<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:
[ ] 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 sec. 240.14a-11(c) or sec. 240.14a-12
COMMERCIAL METALS 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)(l) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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<PAGE> 2
COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
TELEPHONE (214) 689-4300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 27, 2000
The Annual Meeting of Stockholders of Commercial Metals Company, a Delaware
corporation ("Commercial Metals"), will be held in the Thompson Auditorium,
Cityplace Center, 2711 North Haskell Avenue, Dallas, Texas, on January 27, 2000,
at 10:00 a.m., Central Standard Time. If you are planning to attend the meeting
in person, please check the appropriate space on the enclosed proxy card. A map
is included on the back cover of the attached Proxy Statement. The meeting will
be held for the following purposes:
(1) To elect two persons to serve as Class II directors until the 2003
annual meeting of stockholders and until their successors are elected;
(2) To approve the 1999 Non-Employee Director Stock Option Plan;
(3) To approve the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending August 31, 2000; and
(4) To transact such other business as may properly come before the
meeting or any adjournments of the meeting.
Only stockholders of record on November 29, 1999, are entitled to notice of
and to vote at the meeting or any adjournment or adjournments of the meeting.
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 6, 1999
<PAGE> 3
COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
TELEPHONE (214) 689-4300
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 27, 2000
This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of Commercial Metals Company ("Commercial
Metals") for use at the annual meeting of stockholders of Commercial Metals to
be held on January 27, 2000, and at any and all adjournments of the meeting. The
approximate date on which this proxy statement and accompanying proxy card are
first being sent or given to stockholders is December 6, 1999.
Shares represented by each proxy, if properly executed and returned to
Commercial Metals prior to the meeting, will be voted as directed, but if not
otherwise specified, will be voted for the election of the two Class II
directors, for approval of the 1999 Non-Employee Directors Stock Option Plan 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 Commercial Metals, by subsequently executing and delivering a proxy
or by voting in person at the meeting (although attending the meeting without
executing a ballot or executing a subsequent proxy will not constitute
revocation of a proxy).
OUTSTANDING VOTING SECURITIES OF THE COMPANY
On November 29, 1999, the record date for determining stockholders entitled
to vote at the annual meeting, there were outstanding 14,386,695 shares of
common stock, par value $5.00 per share, not including 1,745,888 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 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 II directors, and the affirmative vote of a majority of the
shares of common stock present or represented at the meeting is required to
approve the 1999 Non-Employee Directors Stock Option Plan and 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 proposals to approve the 1999 Non-Employee Directors Stock Option
Plan and to ratify the appointment of Deloitte & Touche LLP. Broker non-votes
have no effect on determining plurality.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
As of the record date the only person, or groups of persons, known to
Commercial Metals' management believed to own beneficially 5% or more of
Commercial Metals' outstanding common stock was:
<TABLE>
<CAPTION>
TYPE OF OWNED PERCENT
NAME AND ADDRESS OWNERSHIP SHARES OF CLASS
---------------- --------- -------- --------
<S> <C> <C> <C>
Moses Feldman Beneficially 1,190,090(1) 8.3%
P.O. Box 931
Doylestown, PA 18901
</TABLE>
- ---------------
(1) Based on filings with the Securities and Exchange Commission, which indicate
the reporting person has sole voting power over 106,399 shares, sole
dispositive power over 106,399 shares and shared dispositive and voting
power over 1,083,691 shares.
PROPOSAL I
ELECTION OF DIRECTORS
Commercial Metals' restated certificate of incorporation divides the board
of directors into three classes. The term of office of the Class II directors
expires at this annual meeting of stockholders. The Class III directors will
serve until the 2001 annual meeting of stockholders. The Class I directors will
serve until the 2002 annual meeting of stockholders. Albert A. Eisenstat, Walter
F. Kammann, Anthony A. Massaro and Charles B. Peterson are currently serving as
directors with terms ending at this annual meeting. Walter F. Kammann and
Charles B. Peterson have decided not to stand for reelection having served
since, respectively, 1969 and 1979. As a result, the directors have decided to
reduce the size of the board to nine members and the number of Class II
directors to two effective with the January 27, 2000, annual meeting. Albert A.
Eisenstat and Anthony A. Massaro will stand for election as Class II directors
for three-year terms of office expiring at the 2003 annual meeting and until
their successors are duly elected. Mr. Eisenstat was previously elected by the
stockholders. Mr. Massaro was elected to the board by the directors in May,
1999. Proxies cannot be voted for the election of more than two 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 the 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> 5
The following table sets forth 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 Messrs. Eisenstat, Massaro, Rabin and
Womack. Mr. Eisenstat had been a director of and Executive Vice President and
Secretary of Apple Computer, Inc. until his retirement in September, 1993. From
June, 1996, until December, 1997, Mr. Eisenstat was a partner in Discovery
Ventures LLC, a venture capital fund. Mr. Massaro has been employed with Lincoln
Electric Holdings, Inc., or affiliates, since 1993. Mr. Massaro was elected
Chairman in May 1997, having been President and Chief Executive Officer since
November 1996. Prior to that time he served as President and Chief Operating
Officer and Executive Vice President of international operations. Mr. Rabin was
elected to the additional position of Chairman in March 1999. Mr. Womack joined
Zurn Industries, Inc. in 1994 and was Chairman and Chief Executive Officer prior
to its merger in 1998 with U.S. Industries. Mr. Womack has announced his
retirement as Chairman of Zurn Industries, Inc. and Chief Executive of U.S.
Industries Bath and Plumbing Products Group as of January, 2000.
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 29, 1999 STOCK
----------------------- --- --------- ------------------ -----------
<S> <C> <C> <C> <C>
CLASS II -- TERM TO EXPIRE IN 2003
Albert A. Eisenstat 69 1982 3,333 *
Investments
Anthony A. Massaro 55 1999 1,000 *
Chairman and Chief Executive Officer
Lincoln Electric Holdings, Inc.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<S> <C> <C> <C> <C>
CLASS III -- TERM TO EXPIRE IN 2001
Moses Feldman 59 1976 238,399(1) 1.7%
President, AeroMed, Inc.
Ralph E. Loewenberg 60 1971 --(2)
President, R. E. Loewenberg Capital
Management Corporation
Stanley A. Rabin 61 1979 281,167(3) 2.0%
Chairman, President and Chief Executive Officer,
Commercial Metals Company
Marvin Selig 76 1964 144,441(3) 1.0%
CMC Steel Group - Chairman and Chief Executive Officer
CLASS I -- TERM TO EXPIRE IN 2002
A. Leo Howell 78 1977 112,804(3) *
Vice President, Commercial Metals Company;
President, Howell Metal Company;
Dorothy G. Owen 64 1995 273,049 1.9%
Former Chairman of the Board - Owen Steel Company,
Inc.; Investments
Robert W. Womack 62 1999 4,000 *
Chairman, Zurn Industries, Inc., subsidiary of U.S.
Industries, Inc.
</TABLE>
- ---------------
* Less than one percent.
3
<PAGE> 6
(1) Excluding 690,641 shares owned of record by the Feldman Foundation, of which
Moses Feldman is one of three voting trustees, 683,691 shares owned by the
Marital Trust under the Jacob Feldman Revocable Trust Indenture of which
Moses Feldman is one of four trustees and 268,000 of 400,000 shares owned by
the Feldman Family Limited Partnership of which Moses Feldman is managing
partner. Mr. Feldman disclaims beneficial ownership as to all shares held by
the Feldman Foundation, the Marital Trust and 268,000 shares held by the
Feldman Family Limited Partnership. See "Principal Stockholders" at page 2
for information concerning Mr. Feldman's ownership of common stock.
(2) Ralph E. Loewenberg is one of four trustees of the Marital Trust under the
Jacob Feldman Revocable Trust Indenture which owns 683,691 shares. Ralph E.
Loewenberg disclaims any beneficial interest as to such shares.
(3) Includes shares subject to options exercisable within sixty days by Mr.
Rabin of 110,600 shares, Mr. Selig of 71,607 shares and Mr. Howell of 46,275
shares.
As of November 19, 1999, all directors and officers as a group beneficially
own 1,640,969 shares or 11% of outstanding common stock including 494,955 shares
subject to options exercisable within sixty days but excluding shares owned by
the Feldman Foundation, Marital Trust and 268,000 of the 400,000 shares owned by
the Feldman Family Limited Partnership discussed in footnotes 1 and 2 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.
Mr. Eisenstat is a director of SunGard Data Systems Inc., Business Objects
S.A. and the Benham Group of Funds (part of American Century Funds). Mr. Massaro
is a director of Lincoln Electric Holdings, Inc., Cleveland-Cliffs Inc. and
Thomas Industries, Inc. Mr. Womack is a director of U.S. Industries, Inc.
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 during fiscal 1999 were directors Eisenstat (Chairman),
Feldman, Loewenberg, Owen, Peterson and since May, 1999, Womack. During the
fiscal year ended August 31, 1999, 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, 2000, and to review
various matters with regard to financial controls, procedures and internal audit
reports.
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. During 1999 the compensation committee consisted of directors
Loewenberg (Chairman), Eisenstat, Feldman, Peterson and since May 1999, Massaro.
The compensation committee may periodically retain a consulting firm
specializing in compensation matters to advise the compensation committee. The
compensation committee met once during the fiscal year ended August 31, 1999, to
establish salaries and bonuses for executive officers, and to review
compensation policies.
Executive Committee. The executive committee consists of Messrs. Howell
(Chairman), Rabin and Selig. Under Commercial Metals' 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, 1999, the entire board of directors met eight times, of which six were
regularly scheduled meetings and two were special meetings. All incumbent
directors attended at least seventy-five percent or more of the meetings of the
board of directors and of the committees of the board on which they served.
4
<PAGE> 7
Compensation of Non-employee Directors. Directors Eisenstat, Feldman,
Kammann, Loewenberg, Massaro, Owen, Peterson and Womack were paid an annual
retainer fee of $22,000 per year and $1,200 for each board meeting or $600 for
each committee meeting they attended during the 1999 calendar year. Effective
January 1, 2000 the annual retainer will be increased to $27,000 per year.
Chairmen of the audit and compensation committees receive an additional payment
of $1,500 per year. The directors are also reimbursed for reasonable expenses of
attending meetings. No employee of the Company receive additional compensation
for serving as a director. Upon his retirement from employment by the Company
and subsidiary on September 1, 1993, Mr. Kammann and the Company entered into a
consulting agreement, providing for payment of 84,000 Swiss Francs
(approximately $54,000) per year plus reimbursement of expenses incurred in the
performance of consulting work for Commercial Metals.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and beneficial owners of more than 10% of
Commercial Metals' common stock to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of Commercial Metals. Based solely upon its review of the copies of
such forms received by it or written representations that no Form 5's were
required from reporting persons, Commercial Metals believes that all such
reports were submitted on a timely basis during the year ended August 31, 1999
except for one late filing by Dorothy G. Owen to report her indirect beneficial
ownership as a co-trustee in an exempt transaction.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid
during each of the last three fiscal years to the Company's Chief Executive
Officer and the four remaining most highly compensated executive officers of the
Company, based on salary and bonus earned during fiscal year 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------- ------------------
FISCAL SALARY BONUS AWARDS OF STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTION/SARS(#)(1) COMPENSATION($)
- ----------------------------------------- ------ ------- ------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Stanley A. Rabin......................... 1999 420,000 490,000 0 78,639(2)
Chairman, President and 1998 405,000 590,000 11,200 85,748
Chief Executive Officer 1997 405,000 470,000 14,000 75,488
Marvin Selig............................. 1999 370,000 433,589 0 67,926(2)
CMC Steel Group - 1998 355,000 600,000 8,800 89,682
Chairman and Chief Executive Officer 1997 355,000 495,000 11,000 67,460
A. Leo Howell............................ 1999 320,000 485,000 0 79,766(2)
Vice President; President - 1998 305,000 380,000 6,800 62,385
Howell Metal Company 1997 305,000 350,000 8,500 56,120
Clyde P. Selig(3)........................ 1999 305,934 301,066 0 70,469(2)
Vice President; CMC Steel Group - 1998 297,024 408,006 8,500 102,542
President and Chief Operating Officer 1997 289,780 341,760 10,919 45,322
David M. Sudbury(4)...................... 1999 250,000 350,000 0 51,698(2)
Vice President, Secretary 1998 235,000 262,000 7,000 49,886
and General Counsel 1997 235,000 217,500 7,500 46,894
</TABLE>
- ---------------
(1) No options or SARs were awarded in 1999 to executive officers. The 1997 and
1998 awards were granted under the Company's 1996 Long-Term Incentive Plan.
The exercise price is 100% of the market value of such share on the date
granted. Although the Plan provides for the granting of stock appreciation
rights, 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 one half at one year from grant date and the
second half two years from grant date and expire seven years from grant
date. All options may vest earlier upon a change in control of the Company
as defined in the plan.
(2) The compensation reported represents Company contributions to and
forfeitures allocated to the account of the recipient under the Commercial
Metals Companies Profit Sharing and 401(k) Plan or, in the case of Marvin
Selig and Clyde P. Selig, the Structural Metals, Inc. Profit Sharing and
401(k) Plan and contributions to the account of the recipient pursuant to
the Company's Benefit Restoration Plan, a non-qualified plan for certain
executives of the Company and subsidiaries. All of the amounts reported are
fully vested in the recipient. The compensation for the named executive
officers for fiscal year 1999 includes contributions to the Benefit
Restoration Plan by the Company into a trust for the benefit of the
recipients in the following amounts: Mr. Rabin - $64,648; Mr. Marvin
Selig - $67,926; Mr. Howell - $65,775; Mr. Clyde Selig - $62,969; and Mr.
Sudbury - $37,707.
(3) Mr. Clyde P. Selig is the beneficial owner of 120,271 shares of common stock
including 65,713 subject to options exercisable within sixty days, or less
than 1% of the outstanding common stock.
(4) Mr. Sudbury is the beneficial owner of 77,100 shares of common stock
including 30,500 subject to options exercisable within sixty days, or less
than 1% of the outstanding common stock.
6
<PAGE> 9
The following table provides information concerning the exercise of options
during fiscal 1999 and unexercised options held as of August 31, 1999, for the
executive officers included in the summary compensation table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
SHARES AT FY-END(#)(1) FY-END($)(1)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Rabin............ 0 0 110,600 20,600 $628,918 $54,238
Marvin Selig................ 0 0 71,607 4,400 445,184 3,575
A. Leo Howell............... 8,666 115,772 46,275 3,400 228,899 2,763
Clyde P. Selig.............. 17,266 209,402 65,713 4,250 399,614 3,453
David M. Sudbury............ 0 0 30,500 3,500 102,215 2,844
</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.
(2) The amounts shown represent the difference between the market value of
Commercial Metals common stock on August 31, 1999, of $30.625, and the
exercise price of such options.
PENSION BENEFITS
Substantially all employees of Commercial Metals and its domestic
subsidiaries, participate in one of three profit sharing and 401(k) plans, all
defined contribution plans. Commercial Metals has no defined benefit pension
plan. As a result of changes in benefit levels and termination of the Structural
Metals, Inc. defined benefit plan in 1998, the compensation committee has
approved an additional non-qualified retirement benefit for Marvin Selig. The
sum of $1,000,000 plus interest at a rate equal to the three year U.S. Treasury
Note accrued and compounded monthly from November 1, 1999, will be paid to
Marvin Selig fifteen days following his retirement on or before December 31,
2004.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the compensation committee concerning
compensation policies applicable to Commercial Metals' twelve executive officers
and the basis for Mr. Rabin's compensation, as Chief Executive Officer, for
fiscal year ended August 31, 1999. The compensation committee during fiscal 1999
was comprised of non-employee directors, Messrs. Ralph E. Loewenberg (Chairman),
Albert A. Eisenstat, Moses Feldman, Charles B. Peterson and since May, 1999,
Anthony Massaro.
OVERALL OBJECTIVES AND STRATEGY
In determining total compensation levels for executive officers, the
compensation committee evaluates 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. Although the committee has not considered it necessary to do so the
last three years, it has in the past utilized a compensation consultant to
review and report on levels and practices at comparable companies. The companies
in this review when last conducted included the S&P Steel Industry Group, as
well as 10 additional companies in the steel minimill or metals industry. The
committee plans to engage a compensation consultant during the 2000 fiscal year
to review compensation policies.
In 1980 Commercial Metals 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
7
<PAGE> 10
above average annual cash bonuses, and moderate long-term equity incentive
opportunities. The number of shares subject to options granted to executive
officers has been limited and is less than levels at the comparable companies
described above. The annual focus of the executive compensation strategy is
consistent with the highly cyclical nature of Commercial Metals' business, which
is characterized by wide periodic swings in steel and metal prices. The
compensation committee reviews information prepared or compiled by employees of
Commercial Metals, confers with independent executive compensation consultants
when it considers necessary and makes decisions based on the business experience
of each compensation committee member.
CASH COMPENSATION
Base Salary. Executive officers are compensated within salary ranges that
generally are competitive with ranges for similar positions in companies of
comparable size and complexity to Commercial Metals. The actual salary of each
officer is based on individual contribution and is in keeping with Commercial
Metals' total compensation strategy described above.
Bonus. The compensation committee recommends to the board of directors
annual cash bonuses for executive officers, based upon the compensation strategy
described above. Fiscal 1999 was a year of record net income and earnings per
share despite challenging market conditions. The committee determined that
although several division and individual contributions were superior to
excellent, others were below expectations. Several factors including unusual
expense and income items render year-to-year comparisons difficult for bonus
determinations. As a result the aggregate bonus paid executive officers for 1999
performance decreased approximately 7% from the 1998 aggregate amount despite
the addition of one officer to the group. The committee believes bonus levels
have been consistent with overall results which saw net earnings increase
approximately 10% and diluted earnings per share increase 14% in 1999 compared
to 1998.
LONG-TERM COMPENSATION
Equity-Based. No stock option grants were issued to executive officers
during fiscal 1999. Given the relatively large number of employees who have in
prior years received stock option grants, the number of shares subject to grants
to executive officers has 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 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 the three executive committee members is also
established, which has been generally 7% to 10% of the total shares set aside
for all participants over the past three years. Periodic grants are made from
pools based on a subjective evaluation of each executive's responsibilities,
sustained performance contributions and ability to influence long-term growth
and profitability. The compensation committee believes equity-based incentives
align stockholder interest with compensation levels and will continue periodic
grants, usually each year, as considered appropriate.
Retirement Benefits. Commercial Metals has no defined benefit pension
plans. The only long-term compensation retirement plans for employees in the
United States are now defined contribution profit sharing and 401(k) plans. As
the result of concern about limitations mandated by federal tax law and
regulations which have limited defined contribution plan retirement benefits of
more highly compensated employees, including executive officers, the board in
1996 approved the Benefit Restoration Plan, a non-qualified plan for certain
executives subject to reduced benefits. Following each year-end Commercial
Metals contributes to a trust created under the Benefit Restoration Plan an
amount equal to the additional contribution which the participant would have
received under the profit sharing and 401(k) plan had the executive's benefit
not been reduced. Payments made to the Benefit Restoration Plan for the benefit
of participants, including executive officers, vest under the same terms and
conditions as the relevant profit sharing and 401(k) plan. The compensation
committee believes this means of restoring a reasonable level of retirement
benefits for executive officers and other key employees is an important element
in the long-term compensation program. The committee has authorized the
additional non-qualified retirement benefit for Marvin Selig described under
Pension Benefits on page 7.
8
<PAGE> 11
CEO COMPENSATION
Mr. Rabin's salary is set annually by the compensation committee and 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 for fiscal 1999 was set at
$420,000, an increase of $15,000 from the 1997 and 1998 level. Mr. Rabin's bonus
decreased to $490,000, a reduction of 17% from the 1998 bonus due to income
considered by the Committee attributable to non-operating items and continued
disappointing results in certain operations. Mr. Rabin's salary was increased by
$10,000 to $430,000 effective with the start of fiscal 2000. Mr. Rabin did not
receive an option grant in fiscal 1999.
CONCLUSION
The compensation committee believes that current total compensation
arrangements are reasonable and competitive. The compensation and executive
committee believe fiscal year 1999 compensation for executive officers is
consistent with current compensation philosophy and reflects corporate
performance. The compensation committee continues to monitor the anticipated
federal tax treatment to Commercial Metals 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. This limitation
has not impacted Commercial Metals to date. 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
and will consider the compensation review to be conducted during 2000 in
establishing future policies.
COMPENSATION COMMITTEE
Ralph E. Loewenberg (Chairman)
Albert A. Eisenstat
Moses Feldman
Anthony A. Massaro
Charles B. Peterson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Messrs. Loewenberg, Eisenstat, Feldman, Massaro and Peterson are the
members of the compensation committee.
Commercial Metals 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
690,641 shares of the Commercial Metals' common stock. Director Moses Feldman
and brothers, Robert L. Feldman and Dr. Daniel E. Feldman, are trustees of the
Feldman Foundation.
9
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return of Commercial
Metals' common stock during the five year period beginning August 31, 1994, and
ending August 31, 1999, with the Standard & Poor's 500 Composite Stock Price
Index also known as the "S&P 500" and the Standard & Poor's Steel Industry Group
Index also known as the "S&P Steel Group". Each index assumes $100 invested at
the close of trading August 31, 1994, and reinvestment of dividends.
<TABLE>
<CAPTION>
COMMERCIAL METALS
COMPANY S&P 500 S&P STEEL GROUP
----------------- ------- ---------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 107.52 121.45 75.62
1996 116.65 144.19 65.21
1997 121.16 202.81 83.72
1998 97.67 219.22 51.61
1999 125.14 306.12 72.89
</TABLE>
PROPOSAL II
PROPOSAL TO APPROVE THE 1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
GENERAL
The board of directors adopted the 1999 Non-Employee Director Stock Option
Plan effective as of November 22, 1999. The plan is subject to the approval of
Commercial Metals' stockholders. Commercial Metals is seeking stockholder
approval of this plan to comply with the requirements of the New York Stock
Exchange. The plan provides for the following grants of options to purchase
Commercial Metals' common stock:
- Each year, non-employee directors will receive a stock option covering
1,500 shares of Commercial Metals' common stock.
- Non-employee directors may elect each year to receive all or some of
their annual retainer fee, which will be $27,000 effective January 1,
2000, in the form of stock options.
On November 29, 1999 the closing price for a share of Commercial Metals' common
stock was $32.4375.
The following is a brief summary of the key features of the 1999
Non-Employee Director Stock Option Plan. The full text of the plan is attached
to this proxy statement as Appendix A.
10
<PAGE> 13
PURPOSE AND ELIGIBILITY
The 1999 Non-Employee Director Stock Option Plan is intended to attract and
retain non-employee directors and more closely align their interests with the
interests of Commercial Metals' stockholders. As of the annual meeting
Commercial Metals will have six outside directors who are eligible to
participate in the plan.
ADMINISTRATION OF THE 1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The 1999 Non-Employee Director Stock Option Plan will be administered by a
committee that consists of at least two "non-employee directors", as defined in
Rule 16b-3 under the Securities Exchange Act of 1934. Any member of the
committee may be removed at any time, with or without cause, by resolution of
the board of directors. In addition, the board of directors may fill any
vacancies on the committee. The committee has full discretion to interpret the
plan, to make or rescind any rules it deems advisable in the administration of
the plan and to take all other actions advisable to administer the plan. The
committee does not have discretion to select participants or to determine the
time at which awards will be granted. The committee does not have authority to
take any action to materially increase the benefits accruing to participants
under the plan.
NUMBER OF SHARES ISSUABLE
The maximum number of shares of common stock authorized for issuance under
the 1999 Non-Employee Director Stock Option Plan is 200,000, subject to
adjustment for stock splits and similar events. Commercial Metals may issue
shares from either authorized but unissued common stock or common stock held by
Commercial Metals in its treasury. Shares of common stock subject to stock
options that are forfeited, terminated, settled in cash in lieu of common stock
or that expired unexercised are available for grants under the plan.
AUTOMATIC YEARLY STOCK OPTION GRANTS
Under the 1999 Non-Employee Director Stock Option Plan, each outside
director, when elected at an annual meeting, will automatically receive an
option to purchase 1,500 shares of common stock. Each person who becomes an
outside director on a date after an annual meeting will receive a pro-rated
grant of stock options based on the number of days the outside director serves
until the next annual meeting.
The stock option may be exercised on the first anniversary of the date of
grant for one half of the number of shares covered by the option, and the stock
option may be exercised on the second anniversary for the remaining one half of
the shares. When a non-employee director terminates service as a director, the
unvested portion of a stock option is forfeited.
The vesting period will accelerate upon a change of control of Commercial
Metals or the termination of the non-employee director's service as a director
because of death or disability. "Change of Control" is defined as the occurrence
of any of the following events: (1) a consolidation, merger or share exchange in
which Commercial Metals does not survive or in which shares of common stock
would be converted into cash, securities or other property, unless Commercial
Metals' stockholders retain the same proportionate common stock ownership in the
surviving company after such transaction, (2) a sale, lease, exchange or other
transfer of all or substantially all of Commercial Metals' assets, (3) the
approval by Commercial Metals' stockholders of a plan to dissolve or liquidate
Commercial Metals, (4) the termination of control of Commercial Metals by
directors in office as of the effective date of the plan and their successors
approved in accordance with the terms of the plan, by virtue of their ceasing to
constitute a majority of the entire board of directors, (5) the acquisition of
beneficial ownership of 15% of the voting power of Commercial Metals'
outstanding voting securities, subject to specified exceptions applicable to
Moses Feldman, who is a director, and some of his family members and their
affiliates, or (6) the appointment of a trustee in a bankruptcy proceeding
involving Commercial Metals.
11
<PAGE> 14
ELECTION TO RECEIVE OPTIONS IN LIEU OF RETAINER FEES
The 1999 Non-Employee Director Stock Option Plan also provides that each
outside director may make an irrevocable annual election to receive part or all
of his retainer fees in the form of a stock option to purchase shares of common
stock. If an outside director elects to receive a stock option in lieu of a
retainer fee, the date of grant of the stock option will be the date of the
annual meeting of stockholders following the year covered by the election.
Options received in lieu of retainer fees are fully vested on the date of grant.
The number of shares of common stock covered by an option will be
determined by dividing the amount of fees to be converted to options by the
value of an option. The option value is calculated by using a formula known as
the Black-Scholes valuation model. The Black-Scholes method is a commonly used
stock option valuation model that uses the fair market value of the stock on the
date of grant, the option exercise price, the option term, the risk-free rate of
return, stock volatility and dividend yield to estimate the value of a stock
option. For example, an election to defer the entire retainer, which is
currently $22,000, would result in an option for 4,000 shares being granted if
the Black-Scholes value was $5.50 per option share.
STOCK OPTION AGREEMENTS
Each grant of stock options must be evidenced by a stock option agreement
that sets forth the total number of shares subject to the stock option, the
option exercise price, the term of the option, the vesting schedule, and any
other terms and provisions approved by the committee that are consistent with
the plan.
EXERCISE OF OPTIONS
The exercise price for any share of common stock that may be purchased
under a stock option is the market price of the common stock on the date of
grant. On the date that the participant exercises a stock option, the
participant may pay the exercise price in cash, check, bank draft or money
order, with shares of Commercial Metals' common stock owned by the participant
on the exercise date, by use of a "cashless exercise" procedure with a broker
who loans the exercise price to the participant, or in another form of payment
acceptable to the committee.
Cash proceeds from the sale of common stock pursuant to the exercise of
stock options under the 1999 Non-Employee Director Stock Option Plan will be
added to the general funds of Commercial Metals and used for general corporate
purposes.
ASSIGNMENT OF OPTIONS; RESTRICTIONS
Stock options may be assigned by non-employee directors to family members
and related entities, subject to specified conditions. After the assignment, any
applicable vesting period or termination event will continue to be determined by
reference to the non-employee director. In other words, a termination of service
of a non-employee director will terminate an assigned stock option according to
the termination provisions summarized below under "Termination and Forfeiture".
Under current tax rules, the director remains responsible for any income tax
liability resulting from the exercise of an assigned option. Stock options may
also be assigned under a will or intestacy laws. Any other assignment of a stock
option is prohibited.
The granting and exercise of stock options and Commercial Metals'
obligations to sell and deliver common stock under the stock options are subject
to all applicable foreign and United States laws, rules and regulations, and to
required approvals on the part of any governmental agencies, stock exchanges or
transaction reporting systems.
TERMINATION AND FORFEITURE
Each stock option will terminate on the earliest of:
- the seventh anniversary of the date of grant;
- one year after the non-employee director's termination of service as a
director by reason of death or disability;
12
<PAGE> 15
- two years after the non-employee director's termination of service as a
director by reason of retirement after age 62; and
- 30 days after the non-employee director's termination of service as a
director for any other reason.
The plan terminates January 31, 2010. Stock options granted before the plan
terminates will continue to be effective according to their terms.
ADJUSTMENTS
If an increase or decrease in the number of issued and outstanding shares
of common stock occurs through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination, or exchange of
shares of common stock, then the plan provides that an appropriate adjustment
will be made in the maximum number of shares of common stock then subject to
being awarded under grants pursuant to the 1999 Non-Employee Director Stock
Option Plan. The committee also will make appropriate and proportionate
adjustments to outstanding stock options.
If Commercial Metals is the surviving or resulting corporation in a merger,
consolidation or share exchange, each holder of stock options granted under the
1999 Non-Employee Director Stock Option Plan will be entitled to exercise the
option and receive the same securities or rights as if the option holder had
held the shares of common stock that the option entitled the option holder to
purchase. If Commercial Metals is not the surviving or resulting corporation in
a merger, consolidation or share exchange, the holder of stock options granted
under the 1999 Non-Employee Director Stock Option Plan will be entitled to
receive, as a substitute for outstanding stock options, the number of shares or
amount of cash, property or assets of the surviving or resulting company that
the option holder would have received if the option holder had owned the
Commercial Metals' common stock that the option entitled the option holder to
purchase.
If Commercial Metals makes a partial distribution of its assets in the
nature of a partial liquidation, except for certain cash dividends, then the
exercise prices of outstanding stock options will be reduced in proportion to
the percentage reduction in the tangible book value of the shares of the common
stock as a result of the distribution.
AMENDMENT OF THE PLAN
The board of directors may at any time without the consent of the
participants suspend or discontinue the 1999 Non-Employee Director Stock Option
Plan in whole or in part. The board of directors may amend the plan without the
consent of the stockholders, unless the board considers stockholder approval to
be necessary or advisable to comply with tax or securities laws or with other
applicable laws, policies or regulations. The New York Stock Exchange is
currently considering adopting a rule that would specify when stockholder
approval would be necessary for stock option plan amendments. Unless required by
law, the board of directors may not take any action that would adversely affect
any rights of option holders or obligations of Commercial Metals to option
holders without the consent of the option holder.
FEDERAL INCOME TAX ASPECTS OF THE PLAN
Commercial Metals will not in most instances realize federal income tax
consequences when it grants a stock option under the plan. However, upon
exercise of a stock option, the plan participant will recognize income in an
amount equal to the difference between the fair market value of the shares on
the date of exercise and the exercise price, and Commercial Metals will be
entitled to a corresponding deduction.
For purposes of determining gain or loss realized upon a subsequent sale or
exchange of these shares, the participant's tax basis will be the sum of the
exercise price paid and the amount of ordinary income, if any, recognized by the
participant upon exercise of the option. Any gain or loss realized by a
participant on disposition of these shares generally will be a long-term capital
gain or loss if the shares have been held as a capital asset for at least one
year and will not result in any tax deduction to Commercial Metals.
13
<PAGE> 16
NEW PLAN BENEFITS
The size of all of the option grants under the plan cannot be determined
until the option grants are made in accordance with the plan. If the plan had
been in effect during calendar year 1999 and all outside directors had received
an automatic grant of options, the following table shows the dollar value of the
options, and the number of shares subject to the options that would have been
granted.
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR
NAME AND POSITION VALUE(1) NUMBER OF UNITS(2)
- ----------------- -------- ------------------
<S> <C> <C>
Albert A. Eisenstat -- Director............................. $ 8,250 1,500
Moses Feldman -- Director................................... 8,250 1,500
Ralph E. Loewenberg -- Director............................. 8,250 1,500
Anthony A. Massaro -- Director.............................. 8,250 1,500
Dorothy G. Owen -- Director................................. 8,250 1,500
Robert W. Womack -- Director................................ 8,250 1,500
All current executive officers (as a group)................. -- --
All current directors who are not also executive officers
(as a group).............................................. 49,500 9,000
All employees, including non-executive officers (as a
group).................................................... -- --
</TABLE>
- ---------------
(1) Based on an assumed Black-Scholes value per option share of $5.50 which is
the approximate average of the Black-Scholes values for similar term option
shares at the end of Commercial Metal's last two fiscal years.
(2) If an outside director elected to take a stock option in lieu of the entire
retainer fee, which effective January 1, 2000 will be $27,000 per year, the
outside director would receive an additional option for 4,910 shares based
on an assumed Black-Scholes value per option share of $5.50.
VOTE REQUIRED
The affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
is required to adopt the plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO ADOPT THE
PLAN.
14
<PAGE> 17
PROPOSAL III
RATIFICATION OF APPOINTMENT OF AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
The board of directors has appointed Deloitte & Touche LLP as the
independent auditors for the fiscal year ending August 31, 2000, subject to
stockholder ratification. Representatives of Deloitte & Touche LLP 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 1999 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 2001 annual meeting must be received by
Commercial Metals at its principal executive offices no later than August 7,
2000.
The expense of solicitation of proxies will be borne by Commercial Metals.
In addition to solicitation by mail, directors, officers and employees of
Commercial Metals may solicit proxies personally or by telephone or facsimile.
Commercial Metals will request brokers, dealers or other nominees to send proxy
material to and obtain proxies from their principals and 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 6, 1999
15
<PAGE> 18
APPENDIX A
COMMERCIAL METALS COMPANY
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Commercial Metals Company 1999 Non-Employee Director Stock Option Plan
(hereinafter called the "Plan") was adopted by the Board of Directors of
Commercial Metals Company, a Delaware corporation (hereinafter called the
"Company"), effective as of November 22, 1999.
ARTICLE 1
PURPOSE
The purpose of the Plan is to attract and retain Outside Directors of
Commercial Metals Company and to provide such persons with a proprietary
interest in the Company through the issuance of Common Stock that will
(a) increase the interest of such persons in the Company's welfare;
(b) furnish an incentive to such persons to continue their services
for the Company; and
(c) provide a means through which the Company may attract able persons
as directors.
ARTICLE 2
DEFINITIONS
For the purpose of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
2.1 "Black-Scholes Value" means the value of a Stock Option granted under
the Plan to purchase one share of Common Stock determined pursuant to the option
pricing model commonly known as the Black-Scholes method.
2.2 "Board" means the board of directors of the Company.
2.3 "Change of Control" means any of the following: (i) any consolidation,
merger or share exchange of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a consolidation, merger or share exchange of the Company in which the
holders of the Company's Common Stock immediately prior to such transaction have
the same proportionate ownership of Common Stock of the surviving corporation
immediately after such transaction; (ii) any sale, lease, exchange or other
transfer (excluding transfer by way of pledge or hypothecation) in one
transaction or a series of related transactions, of all or substantially all of
the assets of the Company; (iii) the stockholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company; (iv) the
cessation of control (by virtue of their not constituting a majority of
directors) of the Board by the individuals (the "Continuing Directors") who (x)
at the date of this Plan were directors or (y) become directors after the date
of this Plan and whose election or nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds of the directors
then in office who were directors at the date of this Plan or whose election or
nomination for election was previously so approved; (v) the acquisition of
beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of an
aggregate of 15% of the voting power of the Company's outstanding voting
securities by any person or group (as such term is used in Rule 13d-5 under the
1934 Act), provided, however, that notwithstanding the foregoing, an acquisition
shall not constitute a Change of Control hereunder if the acquiror is (w) Daniel
E. Feldman, Moses Feldman, Robert L. Feldman, or Sara B. Feldman (the
"Feldmans"), or any of his or her affiliates, so long as the Feldmans and their
affiliates do not beneficially
A-1
<PAGE> 19
own an aggregate of 25% or more of the shares of Common Stock then outstanding,
(x) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company and acting in such capacity, (y) a Subsidiary of the Company
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of voting
securities of the Company or (z) any other person whose acquisition of shares of
voting securities is approved in advance by a majority of the Continuing
Directors; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a
trustee or the conversion of a case involving the Company to a case under
Chapter 7. Under sub-clause (w) of clause (v) of the preceding sentence, if a
person or entity is an affiliate of one or more of the Feldmans and of another
person or entity, such sub-clause (w) shall not serve to exempt such other
person or entity in determining whether a Change of Control has occurred.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the committee appointed or designated by the Board
to administer the Plan in accordance with ARTICLE 3 of this Plan.
2.6 "Common Stock" means the common stock which the Company is currently
authorized to issue or may in the future be authorized to issue.
2.7 "Company" means Commercial Metals Company, a Delaware corporation, and
any successor entity.
2.8 "Date of Grant" means the effective date on which a Stock Option is
awarded to an Outside Director as set forth in the applicable Stock Option
Agreement in accordance with the terms of the Plan.
2.9 "Election Form" means a form approved by the Committee pursuant to
which an Outside Director elects a method of payment of Fees.
2.10 "Employee" means common law employee (as defined in accordance with
the Regulations and Revenue Rulings then applicable under Section 3401(c) of the
Code) of the Company or any Subsidiary of the Company.
2.11 "Fair Market Value" means, as of a particular date, the mean of the
highest and lowest prices per share on the New York Stock Exchange Consolidated
Tape, or such reporting service as the Committee may select, on the appropriate
date, or in the absence of reported sales on such day, the most recent previous
day for which sales were reported.
2.12 "Fees" means the cash retainer payable by the Company to an Outside
Director for service as an Outside Director of the Company, as such amount may
be changed from time to time.
2.13 "Optioned Shares" means the full shares of Common Stock which a
Participant may purchase pursuant to the exercise of a Stock Option granted
pursuant to this Plan.
2.14 "Option Period" means the period during which a Stock Option may be
exercised.
2.15 "Option Price" means the price which must be paid by a Participant
upon exercise of a Stock Option to purchase a share of Common Stock.
2.16 "Options Election Period" means the period beginning on October 1(st)
(or, with respect to the first full calendar year during the term of the Plan,
November 22, 1999) of each year during the term of the Plan and ending on the
following December 31(st), or such other time period designated by the
Committee, during which Outside Directors may elect to receive Stock Options as
payment of some or all of their Fees. If a person becomes an Outside Director on
or after January 1(st) but before October 1(st), including a person serving as a
director and an Employee who becomes an Outside Director because such director's
employment with the Company terminates during such period, the Options Election
Period for such person for that year shall commence on the date such person
first becomes an Outside Director and end 30 days thereafter.
2.17 "Outside Director" means a director of the Company who is not an
Employee.
A-2
<PAGE> 20
2.18 "Participant" shall mean an Outside Director of the Company.
2.19 "Plan" means this Commercial Metals Company 1999 Outside Director
Stock Option Plan, as amended from time to time.
2.20 "Plan Year" means a yearly period during the term of the Plan
beginning on the date of the Company's annual meeting of stockholders and ending
on the day before the Company's next annual meeting of stockholders.
2.21 "Retirement" means Termination of Service as a Director at or after
attaining age 62.
2.22 "Stock Option" means a non-qualified option to purchase Common Stock
granted under the Plan.
2.23 "Stock Option Agreement" means a written agreement between a
Participant and the Company which sets out the terms of the grant of a Stock
Option.
2.24 "Subsidiary" means (i) any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of
the total combined voting power of all classes of stock in one of the other
corporations in the chain, (ii) any limited partnership, if the Company or any
corporation described in item (i) above owns a majority of the general
partnership interest and a majority of the limited partnership interests
entitled to vote on the removal and replacement of the general partner, and
(iii) any partnership or limited liability company, if the partners or members
thereof are composed only of the Company, any corporation listed in item (i)
above or any limited partnership listed in item (ii) above. "Subsidiaries" means
more than one of any such corporations, limited partnerships, partnerships or
limited liability companies.
2.25 "Termination of Service as a Director" occurs when a Participant who
is an Outside Director of the Company shall cease to serve as a director of the
Company for any reason.
2.26 "Total and Permanent Disability" means that the Participant, because
of ill health, physical or mental disability or any other reason beyond his or
her control, is unable to perform his or her duties as a director for a period
of six (6) continuous months, as determined in good faith by the Committee.
ARTICLE 3
ADMINISTRATION
The Plan shall be administered by a committee appointed by the Board (the
"Committee"). The Committee shall consist of not fewer than two persons, each of
whom must be a "Non-Employee Director", as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as such rule now exists or may
hereafter be amended. Any member of the Committee may be removed at any time,
with or without cause, by resolution of the Board. Any vacancy occurring in the
membership of the Committee may be filled by appointment by the Board.
The Committee shall select one of its members to act as its Chairman and
shall make such rules and regulations for its operation as it deems appropriate.
A majority of the Committee shall constitute a quorum, and the act of a majority
of the members of the Committee present at a meeting at which a quorum is
present shall be the act of the Committee. The Committee, in its discretion,
shall (i) interpret the Plan, (ii) prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of the Plan, and
(iii) make such other determinations and take such other action as it deems
necessary or advisable in the administration of the Plan; provided, however,
that the Committee shall have no discretion with respect to the eligibility or
selection of Outside Directors to receive awards under the Plan or the time at
which any such awards are to be granted, and provided further, that the
Committee shall not have the authority to take any action or make any
determination that would materially increase the benefits accruing to
Participants under the Plan. Any interpretation, determination,
A-3
<PAGE> 21
or other action made or taken by the Committee shall be final, binding, and
conclusive on all interested parties.
ARTICLE 4
ELIGIBILITY; GRANT OF OPTIONS
4.1 Automatic Grant of Options. On the first day of every Plan Year, each
Outside Director serving as such on that date shall automatically be granted a
Stock Option to purchase one thousand five hundred (1,500) shares of Common
Stock on such date, without further action by the Committee.
If a person becomes an Outside Director during a Plan Year on a date after
the first day of a Plan Year, including a person serving as a director and an
Employee who becomes an Outside Director because such director's employment with
the Company terminates during such Plan Year, such Outside Director shall
automatically be granted a Stock Option to purchase that number of shares of
Common Stock equal to 1,500 multiplied by a fraction, the numerator of which
shall be the number of days until the end of such Plan Year and the denominator
of which shall be the total number of days in such Plan Year. In the event that
such calculation would result in a fractional share being subject to a Stock
Option, the number of shares that may be purchased under such Stock Option shall
be rounded up to the next whole number of shares. Stock Options granted under
this paragraph shall automatically be granted on the date such person becomes an
Outside Director, without further action by the Committee.
4.2 Election to Receive Stock Options in Lieu of Cash Fees. A Participant
may elect to receive all or part of the Fees otherwise payable to him or her
during a calendar year in the form of a Stock Option to purchase the number of
shares of Common Stock determined as set forth below in this Section 4.2. An
Outside Director who wishes to receive Fees for a calendar year in the form of a
Stock Option must irrevocably elect to do so by delivering a valid Election Form
during the Options Election Period to the Secretary of the Company or such other
person as the Committee may designate. An Outside Director's timely election to
receive a Stock Option in lieu of cash Fees under this Section 4.2 will be
effective as of the first day of the calendar year covered by the Election Form.
Elections to receive Stock Options in lieu of cash Fees are irrevocable and
shall be valid only for the calendar year covered by such election. The Date of
Grant for Stock Options granted under this Section 4.2 will be the first day of
the Plan Year immediately following the calendar year covered by the Election
Form.
The Committee shall cause to be calculated the Black-Scholes Value as of
the first day of the Plan Year immediately following the calendar year covered
by the Election Form. The Committee shall have complete discretion to assign
such values to the factors utilized in the calculation of the Black-Scholes
Value as the Committee deems appropriate. The Committee may, but shall not be
required to, use the services of Employees, consultants or other agents to
assist the Committee in calculating the Black-Scholes Value. The number of
shares subject to a Stock Option granted pursuant to this Section 4.2 shall be
the number of whole shares equal to (i) the dollar amount of the Fees earned by
the Outside Director that the Outside Director elected to receive in the form of
a Stock Option divided by (ii) the Black-Scholes Value. In determining the
number of Optioned Shares, any fraction of a share will be rounded up to the
next highest whole number of shares.
For example:
Assume that an Outside Director has elected to receive $5,000 of his
or her Fees in the form of a Stock Option and that the Black-Scholes Value
was determined to be $10. The Outside Director would be granted a Stock
Option to purchase 500 shares of Common Stock as payment of the $5,000
compensation, calculated as follows: $5,000 divided by $10 = 500 shares.
4.3 Vesting; Time of Exercise.
(a) Stock Options granted pursuant to Section 4.1 will be exercisable
in the following cumulative installments:
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First Installment: A Stock Option will be exercisable for up to 50% of
the Optioned Shares (rounded down so that no fractional share is
exercisable) at any time following the first anniversary of the Date of
Grant.
Second Installment: A Stock Option will be exercisable for the remainder
of the Optioned Shares not exercisable in the first installment at any
time following the second anniversary of the Date of Grant.
Notwithstanding the foregoing, the vesting of installments under Stock
Options granted pursuant to Section 4.1 shall automatically accelerate and
the Stock Options shall be exercisable in full upon (i) the Participant's
death, (ii) the Participant's Termination of Service as a Director as a
result of Total and Permanent Disability, or (iii) the occurrence of a
Change of Control. The determination of the Committee that any of the
foregoing conditions has been met shall be binding and conclusive on all
parties.
(b) Stock Options granted pursuant to Section 4.2 will be fully vested
and exercisable on the Date of Grant.
4.4 Stock Option Agreement. The grant of a Stock Option shall be evidenced
by a Stock Option Agreement setting forth the total number of shares of Common
Stock subject to the Stock Option, the Option Price, the maximum term of the
Stock Option, the Date of Grant, and such other terms and provisions as are
approved by the Committee, but not inconsistent with the Plan. The Company shall
execute a Stock Option Agreement with a Participant promptly after the Date of
Grant of the Stock Option.
ARTICLE 5
SHARES SUBJECT TO PLAN
The maximum number of shares of Common Stock that may be issued under the
Plan is two hundred thousand (200,000) (as may be adjusted in accordance with
ARTICLES 11 and 12 hereof). All Stock Options granted under the Plan shall be
designated as non-qualified stock options. Shares of Common Stock to be issued
under the Plan may be made available from either authorized but unissued Common
Stock or Common Stock held by the Company in its treasury. Shares of Common
Stock previously subject to Stock Options that are forfeited, terminated, or
settled in cash in lieu of Common Stock, or expired unexercised shall
immediately become available for grants of Stock Options under the Plan.
During the term of this Plan, the Company will at all times reserve and
keep available the number of shares of Common Stock that shall be sufficient to
satisfy the requirements of this Plan.
ARTICLE 6
OPTION PRICE
The Option Price for any share of Common Stock which may be purchased under
a Stock Option shall be One Hundred Percent (100%) of the Fair Market Value of
the share on the Date of Grant.
ARTICLE 7
OPTION PERIOD; FORFEITURE
No Stock Option granted under the Plan may be exercised at any time after
the end of its Option Period.
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The Option Period for each Stock Option will terminate on the first of the
following to occur:
(a) 5 p.m. on the seventh anniversary of the Date of Grant;
(b) 5 p.m. on the date which is one (1) year following the
Participant's Termination of Service as a Director due to death or Total
and Permanent Disability;
(c) 5 p.m. on the date that is two (2) years following the
Participant's Termination of Service as a Director due to Retirement;
provided that any installment not vested and exercisable on the
Participant's Retirement shall terminate and be forfeited on such date; or
(d) 5 p.m. on the date that is thirty (30) days after any other
Termination of Service as a Director; provided that any installment not
vested and exercisable on the date of such Termination of Service as a
Director shall terminate and be forfeited on such date.
ARTICLE 8
EXERCISE OF OPTION
Stock Options may be exercised during the Option Period. Stock Options may
be exercised at such times and in such amounts as provided in this Plan and the
applicable Stock Option Agreements, subject to the terms, conditions, and
restrictions of the Plan.
In no event may a Stock Option be exercised or shares of Common Stock be
issued pursuant to a Stock Option if a necessary listing of the shares on a
stock exchange or any registration under state or federal securities laws
required under the circumstances has not been accomplished. No Stock Option may
be exercised for a fractional share of Stock. The granting of a Stock Option
shall impose no obligation upon the Participant to exercise that Stock Option.
Subject to such administrative regulations as the Committee may from time
to time adopt, a Stock Option may be exercised by the delivery of written notice
to the Committee setting forth the number of shares of Common Stock with respect
to which the Stock Option is to be exercised and the date of exercise thereof
(the "Exercise Date") which shall be at least three (3) days after giving such
notice unless an earlier time shall have been mutually agreed upon. On the
Exercise Date, the Participant shall deliver to the Company consideration with a
value equal to the total Option Price of the shares of Common Stock to be
purchased, payable as follows: (a) cash, check, bank draft, or money order
payable to the order of the Company, (b) Common Stock owned by the Participant
on the Exercise Date, valued at its Fair Market Value on the Exercise Date, (c)
by delivery (including by FAX) to the Company or its designated agent of an
executed irrevocable option exercise form together with irrevocable instructions
from the Participant to a broker or dealer, reasonably acceptable to the
Company, to sell certain of the shares of Common Stock purchased upon exercise
of the Stock Option or to pledge such shares as collateral for a loan and
promptly deliver to the Company the amount of sale or loan proceeds necessary to
pay such purchase price, and/or (d) any other form of consideration that is
acceptable to the Committee in its sole discretion.
Upon payment of all amounts due from the Participant, the Company shall
cause certificates for the Common Stock then being purchased to be delivered to
the Participant (or the person exercising the Participant's Stock Option in the
event of his death) at its principal business office promptly after the Exercise
Date. The obligation of the Company to deliver shares of Common Stock shall,
however, be subject to the condition that if at any time the Committee shall
determine in its discretion that the listing, registration, or qualification of
the Stock Option or the Common Stock upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
Stock Option or the issuance or purchase of shares of Common Stock thereunder,
the Stock Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
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<PAGE> 24
If the Participant fails to pay for any of the Common Stock specified in
such notice or fails to accept delivery thereof, the Participant's right to
purchase such Common Stock may be terminated by the Company.
ARTICLE 9
AMENDMENT OR DISCONTINUANCE
Subject to the limitations set forth in this ARTICLE 9, the Board may at
any time and from time to time, without the consent of the Participants, suspend
or discontinue the Plan in whole or in part. The Board may amend the Plan at any
time and for any reason without stockholder approval; provided, however, that
the Board may condition any amendment on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies and regulations.
Subject to the forgoing, any such amendment shall, to the extent deemed
necessary or advisable by the Committee, be applicable to any outstanding Stock
Options theretofore granted under the Plan, notwithstanding any contrary
provisions contained in any Stock Option Agreement. In the event of any such
amendments to the Plan, the holder of any Stock Option outstanding under the
Plan shall, upon request of the Committee and as a condition to the
exercisability thereof, execute a conforming amendment in the form prescribed by
the Committee to any Stock Option Agreement relating thereto within such
reasonable time as the Committee shall specify in such request. Notwithstanding
anything contained in this Plan to the contrary, unless required by law, no
action contemplated or permitted by this ARTICLE 9 shall adversely affect any
rights of Participants or obligations of the Company to Participants with
respect to any Stock Options theretofore granted under the Plan without the
consent of the affected Participant.
ARTICLE 10
STOCKHOLDER APPROVAL; TERM
Anything in the Plan to the contrary notwithstanding, the effectiveness of
the Plan and of the grant of all Stock Options hereunder is in all respects
subject to the approval of the Plan by the affirmative vote of the holders of a
majority of the shares of the Common Stock present in person or by proxy and
entitled to vote at a meeting of stockholders at which the Plan is presented for
approval. Stock Options may be granted under the Plan prior to the time of
stockholder approval. Any such Stock Options granted prior to such stockholder
approval shall be subject to such stockholder approval. Unless sooner terminated
by action of the Board, the Plan will terminate on January 31, 2010, but Stock
Options granted before such date will continue to be effective in accordance
with their terms and conditions.
ARTICLE 11
CAPITAL ADJUSTMENTS
If at any time while the Plan is in effect or unexercised Stock Options are
outstanding there shall be any increase or decrease in the number of issued and
outstanding shares of Common Stock resulting from (1) the declaration or payment
of a stock dividend, (2) any recapitalization resulting in a stock split-up,
combination, or exchange of shares of Common Stock, or (3) other increase or
decrease in such shares of Common Stock effected without receipt of
consideration by the Company, then and in such event:
(i) An appropriate adjustment shall be made in the maximum number of
shares of Common Stock then subject to being issued under the Plan, to the
end that the same proportion of the Company's issued and outstanding shares
of Common Stock shall continue to be subject to being so issued.
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<PAGE> 25
(ii) Appropriate adjustments shall be made in the number of shares of
Common Stock subject to purchase pursuant to Stock Options to be granted
under ARTICLE 4 of the Plan, to the end that Stock Options to purchase the
same proportion of the Company's issued and outstanding shares of Common
Stock shall be granted under ARTICLE 4.
(iii) Appropriate adjustments shall be made in the number of shares of
Common Stock and the Option Price thereof then subject to purchase pursuant
to each such Stock Option previously granted and unexercised, to the end
that the same proportion of the Company's issued and outstanding shares of
Common Stock in each such instance shall remain subject to purchase at the
same aggregate Option Price.
Except as otherwise expressly provided herein, the issuance by the Company
of shares of its capital stock of any class, or securities convertible into
shares of capital stock of any class, either in connection with direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of or Option Price of shares of Common Stock
then subject to outstanding Stock Options granted under the Plan.
Upon the occurrence of each event requiring an adjustment with respect to
any Stock Option, the Company shall mail to each Participant its computation of
such adjustment which shall be conclusive and shall be binding upon each such
Participant.
ARTICLE 12
RECAPITALIZATION, MERGER AND CONSOLIDATION
12.1 General. The existence of this Plan and Stock Options granted
hereunder shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in the Company's capital structure and its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or preference stocks ranking prior to or otherwise
affecting the Common Stock or the rights thereof (or any rights, options, or
warrants to purchase same), or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
12.2 Adjustment; Company Survives. Subject to any required action by the
stockholders, if the Company shall be the surviving or resulting corporation in
any merger, consolidation or share exchange, any Stock Option granted hereunder
shall pertain to and apply to the securities or rights (including cash,
property, or assets) to which a holder of the number of shares of Common Stock
subject to the Stock Option would have been entitled.
12.3 Adjustment; Company Does Not Survive. In the event of any
reorganization, merger, consolidation or share exchange pursuant to which the
Company is not the surviving or resulting corporation, there shall be
substituted for each share of Common Stock subject to the unexercised portions
of such outstanding Stock Options that number of shares of each class of stock
or other securities or that amount of cash, property or assets of the surviving,
resulting or consolidated company which were distributed or are to be
distributed to the stockholders of the Company in respect of each share of
Common Stock held by them, such outstanding Stock Options to be thereafter
exercisable for such stock, securities, cash or property in accordance with
their terms. Notwithstanding the foregoing, however, the Committee, in its sole
discretion, may cancel all such Stock Options as of the effective date of any
such reorganization, merger, consolidation, share exchange or of any dissolution
or liquidation of the Company by giving notice to each holder thereof or his
personal representative of its intention to do so and by permitting the
purchase, during the thirty (30) day period next preceding such effective date,
of all of the shares of Common Stock subject to such outstanding Stock Options.
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<PAGE> 26
12.4 Notice of Adjustment. Upon the occurrence of each event requiring an
adjustment of the Option Price or the number of shares of Common Stock
purchasable pursuant to Stock Options granted pursuant to the terms of this
Plan, the Company shall mail to each Participant its computation of such
adjustment, which shall be conclusive and shall be binding upon each such
Participant.
ARTICLE 13
LIQUIDATION OR DISSOLUTION
In case the Company shall, at any time while any Stock Option under this
Plan shall be in force and remain unexpired, (i) sell all or substantially all
of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each
Participant may thereafter receive upon exercise hereof (in lieu of each share
of Common Stock of the Company which such Participant would have been entitled
to receive) the same kind and amount of any securities or assets as may be
issuable, distributable, or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each share of Common Stock of the
Company. If the Company shall, at any time prior to the expiration of any Stock
Option, make any partial distribution of its assets, in the nature of a partial
liquidation, whether payable in cash or in kind (but excluding the distribution
of a cash dividend payable out of earned surplus and designated as such) then in
such event the Option Prices then in effect with respect to each Stock Option
shall be reduced, on the payment date of such distribution, in proportion to the
percentage reduction in the tangible book value of the shares of the Company's
Common Stock (determined in accordance with generally accepted accounting
principles) resulting by reason of such distribution.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Assignability. No Stock Option granted under this Plan shall be
assignable or otherwise transferable by the Participant (or his or her
authorized legal representative) during the Participant's lifetime and, after
the death of the Participant, other than by will or the laws of descent and
distribution or as provided below in this ARTICLE 14. All or a portion of a
Stock Option granted to a Participant may be assigned by such Participant to (i)
the spouse, children or grandchildren of the Participant ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members
are the only partners, (iv) an entity exempt from federal income tax pursuant to
Section 501(c)(3) of the Code or any successor provision, or (v) a split
interest trust or pooled income fund described in Section 2522(c)(2) of the Code
or any successor provision, provided that (x) there shall be no consideration
for any such transfer, and (y) subsequent transfers of transferred Stock Options
shall be prohibited except those by will or the laws of descent and
distribution. Following transfer, any such Stock Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Articles 8, 9, 11, 12, 13 and 14 hereof
the term "Participant" shall be deemed to include the transferee. The events of
Termination of Service shall continue to be applied with respect to the original
Participant, following which the Stock Options shall be exercisable by the
transferee only to the extent and for the periods specified in the Plan and the
Stock Option Agreement. The Committee and the Company shall have no obligation
to inform any transferee of a Stock Option of any expiration, termination, lapse
or acceleration of such Option. The Company shall have no obligation to register
with any federal or state securities commission or agency any Common Stock
issuable or issued under a Stock Option that has been transferred by a
Participant under this Section 14.1.
14.2 Investment Intent. The Company may require that there be presented to
and filed with it by any Participant(s) under the Plan, such evidence as it may
deem necessary to establish that the Stock Options granted or the shares of
Common Stock to be purchased or transferred are being acquired for investment
purposes and not with a view to their distribution.
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<PAGE> 27
14.3 No Employment Relationship. Each Participant is not an Employee of
the Company. Nothing herein shall be construed to create an employer-employee
relationship between the Company and the Participant.
14.4 Stockholders' Rights. The holder of a Stock Option shall have none of
the rights or privileges of a stockholder except with respect to shares which
have been actually issued.
14.5 Effect of the Plan. Neither the adoption of this Plan nor any action
of the Board or the Committee shall be deemed to give any person any right to be
granted a Stock Option to purchase Common Stock of the Company or any other
rights except as may be evidenced by a Stock Option Agreement, or any amendment
thereto, duly authorized by the Committee and executed on behalf of the Company,
and then only to the extent and upon the terms and conditions expressly set
forth therein.
14.6 Indemnification of Board and Committee. No current or previous member
of the Board or the Committee, nor any officer or employee of the Company acting
on behalf of the Board or the Committee, shall be personally liable for any
action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all such members of the Board and the Committee and
each and any officer or employee of the Company acting on their behalf shall, to
the extent permitted by law, be fully indemnified and protected by the Company
in respect of any such action, determination or interpretation. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such individuals may be entitled under the Company's
Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise.
14.7 Restrictions. This Plan, and the granting and exercise of Stock
Options hereunder, and the obligation of the Company to sell and deliver Common
Stock under such Stock Options, shall be subject to all applicable foreign and
United States laws, rules and regulations, and to such approvals on the part of
any governmental agencies or stock exchanges or transaction reporting systems as
may be required. No Common Stock or other form of payment shall be issued with
respect to any Stock Option unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws and the requirements of any regulatory
authority having jurisdiction over the securities of the Company. Unless the
Stock Options and Common Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising a Stock Option
under this Plan may be required by the Company to give a representation in
writing in form and substance satisfactory to the Company to the effect that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of such shares or any part
thereof. If any provision of this Plan is found not to be in compliance with
such rules, such provision shall be null and void to the extent required to
permit this Plan to comply with such rules. Certificates evidencing shares of
Common Stock delivered under this Plan may be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or quoted, and any applicable federal, foreign
and state securities law. The Committee may cause a legend or legends to be
placed upon any such certificates to make appropriate reference to such
restrictions.
14.8 Gender and Number. Where the context permits, words in the masculine
gender shall include the feminine and neuter genders, the plural form of a word
shall include the singular form, and the singular form of a word shall include
the plural form.
14.9 Tax Requirements. The Company shall have the right to deduct from all
amounts hereunder paid in cash or other form, any Federal, state, or local taxes
required by law to be withheld with respect to such payments. The Participant
receiving shares of Common Stock issued upon exercise of Stock Options granted
under the Plan shall be required to pay the Company the amount of any taxes
which the Company is required to withhold with respect to such shares of Common
Stock. Such payments shall be required to be made prior to the delivery of any
certificate representing such shares of Common Stock. Such payment may be made
in cash, by check or through the delivery of shares of Common Stock owned by the
Participant (which may be effected by the actual delivery of shares of Common
Stock by the
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<PAGE> 28
Participant or by the Company's withholding a number of shares to be issued upon
the exercise of a Stock Option, if applicable), which shares have an aggregate
Fair Market Value equal to the required minimum withholding payment, or any
combination thereof.
14.10 Use of Proceeds. Proceeds from the sale of shares of Common Stock
pursuant to Stock Options granted under this Plan shall constitute general funds
of the Company.
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<PAGE> 29
[MAP FOR ANNUAL MEETING]
<PAGE> 30
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 2000 Annual Meeting of
Stockholders of Commercial Metals Company to be held on Thursday, January 27,
2000, at 10:00 a.m., Central Standard Time in the Thompson Auditorium, Cityplace
Center, 2711 North Haskell Avenue, Dallas, Texas, and any adjournment,
continuation, or postponement of the meeting, according to the number of votes
which the undersigned is now, or may then be, entitled to cast, hereby revoking
any proxies previously executed by the undersigned for the meeting.
All powers may be exercised by a majority of said proxy holders or substitutes
voting or acting or, 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
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
<PAGE> 31
<TABLE>
<S> <C> <C> <C>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED Please mark
SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. your vote as [X]
indicated in
this example.
1. ELECTION OF DIRECTORS NOMINEES: ALBERT A. EISENSTAT, ANTHONY A. MASSARO
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any
listed except as AUTHORITY individual nominee, write that nominee's name in
marked to the to vote for all the space provided below.
contrary nominees listed
[ ] [ ] -------------------------------------------------- I PLAN TO ATTEND
THE MEETING. [ ]
2. APPROVAL OF THE 1999 NON-EMPLOYEE 3. RATIFICATION OF APPOINTMENT OF DELOITTE 4. IN THEIR DISCRETION, THE
DIRECTOR STOCK OPTION PLAN. & TOUCHE LLP AS INDEPENDENT AUDITORS FOR PROXIES ARE AUTHORIZED TO VOTE
THE FISCAL YEAR ENDING AUGUST 31, 2000. UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE
MEETING.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
Dated
------------------------------
------------------------------------
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.
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* FOLD AND DETACH HERE *
</TABLE>
