) Mr. Kaplan, pursuant to voting trust agreements, has voting and
dispositive control with respect to 2,739,154 Ordinary Shares owned by
Argentum LLC and 3,935,825 Ordinary Shares owned by Consolidated
Commodities, Ltd. ("Consolidated").
(9) Mr. Paul Soros owns 100 percent of VDM, Inc., which is the registered
owner of 340,507 Ordinary Shares.
Election of Directors
The Company's Memorandum and Articles of Association establish a classified
Board of Directors with three classes of directors. At each Annual Meeting of
Shareholders, the successors to the class of directors whose terms expire at
that meeting are elected to serve as directors for a three year term. The
Board of Directors has nominated for election at the Meeting the three persons
named below, to serve until the 2002 Annual Meeting of Shareholders or until
their successors are elected, and each of the three persons named below has
consented to being named as a nominee. All of the nominees are currently
directors of the Company. The Board of Directors has no reason to believe any
nominee will not continue to be a candidate or will not be able to serve as a
director of the Company if elected. In the event that any nominee named below
is unable to serve as a director, the proxy holders named in the proxies have
advised that they will vote for the election of such substitute or additional
nominees as the Board of Directors may propose. The affirmative vote of the
holders of a plurality of the Ordinary Shares represented and entitled to vote
at the Meeting is required for the election of directors.
The name and age of each nominee, his principal occupation for at least the
past five years and other information is set forth below, based upon
information furnished to the Company by such nominee.
3
<PAGE>
Nominees For Election
Ove Hoegh, age 62, director since April 1997.
A member of the board of directors from July 1966 until July 1997 of Leif
Hoegh & Co. ASA, a family owned shipping business with more than $1 billion in
assets, Mr. Hoegh has more than 30 years of experience in the international
shipping industry. From 1970 to 1982, he served as Chief Operating Officer and
Chief Executive Officer of Leif Hoegh & Co. ASA. Since 1982, he has served as
the senior partner of Hoegh Invest A/S, a family investment company with a
diversified portfolio of technology, oil and gas and real estate holdings. In
addition, Mr. Hoegh served for eight years as a member of the board of
directors and executive committee of Brown Boveri (Norway), and also has
served on the shareholders' councils of Esso Norway, Den Norske Creditbank,
and Det Norske Veritas. Mr. Hoegh is a member of the board of the Energy
Policy Foundation of Norway, a former member of the steering committee of the
International Maritime Industry Forum, and a former Vice Chairman of the
executive committee of the Independent Tanker Owners' Association. He served
for five years as a member of the Harvard Business School Visiting Committee.
Mr. Hoegh is a graduate of the Royal Norwegian Naval Academy and holds a
M.B.A. from Harvard University.
Keith R. Hulley, age 59, director since April 1997.
A mining engineer with more than 30 years experience, Mr. Hulley has served
as the Chief Operating Officer of Apex Corporation since its formation in
October 1996. He has served as President of Apex Corporation since March 1998,
prior to which he served as the Executive Vice President of Apex Corporation.
From early 1991 until he joined the Company, he served as a member of the
board of directors and the Director of Operations at Western Mining Holdings
Limited Corporation, a publicly-traded international nickel, gold and copper
producer. At Western Mining, Mr. Hulley's responsibilities included
supervising on a global basis strategic planning, mine production,
concentrating, smelting, refining and sales. During this period, Western
Mining produced on an annual basis approximately 90,000 tonnes of nickel,
700,000 ounces of gold, 80,000 tonnes of refined copper and 1,500 tonnes of
uranium oxide. Mr. Hulley also supervised the development and operation of
Western Mining's Mount Keith open-pit nickel mine, an A$450 million mining
project. Prior to joining Western Mining, Mr. Hulley was the President, Chief
Executive Officer and Chairman of the board of directors of USMX Inc., a
publicly-traded precious metals exploration company. Mr. Hulley also served as
the President of the minerals division and Senior Vice President for
Operations of Atlas Corporation, where he was in charge of mining exploration,
development and production. Previously he was Vice President of Mining and
Development of the U.S. division of BP Minerals, Inc. Over the course of his
career, Mr. Hulley has worked as a miner and shift supervisor in the gold
mines of South Africa, Mine Operation Superintendent of Kennecott
Corporation's Bingham Canyon mine which processed 100,000 tonnes of ore per
day, and project manager of the early phase of the Ok Tedi exploration and
development projects in Papua New Guinea. A member of the American Institute
of Mining and Metallurgical Engineers and a Fellow of the Australian Institute
of Mining and Metallurgy, Mr. Hulley holds a B.S. in Mining Engineering from
the University of Witwatersrand and an M.S. in Mineral Economics from Stanford
University.
Paul Soros, age 72, director since March 1996.
Principally involved in private investment activities during the past five
years, Mr. Soros is a director of VDM, Inc. which is a shareholder of the
Company. Mr. Soros is a member of the Investment Advisory Committee of Quantum
Industrial which is a shareholder of the Company. Mr. Soros is involved in the
monitoring of the Quantum Group of Fund's shareholding in Companhia Vale do
Rio Doce S.A. ("CVRD") of Brazil, its participation in Global Power
Investments, L.P., a joint venture with the International Finance Corporation
and GE Capital Corporation to develop power projects in emerging economies,
serves on the Board of Directors of TVX Gold Inc., and is an active advisor to
the Company. Mr. Soros is the founder and former president of Soros
Associates, an international engineering firm specializing in port development
and offshore terminal and material handling projects for the mining industry
and other basic industries. Soros Associates was
4
<PAGE>
involved in projects in more than 80 countries, acting on behalf of consortia
including USX Corporation, The Broken Hill Proprietary Company Limited, Alcan
Aluminum Limited and Aluminum Company of America, and was involved in projects
in a majority of the largest mineral ports in the world. Mr. Soros has served
on the Review Panel of the President's Office of Science and technology and
the U.S.-Japan Natural Resources Commission. He received the Outstanding
Engineering Achievement Award of the National Society of Professional
Engineers in 1989. Mr. Soros holds a Masters of Mechanical Engineering degree
from the Polytechnic Institute of Brooklyn and is a licensed professional
engineer in New York and numerous other states. In addition, he holds several
patents in material handling and offshore technology, and is the author of
over 100 technical articles.
The Board of Directors unanimously recommends that the Company's
shareholders vote FOR the election of Ove Hoegh, Keith R. Hulley and Paul
Soros.
Other Directors
Information regarding the remaining members of the Board of Directors
appears below.
Michael Comninos, age 67, director since April 1997.
An international financier, Mr. Comninos joined N.M. Rothschild & Sons in
1954, becoming a Partner in its corporate finance group in 1965, and, later,
upon the firm's incorporation as N. M. Rothschild & Sons Limited in 1970, a
director. Prior to his retirement from the firm in 1991, Mr. Comninos served
as the head of the firm's investment management and credit divisions and for
ten years served as the chairman of N.M. Rothschild & Sons (C.I.) Ltd., the
firm's merchant banking affiliate in Guernsey. Mr. Comninos has served as a
director of numerous listed real estate and investment funds and since August
1995 has been a member of the investment committee of the East European Food
Fund, a Luxembourg investment fund managed by Jupiter Asset Management Bermuda
Limited. Mr. Comninos is a member of the Institute of Investment Management
and Research, The Institute of Bankers, The Institute of Chartered Secretaries
and Administrators, and the Association of Corporate Treasurers.
Harry M. Conger, age 68, director since April 1997.
A leading figure in the international mining community, Mr. Conger has 42
years of industry experience, rising from shift boss to Chairman and Chief
Executive Officer of Homestake Mining Company ("Homestake"), a New York Stock
Exchange listed-company. He served as Chairman of Homestake from 1982 until
1997 and retired from the Chief Executive Officer position in May 1986. Over
the course of his career, Mr. Conger has been involved in gold, silver, lead,
zinc, uranium, sulfur, coal, iron ore and copper mining. He has been
extensively involved in numerous major project developments, with both on-site
and broader supervisory responsibility, including the $170 million expansion
of an iron ore mine to 25 million tons of material mined per year, the $165
million greenfield development of a large 20 million tonne surface coal mine,
and the $165 million development of a new gold mine with new technology. Mr.
Conger is a former Chairman of the American Mining Congress, the World Gold
Council and is a member of the National Academy of Engineering. He currently
serves on the board of directors of ASA Limited, a closed-end portfolio of
gold stocks listed on the New York Stock Exchange, and Pacific Gas and
Electric Company (PG&E), a San Francisco based utility company. He retired in
1998 from the board of directors of Baker Hughes Inc., an oil and mining
services company based in Houston, Texas, under their ten year tenure rule;
and retired in 1988 from the board of directors of Cal Mat Company of Los
Angeles, an integrated producer of cement, construction aggregates, pre-mixed
concrete and asphalt mixes, and real estate developer.
Eduardo S. Elsztain, age 39, director since March 1996.
Mr. Elsztain is a director of, and is an indirect shareholder in, Silver
Holdings LDC which was a former shareholder of the Company. Mr. Elsztain is
the founder of Consultores Asset Management S.A.
5
<PAGE>
("Consultores"), a leading securities portfolio management firm in Buenos
Aires, Argentina formerly known as Consultores de Inversiones Bursatiles y
Financiera S.A. He has served as the President of Consultores since 1989. Mr.
Elsztain is currently the Chairman of the board of directors of IRSA
Inversiones y Representaciones S.A., an Argentine real estate company listed
on the Buenos Aires Stock Exchange, the New York Stock Exchange and the Mexico
Stock Exchange. He is also the Chairman of the board of directors of Cresud
S.A.C.I.F. y A. and of SAMAP Sociedad Anonima Mercado de Abasto Proveedor,
both of which are listed on the Buenos Aires Stock Exchange. Mr. Elsztain
studied Economics at the University of Buenos Aires.
David Sean Hanna, age 38, director since March 1996.
For the past fifteen years Mr. Hanna has practiced corporate law with the
Bahamian law firm of Arthur D. Hanna & Co, of which he is a Partner. He is
also a director of Consolidated Commodities, Ltd. ("Consolidated") which is a
shareholder of the Company. Mr. Hanna holds an LL.B. (Hons.) from the
University of Buckingham, England and in 1983 was called first to the Bar of
England and Wales and then as an attorney of the Supreme Court of The Bahamas.
Thomas S. Kaplan, age 36, director since March 1996.
Mr. Kaplan has been the Chairman of the board of directors of the Company
since its inception in March 1996 and is a director and was the founder of
Apex LDC and its predecessor, Apex Silver Mines Ltd., a company formed under
the laws of Bermuda, which contributed substantially all of its assets to Apex
LDC in December of 1994. Mr. Kaplan is a director of Litani LDC and a
principal shareholder in Consolidated, which are shareholders of the Company.
For the past ten years, Mr. Kaplan has served as an advisor to private
clients, trusts and fund managers in the field of strategic forecasting, an
analytical method which seeks to identify and assess global trends in politics
and economics and the way in which such trends relate to international
financial markets, particularly in the developing markets of Asia, Latin
America, the Middle East and Africa. Mr. Kaplan has managed numerous venture
capital investments and portfolio investment accounts, and is a principal of
several entities specializing in direct and portfolio investments, including
Feder Information Services Corporation, Tigris Financial Group Ltd., FMS
Partners L.P. and Bridge Capital Group L.P. Mr. Kaplan also serves as a
director of African Plantations Corporation LDC, a Cayman Islands limited
duration company, which owns and operates coffee and tea plantations in
eastern and southern Africa. Mr. Kaplan was educated in Switzerland and
England and holds B.A., M.A., and D. Phil. degrees in History from the
University of Oxford.
Richard Katz, age 56, director since April 1997.
An investment banker specializing in international finance, Mr. Katz was a
director of N.M. Rothschild & Sons Limited, London, England from 1977 until
March 1993, having joined them in 1969; he was also a managing director of
Rothschild Italia S.p.A., Milan, Italy from its inception in 1989 until
December 1993. Mr. Katz has been a supervisory director of Quantum Fund N.V.,
a Netherlands Antilles investment fund, or one of its subsidiaries, since
1986. He is also a member of the board of supervisory directors of a number of
other investment funds affiliated with Mr. George Soros, including Quantum
Emerging Growth Fund N.V., and is the Chairman of the board of supervisory
directors of Quota Fund N.V., and the Chairman of the boards of advisors of
Quantum Realty Fund Limited, Asian Infrastructure Development Fund Ltd., and
Quantum Industrial Holdings LDC, a shareholder of the Company. Mr. Katz has
served as Vice Chairman of the board of directors of Outboard Marine Corp., a
Delaware company listed on the American Stock Exchange, since September 1997.
Mr. Katz has also served since July 1998 as a non-executive director of
Delancey Estates Plc, which is listed on the London Stock Exchange.
Meetings and Committees of the Board of Directors
The Board of Directors met three times during fiscal 1998. Each director,
with the exception of Richard Katz, attended 75 percent or more of the total
number of such meetings and committee meetings on which he served that were
held during 1998.
6
<PAGE>
Audit Committee. The Audit Committee held three meetings during 1998, and is
currently comprised of Messrs. Comninos, Katz and Hoegh. The Audit Committee
reviews the accounting and auditing principles and procedures of the Company
with a view to providing for the safeguard of the Company's assets and the
reliability of its financial records, recommending to the Board of Directors
the engagement of the Company's independent accountants, reviewing with the
independent accountants the plans and results of the auditing engagement, and
considering the independence of the Company's accountants.
Compensation Committee. The Compensation Committee held one meeting during
1998, and is currently comprised of Mr. Harry Conger and Mr. Paul Soros. The
principal responsibilities of the Compensation Committee are to establish
policies and periodically determine matters involving executive compensation,
recommend changes in employee benefit programs, grant or recommend the grant
of stock options and stock awards under the Company's Employees' Share Option
Plan and Non-Employee Directors' Share Plan and provide counsel regarding key
personnel selection.
Director Compensation
The Company's non-employee director compensation program consists of two
principal components: share options and cash payments. . The Non-Employee
Directors' Share Plan provides for the automatic grant of (i) an option to
purchase a number of Ordinary Shares equal to $50,000 divided by the closing
price of the Ordinary Shares on the American Stock Exchange on the date of the
grant to each non-employee director at the effective date of his or her
initial election to the Board of Directors and (ii) an option to purchase the
number of Ordinary Shares equal to $50,000 divided by the closing price of the
Ordinary Shares on the American Stock Exchange on the date of the grant at the
close of business of each annual meeting of the shareholders of the Company,
and (iii) at the close of business of each meeting of the Board of Directors,
an option valued at $3,000 calculated using the Black-Scholes option-pricing
model to purchase Ordinary Shares with an exercise price equal to that of the
closing price of the Ordinary Shares on the American Stock Exchange on such
date, regardless of whether the non-employee director attends the meeting.
During 1998, pursuant to the Non-Employee Directors' Share Plan, each non-
employee director received options to purchase 4,695 and 1,150 Ordinary Shares
at prices of $11.38 and $8.25, respectively.
In addition, non-employee directors are paid $600 for attendance at Board
meetings and $500 for attendance at Board committee meetings. The Company has
also agreed to reimburse the directors for all reasonable out-of-pocket costs
incurred by them in connection with their services to the Company.
7
<PAGE>
Executive Compensation and Other Information
The following table sets forth certain information for the years indicated
with respect to the compensation of the Chief Executive Officer and the four
other most highly compensated executives of Apex Corporation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
-------------- ----------------------------------
Securities
Restricted Underlying All Other
Name and Principal Salary Bonus Security Options Compensation
Position Year ($) ($) Awards ($) (#) ($)
------------------ ---- ------- ------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Kaplan ....... 1998 248,750 25,000 -- -- --
Chairman, Apex Silver
Mines Limited, 1997 213,000 -- -- -- --
and Chief Executive
Officer, Apex
Corporation 1996 120,625 -- -- -- --
Keith R. Hulley......... 1998 233,750 16,250 48,750 -- 5,063
President and Chief
Operating 1997 225,000 -- -- -- 4,500
Officer, Apex
Corporation (1) 1996 56,250 -- -- 125,000 93,167
Marcel F. DeGuire ...... 1998 184,565 12,500 37,500 -- 5,052
Vice President of
Development, 1997 180,000 -- -- -- 3,600
Apex Corporation (2) 1996 67,500 -- -- 62,500 --
Mark A. Lettes.......... 1998 115,642 6,250 18,750 60,000 --
Vice President of
Finance and Chief 1997 -- -- -- -- --
Financial Officer, Apex
Corporation (3) 1996 -- -- -- -- --
Douglas M. Smith. ...... 1998 122,500 6,250 18,750 -- 2,550
Vice President of
Exploration, 1997 96,666 -- -- 31,250 2,400
Apex Corporation (4)... 1996 -- -- -- -- --
</TABLE>
- --------
(1) Mr. Hulley joined the Apex group of companies on October 1, 1996. His
bonus for 1998 included 5,735 Ordinary Shares with a two-year
restriction, which shares were valued at the end of fiscal 1998 at
$47,314. Amounts shown as all other compensation for 1997 and 1998
represent employer contributions to the Apex Silver Mines Corporation
401(k) Plan (the "Apex 401(k) Plan") and for 1996 represent taxable
moving expenses and tax reimbursement.
(2) Mr. DeGuire joined the Apex group of companies on August 19, 1996. His
bonus for 1998 included 4,412 Ordinary Shares with a two-year restriction,
which shares were valued at the end of fiscal 1998 at $36,399. Amounts
shown as all other compensation for 1997 and 1998 represent employer
contributions to the Apex 401(k) Plan.
(3) Mr. Lettes joined Apex Corporation on June 8, 1998. His bonus for 1998
included 2,206 Ordinary Shares with a two-year restriction, which shares
were valued at the end of fiscal 1998 at $18,200.
(4) Mr. Smith joined Apex Corporation on March 7, 1997. His bonus for 1998
included 2,206 Ordinary Shares with a two-year restriction, which shares
were valued at the end of fiscal 1998 at $18,200. Amounts shown as all
other compensation for 1997 and 1998 represent employer contributions to
the Apex 401(k) Plan.
Share Option Grants
The following table contains further information concerning the share option
grants made to the Chief Executive Officer and the four other most highly
compensated executives of Apex Corporation during the fiscal year ended
December 31, 1998.
8
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Share
Price
Appreciation for
Individual Grants Option Term (4)
---------------------------------------- -----------------
% of
Total
Number of Options
Securities Granted Exercise
Underlying to or Base
Options Employees Price
Granted In Fiscal ($/Sh) Expiration
Name (1) Year (2) (3) Date 5% 10%
---- ---------- --------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Kaplan.... 0 0 -- -- -- --
Keith R. Hulley..... 0 0 -- -- -- --
Marcel F. DeGuire... 0 0 -- -- -- --
Mark A. Lettes...... 60,000 38.18 $10.31 06/08/2008 $389,034 $985,889
Douglas M. Smith.... 0 0 -- -- -- --
</TABLE>
- --------
(1) All options granted in 1998 vest ratably over four years, with the first
tranche vesting on the date of grant. In the event of a change in-control
(as defined in the Employees' Share Option Plan) all unexercised options
are immediately exercisable in full.
(2) Based on 157,132 options granted to employees in 1998 pursuant to the
Employees' Share Option Plan.
(3) The weighted exercise price of share options granted during 1998 was
$10.68.
(4) These amounts are based on compounded annual rates of share price
appreciation of five and ten percent over the 10-year term of the options,
as mandated by rules of the Securities and Exchange Commission, and are
not indicative of expected share price performance. Actual gains, if any,
on share option exercises are dependent on future performance of the
overall market conditions, as well as the option holders' continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved or may be exceeded. The indicated amounts
are net of the option exercise price but before taxes that may be payable
upon exercise.
Option Exercises and Holdings
The following table sets forth information with respect to the Chief
Executive Officer and the four other most highly compensated executives of
Apex Corporation concerning unexercised options held as of December 31, 1998.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options At Fiscal Year- the-Money Options at
End Fiscal Year-End
------------------------- -------------------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Kaplan........ 0 -- -- -- -- --
Keith R. Hulley......... 0 -- 93,750 31,250 $23,438 $7,813
Marcel F. DeGuire....... 0 -- 46,875 15,625 $11,719 $3,906
Mark A. Lettes.......... 0 -- 15,000 45,000 -- --
Douglas M. Smith........ 0 -- 15,625 15,625 $ 3,906 $3,906
</TABLE>
- --------
* Computed based upon a price of $8.25 per Ordinary Share, which was the
closing price on December 31, 1998 as quoted by the American Stock
Exchange.
9
<PAGE>
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for establishing and administering the compensation
philosophy, policies, and plans for the non-employee directors of the Company
and the executive officers of the Company's subsidiaries. The Compensation
Committee's executive compensation philosophy is that compensation should
largely be tied to the performance of the Company and the sustained creation
of shareholder value. The compensation programs also are designed to encourage
share ownership. The Compensation Committee believes that such ownership
effectively aligns the interests of executives with those of shareholders of
the Company.
During 1998 the Compensation Committee obtained the services of an
independent third party human resources consultant to prepare reports
detailing proposed compensation and incentive bonus plans for executives of
Apex Corporation. The consultants compared the job descriptions and
performance of the executives with current compensation market surveys and
used the proposed plans based on those comparisons as the basis for
recommending changes to executive compensation. These plans provide for
consideration of a variety of qualitative and quantitative factors in
establishing salaries and incentive compensation. For 1998, the factors
considered by the Committee included the doubling of reserves at the Company's
San Cristobal project in Bolivia, the progress in advancing the bankable
feasibility study for San Cristobal, the marketing of the Company to
investors, the progress made by generative exploration, and the building and
development of the management team. After reviewing the plans and meeting with
the consultants, the Compensation Committee decided to accept the proposed
compensation and incentive bonus plans and recommended to the Board of
Directors that these be approved. The Board of Directors approved the
compensation plan, the incentive bonus plan and the proposed changes to
executive compensation, on October 15, 1998.
The Company's executive compensation program consists of three principal
components: base salary, awards under the Employees' Share Option Plan and
incentive bonus awards. These components are described below:
Base Salary. Executive salaries were initially established at levels
consistent with the median of mining companies of similar size and growth
prospects. The Compensation Committee considered the factors listed above in
making the salary adjustments implemented in 1998 and in future years plans to
continue to use the compensation and incentive bonus plans and their
methodologies as the basis for establishing executive compensation.
Employees' Share Option Plan. The Company has established a share option
plan for officers, employees, consultants and agents of the Company and its
subsidiaries (the "Employees' Share Option Plan"). In 1998, consistent with
past practice, share option grants were made only to executive officers when
they joined the Company. These share option grants were consistent with the
Company's compensation philosophy of aligning the interests of executives with
those of shareholders of the Company and encouraging share ownership by
executives and were determined by comparison with the compensation practices
of other similarly situated companies. The compensation and incentive bonus
plans provide for stock option awards, and the Compensation Committee will
consider the award of additional options to executives in future years.
Incentive Bonus Awards. The award of incentive bonuses in 1998 was made on
the basis of the recommendations made in the consultant's report. In line with
aligning executives' interests with those of the Company's shareholders and
encouraging share ownership, the Compensation Committee recommended to the
Board of Directors, who approved the recommendation, that 75 percent of the
bonus awarded to the executives in 1998 be paid in the form of restricted
Ordinary Shares. Such shares are subject to forfeiture should an employee be
terminated within two years of the date of the grant of the restricted
Ordinary Shares. The other 25 percent of such bonus awards were paid in cash.
Chairman's 1998 Compensation. Mr. Kaplan's base salary of $240,000, which
was established upon his employment with the Company in April of 1997, was
adjusted effective October 1, 1998 to $275,000. In
10
<PAGE>
increasing Mr. Kaplan's salary the Compensation Committee compared his salary
with that of Chief Executive Officers in other mining companies of similar
size and growth prospects and considered his existing ownership of a large
number of Ordinary Shares. At Mr. Kaplan's request, and based on the
Committee's consideration of Mr. Kaplan's large existing share ownership in
the Company, no options were granted to Mr. Kaplan in 1998.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
limits to $1 million the tax deductibility of compensation paid by a public
company to its chief executive officer and four other most highly compensated
executive officers. The Company is relying upon certain transition rules set
forth in recently promulgated regulations. Therefore, the Compensation
Committee believes that it need not take any specific action or adopt a formal
policy at the present time with respect to the deductibility of compensation
under Section 162(m).
Submitted by the Members of the Compensation Committee:
Harry M. Conger
Paul Soros
The preceding report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except
to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under the Securities Act or
the Exchange Act.
11
<PAGE>
Performance Graph
The Securities and Exchange Commission (the "SEC") requires that the Company
include in this Proxy Statement a line graph presentation comparing cumulative
shareholder returns on an indexed basis with a broad market index and either a
published industry or line-of-business index or a group of peer companies
selected by the Company. The Company has selected the Dow Jones Precious
Metals Index to reflect the market for precious metals stocks. The graph below
compares the cumulative total return as of December 31, 1998 on $100 invested
as of the opening of trading on November 25, 1997 (the first day of trading in
the Ordinary Shares) and in the stocks comprising the Dow Jones Precious
Metals Index and Standard & Poor's 500, assuming the reinvestment of all
dividends.
[GRAPHICAL REPRESENTATION OF DATA TABLE BELOW]
TABLE REFLECTING PLOT POINTS FOR CUMULATIVE TOTAL RETURN GRAPH
-------------FISCAL YEAR ENDING-----------
COMPANY/INDEX/MARKET 11/25/1997 12/31/1997 12/31/1998
Apex Silver Mines 100.00 115.25 74.58
Precious Metals 100.00 98.79 79.49
S&P Composite 100.00 101.72 130.78
The information under the heading "Performance Graph" shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or the Exchange
Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under the
Securities Act or the Exchange Act.
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee of the Company are Messrs.
Harry Conger and Paul Soros. In addition, Mr. Soros owns 100 percent of VDM,
Inc. which is a shareholder of the Company and is also a member of the
Investment Advisory Committee of Quantum Industrial Partners LDC, a
shareholder of the Company (see "Certain Transactions").
Certain Transactions
Pursuant to a buy-sell agreement, during 1998 the Company issued 7,079,006
Ordinary Shares on a one-for-one basis to the remaining minority shareholders
of Apex LDC to acquire the remaining share capital of Apex LDC. At December
31, 1998, the Company owned 100 percent of the outstanding shares of Apex LDC.
In connection with this transaction VDM, Inc. received 314,866 Ordinary Shares
and Quantum Industrial Partners LDC received 3,148,660 Ordinary Shares. Paul
Soros, a director of the Company, owns 100 percent of VDM, Inc. and serves on
the Investment Advisory Committee of Quantum Industrial Partners LDC. In
connection with this transaction Consultores Asset Management, S.A. received
62,973 Ordinary Shares and Quantum Dolphin Limited received 1,668,790 Shares.
Eduardo Elsztain, a director of the Company, may be deemed to be the
beneficial owner of these shares (see "Security Ownership of Principal
Shareholders and Management").
Larry Buchanan, the Chief Geologist of Apex Corporation, is a shareholder
and director of Begeyge Minera Ltd. ("Begeyge"). The Company has an option to
purchase a mineral property located in Honduras for $3,000,000 from Begeyge.
During 1998, Begeyge received no payments from the Company in connection with
this mineral property.
Employment Agreements and Change-in-Control Arrangements
The Company has entered into employment agreements with Messrs. Hulley,
DeGuire, Lettes and Smith. Each establishes a base salary and provides that
the executive is eligible to participate in employee benefit programs. Each
agreement provided for a share option grant made under the Employees' Share
Option Plan. Twenty-five percent of the options vested effective on the date
of the employment agreement, with an additional 25 percent vesting on the
three succeeding anniversaries of the date of the employment agreement. The
employment agreements may be terminated by the Company at any time. Three of
the contracts contain severance provisions which, in the case of Messrs.
Hulley and DeGuire, provide one year's salary and benefits in the event of
termination for reasons other than cause before September 2, 1999 and August
1, 1999, respectively, and in the case of Mr. Lettes, provide one year's
salary and benefits in the event of termination for reasons other than cause
before June 2, 1999 and six months salary and benefits if terminated for
reasons other than cause on or after June 2, 1999 and before June 2, 2000.
Messrs. Hulley, DeGuire and Lettes have agreed not to join a company whose
primary business is the acquisition and development of silver mines for two
years after termination of employment with the Company. Mr. Smith has agreed
to keep certain information confidential for two years after the termination
of his employment with the Company.
The Employees' Share Option Plan, pursuant to which Messrs. Hulley, DeGuire,
Lettes and Smith hold options, provides that in the event of a change-in-
control of the Company (as defined in the Employees' Share Option Plan) all
unvested options become exercisable in full.
Compliance with Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Ordinary Shares and other
equity securities of the Company and to furnish the Company with copies of
such reports. The Company is not aware of any delinquent filing, based solely
on its review of the copies of such reports furnished to the Company and
written representations that no other reports were required.
13
<PAGE>
Ratification of Selection of Independent Accountants
The Board of Directors, pursuant to the recommendation of the Audit
Committee of the Board of Directors, unanimously recommends ratification of
the selection of PricewaterhouseCoopers LLP to serve as independent
accountants for the Company for its 1999 fiscal year. PricewaterhouseCoopers
LLP has served as the Company's independent accountants since the Company's
inception. The affirmative vote of the holders of a plurality of the Ordinary
Shares represented and entitled to vote at the Meeting is required to ratify
the selection of the Company's independent accountants for the fiscal year
1999.
Neither the firm of PricewaterhouseCoopers LLP nor any of its partners has a
direct, or material indirect, financial interest in the Company or any of its
subsidiaries. Representatives of PricewaterhouseCoopers LLP will be present at
the Meeting with the opportunity to make a statement if they desire to do so
and to respond to appropriate shareholder questions.
Shareholder Proposals
Shareholders may present proposals for shareholder action in the Company's
proxy statement where such proposals are consistent with applicable law,
pertain to matters appropriate for shareholder action and are not properly
omitted by Company action in accordance with the proxy rules. The Company's
Annual Meeting of Shareholders following the end of fiscal 1999 is expected to
be held on or about May 4, 2000, and proxy materials in connection with that
meeting are expected to be mailed on or about April 5, 2000. Shareholder
proposals prepared in accordance with the proxy rules must be received by the
Company on or before March 4, 2000. The Company's Memorandum and Articles of
Association also contain procedures to be followed for shareholder proposals
for shareholder action, including the nomination of directors.
Other Matters
Management and the board of directors of the Company know of no other
matters to be brought before the Meeting. If other matters are presented
properly to the shareholders for action at the Meeting and any postponements
and adjournments thereof, it is the intention of the proxy holders named in
the proxy to vote in their discretion on all matters on which the Ordinary
Shares represented by such proxy are entitled to vote.
By order of the Board of Directors,
/s/ Thomas S. Kaplan, Chairman
Thomas S. Kaplan, Chairman
The Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission (without exhibits) may be obtained at no charge by any
shareholder entitled to vote at the Meeting who writes to: Vice President of
Investor Relations, Apex Silver Mines Corporation, 1700 Lincoln Street, Suite
3050, Denver, CO 80203.
14
<PAGE>
APEX SILVER MINES LIMITED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 4, 1999
The undersigned hereby appoints Thomas S. Kaplan and Keith R. Hulley,
or either of them, as proxies with full power of substitution to vote all shares
of Ordinary Shares, par value $0.01 per share, of Apex Silver Mines Limited of
record in the name of the undersigned at the close of business on March 31, 1999
at the Annual Meeting of Shareholders to be held in New York, New York on May 4,
1999, or at any postponements or adjournments, hereby revoking all former
proxies.
(Continued and to be signed on reverse side.)
<PAGE>
<TABLE>
<CAPTION>
logo [X] Plese mark your
votes as in this
example using
dark ink only
<S> <C> <C>
1. ELECTION OF DIRECTORS: [__] WITH AUTHORITY to [__] WITHOLD
vote for all nominees AUTHORITY to vote for
listed below (except as all nominees
marked to the contrary)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE WITHHELD NOMINEE'S NAME IN THE LIST AT RIGHT.)
Nominees: Keith R. Hulley, Ove Hoegh, Paul Soros
<S> <C> <C> <C>
2. RATIFICATION OF [__] FOR [__] AGAINST [_] ABSTAIN
PRICEWATERHOUSECOOPERS
LLP AS INDEPENDENT
ACCOUNTANTS
</TABLE>
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS COMING BEFORE THE MEETING.
THE ORDINARY SHARES REPRESENTED BY THE PROXY WILL BE VOTED ON
PROPOSALS (1), (2) AND (3) IN ACCORDANCE WITH THE SPECIFICATION MADE AND "FOR"
SUCH PROPOSALS IF THERE IS NO SPECIFICATION.
Dated: (Signature) (Signature)
----------------- ----------------- -----------------
Note: Please sign name(s) exactly as shown at left. When signing as executor,
administrator, trustee or guardian, give full title as such; when shares
have been issued in the names of two or more persons, all should sign.
