<PAGE> 1
COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
TELEPHONE (214) 689-4300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 25, 1996
The Annual Meeting of Stockholders of Commercial Metals Company, a Delaware
corporation ("Company"), will be held in the Amphitheater of the Radisson Hotel,
1893 West Mockingbird Lane, Dallas, Texas, on January 25, 1996 at 10:00 a.m.,
Central Standard Time, for the following purposes:
(1) To elect three persons to serve as Class I directors until the
1999 Annual Meeting of Stockholders and until their successors are elected;
(2) To approve the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending August 31, 1996; and
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record on November 27, 1995 are entitled to notice of
and to vote at the meeting or any adjournment or adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
FILL OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE
ON WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. PROXIES
FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS REQUESTED BY
THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED IN FURTHER
COMMUNICATION.
By Order of the Board of Directors,
/s/ DAVID M. SUDBURY
DAVID M. SUDBURY
Vice President, Secretary
and General Counsel
Dallas, Texas
December 4, 1995
<PAGE> 2
COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
TELEPHONE (214) 689-4300
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 25, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Commercial Metals Company ("Company") for
use at the Annual Meeting of Stockholders of the Company to be held on January
25, 1996 and at any and all adjournments thereof. The approximate date on which
this Proxy Statement and accompanying proxy card are first being sent or given
to stockholders is December 4, 1995.
Shares represented by each proxy, if properly executed and returned to the
Company prior to the meeting, will be voted as directed, but if not otherwise
specified, will be voted for the election of the three Class I directors and to
ratify the appointment of Deloitte & Touche LLP as independent auditors, all as
recommended by the Board of Directors. A stockholder executing the proxy may
revoke it at any time before it is voted by giving written notice to the
Secretary of the Company.
OUTSTANDING VOTING SECURITIES OF THE COMPANY
On November 27, 1995, the record date for determining stockholders entitled
to vote at the Annual Meeting, there were outstanding 15,352,247 shares of
Common Stock, par value $5.00 per share, not including 780,336 treasury shares.
Each share of such stock is entitled to one vote for each director to be elected
and upon all other matters to be brought to a vote by the stockholders at the
forthcoming Annual Meeting of Stockholders. The affirmative vote of a plurality
of the shares of Common Stock present or represented at the meeting is required
to elect the Class I directors and the affirmative vote of a majority of the
shares of common stock present or represented at the meeting is required to
ratify the appointment of Deloitte & Touche LLP. Abstentions and broker
non-votes are counted for purposes of determining the quorum and have the effect
of a negative vote on the proposal to ratify the appointment of Deloitte &
Touche LLP. Broker non-votes have no effect on determining plurality.
<PAGE> 3
PRINCIPAL STOCKHOLDERS
As of November 27, 1995, the only persons, or groups of persons, known to
the Company's management believed to own beneficially 5% or more of the
Company's outstanding Common Stock were:
<TABLE>
<CAPTION>
TYPE OF OWNED PERCENT
NAME AND ADDRESS OWNERSHIP SHARES OF CLASS
-------------------------------------------------- ------------- -------- --------
<S> <C> <C> <C>
Mitchell Hutchins Institutional Investors, Inc. Beneficially 1,352,822(1) 8.9%
1285 Avenue of the Americas
New York, NY 10019
J. P. Morgan & Co. Incorporated Beneficially 1,290,191(2) 8.5%
60 Wall Street
New York, NY 10260
Robert L. Feldman and Ralph E. Record 942,031 6.1%
Loewenberg, Trustees of The Jacob Feldman and
Sara B. Feldman Grantor Trust
Dated September 24, 1985
Stemmons Center
7800 Stemmons Freeway
10th Floor
Dallas, Texas 75247
Sara B. Feldman Beneficially 843,130 5.5%
11 St. Laurent Place
Dallas, Texas 75225
RCM Capital Management Beneficially 831,500(3) 5.5%
4 Embarcadero Center
San Francisco, CA 94111
</TABLE>
- - ---------------
(1) Based on Amendment 2 to Schedule 13G dated February 13, 1995 which indicates
that Mitchell Hutchins Institutional Investors, Inc. has sole voting and
dispositive power over 1,352,822 shares.
(2) Based on Amendment 6 to Schedule 13G dated December 30, 1994 which indicates
that J. P. Morgan & Co. Incorporated has sole voting power over 932,629
shares and sole dispositive power over 1,290,191 shares.
(3) Based on Schedule 13G dated February 9, 1995 which indicates that RCM
Capital Management has sole voting power over 764,500 shares, sole
dispositive power over 804,500 shares and shared dispositive power over
27,000 shares.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation divides the Board of
Directors into three classes. The term of office of the Class I directors
expires at this Annual Meeting of Stockholders. The Class II directors will
serve until the 1997 Annual Meeting of Stockholders, and the Class III directors
will serve until the 1998 Annual Meeting of Stockholders. Laurence E. Hirsch, A.
Leo Howell, and Dorothy G. Owen are currently directors and will stand for
election as Class I directors for three-year terms of office expiring at the
1999 Annual Meeting and until their successors are duly elected. Messrs. Hirsch
and Howell were both previously elected by the stockholders. Dorothy G. Owen was
elected by the Board of Directors in March, 1995 to a term expiring at this
annual meeting. Proxies cannot be voted for the election of more than three
persons to the Board at the meeting.
The proxies named in the accompanying form of proxy have been designated by
management. All nominees listed above are currently members of the Board of
Directors. Each nominee has consented to being named in this Proxy Statement and
to serve if elected. If any nominee becomes unavailable for any reason, the
shares represented by the proxies will be voted for such person, if any, as may
be designated by the Board of Directors. However, management has no reason to
believe that any nominee will be unavailable.
2
<PAGE> 4
The following table sets forth certain information about the directors. All
directors have been employed in substantially the same positions set forth for
at least the past five years except for Albert A. Eisenstat, Walter F. Kammann
and Dorothy G. Owen. For more than five years prior to September 23, 1993 Mr.
Eisenstat had been a director of and Executive Vice President and Secretary of
Apple Computer, Inc. Mr. Kammann retired September 1, 1993 following thirty five
years of service to the Company culminating with his position as Vice President
of the Company in charge of international operations and Managing Director of
Commercial Metals Holding AG, a subsidiary of the Company. Mr. Kammann currently
is a consultant to the Company. For more than five years prior to November,
1994, Ms. Owen had been Chairman of the Board of Owen Steel Company, Inc. and
affiliates which were acquired by merger with a subsidiary of the Company in
November, 1994. Moses Feldman is President of Commercial Manufacturing
Corporation, which is not affiliated with the Company.
NOMINEES
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY
OWNED PERCENT OF
SERVED AS DIRECTLY OR OUTSTANDING
NAME, PRINCIPAL DIRECTOR INDIRECTLY AS OF COMMON
OCCUPATION AND BUSINESS AGE SINCE NOVEMBER 27, 1995 STOCK
- - ----------------------------------------------- --- --------- ----------------- -----------
<S> <C> <C> <C> <C>
CLASS I -- TERM TO EXPIRE IN 1999
Laurence E. Hirsch 49 1991 1,333 *
Chairman of the Board of Directors
and Chief Executive Officer
Centex Corporation
A. Leo Howell 74 1977 93,784(1) *
Vice President, Commercial Metals Company;
President and Treasurer, Howell Metal Company
(subsidiary)
Dorothy G. Owen 60 1995 369,244 2.5%
Former Chairman of the
Board of Directors
Owen Steel Company, Inc.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY
OWNED PERCENT OF
SERVED AS DIRECTLY OR OUTSTANDING
NAME, PRINCIPAL DIRECTOR INDIRECTLY AS OF COMMON
OCCUPATION AND BUSINESS AGE SINCE NOVEMBER 9, 1995 STOCK
- - ----------------------------------------------- --- --------- ----------------- -----------
<S> <C> <C> <C> <C>
CLASS II -- TERM TO EXPIRE IN 1997
Albert A. Eisenstat 65 1982 3,333 *
Retired former executive officer
and director -- Apple Computer, Inc.
Walter F. Kammann 70 1969 49,363(1) *
Consultant
Charles B. Peterson 82 1979 12,000 *
Investments
CLASS III -- TERM EXPIRES IN 1998
Moses Feldman 55 1976 206,399(2) 1.3%
President, Commercial Manufacturing
Corporation
Ralph E. Loewenberg 56 1971 --(3)
President, R. E. Loewenberg Capital
Management Corporation
Stanley A. Rabin 57 1979 212,567(1) 1.4%
President and Chief Executive Officer,
Commercial Metals Company
Marvin Selig 72 1964 107,666(1) *
President, CMC Steel Group
</TABLE>
3
<PAGE> 5
- - ---------------
* Less than one percent.
(1) Includes shares subject to options exercisable within sixty days by Mr.
Rabin of 44,000 shares, Mr. Selig of 34,832 shares, Mr. Howell of 26,166
shares and Mr. Kammann of 3,972 shares.
(2) Excluding 755,641 shares owned of record by the Feldman Foundation, of which
Moses Feldman and brothers Robert L. Feldman and Dr. Daniel E. Feldman are
voting trustees.
(3) Ralph E. Loewenberg is one of two Trustees of The Jacob Feldman and Sara B.
Feldman Grantor Trust which owns 942,031 shares. See "Principal
Stockholders" at page 2. Ralph E. Loewenberg disclaims any beneficial
interest as to such shares.
As of November 27, 1995, all directors and officers as a group beneficially
own 2,206,041 shares or 14.7% of outstanding Common Stock including the Feldman
Grantor Trust shares discussed in footnote 3 above.
Marvin Selig is the brother of Clyde P. Selig, an executive officer. There
are no other family relationships among the directors, nominees and executive
officers.
None of the directors or nominees other than Messrs. Eisenstat and Hirsch
are directors of another public company. Mr. Eisenstat is a director of SunGard
Data Systems Inc. and Business Objects S.A. Mr. Hirsch is also a director of
Centex Corporation and Envoy Corporation.
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
Audit Committee. The Board of Directors has a standing Audit Committee
which provides the opportunity for direct communications between the independent
certified public accountants, the internal audit staff and the Board. The Audit
Committee meets with the certified public accountants and internal auditors
periodically to review their effectiveness during the annual audit program and
to discuss the Company's internal control policies and procedures. The members
of the Audit Committee are Messrs. Eisenstat (Chairman), Feldman, Loewenberg and
Peterson. During the fiscal year ended August 31, 1995, the Audit Committee met
four times to review the scope and results of the annual audit, to consider the
engagement of the Company's auditors for the fiscal year ending August 31, 1996,
and to review various matters with regard to financial controls and procedures.
Compensation Committee. The Board of Directors also has a standing
Compensation Committee that provides recommendations to the Board regarding
compensation for executive officers of the Company including issuance of stock
options. The Compensation Committee consists of Messrs. Loewenberg (Chairman),
Eisenstat, Feldman and Peterson. The Compensation Committee may periodically
retain a consulting firm specializing in compensation matters to advise the
Compensation Committee. The Compensation Committee met five times during the
fiscal year ended August 31, 1995 to establish salaries and bonuses for
executive officers, to authorize the issuance of stock options, to review
retirement plans, compensation policies, and to review the Compensation
Committee's report on executive compensation for the prior fiscal year.
Executive Committee. The Executive Committee consists of Messrs. Howell
(Chairman), Rabin and Selig. Under the Company's Bylaws, the Executive Committee
is endowed, during the intervals between the meetings of the directors, with all
of the powers of the directors in the management and control of the business.
The Executive Committee meets periodically between meetings of the Board of
Directors.
The Board of Directors does not have a nominating committee because the
Board as a whole functions in this capacity. During the fiscal year ended August
31, 1995 the entire Board of Directors met nine times, of which six were
regularly scheduled meetings and three were special meetings. All directors
attended at least seventy-five percent or more of the meetings of the Board of
Directors of the Company and of the committees of the Board on which they
served. Ms. Owen attended all meetings of the Board of Directors after her
election to the Board in March, 1995.
4
<PAGE> 6
Compensation of Non-employee Directors. During fiscal year 1995 and until
January, 1996, directors Eisenstat, Feldman, Hirsch, Kammann, Owen and Peterson
are paid a fee of $18,000 per year and $1,000 for each board meeting or $500 for
each committee meeting they attend. Chairmen of the Audit and Compensation
Committees received an additional payment of $1,000 per year. Mr. Loewenberg has
waived his right to receive fees and expense reimbursement customarily paid by
the Company to non-employee directors. No employees of the Company receive
additional compensation for serving as directors. Effective January 1, 1996, the
annual fee paid non-employee directors will be $22,000, the board meeting fee
$1,200 per meeting, the board committee fee $600 per committee meeting and
chairmen of the Audit and Compensation Committees will receive an additional
payment of $1,500 per year. Upon his retirement from employment by the Company
and subsidiary on September 1, 1993, Mr. Kammann and the Company entered into a
three-year consulting agreement, providing for payment of 84,000 Swiss Francs
(approximately $74,000) per year plus reimbursement of expenses incurred in the
performance of consulting work for the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and beneficial owners of more than
10% of the Company's Common Stock to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Based solely upon its review of the copies of such
forms received by it and written representations that no Form 5's were required
from reporting persons, the Company believes that all such reports were
submitted on a timely basis during the year ended August 31, 1995 with the
exception of a report by Hugh M. Ghormley on Form 4 of a gift of 1,400 shares of
the Company's common stock made June 2, 1995, which was filed November 22, 1995.
5
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid during each of the last three fiscal years to the Company's Chief Executive
Officer and the four remaining most highly compensated executive officers of the
Company, based on salary and bonus earned during fiscal year 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------------
FISCAL SALARY BONUS AWARDS OF STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTION/SARS(#)(1) COMPENSATION($)
- - ------------------------------ ------ ------- ------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Stanley A. Rabin 1995 395,000 515,000 12,000 12,805(2)
President and 1994 395,000 415,000 12,000 17,610
Chief Executive Officer 1993 385,000 325,000 16,000 15,098
Marvin Selig 1995 345,000 550,000 9,500 0(3)
President -- CMC 1994 345,000 450,000 9,500 0
Steel Group 1993 335,000 375,000 12,666 0
A. Leo Howell 1995 295,000 305,000 7,500 12,805(2)
Vice President; 1994 295,000 300,000 7,500 17,610
President and Treasurer 1993 285,000 300,000 10,000 15,098
Howell Metal Company
(Subsidiary)
Clyde P. Selig(4) 1995 273,141 379,142 8,400 7,500(3)
Executive Vice President 1994 265,186 324,873 8,311 4,653
CMC Steel Group 1993 257,500 292,477 11,068 0
Hugh M. Ghormley(5) 1995 267,678 353,268 7,800 12,805(2)
Executive Vice President 1994 259,882 293,756 7,820 17,610
CMC Steel Group 1993 252,350 252,180 10,400 15,098
</TABLE>
- - ---------------
(1) These awards are made under the Company's 1986 Stock Incentive Plan. The
exercise price for each share subject to these options is 100% of the
market value of such share on the date granted. Although the Plan provides
for the granting of stock appreciation rights (SARs), performance awards
and incentive stock options qualified under sec.422A of the Internal
Revenue Code, none have been made and each of the awards shown represent
stock options which do not qualify under sec.422A. The options are
exercisable two years from date of grant until the end of their ten-year
term. Options granted in fiscal year 1993 have been adjusted to reflect the
33 1/3% stock dividend of December 6, 1993.
(2) The amounts shown for each fiscal year represent the Company's contributions
to and forfeitures allocated to, the account of the recipient under the
Commercial Metals Companies Profit Sharing and 401K Plan, a defined
contribution plan. All of such amounts are fully vested in the recipient.
(3) Messrs. Marvin Selig and Clyde P. Selig are eligible to participate in the
profit sharing plan of Structural Metals, Inc. They also participate in the
Structural Metals, Inc. Pension Plan. See "Pension Benefits" at page 8. Due
to limitations imposed by the Internal Revenue Code on maximum
contributions to and benefits from qualified retirement plans, no company
contribution or forfeitures were allocated to Marvin Selig's profit sharing
plan account for 1993, 1994 and 1995. Clyde P. Selig's company contribution
was limited to the amount shown in each year.
(4) Clyde P. Selig is the beneficial owner of 96,942 shares of Common Stock
including 71,925 subject to options exercisable within sixty days, or less
than 1% of the outstanding Common Stock.
(5) Hugh M. Ghormley is the beneficial owner of 131,352 shares of Common Stock
including 34,313 subject to options exercisable within sixty days, or less
than 1% of the outstanding Common Stock.
6
<PAGE> 8
The following table provides information on option grants in fiscal 1995 to
the executive officers included in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT
ASSUMED ANNUAL
% OF TOTAL RATES
OPTIONS/SARS OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
EMPLOYEES OR BASE OPTION TERM($)(3)
OPTIONS/SARS IN FISCAL PRICE EXPIRATION ------------------
NAME GRANTED(#)(1) YEAR ($/SH)(2) DATE 5% 10%
- - -------------------------- ------------- ------------ --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Rabin.......... 12,000 4.1 24.50 02/10/05 184,895 468,560
Marvin Selig.............. 9,500 3.2 24.50 02/10/05 146,375 370,944
A. Leo Howell............. 7,500 2.6 24.50 02/10/05 115,559 292,850
Clyde P. Selig............ 8,400 2.9 24.50 02/10/05 129,427 327,992
Hugh M. Ghormley.......... 7,800 2.7 24.50 02/10/05 120,182 304,564
Potential Future Commercial Metals Company Stock Price.............................. $38.01 $57.77
</TABLE>
- - ---------------
(1) All options in the above table become exercisable February 10, 1997 or
earlier upon a change of control of the Company as defined in the 1986
Stock Incentive Plan.
(2) The exercise price is the fair market value (mean of high and low sales
price) on the date of grant.
(3) The dollar amounts in the last two columns are the result of calculations at
the 5% or 10% compound annual rates set by the SEC and are not intended to
forecast future appreciation of Commercial Metals Company stock.
The following table provides information concerning the exercise of options
during fiscal 1995 and unexercised options held as of August 31, 1995 for the
executive officers included in the Summary Compensation Table.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
SHARES AT FY-END(#)(1) FY-END($)(1)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Rabin............ 0 0 32,000 24,000 284,000 51,180
Marvin Selig................ 0 0 25,332 19,000 224,822 40,518
A. Leo Howell............... 0 0 18,666 15,000 164,473 31,988
Clyde P. Selig.............. 0 0 63,614 16,711 864,943 35,775
Hugh M. Ghormley............ 0 0 26,493 15,620 256,996 33,279
</TABLE>
- - ---------------
(1) Amounts set forth in the table reflect the number and value of shares and
options only as no stock appreciation rights (SARs) have been awarded under
the Company's 1986 Stock Incentive Plan.
(2) The amounts shown represent the difference between the market value of
Company Common Stock on August 31, 1995 of $28.1875, and the exercise price
of such options.
7
<PAGE> 9
PENSION BENEFITS
Substantially all employees of the Company and its domestic subsidiaries
with the exception of employees of Structural Metals, Inc., (SMI), participate
in either the Commercial Metals Companies Profit Sharing and 401K Plan or the
SMI-Owen Steel Company, Inc. Savings and Deferred Cash Plan, both defined
contribution plans. The Company has no pension plan for the employees who
participate in those two plans. SMI maintains both a defined contribution profit
sharing plan (the SMI Profit Sharing Plan) and a defined benefit pension plan
(the SMI Retirement Plan). Substantially all of the approximately 800 employees
of SMI participate in the two SMI plans. The SMI Retirement Plan is a trusteed,
non-contributory plan qualified under the Internal Revenue Code. An employee is
100% vested under the plan after five years of service with no vesting prior to
that time. Normal retirement age is 65 with benefits payable at 55 through 64 on
a reduced basis. Benefit payments are based on a formula using the monthly
average of all compensation earned by the participant during the ten years prior
to retirement multiplied by 1.5%, multiplied by the number of years of credited
service. There is no offset for social security benefits. Employees may receive
a lump-sum distribution upon retirement or while employed after the attainment
of certain age and service requirements. Although Marvin Selig and Clyde Selig
participate in the SMI Retirement Plan, their benefit levels are limited as
required by Internal Revenue Code sec.415. The Company has no supplemental
benefit plan to pay amounts in excess of such limits under the SMI Retirement
Plan. For 1995 the maximum benefit under Code sec.415 is $120,000 per year
payable at age 65. In addition for purposes of calculating benefits under the
plan, compensation considered must be limited as required by Internal Revenue
Code sec.401(a)(17). For fiscal 1995 the compensation limitation is $150,000.
The following table shows estimated annual benefit amounts which would be
payable to participants in the SMI Pension Plan at normal retirement (age 65) on
a straight life annuity basis without consideration of the Code limitations. The
amounts shown in the table below may not reflect the actual benefits payable
under the SMI Retirement Plan because of the current code limits.
<TABLE>
<CAPTION>
AVERAGE ESTIMATED ANNUAL PENSION FOR
FINAL REPRESENTATIVE YEARS OF CREDITED SERVICE
TEN-YEAR -------------------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40 45 50
- - ------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$300,000............... 67,500 90,000 112,500 135,000 157,500 180,000 202,500 225,000
$400,000............... 90,000 120,000 150,000 180,000 210,000 240,000 270,000 300,000
$500,000............... 112,500 150,000 187,500 225,000 262,500 300,000 337,500 375,000
$600,000............... 135,000 180,000 225,000 270,000 315,000 360,000 405,000 450,000
$700,000............... 157,500 210,000 262,500 315,000 367,500 420,000 472,500 525,000
$800,000............... 180,000 240,000 300,000 360,000 420,000 480,000 540,000 600,000
</TABLE>
Based on Clyde Selig's 32 years of service and present compensation levels,
upon retirement he would receive the maximum benefit presently permitted to be
paid by defined benefit plans of $120,000 annually based on a straight life
annuity election. In fiscal 1993 Marvin Selig, who has 49 years of service,
received a distribution equal to the present value of his accrued plan benefit
calculated as of the date of distribution. Marvin Selig will continue to accrue
additional benefits each year that he is employed by SMI to the extent the
Internal Revenue Code sec.415 limitation increases. These additional benefits
will be paid from the plan at the time he retires or upon his death. No other
executive officers of the Company are eligible to participate in the SMI
Retirement Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee with respect to
compensation policies applicable to the Company's eleven executive officers and
with respect to the basis for Mr. Rabin's compensation, as Chief Executive
Officer, for 1995. The Compensation Committee of the Board of Directors is
comprised of four non-employee directors, Messrs. Ralph E. Loewenberg
(Chairman), Albert A. Eisenstat, Moses Feldman and Charles B. Peterson.
8
<PAGE> 10
OVERALL OBJECTIVES AND STRATEGY
In determining total compensation levels for executive officers, the
Company's Compensation Committee evaluates, primarily on a subjective basis,
Company financial results (including profit before taxes, return on net assets
and cash flow), the potential for future earnings growth, individual performance
contributions, group and division operating performance. The Committee has also,
in the 1993 fiscal year with the assistance of a compensation consultant,
reviewed officer compensation levels and practices at comparable companies,
particularly in the Company's core steel processing and manufacturing
businesses. The Committee did not hire a consultant to conduct a compensation
review for fiscal 1994 or 1995 since there was little probability of significant
change in the two years. The Committee has retained a compensation consulting
firm subsequent to fiscal 1995 year end to continue and update the prior review.
The companies included in this review include the S&P Steel Industry Group, as
well as 10 additional companies in the steel minimill or metals industry.
In 1980 the Company adopted an executive total compensation strategy that
places a significant portion of annual cash bonus at risk. This strategy
combines competitive base salaries, the opportunity for above average annual
cash bonuses, and long-term equity incentive opportunities. Because of the
relatively large number of employees receiving option grants, the number of
shares subject to options granted to executive officers has been limited and is
less than the levels at the comparable companies described above. The annual
focus of the Company's executive compensation strategy is consistent with the
highly cyclical nature of the Company's business, which is characterized by wide
periodic swings in steel and metal prices. The Compensation Committee reviews
information prepared or compiled by the Company, confers with independent
executive compensation consultants when it considers necessary, and makes
decisions based on the business experience of each Compensation Committee
member.
Prior to fiscal 1995, the Executive Committee of the Board performed the
functions of the Compensation Committee in setting total annual cash
compensation including establishing base salaries and bonus payments for the
executive officers of the Company's Steel Group other than Marvin Selig. During
1995 the Compensation Committee assumed this function for all executive officers
of the Company.
CASH COMPENSATION
Executive officers are compensated within salary ranges that generally are
competitive with ranges for similar positions in companies of comparable size
and complexity to the Company. The actual salary of each officer is based on
individual contribution and is in keeping with the Company's total compensation
strategy described above. Salaries of the nine employees serving as executive
officers for each of the last three fiscal years including the CEO have, in the
aggregate, increased approximately $100,300 from fiscal 1993 through fiscal 1995
or slightly less than 2.1% on average for each of the last two years. Fiscal
year 1995 salary increases for all eleven executive officers, including the CEO,
aggregated approximately 1.9%. Fiscal year 1996 salaries for executive officers
will increase, in the aggregate, approximately 3.6%.
In addition the Compensation Committee recommends to the Board of Directors
annual cash bonuses for executive officers of the Company, based upon the
compensation strategy described above. For fiscal 1995 results, a record
performance year for the Company, the total bonus paid executive officers
increased by approximately 28% over the 1994 bonus amount. The Committee
believes bonus levels have been consistent with earnings which increased
approximately 46% in 1995 compared to 1994 and approximately 20% in 1994
compared to 1993.
EQUITY-BASED COMPENSATION
Given the relatively large number of employees receiving stock option
grants, the number of shares subject to grants to executive officers have been
substantially below levels at the comparable companies described above. Separate
option share pools for corporate employees and each operating group and division
are established annually pursuant to a formula based on total salaried employee
counts for the previous year, and cash flow, total assets and return on net
assets for the preceding five years. An additional option pool for Executive
Committee members is also established, which has been generally 10%-20% of the
total shares set aside for all participants. Annual grants are made from pools
based on a subjective evaluation of each
9
<PAGE> 11
executive's responsibilities, sustained performance contributions and ability to
influence long-term growth and profitability. Although stock appreciation rights
and performance awards are allowed under the Company's 1986 Stock Incentive
Plan, no such awards have been made to date. While restricted stock awards were
granted in the past to key employees including executive officers, the last
awards being made October 30, 1989, the Key Employee Restricted Stock Bonus Plan
terminated on January 30, 1990, except as to awards then outstanding. The last
restricted stock awards vested on October 30, 1994.
CEO COMPENSATION
Mr. Rabin's salary is set annually within the range approved by the
Compensation Committee, which is based on similar positions in the comparable
companies described above. Mr. Rabin's annual bonus is based on the same factors
considered for other members of the executive officer group. Mr. Rabin's salary
which had not been increased during fiscal 1995 was increased for fiscal 1996 by
approximately 2.5% to $405,000. Given the Company's record 1995 profitability,
Mr. Rabin's 1995 cash bonus was increased $100,000 from 1994 to $515,000.
A stock option grant to purchase 12,000 shares at fair market value on
grant date also was made to Mr. Rabin on February 10, 1995. This grant was made
after review of stock options previously granted to Mr. Rabin which have been in
the same amount each of the past three years (before adjustment for the December
6, 1993 33 1/3% stock dividend) and is consistent with the Company's equity
based compensation strategy.
CONCLUSION
The Compensation Committee believes that current total compensation
arrangements are reasonable and competitive. The Compensation and Executive
Committee believe fiscal year 1995 compensation for executive officers is
consistent with current compensation philosophy and reflects corporate
performance. The Compensation Committee is continuing to study the anticipated
federal tax treatment to the Company and executive officers of various payments
and benefits, and in particular the limitations on deductibility of compensation
under Section 162(m) of the Internal Revenue Code. The Committee believes it
unlikely in the short term that the limitation will affect the Company but is
considering various alternatives to preserving the deductibility of compensation
to the extent reasonably practicable and consistent with overall objectives of
the compensation strategy; however, the Committee may not in all circumstances
limit executive compensation to that which is deductible under Section 162(m) of
the Internal Revenue Code. The Compensation Committee shall continue to monitor
and administer compensation programs for executive officers of the Company.
COMPENSATION COMMITTEE
Ralph E. Loewenberg (Chairman)
Albert A. Eisenstat
Moses Feldman
Charles B. Peterson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Messrs. Loewenberg, Eisenstat, Moses Feldman and Peterson are the members
of the Compensation Committee.
The Company has historically made charitable contributions of a portion of
consolidated earnings, generally totalling 5% or less to various charitable
entities, including the Feldman Foundation, a private charitable foundation
exempt from federal income tax under Internal Revenue Code sec.501(c)(3). The
Feldman Foundation is the record and beneficial owner of 755,641 shares of the
Company's Common Stock. Director Moses Feldman, Robert L. Feldman and Dr. Daniel
E. Feldman are Trustees of the Feldman Foundation.
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<PAGE> 12
The Feldman Foundation retained R. E. Loewenberg Capital Management
Corporation ("Capital Management"), a registered investment advisor, to serve as
an investment advisor for the twelve months ended August 31, 1995, as well as
the current year. The Feldman Foundation compensates Capital Management on the
basis of a percentage of total assets under management, the same basis for which
Capital Management is compensated for like services by unrelated third parties.
Ralph E. Loewenberg, a director of the Company, is the President and majority
owner of Capital Management. Capital Management also provides investment
advisory services to Sara Feldman, Dr. Daniel E. Feldman and Robert L. Feldman,
all on the same basis for which it renders like services to unrelated third
parties.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return of the Company's
Common Stock during the five year period beginning August 31, 1990 and ending
August 31, 1995, with the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500") and the Standard & Poor's Steel Industry Group Index (the "S&P Steel
Group"). Each index assumes $100 invested at the close of trading August 31,
1990 and reinvestment of dividends.
<TABLE>
<CAPTION>
Commercial
Measurement Period Metals Com- S&P Steel
(Fiscal Year Covered) pany S&P 500 Group
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 106.22 126.91 120.88
1992 127.45 136.96 124.83
1993 213.07 157.80 177.13
1994 204.84 166.43 244.79
1995 220.25 202.12 185.11
</TABLE>
11
<PAGE> 13
RATIFICATION OF APPOINTMENT OF AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
The Board of Directors has appointed Deloitte & Touche as the independent
auditors of the Company for the fiscal year ending August 31, 1996, subject to
stockholder ratification. Representatives of Deloitte & Touche are expected to
be present at the meeting with the opportunity to make a statement if they so
desire and to be available to respond to appropriate questions.
GENERAL
The Annual Report to Stockholders covering fiscal year 1995 has been mailed
to stockholders with this mailing or previously. The Annual Report does not form
any part of the material for the solicitation of proxies.
Pursuant to the rules of the Securities and Exchange Commission, a proposal
to be presented by a stockholder at the Company's 1997 Annual Meeting must be
received by the Company at its principal executive offices no later than August
6, 1996.
The expense of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies personally or by telephone or telegram. The Company
will request brokers, dealers or other nominees to send proxy material to and
obtain proxies from their principals and the Company will, upon request,
reimburse such persons for their reasonable expenses.
OTHER BUSINESS
Management knows of no other matter that will come before the meeting.
However, if other matters do come before the meeting, the proxy holders will
vote in accordance with their best judgment.
By Order of the Board of
Directors,
/s/ DAVID M. SUDBURY
DAVID M. SUDBURY
Vice President, Secretary
and General Counsel
December 4, 1995
12
<PAGE> 14
COMMERCIAL METAL COMPANY
7800 Stemmons
Dallas, Texas 75247
Notice of 1995 Annual Meeting
Proxy Statement
LOGO
LOGO Printed on recycled paper
<PAGE> 15
PROXY
COMMERCIAL METALS COMPANY
7800 Stemmons Freeway
Dallas, Texas 75247
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned Shareholder(s) of Commercial Metals Company hereby appoint(s) A.
Leo Howell, Stanley A. Rabin and Marvin Selig, or any of them as Proxies, each
with the power to appoint his substitute, and hereby authorizes them to
represent and to vote and act for the undersigned at the 1996 Annual Meeting of
Stockholders of Commercial Metals Company to be held on Thursday, January 25,
1996 at 10:00 a.m., Central Standard Time in the Amphitheater of the Radisson
Hotel, 1893 West Mockingbird Lane, Dallas, Texas, and any adjournment,
continuation, or postponement thereof, according to the number of votes which
the undersigned is now, or may then be, entitled to cast, hereby revoking any
proxies heretofore executed by the undersigned for such meeting.
All powers may be exercised by a majority of said proxy holders or substitutes
voting or acting on, if only one votes and acts then by that one. The
undersigned instructs such proxy holders or their substitutes to vote as
specified below on the proposals set forth in the Proxy Statement.
PLEASE MARK, DATE AND SIGN THIS PROXY ON REVERSE SIDE
<PAGE> 16
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. /X/ Please mark
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED your votes
FOR PROPOSALS 1, 2 AND 3. as this
___________________
COMMON
NOMINEES: Laurence E. Hirsch, A. Leo Howell, Dorothy G. Owen
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
- - --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY
except as marked to the to vote for all nominees
contrary listed
/ / / /
2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING AUGUST 31, 1996.
FOR AGAINST ABSTAIN
/ / / / / /
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THIS MEETING.
Dated ____________________________, 19__
________________________________________
Signature
________________________________________
Second Signature If Held Jointly
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in the
partnership name by authorized person.
PLEASE MARK, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
