SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Amendment No. ___________]
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
SOUTHDOWN, INC.
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A.
[ ] $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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________
(5) Total fee paid:
____________________________________________________________________
[ ] 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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____________________________________________________________________
(4) Date filed:
____________________________________________________________________
<PAGE>
SOUTHDOWN, INC.
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 18, 1995
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 9:15 A.M., Houston time, on Thursday, May 18, 1995 for the following
purposes:
1. To elect three directors as members of Class I of the Board of
Directors, to serve until the 1998 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 LLP as the independent auditors of the books and accounts
of the Company for the year ending December 31, 1995.
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 24, 1995 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
April 6, 1995
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>
SOUTHDOWN, INC.
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
(713) 650-6200
April 6, 1995
-----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1995
-----------------
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
18, 1995, 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 April 6, 1995.
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 LLP as
independent auditors of the books and accounts of the Company for the year
ending December 31, 1995. 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 24, 1995 are
entitled to notice of and to vote at the Annual Meeting. As of March 24, 1995,
the issued and outstanding voting securities of the Company consisted of (I)
17,265,887 shares of common stock, par value $1.25 per share (the "Common
Stock"), (II) 1,994,000 shares of Preferred Stock, $.70 Cumulative Convertible
Series A (the "Series A Preferred Stock"), (III) 914,360 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
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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 I will expire at the Annual Meeting, and the nominees listed
below, if elected as Class I directors, will serve for a three-year term
expiring at the annual meeting of shareholders in 1998 and until their
successors are duly elected and have qualified. The present terms of office of
Class II and Class III directors of the Company expire in 1996 and 1997
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 certain 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<F1> SINCE MEMBERSHIPS
------------ -------------- ------------ ------------
<S> <C> <C> <C>
CLASS I (term expires 1995)
Killian L. Huger, Jr. [66]....... Vice President of Canal Barge 1977 Executive
Company, Inc., a marine towing Finance & Audit
company, New Orleans, Conflict of Interest
Louisiana<F2>
V. H. Van Horn III [56].......... President, Chief Executive 1988 Executive
Officer and a director of Compensation & Benefits
National Convenience Stores
Incorporated, an operator of
convenience stores, Houston,
Texas
Steven B. Wolitzer [42].......... Managing Director, Lehman 1993 Executive
Brothers Inc., an investment Finance & Audit
banking firm, New York, Nominating
New York
- ------------
<FN>
<F1> Unless indicated otherwise in the table, the individuals named in the table
have held their positions for more than five years.
<F2> 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.
-2-
</FN>
</TABLE>
Under the Company's Bylaws, no person who has attained the age of 70 is
eligible for election to the Board of Directors. Consequently, Mr. Fentress
Bracewell, a Class I director, who has served the Company as a director since
1983, has not been renominated for election at the Annual Meeting. At a meeting
held on February 14, 1995, the Board of Directors decided not to nominate a
replacement for Mr. Bracewell and to amend the Bylaws of the Company to reduce
the size of the Board from its present twelve members to eleven effective
immediately after the Annual Meeting.
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.
<PAGE>
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
PRINCIPAL CONTINUOUSLY COMMITTEE
NAME AND AGE OCCUPATION<F1> SINCE MEMBERSHIPS
------------ -------------- ------------ -----------
<S> <C> <C> <C>
CLASS II (term expires 1996)
Frank J. Ryan [63]............... Chairman of the Board of 1993 Compensation & Benefits
Directors since March 1995<F2> Nominating
Conflict of Interest
G. Walter Loewenbaum, II [50].... Chairman of the Board and 1975 Executive
President of Southcoast Capital
Corporation, an investment
banking firm, Austin, Texas,
since May 1990<F3>
Michael A. Nicolais [69]......... Senior Managing Director of 1988 Executive
Carret & Co., an investment Finance & Audit
firm, New York, New York<F4> Nominating
Ronald N. Tutor [55]............. President and Chief Executive 1992 Executive
Officer of Tutor-Saliba Finance & Audit
Corporation, a construction Nominating
company, Sylmar, California
CLASS III (term expires 1997)
Clarence C. Comer [47]........... President and Chief Executive 1986 Executive
Officer<F5>
Edgar J. Marston III [55]........ Executive Vice President and 1987
General Counsel
-3-
W. J. Conway [73]................ Retired Vice Chairman of the 1982
Board of Directors of the
Company<F6>
Robert J. Slater [57]............ President, Jackson Consulting, Inc., 1993 Nominating
a private consulting and Conflict of Interest
investment company specializing Compensation & Benefits
in advising basic industries,
New Canaan, Connecticut<F7>
- ------------
<FN>
<F1> 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.
<F2> Mr. Ryan was elected Chairman of the Board of the Company effective March
16, 1995. Since 1990 Mr. Ryan has been a private investor and prior to that
was President and Chief Operating Officer of Air Products and Chemicals,
Inc., a manufacturer of industrial gases and chemicals.
<F3> Mr. Loewenbaum served as Chairman of the Board of the Company for more than five years
prior to his resignation from that position in 1994. Mr. Loewenbaum is also Chairman of
the Board of Envoy Corporation, a financial transaction processor.
<F4> 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.
<F5> Mr. Comer is also a director of Consolidated Graphics, Inc., a company engaged in
commercial and financial printing.
<F6> Mr. Conway served as Vice Chairman of the Board for more than five years
prior to his retirement from that position in 1994.
<F7> Mr. Slater is also a director of National Steel Corp., a manufacturer of
flat rolled carbon steel products, and First Industrial Realty Trust, Inc.,
owner and operator of industrial real estate.
</FN>
</TABLE>
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 standing committees, including an Executive Committee,
a Finance and Audit Committee, an Employee Compensation and Benefits Committee,
a Nominating Committee and a Conflict of Interest Committee.
The members of the Executive Committee are Mr. Loewenbaum, Chairman, Mr.
Comer, Mr. Huger, Mr. Nicolais, Mr. Tutor, Mr. Van Horn 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. Huger, Mr. Tutor, and Mr. Wolitzer. The functions of the Company's Finance
and Audit Committee are to review the Company's financial statements with the
Company's independent auditors; to determine the effectiveness of the audit
effort through regular periodic meetings with the Company's independent and
internal auditors; to determine through
-4-
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 Employee Compensation and Benefits Committee are Mr.
Bracewell, Chairman, Mr. Ryan, Mr. Slater and Mr. Van Horn. The functions of the
Employee Compensation and Benefits Committee include reviewing the existing
compensation arrangements with officers and employees, periodically reviewing
the overall compensation program of the Company and recommending to the Board
modifications of such program which, in the view of the development of the
Company and its business, the Committee believes are appropriate, recommending
to the full Board of Directors the compensation arrangements for senior
management and directors, and 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.
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.
The members of the Conflict of Interest Committee are Mr. Ryan, Chairman,
Mr. Huger and Mr. Slater. 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.
During the year ended December 31, 1994, the Board of Directors held six
meetings, the Executive Committee held one meeting, the Finance and Audit
Committee held six meetings, the Employee Compensation and Benefits Committee
held two meetings, the Nominating Committee held three meetings and the Conflict
of Interest Committee held no formal meetings. During 1994 Mr. Tutor and Mr.
Bracewell attended less than 75% of the meetings of the Board of Directors.
In November 1994, the Board of Directors formed the Ad Hoc Special Committee
to evaluate the Company's cement and concrete operations, assess the Company's
existing corporate organization and management structure and to prepare and
submit a report to the Board on the results of its evaluation and, if warranted,
recommend changes to the Company's organization and management structure. This
committee completed its study and submitted a report to the full Board of
Directors and was eliminated as a standing committee in March 1995. The members
of the Ad Hoc Special Committee were Mr. Ryan, Chairman, Mr. Conway and Mr.
Tutor.
EXECUTIVE COMPENSATION AND OTHER MATTERS
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, 1994 for each of the five
most highly compensated executive officers of the Company ("Named Officers").
-5-
<PAGE>
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
FISCAL OTHER ANNUAL STOCK ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION<F1> OPTIONS COMPENSATION<F2>
- ------------------------- ---- -------- ---------- ---------------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer 1994 $520,000 $ -0- -- $37,000 $ -0-
President & Chief 1993 495,000 -0- -- -0- -0-
Executive Officer 1992 550,000 -0- -- 63,000 -0-
Edgar J. Marston III 1994 349,000 84,818<F3> -- 20,000 26,248
Executive Vice President 1993 332,000 70,872<F3> -- -0- 178,375
& General Counsel 1992 355,000 65,868<F3> -- 39,000 226,069
J. Bruce Tompkins 1994 301,000 -0- -- 17,000 9,378
Executive Vice President- 1993 287,000 -0- -- -0- 4,305
Cement Group 1992 300,000 -0- -- 94,000 -0-
Eugene P. Martineau 1994 250,000 -0- -- 15,000 7,841
Executive Vice President- 1993 210,000 -0- -- -0- 3,855
Concrete Products Group 1992 198,623 -0- -- 40,000 7,234
James L. Persky 1994 250,000 -0- -- 15,000 7,838
Executive Vice President- 1993 220,000 -0- -- -0- 4,497
Finance and Administration 1992 220,000 -0- -- 28,000 4,364
- ------------
<FN>
<F1> 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.
<F2> 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 $12,223, $15,524 and $19,082 related to an interest free loan from
the Company in 1994, 1993 and 1992, respectively, and $14,025, $162,851 and
$202,623 representing the amount accrued for financial reporting purposes
as the cost of a supplemental pension agreement in 1994, 1993 and 1992,
respectively. Mr. Marston's loan and supplemental pension agreement are
described elsewhere in this Proxy Statement.
<F3> Represents an after tax bonus of $50,000 paid pursuant to the terms of
Mr. Marston's employment agreement.
</FN>
</TABLE>
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 senior management 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 senior 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
-6-
Company and individual performance; and (III) provide the ability to attract and
retain executives through salary levels which are competitive with other leading
cement companies, including those used for comparison in the Company's stock
performance graph.
The Company's executive compensation program includes base salary, annual
incentives, and stock options, each of which is tied to the Company's and
executive's performance.
BASE SALARY: It is the policy of the Committee that salaries should
reflect Company and individual performance in meeting the goal of maximizing
shareholder value. Some Company performance measures that are considered by
the Committee are profitability, positive stock price trends and effective
cash flow and balance sheet management. Individual performance measures
considered by the Committee vary depending on the executive's sphere of
responsibility, but generally include revenue growth, expense control,
improvement of products and services and asset management. No specific
weighting is applied to any particular measure. The Committee reviews the
performance of each senior executive officer, including the Chief Executive
Officer ("CEO"), annually. Salary increases are granted to senior executive
officers only in years during which both the Company`s and individual
performance justify an increase and are limited to ranges competitive with
other comparable companies. The Committee has not yet met to consider
changes in the base salaries of the Company's senior executive officers for
1995.
INCENTIVE PLAN: The incentive compensation plan or bonus plan is based
upon an objective formula. Specifically, a bonus pool is computed based upon
the Company's (I) operating return on assets compared to a peer group
comprised of industry competitors whose stocks are publicly traded 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 from this pool are made 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. The Committee has not yet
met to consider bonus awards for the Company's senior executive officers for
1995.
As a condition of his initial employment in 1987 and pursuant to his
Employment Agreement, Mr. Marston was guaranteed a minimum after-tax, annual
bonus of $50,000 for the first ten years of his employment. This arrangement
preceded the formulation of the incentive plan, and as a result, this
minimum bonus is paid without regard to the Company's performance.
STOCK OPTIONS: The Committee believes that stock options are critical
in motivating the long-term creation of shareholder value because stock
options focus executive attention on stock price as the primary measure of
performance. The Committee considers the grant of options to senior
executive officers each year and bases the grants on Company and individual
performances and competitive practices within the industry. The Committee
has established several guidelines to cover the grant of options to senior
executive officers. These guidelines provide that (a) all stock options will
be granted at full market value on the date of grant so that executives
realize gain only to the extent that the Company's stock price appreciates
and (b) the quantity of options granted will be tied to industry practice
and the compensation level of the executive. In addition, since the options
vest over a period of years they enhance the ability of the Company to
retain senior executive officers while encouraging such officers to take a
long-term view in their decisions.
COMPENSATION AGREEMENTS. The Company has entered into employment agreements
with certain of its executives which specify the terms and conditions of their
employment. Central to these agreements are post-takeover employment
arrangements or guarantees. The Committee believes that these change in control
agreements are an essential aspect of the terms of employment of senior
executive officers and recognizes the importance to the Company of retaining its
senior executive officers during and after the disruption typically provoked by
a takeover offer (whether or not ultimately successful). See "Employment and
Other Agreements" for a detailed discussion of the terms of these employment
agreements.
The Company has, under certain circumstances, granted supplemental pensions
to certain employees. The grant of a supplemental pension is made only in
special employment situations and is not limited to executive
-7-
officers. Mr. Marston is the only current executive officer with a supplemental
pension agreement. See "Supplemental Pension Agreements" for a detailed
discussion of this plan.
COMPENSATION OF THE CEO. The CEO's salary, annual incentive payments and
stock option grants are determined in part based upon the same Company and
individual performance measures described above. Within this framework, the
CEO's compensation is based upon the Committee's judgement concerning the CEO's
individual contribution to the business, level of responsibility and career
experience. Although none of these factors has a specific weight and no
particular formulas or procedures are used, primary consideration is given to
the CEO's individual contribution to the business. This type of evaluation along
with a periodic review of the compensation levels of other CEO's and executive
officers of other cement companies of similar size, are the main factors in
determining the CEO's total compensation package.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. In its 1994 tax year, the
Company became subject to U.S. tax legislation adopted in 1993 that could limit
the deductibility of certain compensation payments to its executive officers.
The Company believes that any compensation realized in connection with the
exercise of stock options granted by the Company will continue to be deductible
as performance-based compensation. The Committee will continue to evaluate the
impact of this legislation on its cash compensation programs and submit any
appropriate proposals to the stockholders at future meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Mr. Bracewell,
Chairman of the Committee, is a retired partner of the law firm of Bracewell &
Patterson, L.L.P., which provides legal services to the Company and its
subsidiaries.
THE EMPLOYEE BENEFITS AND COMPENSATION COMMITTEE
Fentress Bracewell, Chairman
Frank J. Ryan
Robert J. Slater
V. H. Van Horn III
STOCK PERFORMANCE GRAPH
The following graph compares total return of the Company's Common Stock
against the S&P 500 Index and a peer group index consisting of public companies
in the cement industry.* The graph assumes that $100 was invested on December
31, 1987 in the Company's Common Stock, the S&P 500 Index and the peer group and
that dividends thereon were reinvested quarterly.
-8-
STOCK PERFORMANCE GRAPH
[LINEAR GRAPH PLOTTED FROM THE DATA SUPPLIED BELOW]
1987 1988 1989 1990 1991 1992 1993 1994
---- ------ ------ ------ ------ ------ ------ ------
Southdown........ 100 117.73 162.93 74.95 83.20 59.54 149.60 88.53
Peer Group....... 100 134.29 127.79 72.51 85.02 85.62 153.42 121.89
S & P 500........ 100 116.61 156.56 148.78 194.11 208.90 229.96 232.99
* The peer group includes Giant Group, Ltd., Holnam Inc., Lafarge Corporation,
Lone Star Industries, Medusa Corporation and Centex Construction Products,
Inc. Information for Holnam Inc. is included only for years prior to 1994
when it ceased being a public company. Information for Centex Construction
Products, Inc. is included only for 1994, its first year as a public
company.
COMPENSATION ARRANGEMENTS FOR AND TRANSACTIONS WITH MEMBERS OF THE
BOARD OF DIRECTORS
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. 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. Ryan was elected Chairman of the Board of the Company on March 16, 1995
and as such will be paid annual compensation in an amount yet to be determined
by the Board of Directors.
The 1991 Nonqualified Stock Option Plan 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
-9-
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.
The Directors' Retirement Plan of the Company provides a retirement benefit
to all directors who are not covered by a qualified retirement plan of the
Company and who have served on the Board for a minimum of five years. In the
event of a change in control of the Company, the retirement benefits vest
immediately without regard to the five years of service requirement. The annual
benefit payable at the later of age 65 or the date of retirement is equal to
two-thirds of the total fees paid to the director during his last twelve months
of service on the Board and is payable for a period equal to the period of his
service on the Board. Should the director die before full payment of this
retirement benefit, his surviving spouse will be entitled to fifty percent of
the remaining obligation.
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 approximately $750,000 in 1994.
EMPLOYMENT AND OTHER AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Messrs. Comer, Marston, Tompkins, Martineau and Persky. Under
the Employment Agreements, the Company employs Mr. Comer as President and Chief
Executive Officer at an annual salary of no less than $520,000, Mr. Marston as
Executive Vice President and General Counsel at an annual salary of no less than
$349,000, Mr. Tompkins as Executive Vice President-Cement Group at an annual
salary of no less than $301,000, Mr. Martineau as Executive Vice
President-Concrete Products Group at an annual salary of no less than $250,000
and Mr. Persky as Executive Vice President-Finance and Administration at an
annual salary of no less than $250,000. Under the terms of the employment
agreements, the salaries of Messrs. Comer, Marston, Tompkins, Martineau and
Persky may be increased by the Board of Directors of the Company (or the
appropriate committee thereof) from time to time.
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 expire on February 28, 1996 but thereafter 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
-10-
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 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 guaranteed bank loan, which had an outstanding principal balance of $275,00
at the beginning of 1994, has been paid in full. Consequently, the guaranty or
assurance arrangement to the bank on behalf of Mr. Marston has been
extinguished. The current balance of the loan from the Company is $100,000.
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 Southdown Plan is funded on an
actuarial basis. 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 any bonuses or other compensation. The maximum amount any
employee may receive under the Southdown Plan is subject to the limitations
described in the provisions of Section 415(d) of the Code.
The following table sets forth the annual retirement benefits to which a
salaried employee having attained age 65 with ten, fifteen, twenty, twenty-five,
thirty or thirty-five years of continuous service with the Company or one of its
subsidiaries at the indicated five-year average salary levels would be entitled
in 1994 under the Southdown Plan. The table takes into account the limitations
under Code Section 415.
YEARS OF SERVICE AT AGE 65
CONSECUTIVE FIVE YEAR ------------------------------------------------------
AVERAGE COMPENSATION 10 15 20 25 30 35
- ------------------------ ------- ------- ------- ------- -------- --------
$ 50,000 ............... $ 6,651 $ 9,976 $13,302 $16,628 $ 19,953 $ 23,278
100,000 ............... 14,901 22,351 29,802 37,252 44,703 52,153
150,000 ............... 23,151 34,726 46,302 57,877 69,453 81,028
200,000 ............... 31,401 47,101 62,802 78,502 94,203 109,903
250,000 and over ...... 37,314 55,972 74,629 93,286 111,944 120,000
Messrs. Comer, Marston, Tompkins, Martineau and Persky have been credited
with seventeen, seven, six, five and nine years of service, respectively, under
the terms of the Southdown Plan described above and were paid base salaries of
$520,000, $349,000, $301,000, $250,000, and $250,000, respectively, during the
year ended December 31, 1994.
Assuming continual employment at their current base salary until age 65,
Messrs. Comer, Marston, Tompkins, Martineau and Persky will be entitled to an
annual retirement benefit of approximately $120,000, $64,000, $96,300, $40,000
and $91,900, respectively. In all cases, the computations of the Named Officers'
retirement benefit were limited by the Code Section 415 limitations in effect at
the beginning of 1995 and thus, were not based upon their current base salaries.
The Company has entered into supplemental pension agreements with Messrs.
Conway and Marston, which are described below.
-11-
SUPPLEMENTAL PENSION AGREEMENTS
In certain special employment situations, the Company has entered into
supplemental pension agreements (the "Agreements") with selected executive
officers of the Company and its subsidiaries. Mr. Conway and Mr. Marston are
parties to such Agreements.
Benefits under the Agreements are determined on the basis of an employee's
base salary, excluding any bonuses or other compensation. 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. Mr. Conway retired as
an employee in 1990 and is receiving a retirement pension under his Agreement of
$93,973 per year after reduction for the value of benefits paid under other
retirement plans of the Company and other employers and social security.
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 Option 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. Unoptioned shares available for grant as of
December 31, 1994 under the Plans were 1,098,578.
OPTION/SAR GRANTS TO NAMED OFFICERS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/ ANNUAL RATES OF STOCK
UNDERLYING SARS PRICE APPRECIATION
OPTIONS/ GRANTED TO EXERCISE FOR OPTION TERM <F3>
SARS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED<F1> FISCAL YEAR SHARE<F2> DATE 0% 5% 10%
---- ----------- ----------- --------- ------------ --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Clarence C. Comer ...... 37,000 17.79 $ 21.25 6/14/04 -0- $494,468 $1,253,080
Edgar J. Marston III ... 20,000 9.62 21.25 6/14/04 -0- 267,280 677,341
J. Bruce Tompkins ...... 17,000 8.17 21.25 6/14/04 -0- 227,188 575,739
Eugene P. Martineau .... 15,000 7.21 21.25 6/14/04 -0- 200,460 508,005
James L. Persky ........ 15,000 7.21 21.25 6/14/04 -0- 200,460 508,005
- ------------
<FN>
<F1> All options were granted under the Company's 1989 Plan and became
exercisable in annual increments of 25% beginning February 13, 1995.
<F2> All options granted are exercisable at the market value (average of high
and low stock prices for the Company's stock as reported in the Wall Street
Journal) of the stock on the date of the grant.
<F3> Potential realizable value was reported net of the option exercise price,
but before taxes associated with the exercise. These amounts represent
stated assumed rates of appreciation only. Actual values realized, if any,
on stock option exercises are dependent on the future performance of the
Common Stock and the
-12-
<PAGE>
officer's continued employment throughout the vesting period. Accordingly,
the amounts reflected in this table may not necessarily be achieved.
</FN>
</TABLE>
NAMED OFFICERS'
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT FISCAL 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 ...... 166,542 $1,964,764 100,000 37,000 $ -0- $ -0-
Edgar J. Marston III ... 68,003 784,023 -0- 32,000 -0- -0-
J. Bruce Tompkins ...... 65,000 666,892 -0- 27,000 -0- -0-
Eugene P. Martineau .... -- -- 57,000 33,000 16,500 11,000
James L. Persky ........ 44,001 492,487 -0- 23,000 -0- -0-
- -------------
* Based upon the closing price of the Company's Common Stock on December 31,
1994.
</TABLE>
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table is furnished as of February 28, 1995, 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 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.
-13-
<PAGE>
AMOUNT
AND PERCENT
NATURE OF TITLE OF OF
NAME OF INDIVIDUAL BENEFICIAL CLASS OR CLASS OR
OR GROUP OWNERSHIP(1) SERIES SERIES
------------------ ------------- ------ --------
Fentress Bracewell.......... 14,750(2) Common *
Clarence C. Comer........... 123,884(3) Common *
21,000 Series B 2.30
Preferred
W. J. Conway................ 32,752(4) Common *
Killian L. Huger, Jr. ...... 61,800(5) Common *
G. Walter Loewenbaum, II.... 37,016(6) Common *
150(6) Series B *
Preferred
Edgar J. Marston III........ 18,713(7) Common *
Eugene P. Martineau......... 70,451(8) Common *
Michael A. Nicolais......... 22,500(9) Common *
80,000(9) Series A 4.01
Preferred
6,000 Series B *
Preferred
James L. Persky............. 54,884(10) Common *
Frank J. Ryan............... 20,000(11) Common *
Robert J. Slater............ 14,750(12) Common *
J. Bruce Tompkins........... 63,555(13) Common *
Ronald N. Tutor............. 121,100(14) Common *
V. H. Van Horn III.......... 13,750(15) Common *
Steven B. Wolitzer.......... 5,000(16) Common *
All executive officers and
directors as a group
(Twenty persons)............ 843,739(17) Common 4.76
80,000 Series A 4.01
Preferred
27,150 Series B 2.97
Preferred
900 Series D *
Preferred
- ------------
* 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 13,750 shares of Common Stock as to which Mr. Bracewell holds
stock options that will be exercisable on April 30, 1995.
(3) Includes 109,250 shares of Common Stock as to which Mr. Comer holds stock
options that will be exercisable on April 30, 1995.
-14-
(4) Includes 26,250 shares of Common Stock as to which Mr. Conway holds stock
options that will be exercisable on April 30, 1995.
(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 13,750 shares of Common Stock as to which Mr. Huger
holds stock options that will be exercisable on April 30, 1995.
(6) Includes 5,014 shares of Common Stock owned by Mr. Loewenbaum's wife and
150 shares of Series B Preferred Stock owned by Mr. Loewenbaum's children.
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.
(7) Includes 17,000 shares of Common Stock as to which Mr. Marston holds stock
options that will be exercisable on April 30, 1995 and 1,713 shares held in
the Company's Retirement Savings Plan.
(8) Includes 68,750 shares of Common Stock as to which Mr. Martineau holds
stock options that will be exercisable on April 30, 1995 and 1,701 shares
held in the Company's Retirement Savings Plan.
(9) 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 12,500 shares of Common Stock as to which Mr.
Nicolais holds stock options that will be exercisable on April 30, 1995.
(10) Includes 11,750 shares of Common Stock as to which Mr. Persky holds stock
options that will be exercisable on April 30, 1995 and 1,777 shares held in
the Company's Retirement Savings Plan.
(11) Includes 5,000 shares of Common Stock as to which Mr. Ryan holds stock
options that will be exercisable on April 30, 1995.
(12) Includes 11,250 shares of Common Stock as to which Mr. Slater holds stock
options that will be exercisable on April 30, 1995.
(13) Includes 14,250 shares of Common Stock as to which Mr. Tompkins holds stock
options that will be exercisable on April 30, 1995 and 663 shares held in
the Company's Retirement Savings Plan.
(14) Includes 108,600 shares owned by Tutor-Saliba Corporation of which Mr.
Tutor is Chairman of the Board and a major shareholder. Also includes
12,500 shares of Common Stock as to which Mr. Tutor holds stock options
that will be exercisable on April 30, 1995. Mr. Tutor has disclaimed
beneficial ownership of these options.
(15) Includes 13,750 shares of Common Stock as to which Mr. Van Horn holds stock
options that will be exercisable on April 30, 1995.
(16) Includes 5,000 shares of Common Stock as to which Mr. Wolitzer holds stock
options that will be exercisable on April 30, 1995.
(17) Includes 474,244 shares of Common Stock subject to stock options held by
the officers and directors that will be exercisable on April 30, 1995 and
11,694 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").
-15-
<PAGE>
AMOUNT AND PERCENT
NATURE OF OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL CLASS OR
OR SERIES BENEFICIAL OWNER OWNERSHIP(1) SERIES(1)
- -------------- ------------------- ------------ ---------
Common Stock NewSouth Capital Management, Inc. 1,768,949(2) 10.25
755 Crossover Lane, Suite 233
Memphis, Tennessee 38117
Common Stock FMR Corp. 2,245,610(3) 13.00
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock Dietche & Field Adivsers, Inc. 1,678,000(4) 9.72
437 Madison Avenue
New York, New York 10022
Common Stock The Capital Group Companies, Inc. 1,159,680(5) 6.72
333 South Hope Street
Los Angeles, California 90071
Common Stock David L. Babson & Co., Inc. 1,182,660(6) 6.85
One Memorial Drive
Cambridge, Massachusetts 02142
Series A A Group 920,000(7) 46.14
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 15.05
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 10.03
Preferred Stock c/o Citibank N.A.
20 Exchange Place
Level A
New York, New York 10043
Series A Pace & Co., for the Account of 149,000 7.47
Preferred Stock the Salaried Employees' Retirement
Plan of Southdown, Inc.
c/o Mellon Bank, N.A.
P.O. Box 360796M
Pittsburgh, Pennsylvania 15251
Series A Bridgerope & Go. 125,000 6.27
Preferred Stock c/o State Street Bank
P. O. Box 5756
Boston, Massachusetts 02206
Series D The TCW Group, Inc. 306,400(8) 17.76
Preferred Stock 865 So. Figueroa Street
Los Angeles, California 90017
Series D Massachusetts Financial Services 135,000(9) 7.83
Preferred Stock Company
500 Boylston Street
Boston, Massachusetts 02116
- ------------
-16-
(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 or ownership records
maintained by the Company.
(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 two Amendments dated through February 13, 1995
reporting beneficial ownership of 2,245,610 shares of Common Stock,
consisting of 2,177,000 issued and outstanding shares of Common Stock,
16,250 shares of Common Stock issuable upon conversion of 6,500 shares of
Series B Preferred Stock and 52,360 shares of Common Stock issuable upon
exercise of 47,600 Common Stock Warrants. The Schedule 13G reports that FMR
Corp. or its affiliates has sole power to vote 440,490 of such shares and
sole power to dispose of all such shares.
(4) Dietche & Field Advisers, Inc. has filed with the SEC a Schedule 13G dated
October 14, 1994 claiming beneficial ownership of these shares because it
has the sole right to vote such shares.
(5) The Capital Group Companies, Inc. has filed with the SEC a Schedule 13G
dated February 8, 1995 reporting that it and certain of its operating
subsidiaries exercised investment discretion over various institutional
accounts which held these shares as of December 31, 1994. According to the
Schedule 13G, Capital Guardian Trust Company, a bank, and one of such
operating companies, exercised investment discretion over 903,650 of such
shares, and that Capital Research and Management Company, a registered
investment adviser, and Capital International Limited and Capital
International, S.A., other operating subsidiaries, had investment
discretion with respect to 226,650, 12,000 and 17,370 shares, respectively,
of such shares.
(6) David L. Babson & Co., Inc., an investment adviser, has filed with the SEC
a Schedule 13G dated February 10, 1995 reporting that Babson is beneficial
owner of these shares because it has sole depositive power on all such
shares, has sole voting power on 627,910 of such shares and shares voting
power on 554,750 of such shares.
(7) 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.
(8) 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 and one
Amendment dated January 21, 1995 claiming sole voting and disposition power
of these shares. According to the Schedule 13G, TCW disclaims any
beneficial interest in these shares.
(9) Massachusetts Financial Services Company and an affiliate, MFS Series Trust
V - MFS Total Return Fund, have filed with the SEC a Schedule 13G dated
February 6, 1995 claiming sole voting and disposition power of these
shares.
-17-
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 Capital 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 1994. During 1994, Mr. Comer filed
late the annual Form 5 reporting one exercise of a common stock option during
1993 and Mr. Stephen Miley filed late a Form 4 reporting a single purchase of
the Company's securities. All other required filings were satisfied on a timely
basis in 1994. 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 1995. The periods during which such persons have
served in such capacities are indicated in the description of business
experience of such persons below.
Frank J. Ryan (63)................... Chairman of the Board
Clarence C. Comer (47)............... President, Chief Executive Officer
and Director
Edgar J. Marston III (55)............ Executive Vice President and General
Counsel and Director
J. Bruce Tompkins (45)............... Executive Vice President-Cement
Group
Eugene P. Martineau (55)............. Executive Vice President-Concrete
Products Group
James L. Persky (46)................. Executive Vice President-Finance and
Administration
Dennis M. Thies (46)................. Senior Vice President-Environmental
Systems
Stephen R. Miley (47)................ Vice President-Sales
Karen A. Twitchell (39).............. Vice President and Treasurer
Allan B. Korsakov (52)............... Corporate Controller
Wendell E. Phillips, II (49)......... Secretary
Mr. Ryan was elected Chairman of the Board effective March 16, 1995. Since
1990 Mr. Ryan has been a private investor and prior to that was President and
Chief Operating Officer of Air Products and Chemicals, Inc., a manufacturer of
industrial gases and chemicals.
Mr. Comer was elected President and Chief Executive Officer effective
February 4, 1987.
Mr. Marston was elected Executive Vice President and General Counsel
effective June 1, 1987.
Mr. Tompkins was elected Executive Vice President-Cement Group effective
June 16, 1989.
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.
-18-
Mr. Persky was elected Executive Vice President-Finance and Administration
effective May 19, 1994. From July 16, 1989 to May 19, 1994, Mr. Persky was
Senior Vice President-Finance of the 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 of the Company.
Mr. Miley was elected Vice President-Sales in September 1994. From May 1990
to September 1994. Mr. Miley was Vice President-Sales & Marketing of the
Company.
Ms. Twitchell was elected Vice President and Treasurer effective April 5,
1994. From August 1989 to April 1994, Ms. Twitchell was Treasurer of the
Company.
Mr. Korsakov was elected Corporate Controller in June 1986.
Mr. Phillips was elected Secretary in January 1984.
RATIFICATION OF INDEPENDENT AUDITORS
The shareholders will be asked to ratify the appointment of Deloitte &
Touche LLP as independent auditors of the books and accounts of the Company for
the year ending December 31, 1995. 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 LLP 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 1996 Annual Meeting of
Shareholders, such proposals must be received by the Company at its principal
executive offices not later than December 8, 1995.
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 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.
-19-
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
-20-
<PAGE>
[FORM OF PROXY FRONT]
SOUTHDOWN, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 18, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Frank J. Ryan, Steven B.
Wolitzer 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 9:15
A.M., Houston time, on Thursday, May 18, 1995, 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 April 6, 1995 is hereby acknowledged.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
<PAGE>
[FORM OF PROXY BACK]
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:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the nominees listed.
contrary)
NOMINEES -- KILLIAN L. HUGER, JR., V. H. VAN HORN III and STEVEN B. WOLITZER.
(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 LLP, as independent
auditors of the books and accounts of the Company for the year ending
December 31, 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated _________________________, 1995
_____________________________________
_____________________________________
Signature of Shareholder(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
