<PAGE>
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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 Section 240.14a-11(c) or Section 240.14a-12
CalMat Co.
- --------------------------------------------------------------------------------
(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)(4) 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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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF CALMAT CO.]
April 9, 1997
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
on Tuesday, May 27, at 10:00 A.M., in the Pacific Ballroom of the Omni Los
Angeles Hotel and Centre, 930 Wilshire Boulevard, Los Angeles, California.
Enclosed with this letter is the formal Notice of the Meeting and the related
Proxy Statement and Proxy Card.
We are very pleased that Mr. Denis R. Brown, President and Chief
Executive Officer of Pinkerton's, Inc., and Ms. Georgia R. Nelson, President,
Edison Mission Energy Americas, who were elected to the Board in January 1997,
are nominees for the first time. Mr. William Jenkins, former Chairman of the
Board of the Company, who has served as a Director since 1973, and Mr. Grover R.
Heyler, who has served as a Director since 1978, will retire from the Board at
the expiration of their terms and are not nominees for election this year. We
acknowledge the many contributions made by Mr. Jenkins and Mr. Heyler during
their tenure on the Board and thank them for their dedication to the Company.
Please sign, date and return the enclosed Proxy Card in the envelope
provided as soon as possible so that your shares can be voted at the Meeting in
accordance with your instructions.
Very truly yours,
/s/ A. F. Gerstell
YOUR VOTE IS IMPORTANT
Please Sign, Date, and Return Your Proxy Card
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Notice of Annual Meeting of Stockholders........................................... 1
* Election of Directors for A Term of One Year..................................... 2
1997 Nominees for Director................................................... 2
Stock Holdings of Directors.................................................. 4
General Information About the Board................................................ 6
Committees of the Board and Director Compensation............................ 6
Stock Ownership of Certain Beneficial Owners and Management.................. 8
Section 16(a) Beneficial Ownership Reporting Compliance...................... 9
Executive Compensation............................................................. 9
Report of the Compensation Committee......................................... 9
Compensation Committee Interlocks and Insider Participation.................. 12
Employment Agreements........................................................ 12
Summary Compensation......................................................... 13
Option Grants for 1996....................................................... 14
Option Exercises and Year-end Value.......................................... 14
Pension Plans................................................................ 15
Performance Graph............................................................ 16
* Ratification of Appointment of Auditors.......................................... 17
* 1997 Stockholder Proposals....................................................... 17
Stockholder Proposals for 1998 Proxy............................................... 21
* Other Business................................................................... 21
Proxies and Voting at the Meeting.................................................. 22
</TABLE>
* Indicates items to be voted on at the Meeting.
<PAGE>
[LOGO OF CALMAT]
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: Tuesday, May 27, 1997
Time: 10:00 A.M.
Place: Pacific Ballroom
Omni Los Angeles Hotel and Centre
930 Wilshire Boulevard, Los Angeles, California
At the Annual Meeting, the following items will be on the agenda for action by
the stockholders:
* To elect thirteen (13) directors to serve during the ensuing year and
until their successors are elected or appointed;
* To ratify the selection of Coopers & Lybrand L.L.P. as independent
auditors;
* To act upon two stockholder proposals; and
* To transact such other business as may properly come before the Meeting.
These items are more fully described in the following pages. Stockholders of
record at the close of business (5:00 P.M., Pacific Daylight Time) on April 8,
1997, are entitled to one vote for each share held. A list of these stockholders
will be available for inspection during the ten days preceding the Meeting, at
the general offices of the Company at 3200 San Fernando Road, Los Angeles,
California 90065, during normal business hours. The list will also be available
for inspection at the Meeting.
By order of the Board of Directors,
PAUL STANFORD
Secretary
Los Angeles, California
April 9, 1997
This Proxy Statement and its accompanying form of Proxy Card are being mailed
beginning on or about April 9, 1997 to stockholders entitled to vote. The
CalMat Co. 1996 Annual Report, which includes Financial Statements, is being
mailed with this Proxy Statement. A copy of the Company's Annual Report on Form
10-K will be provided without charge to stockholders upon request to the Company
at 3200 San Fernando Road, Los Angeles, CA 90065, Attention: Paul Stanford,
Secretary, (213) 258-2777.
1
<PAGE>
* Election of Directors for A Term of One Year
The Board of Directors recommends a vote FOR the following directors of the
Company for a term of one year.
Each of the nominees for director named below is a member of the present
Board of Directors. Should one or more of these nominees become unavailable to
accept nomination or election as a director, the individuals named as Proxies on
the enclosed Proxy Card will vote the shares that they represent for the
election of such other person or persons as the Board may recommend, unless the
Board reduces the number of directors.
1997 Nominees for Director
JOHN C. ARGUE. Of Counsel to the Los Angeles law firm of Argue Pearson
Harbison & Myers where he has worked since 1972. He has practiced law since
1957. Mr. Argue is a Director of Avery Dennison, Inc., Coast Savings
Financial, Inc., and its subsidiary, Coast Federal Bank. He is a trustee of
TCW Funds, Inc., the TCW/DW Family of Funds and Term Trusts 2000, 2002,
2003, and also serves as Chairman of the Rose Hills Foundation and of the
Advisory Directors of LAACO, Ltd.
ARTHUR BROWN. Chairman of the Board, Chief Executive Officer and President
of Hecla Mining Company ("Hecla"), producers of gold, silver, lead, zinc
and industrial minerals. Prior to being named President in 1986, Mr. Brown
served as Hecla's Chief Operating Officer, and Executive Vice President in
addition to various other positions as an officer of Hecla. Mr. Brown is
also a director of Southern Africa Minerals Corporation, American Colloid
Company (an American industrial minerals company), and Idaho Independent
Bank.
DENIS R. BROWN. President and Chief Executive Officer, since 1994, of
Pinkerton's, Inc., a global provider of total security services. From 1990
to 1993, Mr. Brown was Chairman and Chief Executive Officer of Concurrent
Computer Corporation. Mr. Brown is a director of Pinkerton's, Inc. and Farr
Company.
HARRY M. CONGER. Chairman of the Board, since 1986, of Homestake Mining
Company, an international company engaged in gold mining and related
activities. Mr. Conger was also Chief Executive Officer of Homestake from
1986 to 1996, and its President from 1982 to 1986. He is also a Director of
ASA, Ltd., Baker Hughes, Inc., Pacific Gas and Electric Company, and the
National Mining Association. He is also Chairman of the World Gold Council,
and a Trustee of the California Institute of Technology.
RAYBURN S. DEZEMBER. Serves on the boards of Wells Fargo & Co. and Wells
Fargo Bank and Tejon Ranch Co. Mr. Dezember is also a Director of The
Bakersfield Californian and Bolthouse Farms. He served as Chairman of the
Board and Chief Executive Officer of Central Pacific Corp. from 1981 to
1990. He is also a Trustee of Whittier College.
2
<PAGE>
A. FREDERICK GERSTELL. Chairman of the Board and Chief Executive Officer
of the Company. From 1984 to 1988, Mr. Gerstell was President and Chief
Operating Officer of the Company. In 1988, he was elected Chief Executive
Officer and, in 1991, he was elected Chairman of the Board. From 1981 to
1984, he was President and Chief Operating Officer and a Director of
California Portland Cement Company ("CPC"), a predecessor constituent
company, and, prior to 1981, a Vice President of CPC. Mr. Gerstell is also
a Director of Ameron, Inc.
RICHARD A. GRANT, JR. Private investor and Co-Trustee of M. B. Scott
Trusts. Mr. Grant is also a Co-Trustee of the P.D. Byrne Trust, which owns
296,273 shares of the Company's Common Stock. Mr. Grant is also Secretary,
Treasurer and a Trustee of the Dan Murphy Foundation, a nonprofit
foundation which owns 3,923,247 shares of the Company's Common Stock.
WILLIAM T. HUSTON. Chairman of the Board of Watson Land Company since
January 1, 1994, formerly known as Watson Industrial Properties, a real
estate development company. From 1986 through 1993, Mr. Huston was its
Chairman and Chief Executive Officer, and from 1963 to 1985, he was its
President and Chief Executive Officer.
EDWARD A. LANDRY. Senior partner of the Los Angeles law firm of Musick,
Peeler & Garrett, where he has practiced law since 1965. The Company
retained the services of Musick, Peeler & Garrett during 1996 and has
retained such services in 1997. Mr. Landry is a Trustee of the Dan Murphy
Foundation, a non-profit foundation, which owns 3,923,247 shares of the
Company's Common Stock. He also serves as a trustee for other non-profit
foundations.
THOMAS L. LEE. Has served as Chief Executive Officer, as a Director, and
since July 1989 as Chairman of The Newhall Land and Farming Company, a
publicly traded California limited partnership. Mr. Lee served as its
President and Chief Executive Officer from 1987 to 1989, and as President
and Chief Operating Officer from 1985 to 1987. He also is a Director of
Wells Fargo & Co. and of Wells Fargo Bank, and a Trustee of California
Institute of the Arts.
THOMAS M. LINDEN. Private investor. Mr. Linden was Executive Vice
President and General Manager - Properties Division of the Company from May
1985 through May 1989. Before that time, he was a partner with Smith,
Linden and Basso, certified public accountants.
GEORGIA R. NELSON. President, Edison Mission Energy Americas, and Senior
Vice President, Worldwide Operations, Edison Mission Energy, one of the
world's largest independent power producers. Prior to 1996, Ms. Nelson was
Senior Vice President of Southern California Edison. Prior to 1995, Ms.
Nelson was Vice President and Special Assistant to the Chairman and Chief
Executive Officer of EIX (Edison International).
STUART T. PEELER. Petroleum industry consultant and independent oil and
gas producer since the beginning of 1989. Mr. Peeler was Chairman of the
Board and Chief Executive Officer of Statex Petroleum, Inc., from 1982
through 1989 and was its President from 1983 to 1986. Mr. Peeler is a
Director of Chieftain International, Inc., Chieftain International Funding
Corp., and Homestake Mining Company. He is also a Trustee of the J. Paul
Getty Trust.
3
<PAGE>
Stock Holdings of Directors
The following table shows shares of the Company's Common Stock beneficially
owned by each current director and nominee.
<TABLE>
<CAPTION>
Shares of Company
First Became Stock Beneficially
Position with a Owned as of Percent
Name of Nominee Age Company Director February 18, 1997(a) of Class
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John C. Argue 65 Director 1990 6,000(b) *
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Arthur Brown 56 Director 1994 3,500(c) *
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Denis R. Brown 57 Director 1997 -0- *
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Harry M. Conger 66 Director 1981(d) 9,500(b) *
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Rayburn S. Dezember 66 Director 1989 8,100(b)(e) *
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A. Frederick Gerstell 59 Chairman of the Board, 1981(d) 352,182(f) 1.49
CEO, and Director
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Richard A. Grant, Jr. 57 Director 1972(d) 37,000(g) *
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Grover R. Heyler** 70 Director 1978 6,500(b) *
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William T. Huston 69 Director 1978 6,580(b) *
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William Jenkins** 77 Director 1973 54,334(b) *
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Edward A. Landry 57 Director 1994 4,750(h) *
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Thomas L. Lee 54 Director 1990 7,500(b) *
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Thomas M. Linden 53 Director 1978 583,470(i) 2.51
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Georgia R. Nelson 47 Director 1997 -0- *
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Stuart T. Peeler 67 Director 1966(d) 20,500(b) *
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* Less than 1%
** Mr. Heyler and Mr. Jenkins will retire from the Board at the expiration of their terms, concurrently with the election
of directors, at which time the full Board size will be reduced from 15 to 13 directors.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Unless otherwise indicated, the beneficial owner (within the meaning of
the rules of the Securities and Exchange Commission) of the shares shown
has sole voting and investment power, subject to applicable community
property laws.
(b) Of the shares shown, 4,500 are shares that the director has the right to
acquire under the director's stock option agreements.
(c) Of the shares shown, 2,250 are shares that the director has the right to
acquire under the director's stock option agreements.
(d) Includes service as a director of CPC. Each of these nominees for
director became a director upon formation of the Company in 1984 by the
combination of CPC and Conrock Co.
4
<PAGE>
(e) Mr. Dezember has shared voting and investment power with respect to 3,600
of the shares shown. The shares are held in a family trust, of which Mr.
Dezember and his wife are Co-Trustees.
(f) Of the shares shown, 317,500 are shares that Mr. Gerstell has the right
to acquire under stock option agreements.
(g) Does not include, and Mr. Grant disclaims any beneficial interest in, the
3,923,247 shares owned by the Dan Murphy Foundation, of which he is
Secretary, Treasurer and a Trustee, and the 296,273 shares owned by the
P.D. Byrne Trust, of which he is a Co-Trustee. Mr. Grant also disclaims
any beneficial interest in the 4,000 shares owned by one of his children,
also not shown, who still shares his household. Included in the shares
shown are 4,500 shares which Mr. Grant has the right to acquire under the
director's stock option agreements.
(h) Does not include, and Mr. Landry disclaims any beneficial interest in,
the 3,923,247 shares owned by the Dan Murphy Foundation, of which he is a
Trustee, and the 1,868 shares held in the Philip Marlow Trust, of which
he is a Trustee. Of the shares shown, 2,250 are shares which Mr. Landry
has the right to acquire under the director's stock option agreements.
(i) Mr. Linden has shared voting and investment power with respect to 218,204
shares of the shares shown. Mr. Linden disclaims beneficial ownership
with respect to the 167,798 shares held by the R.F. and D.A. Ingold
Trust, of which he is a Co-Trustee, which are not shown. Of the shares
shown, 4,500 are shares which Mr. Linden has the right to acquire under
the director's stock option agreements.
5
<PAGE>
General Information About the Board
Committees of the Board and Director Compensation
During 1996, the Board of Directors met eight times. Directors who are not
Company employees were paid a quarterly retainer fee of $4,000 for service on
the Board -- $4,500 if the director also served as a Committee Chairman. In
addition, non-employee directors were paid a fee of $1,200 for each Board
meeting and $800 for each Committee meeting attended.
The Board of Directors has an Audit Committee, a Management Development and
Compensation Committee, a Nominating Committee, a Finance Committee, an
Executive Committee, and a Property Committee. During 1996, the Audit, Finance,
Nominating and Property Committees each met three times. The Management
Development and Compensation Committee met seven times. The Executive Committee
met once. All directors attended at least 75% of all meetings of the Board and
any committees on which they served.
Audit Committee
The Audit Committee recommends the selection of independent auditors and
approves their fee arrangement. The Audit Committee reviews the plan and
scope of the audit and the resulting audit report and management letter.
The Audit Committee also monitors the Company's ethics programs and other
compliance policies, and discusses with management and the outside auditors
the effect of recently issued accounting standards on the Company's
financial statements.
1996 Members
John C. Argue, Chairman William Jenkins
Grover R. Heyler Edward A. Landry
William T. Huston Stuart T. Peeler
Management Development and Compensation Committee
The Management Development and Compensation Committee ("Compensation
Committee") approves and recommends to the Board of Directors director
compensation, remuneration for senior management of the Company, and the
adoption of any compensation plans. The Compensation Committee also makes
recommendations to the Board concerning succession planning and management
development policies for the Company. The Compensation Committee's Stock
Option Sub-Committee approves the granting of stock options or other
benefits under stock option plans.
1996 Members
Stuart T. Peeler, Chairman* Harry M. Conger*
John C. Argue* Thomas L. Lee*
Arthur Brown Thomas M. Linden
*Also members of the Stock Option Sub-Committee.
6
<PAGE>
Nominating Committee
The Nominating Committee recommends to the Board of Directors nominees to
fill Board vacancies, and a slate of nominees for election at the Annual
Meeting of Stockholders. The Nominating Committee has no formal procedures
for consideration of recommendations for nominees which may be submitted by
stockholders.
1996 Members
Thomas L. Lee, Chairman Grover R. Heyler
Harry M. Conger William T. Huston
Richard A. Grant, Jr.
Finance Committee
The Finance Committee monitors the performance of investments in the
Company's pension plans and selects and recommends managers, financial
advisors and trustees for pension fund investments. The Finance Committee
also reviews and makes recommendations regarding the structure of Company
indebtedness, specific major borrowings, the Company's debt-to-equity ratio
and the relationship of long-term debt to short-term debt.
1996 Members
Richard A. Grant, Jr., Chairman Grover R. Heyler
Arthur Brown William Jenkins
Rayburn S. Dezember Thomas M. Linden
Executive Committee
The Executive Committee reviews and makes recommendations regarding
corporate objectives and policies, the Company's long-range plan, major
Company acquisitions or divestitures and the Company's dividend policy.
When necessary, the Executive Committee may act in lieu of the Board of
Directors, exercising all the powers of the Board of Directors in the
management of the business and affairs of the Company, except where limited
by Section 141 of the Delaware General Corporation Law.
1996 Members
A. Frederick Gerstell, Chairman Thomas L. Lee
John C. Argue Thomas M. Linden
Harry M. Conger Stuart T. Peeler
Richard A. Grant, Jr.
Property Committee
The Property Committee oversees the development and disposition of the
Company's real estate.
1996 Members
Rayburn S. Dezember, Chairman Edward A. Landry
John C. Argue Thomas L. Lee
William T. Huston Thomas M. Linden
7
<PAGE>
Stock Ownership of Certain Beneficial Owners and Management
The following shows information (i) as of December 31, 1996 with respect to
the only persons known to the Company to be the beneficial owners of more than
5% of the Company's outstanding stock, based on the Company's records and a
review of filings made pursuant to Sections 13 and 16 of the Securities Exchange
Act of 1934 (the "Exchange Act"); and (ii) as of March 21, 1997 for the officers
named in this Proxy Statement under the caption "Executive Compensation" and for
directors and executive officers as a group. Unless noted otherwise, beneficial
owners listed have sole voting and investment power with respect to the shares
reported.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dan Murphy Foundation 3,923,247 shares 16.88
Post Office Box 711267
Los Angeles, CA 90071
- -------------------------------------------------------------------------------------------------------------
A. Frederick Gerstell 352,182 shares(a) 1.49
Chairman of the Board, Chief Executive Officer
and Director
- -------------------------------------------------------------------------------------------------------------
R. Bruce Rieser 14,750 shares(a) (b)
President and Chief Operating Officer
- -------------------------------------------------------------------------------------------------------------
Scott J Wilcott 135,865 shares(a) (b)
Executive Vice President, Law and Property
- -------------------------------------------------------------------------------------------------------------
H. James Gallagher 51,750 shares(a) (b)
Executive Vice President - Finance, Chief Financial Officer and
Treasurer
- -------------------------------------------------------------------------------------------------------------
Paul Stanford 62,811 shares(a) (b)
Executive Vice President, General Counsel and Secretary
- -------------------------------------------------------------------------------------------------------------
Directors and executive officers as a group (19 persons) 1,405,492 shares(a) 5.97
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The amounts shown include the following shares that may be acquired
within 60 days pursuant to outstanding stock option grants: A. Frederick
Gerstell, 317,500 shares; R. Bruce Rieser, 13,750 shares; Scott J
Wilcott, 126,536 shares; H. James Gallagher, 47,750 shares; Paul
Stanford, 62,286 shares; and all directors and executive officers as a
group, 655,822 shares.
(b) Less than 1%.
8
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
designated Section 16 officers and persons who own more than 10% of the
Company's Common Stock (collectively "Reporting Persons") to file reports of
ownership and changes in ownership of the Company's Common Stock. Reporting
Persons are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on its review of copies of such
reports furnished to the Company and written statements of its directors and
executive officers to the effect that no other reports were required to be filed
during the 1996 fiscal year, all Section 16(a) filing requirements applicable to
its directors, executive officers and 10% owners were complied with, except that
Mr. Landry filed a late report with respect to stock purchased for his 401(k)
account.
Executive Compensation
The Executive Compensation section of this Proxy Statement includes (i) the
Report of the Compensation Committee, (ii) a discussion of certain Employment
Agreements entered into by the Company with certain executives, (iii) a Summary
Compensation Table that shows the compensation paid or accrued to the named
individuals by the Company during the fiscal years ended December 31, 1996, 1995
and 1994, (iv) an Option Grants table and an Option Exercises and Year-End Value
table that show grants and exercises during the last fiscal year with year-end
information regarding outstanding options, (v) a discussion of Pension Plan
benefits in effect for the named individuals for 1996; and (vi) a Performance
Graph of the Company's stock performance during the last five fiscal years
compared to the stock performance of the Company's peer group and others during
the same period.
Report of the Compensation Committee
Compensation Policies for Executive Officers of the Company
The Compensation Committee is responsible for setting and administering all
policies that govern salaries, salary increases, and bonuses for the
Company's executive officers and key managerial employees for approval by
the Company's Board of Directors. In 1996, the Compensation Committee met
seven times.
The Compensation Committee's purpose is to ensure that the Company is able
to attract and retain well-qualified executives who will manage the Company
for the benefit of stockholders and contribute to the Company's success.
The policy of the Compensation Committee is to provide compensation to
executive-level officers that is appropriate to each executive officer's
level of responsibility, and will both reward the executive for past
performance and provide an incentive to the executive for future
performance.
1996 Compensation and Bonuses - Executive Officers
The primary focus of the Compensation Committee in making its compensation
decisions for executive officers in fiscal 1996 was its subjective review
of each executive officer's individual performance. The Compensation
Committee did not establish predetermined performance
9
<PAGE>
standards for executive officers, but rather reviewed each executive
officer's individual performance in the context of the Company. In making
this evaluation, the Compensation Committee considered the earnings
performance of the Company and evaluated whether the specific performance
of the area over which an executive officer had control contributed to the
earnings performance or otherwise supported the Company's overall
performance. The Compensation Committee also reviewed the individual
performance of the executive in the executive's role as a manager and
leader within the Company.
Additionally, as part of its subjective determination of the
appropriateness of salary with regard to an executive's level of
responsibility, the Compensation Committee reviewed salary surveys of
companies within the Company's peer group of ten U.S. companies within the
sand, gravel and mining industry. In reviewing these peer industry
surveys, the Compensation Committee primarily considered the level of
compensation being paid to executives with similar responsibilities in
comparable businesses with similar business cycles. For example, the
Compensation Committee especially considered the surveys of mining
companies whose business cycles, like the Company's, are tied to the
construction industry. The Compensation Committee also reviewed
professional surveys of non-industry related companies, primarily in
California, which have comparable revenue, location density in California,
and number of employees. In reviewing these non-industry surveys, the
Compensation Committee considered the compensation being paid to executives
with similar responsibilities in similarly-sized California companies, with
a heavier focus on Southern California companies, so as to determine
competitive wages within the geographic region. The professional surveys
reviewed include surveys produced by William M. Mercer, Inc., Towers
Perrin, and Watson Wyatt. The Compensation Committee did not target any
predetermined relationship between the salaries of the Company's executives
and those of the executives of the surveyed companies. In 1996, the named
executive officers as a group received salaries that were at or above the
mean for executive officers in their peer group and at or above the mean
for executives within nonindustry-related comparable companies in
California.
After its evaluation of these factors, the Compensation Committee
subjectively determined the appropriate level of compensation to be paid.
The Compensation Committee also oversees the Company's bonus plan, which
the Company uses to reward individual employee performance for the prior
year. In January 1996, the Company's Economic Value Added ("EVA(R)")
Incentive Compensation Program was adopted to provide key employees with an
incentive based upon increase in stockholder value. All bonuses awarded to
executive officers (except for the limited "discretionary bonus" described
below) are now determined based on improvement in EVA(R).
At the beginning of the year, target bonuses, expressed as a percentage of
an executive's base salary, were established using competitive information
obtained from compensation surveys for key positions. Actual payouts were
determined by multiplying the Target Bonus by a bonus multiple. The
multiple was derived by comparing target and actual EVA(R) for the year,
adjusted by a "leverage factor" that reflects the expected variability of
the Company's performance based on historical factors. In 1996, corporate
participants were evaluated based on improvement in EVA(R) for the
Company as a whole, and business unit participants were evaluated based on
improvement in their business unit's EVA(R). All management participants
in the Incentive Program were also eligible for a discretionary bonus of up
to ten percent (10%) of their Target Bonus, based on individual
achievement, irrespective of EVA(R) performance.
10
<PAGE>
1996 Compensation and Bonus - Chief Executive Officer
In 1996, the Compensation Committee determined the compensation for the CEO
by subjectively evaluating his performance with regard to the performance
of the Company as a whole. The Compensation Committee did not predetermine
performance goals for the CEO, but subjectively evaluated his performance
in the following areas: (i) establishment of clear and sound objectives;
(ii) achievement of those objectives; (iii) creation of overall management
strength; (iv) development of successor management; and (v) communication
with the Board of Directors and senior management. Additionally, the
Compensation Committee considered particular accomplishments of the CEO in
1996, which have contributed to long-term stockholder value. Specifically,
the Compensation Committee subjectively evaluated the following
accomplishments: maintaining profitability, success in reducing costs,
acquisition and expansion activities, managing under adverse labor
conditions, and improvements in customer service and governmental
relations. Finally, in evaluating the CEO's performance, the Compensation
Committee compared the short-term and long-term total stockholder return
performance of companies within its peer group to the Company's own short-
term and long-term performance. In 1996, the Company's total stockholder
return was below its peer group as shown on the Performance Graph on page
16. The Compensation Committee did not evaluate these factors using a
predetermined formula, but used its subjective discretion to reach its
result.
The Compensation Committee, as it did for executive officer compensation,
also reviewed the same professional surveys of industry-related and
nonindustry-related companies in determining the CEO's salary level. In
1996, the CEO's salary level was at or above the mean for industry-related
companies and at or above the mean for CEOs within nonindustry-related
comparable companies in California. For 1997, the CEO's base compensation
was raised from $500,000 to $530,000. The CEO's bonus for 1996 was
$79,000.
Stock Option Grants
The Stock Option Sub-Committee of the Compensation Committee (the "Sub-
Committee"), which is composed of independent directors, met four times in
1996 to determine the amount of any stock options to be granted to Company
employees, including the executive officers and the CEO. The Sub-Committee
uses the award of stock options to meet the Compensation Committee's goal
to provide an incentive for continued and future performance of executive
officers and other key employees, as part of the total compensation
package. In making its decisions in 1996, the Sub-Committee subjectively
considered the performance of the Company as a whole and the extent to
which the performance of a particular employee impacted that performance.
The Sub-Committee did not review surveys of stock option grants for other
companies in determining its stock option awards.
Report submitted by the Management Development and Compensation Committee:
Stuart T. Peeler, Chairman
John C. Argue
Arthur Brown
Harry M. Conger
Thomas L. Lee
Thomas M. Linden
11
<PAGE>
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee are present or former
members of management except Mr. Thomas M. Linden, who was Executive Vice
President and General Manager - Properties Division of the Company from May 1985
through May 1989.
Employment Agreements
The Company has executed the following employment agreements with certain
executive officers according to the terms summarized below:
The Company has executed employment agreements with Messrs. Gerstell,
Wilcott, and Stanford that provide for compensation at an annual rate of
$530,000, $257,400, and $240,000, respectively, for 1997. In addition to
providing benefits in the case of disability, the agreements provide that
the compensation and other benefits (including bonus, retirement plan
contributions and insurance coverages) shall continue unabated for the
period specified in each agreement (four years for Mr. Gerstell and three
years for Mr. Wilcott and Mr. Stanford) from the date of notice of
termination by the Company. In the event the Company significantly reduces
the importance of their responsibilities, reduces their compensation or
benefits, relocates the Company's principal executive offices outside Los
Angeles or reassigns them to a location other than the principal executive
offices, each executive's agreement provides that the executive may
terminate the agreement and receive the salary and benefits that would have
been provided to him under the agreement (four years for Mr. Gerstell and
three years for Mr. Wilcott and Mr. Stanford). In the event of a change of
control, the executive may accelerate the exercisability of all options to
acquire shares covered by any outstanding stock option agreements he has
with the Company.
The Company has executed agreements with Messrs. Rieser and Gallagher with
respect to severance that provide for payment of two years' base salary
(determined as of the date of termination) in the event of termination
without cause. Mr. Rieser's base salary for 1997 is $310,000 and Mr.
Gallagher's base salary for 1997 is $245,000. Messrs. Rieser and Gallagher
have also executed agreements with the Company which provide that
compensation and other benefits (including bonus, retirement plan
contributions and insurance coverages) will continue unabated for three
years from the day preceding any change of control of the Company. In
addition, the agreements provide that in the event of a change of control,
the executives may accelerate the exercisability of all options to acquire
shares covered by any outstanding stock option agreements the executives
have with the Company.
12
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION
- -----------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation (a) Compensation
------------------------------ -------------------
Number of
Underlying Options All Other
Year Salary Bonus Granted Compensation
Name and Principal Position ($) ($) (#)(b) ($)(c)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. Frederick Gerstell 1996 $500,000 $ 79,000 53,400 $91,798
Chairman of the Board, Chief 1995 $485,000 $100,000 40,000 $93,030
Executive Officer and Director 1994 $460,000 $200,000 60,000 $84,098
- --------------------------------------------------------------------------------------------------------------------
R. Bruce Rieser* 1996 $267,200 $ 31,000 40,000 $45,926
President and Chief Operating 1995 $175,000 $ 32,750 35,000 $ 884
Officer 1994 ----- ----- ----- -----
- --------------------------------------------------------------------------------------------------------------------
Scott J Wilcott 1996 $247,500 $ 75,000 15,000 $45,605
Executive Vice President, 1995 $240,000 $ 32,500 15,000 $45,098
Law and Property 1994 $232,500 $ 65,000 25,000 $42,714
- --------------------------------------------------------------------------------------------------------------------
H. James Gallagher 1996 $230,000 $ 24,000 15,000 $39,557
Executive Vice President - 1995 $220,000 $ 30,000 15,000 $39,560
Finance, Chief Financial Officer 1994 $200,000 $ 60,000 25,000 $ 8,768
and Treasurer
- --------------------------------------------------------------------------------------------------------------------
Paul Stanford 1996 $230,000 $ 20,000 15,000 $40,553
Executive Vice President, General 1995 $220,000 $ 30,000 15,000 $40,514
Counsel and Secretary 1994 $200,000 $ 60,000 25,000 $35,095
- --------------------------------------------------------------------------------------------------------------------
* Mr. Rieser joined the Company as Senior Vice President, Construction Materials in March 1995, was elected
Executive Vice President, Construction Materials in December 1995, and was elected President and Chief Operating
Officer in July 1996.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers.
(b) 1995 options granted in January 1996 are shown in 1995 and not included in
1996.
(c) The amounts shown in this column for the last fiscal year include the
following items: (i) Mr. Gerstell: $21,000 - Company accrual to the Thrift
and Profit-Sharing Retirement Plan and Money Purchase Pension Plan for
Employees of CalMat Co., a defined contribution plan (DCP); $62,270 - paid
by the Company to a trust for the Non-qualified Deferred Compensation Plan
for Selected Executives of CalMat Co., a non-qualified defined contribution
plan (NDCP); and $8,528 - Company-paid term life insurance (TLI); (ii) Mr.
Rieser: $21,000 - Company accrual to DCP; $23,299 - Company accrual to
NDCP; and $1,627 - Company-paid TLI; (iii) Mr. Wilcott: $21,000 - Company
accrual to DCP; $20,611 - Company accrual to NDCP; and $3,994 - Company-
paid TLI; (iv) Mr. Gallagher: $21,000 - Company accrual to DCP; $17,133 -
Company accrual to NDCP; and $1,424 - Company-paid TLI; and (v) Mr.
Stanford: $21,000 - Company accrual to DCP; $17,201 - Company accrual to
NDCP; and $2,352 - Company-paid TLI.
13
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
OPTION GRANTS FOR 1996
(Excludes 1995 options granted on 1/23/96)
- -------------------------------------------------------------------------------------------------------------
Number of Securities % of Total
Underlying Options Granted Exercise Grant Date
Options to Employees Base Price Expiration Present Value
Name Granted (#)(a) in Fiscal Year ($/Share)(b) Date ($)(c)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. Frederick Gerstell 53,400 19.32 $18.375 11-24-06 $189,220
- -------------------------------------------------------------------------------------------------------------
R. Bruce Rieser (d) 15,000/ 5.43/ $17.625/ 07-17-06/ $52,222/
25,000 9.04 $18.25 11-24-06 $90,049
- -------------------------------------------------------------------------------------------------------------
Scott J Wilcott 15,000 5.43 $18.25 11-24-06 $54,030
- -------------------------------------------------------------------------------------------------------------
H. James Gallagher 15,000 5.43 $18.25 11-24-06 $54,030
- -------------------------------------------------------------------------------------------------------------
Paul Stanford 15,000 5.43 $18.25 11-24-06 $54,030
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Options granted are exercisable at 12 months after the grant date, with 25%
of the shares covered thereby becoming exercisable at that time and an
additional 25% of the option shares becoming exercisable on each successive
anniversary date, with full vesting occurring on the fourth anniversary
date. The option term is ten years; however, unless modified by an
employment agreement, no option that is unexercisable at termination of
employment will become exercisable.
(b) The exercise price may be paid by cash, by delivery of shares of the
Company's Common Stock owned by the Optionee or, with consent of the
Compensation Committee, by delivery of a full-recourse promissory note.
(c) The Modified Black-Scholes Option Valuation Model modifies the Black-
Scholes formula to include the impact of cash dividend payments and the
right to exercise options prior to maturity. The volatility factor and
risk-free rate of return at grant date used in the modified model were
0.1972 and 6.31%, respectively. The Company's dividend yield at the grant
date of 2.1477% was used in the modified model. The model assumes that
options are exercised approximately one year from vesting, based on
analyses of historical exercise patterns for all optionees. In prior
years, the model was based on historical exercise patterns for only the
named executives.
(d) Mr. Rieser received two grants for 1996: 15,000 option shares were granted
at the time of his promotion to Company President in July 1996 and 25,000
were granted on November 25, 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
OPTION EXERCISES AND YEAR-END VALUE
- -------------------------------------------------------------------------------------------------------
Aggregated Option Exercises in Last FiscaL Year and FY-End Option Values
- -------------------------------------------------------------------------------------------------------
Number of Securties Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
at FY-End(#) at FY-End($)(b)
Number of Value Realized ------------------- ----------------
Shares Acquired at Date of Exercisable/ Exercisable/
Name on Exercise(#) Exercise($)(a) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A. Frederick Gerstell ----- ----- 307,500/135,900 $46,875/95,650
- -------------------------------------------------------------------------------------------------------
R. Bruce Rieser ----- ----- 5,000/70,000 $625/53,750
- -------------------------------------------------------------------------------------------------------
Scott J Wilcott 10,000 $35,000 122,786/48,214 $17,858/37,143
- -------------------------------------------------------------------------------------------------------
H. James Gallagher ----- ----- 44,000/53,000 $27,000/37,000
- -------------------------------------------------------------------------------------------------------
Paul Stanford ----- ----- 58,536/48,214 $17,858/37,143
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Market value of the underlying securities at exercise date minus the
exercise price of the options.
(b) Market value of the underlying securities at year-end minus the exercise
price of in-the-money options.
14
<PAGE>
Pension Plans
Under the Supplemental Executive Retirement Plan ("SERP") in effect for
1996, Messrs. Gerstell, Rieser, Wilcott, Gallagher, and Stanford would receive,
upon retirement, a supplemental benefit added to amounts received from Social
Security, the DCP and the NDCP.
The formula for the net SERP benefit is equal to the "SERP Target Percent"
(65% for Mr. Gerstell and 60% for all other named executives) multiplied by
"Final Average Earnings" at retirement reduced by the level annual benefits
provided by the employer contributions to the Qualified and Non-qualified
defined contribution plans and one-half of the actuarial equivalent of the
estimated Social Security benefit. "Final Average Earnings" is defined as the
highest compensation for three out of the last five calendar years of
employment. Compensation includes total cash compensation paid to the
executive.
The estimated annual net SERP benefit for the five named officers are: Mr.
Gerstell - $483,226; Mr. Rieser - $374,515; Mr. Wilcott - $48,869; Mr. Gallagher
- - $299,412; and Mr. Stanford - $245, 445. The Estimated Annual Net SERP Benefit
is based on the following assumptions: interest on defined contribution balances
and conversion of account balances to annuities - 7%; salary increases - 6.5%;
mortality - 85% of 1983 group annuity mortality; Social Security wage base
increases - 3%; retirement - at age 62; and future employer contributions to
defined contribution plans - 15% of base compensation.
15
<PAGE>
Performance Graph
The following graph compares the cumulative total stockholder return on the
Company's common stock with the cumulative total return of the Standard & Poor's
500 Stock Index (the "S & P 500") and a composite industry index (the "Industry
Index") consisting of eight public companies in the building materials
industry.* The graph assumes that $100 was invested on December 31, 1991 in each
of CalMat stock, the S & P 500 and the Industry Index, and that all dividends
were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG CALMAT, AVERAGE OF COMPOSITE AND S&P 500 INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period AVERAGE OF S&P
(Fiscal Year Covered) CALMAT COMPOSITE 500 INDEX
- --------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 12/31/91 $100.00 $100.00 $100.00
FYE 12/31/92 $ 99.99 $119.00 $107.57
FYE 12/31/93 $ 96.05 $156.90 $118.22
FYE 12/31/94 $ 80.20 $132.90 $119.61
FYE 12/31/95 $ 86.25 $160.40 $164.04
FYE 12/31/96 $ 90.39 $178.60 $201.15
</TABLE>
* Composite includes Florida Rock Industries, Granite Construction, Inc.,
Lafarge Corp., Martin Marietta Materials, Southdown, Inc., Texas
Industries, Inc., Vulcan Materials Co., and CalMat Co. Information for
Martin Marietta Materials begins in 1993 when such information first became
publicly available. CalMat is the only company in the composite industry
index whose primary market area is Southern California, an area that has
experienced a severe recession affecting the construction industry
throughout the period depicted in the Performance Graph.
16
<PAGE>
* Ratification of Appointment of Auditors
The Board of Directors recommends a vote FOR ratification of its
appointment of auditors.
The Board of Directors has appointed the firm of Coopers & Lybrand L.L.P.,
independent accountants, to be CalMat Co.'s auditors for the year 1997 and
recommends to stockholders they vote for ratification of that appointment.
Coopers & Lybrand L.L.P. served in this capacity for the year 1996. Its
representative will be present at the Annual Meeting and will have an
opportunity to make a statement and be available to respond to appropriate
questions.
The appointment of auditors is approved annually by the Board. The
decision of the Board is based on the recommendation of the Audit Committee,
which reviews and approves in advance the audit scope, the types of nonaudit
services, and the estimated fees for the coming year. The Committee also
reviews and approves proposed nonaudit services to ensure that they will not
impair the independence of the accountants.
Before making its recommendation to the Board for appointment of Coopers &
Lybrand L.L.P., the Audit Committee carefully considered that firm's
qualifications as auditors for the Company. This included a review of its
performance in prior years, as well as its reputation for integrity and
competence in the fields of accounting and auditing. The Committee has
expressed its satisfaction with Coopers & Lybrand L.L.P. in all of these
respects.
* 1997 Stockholder Proposals
The following proposals were submitted for inclusion in this Proxy Statement:
* Stockholder's Proposal on Sale or Merger of Company
Management has been advised that Dr. Charles Miller, 23 Park Circle, Great
Neck, New York 11024, beneficial owner of 450 shares of the Company's Common
Stock, intends to present the following proposal at the Annual Meeting. To be
adopted, this resolution, which is opposed by the Board of Directors, would
require the affirmative vote of a majority of the votes present in person or by
proxy at the Annual Meeting.
The Board of Directors recommends a vote AGAINST the following proposal for
the reasons stated after the proposal.
"Resolved: that the shareholders of the Company recommend and deem it
desirable and in their best interest that the board of directors
immediately engage the services of a nationally recognized investment
banker to explore all alternatives to enhance the value of the Company.
These alternatives should include, but not be limited to, the possible
sale, merger or other transaction involving the Company."
Supporting Statement of Proponent
"In support of the above resolution, the proponent believes that in view of
the unacceptable performance of the Company over the past five years, the
deplorable stock price, and in my opinion, ineffective management, the
board of directors should take immediate action to engage the services of
an investment banker to explore all alternatives to enhance the value of
the Company.
17
<PAGE>
"I am a co-founder of the Investors Rights Association of America and it is
my opinion that the value of the Company can be enhanced if the above
resolution is carried out and the shareholders would at long last be able
to salvage meaningful monetary rewards for their patience and long
suffering.
"Nell Minow, a highly acclaimed corporate governance specialist, and
principal of the LENS Fund, which specializes in increasing the value of
under-performing companies, has stated:
'Companies can only justify asking investors to take the risk of
investing in equities by delivering a competitive rate of return on
the invested capital. When a company's management and board cannot
meet that goal, they owe it to their investors to submit themselves to
an independent evaluation by an outside firm, to insure that all
options are objectively evaluated.
If a company's performance lags over a sustained period, it is time
for the shareholders to send a message of no confidence to the board,
reminding them that they have to hold management - and themselves - to
a higher standard.'
"I URGE YOUR SUPPORT. VOTE FOR THIS RESOLUTION."
Recommendation of Directors Against the Proposal
The Board of Directors believes that stockholder value will not be enhanced
by adoption of this proposal and recommends a vote AGAINST the proposal for the
reasons set forth below.
(1) The Board's regular review of alternative strategies for the Company
effectively responds to the stockholder's concern.
The Board is committed to maximizing value for stockholders. In order
to meet this commitment, it is the proper role of the Board to
determine the development and execution of the Company's short-term
and long-term business strategies, using its in-depth knowledge of the
Company and its businesses. The Board determines these strategies by
regularly reviewing alternative opportunities presented by the
Company's Strategic Planning Group to maximize the value of the
Company for stockholders. Management, in the normal course of
business, has worked closely with investment bankers and others to
consider acquisition or merger opportunities that would enhance
stockholder value. The Board pursues the courses of action that are
most likely to, in the Board's judgment, achieve this objective.
In this regard, the Board has approved the implementation of the
Company's Strategic Plan and has required the Company to take specific
actions in the areas of costs and efficiencies, marketing development,
diversification, and management and employee development.
For example, in 1995, the Board approved, and in 1996, the Company
implemented, the EVA(R) incentive compensation program that
directly ties annual incentive compensation for key employees with
changes in stockholder value. The Board of Directors approved
EVA(R) specifically to enhance stockholder value. EVA(R), an
internal measurement of operating and financial performance, was
developed by Stern, Stewart and Company, a nationally-recognized
financial advisory firm, to closely correlate performance with
stockholder value. Under EVA(R), managers are rewarded relative to
the economic value their business units produce for the Company.
Similarly, the Board has overseen the implementation of a stock
18
<PAGE>
ownership program for managers in order to further align managers'
goals wih those of stockholders.
(2) The Company's continued profitability throughout California's severe
recession demonstrates the Board's success in determining the appropriate
course of action, and indicates that it is not the appropriate time to
consider a transaction such as a sale or merger.
The Board believes that the Company's continued profitable
performance, in spite of the severe recession in the Company's major
California market (particularly Southern California), demonstrates the
Board's success in determining the appropriate course of action for
the Company. The Board believes that the California construction
economy is improving and that the Company's results are likely to
improve with this cycle. Therefore, the Board believes that this is
not the appropriate time to consider a transaction such as a sale or
merger. The Board believes that stockholder value will be maximized
by remaining independent at this time and continuing to implement the
Company's Strategic Plan.
(3) The Board believes that appointing a financial advisor to consider the
sale, merger or other change of control of the Company, may have a negative
effect on stockholders' interests.
The Board of Directors believes that any attempt to effect a change of
control of the Company at this time could have a negative effect on
stockholders' interests. The proposal recommends that the Board hire
an independent financial advisor. The Board believes that the effect
of an announcement that the proposal has been adopted and that the
Company has been put "in play," whether or not the advice is actually
followed, could severely damage the Company's long-term relationships
with its principal customers and could have an adverse impact on the
Company's ability to effectively compete in the short- and long-term,
resulting in a possible decline in revenues and, a corresponding
decline in stockholder value. In addition, such an announcement could
have a negative impact on the morale of employees and could impact the
ability of the Company to keep and attract qualified employees.
Accordingly, the Board of Directors unanimously recommends a vote AGAINST
the proposal. Proxies held by the Board will be so voted unless the stockholder
marks the Proxy Card otherwise.
* Stockholder's Proposal on Stock Compensation
Management has been advised that Mr. William Steiner, 4 Radcliff Drive,
Great Neck, New York 11024, beneficial owner of 700 shares of the Company's
Common Stock intends to present the following proposal at the Annual Meeting.
To be adopted, this resolution, which is opposed by the Board of Directors,
would require the affirmative vote of a majority of the votes present in person
or by proxy at the Annual Meeting.
The Board of Directors recommends a vote AGAINST the following proposal for
the reasons stated after the proposal.
"RESOLVED, that the shareholders recommend that the Board of Directors take
the necessary steps to ensure that from here forward all non-employee
directors should receive a minimum of fifty percent (50%) of their total
compensation in the form of Company stock which cannot be sold for three
years."
19
<PAGE>
Supporting Statement of Proponent
"A significant equity ownership by non-employee directors is probably the
best motivator for enhancing shareholder value and facilitating
identification with shareholders.
"Traditionally, non-employee directors were routinely compensated with a
fixed fee, regardless of corporate performance. In today's competitive
global economy, outside directors must exercise critical oversight of
management's performance in fostering corporate profitability and
shareholder value. All too often, outside directors' oversight has been
too lax, and their actions were too late to effect any meaningful change.
"The history of public corporations in America has too many examples of
directors passively allowing strategic management errors to occur. This
results in eroding corporate and shareholder value.
"When compensation takes the form of company stock, there is a greater
likelihood that outside directors will exercise greater diligence in
protecting their own, as well as corporate, and shareholder interests.
"What is being recommended in this proposal is neither novel nor untried.
A number of corporations have already established versions of such
practices, namely, Alexander & Alexander, Baxter International, Hartford
Steam Boiler, James River, McGraw Hill, NYNEX, RJR Nabisco, Sunbeam
Corporation, The Travelers, Westinghouse, Woolworth and Zurn Industries.
"In June, 1995, the National Association of Corporate Directors' (NACD)
Blue Ribbon Commission on Director Compensation issued a report urging that
public company directors be paid their annual fees primarily in company
stock to more closely align their interests with those of shareholders.
Several widely-reported empirical studies have confirmed the potential
efficacy of this approach. Albert J. Dunlap, a Commission member and
Chairman and Chief Executive Officer of Sunbeam Corporation has stated:
'What kind of contribution will the directors ever make if they don't
have a vested interest in the company's financial success. They've
got to show that they believe in the company, that they're willing to
stand behind their choices. . . . Any director who isn't willing to
be paid [one hundred] percent in stock doesn't believe in the
company.'
"It can be argued that awarding stock options to outside directors
accomplishes the same purpose of insuring director's allegiance to a
company's profitability as paying them in stock. However, it is my
contention that stock options entail no downside risk, i.e., while stock
options offer rewards should the stock increase, if the stock price
decreases, no penalties ensue. There are few strategies that are more
likely to align the interests of outside directors with those of
shareholders than one which results in their sharing of the same bottom
line.
"I URGE YOUR SUPPORT. VOTE FOR THIS RESOLUTION!"
20
<PAGE>
Recommendation of Directors Against the Proposal
The Board of Directors of the Company recommends a vote AGAINST this
proposal.
While the Board agrees that it is desirable for directors to own shares of
the Company's stock, it does not believe that it is in the interests of the
Company to require that a portion of director compensation be paid in shares. A
director of the Company owes, by law, a fiduciary obligation to the stockholders
of the Company. He or she is obligated to exercise the utmost duty of care and
loyalty to stockholders and to conduct the business and affairs of the Company
in such a way as to maximize the benefits of stock ownership.
The proposal removes the flexibility to determine the optimum form of
compensation in order to attract and retain the best directors possible. This
can vary from time to time based on general trends in director compensation.
The proposed mandate that a minimum of 50% of all director compensation be in
shares of the Company's stock may result in well-qualified individuals declining
to serve as directors of the Company because they consider cash and other forms
of compensation offered by other corporations more desirable.
Although the Company does not require directors to hold shares of the
Company's stock, each member of the Board is a stockholder, except for the new
directors elected in 1997, and some holdings are very significant. In addition
to individual stockholdings and cash compensation, Board members receive options
to purchase 3,000 shares of Company stock (priced at market value at the time of
the grant) upon election to the Board and yearly thereafter. Also, in November
1996, the Board adopted the Directors' Stock Ownership Program ("Directors'
Program"). The Directors' Program has as its goal a steady annual progression
of ownership of the Company's Common Stock by non-employee directors. The
Directors' Program establishes a target of stock ownership for each Director
equal to three hundred percent (300%) of the Director's total compensation. The
Directors' Program, while voluntary, will provide regular reports to the Board
of each Director's progress toward the goal.
The Board believes that the combination of individual stockholdings, stock
options and the new Directors' Stock Ownership Program effectively aligns the
interests of the directors with those of stockholders.
Accordingly, the Board of Directors unanimously recommends a vote AGAINST
this proposal. Proxies held by the Board will be so voted unless the
stockholder marks the Proxy Card otherwise.
Stockholder Proposals for 1998 Proxy
Stockholder proposals may be submitted for inclusion in the Company's 1998
proxy material after the Annual Meeting, but no later than 5:00 P.M. PST on
December 9, 1997. Proposals must be in writing and sent via registered,
certified or express mail to: Office of the Secretary of CalMat Co., 3200 San
Fernando Road, Los Angeles, California 90065. Facsimiles or other forms of
electronic submission will not be accepted.
* Other Business
The Company is not aware of any matters that may come before the Meeting
other than those referred to in the Notice of Annual Meeting of Stockholders.
If any other matters shall properly come before the Meeting, the persons named
in the accompanying form of Proxy intend to vote thereon in accordance with
their best judgment.
21
<PAGE>
Proxies and Voting at the Meeting
The thirteen nominees for director who receive a plurality of the votes
cast at the Annual Meeting in person or by proxy shall be elected. All other
proposals require a majority of the votes.
Each stockholder of record at the close of business on April 8, 1997, is
entitled to one vote for each share of Common Stock held. With respect to the
election of directors, stockholders have the right to cumulate votes and give
one candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that stockholder's shares are
entitled, or to distribute such votes among as many candidates as the
stockholder determines. Stockholders who wish to cumulate their votes must so
indicate on the form of proxy.
A majority of the stock issued and outstanding, represented in person or by
proxy, constitutes a quorum for the transaction of business at the Meeting. On
March 21, 1997, there were outstanding 23,244,812 shares of the Company's Common
Stock, $1 par value, all of which are one class.
Under the Company's By-laws and Delaware law, shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the Annual Meeting, but with respect to which
such broker or nominee is not empowered to vote on a particular proposal) will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. To be elected, nominees must receive a
plurality of the votes cast by holders of Common Stock who are present and
entitled to vote, in person or by proxy, at the Annual Meeting. Accordingly,
abstentions or broker non-votes will not affect the election of the candidates
receiving the plurality of votes. All other proposals to come before the Annual
Meeting require the approval of a majority of the votes cast by holders of
Common Stock who are present with the power to vote. Abstentions as to a
particular proposal will have the same effect as votes against such proposal.
Broker non-votes, however, will have the effect of nonvoted shares for purposes
of determining approval of such proposal and will not be counted as votes for or
against such proposal.
Shares cannot be voted unless the stockholder attends the meeting, returns
a signed Proxy Card, or designates a representative who attends the Meeting and
votes the shares on behalf of the owner. Any stockholder giving a proxy may
revoke it at any time before it is voted.
Stockholders are encouraged to specify their choices by marking the
appropriate boxes on the enclosed Proxy Card. Shares will be voted in
accordance with such instructions. However, it is not necessary to mark any
boxes if you wish to vote in accordance with the Board of Directors'
recommendations; simply sign, date, and return the Proxy Card in the enclosed
envelope.
Solicitation of proxies is being made by the Company by mail, in person,
and by telecommunications. The cost thereof will be borne by the Company. In
addition, management has retained Georgeson & Company, Inc., to assist in
soliciting proxies for a fee of approximately $7,000 plus reasonable out-of-
pocket expenses. Brokerage houses, custodians, nominees, and others who hold
stock in their names will be reimbursed for expenses incurred by them in sending
proxy materials to beneficial owners.
Paul Stanford
Secretary
Los Angeles, California
April 9, 1997
22
<PAGE>
[CALMAT CO. LOGO APPEARS HERE]
CalMat Co.
3200 San Fernando Road
Los Angeles, California 90065
(213) 258-2777
<PAGE>
- --------------------------------------------------------------------------------
CALMAT CO.
P
PROXY SOLICITED BY BOARD OF DIRECTORS
R FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 27, 1997
O I hereby appoint A. Frederick Gerstell and R. Bruce Rieser, and each of
them, with full power of substitution and revocation to each, as my proxies
X to vote all shares of common stock of CalMat Co. held or owned by me at the
Annual Meeting of Stockholders to be held at the Omni Los Angeles Hotel &
Y Centre, 930 Wilshire Boulevard, Los Angeles, California, at 10:00 a.m., on
Tuesday, May 27, 1997, and at any and all adjournments thereof, upon the
matters listed on the reverse side of this card. I (we) hereby (1) revoke
any proxy given prior to this one, (2) acknowledge receipt of the Notice of
the Annual Meeting of Stockholders and the Proxy Statement, both dated
April 9, 1997, and (3) authorize and confirm any action taken by the
designated proxies, or their substitutes, or any one of them, by virtue of
this authorization.
Election of Directors. Nominees:
John C. Argue, Arthur Brown, Denis R. Brown, Harry M. Conger, Rayburn S.
Dezember, A. Frederick Gerstell, Richard A. Grant, Jr., William T. Huston,
Edward A. Landry, Thomas L. Lee, Thomas M. Linden, Georgia R. Nelson and Stuart
T. Peeler.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE OF THIS PROXY CARD. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY
CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THIS CARD.
(CONTINUE AND TO BE SIGNED ON OTHER SIDE)
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<PAGE>
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[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
CALMAT'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2 AND AGAINST BOTH
STOCKHOLDER PROPOSALS LISTED UNDER ITEM 3.
FOR ALL NOMINEES LISTED
1 Election of Thirteen (13) Directors (EXCEPT AS MARKED
(see reverse). TO THE CONTRARY BELOW)
[_]
To withhold authority to vote for any WITHHELD AUTHORITY
individual nominee, write that TO VOTE FOR ALL
nominee's name: NOMINEES LISTED
- ----------------------------------------- [_]
To cumulate votes, please
indicate distribution:
--------------------------
FOR AGAINST ABSTAIN
2. Ratification of Appointment
of Auditors [_] [_] [_]
3. 1997 Stockholder Proposals;
Stockholder's Proposal on Sale or
Merger of Company [_] [_] [_]
Stockholder's Proposal on Stock
Compensation [_] [_] [_]
4. To transact such other business as may properly come before the Meeting or
any adjournment thereof. If other matters shall properly come before the
meeting, the proxies named shall vote in accordance with their best judgment.
SIGNATURE(S) DATE
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NOTE: PLEASE DATE THIS PROXY AND SIGN EXACTLY AS YOUR NAME(S) APPEAR(S). IF THE
STOCK IS HELD JOINTLY, EACH OWNER MUST SIGN. PERSONAL REPRESENTATIVES,
TRUSTEES, GUARDIANS, AND OTHERS SIGNING IN A REPRESENTATIVE CAPACITY
SHOULD GIVE FULL TITLE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW THIS
PROXY AND VOTE IN PERSON.
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