<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
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(Name of Registrant as Specified in its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(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 25, 2001
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 25, 2001,
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 four persons to serve as directors until the 2004 annual
meeting of stockholders and until their successors are elected;
(2) To approve the appointment of Deloitte & Touche LLP as independent
auditors for the fiscal year ending August 31, 2001; and
(3) To transact such other business as may properly come before the
meeting or any adjournments of the meeting.
Only stockholders of record on November 27, 2000, 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 11, 2000
<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 25, 2001
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 25, 2001, 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 11, 2000.
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 four Class III
directors, and to ratify the appointment of Deloitte & Touche LLP as independent
auditors, all as recommended by the board of directors. A stockholder executing
the proxy may revoke it at any time before it is voted by giving written notice
to the Secretary of 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 27, 2000, the record date for determining stockholders entitled
to vote at the annual meeting, there were outstanding 12,998,872 shares of
common stock, par value $5.00 per share, not including 3,133,711 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 III directors, and the affirmative vote of a majority of the
shares of common stock present or represented at the meeting is required to
ratify the appointment of Deloitte & Touche LLP. Abstentions and broker
non-votes are counted for purposes of determining the quorum and have the effect
of a negative vote on the proposal to ratify the appointment of Deloitte &
Touche LLP. Broker non-votes have no effect on determining plurality.
<PAGE> 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) 9.2%
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 III directors
expires at this annual meeting of stockholders. The three Class I directors will
serve until the 2002 annual meeting of stockholders. The terms of the two Class
II directors end at the 2003 annual meeting of stockholders. Each of the four
Class III nominees, Moses Feldman, Ralph E. Loewenberg, Stanley A. Rabin and
Marvin Selig, was previously elected by the stockholders, currently serves as a
director and stands for election to a three year term of office expiring at the
2004 annual meeting and until his successor is duly elected. Proxies cannot be
voted for the election of more than four persons to the board at the meeting.
The proxies named in the accompanying form of proxy have been designated by
management. 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 was
Chairman and Chief Executive Officer of Zurn Industries, Inc. prior to its
merger in 1998 with U.S. Industries. Mr. Womack retired as Chairman and Chief
Executive Officer of Zurn Industries, Inc. and Chief Executive of U.S.
Industries Bath and Plumbing Products Group in 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 DECEMBER 1, 2000 STOCK
----------------------- --- --------- ------------------ -----------
<S> <C> <C> <C> <C>
CLASS III -- TERM TO EXPIRE IN 2004
Moses Feldman 60 1976 225,949(1)(2) 1.7%
President, AeroMed, Inc.
Ralph E. Loewenberg 61 1971 750(2)(3)
President, R. E. Loewenberg Capital
Management Corporation
Stanley A. Rabin 62 1979 296,767(4) 2.3%
Chairman, President and Chief Executive Officer,
Commercial Metals Company
Marvin Selig 77 1964 149,941(4) 1.1%
CMC Steel Group - Chairman and Chief Executive Officer
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<S> <C> <C> <C> <C>
CLASS I -- TERM TO EXPIRE IN 2002
A. Leo Howell 79 1977 112,804(4) *
Vice President, Commercial Metals Company;
President, Howell Metal Company;
Dorothy G. Owen 65 1995 244,251(2) 1.9%
Former Chairman of the Board - Owen Steel Company,
Inc.; Investments
Robert R. Womack 63 1999 4,750(2) *
Retired - Former Chairman and Chief Executive Officer,
Zurn Industries, Inc. and Chief Executive of U.S.
Industries Bath and Plumbing Products Group
CLASS II -- TERM TO EXPIRE IN 2003
Albert A. Eisenstat 70 1982 4,083(2) *
Investments
Anthony A. Massaro 56 1999 2,250(2) *
Chairman and Chief Executive Officer
Lincoln Electric Holdings, Inc.
</TABLE>
---------------
* Less than one percent.
3
<PAGE> 6
(1) Excluding 631,107 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 281,200 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 281,200 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) Includes for each non-employee director (Mr. Eisenstat, Mr. Feldman, Mr.
Loewenberg, Mr. Massaro, Ms. Owen and Mr. Womack) 750 shares subject to
options exercisable within sixty (60) days which represent one-half of a
1,500 share option granted January 27, 2000, pursuant to the Non-Employee
Director Stock Option Plan.
(3) 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.
(4) Includes shares subject to options exercisable within sixty days by Mr.
Rabin of 123,200 shares, Mr. Selig of 81,507 shares and Mr. Howell of 53,925
shares.
As of December 1, 2000, all directors and officers as a group beneficially
own 1,551,696 shares or 12% of outstanding common stock including 509,662 shares
subject to options exercisable within sixty days but excluding shares owned by
the Feldman Foundation, Marital Trust and 281,200 of the 400,000 shares owned by
the Feldman Family Limited Partnership discussed in footnotes 1 and 3 above.
Marvin Selig is the brother of Clyde P. Selig, an executive officer. There
are no other family relationships among the directors, nominees and executive
officers.
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., Ogden
Corporation and Precision Partners, Inc.
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
Audit Committee. The board of directors has a standing audit committee
which performs the activities more fully described in the Audit Committee Report
on page 11. The members of the audit committee during fiscal 2000 were directors
Eisenstat (Chairman), Feldman, Loewenberg, Owen, Womack and, prior to his
retirement at the January, 2000, meeting of stockholders, Charles B. Peterson.
During the fiscal year ended August 31, 2000, the audit committee met four
times.
Compensation Committee. The board of directors also has a standing
compensation committee that provides recommendations to the board regarding
compensation for executive officers including issuance of stock options. During
2000 the compensation committee consisted of directors Loewenberg (Chairman),
Eisenstat, Feldman, Massaro and, prior to his retirement at the January, 2000,
meeting of stockholders, Charles B. Peterson. The compensation committee met
once during the fiscal year ended August 31, 2000, to establish salaries and
bonuses for executive officers, to review compensation policies and approve the
issuance of stock options.
Executive Committee. Effective January 27, 2000 the board determined that
the executive committee should be comprised of non-employee directors. Prior to
that date directors Rabin, Howell and Selig constituted the executive committee.
Since January 27, 2000, the executive committee has consisted of directors
Massaro (Chairman), Eisenstat, Feldman, Loewenberg, Owen and Womack. 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
met once during the fiscal year ended August 31, 2000 to consider board
structure, candidates for directors and company strategy.
4
<PAGE> 7
The board of directors does not have a nominating committee because the
executive committee and board as a whole function in this capacity. During the
fiscal year ended August 31, 2000, the entire board of directors met nine times,
of which six were regularly scheduled meetings and three 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.
Compensation of Non-employee Directors. No employees of Commercial Metals
receive additional compensation for serving as a director. Directors Eisenstat,
Feldman, Loewenberg, Massaro, Owen 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 was increased to $27,000 per year. Chairmen of the audit,
compensation and executive committees receive an additional payment of $1,500
per year. The directors are also reimbursed for expenses of attending meetings.
Under the terms of the Non-Employee Director Stock Option Plan on January
27, 2000, each non-employee director received an option to acquire 1,500 shares
of common stock at $31.94, the fair market value on that date. On January 25,
2001, and on the date of each annual meeting thereafter, non-employee directors
will likewise receive an option to acquire 1,500 shares. In addition, each
non-employee director may annually make an irrevocable election prior to January
1, to accept an additional option grant in lieu of all or part of the annual
cash retainer. The number of shares subject to option as a result of this
election will be determined by dividing the amount of the annual retainer by the
Black-Scholes value for one share as of the grant date. The grant date shall be
the date of the annual meeting of stockholders following the calendar year
covered by the election. Directors Eisenstat, Loewenberg, Massaro, Owen and
Womack have elected to convert their retainer fee for the calendar year 2000 to
options for a number of shares to be determined and granted January 25, 2001.
The exercise price for all options granted non-employee directors shall be
the fair market value on the day of grant. One-half of the number of the shares
covered by each 1,500 share option vests on the first anniversary of the date of
grant with the remaining one-half vesting on the second anniversary or
immediately upon a change in control of Commercial Metals. All options received
as a result of a non-employee director's election are fully vested on the date
of grant. All non-employee director options terminate on the earliest of (i) the
seventh anniversary of the date of grant; (ii) one year after termination of
service by reason of death or disability; (iii) two years after termination of
service by reason of retirement after age sixty-two or; (iv) thirty days
following termination of service for any other reason. These options are
"non-qualified" options under sec.422A of the Internal Revenue Code.
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, 2000.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid
during each of the last three fiscal years to the Chief Executive Officer and
the four remaining most highly compensated executive officers of Commercial
Metals Company, based on salary and bonus earned during fiscal year 2000.
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......................... 2000 430,000 650,000 14,000 95,679(2)
Chairman, President and 1999 420,000 490,000 0 78,639
Chief Executive Officer 1998 405,000 590,000 11,200 85,748
Marvin Selig............................. 2000 380,000 500,000 11,000 79,886(2)
CMC Steel Group - 1999 370,000 433,589 0 67,926
Chairman and Chief Executive Officer 1998 355,000 600,000 8,800 89,682
A. Leo Howell............................ 2000 330,000 610,000 8,500 82,807(2)
Vice President; President - 1999 320,000 485,000 0 79,766
Howell Metal Company 1998 305,000 380,000 6,800 62,385
Clyde P. Selig(3)........................ 2000 312,100 347,000 7,900 59,158(2)
Vice President; CMC Steel Group - 1999 305,934 301,066 0 70,469
President and Chief Operating Officer 1998 297,024 408,006 8,500 102,542
Hugh M. Ghormley(4)...................... 2000 308,100 314,000 8,100 56,081(2)
Vice President; CMC Steel Group - 1999 299,040 272,660 0 57,409
President - Fabrication Plants 1998 290,331 375,766 8,100 61,091
</TABLE>
---------------
(1) These awards were granted under the 1996 Long-Term Incentive Plan. The
exercise price is the fair 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 Commercial Metals as
defined in the plan.
(2) The compensation reported represents 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
Benefit Restoration Plan, a non-qualified plan for certain executives. All
of the amounts reported are fully vested in the recipient. The compensation
for the named executive officers for fiscal year 2000 includes
contributions to the Benefit Restoration Plan by Commercial Metals into a
trust for the benefit of the recipients in the following amounts: Mr.
Rabin - $81,346; Mr. Marvin Selig - $76,086; Mr. Howell - $68,474; Mr.
Clyde Selig - $47,238; and Mr. Ghormley - $41,748.
(3) Mr. Clyde P. Selig is the beneficial owner of 121,221 shares of common stock
including 73,913 subject to options exercisable within sixty days, or less
than 1% of the outstanding common stock.
(4) Mr. Ghormley is the beneficial owner of 167,672 shares of common stock
including 48,480 subject to options exercisable within sixty days, or 1.3%
of the outstanding common stock.
6
<PAGE> 9
The following table provides information concerning the exercise of options
during fiscal 2000 and unexercised options held as of August 31, 2000, for the
executive officers included in the summary compensation table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
SHARES AT FY-END(#)(1) FY-END($)(1)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Rabin............ 0 0 116,200 29,000 $323,263 $6,113
Marvin Selig................ 0 0 76,007 11,000 249,453 0
A. Leo Howell............... 0 0 49,675 8,500 103,964 0
Clyde P. Selig.............. 0 0 69,963 7,900 220,669 0
Hugh M. Ghormley............ 0 0 65,323 8,100 206,036 0
</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, 2000, of $27.72, and the
exercise price of such options.
RETIREMENT 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. At August 31, 2000 the benefit had increased $54,404 for accrued interest.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the compensation committee concerning
compensation policies applicable to Commercial Metals' eleven executive officers
and the basis for Mr. Rabin's compensation as Chief Executive Officer, for
fiscal year ended August 31, 2000. The compensation committee is comprised of
non-employee directors, Ralph E. Loewenberg (Chairman), Albert A. Eisenstat,
Moses Feldman, and Anthony Massaro.
OVERALL OBJECTIVES AND STRATEGY
In determining the 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. During 2000 the committee engaged a compensation consultant to
review compensation policies but the report and recommendations were not
complete at fiscal year end and the committee did not rely on that review for
its determinations with regard to fiscal 2000 compensation. The committee last
engaged a compensation consultant four years ago to review and report on levels
and practices at comparable companies. The companies reviewed at that time
included the S & P Steel Industry Group as well as approximately 10 additional
companies in the steel minimill or metals industry.
7
<PAGE> 10
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 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' businesses, which is characterized by wide
periodic swings in steel and metal prices. The compensation committee reviewed
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 2000 was a year of record earnings per share and sales.
Net earnings in aggregate decreased by less an $1 million despite an increase in
the Company's LIFO reserve for inventory valuation of over $5 million which
reduced taxable net earnings. The committee determined that most division and
individual contributions were satisfactory to excellent with improvement from
the previous year in the units producing unsatisfactory results. The committee
was also of the opinion that results were considered satisfactory to superior in
view of the difficulties reported by several competitors and challenging metal
market conditions overall. As a result the aggregate bonus paid the continuing
eleven executive officers for 2000 performance increased approximately 25%
compared to 1999 levels which had represented a decrease of approximately 7%
from the prior year. The committee believes these bonus levels have been
consistent with its evaluation of overall results compared to the prior year
including a slight earnings per share increase of 1%, net sales increase of 18%,
an increase in operating cash flow of 13% and an increase in shareholder's
equity per share of 10%.
LONG-TERM COMPENSATION
Equity-Based. Stock option grants were issued to all eleven executive
officers during fiscal 2000 together with 529 other employees. Given the
relatively large number of employees who have received stock option grants the
number of shares subject to grants to executive officers has been substantially
below levels of comparable companies described above. During fiscal 2000
executive officers in aggregate received option grants for 73,500 of the 377,900
shares subject to options grants during the year. 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 grown 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 defined contribution profit sharing and 401(k) plans. As a
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 of directors 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
8
<PAGE> 11
participant would have received under the profit sharing and 401(k) plan had the
executive's benefit not been reduced. Payments made 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
previously authorized the additional non-qualified retirement benefit for Marvin
Selig described under Retirement Benefits on page 7.
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 2000 was set at
$430,000, an increase of $10,000 from the 1999 level. Mr. Rabin's cash bonus for
fiscal 2000 increased to $650,000, an increase of approximately 33% over 1999.
The increased cash bonus reflected the committee's determination that as Chief
Executive Officer Mr. Rabin had been instrumental in achievement of record sales
and earnings per share consistent with the Company's strategy and objectives
despite difficult market conditions in most metals related businesses. Mr. Rabin
elected to defer receipt of a portion of his salary and bonus payments pursuant
to Commercial Metals' 401(k) plan and Benefit Restoration Plan. This resulted in
reducing Mr. Rabin's currently taxable compensation from those sources and
maintained the ability of Commercial Metals to deduct those payments under
Section 162(m) of the Internal Revenue Code. Based on preliminary information
received from the compensation consultants subsequent to fiscal 2000 year end,
the committee determined that it was appropriate to increase Mr. Rabin's salary
by an amount in excess of increases generally considered for other executive
officers for fiscal year 2001. As a result, Mr. Rabin's salary for fiscal year
2001 was increased by $45,000 to $475,000, in order to reach a more competitive
range for chief executive officers in comparable companies. Mr. Rabin received a
stock option grant for 14,000 shares during 2000 compared with his last option
grant of 11,200 in fiscal year 1998. The increase reflects the committee's
determination that equity based compensation levels for executive officers and
particularly the chief executive officer are substantially less than those at
comparable companies.
CONCLUSION
The compensation committee believes that current total compensation
arrangements are reasonable and competitive but is evaluating alternatives to
further align equity based compensation with stockholder value. The compensation
committee believes fiscal year 2000 compensation for executive officers is
consistent with current compensation philosophy and reflects corporate
performance. The compensation committee will continue 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 payments under Section 162(m) of the Internal Revenue Code. Because
of employee elected salary and bonus deferrals under various plans, this
limitation has not had a significant impact to date on the deductibility
compensation paid by Commercial Metals. 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 recommendations from the on-going compensation review in
modifying existing or establishing new compensation policies.
COMPENSATION COMMITTEE
Ralph E. Loewenberg (Chairman)
Albert A. Eisenstat
Moses Feldman
Anthony A. Massaro
9
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Messrs. Loewenberg, Eisenstat, Feldman and Massaro 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
631,107 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.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return of Commercial
Metals' common stock during the five year period beginning August 31, 1995, and
ending August 31, 2000, 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, 1995, and reinvestment of dividends.
[CHART]
<TABLE>
<CAPTION>
COMMERCIAL METALS COMPANY S & P 500 S & P STEEL GROUP
------------------------- --------- -----------------
<S> <C> <C> <C>
100 100.00 100.00
108.49 118.73 86.23
112.7 167.00 110.71
90.78 180.51 68.24
116.51 252.40 85.98
108.16 293.59 60.30
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial Metals
Company $100.00 $108.49 $112.70 $90.78 $116.51 $108.16
S&P 500 $100.00 $118.73 $167.00 $180.51 $252.40 $293.59
S&P Steel Group $100.00 $86.23 $110.71 $68.24 $85.98 $ 60.30
</TABLE>
10
<PAGE> 13
AUDIT COMMITTEE REPORT
This report is submitted by the audit committee in compliance with new
recently effective proxy and information disclosure requirements. For many years
the board of directors has included a standing audit committee. Members of the
audit committee are selected annually by the board of directors. Four non-
employee directors, Albert A. Eisenstat (Chairman), Moses Feldman, Dorothy G.
Owen and Robert R. Womack are presently members of the committee. Each member of
the audit committee is qualified to serve and is independent as "independence"
is defined by the applicable listing standards of the New York Stock Exchange.
The duties and responsibilities of the audit committee are set forth in the
Audit Committee Charter which the board of directors adopted on March 17, 2000.
A copy of the Charter is included as Appendix "A" to this proxy statement.
During the fiscal year ending August 31, 2000, the audit committee met four
times. The audit committee among other activities, makes recommendations to the
board of directors as to whether the audited financial statements should be
included in Commercial Metals' Annual Report on Form 10-K, the selection of
independent auditors, reviews quarterly financial statements with management and
independent auditors and reviews with internal audit staff and independent
auditors Commercial Metals' financial controls and procedures.
The audit committee has reviewed and discussed the audited financial
statements for the fiscal year ended August 31, 2000, with management and with
the independent auditors. Those discussions included the matters required to be
disclosed by SAS 61 (Codification of Statements on Auditing Standards). The
audit committee has received the written disclosures and letter from the
independent accountants as required by Independence Standards Board Standard No.
1 concerning independence discussions with audit committees. The audit committee
has discussed with the independent accountants their independence under such
standards. Based on discussion and review with management and the independent
auditors, the audit committee recommended to the board of directors that the
audited financial statements for the fiscal year ended August 31, 2000, be
included in Commercial Metals' Annual Report on Form 10-K as filed November 21,
2000 with the Securities and Exchange Commission.
AUDIT COMMITTEE
Albert A. Eisenstat (Chairman)
Moses Feldman
Dorothy G. Owen
Robert R. Womack
PROPOSAL II
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, 2001, 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.
11
<PAGE> 14
GENERAL
The annual report to stockholders covering fiscal year 2000 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 2002 annual meeting must be received by
Commercial Metals at its principal executive offices no later than August 13,
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 11, 2000
12
<PAGE> 15
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
- Monitor the independence and performance of the Company's independent
auditors and internal auditing department
- Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
Management is responsible for preparing the Company's financial statements.
The Company's outside auditors are responsible for auditing the financial
statements. The activities of the Audit Committee are in no way designed to
supersede or alter these traditional responsibilities.
The Company's outside auditors, management and internal auditors have more
available time and information about the corporation than does the Audit
Committee. Accordingly, the Audit Committee's role does not provide any special
assurances with regard to the Company's financial statements, nor does it
involve a professional evaluation of the quality of the audits performed by the
outside auditors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the New York Stock
Exchange. The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall have no relationship to the Company
that may interfere with the exercise of their independence from management and
the Company. All members shall satisfy the independence requirements for Audit
Committee members of the New York Stock Exchange. All members of the Committee
shall have a basic understanding of finance and accounting and be able to read
and understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board. If an Audit
Committee Chair is not designated or present, the members of the Committee may
designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or approve
an agenda in advance of each meeting. The Committee should meet privately in
executive session at least annually with management, the director of the
internal auditing department, the independent auditors, and as a committee to
discuss any matters that the Committee or each of such groups believe should be
discussed. In addition, the Committee, or at least its Chair, should communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings based upon the auditors limited
review procedures.
A-1
<PAGE> 16
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices, and judgments.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control and report such exposures. Review
significant findings prepared by the independent auditors and the internal
auditing department together with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings and/or
the Company's quarterly financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in accordance with
SAS 61. The Chair of the Committee may represent the entire Audit Committee for
purposes of this review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the Board
of Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
8. Review the independent auditors audit plan -- discuss scope, staffing,
locations, reliance upon management, and internal audit and general audit
approach.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required to be
communicated to Audit Committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Internal Audit Department and Legal Compliance
11. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as needed.
12. Review the appointment, performance, and replacement of the senior
internal audit executive.
13. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
14. Periodically and at least on an annual basis, review with the Company's
counsel, any legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with applicable
laws and regulations, and inquiries received from regulators or governmental
agencies.
A-2
<PAGE> 17
Other Audit Committee Responsibilities
15. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's annual
proxy statement.
16. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board deems
necessary or appropriate.
17. Maintain minutes of meeting and periodically report to the Board of
Directors on significant results of the foregoing activities.
18. Review and update as needed the Company's Policy on Business Conduct
and ensure that management has established a system to enforce this Policy.
A-3
<PAGE> 18
[Map for Annual Meeting]
<PAGE> 19
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 2001 Annual Meeting of
Stockholders of Commercial Metals Company to be held on Thursday, January 25,
2001 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
<PAGE> 20
<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 AND 2. your vote as [X]
indicated in
this example
1. ELECTION OF DIRECTORS NOMINEES: MOSES FELDMAN, RALPH E. LOEWENBERG, STANLEY A. RABIN, MARVIN SELIG
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any individual nominee, write that
listed except as AUTHORITY nominee's name in the space provided below.
marked to the to vote for all
contrary nominees listed
[ ] [ ] ----------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF DELOITTE 3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO I PLAN TO ATTEND THE
& TOUCHE LLP AS INDEPENDENT AUDITORS FOR VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME MEETING. [ ]
THE FISCAL YEAR ENDING AUGUST 31, 2001. BEFORE THE MEETING.
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.
</TABLE>
