<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
VULCAN MATERIALS COMPANY
- --------------------------------------------------------------------------------
(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> 2
March 30, 1998
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Vulcan Materials Company, which will be held in the auditorium of the
Protective Life Corporation Building, 2801 Highway 280 South, Birmingham,
Alabama, on Friday, May 8, 1998, at 10:00 a.m., Central Daylight Time. The
formal Notice of the Annual Meeting, the Proxy Statement and a proxy accompany
this letter.
We hope that you will be present at the meeting. Whether or not you plan to
attend, however, please execute and return your proxy so that the Company may be
assured of the presence of a quorum at the meeting. A postage-prepaid envelope
is enclosed for your convenience in replying. The prompt return of your proxy
will be greatly appreciated.
The Annual Report of your Company for 1997 is enclosed. We trust you will
find it interesting and informative.
Sincerely yours,
Donald M. James
Chairman and
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD MAY 8, 1998
To the Shareholders of the Company:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
the Shareholders of Vulcan Materials Company (the "Company") will be held in the
auditorium of the Protective Life Corporation Building, 2801 Highway 280 South,
Birmingham, Alabama, on Friday, May 8, 1998, at 10:00 a.m., Central Daylight
Time, for the following purposes:
1. To elect three (3) directors each to serve for a term of three (3)
years until the Annual Meeting of the Shareholders in 2001 and one (1)
director to serve a term of two (2) years until the Annual Meeting of the
Shareholders in 2000 and until their successors are duly elected and
qualified.
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for 1998.
3. To transact such other business as may properly come before the
Annual Meeting.
Holders of record of the Common Stock of the Company at the close of
business on March 20, 1998, are entitled to notice of and to vote at the Annual
Meeting.
The Annual Meeting may be adjourned from time to time without notice other
than announcement at the meeting, or any adjournment thereof, and any business
for which notice is hereby given may be transacted at any such adjournment.
By Order of the Board of Directors,
William F. Denson, III
Secretary
One Metroplex Drive
Birmingham, Alabama 35209
March 30, 1998
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NOTE -- PLEASE SIGN, DATE AND RETURN YOUR PROXY
AS PROMPTLY AS POSSIBLE
WHETHER YOU OWN ONE OR MANY SHARES.
- --------------------------------------------------------------------------------
<PAGE> 4
PROXY STATEMENT FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD MAY 8, 1998
The accompanying proxy is solicited on behalf of the Board of Directors of
Vulcan Materials Company (the "Company") for use at the Annual Meeting of the
Shareholders of the Company (the "Annual Meeting") to be held in the auditorium
of the Protective Life Corporation Building, 2801 Highway 280 South, Birmingham,
Alabama, at 10:00 a.m., Central Daylight Time, on Friday, May 8, 1998, and any
adjournments thereof. A shareholder giving a proxy may revoke it at any time
before it is voted by sending a letter of revocation to the Secretary of the
Company, in care of First Chicago Trust Company of New York, P. O. Box 8060,
Edison, New Jersey 08818-9039. A proxy may also be revoked by signing and
returning a ballot at the Annual Meeting or by signing a proxy with a more
recent date than that of the proxy first given and returning it to the
inspectors of election. Attendance at the Annual Meeting by itself will not
revoke a proxy. The mailing address of the principal executive office of the
Company is P. O. Box 530187, Birmingham, Alabama 35253-0187. The approximate
date on which this Proxy Statement and the proxy are to be first mailed to
shareholders is March 30, 1998.
GENERAL INFORMATION
On March 20, 1998, the record date for the Annual Meeting, the number of
issued and outstanding shares of Common Stock of the Company was 33,546,660. The
holders of each outstanding share of Common Stock of the Company on such date
are entitled to one vote per share with respect to each matter to be considered
at the Annual Meeting. There are no cumulative voting rights.
A majority of the outstanding shares of Common Stock, represented in person
or by proxy, is required to constitute a quorum at the Annual Meeting. Shares of
Common Stock of the Company, represented by proxies which have been properly
executed and duly returned, will be counted for purposes of determining a quorum
and will be voted at the Annual Meeting as specified by the shareholders. Shares
of Common Stock represented by a properly executed and returned proxy will be
treated as present at the Annual Meeting for purposes of determining a quorum
without regard to whether the proxy is marked as casting a vote for or against
or abstaining with respect to a particular matter. In addition, shares of Common
Stock represented by "broker non-votes" (i.e., shares of Common Stock held in
record name by brokers or nominees as to which a proxy is received and (i) no
instructions have been received from the beneficial owner or person entitled to
vote, (ii) the broker or nominee does not have discretionary voting power and
(iii) the record holder has indicated that it does not have authority to vote
such shares on the matter) generally will be treated as present for purposes of
determining a quorum, but will have the effect as described below concerning the
matters to be voted upon by the shareholders at the Annual Meeting.
The affirmative vote of a plurality of the votes cast by the holders of
outstanding shares of Common Stock of the Company present in person or
represented by proxy at the Annual Meeting is necessary to elect the nominees
for directors named in the Proxy Statement. Under New Jersey law, neither an
abstention nor a broker non-vote is considered a vote for the purpose of
determining the number of votes cast on a proposal. Accordingly, abstentions and
broker non-votes with respect to the election of directors will have no effect
upon the election of directors at the Annual Meeting. The affirmative vote of a
majority of the votes cast by the holders of outstanding shares of Common Stock
of the Company present in person or represented by a proxy at the Annual Meeting
is necessary to ratify the appointment of Deloitte & Touche as independent
auditors for 1998. Therefore, abstentions and broker non-votes with respect to
the ratification of the Company's independent auditors will have the same effect
as negative votes.
Duly executed proxies without voting instructions will be voted in
accordance with the recommendations of the Board of Directors. As of the date of
this Proxy Statement, the Board of Directors does not know of any business to be
presented for consideration or action at the Annual Meeting other than that
described in this Proxy Statement.
<PAGE> 5
The Board of Directors has adopted a policy pursuant to which all proxies,
ballots and tabulations relating to shareholder meetings are to be maintained in
confidence, except where disclosure may be required by applicable law, where
shareholders write comments on their proxy forms, where disclosure is expressly
requested by a shareholder, and in limited circumstances as determined by the
Board of Directors, such as proxy solicitations not approved and recommended by
the Board of Directors. The inspectors of election and the tabulators of all
proxies, ballots and voting results that identify shareholders are independent
and are not employees of the Company.
The costs of soliciting proxies on behalf of the Board of Directors will be
borne by the Company. In addition to use of the mails, proxies may be solicited
by personal interview, telephone or telegraph. The Company has retained
Georgeson & Company Inc. for a fee of $6,500 and the reimbursement of out-of-
pocket expenses, to assist in the solicitation of proxies from brokerage firms,
banks and other institutional holders. The Company will reimburse brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred in forwarding proxy materials to, and obtaining proxies from,
beneficial owners of the Common Stock of the Company.
1. ELECTION OF DIRECTORS
The By-laws of the Company provide that the Board of Directors shall
consist of not fewer than nine nor more than 21 directors, the number of
directors within such minimum and maximum limits to be determined from time to
time by resolution of the Board of Directors. The Board of Directors has fixed
the number of directors of the Company at 10.
The Company's Certificate of Incorporation (Restated 1988) provides that
the Board of Directors shall be divided into three classes, each of which serves
for three years, with one class being elected each year.
The Board of Directors has nominated three persons for election as
directors to serve three-year terms expiring in 2001 and one person for election
as a director to serve a two-year term expiring in 2000. Unless otherwise
directed, proxies will be voted in favor of these four nominees. Should any of
the nominees be unable to accept election, the proxies will be voted for the
election of such other person or persons as the Board of Directors may
recommend. These nominees have consented to serve if elected, and the Board of
Directors has no reason to believe that any of the persons nominated will be
unable to accept election.
The following information about the nominees for director and the directors
continuing in office is provided below: (1) their ages as of March 31, 1998; (2)
the year they first became directors of the Company; (3) their principal
occupations since 1993; (4) other directorships, including any directorship of a
company which has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, is subject to the reporting
requirements of Section 15(d) of said Act or is registered as an investment
company under the Investment Company Act of 1940; and (5) memberships on
committees of the Board of Directors.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
TERM EXPIRING IN 2000
<TABLE>
<C> <S>
JOHN K. GREENE
Age: 68. Director since 1974.
PHOTO Special Principal, William Blair & Company, Chicago,
Illinois (an investment banking firm), since 1995;
Partner of that company prior thereto.
Committee memberships: Audit Review; Governance and
Succession; Finance and Pension Funds.
</TABLE>
<PAGE> 6
TERMS EXPIRING IN 2001
<TABLE>
<C> <S>
DOUGLAS J. MCGREGOR
Age: 57. Director since 1992.
Chairman and Chief Executive Officer, M. A. Hanna
Company, Cleveland, Ohio (an international specialty
PHOTO chemicals company with interests in formulated
polymers), since July, 1997; President and Chief
Executive Officer from January, 1997 to July, 1997;
President and Chief Operating Officer prior thereto.
Other directorships: KeyCorp; M. A. Hanna Company.
Committee memberships: Audit Review; Compensation; Safety,
Health and Environmental Affairs.
DONALD B. RICE
Age: 58. Director since 1986.(*)
President and Chief Executive Officer of UroGenesys, Inc., Santa
PHOTO Monica, California (a biotechnology company developing
therapeutics and diagnostic testing for urogenital cancer),
since 1996; President and Chief Operating Officer of
Teledyne, Inc., Los Angeles, California (a manufacturer of
aviation, electronic, industrial, specialty metal and
consumer products), from 1993 to 1996; Secretary of the Air
Force, from 1989 to 1993.
Other directorships: Scios, Inc.; UroGenesys, Inc.;
Wells Fargo & Company and Wells Fargo Bank N.A.
Committee memberships: Audit Review; Executive;
Finance and Pension Funds; Governance and Succession.
(*) Dr. Rice was first elected a director in 1986, and
served until May, 1989, when he was appointed Secretary
of the Air Force. He was reelected a director of the
Company by the Board of Directors on February 12, 1993.
ORIN R. SMITH
Age: 62. Director since 1983.
Chairman and Chief Executive Officer of Engelhard
PHOTO Corporation, Iselin, New Jersey (provider of
environmental technologies, performance products,
engineered materials and related services), since
January, 1995; President and Chief Executive Officer of
that company prior thereto.
Other directorships: Engelhard Corporation;
Ingersoll-Rand Company; Minorco; Perkin-Elmer
Corporation; Summit Bancorporation. Committee
memberships: Compensation; Ex- ecutive; Governance and
Succession; Safety, Health and Environmental Affairs.
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE NOMINEES
NAMED ABOVE.
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2000
<TABLE>
<C> <S>
MARION H. ANTONINI
Age: 67. Director since 1983. Principal,
Kohlberg & Company, Mount Kisco, New York (a private
PHOTO merchant banking firm), since January, 1998; Chairman,
Chief Executive Officer and President of Welbilt
Corporation, Stamford, Connecticut (a manufacturer and
distributor of commercial food service equipment and
residential furnaces) prior thereto.
Other directorships: Engelhard Corporation;
Scientific-Atlanta, Inc.
Committee memberships: Compensation; Executive; Governance and
Succession; Finance and Pension Funds.
</TABLE>
<PAGE> 7
<TABLE>
<C> <S>
JAMES V. NAPIER
Age: 61. Director since 1983.
PHOTO Chairman of the Board of Scientific- Atlanta, Inc.,
Atlanta, Georgia (a manufacturer and designer of
telecommunication systems, satellite-based
communications networks, and instrumentation for
industrial, telecommunications and government
applications).
Other directorships: Engelhard Corporation; HBO & Co.;
Intelligent Systems, Inc.; Personnel Group of America,
Inc.; Scientific-Atlanta, Inc.; Westinghouse Air Brake
Co.
Committee memberships: Audit Review; Compensation;
Finance and Pension Funds.
</TABLE>
TERMS EXPIRING IN 1999
<TABLE>
<C> <S>
LIVIO D. DESIMONE
Age: 61. Director since 1987.
PHOTO Chairman and Chief Executive Officer of Minnesota
Mining & Manufacturing Company, St. Paul, Minnesota (a
diversified manufacturer).
Other directorships: Cargill, Incorporated; Dayton
Hudson Corporation; General Mills, Inc.; Minnesota
Mining & Manufacturing Company.
Committee memberships: Compensation; Executive;
Governance and Succession; Safety, Health and
Environmental Affairs.
DONALD M. JAMES Age: 49.
Director since 1996.
Chairman and Chief Executive Officer of the Company
PHOTO since May, 1997; President and Chief Executive Officer
from February, 1997 to May, 1997; President and Chief
Operating Officer from February, 1996 to February,
1997; President of the Company's Southern Division from
1994 to 1996; Senior Vice President, South,
Construction Materials Group of the Company from 1995
to 1996; Senior Vice President and General Counsel of
the Company from December, 1992 through 1993.
Other directorships: Protective Life Corporation.
Committee memberships: Executive.
ANN D. MCLAUGHLIN
Age: 56. Director since 1990.
Chairman, The Aspen Institute, Aspen, Colorado (an
PHOTO independent, nonprofit organization whose programs are
designed to enhance the ability of leaders to
understand national and international issues), since
1996; Vice Chairman of that organization from 1993 to
1996; President, Federal City Council, Washington, D.C.
(a nonpartisan, nonprofit organization which is
dedicated to improving the nation's capital), from 1990
until 1995; President and Chief Executive Officer, New
American Schools Development Corporation, Arlington,
Virginia (a private organization which supports the
design and establishment of high- performance learning
environments), from 1992 until 1993. Other
directorships: AMR Corporation; Donna Karan
International, Inc.; Fannie Mae; General Motors
Corporation; Harman International Industries, Inc.;
Host Marriott Corporation; Kellogg Company; Nordstrom,
Inc.; Potomac Electric Power Company; Sedgwick Group
plc; Union Camp Corporation.
Committee memberships: Audit Review; Executive;
Finance and Pension Funds; Safety, Health and
Environmental Affairs.
</TABLE>
<PAGE> 8
<TABLE>
<C> <S>
HERBERT A. SKLENAR
Age 66. Director since 1973.
Chairman Emeritus of the Company since May, 1997;
PHOTO Chairman of the Board from February, 1997 to May, 1997;
Chairman and Chief Executive Officer from May, 1992 to
February, 1997; President and Chief Executive Officer
prior thereto.
Other directorships: AmSouth Bancorporation;
Protective Life Corporation; Temple-Inland, Inc.
Committee memberships: Finance and Pension Funds;
Safety, Health and Environmental Affairs.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
In 1997, the Board of Directors held seven meetings. The Board of Directors
has established six standing committees which have the responsibilities set
forth below.
The Executive Committee has the same powers as the Board of Directors,
except as limited by the New Jersey Business Corporation Act. In practice, the
powers of the Executive Committee are exercised only for matters that arise
between meetings of the Board of Directors. The Executive Committee met once in
1997.
The Audit Review Committee advises the Board of Directors and the
management of the Company from time to time with respect to internal controls,
systems and procedures, accounting policies and other significant aspects of the
financial management of the Company. The Audit Review Committee also reviews
with the firm of independent certified public accountants its audit procedures
and other significant aspects of the annual audit made by the firm, and advises
the Board of Directors of the adequacy of the audit by the independent certified
public accountants. The Audit Review Committee met two times during 1997.
The Compensation Committee interprets and administers the Company's
Management Incentive Plan, the 1991 Long-Range Performance Share Plan and the
1996 Long-Term Incentive Plan. It is comprised of nonemployee directors
ineligible to participate in these plans. The Compensation Committee also is
responsible for determining and fixing the amount of compensation paid to each
officer of the Company, each division president and each Chemicals Group
business unit president ("Senior Executives"). In addition, it determines and
fixes other benefits to be provided to such Senior Executives and certain other
employees of the Company. It also makes recommendations to the Board of
Directors concerning changes in the compensation of the directors of the
Company. The Compensation Committee met two times during 1997.
The Governance and Succession Committee: (a) conducts such meetings as are
appropriate with other directors, officers, other employees of the Company, or
any other persons whom it might select for purposes of discussing with them (i)
the tenure and selection of persons for membership on the Board of Directors and
(ii) the tenure and selection of a successor to the chief executive officer, and
(b) makes appropriate recommendations to the Board of Directors with respect
thereto. This Committee will consider nominees for director recommended by
shareholders for 1999 if such recommendations are made in writing, addressed to
the Committee, in care of the Secretary of the Company, at the principal office
of the Company, and are received by November 29, 1998. The Governance and
Succession Committee met three times during 1997.
The Safety, Health and Environmental Affairs ("SHE") Committee has the
responsibility for reviewing the Company's policies, practices and programs with
respect to the management of safety, health and environmental affairs and
monitoring the Company's compliance with safety, health and environmental laws
and regulations. The SHE Committee met two times during 1997.
The Finance and Pension Funds Committee has responsibility for overseeing
the Company's financial affairs and recommending to the Board of Directors
financial policies and actions to accommodate the Company's goals and operating
strategies while maintaining a sound financial condition. Its functions include
keeping informed about the Company's financial condition, recommending a
dividend policy, reviewing and recommending changes in the quarterly dividend
payments, and evaluating and making recommendations concerning the appropriate
mix of debt and equity, incurrence of long-term debt, and changes in the
authorized limit of short-term debt. The Finance and Pension Funds Committee is
also responsible for
<PAGE> 9
overseeing the funding and management of assets for pension plans sponsored by
the Company. To fulfill these functions, it establishes funding policies and
methods consistent with pension plan objectives and the Employee Retirement
Income Security Act of 1974, selects and removes investment managers, and
appoints trustees for the pension plans. The Finance and Pension Funds Committee
met two times in 1997.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not employees of the Company are
paid a retainer of $30,000 per year, plus a fee of $1,500 for each meeting
actually attended.
Each member of a committee who is not an employee of the Company is paid a
fee of $1,500 for each committee meeting attended in person or by telephone and
for each unanimous consent to action in lieu of meeting executed. In addition,
each chairman of a committee who is not an employee of the Company is paid a fee
of $5,000 per year for service as chairman of a committee.
The Company has a Deferred Compensation Plan for Directors Who Are Not
Employees of the Company (the "Deferred Compensation Plan") under which payment
to nonemployee directors of their compensation as directors may be deferred for
certain periods or until they cease to be directors. Currently, five directors
are deferring their fees pursuant to the Deferred Compensation Plan. The
deferred amounts, at the election of the director, either (i) are credited with
interest at prescribed rates or (ii) are converted to the equivalent of that
number of shares of the Company's Common Stock (based on the market price at the
time of deferral) that could be purchased with the deferred amounts, and are
thereafter credited with amounts equal to dividends thereon (also converted to
stock equivalents). All payments under the Deferred Compensation Plan are in the
form of cash. The Deferred Compensation Plan provides that lump-sum payments of
all deferred compensation would be made within 30 days if (i) there is a Change
in Control (see the definition of "Change in Control" on page 26) and (ii) at
any time after a Change in Control the participating director ceases to be a
member of the Board of Directors, the Deferred Compensation Plan is terminated
or the Company's capital structure is changed materially. The Deferred
Compensation Plan was approved by the shareholders in 1993.
The Company also has a Deferred Stock Plan for Nonemployee Directors of the
Company (the "Deferred Stock Plan"), which was adopted by the Board of Directors
and approved by the shareholders of the Company in 1996. The Deferred Stock Plan
is designed to provide for the payment of a greater portion of the compensation
of nonemployee directors of the Company in the form of equity, thereby more
closely aligning the interests of the nonemployee directors with those of the
other shareholders of the Company. Under the Deferred Stock Plan, an account is
established for each nonemployee director to which deferred stock units are
credited. Each deferred stock unit will evidence the right to receive a share of
Common Stock of the Company upon the director's termination of service. The
Deferred Stock Plan provides that each nonemployee director will receive annual
grants of deferred stock units calculated by dividing an amount equal to 40% of
the annual retainer payable to nonemployee directors then in effect by the
average daily closing price per share of Common Stock of the Company for the 20
trading days prior to the date of grant. On each date on which a regular cash
dividend is paid on the Common Stock, the account of each eligible nonemployee
director will be credited with additional deferred stock units corresponding to
the cash dividend paid on the number of shares of Common Stock evidenced by the
deferred stock units credited to the account of each such nonemployee director.
The entire balance of a nonemployee director's account will be paid to the
director, in either a lump sum or installments at the election of such director,
in shares of Common Stock of the Company, upon the director's termination of
service. The value of the deferred stock units is dependent upon the fair market
value of the shares of Common Stock of the Company, and therefore is subject to
market fluctuations in the value of the Company's Common Stock until the date of
distribution. The total number of shares of Common Stock of the Company reserved
for issuance pursuant to the Deferred Stock Plan is 100,000, subject to
adjustment in the event of a stock split, reverse stock split, reorganization or
recapitalization.
<PAGE> 10
The Company also has a Restricted Stock Plan for Nonemployee Directors (the
"Restricted Stock Plan"), which was approved by the Board of Directors in 1997.
The Restricted Stock Plan was implemented to promote a greater identity of
interests between the Company's nonemployee directors and its shareholders
through increasing ownership of Common Stock by the nonemployee directors and to
assist the Company in attracting and retaining qualified individuals to serve as
nonemployee directors by affording them an opportunity to share in the future
success of the Company. Under the Restricted Stock Plan, 65 restricted shares
(the "Restricted Shares") are granted annually to each nonemployee director. The
Restricted Shares are held in special restricted accounts by the Company's
exchange agent and the nonemployee directors have no right to receive the shares
until the restrictions lapse or are waived, at which time the shares are
distributed in a lump sum payment. With the exception of the right to receive,
sell, assign, pledge or otherwise transfer the Restricted Shares, the
nonemployee director is entitled to all rights and benefits of a shareholder
with respect to the Restricted Shares, including the right to vote the shares.
The restrictions expire when the nonemployee director reaches age 70 (or the
then current mandatory retirement age), or the nonemployee director ceases to be
a director before reaching age 70 because of death or disability. The Chief
Executive Officer of the Company has the power to waive the restrictions in the
event the nonemployee director fails to remain a director for any reason other
than retirement at the mandatory age, death or disability.
In accordance with the Restricted Stock Plan, dividends paid on Restricted
Shares are credited to an account for each nonemployee director in the form of
deferred stock units. The number of deferred stock units is determined by
multiplying the per share dividend amount by the number of Restricted Shares
granted to the nonemployee director upon which restrictions have not yet lapsed
and deferred stock units previously credited to such nonemployee director under
the Restricted Stock Plan and dividing the product by the average daily closing
price per share of Common Stock for the 20 trading days prior to the dividend
payment date. The dividends held as deferred stock units will be paid to the
nonemployee director in the form of Common Stock upon the nonemployee director's
termination of service, regardless of whether or not the Restricted Shares are
ever distributed.
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following is information regarding persons known to the Company to have
beneficial ownership of more than 5% of the outstanding Common Stock of the
Company, which is the only outstanding class of voting securities of the
Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------------ -------------------- ----------
<S> <C> <C>
State Farm Mutual Automobile Insurance Company and
Affiliates................................................ 3,677,400 shares(1) 10.9%
One State Farm Plaza
Bloomington, Illinois 61710
AmSouth Bancorporation...................................... 3,250,148 shares(2) 9.7%
AmSouth Sonat Tower
Birmingham, Alabama 35203
AMVESCAP PLC................................................ 2,460,900 shares(3) 7.3%
11 Devonshire Square
London EC2M 4YR
England
Gerald Ratner, as Attorney and Agent........................ 2,402,517 shares(4) 7.1%
222 North LaSalle Street
Chicago, Illinois 60601
</TABLE>
- ---------------
(1) Based on information contained in the Schedule 13G, dated January 22, 1998,
filed with the Securities and Exchange Commission. The total includes
2,791,200 shares over which State Farm Mutual Automobile Insurance Company
holds sole voting and dispositive power, 399,800 shares over which State
Farm Investment Management Corp. holds sole voting and dispositive power,
and 486,400 shares over which State Farm Employees Savings and Thrift Plan
holds sole voting and dispositive power. State Farm Mutual Automobile
Insurance Company and each of the various affiliated entities listed on
Exhibit A to the Schedule 13G expressly disclaim "beneficial ownership" as
to all shares as to which such entity has no right to receive the proceeds
of sale of the security and disclaims that it is part of a "group."
(2) Based on information contained in a Schedule 13G, dated February 13, 1998,
filed with the Securities and Exchange Commission. The total consists
exclusively of shares of Common Stock held by estates and trusts of which
AmSouth Bank, a subsidiary of AmSouth Bancorporation, is a fiduciary. No
single one of these estates or trusts holds as much as 5% of the Common
Stock of the Company. As reported in the Schedule 13G, AmSouth Bank has
shared voting power with respect to 3,237,348 shares and shared dispositive
power with respect to 2,782,433 shares.
(3) Based on information contained in a Schedule 13G, dated February 9, 1998,
filed with the Securities and Exchange Commission. AMVESCAP PLC has shared
voting and dispositive power with respect to such shares with its
subsidiaries AVZ, Inc., AIM Management Group Inc., AMVESCAP Group Services,
Inc., INVESCO, Inc., and INVESCO North American Holdings, Inc., each of
which is a holding company, and INVESCO Capital Management, Inc., INVESCO
Funds Group, Inc., INVESCO Management and Research, Inc. and INVESCO Realty
Advisors, Inc., each of which is a registered investment adviser under the
Investment Advisers Act of 1940. AMVESCAP PLC and each of the foregoing
affiliated entities expressly disclaim "beneficial ownership" of the
securities covered by the Schedule 13G.
(4) The Company has been advised by Gerald Ratner that Lester Crown, members of
his family, and certain partnerships and trusts associated with the Crown
family are the beneficial owners of 2,402,517 shares of the Common Stock of
the Company. Such persons, including Mr. Crown, disclaim that they act as a
group for purposes of Section 13 of the Securities Exchange Act of 1934 or
otherwise and disclaim that any one of such persons is the beneficial owner
of shares owned by any other such person.
<PAGE> 12
SECURITY HOLDINGS OF MANAGEMENT
The following table sets forth information, unless otherwise indicated, as
of March 1, 1998, regarding Common Stock and stock-based holdings of the
directors, the chief executive officer and the four other most highly
compensated executive officers which are based on the Common Stock of the
Company. The "Stock" column shows beneficial ownership, direct and indirect, and
the "Total" column shows all stock-based holdings, including those in the
"Stock" column. The value of their total holdings will increase or decrease with
changes in the price of the Company's Common Stock.
COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS(1)
<TABLE>
<CAPTION>
NAME STOCK(2) TOTAL(3)
- ---- -------- --------
<S> <C> <C>
Marion H. Antonini.......................................... 4,315 27,569
Guy M. Badgett, III......................................... 15,120 21,752
Peter J. Clemens, III....................................... 47,483 57,168
Livio D. DeSimone........................................... 1,115 15,054
John K. Greene.............................................. 24,141(4) 27,894(4)
John A. Heilala............................................. 18,567 24,834
Donald M. James............................................. 29,758 37,933
Daniel J. Leemon............................................ 22,224 29,882
Douglas J. McGregor......................................... 515(5) 8,676(5)
Ann D. McLaughlin........................................... 1,059 8,993
James V. Napier............................................. 1,115 3,874
Donald B. Rice.............................................. 715(6) 3,143(6)
Herbert A. Sklenar.......................................... 218,183 226,307
Orin R. Smith............................................... 1,115 13,521
All Directors and Executive Officers as a group (24
persons).................................................. 494,423(7) 662,757
</TABLE>
- ---------------
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of March 1, 1998, that such person
or group has the right to acquire within sixty days after such date, or with
respect to which such person otherwise has or shares voting or investment
power. For purposes of computing beneficial ownership and the percentages of
outstanding shares held by each person or group of persons on a given date,
shares which such person or group has the right to acquire within sixty days
after such date are shares for which such person has beneficial ownership
and are deemed to be outstanding for purposes of computing the percentage
for such person, but are not deemed to be outstanding for the purpose of
computing the percentage of any other person. None of the directors or
executive officers listed in the table individually own in excess of 1% of
the outstanding Common Stock of the Company.
(2) With respect to employees of the Company, includes shares held under the
Company's Thrift Plan for Salaried Employees on March 1, 1998, to the extent
the beneficial ownership was vested in the persons listed. Also includes
shares beneficially owned by spouses of persons listed and other relatives
living in their households, whether or not interest in such shares is
disclaimed by the person listed. With respect to nonemployee directors,
includes restricted shares awarded under the Company's Restricted Stock Plan
for Nonemployee Directors.
(3) With respect to the holdings of nonemployee directors, includes stock
equivalents as to which there are no voting rights and which will be paid
totally in cash under the Deferred Compensation Plan for Directors Who Are
Not Employees of the Company and deferred stock units held in an account for
each nonemployee director pursuant to the Company's Deferred Stock Plan for
Nonemployee Directors and Restricted Stock Plan for Nonemployee Directors
(each of which is more fully described beginning at page 10 hereof). With
respect to executive officers, these totals include shares awarded but not
yet earned under the 1991 Long-Range Performance Share Plan (which is more
fully described at Note 3 to the Summary Compensation Table on page 15)
which carry no voting or dividend rights. Also includes stock equivalents as
to which there are no voting rights and which will be paid totally in cash
under the Company's Unfunded Supplemental Benefit Plan for Salaried
Employees.
<PAGE> 13
(4) Includes 4,400 shares of the Common Stock of the Company held by John K.
Greene and a bank, as trustees under a trust created by Mr. Greene's mother.
Mr. Greene is an income beneficiary of this trust and has a special power of
appointment over the trust assets. Also includes a total of 3,200 shares
which are held in three trusts of which Mr. Greene and another individual
are co-trustees.
(5) Two hundred of these shares are held in a trust of which Mr. McGregor is the
trustee.
(6) Four hundred of these shares are held in a retirement trust of which Dr.
Rice is the trustee and full beneficiary.
(7) The Common Stock holdings of all directors and executive officers as a group
represents 1.5% of the outstanding Common Stock of the Company.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for Mr. James, Mr. Sklenar and the four other executive
officers of the Company who were the most highly compensated for the fiscal year
ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
OPTIONS
ANNUAL COMPENSATION GRANTED(2)
------------------- (NUMBER LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OF SHARES) PAYOUTS(3) COMPENSATION(4)
- --------------------------- ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald M. James........................ 1997 $550,008 $505,803 60,000 $ 163,438 $27,711
Chairman and 1996 378,402 360,000 50,000 56,108 7,951
Chief Executive Officer 1995 225,218 150,000 28,792 3,517
Herbert A. Sklenar(5).................. 1997 285,002 564,426 30,000 1,917,534(6) 62,449
Chairman Emeritus 1996 650,840 700,000 60,000 301,521 46,034
1995 600,034 500,000 203,072 36,001
Peter J. Clemens, III.................. 1997 306,668 253,500 14,725 210,901 28,727
Executive Vice President, Finance 1996 273,658 215,000 15,525 90,100 17,466
& Administration & Treasurer 1995 255,034 163,000 61,099 15,341
Daniel J. Leemon....................... 1997 231,338 192,000 7,550 226,793 21,531
President, 1996 221,510 151,000 7,400 80,655 11,882
Midsouth Division 1995 216,684 125,000 55,897 9,800
Guy M. Badgett, III.................... 1997 220,337 180,000 7,550 107,146 20,283
Chairman, Southern Division; 1996 194,510 147,000 7,400 31,051 12,420
President, Southeast Division 1995 179,200 116,000 22,291 10,448
John A. Heilala........................ 1997 222,100 127,000 8,100 107,146 20,783
President, Chloralkali 1996 204,400 147,000 8,300 46,832 13,376
Business Unit 1995 183,667 130,000 33,035 7,859
</TABLE>
- ---------------
(1) Consists of payments made under the Company's Management Incentive Plan
("MIP"). If a Change in Control (see the definition of "Change in Control"
on page 26) occurs in a given year, awards already determined by the
Compensation Committee for that year will be paid. If the Change in Control
occurs after the end of a given year, and the Compensation Committee has not
determined an award, participants will be entitled to the entire "target
award" (as defined in the MIP). Participants will receive pro rata portions
of their target awards if the Change in Control occurs before the end of the
given year.
(2) See Option Grant Table on page 17 for more detail concerning the option
grants.
(3) Represents the dollar value of performance shares paid under the Company's
1981 Long-Range Performance Share Plan (the "1981 Plan") and the 1991
Long-Range Performance Share Plan (the "1991 Plan"). Payment of performance
share awards is subject to conditions for payment which are set by the
Compensation Committee. The Compensation Committee determined that payment
with respect to one-half of the award will be based on a comparison of the
Company's growth in earnings per share
<PAGE> 14
during the award period with the growth in earnings per share of a group of
comparison companies which was selected by the Compensation Committee at the
time awards were made. Payment with respect to the other one-half of the
award will be based on a comparison of the Company's return on investment
performance with the return on investment performance of the companies
constituting the comparison group. Payments under the 1991 Plan will be made
only if the Company's performance in growth in earnings per share or in
return on investment places it in at least the 50th percentile in a ranking
of companies in the comparison group. However, regardless of the Company's
ranking in the comparison group, no payment with respect to the earnings per
share half of the award is made if the Company's average earnings per share
during the award period is less than the Company's average earnings per
share during the five years ended December 31, 1997. Likewise, no payment
with respect to the return on investment half of the award is made if the
Company's average pretax return on investment is less than the average
three-month U.S. Treasury Bill rate during the award period.
The Company's performance with respect to earnings per share or return on
investment must place it at the 50th percentile in the comparison group in
order to earn 50% of the half of the award allocated to such criterion. The
Company's performance with respect to earnings per share or return on
investment must place it at the 75th percentile in the comparison group in
order to earn 100% of the half of the award allocated to such criterion. The
Company's performance with respect to earnings per share or return on
investment must place it in the 100th percentile in the comparison group in
order to earn 150% of the half of the award allocated to such criterion. Pro
rata payments of all outstanding awards will be made if, within two years of
a Change in Control (see the definition of "Change in Control" on page 26),
a participant is terminated under the circumstances described in the 1991
Plan.
Until 1996, payments made pursuant to the 1991 Plan were made partially in
cash and partially in the Company's Common Stock. The cash portion of the
payments was determined based on the average of the daily closing prices of
the Company's Common Stock for the 20 trading days ending on the fifth
trading day before the date set for payment by the Compensation Committee.
The value of the portion of the payments made in the Company's Common Stock
is based on the average of the high and low trading prices of the stock on
the date of payment. Payments made in 1996 and thereafter will be made
entirely in Common Stock.
(4) These amounts consist of Company contributions made on behalf of the named
employee to the Company's Thrift Plan for Salaried Employees (the "Thrift
Plan") and to the Company's Unfunded Supplemental Benefit Plan for Salaried
Employees (the "Supplemental Plan"). Under the Supplemental Plan,
participating employees whose Company-matching contributions to the Thrift
Plan have been reduced as a result of the limitations imposed by Sections
401 and 415 of the Internal Revenue Code are provided with a benefit that is
essentially equal to the benefit those employees would have received in the
absence of such limitations. The Compensation Committee designates the
participants under the Supplemental Plan. The following amounts were
contributed pursuant to the Thrift Plan during 1997: Mr. James $5,900, Mr.
Sklenar $6,400, Mr. Clemens $9,100, Mr. Leemon $9,100, Mr. Badgett $9,100
and Mr. Heilala $9,100. The following amounts were accrued pursuant to the
Supplemental Plan during 1997: Mr. James $21,811, Mr. Sklenar $56,049, Mr.
Clemens $19,627, Mr. Leemon $12,431, Mr. Badgett $11,183 and Mr. Heilala
$11,683.
(5) Mr. Sklenar served as Chairman and Chief Executive Officer of the Company
until February 1997 and as Chairman of the Board until May 1997.
(6) Reflects the payment of all outstanding awards in connection with Mr.
Sklenar's retirement.
An executive officer of the Company not named in the table above serves as
the chief executive officer of three companies in which the Company has a 51%,
50%, and 49% interest, respectively. Each of the companies reimburses the
Company for a portion of the executive officer's salary and bonus. In 1997, the
total amount of this reimbursement was $150,000.
<PAGE> 15
OPTION GRANTS IN 1997
The following table sets forth each grant of stock options during 1997 to
Mr. James and the other named executive officers:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL GRANT DATE
OPTIONS SHARES EXERCISE OR EXPIRATION PRESENT
NAME GRANTED(1) GRANTED BASE PRICE DATE VALUE($)(2)
- ---- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
D. M. James................................ 60,000 14.70 $63.94 2/14/07 $753,714
H. A. Sklenar.............................. 30,000 7.35 63.94 2/14/07 376,857
P. J. Clemens, III......................... 14,725 3.61 63.94 2/14/07 184,974
D. J. Leemon............................... 7,550 1.85 63.94 2/14/07 94,842
G. M. Badgett, III......................... 7,550 1.85 63.94 2/14/07 94,842
J. A. Heilala.............................. 8,100 1.99 63.94 2/14/07 101,751
</TABLE>
- ---------------
(1) Reflects nonqualified options granted pursuant to the Company's 1996
Long-Term Incentive Plan. The option exercise price of all options granted
equals the fair market value of the shares of Common Stock of the Company on
the date of grant. The options are subject to vesting in 20% increments over
a five-year period, unless accelerated upon the optionee's death, disability
or retirement or upon a change in control of the Company.
(2) Pursuant to the rules of the Securities and Exchange Commission, the Company
has elected to provide a grant date present value for these option grants
determined by the Black-Scholes pricing model. The assumptions utilized in
this model include: an expected volatility of 14.5% (derived by using daily
stock prices for the historical period of six years preceding the grant
date), a dividend yield of 2.8%, an interest rate of 6.1% (the interpolated
rate on a U.S. Treasury note with a maturity date of six years from the
grant date), and an expected time of exercise of six years from grant date.
The Company does not believe that the values estimated by the Black-Scholes
model, or any other model, will necessarily be indicative of the values to
be realized by an executive.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth for each of Mr. James and the other named
executive officers the number and dollar value of unexercised options
outstanding at December 31, 1997. No stock options were exercised by the
executive officers named below during 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END FISCAL YEAR END
--------------------------------- ---------------------------------
NAME EXERCISABLE(1) UNEXERCISABLE(2) EXERCISABLE(1) UNEXERCISABLE(2)
- ---- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
D. M. James.............................. 10,000 100,000 $ 455,338 $4,110,580
H. A. Sklenar............................ 90,000 -0- 3,876,642 -0-
P. J. Clemens, III....................... 3,105 27,145 140,803 1,125,026
D. J. Leemon............................. 1,480 13,470 67,390 557,621
G. M. Badgett, III....................... 1,480 13,470 67,390 557,621
J. A. Heilala............................ 1,660 14,740 75,586 611,390
</TABLE>
- ---------------
(1) The number of securities underlying unexercised options consists of
presently exercisable nonqualified stock options granted under the Company's
1996 Long-Term Incentive Plan. The value of unexercised in-the-money options
represents the difference between the fair market value of the shares
subject to unexercised options as of December 31, 1997 and the option
exercise price of the shares. A fair market value of $102.0938 per share is
used and is based upon the high/low average price of the Common Stock on the
New York Stock Exchange on December 31, 1997, the final trading day of 1997.
The actual value, if any, a person may realize as a result of such options
will depend on the excess of the stock price over
<PAGE> 16
the exercise price on the date the option is exercised. The ultimate value
of an option is dependent on the market value of the Common Stock at a
future date, which will depend to a large degree on the efforts of the
executive officers named above to bring future success to the Company for
the benefit of all shareholders.
(2) Consists of presently unexercisable nonqualified stock options granted under
the Company's 1996 Long-Term Incentive Plan. The value of the unexercisable
in-the-money options represents the difference between the fair market value
of the shares subject to the options as of December 31, 1997, and the option
exercise price of the shares. A fair market value of $102.0938 per share is
used and is based upon the high/low average price of the Common Stock on the
New York Stock Exchange on December 31, 1997, the final trading day of 1997.
The actual value, if any, a person may realize as a result of such options
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. The ultimate value of an option is dependent
on the market value of the Common Stock at a future date, which will depend
to a large degree on the efforts of the executive officers named above to
bring future success to the Company for the benefit of all shareholders.
REPORT OF THE COMPENSATION COMMITTEE
Under the supervision of the Compensation Committee of the Board of
Directors (the "Committee"), which is composed entirely of nonemployee
directors, the Company has developed and implemented performance-based
compensation policies and plans that are intended to enhance the profitability
of the Company and shareholder value by aligning closely the financial interests
of the Company's senior managers with those of its shareholders. The objective
of the Company is to provide a competitive compensation program that reflects
both Company and individual performance. The Committee believes that the senior
management of the Company is dedicated to achieving superior financial
performance and that the performance-based compensation policies and plans the
Committee has implemented contribute to achieving this management focus.
Compensation for senior management, including the Chief Executive Officer,
consists of base salary and annual and long-term incentive compensation. The
annual and long-term incentive compensation is directly related to the Company's
performance as measured by specific financial factors.
The Committee sets base salaries, determines the amounts payable under the
Management Incentive Plan, makes awards under the 1996 Long-Term Incentive Plan
(the "1996 Plan") and authorizes payments under the predecessor 1991 Long-Range
Performance Share Plan (the "1991 Plan") for all officers of the Company,
division presidents and Chemicals Group business unit presidents (the "Senior
Executives"). This group includes Donald M. James, Chairman of the Board and
Chief Executive Officer and Herbert A. Sklenar who ceased to be the Chief
Executive Officer in February, 1997, and retired as Chairman of the Board in
May, 1997, and each of the other four executive officers named in the Summary
Compensation Table. In addition, the Committee determines the total amount
payable to all other eligible employees under the Management Incentive Plan,
makes awards under the 1996 Plan and authorizes payments under the 1991 Plan to
all other eligible employees.
Base Salary. The base salary of each Senior Executive (other than the
Chief Executive Officer) is established annually by the Committee based on the
recommendation of the Chief Executive Officer and is set independently from the
other elements of the compensation package. The recommendations of the Chief
Executive Officer are developed by a process which begins with the establishment
of a competitive market salary rate for each Senior Executive position. The
competitive market salary rate is based on a study conducted by the Company's
human resources staff of salaries paid to executives in comparable positions at
companies of comparable size to the Company. In order to set these market rates,
the Company's human resources staff relies on data from general industry
surveys. The companies in the Wilshire Materials and Services Index, the
performance of which is charted in the Shareholder Return Performance
Presentation, overlap to some extent with the companies in the surveys. The
competitive market rates are generally targeted to the medians of the salaries
identified in the surveys. The competitive market rate for each Senior Executive
is then reviewed by the Chief Executive Officer and individual salaries are
proposed to the Committee based on the established rate and the results of
individual performance evaluations that take into account, among other factors,
the achievement of individual, group and company-wide performance goals. The
resulting
<PAGE> 17
recommendations are then presented to the Committee, along with data supporting
the recommendations. The Committee typically follows the recommendations of the
Chief Executive Officer in setting the salaries of the Senior Executives (other
than the Chief Executive Officer). The 1996 base salaries of the Senior
Executives were increased in 1997 to reflect increases in competitive market
rates and the performance of the Senior Executives. The average of the salaries
paid to the Senior Executives in 1997 was slightly below the median of the
competitive market rates.
In establishing the Chief Executive Officer's salary, the Committee also
reviews the competitive market rate for his position, its assessment of his
performance and the Company's performance. Neither Mr. James nor Mr. Sklenar
participated in setting his own salary. In February, 1997, the Committee
increased Mr. James salary upon his election as Chief Executive Officer due to
his increased responsibility. The Committee increased Mr. Sklenar's salary based
on its consideration of his performance with respect to a number of factors,
including significant improvement in the Company's financial performance.
Management Incentive Plan. The purpose of the Management Incentive Plan is
to promote the profitability of the Company by providing incentive and reward
for those employees who lead the Company's efforts to improve the operating
progress and earnings of the Company. Annual incentive awards under the
Company's Management Incentive Plan are tied directly to the Company's
performance and that of individual profit centers as measured by specific
financial performance factors approved by the Committee. After the end of each
fiscal year and completion of the audit of the Company's financial statements
for that year, the Committee establishes the amount to be added to the
Management Incentive Plan fund, which amount, in accordance with the terms of
the Management Incentive Plan, cannot exceed 12 1/2% of consolidated net
earnings in excess of an amount equal to 6% of net capital for such year. The
amount added to the fund is usually well below the maximum allowable.
The Committee sets the target bonus for each Senior Executive; it is
equivalent to a specified percentage of each Senior Executive's base salary.
Generally, this percentage becomes greater as the level of the Senior
Executive's responsibility increases. The amount of any award to an individual
under the Management Incentive Plan may be lower or higher than the individual's
target bonus depending on the overall corporate or profit center or group
performance and the individual's personal performance.
During 1996, the Committee adopted Economic Profit ("EP") as the primary
financial performance measure upon which awards under the Management Incentive
Plan will be based. It is the view of the Committee and management that
improvement in EP is closely correlated with an increase in shareholder wealth.
EP is derived by subtracting a capital charge from the Company's net operating
profit after taxes. EP performance for 1997 was compared to a targeted
performance level. Bonuses under the Management Incentive Plan are increased or
decreased proportionately in relation to the success (or failure) of the Senior
Executive in achieving EP objectives. In order to implement the EP-based
incentive plan, the Committee adopted for 1996 and 1997 a transitional minimum
payment arrangement under which bonus payments will not be less than they would
have been under the financial performance factors used by the Committee in prior
years.
Also in 1996, the Committee determined that individual deferred bonus
accounts should be utilized in the administration of the Management Incentive
Plan. Such deferred bonus accounts are designed to enhance the motivational
value of the Management Incentive Plan by providing Management Incentive Plan
participants an equity-like stake in the future performance of the Company. Each
year the deferred bonus account will be credited or debited to reflect EP and
individual performance, and one-half of the resulting account balance will be
paid to the participant. The remaining account balance will be carried forward
for use in determining payments in subsequent years.
In establishing the 1997 Management Incentive Plan awards, the Committee
reviewed with the Chief Executive Officer (Mr. James) management's
recommendations concerning the bonuses to be awarded and the target bonuses
established for each position. These recommendations did not include any
recommendations with respect to Mr. James or Mr. Sklenar.
<PAGE> 18
The Management Incentive Plan payment to Mr. James with respect to 1997 was
determined as described above. In addition, the Committee independently
evaluated Mr. James' performance in his role as Chief Executive Officer which
commenced in February 1997. The Committee took note of the Company's record
sales and earnings per share in 1997. Sales were up 7% and earnings per share
were up 14%. He has also provided leadership in evaluating growth opportunities
and enhancing shareholder relations. The Committee also reviewed the total
return to the Company's shareholders in 1997 of 71.77% compared to the S&P 500
total return of 33.25%. Based on 1997 performance, Mr. James' payment under the
Management Incentive Plan was 92% of his base salary or 154% of the target bonus
established for him under the Management Incentive Plan.
Under the terms of the Management Incentive Plan, Mr. Sklenar was eligible
to receive a bonus payment prorated for the period of time he was an employee of
the Company during 1997. Mr. Sklenar's payment under the Management Incentive
Plan was 48% of his annualized base salary. Further he received payment of the
"at risk" portion of the balance in his deferred bonus account which was 33% of
his annualized base salary.
Long-Term Incentives. Long-term incentives are provided under the 1991
Plan and the 1996 Plan (collectively, the "Plans"). The purpose of the Plans is
to further the long-term growth in profitability of the Company by offering
long-term incentives to those executives who will be largely responsible for
such growth. The last award under the 1991 Plan was granted in 1995. No future
awards will be made under the 1991 Plan.
At the Annual Meeting in May 1996, the shareholders approved the adoption
of the 1996 Plan. The 1996 Plan authorizes the granting of nonqualified stock
options, incentive stock options, stock appreciation rights, restricted stock
and other stock-based incentives which may be adopted by the Committee. In 1997,
long-term incentive awards were made exclusively in the form of nonqualified
stock options. The value of such stock option awards to the Senior Executives
was determined based on a percentage of the base salary market rate for each
Senior Executive. Generally, this percentage increases as the level of the
Senior Executive's responsibility increases.
The nonqualified stock options granted in 1997, have a ten-year term and
vest in equal amounts over a five-year period, unless accelerated due to the
retirement, death or disability of the optionee. The exercise price of the stock
options is equal to the market price of the Common Stock on the date of the
grant and, therefore, will have value only if the Company's stock price
increases, resulting in a commensurate benefit for the Company's shareholders.
Awards of performance shares under the 1991 Plan were made annually through
1995 by the Committee and have a maturity period of five years (except for
awards for shorter periods made to executives who are within five years of
retirement). One performance share corresponds to one share of Common Stock, but
carries no voting or dividend rights. The Committee established conditions for
payment and selected a group of companies to which the Company's performance
would be compared over the five-year award period. As determined by the
Committee, payment with respect to one-half of each performance share award is
based on comparison of the Company's growth in earnings per share during the
award period with the growth in earnings per share of the comparison companies.
Payment with respect to the other one-half of the award is based on a comparison
of the Company's return on investment performance with the return on investment
performance of the comparison companies. The companies in the Wilshire Materials
and Services Index, which was used in the Shareholder Return Performance
Presentation, overlap to some extent with the companies in the comparison group.
In setting the number of shares to be awarded to each Senior Executive, the
Committee used a formulistic approach. The value of the performance shares
awarded generally was equal to a percentage of the sum of the market rate salary
and the target bonus for each Senior Executive. Generally, this percentage
increases as the level of the Senior Executive's responsibility increases.
In May 1997, the Committee determined that conditions established with
respect to performance shares awarded in 1992 had been met to the extent that
97.9% of the awards made in that year were earned and paid. The Company's
performance with respect to the five-year award period placed it at the 83rd
percentile in return on investment, and at the 65th percentile in growth in
earnings per share with respect to a comparison group of companies. The
Company's average earnings during the five-year award period were up 26.8% over
the average earnings in the five years preceding the award period. The
performance share payment made to
<PAGE> 19
Mr. James and Mr. Sklenar in 1997 was the same percentage that was paid to all
other participants in the 1991 Plan.
Compliance with Internal Revenue Code Section 162(m). Internal Revenue
Code Section 162(m), enacted in 1993, prohibits a public corporation from taking
a deduction for compensation in excess of $1 million paid to its chief executive
officer or any of its other highest paid executive officers. To date, none of
the executives named in the Summary Compensation Table, with the exception of
Mr. James and Mr. Sklenar, has received annual compensation exceeding $1
million.
Internal Revenue Service regulations exempt certain "qualified
performance-based compensation" from the application of the Section 162(m)
limitation. It is the Committee's understanding that awards and payments made
pursuant to the 1991 Plan and the options granted under the 1996 Plan should
qualify under the regulations as "performance-based" compensation. The
Management Incentive Plan has been approved by the shareholders and satisfies
several, but not all, of the criteria necessary to be deemed "qualified
performance-based compensation." The Committee will continue to review tax
consequences as well as other relevant considerations in connection with
compensation decisions.
Compensation Committee
O. R. Smith, Chairman
M. H. Antonini
L. D. DeSimone
D. J. McGregor
J. V. Napier
<PAGE> 20
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph and table compare the performance of the Company's
Common Stock to that of the Standard & Poor's 500 Stock Index ("S&P 500") and
the Wilshire Materials and Services Index ("Wilshire M&S") for the period
commencing December 31, 1992, and ending on December 31, 1997. All of these
indices have been calculated by Wilshire Associates, Incorporated. The Wilshire
M&S Index is a market capitalization weighted index containing the public
equities of firms in the Materials and Services sector as defined by Wilshire
Associates, Incorporated. The Materials and Services sector includes the Company
and approximately 1,600 other corporations, some of which are in the mining and
chemicals industries. The Index is one of nine sectors that make up the Wilshire
5000. The graph assumes that the index value of the investment in the Company's
Common Stock and each index was 100 on December 31, 1992, and that all dividends
have been reinvested.
COMPARATIVE TOTAL RETURNS TO SHAREHOLDERS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) VULCAN (VMC) S&P 500 INDEX WILSHIRE M&S
<S> <C> <C> <C>
1992 100 100 100
1993 100 110 111
1994 111 111 109
1995 129 153 137
1996 141 188 156
1997 242 251 180
</TABLE>
<PAGE> 21
RETIREMENT INCOME PLAN
The Retirement Income Plan for Salaried Employees of Vulcan Materials
Company (the "Retirement Plan") provides benefits under a funded noncontributory
defined benefit plan and covers most salaried employees, including all executive
officers. Under the Retirement Plan, normal retirement benefits are paid
commencing at age 65 (or later actual retirement) based on the participant's
years of benefit service under the Retirement Plan and the average of the
highest 36 consecutive months of eligible earnings. Eligible earnings under the
Retirement Plan include an employee's salary and any awards under the Company's
Management Incentive Plan, as described in the "Salary" and "Bonus" columns of
the Summary Compensation Table. The benefit amounts are subject to deductions
equal to 1.34% of a participant's monthly primary social security benefit for
each year of benefit service, up to a maximum of 50% of the primary social
security benefit. There were no contributions by the Company to the Retirement
Plan in 1997 due to the full funding limitations imposed by federal law.
Under Section 415 of the Internal Revenue Code, the maximum benefit
allowable under the Retirement Plan for an employee retiring at age 65 in 1997
is $125,000, an amount which may change each year in accordance with a
determination made by the Internal Revenue Service. In addition, Section 401 of
the Internal Revenue Code limits the amount of an employee's compensation which
may be taken into account under the Retirement Plan to $160,000, an amount which
also is subject to change each year in accordance with a similar determination.
Therefore, the Company has an Unfunded Supplemental Benefit Plan for Salaried
Employees (the "Supplemental Plan") which enables the Company to pay to any
person designated by the Compensation Committee whose pension under the
Retirement Plan has been reduced as a result of the limitations imposed by
Sections 401 and 415 of the Internal Revenue Code an amount equal to the
difference between the amount the person would have received under the
Retirement Plan had there been no limitations and the amount the person will
receive under the Retirement Plan after giving effect to the limitations.
The Supplemental Plan is unfunded and amounts due the employees covered
thereby are general obligations of the Company; however, the Supplemental Plan
contains provisions which allow for the creation of a trust to help ensure the
payment of benefits under the Supplemental Plan.
The Supplemental Plan provides for the vesting of excess retirement
benefits in the same manner that benefits vest under the Retirement Plan, which
is after five years. In addition, the Supplemental Plan provides for an
acceleration of the payment of excess retirement benefits in connection with a
Change in Control of the Company (see the definition of "Change in Control" on
page 26 below) if, simultaneously with or subsequent to the Change in Control,
the participant's employment is terminated, the Supplemental Plan is terminated
or the Company's capital structure is changed materially.
<PAGE> 22
Assuming continuance of the Retirement Plan and the Supplemental Plan in
their present form, annual benefits payable to participating employees
(including executive officers) following retirement, in specific salary
classifications and with the continuous years of benefit service indicated, are
shown in the table below. Each amount in the table is based on the benefit
applicable on December 31, 1997, to an employee retiring at age 65 payable in
the form of a single life annuity and is subject to the above-described
deduction for the primary social security benefit.
<TABLE>
<CAPTION>
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- ------------ ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000.................................. 25,200 33,600 40,650 47,700 54,750 58,000
150,000.................................. 37,800 50,400 60,975 71,550 82,125 87,000
200,000.................................. 50,400 67,200 81,300 95,400 109,500 116,000
250,000.................................. 63,000 84,000 101,625 119,250 136,875 145,000
300,000.................................. 75,600 100,800 121,950 143,100 164,250 174,000
350,000.................................. 88,200 117,600 142,275 166,950 191,625 203,000
400,000.................................. 100,800 134,400 162,600 190,800 219,000 232,000
500,000.................................. 126,000 168,000 203,250 238,500 273,750 290,000
600,000.................................. 151,200 201,600 243,900 286,200 328,500 348,000
700,000.................................. 176,400 235,200 284,550 333,900 383,250 406,000
800,000.................................. 201,600 268,800 325,200 381,600 438,000 464,000
900,000.................................. 226,800 302,400 365,850 429,300 492,750 522,000
1,000,000.................................. 252,000 336,000 406,500 477,000 547,500 580,000
</TABLE>
The benefit service accruals used to determine benefits under the
Retirement Plan as of December 31, 1997, for Mr. James, Mr. Sklenar and the four
other executive officers named in the Summary Compensation Table are shown
below.
<TABLE>
<CAPTION>
YEARS OF
BENEFIT SERVICE
NAME AS OF 12/31/97
- ---- ---------------
<S> <C>
Donald M. James............................................. 5 0/12
Herbert A. Sklenar.......................................... 24 11/12(1)
Peter J. Clemens, III....................................... 20 5/12
Daniel J. Leemon............................................ 16 5/12
Guy M. Badgett, III......................................... 27 1/12
John A. Heilala............................................. 17 10/12
</TABLE>
- ---------------
(1) Mr. Sklenar retired effective June 1, 1997 and benefit service reflects that
date.
EMPLOYEE SPECIAL SEVERANCE PLAN
The Company's Employee Special Severance Plan (the "Special Severance
Plan") became effective in 1990, following adoption by the Board of Directors.
The Special Severance Plan covers all full-time salaried employees, including
the executive officers named in the Summary Compensation Table, and is designed
to reassure participants in the event of a Change in Control (as defined below)
of the Company, so that they can continue to focus their time and energy on
business-related concerns rather than personal concerns. A Change in Control is
defined as (1) the acquisition by any person, entity or group of 25% or more of
the outstanding shares of Company stock or the combined voting power of the
Company's outstanding voting securities, unless a majority of the continuing
directors determines that this acquisition does not constitute a Change in
Control; (2) the continuing directors cease to constitute a majority of the
Board of Directors; (3) approval by the Board of Directors of (a) a merger,
consolidation or reorganization of the Company, after which either (i) the
continuing directors do not constitute a majority of the directors of the
surviving corporation, or (ii) any person, entity or group controls more than
25% of the combined voting power, (b) any sale, lease or other transfer of all
or substantially all of the Company's assets, or (c) any plan or proposal for
the Company's dissolution or liquidation, unless a majority of the continuing
directors determine that such merger, consolidation, reorganization, sale,
lease, other transfer, liquidation or dissolution shall not be deemed a Change
in Control for purposes of the Special Severance Plan. A participant is entitled
to benefits under the
<PAGE> 23
Special Severance Plan if, within two years after a Change in Control, the
participant's employment is terminated without substantial cause ("Substantial
Cause") or is voluntarily terminated by the participant for good reason ("Good
Reason"). Substantial Cause is defined as: (1) the participant's willful and
continued failure to substantially perform his duties after receiving a written
demand for substantial performance; (2) the participant's willful engaging in an
act of gross misconduct which is demonstrably injurious to the Company; or (3)
the participant's commission of an act of fraud intended to result in
substantial personal enrichment. Good Reason is defined as: (1) the assignment
to the participant of duties that are materially inconsistent with his position
or a change in the participant's title or office without his consent; (2) a
reduction in the participant's salary or the Company's failure to increase the
participant's salary by a specified percentage and by a specified date; (3) a
change in the participant's principal work location to a location more than 50
miles from his current principal work location; (4) the Company's failure to
maintain any benefit or compensation plan (collectively, "Plans") in which the
participant was participating, a reduction of the participant's benefits under
the Plans, or the failure to provide the participant the number of vacation days
to which he is entitled; (5) the Company's failure to pay the participant any
compensation within seven days of its due date; (6) the Company's failure to
require any successor to the Company to assume the obligations pursuant to the
Special Severance Plan; or (7) the Company's termination of the participant in a
manner inconsistent with the Special Severance Plan.
Benefits under the Special Severance Plan include a lump-sum payment upon
termination which, in the case of executives of the Company whose compensation
is determined by the Compensation Committee of the Board of Directors, would be
equal to two years' base salary. The lump-sum payments made to other
participants would be equal to two and one-half weeks' base salary times the
participant's years of service, subject to a maximum of two years' base salary
and a minimum ranging from one-fourth year's base salary to one year's base
salary, depending upon the participant's position with the Company. (The Special
Severance Plan also contains limitations on benefits which are designed to
prevent the payments made under the Special Severance Plan, when added to
payments which may be made to employees under other Company plans in the event
of a Change in Control, from exceeding certain limits imposed by the Internal
Revenue Code.) Benefits under the Special Severance Plan also include the
maintenance by the Company of all life insurance, accidental death and
dismemberment insurance and medical, dental and prescription drug plans in which
the participant was entitled to participate for up to one year from a
participant's termination.
The Special Severance Plan is unfunded, but contains provisions which allow
for the creation of a trust to help ensure the payment of benefits under the
Special Severance Plan.
2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Review Committee, which is composed of
directors who are not officers of the Company, the Board of Directors has
appointed Deloitte & Touche LLP, a firm of independent certified public
accountants, as independent auditors for the year 1998 and until their
successors are chosen. The function of the independent auditors is to audit the
accounts and records of the Company, to report on the consolidated balance
sheet, the related statements of consolidated earnings, consolidated
shareholders' equity and changes in consolidated financial position of the
Company and its subsidiaries, and to perform such other appropriate accounting
services as may be required by the Board of Directors. Although shareholder
ratification is not required, the Board of Directors has determined that it
would be desirable to request an expression from the shareholders as to whether
or not they concur in this appointment. If a majority of the shares voting at
the Annual Meeting fails to ratify the selection of Deloitte & Touche LLP as
independent auditors, the Board of Directors will consider the selection of
another independent certified public accounting firm.
<PAGE> 24
The firm of Deloitte & Touche LLP, or its predecessors, Deloitte Haskins &
Sells and Haskins & Sells, has audited the Company's financial statements since
1956. A representative of that firm will be present at the Annual Meeting and
will be given an opportunity to make a statement and to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY ITS
INDEPENDENT AUDITORS.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
each of the Company's directors and executive officers, and any beneficial owner
of more than 10% of the Common Stock, is required to file with the Securities
and Exchange Commission (the "SEC") initial reports of beneficial ownership of
the Common Stock and reports of changes in beneficial ownership of the Common
Stock. Such persons also are required by SEC regulations to furnish the Company
with copies of all such reports. Based solely on its review of the copies of
such reports furnished to the Company for the year ended December 31, 1997, and
on the written representations made by such persons that no other reports were
required, the Company believes that during the year ended December 31, 1997, all
filing requirements applicable to its officers, directors and shareholders were
complied with in a timely manner with the exception of a Form 4 filing that was
not made in a timely manner by Mr. Peter J. Clemens, III, an officer of the
Company.
SHAREHOLDER PROPOSALS FOR 1999
To be eligible for inclusion in the Company's Proxy Statement and form of
proxy for its 1998 annual meeting, a shareholder's proposal must be received by
the Company at its principal office no later than November 29, 1998. Proposals
should be addressed to William F. Denson, III, Secretary, P.O. Box 530187,
Birmingham, Alabama 35253-0187.
VULCAN MATERIALS COMPANY
William F. Denson, III
Secretary
One Metroplex Drive
Birmingham, Alabama 35209
March 30, 1998
<PAGE> 25
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING OF
SHAREHOLDERS
MAY 8, 1998
VULCAN MATERIALS COMPANY
<PAGE> 26
VULCAN MATERIALS COMPANY
NOTICE TO THRIFT PLAN PARTICIPANTS
OF MATTERS TO BE ACTED UPON AT
THE ANNUAL MEETING OF SHAREHOLDERS
VOTING INSTRUCTION INFORMATION
As a participant in the Company's Thrift Plan for Salaried Employees (the
"Thrift Plan"), you have the right to direct the Trustee under the Thrift Plan
as to how certain shares of the Company's Common Stock represented by moneys
standing to your credit under the Thrift Plan as of March 20, 1998, should be
voted at the Annual Meeting of Shareholders. The number of such shares is shown
on the enclosed voting instruction card.
The Annual Meeting will be held in the auditorium of the Protective Life
Corporation Building, 2801 Highway 280 South, Birmingham, Alabama, on Friday,
May 8, 1998, at 10:00 a.m., Central Daylight Time, for the following purposes:
(1) To elect three (3) directors to serve for a term of three years
until the Annual Meeting of the Shareholders in 2001 and one (1) director
to serve a term of two years until the Annual Meeting of the Shareholders
in 2000 and until their successors are duly elected and qualified.
(2) To ratify the appointment of Deloitte & Touche LLP as independent
auditors for 1998.
(3) To transact such other business as may properly come before the
Annual Meeting.
The Thrift Plan Administrative Committee hopes that every participant will
take this opportunity to participate in the affairs of the Company by
completing, signing and returning the enclosed instruction card, in the envelope
provided, to The Northern Trust Company, the Trustee under the Thrift Plan. The
directions of any participant will be kept in complete confidence by the
Trustee. Common Stock of the Company with respect to which directions are not
received by the Trustee prior to the Annual Meeting shall be voted by the
Trustee in the same proportion as the shares for which instructions are
received.
Information of interest to participants in connection with the Annual
Meeting is set forth in the enclosed Proxy Statement, which is being distributed
to all shareholders of record.
The Annual Report of your Company for 1997 also is enclosed.
On behalf of the Thrift Plan
Administrative Committee,
J. Wayne Houston, Chairman
March 30, 1998
<PAGE> 27
APPENDIX A
VULCAN MATERIALS COMPANY THRIFT PLAN FOR SALARIED EMPLOYEES
VOTING INSTRUCTIONS TO THE TRUSTEE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned Thrift Plan participant hereby directs The Northern Trust
Company of Chicago Illinois, Trustee under the Vulcan Materials Company Thrift
Plan for Salaried Employees, to vote, in person or by proxy, the shares of stock
represented by moneys standing to the credit of the undersigned as of March 29,
1998, and representing his/her own savings and Company contributions, upon all
matters at the Company's Annual Meeting of Shareholders to be held on May 8,
1998, and at any adjournment or adjournments thereof, and without limiting the
general direction hereby given, the Trustee is directed to vote with respect to
the following matters described in the Voting Instruction Information and Proxy
statement:
(1) ELECTION OF DIRECTORS
Nominees: John K. Greene, Douglas J. McGregor, Donald B. Rice and Orin R.
Smith
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominee(s) (if any):
- --------------------------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
(Continued, and to be signed on the reverse side)
(Continued from other side)
(2) To vote FOR [ ] AGAINST [ ] ABSTAIN [ ] Ratification of the appointment
of Deloitte & Touche LLP as independent auditors for the year 1998.
(3) To vote, in its discretion, upon such other matters as may properly come
before the meeting.
IF NO INDICATION IS MADE WITH RESPECT TO THE FOREGOING MATTERS, THE SHARES TO
WHICH THIS VOTING INSTRUCTION CARD RELATES WILL BE VOTED BY THE TRUSTEE IN THE
SAME PROPORTION AS THE SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED.
--------------------------------
Number of shares participant
is entitled to instruct.
Dated , 1998
--------------------
--------------------------------
(Signature)
Please sign name exactly as printed immediately to the left.
<PAGE> 28
VULCAN MATERIALS COMPANY
NOTICE TO CONSTRUCTION MATERIALS DIVISIONS
SAVINGS PLAN PARTICIPANTS
OF MATTERS TO BE ACTED UPON AT
THE ANNUAL MEETING OF SHAREHOLDERS
VOTING INSTRUCTION INFORMATION
As a participant in the Company's Construction Materials Divisions Hourly
Employees Savings Plan (the "Savings Plan"), you have the right to direct the
Trustee under the Savings Plan as to how certain shares of the Company's Common
Stock represented by moneys standing to your credit under the Savings Plan as of
February 27, 1998, should be voted at the Annual Meeting of Shareholders. The
number of such shares is shown on the enclosed voting instruction card.
The Annual Meeting will be held in the auditorium of the Protective Life
Corporation Building, 2801 Highway 280 South, Birmingham, Alabama, on Friday,
May 8, 1998, at 10:00 a.m., Central Daylight Time, for the following purposes:
(1) To elect three (3) directors to serve for a term of three years
until the Annual Meeting of the Shareholders in 2001 and one (1) director
to serve a term of two years until the Annual Meeting of the Shareholders
in 2000 and until their successors are duly elected and qualified.
(2) To ratify the appointment of Deloitte & Touche LLP as independent
auditors for 1998.
(3) To transact such other business as may properly come before the
Annual Meeting.
The Savings Plan Administrative Committee hopes that every participant will
take this opportunity to participate in the affairs of the Company by
completing, signing and returning the enclosed instruction card, in the envelope
provided, to The Northern Trust Company, the Trustee under the Savings Plan. The
directions of any participant will be kept in complete confidence by the
Trustee. Common Stock of the Company with respect to which directions are not
received by the Trustee prior to the Annual Meeting shall be voted by the
Trustee in the same proportion as the shares for which instructions are
received.
Information of interest to participants in connection with the Annual
Meeting is set forth in the enclosed Proxy Statement, which is being distributed
to all shareholders of record.
The Annual Report of your Company for 1997 also is enclosed.
On behalf of the Construction Materials
Divisions Savings Plan Administrative
Committee,
J. Wayne Houston, Chairman
March 30, 1998
<PAGE> 29
APPENDIX B
VULCAN MATERIALS COMPANY
CONSTRUCTION MATERIALS DIVISION
HOURLY EMPLOYEES SAVINGS PLAN -- VOTING INSTRUCTIONS TO THE TRUSTEE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned Savings Plan participant hereby directs The Northern Trust
Company of Chicago, Illinois, Trustee under the Vulcan Materials Company
Construction Materials Divisions Hourly Employees Savings Plan, to vote, in
person or by proxy, the shares of stock represented by moneys standing to the
credit of the undersigned as of February 27, 1998, and representing his/her own
savings and Company contributions, upon all matters at the Company's Annual
Meeting of Shareholders to be held on May 8, 1998, and at any adjournment or
adjournments thereof, and without limiting the general direction hereby given,
the Trustee is directed to vote with respect to the following matters described
in the Voting Instruction Information and Proxy Statement:
(1) ELECTION OF DIRECTORS:
Nominees: John K. Greene, Douglas J. McGregor, Donald B. Rice and Orin R.
Smith.
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominee(s)(if any):
- --------------------------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
(Continued, and to be signed on the reverse side)
(Continued from other side)
(2) To vote FOR [ ] AGAINST [ ] ABSTAIN [ ] Ratification of the appointment
of Deloitte & Touche LLP as independent auditors for the year 1998.
(3) To vote, in its discretion, upon such other matters as may properly come
before the meeting.
IF NO INDICATION IS MADE WITH RESPECT TO THE FOREGOING MATTERS, THE SHARES TO
WHICH THIS VOTING INSTRUCTION CARD RELATES WILL BE VOTED BY THE TRUSTEE IN THE
SAME PROPORTION AS THE SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED.
--------------------------------
Number of shares participant
is entitled to instruct.
Dated: 1998
----------------,
--------------------------------
(Signature)
Please sign name exactly as
printed immediately to the left.
<PAGE> 30
VULCAN MATERIALS COMPANY
NOTICE TO CHEMICALS GROUP SAVINGS PLAN PARTICIPANTS
OF MATTERS TO BE ACTED UPON AT
THE ANNUAL MEETING OF SHAREHOLDERS
VOTING INSTRUCTION INFORMATION
As a participant in the Company's Chemicals Group Hourly Employees Savings
Plan (the "Savings Plan"), you have the right to direct the Trustee under the
Savings Plan as to how certain shares of the Company's Common Stock represented
by moneys standing to your credit under the Savings Plan as of March 20, 1998,
should be voted at the Annual Meeting of Shareholders. The number of such shares
is shown on the enclosed voting instruction card.
The Annual Meeting will be held in the auditorium of the Protective Life
Corporation Building, 2801 Highway 280 South, Birmingham, Alabama, on Friday,
May 8, 1998, at 10:00 a.m., Central Daylight Time, for the following purposes:
(1) To elect three (3) directors to serve for a term of three years
until the Annual Meeting of the Shareholders in 2001 and one (1) director
to serve a term of two years until the Annual Meeting of the Shareholders
in 2000 and until their successors are duly elected and qualified.
(2) To ratify the appointment of Deloitte & Touche LLP as independent
auditors for 1998.
(3) To transact such other business as may properly come before the
Annual Meeting.
The Savings Plan Administrative Committee hopes that every participant will
take this opportunity to participate in the affairs of the Company by
completing, signing and returning the enclosed instruction card, in the envelope
provided, to The Northern Trust Company, the Trustee under the Savings Plan. The
directions of any participant will be kept in complete confidence by the
Trustee. Common Stock of the Company with respect to which directions are not
received by the Trustee prior to the Annual Meeting shall be voted by the
Trustee in the same proportion as the shares for which instructions are
received.
Information of interest to participants in connection with the Annual
Meeting is set forth in the enclosed Proxy Statement, which is being distributed
to all shareholders of record.
The Annual Report of your Company for 1997 also is enclosed.
On behalf of the Chemicals Group
Savings Plan Administrative Committee,
J. Wayne Houston, Chairman
March 30, 1998
<PAGE> 31
APPENDIX C
VULCAN MATERIALS COMPANY CHEMICALS GROUP
HOURLY EMPLOYEES SAVINGS PLAN -- VOTING INSTRUCTIONS TO THE TRUSTEE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned Savings Plan participant hereby directs The Northern Trust
Company of Chicago, Illinois, Trustee under the Vulcan Materials Company
Chemicals Group Hourly Employees Savings Plan, to vote, in person or by proxy,
the shares of stock represented by moneys standing to the credit of the
undersigned as of March 20, 1998, and representing his/her own savings and
Company contributions, upon all matters at the Company's Annual meeting of
Shareholders to be held on May 8, 1998, and at any adjournment or adjournments
thereof, and without limiting the general direction hereby given, the Trustee is
directed to vote with respect to the following matters described in the Voting
Instruction Information and Proxy Statement:
(1) ELECTION OF DIRECTORS:
Nominees: John K. Greene, Douglas J. McGregor, Donald B. Rice and Orin R.
Smith.
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominee(s) (if any):
- --------------------------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
(Continued, and to be signed on the reverse side)
(Continued from other side)
(2) To vote FOR [ ] AGAINST [ ] ABSTAIN [ ] Ratification of the appointment of
Deloitte & Touche LLP as independent auditors for the year 1998.
(3) To vote, in its discretion, upon such other matters as may properly come
before the meeting.
IF NO INDICATION IS MADE WITH RESPECT TO THE FOREGOING MATTERS, THE SHARES
TO WHICH THIS VOTING INSTRUCTION CARD RELATES WILL BE VOTED BY THE TRUSTEE
IN THE SAME PROPORTION AS THE SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED.
-------------------------------
Number of shares participant
is entitled to instruct.
Dated 1998
------------------,
-------------------------------
(Signature)
Please sign name exactly as
printed immediately to the left.
<PAGE> 32
APPENDIX D
<TABLE>
<S> <C>
VULCAN MATERIALS COMPANY
ANNUAL MEETING OF SHAREHOLDERS MAY 8, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF VULCAN MATERIALS COMPANY
PROXY
The undersigned hereby appoints LIVIO D. DeSIMONE, DONALD M. JAMES and ORIN R.
SMITH, and each of them, with full power of substitution, proxies to vote all
shares of stock that the undersigned could vote if present at the 1998 Annual
Meeting of Shareholders to be held May 8, 1998, and at any adjournment or
adjournments thereof, on all matters coming before said meeting as set forth on
the opposite side of this card.
Election of Directors.
Nominees for Election as Director: John K. Greene, Douglas J. McGregor, Donald
B. Rice and Orin R. Smith
You are encouraged to specify your choices by marking the appropriate boxes
(SEE REVERSE SIDE), but you NEED NOT MARK any boxes if you wish to VOTE IN
ACCORDANCE with the Board of Director's recommendations. Please mark, sign,
date, and return this Proxy promptly using the enclosed envelope.
-----------
SEE REVERSE
SIDE
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
- ----- Please mark your
x votes as in this
- ----- example
This proxy when properly executed will be voted in the manner directed herein. If no direction is given,
this Proxy will be voted FOR all of the Board of Directors' nominees and FOR proposal 2.
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR its nominees and FOR proposal 2.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of ----- -------- 2. Ratification of Deloitte & Touche ------- -------
Directors. LLP as independent auditors for
(See reverse ----- -------- the year 1998. ------- -------
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Please sign names(s) exactly as printed hereon. If shares are held jointly,
each shareholder must sign. If signing as an attorney, administrator,
executor, guardian, or trustee, please give full title as such.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
TO VULCAN MATERIALS COMPANY SHAREHOLDERS:
Attached above is your 1998 Vulcan Materials Company proxy card. Please read both sides of the card and
mark, SIGN, and date it. Then detach and return it promptly, using the enclosed envelope. We urge you to vote
your shares.
You are invited to attend the 1998 Annual Meeting of Shareholders on Friday, May 8, 1998 at 10:00 a.m., in the
auditorium of the Protective Life Corporation Building, 2801 Highway 280 South, Birmingham, Alabama.
Thank you in advance for voting on these important issues.
William F. Denson, III
Secretary
DON'T FORGET TO SIGN AND DATE THIS PROXY
</TABLE>
