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 16, 1996
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 8:15 A.M., Houston time, on Thursday, May 16, 1996 for the following
purposes:
1. To elect three directors as members of Class II of the Board of
Directors, to serve until the 1999 annual meeting of shareholders and until
their successors are duly elected and have qualified.
2. To consider and act upon a proposal to ratify and approve the Board
of Directors' amendment of the 1991 Nonqualified Stock Option Plan for
Non-Employee Directors of the Company.
3. 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, 1996.
4.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 26, 1996 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 10, 1996
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.
SOUTHDOWN, INC.
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
(713) 650-6200
---------------------
April 10, 1996
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 1996
---------------------
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
16, 1996, 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 10, 1996.
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,
(II) for the ratification and approval of the Board of Directors' amendment of
the 1991 Nonqualified Stock Option Plan for Non-Employee Directors (the "1991
Plan"), and (III) 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, 1996. 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 26, 1996 are
entitled to notice of and to vote at the Annual Meeting. As of March 26, 1996,
the issued and outstanding voting securities of the Company consisted of (I)
17,299,889 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 affirmative vote of a
majority of the votes cast at the Annual Meeting, in person or by proxy. Any
shareholder giving a proxy has the right to withhold authority to vote for any
individual nominee to the Board of Directors by writing that nominee's name in
the space provided on the proxy. Votes that are withheld will be excluded
entirely from the vote and will have no effect on the outcome of any of the
proposals. Abstentions may be specified on all proposals and will be counted as
present for purposes of determining a quorum regarding the item on which the
abstention is voted. Under applicable Louisiana law, a broker non-vote will not
count as a vote for or against the proposals, and will not be included in
calculating the number of votes necessary for approval of such matters.
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 II will expire at the Annual Meeting, and the nominees listed
below, if elected as Class II directors, will serve for a three-year term
expiring at the annual meeting of shareholders in 1999 and until their
successors are duly elected and have qualified. Mr. Michael A. Nicolais, a Class
II director since 1988 and a member of the Finance and Audit and Employee
Compensation and Benefits Committees, will retire from the Board of Directors
after the Annual Meeting. Mr. G. Walter Loewenbaum II, a Class II director since
1975, resigned from the Board in July 1995. The present terms of office of Class
I and Class III directors of the Company expire at the annual meeting of
shareholders in 1998 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(1) SINCE MEMBERSHIPS
------------ ------------- ------- -----------
CLASS II (term expires 1999)
<S> <C> <C> <C>
Frank J. Ryan [64] . . . . .Chairman of the Board of 1993 Compensation & Benefits
the Company(2) Nominating
Whitson Sadler [55]..........President and Chief Executive
Officer of Solvay America, Inc.,
Houston, Texas(3)
Ronald N. Tutor [56]........President and Chief Executive 1992 Finance & Audit
Officer of Tutor-Saliba Nominating
Corporation, a construction
company, Sylmar, California
</TABLE>
- ------------
(1) Unless indicated otherwise in the table, the individuals named in the table
have held their positions for more than five years.
2
(2) Since 1990, Mr. Ryan has been a private investor, and prior to that time
was President and Chief Operating Officer of Air Products and Chemicals,
Inc., a manufacturer of industrial gases and chemicals. Mr. Ryan was
elected Chairman of the Board of the Company effective March 16, 1995.
(3) Solvay America, Inc. is a United States subsidiary of Solvay S.A., a major
European chemical company headquartered in Brussels, Belgium.
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 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 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
NAME AND AGE PRINCIPAL CONTINUOUSLY COMMITTEE
OCCUPATION(1) SINCE MEMBERSHIPS
CLASS I (term expires 1998)
<S> <C> <C> <C>
Killian L. Huger, Jr. [67].. Vice President of Canal Barge 1977 Finance & Audit
Company, Inc., a marine towing Conflict of Interest
company, New Orleans,
Louisiana(2)
David J. Tippeconnic [56] .. President and Chief Executive 1996
Officer of UNO-VEN Company
Arlington Heights, Illinois(3)
V. H. Van Horn III [57]..... Retired, Houston, Texas(4) 1988 Compensation & Benefits
Nominating
Steven B. Wolitzer [43]..... Managing Director, Lehman 1993 Finance & Audit
Brothers Inc., an investment Nominating
banking firm, New York,
New York
CLASS III (term expires 1997)
Clarence C. Comer [48]...... President and Chief Executive 1986
Officer of the Company(5)
W. J. Conway [74]........... Retired Vice Chairman of the 1982 Nominating
Board of Directors of the Conflict of Interest
Company(6)
Robert J. Slater [58]....... President, Jackson Consulting, 1993 Finance & Audit
Inc, a private consulting and Compensation & Benefits
investment company specializing
in advising basic industries,
New Canaan, Connecticut(7)
</TABLE>
3
- ------------
(1) Unless indicated otherwise in this 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) Mr. Tippeconnic was elected to the Board in March 1996 to fill a vacancy.
Mr. Tippeconnic has been President and Chief Executive Officer of UNO-VEN
Company since February 1995. UNO-VEN is a joint venture between UNOCAL and
Petroleos de Venezuela S.A. that refines petroleum crude oil and produces
and markets petroleum products. For more than five years prior to his
retirement in 1994, Mr. Tippeconnic served in various executive positions
with the Phillips Petroleum Company.
(4) For more than five years prior to his retirement in January 1996, Mr. Van
Horn was President, Chief Executive Officer and a director of National
Convenience Stores Incorporated, an operator of convenience stores. On
December 9, 1991, National Convenience Stores Incorporated filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code, and on February 25, 1993 the Bankruptcy Court for the
Southern District of Texas confirmed a Plan of Reorganization.
(5) Mr. Comer is also a director of Consolidated Graphics, Inc., a company
engaged in commercial and financial printing.
(6) Mr. Conway served as Vice Chairman of the Board for more than five years
prior to his retirement from that position in 1994.
(7) Mr. Slater is also a director of National Steel Corp., a manufacturer of
flat rolled carbon steel products, and First Industrial Realty Trust,
Inc., an owner and operator of industrial real estate.
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, which include a Finance and Audit
Committee, an Employee Compensation and Benefits Committee, a Nominating
Committee and a Conflict of Interest Committee.
The members of the Finance and Audit Committee are Mr. Nicolais, Chairman,
Mr. Huger, Mr. Slater, 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 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. Van
Horn, Chairman, Mr. Ryan, Mr. Slater and Mr. Nicolais. 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
4
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.
Conway, Mr. Tutor, Mr. Ryan and Mr. Van Horn. 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. Huger, Chairman,
and Mr. Conway. The functions of the Conflict of Interest Committee are to
approve or disapprove transactions, other than compensation matters, between the
Company or one of its subsidiaries 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, 1995, the Board of Directors held eight
meetings, the Finance and Audit Committee held eight meetings, the Employee
Compensation and Benefits Committee held five meetings, the Nominating Committee
held one meeting and the Conflict of Interest Committee held one meeting.
During the year ended December 31, 1995, each Director, for the period he
served on the Board, attended 75% or more of the aggregate of (1) the total
number of meetings of the Board of Directors and (2) the total number of
meetings held by all committees of the Board on which he served, except for Mr.
Tutor and Mr. Loewenbaum.
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, 1995 for each of the five
most highly compensated executive officers of the Company ("Named Officers").
(TABLE ON FOLLOWING PAGE)
5
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
FISCAL OTHER ANNUAL STOCK ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
------------------------- ------ ------ ----- ----------------------- ------------
<S> <C> <C> <C> <C> <C>
Clarence C. Comer 1995 $533,000 $170,000 - 38,000 $ -0-
President & Chief 1994 520,000 125,000 - 37,000 -0-
Executive Officer 1993 495,000 -0- - -0- -0-
J. Bruce Tompkins 1995 307,250 100,000 - 17,600 9,828 (2)
Executive Vice President- 1994 301,000 50,000 17,000 9,378 (2)
Cement Group 1993 287,000 -0- - -0- 4,305 (2)
Eugene P. Martineau 1995 256,250 73,500 - 14,600 15,593 (3)
Executive Vice President- 1994 250,000 50,000 - 15,000 7,841 (2)
Concrete Products Group 1993 210,000 -0- - -0- 3,855 (2)
James L. Persky 1995 256,250 73,500 - 14,600 9,548 (2)
Executive Vice President- 1994 250,000 50,000 - 15,000 7,838 (2)
Finance and Administration 1993 220,000 -0- - -0- 4,497 (2)
Dennis M. Thies 1995 229,500 35,000 - 11,000 7,906 (2)
Senior Vice President- 1994 226,000 22,000 - 11,000 4,620 (2)
Corporate Development 1993 215,000 -0- - -0- 4,400 (2)
</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.
(3) At the time of his employment with the Company, Mr. Martineau was granted
an interest free loan of $75,000 from the Company. Other compensation
includes $6,420 of imputed interest income from this loan and $9,173 in
Company contributions to the Company's Retirement Savings Plan.
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 align the
interests of management with those of the shareholders in maximizing 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 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 with other leading industrial companies.
The Company's executive compensation program includes base salary, annual
cash incentives, and stock options, each of which is tied to the Company's and
executive's performance.
6
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 industrial companies.
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.
For 1996 and beyond, the Company will base annual incentive payments
on a three-part formula consisting of (I) return on equity relative to an
industry peer group, (II) annual profitability of the Company relative to
an internal measure and (III) subjective review of individual 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, in the past, 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 officers.
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
7
of this legislation on its cash compensation programs and submit any appropriate
proposals to the shareholders at future meetings.
THE EMPLOYEE BENEFITS AND COMPENSATION COMMITTEE
V. H. Van Horn III, Chairman
Michael A. Nicolais
Frank J. Ryan
Robert J. Slater
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.
(GRAPH ON FOLLOWING PAGE)
8
SOUTHDOWN, INC.
1996 PERFORMANCE GRAPH DATA
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1987 1988 1989 1990 1991 1992 1993 1994 1995
---- ------ ------ ------ ------ ------ ------ ------ ------
Southdown 100 117.73 162.93 74.95 83.20 59.54 149.60 88.53 119.06
Pear Group 100 134.29 127.79 72.51 85.02 85.62 153.42 121.89 136.16
S & P 500 100 116.61 153.56 148.78 194.11 208.90 229.96 232.99 319.67
* The peer group includes Giant Group, Ltd., Giant Cement Holding, Inc.,
Holnam Inc., Lafarge Corporation, Lone Star Industries, Medusa Corporation
and Centex Construction Products, Inc. Giant Group Ltd. sold its cement
operation in October 1994 through a public offering of its subsidiary Giant
Cement Holding, Inc. The graph includes information for Giant Group, Ltd.
for years prior to 1995 and for Giant Cement Holding, Inc. for 1995.
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 beginning in 1994, its first year as a public
company.
COMPENSATION ARRANGEMENTS FOR AND TRANSACTIONS WITH
MEMBERS OF THE BOARD OF DIRECTORS
Mr. Ryan receives a fee of $10,000 per month for his services as Chairman
of the Board. 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 Finance and Audit, Employee Compensation and Benefits,
Nominating and Conflict of Interest 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.
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
9
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.
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. Conway, who retired as an employee of the Company in 1990, is paid a
supplemental pension per an agreement entered into at the time of his employment
with the Company. The pension is payable during his lifetime at an annual rate
equal to the amount which 60% of his highest five year's average base salary
exceeds the aggregate benefits received under other pension plans of the
Company, other employer pension plans and social security. Mr. Conway was paid
$93,973 in 1995 under this supplemental pension agreement.
Mr. Wolitzer is a managing director of Lehman Brothers Inc., which has
provided from time to time investment banking services to the Company for which
it has received customary fees and commissions.
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 $290,000 in 1995.
Edgar J. Marston III resigned as a director and executive officer of the
Company in April 1995. Pursuant to a Separation and Release Agreement between
Mr. Marston and the Company, the Company paid Mr. Marston $349,000 (the
equivalent of one year's salary), $298,340 for the buy out of Mr. Marston's
supplemental pension agreement, $66,667 reimbursement for personal income taxes
related to income upon the forgiveness of a $100,000 promissory note between Mr.
Marston and the Company and other miscellaneous payments related to his
resignation of $23,787. Mr. Marston was also paid $116,333 in salary during
1995.
EMPLOYMENT AND OTHER AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Messrs. Comer, Tompkins, Martineau, Persky and Thies. Under
the Employment Agreements, the Company employs Mr. Comer as President and Chief
Executive Officer at an annual salary of no less than $546,000, Mr. Tompkins as
Executive Vice President--Cement Group at an annual salary of no less than
$313,500, Mr. Martineau as Executive Vice President--Concrete Products Group at
an annual salary of no less than $262,500, Mr. Persky as Executive Vice
President--Finance and Administration at an annual salary of no less than
$262,500 and Mr. Thies as Senior Vice President- Corporate Development at an
annual salary of no less than $233,000. Under the terms of the employment
agreements, the salaries of Messrs. Comer, Tompkins, Martineau, Persky and Thies
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 group benefit plans of the Company. The Employment Agreements
expire on February 28, 1997 but 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
10
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 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.
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.
<TABLE>
<CAPTION>
YEARS OF SERVICE AT AGE 65
CONSECUTIVE FIVE YEAR -----------------------------------------------------------------
AVERAGE COMPENSATION 10 15 20 25 30 35
-------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000............... $ 6,495 $ 9,743 $ 12,990 $ 16,238 $ 19,485 $ 22,733
100,000................ 14,745 22,118 29,490 36,863 44,235 51,608
150,000................ 22,995 34,493 45,990 57,488 68,985 80,483
200,000................ 27,945 41,918 55,890 69,863 83,835 97,808
250,000 and over....... 31,493 47,240 62,986 78,733 94,479 110,226
</TABLE>
Messrs. Comer, Tompkins, Martineau, Persky and Thies have been credited
with eighteen, seven, six, ten and fifteen years of service, respectively, under
the terms of the Southdown Plan described above and were paid base salaries of
$546,000, $313,500, $262,500, $262,500 and $233,000 respectively, during the
year ended December 31, 1995.
Assuming continual employment at their current base salary until age 65,
Messrs. Comer, Tompkins, Martineau, Persky and Thies will be entitled to an
annual retirement benefit of approximately $120,0000, $96,300, $40,000, $91,900
and $105,100, 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.
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, 1995 under the Plans were 956,778.
11
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 (3)
SARS EMPLOYEES IN PRICE PER EXPIRATION -------------------------------
NAME GRANTED (1) FISCAL YEAR SHARE(2) DATE 0% 5% 10%
---- ----------- ----------- -------- ------------ ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Clarence C. Comer..........38,000 22.65 $20.5 7/19/05 -0- $489,909 $1,241,525
J. Bruce Tompkins..........17,600 10.49 20.5 7/19/05 -0- 226,905 575,022
Eugene P. Martineau........14,600 8.70 20.5 7/19/05 -0- 188,228 477,007
James L. Persky............14,600 8.70 20.5 7/19/05 -0- 188,228 477,007
Dennis M. Thies............11,000 6.56 20.5 7/19/05 -0- 141,816 359,389
</TABLE>
- -----------
(1) All options were granted under the Company's 1989 Plan and become
exercisable in annual increments of 25% beginning July 19, 1996.
(2) All options granted are exercisable at the market value (average of high
and low stock prices for the Company's Common Stock as reported in the Wall
Street Journal) of the Common Stock on the date of the grant.
(3) 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 officer's continued employment throughout the vesting
period. Accordingly, the amounts reflected in this table may not
necessarily be achieved.
NAMED OFFICERS'
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION/SAR VALUES
SHARES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT FISCAL AT FISCAL
YEAR END YEAR END*
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer - - 109,250 65,750 $ -0- $ -0-
J. Bruce Tompkins - - 14,250 30,350 47,500 -0-
Eugene P. Martineau - - 70,750 33,850 208,250 45,500
James L. Persky - - 11,750 25,850 38,000 -0-
Dennis M. Thies - - 69,635 19,250 274,016 -0-
</TABLE>
- ------------
* Based upon the closing price on the New York Stock Exchange of the
Company's Common Stock on December 31, 1995.
12
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table is furnished as of February 28, 1996, 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, each
nominee for director and each of the Named Officers, individually, and all
executive 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>
Clarence C. Comer...................... 133,134(2) Common *
21,000 Series B 2.30
Preferred
W. J. Conway........................... 34,002(3) Common *
Killian L. Huger, Jr................... 51,614(4) Common *
Eugene P. Martineau.................... 84,712(5) Common *
Michael A. Nicolais.................... 23,750(6) Common *
80,000(6) Series A 4.01
Preferred
6,000 Series B *
Preferred
James L. Persky........................ 39,165(7) Common *
Frank J. Ryan.......................... 22,500(8) Common *
Whitson Sadler. . . . . . . . . . . . . . . . .1,000(9) . . . Common *
Robert J. Slater....................... 16,000(10) Common *
Dennis M. Thies . . . . . . . . . . . . . . . 85,670(11). . Common *
David J. Tippeconnic . . . . . . . . . . . . . 2,500(12) . Common *
J. Bruce Tompkins...................... 23,361(13) Common *
Ronald N. Tutor........................ 122,350(14) Common *
V. H. Van Horn III..................... 16,250(15) Common *
Steven B. Wolitzer..................... 11,250(16) Common *
748,317(17) Common 4.20
80,000 Series A 4.01
Preferred
27,000 Series B 2.95
Preferred
All executive officers and directors
as a group (Twenty persons)......... 900 Series D *
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 118,500 shares of Common Stock as to which Mr. Comer holds stock
options that will be exercisable on April 30, 1996.
(3) Includes 27,500 shares of Common Stock as to which Mr. Conway holds stock
options that will be exercisable on April 30, 1996.
13
(4) Includes 26,456 shares of Common Stock owned by Mr. Huger's wife. 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 16,250 shares of Common Stock as to which Mr.
Huger holds stock options that will be exercisable on April 30, 1996.
(5) Includes 82,500 shares of Common Stock as to which Mr. Martineau holds
stock options that will be exercisable on April 30, 1996 and 2,212 shares
held in the Company's Retirement Savings Plan.
(6) Includes 80,000 shares of Series A Preferred Stock which are 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 13,750 shares of Common Stock as to which Mr.
Nicolais holds stock options that will be exercisable on April 30, 1996.
(7) Includes 15,500 shares of Common Stock as to which Mr. Persky holds stock
options that will be exercisable on April 30, 1996 and 2,308 shares held
in the Company's Retirement Savings Plan.
(8) Includes 7,500 shares of Common Stock as to which Mr. Ryan holds stock
options that will be exercisable on April 30, 1996.
(9) Nominees elected for the first time as directors of the Company receive
options to purchase 10,000 shares of Common Stock under the 1991 Plan
described elsewhere in this Proxy Statement. Options granted under the
1991 Plan are subject to vesting over time.
(10) Includes 12,500 shares of Common Stock as to which Mr. Slater holds stock
options that will be exercisable on April 30, 1996. Also includes 500
shares of Common Stock owned by a trust of which Mr. Slater is trustee.
Mr. Slater has informed the Company that reference to such shares should
not be construed as an admission of his beneficial ownership thereof.
(11) Includes 72,385 shares of Common Stock as to which Mr. Thies holds stock
options that will be exercisable on April 30, 1996 and 1,870 shares held
in the Company's Retirement Savings Plan.
(12) Includes 2,500 shares of Common Stock as to which Mr. Tippeconnic holds
stock options that will be exercisable on April 30, 1996.
(13) Includes 18,500 shares of Common Stock as to which Mr. Tompkins holds
stock options that will be exercisable on April 30, 1996 and 1,219 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
13,750 shares of Common Stock as to which Mr. Tutor holds stock options
that will be exercisable on April 30, 1996. Mr. Tutor has disclaimed
beneficial ownership of these options.
(15) Includes 16,250 shares of Common Stock as to which Mr. Van Horn holds
stock options that will be exercisable on April 30, 1996.
(16) Includes 11,250 shares of Common Stock as to which Mr. Wolitzer holds
stock options that will be exercisable on April 30, 1996.
(17) Includes 502,794 shares of Common Stock subject to stock options held by
the officers and directors that will be exercisable on April 30, 1996 and
11,394 shares held in the Company's Retirement Savings Plan.
14
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>
<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. 1,917,631(2) 11.09
755 Crossover Lane, Suite 233
Memphis, Tennessee 38117
Common Stock FMR Corp. 1,987,100(3) 11.49
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock The Capital Group Companies, Inc. 911,320(4) 5.27
333 South Hope Street
Los Angeles, California 90071
Common Stock David L. Babson & Co., Inc. 1,444,240(5) 8.35
One Memorial Drive
Cambridge, Massachusetts 02142
Series A A Group 920,000(6) 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 & Co. 125,000 6.27
Preferred Stock c/o State Street Bank
P. O. Box 5756
Boston, Massachusetts 02206
</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 or ownership records
maintained by the Company.
(2) NewSouth Capital Management, Inc., an investment adviser, has filed with
the SEC a Schedule 13G and three amendments dated through February 13,
1996 reporting that NewSouth is the beneficial owner of these shares
because it has sole power to dispose of and vote 1,828,631 of such shares
and has sole power to dispose of and shared voting power with respect to
89,000 of such shares.
15
(3) FMR Corp. and various affiliates have filed with the SEC a Schedule 13G
and three amendments dated through February 14, 1996 reporting that FMR
Corp. is the beneficial owner of these shares because it has sole power to
vote 302,300 of such shares and sole power to dispose of all such shares.
(4) The Capital Group Companies, Inc. has filed with the SEC a Schedule 13G
and one amendment dated February 9, 1996 reporting that it and certain of
its operating subsidiaries exercised investment discretion over various
institutional accounts which held these shares as of December 29, 1995.
According to the Schedule 13G, Capital Guardian Trust Company, a bank, and
one of such operating companies, exercised investment discretion over
778,000 of such shares, and that Capital Research and Management Company,
a registered investment adviser, and Capital International Limited,
another operating subsidiary, had investment discretion with respect to
113,320 and 20,000 of such shares, respectively. The number of shares held
includes 113,320 shares resulting from the assumed conversion of 75,000
shares of Series D Preferred Stock.
(5) David L. Babson & Co., Inc., an investment adviser, has filed with the SEC
a Schedule 13G and one amendment dated February 12, 1996 reporting that
Babson is beneficial owner of these shares because it has sole depositive
power on all such shares, has sole voting power on 643,240 of such shares
and shares voting power on 801,000 of such shares.
(6) The Clark Estates, Inc. has filed with the SEC a Schedule 13D dated July
4, 1987 and one amendment dated 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.
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 Capital 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. Mr. Huger reported on the annual Form 5 for
1995 a purchase of Common Stock in a prior year that had not been reported. All
required filings in 1995 were satisfied on a timely basis. 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 1996. The periods during which such persons have
served in such capacities are indicated in the description of business
experience of such persons below.
Clarence C. Comer (48)......... President, Chief Executive Officer
and Director
J. Bruce Tompkins (46)......... Executive Vice President--Cement
Group
Eugene P. Martineau (56)....... Executive Vice President--Concrete
Products Group
James L. Persky (47)........... Executive Vice President--Finance and
Administration
Dennis M. Thies (47)........... Senior Vice President--Corporate Development
Patrick S. Bullard (34)........ Vice President and General Counsel
16
Stephen R. Miley (48).......... Vice President--Sales
Thomas E. Daman (39)........... Treasurer
Allan B. Korsakov (53)......... Corporate Controller
Wendell E. Phillips, II (50)... Secretary
Mr. Comer was elected President and Chief Executive Officer effective
February 4, 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.
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--Corporate Development in May
1995. From April 1992 to May 1995, Mr. Thies was Senior Vice
President--Environmental Systems. From June 16, 1989 to April 1992, Mr. Thies
was Senior Vice President--Corporate Development of the Company.
Mr. Bullard was elected Vice President and General Counsel effective August
21, 1995. From May 1993 to that time Mr. Bullard was associated with the law
firm of Bracewell & Patterson, L.L.P., Houston, Texas, and from September 1989
until May 1993 he was associated with the law firm of Weil, Gotshal & Manges.
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.
Mr. Daman was elected Treasurer in February 1996. For more than five years
prior to that time he served as Assistant Treasurer of the Company.
Mr. Korsakov was elected Corporate Controller in June 1986.
Mr. Phillips was elected Secretary in January 1984.
PROPOSAL TO AMEND
THE 1991 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
DESCRIPTION OF THE PROPOSED AMENDMENT AND VOTE REQUIRED
In February 1991, the Board of Directors adopted the 1991 Plan. The 1991
Plan was approved by the shareholders and became effective at the 1991 Annual
Meeting. In March 1996, the Board of Directors voted to amend the 1991 Plan and
directed that such amendment be submitted for approval by the shareholders at
the 1996 Annual Meeting.
The amendment to the 1991 Plan increased the number of authorized shares of
Common Stock issuable upon exercise of nonqualified options by 250,000 shares to
400,000 shares. The 1991 Plan is a formula plan that calls for automatic grants
of options to new directors and re-elected directors. An increase in the size of
the Board of Directors from nine in 1991 to twelve in 1993 and the adoption of a
mandatory retirement age for directors has depleted the number of authorized
shares available for grant. The Company still believes that the 1991 Plan
promotes the interests of the Company and its shareholders by attracting and
retaining the services of experienced and knowledgeable non-employee directors.
Without the approval of the additional authorized shares, the 1991 Plan will
have to be terminated in 1996.
The ratification and approval of this amendment to the 1991 Plan requires
the affirmative vote of the holders of a majority of votes cast at the Annual
Meeting.
17
SUMMARY DESCRIPTION OF THE 1991 PLAN
ADMINISTRATION. The 1991 Plan is administered by the Board of Directors.
All decisions made by the Board pursuant to the provisions of the 1991 Plan
shall be made by a majority of its members at a duly held regular or special
meeting or by written consent in lieu of any such meeting.
AUTHORIZED SHARES AND ADJUSTMENTS. The 1991 Plan, as amended, authorizes
the grant of options to purchase up to 400,000 shares of Common Stock for
issuance as nonqualified options within the meaning of the Internal Revenue Code
of 1986 (the "Code"). Upon expiration of any option or its termination prior to
exercise, the unissued shares subject to option will again be available for
grant under the 1991 Plan. The number of shares authorized for issuance under
the 1991 Plan and the number of shares and exercise prices of outstanding
options are subject to adjustment in the event of stock splits, stock dividends,
and similar changes in the Company's capitalization.
ELIGIBILITY AND LIMITATIONS OF OPTIONS. Each director of the Company who is
not an employee of the Company or any of the Company's subsidiaries (as defined
in Section 425(f) of the Code) ("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. Except as expressly
provided in the preceding two sentences, an Eligible Director shall not be
granted any options to purchase Common Stock pursuant to the 1991 Plan or
otherwise.
The options granted to Eligible Directors are subject to the following
limitations: (I) the exercise price shall not be lower than the fair market
value of the Common Stock on the date of grant; (II) each option shall become
exercisable with respect to 25% of the shares covered thereby on the date of
grant; (III) each option shall become exercisable with respect to an additional
25% of the shares covered thereby on each anniversary of the date of grant; and
(IV) notwithstanding clauses (II) and (III) above, each option shall become
fully exercisable upon the expiration of an Eligible Director's three-year term
as a director of the Company. In the event of the death or disability of the
optionee, all options outstanding in the name of the optionee become exercisable
in full without regard to any vesting restrictions.
Each option granted hereunder shall also become fully exercisable upon a
Change in Control of the Company. "Change in Control" of the Company shall be
conclusively deemed to have occurred if any of the following shall have taken
place: (I) a change in control is reported by the Company under the Exchange
Act, (II) any "person" becomes the beneficial owner, directly or indirectly, of
securities of the Company representing forty percent or more of the combined
voting power of the Company's then outstanding securities, or (III) following
the election or removal of directors, a majority of the Board consists of
individuals who were not members of the Board two years before such election or
removal, unless the election of each director who was not a director at the
beginning of such two-year period has been approved in advance by directors
representing at least a majority of the directors then in office who were
directors at the beginning of the two-year period.
TERM OF OPTION. Each option granted shall provide that it shall terminate
and be of no force or effect with respect to any shares not previously purchased
by the Eligible Director upon the first to occur of the expiration of ten years
from the date the grant of the option or the expiration of ninety days after the
termination of the Eligible Director's service as a director of the Company for
any reason other than death or disability. If, following a Change in Control of
the Company, the Eligible Director's service as a director is terminated for any
reason, each option may be exercised during the remainder of its full ten-year
term to the extent unexercised.
EXERCISE. The 1991 Plan requires that the purchase price of the shares for
which an option is exercised be paid in full at the time of exercise. The
payment may be in the form of cash or by delivery to the Company of Common Stock
theretofore owned by the Eligible Director equal in value to the full amount of
the option price. Options may be exercised solely by the optionee during his
lifetime or after his death by the person or persons entitled thereto under his
will or by the laws of descent and distribution.
18
AMENDMENT AND TERMINATION. The Board of Directors may amend or terminate
the 1991 Plan at any time, provided that no amendment may impair the rights of
any optionee under the 1991 Plan without his or her consent and except that no
amendment or alteration may be made which, without the approval of the
shareholders, would increase the total number of shares reserved for issuance
under the 1991 Plan, extend the duration of options, materially increase the
benefits accruing to optionees under the 1991 Plan or materially modify the
requirements as to eligibility under the 1991 Plan.
The Board of Directors recommends a vote FOR the ratification and approval
of the amendment of the 1991 Plan.
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, 1996. 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.
The Board of Directors recommends a vote FOR the reappointment of Deloitte
& Touche LLP as the Company's independent auditors for 1996.
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 1997 Annual Meeting of
Shareholders, such proposals must be received by the Company at its principal
executive offices not later than December 11,1996.
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
$7,500 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>
SOUTHDOWN, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 16, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Clarence C. Comer, Steven
B. Wolitzer and V.H. Van Horn III, 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 8:15
A.M., Houston time, on Thursday, May 16, 1996, 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 10, 1996 is hereby acknowledged.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
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" PROPOSALS 2 AND 3.
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
(except as marked to for all nominees listed
the contrary)
NOMINEES -- FRANK J. RYAN, WHITSON SADLER AND RONALD N. TUTOR.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
2. PROPOSAL TO RATIFY AND APPROVE THE BOARD OF DIRECTORS' AMENDMENT OF THE
1991 NONQUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE BOOKS AND ACCOUNTS FOR THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
------------------------------------------------
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
