<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, 2000
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of the
Shareholders of Vulcan Materials Company, which will be held in Birmingham,
Alabama, on Friday, May 12, 2000, 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 attend the meeting. Your vote is important.
Whether or not you plan to attend the meeting, we encourage you to vote by
proxy. You can also vote by proxy via the telephone or the Internet using the
instructions on your proxy card. Your prompt vote will be greatly appreciated.
Our Annual Report to Shareholders for 1999 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 12, 2000
To the Shareholders of the Company:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of the
Shareholders of Vulcan Materials Company (the "Company") will be held at the
Birmingham Marriott, 3590 Grandview Parkway, Birmingham, Alabama, on Friday, May
12, 2000, at 10:00 a.m., Central Daylight Time, for the following purposes:
1. To elect two directors to serve three-year terms and one
director to serve a one year term, until he reaches mandatory
retirement age.
2. To ratify the appointment of Deloitte & Touche LLP as
independent auditors for 2000.
3. To conduct such other business as may properly come before the
Meeting.
Shareholders who owned stock at the close of business on March 24,
2000, can vote at the Meeting.
By Order of the Board of Directors,
WILLIAM F. DENSON, III
Secretary
1200 Urban Center Drive
Birmingham, Alabama 35242
March 30, 2000
================================================================================
NOTE -- PLEASE SIGN, DATE AND RETURN YOUR PROXy
AS PROMPTLY AS POSSIBLE
WHETHER YOU OWN ONE OR MANY SHARES.
===============================================================================
2
<PAGE> 4
VULCAN MATERIALS COMPANY
1200 URBAN CENTER DRIVE
BIRMINGHAM, ALABAMA 35242
PROXY STATEMENT FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD MAY 12, 2000
The accompanying proxy is solicited by the Board of Directors of Vulcan
Materials Company (the "Company") for use at the Company's Annual Meeting. The
Meeting will be held at the Birmingham Marriott, 3590 Grandview Parkway,
Birmingham, Alabama on May 12, 2000, at 10:00 a.m. local time. The proxies may
also be voted at any adjournment or postponements of the Meeting.
A shareholder can revoke a proxy in one of three ways: giving written
notice to the Secretary of the Company, delivering a later dated proxy or voting
in person at the Meeting.
The mailing address of the principal executive offices of the Company
is 1200 Urban Center Drive, Birmingham, Alabama 35242. The date on which this
Proxy Statement and form of proxy are first being sent or given to shareholders
is March 30, 2000.
Holders of shares of Common Stock of the Company of record at the close
of business on March 24, 2000 are entitled to notice of and to vote at the
Meeting and all adjournments of the Meeting. Each share entitles its owner to
one vote. The holders of a majority of the shares entitled to vote at the
Meeting must be present in person or represented by proxy in order to constitute
a quorum for all matters presented at the Meeting. On the record date there were
100,747,197 shares outstanding.
The affirmative vote of a plurality of the votes cast at the Meeting is
required to elect the nominated directors. The affirmative vote of a majority of
the votes cast is necessary to ratify the appointment of Deloitte & Touche. For
purposes of determining the number of votes cast with respect to a particular
matter, only those cast "For" or "Against" are included. Abstentions and broker
non-votes are counted only for purposes of determining whether a quorum is
present at the Meeting, are not included in the vote totals, and thus will not
affect the outcome of the vote.
Duly executed proxies without voting instructions will be voted FOR the
election of all nominees and FOR the proposal to ratify the appointment of
Deloitte & Touche LLP. The Board is not aware of any matters to be presented at
the Meeting other than the matters described in this Proxy Statement.
All proxies are held in confidence, unless the shareholder writes
comments on the proxy and under certain other circumstances. The votes are
tabulated by independent third parties. The accompanying proxy is solicited by
the Board of the Company and the solicitation costs will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited in
person or by telephone. The Company has retained Georgeson Shareholder
Communications Corp. for a fee of approximately $6,500, plus expenses. The
Company will also reimburse brokers, fiduciaries and custodians for their costs
in forwarding proxy materials to beneficial owners of Common Stock held in their
names.
1. ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes for
purposes of election. One class is elected at each Annual Meeting to serve a
three-year term.
The Board of Directors has nominated three persons for election as
directors to serve three-year terms expiring in 2003 or until the director
reaches mandatory retirement age, whichever is sooner. Mr. Antonini will reach
mandatory retirement age in 2001. Unless otherwise directed, proxies will be
voted in favor of these three nominees. Should any of the nominees be unable to
accept election, the proxies will be voted for the election of such
3
<PAGE> 5
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.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
TERM EXPIRING IN 2001
[PHOTO]
MARION H. ANTONINI
Age: 69. Director since 1983.
Principal, Kohlberg & Company, Mount Kisco, New York (a private 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: Colorspot Nurseries, Inc.; Engelhard Corporation; Holley
Performance Products, Inc.; Scientific-Atlanta, Inc.; Turbo Chef Technologies.
COMMITTEE MEMBERSHIPS: Audit Review; Compensation; Executive; Governance and
Succession.
TERMS EXPIRING IN 2003
[PHOTO]
PHILLIP W. FARMER
Age: 61. Director since 1999.
Chairman and Chief Executive Officer of Harris Corporation, Melbourne, Florida
(an international communications equipment company) since 1995.
OTHER DIRECTORSHIPS: Harris Corporation
COMMITTEE MEMBERSHIPS: To be assigned at the Annual Meeting.
[PHOTO]
JAMES V. NAPIER
Age: 63. Director since 1983.
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, telecommun-ications
and government applications).
OTHER DIRECTORSHIPS: Engelhard Corporation; Intelligent Systems, Inc.; McKesson
HBOC; Personnel Group of America, Inc.; Scientific-Atlanta, Inc.; Westinghouse
Air Brake Co.
COMMITTEE MEMBERSHIPS: Audit Review; Compensation; Finance and Pension Funds.
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS A VOTE FOR THE NOMINEES NAMED ABOVE.
4
<PAGE> 6
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2002
[PHOTO]
PHILIP J. CARROLL, JR.
Age: 62. Director since 1999.
Chairman and Chief Executive Officer of Fluor Corporation, Aliso Viejo,
California (an engineering, construction and diversified services company),
since July, 1998; President and Chief Executive Officer of Shell Oil Company,
Houston, Texas (a leading oil and natural gas producer; manufacturer,
transporter and marketer of oil and chemicals products), prior thereto.
OTHER DIRECTORSHIPS: Boise Cascade Corporation; Fluor Corporation.
COMMITTEE MEMBERSHIPS: Compensation; Safety, Health and Environmental Affairs.
[PHOTO]
LIVIO D. DESIMONE
Age: 63. Director since 1987.
Chairman and Chief Executive Officer of Minnesota Mining & Manufacturing
Company, St. Paul, Minnesota (a diversified manufacturer).
OTHER DIRECTORSHIPS: Cargill, Incorporated; General Mills, Inc.; Minnesota
Mining & Manufacturing Company; Target Corporation.
COMMITTEE MEMBERSHIPS: Compensation; Executive; Governance and Succession;
Safety, Health and Environmental Affairs.
[PHOTO]
DONALD M. JAMES
Age: 51. Director since 1996.
Chairman and Chief Executive Officer of the Company 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.
OTHER DIRECTORSHIPS: Protective Life Corporation; Southern Company; SouthTrust
Corporation.
COMMITTEE MEMBERSHIPS: Executive.
5
<PAGE> 7
[PHOTO]
ANN D. MCLAUGHLIN
Age: 58. Director since 1990.
Chairman, The Aspen Institute, Aspen, Colorado (an 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.
OTHER DIRECTORSHIPS: AMR Corporation; Donna Karan International, Inc.; Fannie
Mae; General Motors Corporation; Harman International Industries, Inc.; Host
Marriott Corporation; Kellogg Company; Microsoft Corporation; Nordstrom, Inc.
COMMITTEE MEMBERSHIPS: Audit Review; Executive; Finance and Pension Funds;
Safety, Health and Environmental Affairs. TERMS EXPIRING IN 2001
[PHOTO]
DOUGLAS J. MCGREGOR
Age: 59. Director since 1992.
Principal, C.A.M. Investments, Pepper Pike, Ohio (an investment firm), since
January, 1999; Chairman and Chief Executive Officer, M. A. Hanna Company,
Cleveland, Ohio (an international specialty chemicals company with interests in
formulated polymers), from July, 1997 until October, 1998; President and Chief
Executive Officer from January, 1997 to July, 1997; President and Chief
Operating Officer prior thereto.
OTHER DIRECTORSHIPS: KeyCorp.
COMMITTEE MEMBERSHIPS: Audit Review; Finance and Pension Funds; Safety, Health
and Environmental Affairs.
[PHOTO]
DONALD B. RICE
Age: 60. Director since 1986.(*)
President and Chief Executive Officer of UroGenesys, Inc., Santa 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) prior thereto.
OTHER DIRECTORSHIPS: Scios, Inc.; Unocal Corp.; UroGenesys, Inc.; Wells Fargo &
Company.
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.
[PHOTO]
HERBERT A. SKLENAR
Age 68. Director since 1973.
Chairman Emeritus of the Company since May, 1997; Chairman of the Board from
February, 1997 to May, 1997; Chairman and Chief Executive Officer prior thereto.
OTHER DIRECTORSHIPS: AmSouth Bancorporation; Temple-Inland, Inc.
COMMITTEE MEMBERSHIPS: Finance and Pension Funds; Safety, Health and
Environmental Affairs.
[PHOTO]
ORIN R. SMITH
Age: 64. Director since 1983.
Chairman and Chief Executive Officer of Engelhard Corporation, Iselin, New
Jersey (provider of environmental technologies, performance products, engineered
materials and related services), since January, 1995.
OTHER DIRECTORSHIPS: Engelhard Corporation; Ingersoll-Rand Company; PE
Corporation; Summit Bancorporation.
COMMITTEE MEMBERSHIPS: Compensation; Executive; Governance and Succession;
Safety, Health and Environmental Affairs.
6
<PAGE> 8
BOARD OF DIRECTORS AND COMMITTEES
In 1999, the Board of Directors held five meetings. The Board of
Directors has established six standing committees which have the
responsibilities set forth below. All committees except the Executive Committee
are composed entirely of outside directors.
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 did not meet
in 1999.
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 1999.
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 five times during 1999.
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 2001 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 December 1, 2000. The Governance and
Succession Committee met three times during 1999.
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 1999.
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 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 1999.
7
<PAGE> 9
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
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, seven 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 (as defined in the Deferred Compensation Plan) 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 evidences 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
300,000, subject to adjustment in the event of a stock split, reverse stock
split, reorganization or recapitalization.
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, a number of restricted
shares determined annually by the Board (the "Restricted Shares") are granted to
each nonemployee director. In 1999, 400 Restricted Shares were issued to each
nonemployee director as of June 1, 1999. 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 Restricted Shares until
8
<PAGE> 10
the restrictions lapse or are waived, at which time the shares are distributed
in a lump sum payment. With the exception of the restriction on selling,
assigning, pledging or otherwise transferring 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
and receive dividends on 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.
STOCK 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>
================================================================================================
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
================================================================================================
<S> <C> <C>
State Farm Mutual Automobile Insurance 11,033,971 shares(1) 10.9%
Company and Affiliates
One State Farm Plaza
Bloomington, Illinois 61710
AmSouth Bancorporation 7,885,876 shares(2) 7.8%
AmSouth Sonat Tower
Birmingham, Alabama 35203
Davis Selected Advisors, L.P. 7,284,000 shares 7.2%
609 Fifth Avenue, 11th Floor
New York, New York 10017
Gerald Ratner, as Attorney and Agent 7,207,551 shares(3) 7.1%
222 North LaSalle Street
Chicago, Illinois 60601
</TABLE>
(1)Based on information contained in the Schedule 13G, dated February 4, 2000,
filed with the Securities and Exchange Commission. The total includes the
following shares over which the listed entities have sole voting and dispositive
power:
<TABLE>
<CAPTION>
Affiliate Shares
---------
<S> <C>
State Farm Mutual Automobile Insurance Company 8,373,600
State Farm Growth Fund, Inc. 1,039,200
State Farm Balanced Fund, Inc. 160,200
State Farm Variable Product Trust 1,771
State Farm Insurance Companies Savings and Thrift Plan for U.S. Employees
-Equities Account 1,208,400
-Balanced Account 250,800
</TABLE>
9
<PAGE> 11
State Farm Mutual Automobile Insurance Company and each of the various listed
affiliated entities 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 14, 2000,
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 7,123,627 shares and shared dispositive power with respect to
7,270,220 shares.
(3)Based on information contained in a Schedule 13D, dated June 30, 1999, filed
on behalf of Longview Management Group, LLC, Charles H. Goodman, James S. Crown,
A. Steven Crown, William H. Crown and Geoffrey F. Grossman, as the trustee of
The Edward Trust.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information, unless otherwise indicated,
as of March 1, 2000, regarding beneficial ownership of the Company's Common
Stock by each of the directors, the chief executive officer and the four other
most highly compensated executive officers and the directors and executive
officers of the Company as a group. This total includes all Company stock-based
holdings as set forth in the footnotes. This table indicates the alignment of
the named individual's financial interest with the interests of the Company's
shareholders, because the value of the individual's total Company holdings will
increase or decrease in line with the price of the Company's stock.
<TABLE>
<CAPTION>
==========================================================================
NAME AMOUNT AND PERCENT OF
NATURE OF CLASS
STOCK-BASED
OWNERSHIP
==========================================================================
<S> <C> <C>
DIRECTORS(1)
Marion H. Antonini 93,418 *
Philip J. Carroll 1,772 *
Livio D. DeSimone 43,126 *
Phillip W. Farmer 1,445 *
Douglas J. McGregor(2) 30,924 *
Ann D. McLaughlin 29,214 *
James V. Napier 13,229 *
Donald B. Rice(3) 11,000 *
Herbert A. Sklenar(4) 684,898 *
Orin R. Smith 44,764 *
CHIEF EXECUTIVE OFFICER AND OTHER
EXECUTIVE OFFICERS(5)
Guy M. Badgett, III 95,177 *
Peter J. Clemens, III 207,817 *
Donald M. James 376,339 *
Daniel J. Leemon(6) 140,841 *
James W. Smack 100,581 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP (26 persons) 2,548,295 2.5%
</TABLE>
*Less than 1% of issued and outstanding shares of Company Common Stock.
10
<PAGE> 12
(1)Beneficial ownership for the directors includes all shares held of record or
in street name, or by trusts or family members, if noted. The amounts also
include restricted shares granted under the Company's Restricted Stock Plan for
Nonemployee Directors and phantom shares accrued under the Directors Deferred
Compensation Plan, the Deferred Stock Plan and the Restricted Stock Plan, as
follows:
<TABLE>
<CAPTION>
Shares owned Phantom Shares held
Directly or Indirectly Restricted Shares pursuant to Plans
---------------------- ----------------- -------------------
<S> <C> <C> <C>
Marion H. Antonini 16,550 895 75,973
Philip J. Carroll 0 400 1,372
Livio D. DeSimone 3,150 895 39,081
Phillip W. Farmer 1,000 0 445
Douglas J. McGregor 1,350 895 28,679
Ann D. McLaughlin 3,039 895 25,280
James V. Napier 3,150 895 9,184
Donald B. Rice 1,950 895 8,155
Herbert A. Sklenar 352,668 895 5,102
Orin R. Smith 3,150 895 40,719
</TABLE>
(2) Shares are held in a trust of which Mr. McGregor is the trustee.
(3)Includes 1,200 shares which are held in a retirement trust of which Dr. Rice
is the trustee and full beneficiary.
(4)In addition to the ownership set forth in footnote (1) above, includes the
following stock ownership attributable to Mr. Sklenar's former employment as the
chief executive officer of the Company: 270,000 options which are, or will be,
exercisable as of May 30, 2000, 32,973 shares credited to Mr. Sklenar's account
under the Company's Thrift Plan for Salaried Employees, and 23,260 USBP stock
equivalents (see definition of "USBP" in footnote (5) below).
(5)Beneficial ownership for the executive officers includes shares held of
record or in street name, or by trusts or family members as noted. The amounts
also include shares which may be acquired upon the exercise of options which are
presently exercisable or which will become exercisable on or before May 30,
2000, shares credited to the executives' accounts under the Company's Thrift
Plan for Salaried Employees ("Thrift Plan"), 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 ("USBP") and phantom shares accrued under the
Executive Deferred Compensation Plan ("Deferred Compensation"), as follows:
<TABLE>
<CAPTION>
Shares owned Thrift Plan Deferred
Directly or Indirectly Exercisable Options and USBP Compensation
---------------------- ------------------- ----------- ------------
<S> <C> <C> <C> <C>
Guy M. Badgett, III 21,863 45,885 27,429 0
Peter J. Clemens, III 73,224 89,400 45,193 0
Donald M. James 37,675 321,000 5,043 12,621
Daniel J. Leemon 67,782 42,825 30,234 0
James W. Smack 26,182 45,315 29,084 0
</TABLE>
(6)Includes 7,300 shares held in two trusts of which Mr. Leemon is the trustee.
11
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for Mr. James and the four other executive officers of
the Company who were the most highly compensated for the fiscal year ended
December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
===================================================================================================================
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- --------------------------
NAME AND OPTIONS LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) GRANTED(2) PAYOUTS(3) COMPENSATION(4)
(NUMBER OF
SHARES)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Donald M. James 1999 $675,000 $850,000 195,000 $413,389 $50,449
Chairman and 1998 $591,668 $750,000 135,000 $253,152 $40,150
Chief Executive Officer 1997 $550,008 $505,803 180,000 $163,438 $27,711
Peter J. Clemens, III 1999 $355,668 $350,000 56,475 $460,460 $38,724
Executive Vice President, 1998 $331,340 $320,000 39,000 $281,292 $33,827
Finance & Administration & 1997 $306,668 $253,500 44,175 $210,901 $28,727
Treasurer
James W. Smack 1999 $332,040 $260,000 30,225 $331,423 $29,045
President, 1998 $213,668 $214,000 19,800 $203,906 $21,154
CalMat Division 1997 $200,340 $146,500 22,650 $159,695 $18,528
Guy M. Badgett, III 1999 $271,709 $270,000 30,225 $331,423 $28,323
Senior Vice President, 1998 $242,504 $225,000 21,225 $203,906 $24,247
Construction Materials, 1997 $220,337 $180,000 22,650 $107,146 $20,283
East
Daniel J. Leemon 1999 $252,270 $220,000 17,775 $354,092 $27,767
President, 1998 $241,834 $225,000 19,800 $267,222 $25,000
Midsouth Division 1997 $231,338 $192,000 22,650 $226,793 $21,531
</TABLE>
(1)Consists of payments made under the Company's Management Incentive Plan
("MIP"). See the information under the heading "Change of Control Employment
Agreements" below for information relating to MIP payments in the event of a
Change of Control.
(2)See Option Grant Table on page 13 for more detail concerning the option
grants.
(3)Represents the dollar value of performance shares paid under the Company's
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 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
12
<PAGE> 14
December 31, 1999. 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 of Control (under the 1991
Plan), a participant is terminated under the circumstances described in the 1991
Plan.
Payments under the Plan are made in Common Stock valued at the average of the
high and low trading prices of the stock on the date of payment.
(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
1999: Mr. James $6,400, Mr. Clemens $9,600, Mr. Smack $9,600, Mr. Badgett $9,600
and Mr. Leemon $9,600. The following amounts were accrued pursuant to the
Supplemental Plan during 1999: Mr. James $44,049, Mr. Clemens $29,124, Mr. Smack
$19,445, Mr. Badgett $18,723 and Mr. Leemon $18,167.
OPTION GRANTS IN 1999
The following table sets forth each grant of stock options during 1999
to Mr. James and the other named executive officers:
<TABLE>
<CAPTION>
==================================================================================================
NUMBER OF
SECURITIES % OF TOTAL EXERCISE OR EXPIRATION GRANT DATE
NAME UNDERLYING SHARES BASE PRICE DATE PRESENT
OPTIONS GRANTED VALUE ($)(2)
GRANTED(1)
==================================================================================================
<S> <C> <C> <C> <C> <C>
D. M. James 195,000 20.24 45.17 2/11/09 $1,544,400
P. J. Clemens, III 56,475 5.86 45.17 2/11/09 $447,282
J. W. Smack 30,225 3.14 45.17 2/11/09 $239,382
G. M. Badgett, III 30,225 3.14 45.17 2/11/09 $239,382
D. J. Leemon 17,775 1.85 45.17 2/11/09 $140,778
</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 of Control of the Company as defined in the 1996
Long-Term Incentive Plan.
13
<PAGE> 15
(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 a modified Black-Scholes pricing model. The assumptions utilized
in this model include: an expected volatility of 21.4% (derived by using daily
closing stock prices for the twelve months preceding the grant date), a dividend
yield of 1.7%, an interest rate of 5.2% (the rate on a U.S. Treasury note with a
maturity date of five 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, 1999. No stock options were exercised by the
executive officers named below during 1999.
<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 189,000 471,000 $3,368,210 $3,945,222
P. J. Clemens, III 53,415 132,810 $ 954,385 $1,079,532
J. W. Smack 26,340 68,535 $ 469,029 $ 539,093
G. M. Badgett, III 26,625 69,675 $ 470,932 $ 546,706
D. J. Leemon 26,340 56,085 $ 469,029 $ 539,093
</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, 1999 and the option exercise price of the
shares. A fair market value of $39.63 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, 1999, the final trading day of 1999. 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.
(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, 1999, and the option
exercise price of the shares. A fair market value of $39.63 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, 1999, the final trading day of 1999. 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.
14
<PAGE> 16
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 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, and authorizes awards under the 1996 Plan and 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 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 1998 base
salaries of the Senior Executives were increased in 1999 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 1999 was at 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. Mr. James does not participate in
setting his own salary. In February, 1999, the Committee increased Mr. James'
salary based on its consideration of his performance with respect to a number of
factors, including significant improvement in the Company's 1998 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
15
<PAGE> 17
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.
Since 1996, the Company has used Economic Profit ("EP") as the primary
financial performance measure upon which awards under the Management Incentive
Plan are based. It is the view of the Committee and management that improvement
in EP is closely correlated with an increase in share price. EP is derived by
subtracting a capital charge from the Company's net operating profit after
taxes. EP performance for 1999 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.
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 is credited or debited to reflect EP and
individual performance, and one-half of the resulting account balance is paid to
the participant. The remaining account balance is carried forward for use in
determining payments in subsequent years.
In establishing the 1999 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.
The Management Incentive Plan payment to Mr. James with respect to 1999
was determined as described above. In addition, the Committee independently
evaluated Mr. James' performance in his role as Chief Executive Officer. The
Committee took note of the Company's record performance in construction
materials. Segment earnings of $370 million were up 20% over 1998 earnings.
Total Company sales were up 33%. Mr. James has also provided leadership in
evaluating and implementing growth opportunities. The Company successfully
completed the integration of CalMat, including the establishment of a strong top
management team. In addition to the CalMat acquisition, the Company acquired
twenty other quarries, opened four new greenfield sites, and strengthened the
distribution network. The Company made significant progress on the construction
of the Mitsui joint venture facilities. Based on 1999 performance, Mr. James'
payment under the Management Incentive Plan was 123% of his 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
1999, 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 1999, 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.
16
<PAGE> 18
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 formula 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 1999, the Committee determined that conditions established with
respect to performance shares awarded in 1994 had been met to the extent that
120.8% 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 96th
percentile in return on investment and at the 75th percentile in growth in
earnings per share with respect to a comparison group of companies. The
performance share payment made to Mr. James in 1999 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, 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
P. J. Carroll, Jr.
L. D. DeSimone
J. V. Napier
17
<PAGE> 19
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 5000 M&S") for the period
commencing December 31, 1994, and ending on December 31, 1999. The Wilshire 5000
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, 1994, and that all dividends
have been reinvested.
COMPARATIVE TOTAL RETURNS TO SHAREHOLDERS
[CHART]
<TABLE>
<CAPTION>
Index as of December 31
--------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Vulcan (VMC) 100 117 127 218 286 266
--------------------------------------------------------------------------------------------
S&P 500 Index 100 138 169 226 290 351
--------------------------------------------------------------------------------------------
Wilshire 5000 M&S 100 125 143 164 165 219
--------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 20
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 1999 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 1999
is $130,000, 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 of Control of the Company (as defined in the Plan) if, simultaneously
with or subsequent to the Change of Control, the participant's employment is
terminated, the Supplemental Plan is terminated or the Company's capital
structure is changed materially.
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, 1999, 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
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
===============================================================================================================
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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, 1999, for Mr. James and the four other
executive officers named in the Summary Compensation Table are shown below.
<TABLE>
<CAPTION>
==================================================
YEARS OF
NAME BENEFIT SERVICE
AS OF 12/31/99
==================================================
<S> <C>
Donald M. James 7
Peter J. Clemens, III 22 5/12
James W. Smack 17 1/12
Guy M. Badgett, III 29 1/12
Daniel J. Leemon 18 5/12
</TABLE>
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
In February 2000, the Company entered into change of control agreements
with each of the named executives and with certain other key executives. Each of
the agreements has an initial three-year term, which on each anniversary of the
execution of the agreement is extended for an additional year unless the Company
notifies the executive otherwise at least 60 days prior to the anniversary date
(the "Covered Period"). If a Change of Control occurs during the Covered Period,
the agreement is activated (the date of such Change of Control being referred to
as the "Effective Date"). From the Effective Date, the Company agrees to employ
the executive for a two-year period generally on terms (including salary, bonus,
participation in long-term incentive, savings and retirement and welfare
benefits plans and fringe benefits) no less favorable than were provided to the
executive prior to the Change of Control. A "Change of Control" includes (1) the
acquisition by any individual or group (other than from the Company) of
beneficial ownership of 20% or more of the outstanding Common Stock, (2) a
change in at least a majority of the Board members (other than generally as
approved by the incumbent Board members) or (3) certain business combination
transactions.
If, during the two-year period, the Company terminates the executive's
employment (other than for cause or due to death or disability) or the executive
terminates his employment for good reason (and, in the case of Messrs. James and
Clemens, the executive terminates his employment for any reason during the
30-day period following the first anniversary of a Change of Control transaction
in which the Company is not the survivor), the executive will be entitled to
receive: (1) a payment in cash equal to three times the sum of (a) the
executive's then current annual base salary, (b) the higher of the executive's
Recent Annual Bonus (as defined by the agreement) and the annual bonus for the
year in which the date of termination occurs, and (c) the value of the
executive's annual long-term incentive award; (2) accrued but unpaid
compensation (including a pro rata portion of the executive's bonus for the year
in which the termination occurs (or, if higher, the executive's Recent Annual
Bonus) and accrued vacation pay); (3) an amount equal to the actuarial present
value of the additional pension benefits the executive would have received under
the Company's qualified and supplemental retirement plans if he had continued to
be employed by the Company for an additional three years; and (4) an amount
equal to the additional matching contributions the executive would have received
under the Company's qualified and non-qualified savings plans if he had
continued to be employed by the Company for an additional three years. The
executive also will be entitled to receive (1) a continuation of welfare and
fringe benefits for three years and (2) Company-paid outplacement services in an
amount up to $50,000. In addition, subject to certain limitations, the
agreements provide that the executive is entitled to
20
<PAGE> 22
receive a payment in an amount sufficient to make the executive whole for any
excise tax on excess parachute payments imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended.
These change of control employment agreements take the place of the
executive's participation under the Company's Employee Special Severance Plan,
which plan continues in effect with respect to other salaried employees.
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 2000 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 consolidated statements of cash flows 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.
The firm of Deloitte & Touche LLP, or its predecessors, 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, 1999, 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, 1999, all
filing requirements applicable to its officers, directors and shareholders were
complied with in a timely manner, except that Guy M. Badgett, III, Senior Vice
President, Construction Materials, East, Robert A. Wason IV, Senior Vice
President, Corporate Development, and Daniel J. Leemon, President, Midsouth
Division, all filed a Form 5 late with respect to shares gifted to family
members.
21
<PAGE> 23
SHAREHOLDER PROPOSALS FOR 2001
To be eligible for inclusion in the Company's Proxy Statement and form
of proxy for its 2001 annual meeting, a shareholder's proposal must be received
by the Company at its principal office no later than December 1, 2000. Proposals
should be addressed to William F. Denson, III, Secretary, P. O. Box 385014,
Birmingham, Alabama 35238-5014.
VULCAN MATERIALS COMPANY
WILLIAM F. DENSON, III
Secretary
1200 Urban Center Drive
Birmingham, Alabama 35242
March 30, 2000
22
<PAGE> 24
PROXY
VULCAN MATERIALS COMPANY
ANNUAL MEETING OF SHAREHOLDERS MAY 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF VULCAN MATERIALS COMPANY
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 2000 Annual
Meeting of Shareholders to be held May 12, 2000, 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 Directors: (three year terms) 01 James V. Napier and 02
Phillip W. Farmer; (one year term), 03 Marion H. Antonini.
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 DIRECTORS' RECOMMENDATIONS. PLEASE MARK, SIGN, DATE, AND
RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
If you are a participant in any of the following employee benefit plans of the
Company, this card also constitutes voting instructions for any shares held for
the shareholder in the Thrift Plan for Salaried Employees, Construction
Materials Divisions Hourly Employee Savings Plan and the Chemicals Group Hourly
Employees Savings Plan. If you are a participant in any of these plans, your
shares will be voted in accordance with the terms of such plans.
SEE REVERSE
SIDE
DETACH HERE
ABOVE IS YOUR PROXY CARD
<PAGE> 25
X Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HERE IN.
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.
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of Deloitte & [ ] [ ] [ ]
Directors. Touche LLP as independent
(Seereverse) auditors for the year 2000.
For, except vote withheld from the following nominee(s)
- ----------------------------------------------------------
</TABLE>
Please sign name(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
DETACH HERE
TO VULCAN MATERIALS COMPANY SHAREHOLDERS:
Vulcan Materials Company encourages you to take advantage of two new and
convenient ways to vote your shares.
You may now vote your proxy 24 hours a day, 7 days a week, using either a
touch-tone telephone or through the Internet. This eliminates the need to return
this proxy card.
To vote your shares electronically, you must use the Voter Control Number
printed in the box above, just below the perforation. The series of numbers that
appear in the box above is your personal code to access the system. Your
telephone or internet vote authorizes the proxies named on the above proxy card
to vote your shares in the same manner as if you marked, signed and returned
your proxy card.
To Vote by Phone: On a touch-tone telephone dial 1-877-PRX-VOTE
(1-877-779-8683). You will be asked to enter the Voter
Control Number. Then follow the instructions.
To Vote by Internet: Log on the Internet and go to the website
http://www.eproxyvote.com/vmc. Click on the "Proxy
Voting" icon. You will be asked to enter your voter control
number. Then follow the instructions.
To Vote by Mail: Mark, sign and date your proxy card and return it in the
enclosed postage-paid envelope. If you are voting by
telephone or the Internet, please do not mail your proxy
card.
You are invited to attend the 2000 Annual Meeting of Shareholders on Friday, May
12, 2000, at 10:00 a.m. at the Birmingham Marriott, 3590 Grandview Parkway,
Birmingham, Alabama.
Thank you in advance for voting on these important issues.
William F. Denson, III
Secretary
