<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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Southdown, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Wendell Phillips, II
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
SOUTHDOWN, INC.
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 19, 1994
To the Shareholders of Southdown, Inc.:
An Annual Meeting of Shareholders of Southdown, Inc. (the "Company")
will be held at the Doubletree Hotel at Allen Center, 400 Dallas Street,
Houston, Texas at 10:15 A.M., Houston time, on Thursday, May 19, 1994 for the
following purposes:
1.To elect four directors as members of Class III of the Board
of Directors, to serve until the 1997 annual meeting of shareholders
and until their successors are duly elected and have qualified.
2.To consider and act upon a proposal to ratify the appointment
of Deloitte & Touche as the independent auditors of the books and
accounts of the Company for the year ending December 31, 1994.
3.To transact such other business as may properly come before
the meeting or any adjournment thereof. Shareholders of record at the
close of business on March 25, 1994 are entitled to notice of and to
vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you
are planning to attend the meeting, you are urged to complete, date and sign
the enclosed proxy card and return it promptly.
By Order of the Board of Directors
Wendell E. Phillips, II
Secretary
Houston, Texas
March 31, 1994
***************************************************************************
* YOUR VOTE IS IMPORTANT *
* *
* TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE *
* COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE *
* ACCOMPANYING ENVELOPE. NO ADDITIONAL POSTAGE IS NECESSARY IF MAILED *
* IN THE UNITED STATES. *
* *
***************************************************************************
<PAGE> 3
SOUTHDOWN, INC.
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
(713) 650-6200
________________ March 31, 1994
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1994
________________
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Southdown, Inc. (the
"Company") for use at the Annual Meeting of Shareholders of the Company to be
held on Thursday, May 19, 1994, and at any adjournment thereof (the "Annual
Meeting"). The Proxy Statement and the enclosed form of proxy will first be
sent to shareholders on or about March 31, 1994.
PROXIES
The shares represented by any proxy in the enclosed form, if such proxy
is properly executed and is received by the Company prior to or at the Annual
Meeting, will be voted in accordance with the specifications made thereon.
Proxies on which no specification has been made by the shareholder will be voted
(i) for the election to the Board of Directors of the nominees named herein and
(ii) for the ratification of the appointment of Deloitte & Touche as independent
auditors of the books and accounts of the Company for the year ending December
31, 1994. Proxies are revocable by written notice received by the Secretary of
the Company at any time prior to their exercise or by executing a later dated
proxy. Proxies will be deemed revoked by voting in person at the Annual
Meeting.
VOTING SECURITIES
Shareholders of record at the close of business on March 25, 1994 are
entitled to notice of and to vote at the Annual Meeting. As of March 25, 1994,
the issued and outstanding voting securities of the Company consisted of (i)
17,149,897 shares of common stock, par value $1.25 per share (the "Common
Stock"), (ii) 1,999,000 shares of Preferred Stock, $.70 Cumulative Convertible
Series A (the "Series A Preferred Stock") (iii) 959,000 shares of Preferred
Stock, $3.75 Convertible Exchangeable Series B (the "Series B Preferred Stock"),
and (iv) 1,725,000 shares of Preferred Stock, $2.875 Cumulative Convertible
Series D (the "Series D Preferred Stock"). The Common Stock, the Series A
Preferred Stock, the Series B Preferred Stock and the Series D Preferred Stock
vote together as one class on all matters that may properly come before the
Annual Meeting and each such share is entitled to one vote on all such matters.
The Common Stock, the Series A Preferred Stock, the Series B Preferred Stock
and the Series D Preferred Stock are referred to collectively herein as the
"Capital Stock".
QUORUM AND OTHER MATTERS
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of Capital Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum. The Board of
Directors is not aware of any matters that are expected to come before the
Annual Meeting other than those referred to in this Proxy Statement. If any
other matter should come before the Annual Meeting, the persons named in the
accompanying proxy intend to vote such proxies in accordance with their best
judgment.
Shares of Capital Stock represented by a properly dated, signed and
returned proxy will be counted as present at the Annual Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting
a vote or abstaining. Directors will be elected by a plurality of the votes
cast at the Annual Meeting. All other matters scheduled to come before the
Annual Meeting require the approval of a majority
<PAGE> 4
of the votes cast at the Annual Meeting. Therefore, absententions and broker
non-votes will have no effect on the election of directors or any such other
matter.
The Board of Directors, any committee of the Board designated by it for
that purpose, or the chairman of any meeting of shareholders may prescribe such
rules, regulations and procedures for the conduct of any meeting of
shareholders, including the Annual Meeting, as they deem appropriate or
convenient.
Under the laws of the State of Louisiana, dissenters rights are not
available to shareholders of the Company with respect to any matter scheduled to
be brought before the annual meeting.
ELECTION OF DIRECTORS
The Restated Articles of Incorporation, as amended, of the Company
classify the Board of Directors into three classes (Class I, Class II and Class
III) having staggered terms of three years each. The present term of office of
the directors in Class III will expire at the Annual Meeting, and the nominees
listed below, if elected as Class III directors, will serve for a three-year
term expiring at the annual meeting of shareholders in 1997 and until their
successors are duly elected and have qualified. The present terms of office of
Class I and Class II directors of the Company expire in 1995 and 1996,
respectively. The election of directors requires the favorable vote of the
holders of a plurality of the shares of Capital Stock present and voting, in
person or by proxy, at the Annual Meeting.
NOMINEES FOR ELECTION
The following table sets forth information with respect to each nominee
for election as a director. The information as to age, principal occupation and
directorships held has been furnished by each such nominee.
<TABLE>
<CAPTION>
Served as
Director
Principal Continuously Committee
Name and Age Occupation(1) Since Memberships
------------ ------------- ----------- -----------
<S> <C> <C> <C>
CLASS III (term expires 1994)
Clarence C. Comer [46] . . . . . . . . . . . . President and Chief 1986 Executive
Executive Officer
Edgar J. Marston III [54] . . . . . . . . . . Executive Vice President 1987
and General Counsel
W. J. Conway [72] . . . . . . . . . . . . . . . Vice Chairman of the Board 1982
of the Company since
August 23, 1989(2)
Robert J. Slater [56] . . . . . . . . . . . . . President, Jackson 1993 Nominating
Consulting, Inc., Conflict of
a private consulting Interest
and investment company
specializing in
advising basic industries,
New Canaan, Connecticut(3)
</TABLE>
- ---------
(1) Unless indicated otherwise in the table or in the section of this Proxy
Statement captioned "Executive Officers of the Company," the individuals
named in the table have held their positions for more than five years.
(2) For more than five years prior to assuming his position as Vice Chairman
of the Board, Mr. Conway was a Director of the Company and Chairman of the
Board and President of Southwestern Portland Cement Company, a former
subsidiary of the Company.
(3) Mr. Slater is also a director of National Steel Corporation.
2
<PAGE> 5
Unless authority to vote for the election of directors is withheld as to
any or all nominees, all shares represented by proxies will be voted for the
election of the nominees listed. If authority to vote for the election of
directors is withheld as to any but not all of the nominees listed, all shares
represented by such proxies will be voted for the election of the nominees as to
whom authority is not withheld. If a nominee becomes unavailable for any reason
before the election, the shares represented by proxies will be voted for such
person, if any, as may be designated by the Board of Directors. However, the
Board of Directors has no reason to believe that any nominee will be
unavailable. Any vacancy occurring between meetings may be filled by the Board
of Directors. A director elected to fill a vacancy in a class shall hold office
for a term expiring at the annual meeting of shareholders at which the term of
the class to which he was elected expires. Vacancies resulting from an increase
in the number of directors may be filled by the Board of Directors. Any such
director would serve for a term expiring at the next annual meeting of
shareholders of the Company and would not be designated as a member of any class
of directors unless elected by the shareholders at such annual meeting.
CONTINUING DIRECTORS
The following table sets forth certain information about those directors
whose terms of office will continue after the Annual Meeting. The information
as to age, principal occupation and directorships held has been furnished by
each such director.
<TABLE>
<CAPTION>
Served as
Director
Principal Continuously Committee
Name and Age Occupation(1) Since Memberships
------------ ------------- ----------- -----------
<S> <C> <C> <C>
CLASS I (term expires 1995)
Fentress Bracewell [72] . . . . . . . . . . . . Retired Partner, Bracewell & 1983 Compensation & Benefits
Patterson, L.L.P., Nominating
attorneys,
Houston, Texas
Killian L. Huger, Jr. [65] . . . . . . . . . . Vice President of Canal 1977 Executive
Barge Company, Inc., Conflict of
a marine towing Interest
company, New Orleans,
Louisiana(2)
V. H. Van Horn III [55] . . . . . . . . . . . . President, Chief Executive 1988 Finance & Audit
Officer and a director of Compensation & Benefits
National Convenience Stores
Incorporated, an operator
of convenience stores,
Houston, Texas
Steven B. Wolitzer [41] . . . . . . . . . . . . Managing Director, Lehman 1993 Executive
Brothers Inc., an Nominating
investment banking firm,
New York, New York
</TABLE>
(Table continued on following page)
3
<PAGE> 6
<TABLE>
<CAPTION>
Served as
Director
Principal Continuously Committee
Name and Age Occupation(1) Since Memberships
------------ ------------- ----------- -----------
<S> <C> <C> <C>
CLASS II (term expires 1996)
G. Walter Loewenbaum, II [49] . . . . . . . . . Chairman of the Board of the 1975 Executive
Company since February 4,
1987; Chairman of the Board
and President of Southcoast
Capital Corporation, an
investment banking firm,
Austin, Texas,
since May 1990(3)
Michael A. Nicolais [68] . . . . . . . . . . . Senior Managing Director of 1988 Executive
Carret & Co., an investment Finance & Audit
firm, New York, New York(4) Compensation & Benefits
Nominating
Ronald N. Tutor [54] . . . . . . . . . . . . . President and Chief 1992 Finance & Audit
Executive Officer of Nominating
Tutor-Saliba Corporation,
a construction company,
Sylmar, California(5)
Frank J. Ryan [62] . . . . . . . . . . . . . . Private Investor(6) 1993 Finance & Audit
Nominating
Conflict of Interest
</TABLE>
- --------
(1) Unless indicated otherwise in the table or in the section of this Proxy
Statement captioned "Executive Officers of the Company," the individuals
named in the table have held their positions for more than five years.
(2) For more than five years prior to becoming Vice President of Canal Barge
Company, Inc. in 1991, Mr. Huger was President of Central Marine Service,
Inc., a marine service and towing company located in New Orleans,
Louisiana.
(3) For more than five years prior to the formation of Southcoast Capital
Corporation in 1990, Mr. Loewenbaum was a Managing Director and a member
of the Board of Directors of Morgan Keegan & Company, Inc., an investment
banking company in New Orleans, Louisiana. Mr. Loewenbaum is also
Chairman of the Board of Envoy Corporation, a financial transaction
processor.
(4) From May of 1991 to March of 1993, Mr. Nicolais was associated with
Goldman Capital Management, Inc., an investment firm in the city of New
York. For more than five years prior to May of 1991, Mr. Nicolais was
President of The Clark Estates, Inc. See the section of this Proxy
Statement captioned "Beneficial Ownership of Capital Stock" for a
description of The Clark Estates, Inc. Mr. Nicolais is also a director of
Hitox Corporation of America, a manufacturer of titanium dioxide and Basin
Exploration Company, an oil and gas exploration and production company.
(5) Mr. Tutor is also Co-Chairman of The Carpenters Pension Trust for Southern
California. See the section of this Proxy Statement captioned "Beneficial
Ownership of Capital Stock".
(6) Mr. Ryan served as Group Vice President--Chemicals of Air Products and
Chemicals, Inc. (a manufacturer of industrial gases and chemicals
headquartered in Allentown, Pennsylvania) from 1978 until 1988, when he
became President and Chief Operating Officer of that corporation until
1990. Mr. Ryan is also a director of Fischer & Porter Company, a
manufacturer of process control instruments.
INFORMATION CONCERNING OPERATION OF THE BOARD OF DIRECTORS
In order to facilitate the various functions of the Board of Directors,
the Board has created several committees, including an Executive Committee, a
Finance and Audit Committee, an Employee Compensation
4
<PAGE> 7
and Benefits Committee, a Nominating Committee and a Conflict of Interest
Committee. An Annual Meeting Committee existed from March 31, 1993 to April
20, 1993 and an Ad Hoc Issues Evaluation Committee existed from May 20, 1993 to
December 31, 1993.
The members of the Executive Committee are Mr. Loewenbaum, Chairman, Mr.
Comer, Mr. Nicolais, Mr. Huger and Mr. Wolitzer. The Executive Committee,
subject to certain limitations specified in the bylaws of the Company, may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Company.
The members of the Finance and Audit Committee are Mr. Nicolais,
Chairman, Mr. Tutor, Mr. Ryan and Mr. Van Horn. The functions of the Company's
Finance and Audit Committee are to review the Company's financial statements
with the Company's independent and internal auditors; to determine the
effectiveness of the audit effort through regular periodic meetings with the
Company's independent and internal auditors; to determine through discussion
with the Company's independent and internal auditors that no unreasonable
restrictions were placed on the scope or implementation of their examinations;
to inquire into the effectiveness of the Company's financial and accounting
functions and internal controls through discussions with the Company's
independent and internal auditors and officers of the Company; to recommend to
the full Board of Directors the engagement or discharge of the Company's
independent auditors; and to review with the independent and internal auditors
the plans and results of the auditing engagement as well as each professional
service provided by the independent auditors.
The members of the Nominating Committee are Mr. Wolitzer, Chairman, Mr.
Bracewell, Mr. Nicolais, Mr. Tutor, Mr. Ryan and Mr. Slater. The function of
the Nominating Committee is to research, interview and recommend candidates to
fill vacancies in the membership of the Board of Directors. In addition, the
Nominating Committee will review shareholders' suggestions for nominees for
director that are submitted to the Nominating Committee, at the address of the
Company's principal executive offices, not less than 60 days in advance of the
anniversary date of this Proxy Statement.
On March 17, 1994, the Board of Directors created the Conflict of
Interest Committee and appointed Mr. Ryan Chairman and Mr. Huger and Mr. Slater
as members. The functions of the Conflict of Interest Committee are to approve
or disapprove transactions, other than compensation matters, between the Company
and any officer or director of the Company, and their respective affiliates and
to consider violations by senior management of the Company's Statement of Policy
Regarding Corporate Ethics and Conflicts of Interest.
The members of the Annual Meeting Committee were Mr. Loewenbaum,
Chairman, Mr. Bracewell, Mr. Comer, Mr. Conway, Mr. Huger, Mr. Marston, Mr.
Nicolais and Mr. Van Horn. The function of the Annual Meeting Committee was to
deal with all matters in connection with or relating to the 1993 Annual Meeting
of Shareholders.
The members of the Ad Hoc Issues Evaluation Committee were Mr. Wolitzer,
Chairman, Mr. Loewenbaum, Mr. Comer, Mr. Tutor and Mr. Slater. The function of
the Ad Hoc Issues Evaluation Committee was to investigate concerns raised by any
director with respect to any aspect of the business, operations, assets or
management of the Company with the view of developing and making recommendations
to the full Board with respect to the resolution of such concerns. The work of
this committee was completed by the end of 1993 and resulted in the creation of
the Conflict of Interest Committee.
During the year ended December 31, 1993, the Board of Directors held
nine meetings, the Executive Committee held four meetings, the Finance and Audit
Committee held six meetings, the Employee Compensation and Benefits Committee
held one meeting, the Annual Meeting Committee held four meetings and the
Nominating Committee held one meeting. The Ad Hoc Issues Evaluation Committee
held no formal meetings.
5
<PAGE> 8
EXECUTIVE COMPENSATION AND OTHER MATTERS
EMPLOYEE COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Employee Compensation and Benefits Committee (the "Committee")
includes only directors who are not employees of the Company. The Committee is
responsible for recommending to the full Board of Directors the compensation
arrangements for senior management and directors, recommending to the full Board
of Directors the adoption of compensation plans in which officers and directors
are eligible to participate and granting options or other benefits under such
plans.
COMPENSATION POLICIES AND PROGRAMS. The Committee believes that the
ultimate goal of the executive compensation program should be to encourage
maximization of shareholder value over the long term. The Committee believes
that the best way to do this is by tying the financial interests of the
Company's executives closely to the interests of the Company's shareholders
through a combination of annual cash incentives and stock options. The
Committee believes that the Company's executive compensation program should: (i)
motivate executives toward effective long-term management of Company operations
through stock programs which focus executives' attention on increasing
shareholder value, as measured by stock price; (ii) reward effective, efficient
ongoing management of Company operations through annual incentives which are
tied to Company and individual performance; and (iii) provide the ability to
attract and retain executives through salary levels which are competitive.
The Committee also believes that compensation programs should be
structured to be competitive with other leading cement companies, including
those used for comparison in the Company's stock performance graph, and that
compensation normally should be "performance-based" so as to provide tax
deductibility of executive compensation for the Company
The Company's executive compensation program includes base salary,
annual incentives, and stock options, each of which is tied to the executive's
performance.
BASE SALARY: It is the policy of the Committee that salaries
should reflect Company and individual performance. The Committee
reviews the performance of each senior executive officer annually.
Salary increases are granted to senior officers only in years during
which both Company and individual performance justify an increase.
Based on Company performance in 1992, salaries of the three highest-
paid officers were reduced in 1993 and no increases were granted to
other senior executives.
INCENTIVE PLAN: In 1991, after commissioning an independent
consultant to evaluate the Company's needs, the Board adopted a policy
that based incentive compensation on an objective formula.
Specifically, the Board of Directors adopted a plan in which incentives
are based on the Company's (i) operating return on assets compared to a
peer group of industry competitors and (ii) pre-tax return on equity,
compared to national averages for mining, manufacturing and trade
corporations as reported by the U.S. Department of Commerce. Bonus
awards are also designed to reflect the individual performance of each
executive. No bonuses under this plan will be awarded for any year in
which the Company reports a loss or fails to meet certain minimum
performance standards. Based on this new incentive plan, no incentive
bonuses were awarded based on either 1991, 1992 or 1993 performance.
STOCK OPTIONS: The Committee believes that stock options are
critical in motivating the long-term creation of shareholder value
because options focus executive attention on stock price as the primary
measure of performance. After commissioning an independent study of
competitive practices in 1991, the Committee recommended, and the Board
adopted, guidelines to cover the grant of options to senior executives.
The grant guidelines provide that all stock options will be granted at
full market value on the date of grant so that executives gain only when
the stock price increases and that normally grants will be made to an
executive no more frequently than once each three years (so that options
do not become considered a part of normal annual compensation).
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER ("CEO") IN 1993. The
Committee evaluates Company performance in connection with reviewing the
compensation of all executive officers and approves salary adjustments, bonus
awards, and stock option awards based on performance of the Company and each
executive,
6
<PAGE> 9
including the CEO. In February 1993, management recommended that in view of
industry conditions, salaries and perquisites of the three highest-paid
executives should be reduced. Effective February 1, 1993 the Committee
accepted management's recommendation, and the salary and perquisites of the CEO
were reduced by $68,000 as a cost-saving measure.
THE EMPLOYEE BENEFITS AND COMPENSATION COMMITTEE
Fentress Bracewell, Chairman
Michael A. Nicolais
V. H. Van Horn III
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning cash and non-cash
compensation paid or accrued for services in all capacities to the Company and
its subsidiaries during the year ended December 31, 1993 for each of the five
most highly compensated executive officers of the Company ("Named Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
--------------------------------- ------------
Fiscal Other Annual Stock All Other
Name & Principal Position Year Salary Bonus Compensation Options Compensation(2)
--------------------- ----- -------- -------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer 1993 $495,000 $ -0- - -0- $ -0-
President & Chief 1992 550,000 -0- - 63,000 -0-
Executive Officer 1991 550,000 -0- * -0- *
Edgar J. Marston III 1993 332,000 70,872(3) - -0- 178,375
Executive Vice President 1992 355,000 65,868(3) - 39,000 226,069
& General Counsel 1991 355,000 63,654(3) * 60,000 *
J. Bruce Tompkins 1993 287,000 -0- - 4,305
Executive Vice President- 1992 300,000 -0- - 94,000 -0-
Cement Group 1991 300,000 -0- * 50,000 *
James L. Persky 1993 220,000 -0- - -0- 4,497
Senior Vice President- 1992 220,000 -0- - 28,000 4,364
Finance 1991 220,000 -0- * 40,000 *
Dennis M. Thies 1993 215,000 -0- - -0- 4,497
Senior Vice President- 1992 215,000 -0- - 26,000 4,364
Environmental Systems 1991 215,000 -0- * 40,000 *
</TABLE>
- --------
(1) Although the officers receive certain perquisites such as a car
allowance and Company provided life insurance, the value of such
perquisites did not exceed the lesser of $50,000 or 10% of the officer's
salary and bonus.
(2) These amounts represent the Company's contribution to the Company's
Retirement Savings Plan and, in the case of Mr. Marston, the amounts
also include $15,524 and $19,082 related to an interest free loan from
the Company in 1993 and 1992, respectively, and $162,851 and $202,623
representing the amount accrued for financial reporting purposes as the
cost of a supplemental pension agreement in 1993 and 1992, respectively.
These accruals for Mr. Marston's supplemental pension are abnormally
high as the result of changes in actuarial assumptions during both
years. Mr. Marston's loan and supplemental pension agreement are
described elsewhere in this proxy statement.
(Notes continued on following page)
7
<PAGE> 10
(3) Represents a an after tax bonus of $50,000 paid pursuant to the terms of
Mr. Marston's employment agreement.
* Under the Securities and Exchange Commission's transition rules, no
disclosure is required
STOCK PERFORMANCE GRAPH
The following graph compares total return of the Company's Common Stock
against the S&P 500 Index and a cement industry peer group. The graph assumes
$100 was invested on December 31, 1988 in the Company's Common Stock, the S&P
500 Index and the peer group and that dividends were reinvested quarterly.
SOUTHDOWN, INC.
COMPARISON OF FIVE-YEAR
CUMULATIVE SHAREHOLDER RETURNS
TRANS./DIST.
MEASUREMENT PERIOD SOUTHDOWN, S&P 500 CO. PEER
(FISCAL YEAR COVERED) INC. INDEX INDEX
- --------------------- ---------- ------- -----------
1988 100.00 100.00 100.00
1989 138.39 131.69 95.16
1990 63.67 127.60 54.00
1991 70.67 166.47 63.32
1992 50.57 179.15 63.77
1993 127.08 197.21 114.26
* Peer group includes Giant Group, Ltd., Holnam Inc., Lafarge Corporation,
Lone Star Industries, Inc. and Medusa Corporation
COMPENSATION ARRANGEMENTS FOR AND TRANSACTIONS WITH MEMBERS OF THE BOARD OF
DIRECTORS
Prior to 1994, Mr. Loewenbaum received fees totaling $150,000 per year
for his services as Chairman of the Board. This amount was reduced to $36,000
per year in 1994. Members of the Board of Directors of the Company, other than
the Chairman of the Board and those directors who are employees of the Company
or its subsidiaries, receive a fee of $1,500 per month for their services as
directors. Members of the Executive, Finance and Audit, Employee Compensation
and Benefits and Nominating Committees of the Board of Directors, other than the
Chairman of the Board and those members who are employees of the Company or its
subsidiaries, receive an additional fee of $500 per month for their services on
each such committee.
8
<PAGE> 11
Members of the Board of Directors of the Company who are employees of the
Company or its subsidiaries do not receive a fee for their services as
directors or as members of committees.
Mr. Wolitzer, a member of the Board of Directors of the Company, is also
a managing director of Lehman Brothers Inc. which acted as an Underwriter in
connection with the Company's public offering of 1,725,000 shares of Series D
Preferred Stock and the offering of 1,782,500 shares of Common Stock for the
account of a selling shareholder in January 1994. Lehman Brothers Inc. has
provided from time to time investment banking services to the Company, for which
it has received customary fees and commissions.
Mr. Bracewell, a member of the Board of Directors of the Company, is a
retired partner of the law firm of Bracewell & Patterson, L.L.P., which firm
provides legal services to the Company and its subsidiaries. Mr. Marston,
Executive Vice President and General Counsel and a member of the Board of
Directors, serves in an "of counsel" capacity to Bracewell & Patterson, L.L.P.,
but has no voting or income-sharing interest in this law firm.
Mr. Tutor is President of Tutor-Saliba Corporation, which purchases
ready-mixed concrete from the Company on terms and conditions comparable to
those offered to other customers of the Company. According to Company records,
Tutor-Saliba purchases totaled $3.1 million in 1993.
For a description of compensation arrangements or transactions with
principal shareholders, see the disclosures in the Beneficial Ownership of
Capital Stock section of this Proxy Statement.
EMPLOYMENT AND OTHER AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Messrs. Comer, Marston, Tompkins, Persky and Thies. Under the
Employment Agreements, the Company employs Mr. Comer as President and Chief
Executive Officer at an annual salary of $520,000, Mr. Marston as Executive Vice
President and General Counsel at an annual salary of $349,000, Mr. Tompkins as
Executive Vice President--Cement Group at an annual salary of $301,000, Mr.
Persky as Senior Vice President--Finance at an annual salary of $250,000 and Mr.
Thies as Senior Vice President--Environmental Systems at an annual salary of
$226,000. Under the terms of the employment agreements, the salaries of
Messrs. Comer, Marston, Tompkins, Persky and Thies may be increased by the
Board of Directors of the Company (or the appropriate committee thereof) from
time to time. Notwithstanding the terms of their employment agreements,
Messrs. Comer, Marston and Tompkins recommended that the Employee Compensation
and Benefits Committee reduce their 1993 base salaries.
Under the Employment Agreements, each executive is entitled to receive,
in addition to his annual salary, bonuses pursuant to the Company's incentive
plan for senior officers and certain fringe benefits, including the right to
participate in all group benefit plans of the Company. The terms of the
Employment Agreements are through February 28, 1995 and thereafter the
Employment Agreements are automatically extended for one-year periods unless
there is notice of termination from either the Company or the executive. In the
event the executive's employment is terminated because of his death, disability,
voluntary termination of employment prior to the occurrence of a "change in
control event" (as defined at the end of this paragraph) or misappropriation of
funds or properties of the Company (as determined by three-quarters of the Board
of Directors), the executive shall receive only his annual salary on a pro rata
basis to the date of termination. If, prior to a change in control event, the
executive's employment is terminated pursuant to resolution of the Board of
Directors that the executive is no longer discharging his duties in a manner
consistent with the effective administration of the Company's affairs, the
executive shall be entitled to a lump sum payment equal to his base annual
salary. Upon the occurrence of a change in control event, all outstanding
options previously granted by the Company to the executive under any stock
option, stock appreciation or other employee plan will be accelerated and if the
executive's employment terminates following such change in control event, the
Company must pay the executive a lump sum termination payment equal to 2.99
times the sum of his base annual salary and the average annual bonus, if any,
received during the two years preceding the change in control event. Payments
made to such executives under all incentive agreements to which they are parties
shall be limited, in the event of a change in control by the provisions of
Sections 280G and 4999 of the Internal Revenue Code (the "Code"), only if the
after-tax payments to each executive are greater as a result of such
limitation. As
9
<PAGE> 12
used in the Employment Agreements, a "change in control event" is defined to be
the acquisition by any person or entity of (i) beneficial ownership of more
than 40% of the Company's outstanding voting securities or (ii) all or
substantially all of the Company's assets.
The Company's Employment Agreement with Mr. Marston contains certain
additional provisions. Under such agreement, the Company (i) extended a loan of
$500,000 to Mr. Marston on an interest-free basis to be repaid in ten annual
installments of $50,000 beginning June 1, 1988, subject to the outstanding
indebtedness being forgiven in the event that Mr. Marston becomes disabled, (ii)
in effect guaranteed Mr. Marston a yearly net cash bonus of at least $50,000 to
reduce the outstanding principal balance of his loan from the Company and (iii)
provided a guaranty or assurance arrangement to a bank on behalf of Mr. Marston
with respect to a loan that was outstanding prior to the date of his
employment. The current balance of these loans is $150,000 and $275,000,
respectively.
In December 1990 the Board of Directors approved a loan by the Company
to Mr. Comer to fund his purchase of shares of Series B Preferred Stock on the
open market. The principal amount of the loan was $746,553 and was secured by
the 21,000 shares of Series B Preferred Stock purchased by Mr. Comer. The loan
bore interest at the interest rate charged to the Company by its principal
lender plus 18 of 1%. The outstanding balance of the loan, including all
accrued interest thereon, was repaid by Mr. Comer in March 1994 through the
tender to the Company of approximately 27,000 shares of Common Stock of the
Company, following approval of such method of repayment by the Board of
Directors.
PRIOR YEAR SHAREHOLDER PROPOSAL
At the 1993 Annual Shareholders Meeting, a shareholder proposal
recommending that the Board of Directors adopt a policy against entering into
any agreement with officers and directors which provides compensation contingent
on a change of control without shareholder approval was voted on and approved.
As stated in the 1993 Proxy Statement, the Board of Directors believes
that it is vested with the responsibility of managing the affairs of the
Company, including negotiating the terms and conditions under which executives
are employed, and further believes that it is inappropriate for the shareholders
to approve the terms of any particular employment arrangement.
Although approximately 60% of the shares represented at the meeting
abstained or did not vote or voted against the proposal, the proposal was
approved and the Board has considered the recommendation. As a result, the
Board of Directors has set a policy that no employment agreements that grant
severance benefits to executive officers in the event of a change in control of
the Company will be granted, unless such employment agreements have been
unanimously approved by the members of the Board's Employee Compensation and
Benefits Committee. This policy will assure that all such agreements are
approved by a committee of outside, independent directors.
PENSION PLAN
Substantially all non-bargaining unit employees of the Company,
including the Named Officers, are covered by a defined benefit pension plan (the
"Southdown Plan") sponsored by the Company. The Company also sponsors and
contributes to other pension plans covering substantially all other employees.
The formula used to determine the retirement benefits to which an employee is
entitled at age 65 under the Southdown Plan is dependent on, among other things,
the employee's length of service, his average salary level for the five
consecutive years during his participation in the plan yielding the highest
average and his social security covered compensation. The remuneration used in
the calculation of benefits under the Southdown Plan is a participant's base
salary, excluding bonuses and other compensation. The base salary taken into
account and benefits payable are also limited by Section 415 of the Code.
Assuming continual employment at their current base salary until age 65,
Messrs. Comer, Marston, Tompkins, Persky and Thies will be entitled to an annual
retirement benefit of approximately $118,800, $64,000, $92,500, $105,800 and
$97,000, respectively.
10
<PAGE> 13
SUPPLEMENTAL PENSION AGREEMENTS
In order to provide more adequate retirement benefits for its higher
paid executives and key employees and to provide incentives for those employees
to remain with the Company, the Company has entered into supplemental pension
agreements (the "Agreements") with selected key employees of the Company and its
subsidiaries. Benefits under the Agreements are determined on the basis of an
employee's base salary, excluding any bonuses or other compensation. In
general, the Agreements are made only with employees who earn in excess of
$50,000 a year and who have a minimum of ten years' service with the Company and
its subsidiaries. Mr. Conway and Mr. Marston are parties to such Agreements.
Under the Agreements, a participating employee will be entitled to
receive a pension, commencing at age 65, payable during his life at an annual
rate equal to the amount by which 60% of his highest five years' average base
salary exceeds the aggregate benefits receivable by the employee under other
pension or retirement plans of the Company and other employers and under social
security. If an employee's employment terminates prior to age 65, he will be
entitled to a percentage of the pension otherwise payable at age 65, based on
the number of months he has worked for the Company since his execution of an
Agreement in relation to the total number of months he could have worked from
such date until his normal retirement date. The Agreements provide that (i) if
the employee's employment terminates after attaining age 61 for any reason other
than his voluntary termination without the Company's consent, his pension
commences on the first day of the month following such termination, and (ii) if
the provisions of clause (i) are not applicable and such employment terminates
for any reason other than death or disability, the employee's pension commences
on the first day of the month following the month in which the employee attains
age 65. If the employee dies before he has received ten years of payments, his
beneficiary will receive those payments required to complete the ten-year
period.
If a participating employee dies before the age of 65, he will be
considered fully vested at the date of death and his beneficiary will
immediately begin to receive monthly payments for ten years at the same rate the
employee would have received if he had achieved his normal retirement age. If a
participating employee becomes disabled, he will immediately begin to receive a
pension, payable monthly for the remainder his life at an annual rate equal to
the amount by which 60% of the greater of (i) his annual base salary during the
last complete calendar year prior to his disability or (ii) his rate of annual
base salary in effect at the time of his disability exceeds the aggregate
benefits received by the employee under other disability plans of the Company
and other employers and under social security.
Mr. Conway retired as an employee in 1990 and is receiving a retirement
pension under his Agreement of $93,973 per year. Assuming retirement at age 65
and the continuation of his current level of base salary until such retirement,
Mr. Marston will be entitled to receive a retirement pension of $209,400 per
year, reduced by the value of benefits then payable under other retirement plans
of the Company and other employers and by social security.
STOCK OPTIONS
1987 PLAN AND 1989 PLAN. The Company's 1987 Stock Option Plan (the
"1987 Plan") and 1989 Stock Plan (the "1989 Plan"), collectively referred to as
the "Plans," provide for the grant of stock options to key employees of the
Company and its affiliates. The Plans authorize the issuance of options to
purchase a total of 4,000,000 shares of Common Stock (2,000,000 shares under the
1987 Plan and 2,000,000 shares under the 1989 Plan). The Plans are administered
by the Employee Benefits and Compensation Committee (the "Committee"). Members
of the Committee are not eligible to participate in the Plans or any other plan
of the Company or its affiliates that the Committee administers at any time
within one year prior to appointment or while serving on the Committee. The
Committee is authorized to select key employees to whom stock options are
granted under the Plans and to determine the number of shares, exercise price
and terms of each option granted.
11
<PAGE> 14
OPTION GRANTS TO NAMED OFFICERS IN LAST FISCAL YEAR
No options were granted to the Named Officers during 1993. For a
discussion of the Employee Compensation and Benefits Committee's policy on
granting stock options to executive officers see the section of this Proxy
Statement captioned "Executive Compensation and Other Matters-- Employee
Compensation and Benefits Committee Report on Executive Compensation."
NAMED OFFICERS'
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held at Fiscal Options at Fiscal
Shares Year End Year End*
Acquired on Value -------------------------- --------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer 37 $ 897 266,542 0 $1,455,529 $ 0
Edgar J. Marston III 9,746 326,618 56,003 24,000 513,524 234,000
J. Bruce Tompkins 26,206 940,005 55,000 20,000 375,313 195,000
James L. Persky 15,067 435,514 36,001 16,000 292,508 156,000
Dennis M. Thies 4,213 151,887 74,770 16,000 664,381 156,000
</TABLE>
- --------
* Based upon the closing price of the Company's Common Stock on December
31, 1993.
During the year ended December 31, 1993, a total of 82,105 non-qualified
stock options were granted pursuant to the Plans at an average option price of
$14.19. As of December 31, 1993, 90 current and retired employees of the
Company held options under the Plans covering an aggregate of 1,301,022 shares
of Common Stock at an average option price of $17.60. Options to purchase an
aggregate of 201,178 and 1,130,200 shares of Common Stock remain available for
future grants under the 1987 Plan and the 1989 Plan, respectively.
1991 PLAN. The 1991 Nonqualified Stock Option for Non-Employee
Directors of Southdown, Inc. (the "1991 Plan") provides for the grant of stock
options to non-employee directors of the Company. The 1991 Plan is administered
by the Board of Directors and authorizes the grant of options to purchase up to
150,000 shares of Common Stock for issuance as nonqualified options.
Each director of the Company who is not an employee of the Company or
any of the Company's subsidiaries ("Eligible Director"), will be granted options
to acquire 10,000 shares of Common Stock on the date of such director's first
election to the Board. Additional options to acquire 5,000 shares of Common
Stock shall thereafter be awarded to each Eligible Director on the date of the
annual meeting of shareholders at which he or she is reelected to serve an
additional three-year term as a Director of the Company.
During the year ended December 31, 1993, Messrs. Nicolais and Tutor were
each awarded 5,000 non-qualified options at an option price of $11.69 upon
their reelection as Board members in May 1993. Messrs. Ryan, Slater and
Wolitzer were each awarded 10,000 non-qualified options at an option price of
$11.69 upon their election to the Board in May 1993. Options to purchase an
aggregate of 45,000 shares of Common Stock remain available for grant. During
the year ended December 31, 1993, there were no exercises of options under the
1991 Plan.
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table is furnished as of February 28, 1994, to indicate
beneficial ownership of shares of the Common Stock, Series A Preferred Stock,
Series B Preferred Stock and Series D Preferred Stock by each
(Table on following page)
12
<PAGE> 15
director, nominee and Named Officers, individually, and all officers and
directors of the Company, as a group. The information in the following table
was provided by such persons.
<TABLE>
<CAPTION>
Amount
and Percent
Nature of Title of of
Name of Individual Beneficial Class or Class or
or Group Ownership(1) Series Series
------------------ ------------ -------- --------
<S> <C> <C> <C>
Fentress Bracewell . . . . . . . . . 13,500(2) Common *
Clarence C. Comer . . . . . . . . . 141,620(3) Common *
21,000 Series B 2.19
Preferred
W. J. Conway . . . . . . . . . . . . 31,502(4) Common *
Killian L. Huger, Jr. . . . . . . . 60,550(5) Common *
G. Walter Loewenbaum, II . . . . . . 122,016(6) Common *
5,000(6) Series B *
Preferred
Edgar J. Marston III . . . . . . . . 18,896(7) Common *
Michael A. Nicolais . . . . . . . . 21,250(8) Common *
80,000(8) Series A 4.00
Preferred
6,000 Series B *
Preferred
James L. Persky . . . . . . . . . . 42,752(9) Common *
Frank J. Ryan . . . . . . . . . . . 2,500(10) Common *
Robert J. Slater . . . . . . . . . . 6,000(11) Common *
Dennis M. Thies . . . . . . . . . . 76,551(12) Common *
J. Bruce Tompkins . . . . . . . . . 48,839(13) Common *
Ronald N. Tutor . . . . . . . . . . 11,250(14) Common *
V. H. Van Horn III . . . . . . . . . 12,500(15) Common *
Steven B. Wolitzer . . . . . . . . . 2,500(16) Common *
All executive officers and directors
as a group (Twenty-one persons) . 738,857(17) Common 4.20
80,000 Series A 4.00
Preferred
32,000 Series B 3.34
Preferred
</TABLE>
- ------------
* Less than 1%
(1) Except as otherwise noted, each person listed in the table has sole voting
and sole investment power with respect to the shares of Capital Stock
listed in the table.
(2) Includes 12,500 shares of Common Stock as to which Mr. Bracewell holds
stock options that will be exercisable on April 30, 1994.
(3) Includes 100,000 shares of Common Stock as to which Mr. Comer holds stock
options that will be exercisable on April 30, 1994.
(Notes continued on following page)
13
<PAGE> 16
(4) Includes 25,000 shares of Common Stock as to which Mr. Conway holds stock
options that will be exercisable on April 30, 1994.
(5) Includes 26,456 shares of Common Stock owned by Mr Huger's wife, 11,022
shares of Common Stock registered in the name of custodians for his son
and 3,664 shares of Common Stock registered in the name of his son. Mr.
Huger has informed the Company that reference to such shares should not be
construed as an admission of his beneficial ownership thereof. Stock
ownership also includes 12,500 shares of Common Stock as to which Mr.
Huger holds stock options that will be exercisable on April 30, 1994.
(6) Includes 5,014 shares of Common Stock owned by Mr. Loewenbaum's wife,
5,000 shares of Common Stock and 2,000 shares of Series B Preferred Stock
owned by Southcoast Capital Corporation of which Mr. Loewenbaum is the
Chairman of the Board and President and largest shareholder and 20,000
shares of Common Stock and 3,000 shares of Series B Preferred Stock owned
by Mr. Loewenbaum's retirement plan. Mr. Loewenbaum has informed the
Company that reference to such shares of Common Stock and Series B
Preferred Stock should not be construed as an admission of his beneficial
ownership thereof. Stock ownership also includes 40,000 shares of Common
Stock as to which Mr. Loewenbaum holds stock options that will be
exercisable on April 30, 1994.
(7) Includes 1,705 shares held in the Company's Retirement Savings Plan.
(8) Includes 80,000 shares of Series A Preferred Stock which is owned by
various trusts of which Mr. Nicolais is co-trustee. Mr. Nicolais has
informed the Company that reference to such shares of Series A Preferred
Stock should not be construed as an admission of his beneficial ownership
thereof. Also includes 11,250 shares of Common Stock as to which Mr.
Nicolais holds stock options that will be exercisable on April 30, 1994.
(9) Includes 1,395 shares held in the Company's Retirement Savings Plan.
(10) Includes 2,500 shares of Common Stock as to which Mr. Ryan holds stock
options that will be exercisable on April 30, 1994.
(11) Includes 2,500 shares of Common Stock as to which Mr. Slater holds stock
options that will be exercisable on April 30, 1994.
(12) Includes 58,885 shares of Common Stock as to which Mr. Thies holds stock
options that will be exercisable on April 30, 1994 and 1,251 shares held
in the Company's Retirement Savings Plan.
(13) Includes 197 shares held in the Company's Retirement Savings Plan.
(14) Includes 11,250 shares of Common Stock as to which Mr. Tutor holds stock
options that will be exercisable on April 30, 1994. Mr. Tutor has
disclaimed beneficial ownership of these options.
(15) Includes 12,500 shares of Common Stock as to which Mr. Van Horn holds
stock options that will be exercisable on April 30, 1994.
(16) Includes 2,500 shares of Common Stock as to which Mr. Wolitzer holds stock
options that will be exercisable on April 30, 1994.
(17) Includes 404,344 shares of Common Stock subject to stock options held by
the officers and directors that will be exercisable on April 30, 1994 and
10,463 shares held in the Company's Retirement Savings Plan.
The following table sets forth information with respect to each person
who, as of the dates indicated in the footnotes below, was known by the Company
to be the beneficial owner of more than 5% of the Common Stock, the Series A
Preferred Stock, the Series B Preferred Stock or the Series D Preferred Stock,
as "beneficial ownership" is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(Table on following page)
14
<PAGE> 17
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NATURE OF OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL CLASS OR
OR SERIES BENEFICIAL OWNER OWNERSHIP(1) SERIES(1)
--------- ---------------- ------------ ---------
<S> <C> <C> <C>
Common Stock NewSouth Capital Management, Inc. 1,768,949(2) 10.30
755 Crossover Lane, Suite 233
Memphis, Tennessee 38117
Common Stock FMR Corp. 2,222,525(3) 12.45
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock Capital Growth Management Limited Partnership 1,207,400(4) 7.03
One International Place
Boston, Massachusetts 02110
Series A A Group 920,000(5) 46.02
Preferred Stock c/o The Clark Estates, Inc.
30 Wall Street
New York, New York 10005
Series A Pace & Co., for the Account of 300,000 15.01
Preferred Stock the Hourly Employees' Retirement Plan of
Southdown, Inc.
c/o Mellon Bank, N.A.
P.O. Box 360796M
Pittsburgh, Pennsylvania 15251
Series A American Trust plc 200,000 10.01
Preferred Stock c/o Citibank N.A.
20 Exchange Place
Level A
New York, New York 10043
Series A Bear, Stearns Securities Corp. 200,000 10.01
Preferred Stock One Metrotech Center North
Brooklyn, New York 11201-3862
Series A Pace & Co., for the Account of 149,000 7.45
Preferred Stock the Salaried Employees' Retirement Plan of
Southdown, Inc.
c/o Mellon Bank, N.A.
P.O. Box 360796M
Pittsburgh, Pennsylvania 15251
Series B Richard C. Blum & Associates, Inc. 63,200(6) 6.59
Preferred Stock The Carpenters Pension Trust for Southern California
909 Montgomery Street, Suite 400
San Francisco, California 94133
Series D The TCW Group, Inc. 308,900(7) 17.91
Preferred Stock 865 So. Figuero Street
Los Angeles, CA 90017
</TABLE>
- ---------
(1) The information contained in this table with respect to beneficial
ownership of Common Stock, Series B Preferred Stock and Series D Preferred
Stock was obtained from filings made by the named beneficial owners with
the Securities and Exchange Commission (the "SEC"). The information
contained in this table with respect to beneficial ownership of Series A
Preferred Stock is based upon information contained in filings made with
the SEC or in the Preferred Stock Purchase Agreements between the Company
and the purchasers of Series A Preferred Stock.
(Notes continued on following page)
15
<PAGE> 18
(2) NewSouth Capital Management, Inc., an investment adviser, has filed with
the SEC a Schedule 13G dated January 7, 1993 and two amendments dated
through April 7, 1993 reporting that NewSouth is the beneficial owner of
these shares because it has sole power to dispose of and vote 1,668,949 of
such shares and has sole power to dispose of and shared voting power with
respect to 100,000 of such shares.
(3) FMR Corp. and various affiliates have filed with the SEC a Schedule 13G
dated July 31, 1993 and one Amendment dated February 14, 1994 reporting
beneficial ownership of 2,222,525 shares of Common Stock, consisting of
1,845,100 issued and outstanding shares of Common Stock, 147,500 shares of
Common Stock issuable upon conversion of 295,000 shares of Series A
Preferred Stock, 144,125 shares of Common Stock issuable upon conversion
of 57,650 shares of Series B Preferred Stock and 85,800 shares of Common
Stock issuable upon exercise of 78,000 Common Stock Warrants. The
Schedule 13G reports that FMR Corp. or its affiliates has sole power to
vote 368,730 of such shares and sole power to dispose of all such shares.
(4) Capital Growth Management Limited Partnership ("CGM") has filed with the
SEC a Schedule 13G dated February 9, 1994 reporting an aggregate of
1,207,400 shares of Common Stock which it claims sole voting and
dispositive power. According to the Schedule 13G, CGM disclaims any
beneficial interest in these shares which are held in various client
accounts under the theory that such client accounts are not acting as a
"group" for purposes of Section 13(d) under the Exchange Act and thus, are
not otherwise required to attribute to each other the "beneficial
ownership" of securities "beneficially owned" under Rule 13d-3 promulgated
under the Exchange Act.
(5) The Clark Estates, Inc. has filed with the SEC a Schedule 13D dated July
4, 1987 and one amendment through March 31, 1991 reporting beneficial
ownership of 801,400 shares of Common Stock, consisting of 761,400 issued
and outstanding shares of Common Stock and 460,000 shares of Common Stock
issuable upon conversion of 920,000 shares of Series A Preferred Stock.
The Schedule 13D reports that the shares are beneficially owned by various
individual members of the Clark family or affiliated trusts, corporations
and foundations. The Clark Estates, Inc. provides such beneficial owners
with administrative services and shares voting and investment powers.
(6) Richard C. Blum & Associates, Inc. and The Carpenters Pension Trust for
Southern California (the "Carpenters Pension Trust") filed with the SEC a
Schedule 13D dated June 28, 1991 and fourteen amendments dated through
January 28, 1994 reporting beneficial ownership of 739,100 shares of
Common Stock consisting of 581,100 shares of Common Stock and 158,000
shares of Common Stock issuable upon conversion of 63,200 shares of Series
B Preferred Stock. The Schedule 13D reports that The Carpenters Pension
Trust for Southern California possesses economic beneficial ownership.
Full discretion, voting and acquisition and disposition authority have
been granted to its investment adviser, Richard C. Blum & Associates,
Inc., but the Carpenters Pension Trust has the power to terminate the
advisory agreement.
(7) The TCW Group, Inc. ("TCW") and its subsidiary, Trust Company of the West,
have filed with the SEC a Schedule 13G dated March 9, 1994 claiming sole
voting and disposition power of these shares. According to the Schedule
13G, TCW disclaims any beneficial interest in these shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1993, the Carpenters Pension Trust, Richard C. Blum &
Associates, Inc. as investment manager for the Carpenters Pension Trust, and the
Company agreed, pursuant to the terms of a Registration Rights and Lock Up
Agreement dated November 22, 1993, to file a Registration Statement covering
shares of Common Stock held by the Carpenters Pension Trust. On January 27,
1994, the Carpenters Pension Trust sold 1,782,500 shares pursuant to the
Registration Statement. As reported by its amendment to its prior Schedule 13D,
the Carpenters Pension Trust currently holds 581,100 shares of Common Stock and
63,200 shares of Series B Preferred Stock.
The Company may be obligated, pursuant to the Registration Rights and
Lock Up Agreement, to register the sale of the Carpenters Pension Trust's
remaining shares of Common Stock under the Securities Act of 1933, as amended.
The Company will not be obligated to keep that registration statement effective
after March 1, 1995.
16
<PAGE> 19
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the SEC
and the New York Stock Exchange, Inc. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file by these dates during 1993. All of these filing
requirements were satisfied on a timely basis in 1993. In making these
disclosures, the Company has relied solely on written statements of its
directors, executive officers and shareholders and copies of the reports that
they have filed with the SEC.
EXECUTIVE OFFICERS OF THE COMPANY
The following list sets forth the names, ages and offices of the present
executive officers of the Company serving until the annual meeting of the Board
of Directors to be held in 1994. The periods during which such persons have
served in such capacities are indicated in the description of business
experience of such persons below.
<TABLE>
<S> <C>
Clarence C. Comer (46) . . . . . . . . . . . . . . President, Chief Executive Officer
and Director
Edgar J. Marston III (54) . . . . . . . . . . . . Executive Vice President and General
Counsel and Director
J. Bruce Tompkins (44) . . . . . . . . . . . . . . Executive Vice President--Cement
Group
Eugene P. Martineau (54) . . . . . . . . . . . . . Executive Vice President--Concrete
Products Group
James L. Persky (45) . . . . . . . . . . . . . . . Senior Vice President--Finance
Joseph W. Devine (49) . . . . . . . . . . . . . . Senior Vice President--Human Resources
Dennis M. Thies (45) . . . . . . . . . . . . . . . Senior Vice President--Environmental
Systems
Stephen R. Miley (46) . . . . . . . . . . . . . . Vice President--Sales & Marketing
Karen A. Twitchell (38) . . . . . . . . . . . . . Treasurer
Wendell E. Phillips, II (48) . . . . . . . . . . . Secretary
Allan B. Korsakov (51) . . . . . . . . . . . . . . Corporate Controller
</TABLE>
Mr. Comer was elected President and Chief Executive Officer of the
Company effective February 4, 1987.
Mr. Marston was elected Executive Vice President and General Counsel of
the Company effective June 1, 1987.
Mr. Tompkins was elected Executive Vice President--Cement Group
effective June 16, 1989. From October 1988 to June 1989, Mr. Tompkins was Vice
President--Technical Services of the Company. From July 1988 to October 1988,
Mr. Tompkins was Vice President and General Manager of a subsidiary of
Gifford-Hill & Company, Inc. ("Gifford-Hill") a Dallas, Texas based cement and
concrete products manufacturer.
Mr. Martineau was elected Executive Vice President--Concrete Products
Group effective April 16, 1992. From April 1990 to April 1992, Mr. Martineau
was Division Vice President and General Manager of Florida Mining & Materials
Concrete Corp., a division of the Company. From September 1987 to April 1990,
Mr. Martineau was Executive Vice President of Allied Readymix Inc. of Decatur,
Georgia.
Mr. Persky was elected Senior Vice President--Finance of the Company
effective June 16, 1989. From April 1986 to June 1989, Mr. Persky was Vice
President--Finance of the Company.
17
<PAGE> 20
Mr. Devine was elected Senior Vice President--Human Resources of the
Company effective August 16, 1990. From July 1989 to August 1990, Mr. Devine
was General Manager of Human Resources for the Continental Can Company, a
Norwalk, Connecticut based packaging company. For more than 5 years prior to
July 1989, Mr. Devine was Director of Human Resources for the Continental Can
Company.
Mr. Thies was elected Senior Vice President--Environmental Systems on
April 16, 1992. From June 16, 1989 to April 1992, Mr. Thies was Senior Vice
President--Corporate Development. From February 1987 to June 1989, Mr. Thies
was Vice President--Corporate Development.
Mr. Miley was elected Vice President--Sales & Marketing of the Company
in May 1990. From August 1989 to May 1990 Mr. Miley was Director of Sales &
Marketing of the Company. From June 1987 to August 1989 Mr. Miley was a Vice
President of Southwestern Sunbelt Cement, a marketing joint venture managed and
fifty percent owned by the Company during this period.
Ms. Twitchell was elected Treasurer of the Company effective August 23,
1989. From January 1988 to August 1989, Ms. Twitchell was Manager of Corporate
Development of the Company.
Mr. Phillips was elected Secretary of the Company in January 1984.
Mr. Korsakov was elected Corporate Controller of the Company in June
1986.
RATIFICATION OF INDEPENDENT AUDITORS
The shareholders will be asked to ratify the appointment of Deloitte &
Touche as independent auditors of the books and accounts of the Company for the
year ending December 31, 1994. Such ratification will require the favorable
vote of the holders of a majority of the shares of Capital Stock present and
voting, in person or by proxy, at the Annual Meeting.
Representatives of Deloitte & Touche will be present at the Annual
Meeting, will be given an opportunity to make a statement, if they desire to do
so, and will be available to respond to appropriate questions.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
In order for shareholder proposals to be included in the Company's Proxy
Statement and proxy relating to the Company's 1995 Annual Meeting of
Shareholders, such proposals must be received by the Company at its principal
executive offices not later than December 8, 1994.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company.
Solicitations of proxies are being made by the Company through the mail, and may
also be made in person or by telephone. Employees and directors of the Company
may be utilized in connection with such solicitation. In addition, the Company
has retained Georgeson & Company, Inc. to assist in soliciting proxies for a fee
of $7,000 plus out-of-pocket expenses. The Company will also request brokers
and nominees to forward soliciting materials to the beneficial owners of the
Capital Stock held of record by such persons and will reimburse them for their
reasonable forwarding expenses.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and has not been informed that any other matters are to be
presented by others. In the event any other matters properly
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<PAGE> 21
come before the Annual Meeting, the persons named in the enclosed form of proxy
will vote all proxies in accordance with their best judgment on such matters.
Whether or not you are planning to attend the Annual Meeting, you are
urged to complete, date and sign the enclosed proxy and return it in the
enclosed stamped envelope at your earliest convenience.
By Order of the Board of Directors
Wendell E. Phillips, II
Secretary
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SOUTHDOWN, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 19, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Killian L. Huger,
Jr., Fentress Bracewell and Michael A. Nicolais, and each of them,
attorneys and agents, with full power of substitution to vote as proxy
all the shares of Common Stock, Preferred Stock, $.70 Cumulative
Convertible Series A, Preferred Stock, $3.75 Convertible Exchangeable
Series B and Preferred Stock, $2.875 Cumulative Convertible Series D
standing in the name of the undersigned at the Annual Meeting of
Shareholders of Southdown, Inc. (the "Company") to be held at the
Doubletree Hotel at Allen Center, 400 Dallas Street, Houston, Texas at
10:15 A.M., Houston time, on Thursday, May 19, 1994, and at any
adjournment(s) thereof, in accordance with the instructions noted
below, and with discretionary authority with respect to such other
matters, not known or determined at the time of the solicitation of
this proxy, as may properly come before said meeting or any
adjournment(s) thereof. Receipt of notice of the meeting and Proxy
Statement dated March 31, 1994 is hereby acknowledged.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
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<PAGE> 23
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS HEREON. IN THE
ABSENCE OF SUCH SPECIFICATIONS, THE PROXY WILL BE VOTED "IN FAVOR" OF
EACH NOMINEE FOR DIRECTOR AND "FOR" ON PROPOSAL 2.
The undersigned hereby revokes any proxies heretofore given and
directs said attorneys to act or vote as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed / / WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary) nominees listed
</TABLE>
NOMINEES -- CLARENCE C. COMER, EDGAR J. MARSTON III, W. J. CONWAY and
ROBERT J. SLATER
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
----------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE, as
independent auditors of the books and accounts of the Company for
the year ending December 31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
Dated
---------------------------------,1994
---------------------------------
---------------------------------
Signature of Shareholders(s)*
* Please sign as name appears.
Joint owners each should sign.
When signing as attorney,
trustee, administrator,
executor, etc., please indicate
your full title as such.
PLEASE DATE, SIGN AND MAIL YOUR PROXY PROMPTLY. PLEASE DO NOT FOLD
THIS PROXY.
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