SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
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|_| 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 Rule 14a-11(c) or Rule 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| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
........................................................................
(2) Aggregate number of securities to which transaction 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:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
<PAGE>
SOUTHDOWN, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
Southdown, Inc. will hold its Annual Meeting of Shareholders on Thursday,
May 20, 1999, at 8:30 a.m. Houston time. The meeting will be held at the
Doubletree Hotel at Allen Center, 400 Dallas Street, Houston, Texas. Southdown's
shareholders will act upon the following matters at the Annual Meeting or at any
adjournment of that meeting:
1. Election of five directors; one to serve until 2000, one to serve
until 2001, and three to serve until 2002;
2. Amendment of our 1991 Nonqualified Stock Option Plan for
Non-Employee Directors as part of an overhaul of non-employee
director compensation;
3. Ratification of the appointment of Deloitte & Touche LLP as our
independent auditors for 1999; and
4. Any other matters that may properly come before the meeting or at
any adjournment of the meeting.
Only shareholders of record at the close of business on March 25, 1999
will be entitled to vote at the meeting and at any adjournment of the meeting.
In order that your shares may be represented at the Annual Meeting, please date
and sign the enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
Patrick S. Bullard
SENIOR VICE PRESIDENT-GENERAL COUNSEL AND
SECRETARY
Houston, Texas
April 5, 1999
<PAGE>
SOUTHDOWN, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: Three proposals.
o Election of five directors
o Amendment of our stock option plan for non-employee directors.
o Ratification of Deloitte & Touche LLP as our independent auditors
for 1999.
Q: WHO CAN VOTE?
A: All shareholders of record at the close of business on March 25, 1999 are
entitled to vote. Holders of our common stock are entitled to one vote per
share.
Q: WHO CAN ATTEND THE MEETING?
A: All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting.
Q: HOW DO I VOTE?
A: You can vote in person OR by completing, dating, signing and mailing the
proxy card in the enclosed postage pre-paid envelope. To vote in person,
you must attend the meeting and submit a written ballot which will be
provided there.
Q: WHAT HAPPENS IF I DO NOT INDICATE HOW I WISH TO VOTE ON ONE OF THE ITEMS?
A: If you return your signed proxy card but do not indicate how you wish to
vote, Clarence C. Comer, Robert G. Potter and Robert J. Slater, as the
proxy holders named in the proxy card, will vote your shares FOR election
of all the nominees for director (Proposal 1), FOR the amendments of the
stock option plan for non-employee directors (Proposal 2) and FOR
ratification of appointment of Deloitte & Touche LLP (Proposal 3).
Q: WHAT IF I VOTE AND THEN CHANGE MY MIND?
A: You can revoke your proxy at any time before the Annual Meeting (1) by
writing to Southdown's Secretary, (2) by attending the meeting and casting
your vote in person, or (3) by sending in a later-dated proxy.
Q: WHAT CONSTITUTES A QUORUM?
A: As of the record date, March 25, 1999, there were 38,696,306 shares of
common stock outstanding. Each share is entitled to one vote on all
matters. The presence, in person or by proxy, of the holders of a majority
of the outstanding shares of common stock constitutes a quorum. If you
have properly signed your proxy card, you will be considered part of the
quorum. Broker non-votes - which occur when a broker does not have
authority to vote - will not be counted toward establishing a quorum if
they are non-votes as to all proposals.
Q: WHAT VOTE IS REQUIRED FOR THE PASSAGE OF EACH OF THE MATTERS UP FOR
CONSIDERATION AT THE ANNUAL MEETING?
A: ELECTION OF DIRECTORS - Directors are elected by a plurality of the shares
of common stock present and voting at the meeting. Abstentions and
non-votes will have no effect on the vote.
AMENDMENT OF STOCK OPTION PLAN - The amendments to the stock option plan
will be approved by a majority of the votes cast on the proposal, as long
as at least 50% of the outstanding shares vote. Abstentions will have the
same effect as votes against the proposal. Broker non-votes are not
counted as votes cast either for or against the proposal.
RATIFICATION OF AUDITORS - Submission of the appointment of Deloitte &
Touche LLP to Southdown's shareholders is not required. However, the
appointment will be deemed ratified if approved by a majority of the votes
cast on the proposal. Abstentions will have the same effect as votes
against the proposal. Broker non-votes are not counted as votes cast
either for or against the proposal.
Q: WHO WILL COUNT THE VOTES?
A: Representatives of American Stock Transfer & Trust Company will tabulate
the votes and act as the inspectors of election.
Q: WHAT SHARES ARE INCLUDED ON THE PROXY CARD?
A: The shares listed on your card represent all the shares of common stock
held in your name (as distinguished from those held in "street" name). You
will receive a separate card from your broker if you hold shares in
"street" name.
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<PAGE>
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It indicates that your shares are held in more than one account, such as
two brokerage accounts and registered in different names. You should vote
each of the proxy cards to ensure that all of your shares are voted.
Q: WHOM CAN I CALL WITH QUESTIONS?
A: You may call Georgeson & Company, Inc. at: (800) 223-2064.
<PAGE>
BOARD OF DIRECTORS
THIS SECTION GIVES BIOGRAPHICAL INFORMATION ABOUT OUR DIRECTORS AND DESCRIBES
THEIR MEMBERSHIP ON BOARD COMMITTEES, THEIR ATTENDANCE AT MEETINGS AND THEIR
COMPENSATION. THE INFORMATION AS TO AGE, PRINCIPAL OCCUPATION AND DIRECTORSHIPS
HELD IN OTHER COMPANIES HAS BEEN FURNISHED BY EACH DIRECTOR.
ELECTION OF DIRECTORS
Our Articles of Incorporation divide our Board 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.
The Board has selected Frank J. Ryan, Whitson Sadler and J. Bruce Tompkins, each
of whom currently serve on the Board, as nominees for election at the Annual
Meeting. If elected, Messrs. Ryan, Sadler and Tompkins will each serve for a
three-year term expiring at the annual meeting of shareholders in 2002.
In addition, two former directors of Medusa Corporation were appointed by the
Board as directors in 1998 in connection with the Medusa merger. The Board has
nominated George E. Uding, Jr. as a Class III director and Robert S. Evans as a
Class I director for election at the Annual Meeting. If elected, Messrs. Uding
and Evans will serve for terms expiring at the annual meeting of shareholders in
2000 and 2001, respectively.
All nominees have consented to serve as directors. The Board has no reason to
believe that any of the nominees will be unable to act as a director. If any
director is unable to stand for re-election at the annual meeting, however, the
Board may either reduce the size of the Board or designate a substitute. If a
substitute nominee is named, the proxies will vote for the election of the
substitute. Should a vacancy on the Board occur between meetings, the Board may
fill the vacancy by electing a director to complete the term of office of the
class in which the vacancy exists. If the Board increases the total number of
directorships, the Board may also fill the vacancies created by the increase in
size. Those directors, however, would serve for a term expiring at the next
annual meeting of shareholders and would not be designated as a member of a
class.
Unless you withhold authority to vote for one or more of the nominees, the
persons named as proxies intend to vote for the election of the five nominees.
- --------------------------------------------------------------------------------
CLASS II DIRECTORS NOMINATED FOR ELECTION - TERM EXPIRING 2002
- --------------------------------------------------------------------------------
FRANK J. RYAN Director since 1993
Mr. Ryan, 67, has been Chairman of Southdown's Board since March 16, 1995.
Since 1990 he has been a private investor. Prior to that time he was
President and Chief Operating Officer of Air Products and Chemicals, Inc.,
a manufacturer of industrial gases and chemicals.
WHITSON SADLER Director since 1996
Mr. Sadler, 58, is President and Chief Executive Officer of Solvay
America, Inc., a United States subsidiary of Solvay S.A. Solvay S.A. is a
major European chemical company headquartered in Brussels, Belgium.
J. BRUCE TOMPKINS Director since 1998
Mr. Tompkins, 49, is Southdown's Executive Vice President and Chief
Operating Officer. Before he was elected to that office in October 1997,
he was our Executive Vice President -Cement.
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<PAGE>
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CLASS III DIRECTOR NOMINATED FOR ELECTION - TERM EXPIRING 2000
- --------------------------------------------------------------------------------
GEORGE E. UDING, JR. Director since 1998
Mr. Uding, 67, served as President, Chief Operating Officer and a director
of Medusa Corporation for more than five years prior to his retirement in
June 1998. Prior to our merger with Medusa, Medusa was a publicly-held
manufacturer of portland cement and producer of other construction
materials.
- --------------------------------------------------------------------------------
CLASS I DIRECTOR NOMINATED FOR ELECTION - TERM EXPIRING 2001
- --------------------------------------------------------------------------------
ROBERT S. EVANS Director since 1998
Mr. Evans, 55, is Chairman and Chief Executive Officer of Crane Co., a
diversified manufacturer of engineered products. He is also a director of
Fansteel, Inc., a specialty metals manufacturer, and a director of HBD
Industries, Inc., a holding company of a diversified manufacturer.
THE ELECTION OF DIRECTORS REQUIRES THE FAVORABLE VOTE OF THE HOLDERS OF A
PLURALITY OF THE SHARES OF COMMON STOCK PRESENT AND VOTING, IN PERSON OR BY
PROXY, AT THE ANNUAL MEETING. YOUR BOARD RECOMMENDS A VOTE FOR THE NOMINEES
LISTED ABOVE. ABSTENTIONS AND BROKER NON-VOTES WILL HAVE NO EFFECT ON THE
ELECTION OF DIRECTORS.
- --------------------------------------------------------------------------------
CONTINUING CLASS III DIRECTORS - TERM EXPIRING 2000
- --------------------------------------------------------------------------------
CLARENCE C. COMER Director since 1986
Mr. Comer, 51, has been President and Chief Executive Officer of our
company since February 1987. He is also a director of Consolidated
Graphics, Inc., a company engaged in commercial and financial printing.
ROBERT G. POTTER Director since 1996
Mr. Potter, 60, is Chairman and Chief Executive Officer and a director of
Solutia Inc., a diversified manufacturer of specialty chemical products.
For more than five years prior to assuming his position with Solutia, Mr.
Potter was the Executive Vice President and Advisory Director of Monsanto
Company, a diversified chemical and manufacturing company. Mr. Potter is
also a director of Stepan Co., a manufacturer of specialty and
intermediate chemicals.
ROBERT J. SLATER Director since 1993
Mr. Slater, 61, is President of Jackson Consulting, Inc., a private
consulting and investment company specializing in advising basic
industries. He is also a director of First Industry Realty Trust, Inc., an
owner and operator of industrial real estate.
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<PAGE>
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CONTINUING CLASS I DIRECTORS - TERM EXPIRING 2001
- --------------------------------------------------------------------------------
DAVID J. TIPPECONNIC Director since 1996
Mr. Tippeconnic, 59, is President and Chief Executive Officer of CITGO
Petroleum Corporation, a refiner and marketer of petroleum products,
petrochemicals and other industrial products. From 1995 to 1997, he was
President and Chief Executive Officer of UNO-VEN Company, a joint venture
between Unocal and Petroleos de Venezuela S.A. that refines and markets
petroleum products. Mr. Tippeconnic served in various executive positions
with the Phillips Petroleum Company for more than five years prior to his
retirement from that company in 1994.
V. H. VAN HORN III Director since 1988
Mr. Van Horn, 60, was President, Chief Executive Officer and a director of
National Convenience Stores, Inc., an operator of convenience stores, for
more than five years prior to his retirement in 1996.
STEVEN B. WOLITZER Director since 1993
Mr. Wolitzer, 46, is Managing Director, Head of Mergers and Acquisitions
Group, of Lehman Brothers Inc., an investment banking firm.
THE BOARD AND ITS COMMITTEES
NUMBER OF MEETINGS
The Board met eight times during 1998. All of our directors attended 75%
or more of all applicable Board and committee meetings during 1998.
FINANCE AND AUDIT COMMITTEE
Our Finance and Audit Committee reviews our financial statements with our
independent accountants prior to publication, generally inquires into the
effectiveness of our financial and accounting systems and internal controls, and
meets regularly with our independent public accountants and our internal
auditors. The committee also recommends to the whole Board the engagement or
discharge of independent auditors. It periodically reviews the financial
performance of our defined benefit employee retirement plan, which includes,
among other things, assessment of fund managers, review of the plan's portfolio
asset allocations and evaluation of the general investment objectives of the
plan. In addition, the committee reviews maintenance appropriations, taxes and
budgets and our dealings with banks, securities brokers and other financial
institutions. The committee also makes recommendations to the whole Board
regarding current and proposed financing strategies as well as dividend and
other distribution policies.
The members of the Finance and Audit Committee are Mr. Wolitzer
(Chairman), Mr. Sadler, Mr. Slater and Mr. Uding. No member of the committee is
an officer or employee of the company, although Mr. Uding provides consulting
services to us under a consulting agreement. See "Board Compensation
Arrangements and Transactions." The committee met eight times in 1998.
EMPLOYEE COMPENSATION AND BENEFITS COMMITTEE
The Employee Compensation and Benefits Committee reviews existing
compensation arrangements with officers and employees and periodically reviews
the overall compensation program of the entire company. The committee recommends
to the whole Board any modifications to our compensation arrangements and
programs that it deems appropriate. Other than our 1991 Nonqualified Stock
Option Plan for Non-Employee Directors, which is administered by the whole
Board, the committee is responsible for the administration of our stock option
plans.
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<PAGE>
The members of the Employee Compensation and Benefits Committee are Mr.
Van Horn (Chairman), Mr. Evans, Mr. Potter, Mr. Ryan and Mr. Tippeconnic. No
member of the committee is an officer or employee of the company. The committee
met eight times during 1998.
NOMINATING COMMITTEE
The Nominating Committee researches, interviews and recommends to the
Board nominees for election to the Board. The committee reviews candidates for
director suggested by any shareholder submitting a recommendation at least 60
days prior to the anniversary date of this Proxy Statement. The committee also
recommends directors for appointment to committees of the Board and the term of
appointment to such committees.
The members of the Nominating Committee are Mr. Ryan (Chairman), Mr.
Tippeconnic, Mr. Van Horn and Mr. Wolitzer. No member of the committee is an
officer or employee of the company. The committee met two times during 1998.
CONFLICTS OF INTEREST COMMITTEE
The Conflicts of Interest Committee reviews and approves or disapproves
transactions between us or our subsidiaries and any of our officers or
directors. The committee also considers violations by senior management of our
Code of Business Conduct.
The members of the Conflicts of Interest Committee are Mr. Slater
(Chairman), Mr. Potter, and Mr. Sadler. No member of the committee is an officer
or employee of the company. The committee met four times during 1998.
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<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
THIS SECTION CONTAINS TABLES THAT SHOW THE AMOUNT OF COMPENSATION EARNED
BY OUR FIVE MOST HIGHLY PAID EXECUTIVE OFFICERS DURING 1998 (THE "NAMED
OFFICERS"). IT ALSO CONTAINS THE PERFORMANCE GRAPH COMPARING OUR COMPANY'S
PERFORMANCE RELATIVE TO ITS PEER GROUP AND THE REPORT OF OUR COMPENSATION
COMMITTEE EXPLAINING THE COMPENSATION PHILOSOPHY FOR OUR MOST HIGHLY PAID
OFFICERS.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- -----------------------
OTHER RESTRICTED
FISCAL ANNUAL STOCK STOCK ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
------------------------- ---- ------ ----- ------------ ------ ------- ------------
(2) (3) (4)
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer 1998 $546,000 $700,000 -- $424,000 35,200 -0-
President and Chief 1997 546,000 645,372 -- -- 36,000 -0-
Executive Officer 1996 546,000 479,934 -- -- 50,000 -0-
J. Bruce Tompkins 1998 350,000 344,750 -- 272,000 16,700 $ 4,800
Executive Vice President 1997 313,500 278,075 -- -- 11,800 4,800
and Chief Operating Officer 1996 313,500 206,597 -- -- 18,000 4,500
Dennis M. Thies
Executive Vice President- 1998 243,383 220,641 -- 144,000 11,000 4,800
Finance and Chief Financial 1997 233,000 179,410 -- -- 5,300 4,800
Officer 1996 233,000 136,538 -- -- 6,000 4,500
David J. Repasz 1998 180,000 136,850(1) -- 92,000 4,400 4,800
Senior Vice President- 1997 142,033 85,835 -- -- 2,200 4,800
Cement Operations 1996 134,016 76,574 -- -- 2,000 14,500
Patrick S. Bullard
Senior Vice President- 1998 165,666 132,940(1) -- 90,000 4,400 4,800
General Counsel and 1997 143,000 92,448 -- -- 2,200 4,800
Secretary 1996 137,500 67,206 -- -- 3,900 4,500
</TABLE>
(1) These amounts include amounts deferred under our Key Employee Security
Option Plan by Mr. Repasz and Mr. Bullard of $136,850 and $93,058,
respectively. For a description of this plan, see the Employee Benefits and
Compensation Committee report on Executive Compensation section of this
Proxy Statement.
(2) Although the officers receive certain perquisites such as a car allowance
and life insurance, the value of such perquisites did not exceed the lesser
of $50,000 or 10% of the officer's salary and bonus.
(3) The amount shown is the value of the restricted stock award on the date of
grant, January 20, 1999. The award will vest in full three years from that
date and is subject to the executive's continued employment by us.
Dividends will be paid on the restricted stock.
(4) These amounts represent our contribution to the Retirement Savings Plan on
behalf of the executive and in the case of Mr. Repasz in 1996, a $10,000
moving and living allowance.
EMPLOYEE COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Employee Compensation and Benefits Committee includes only directors who
are not employees. The Committee is responsible for recommending to the whole
Board the compensation arrangements for senior management and directors and the
adoption of compensation plans in which senior management and directors
are eligible to participate. The Committee is also responsible for granting
options or other benefits under such plans.
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<PAGE>
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 company executives closely to the interests of our
shareholders through a combination of annual cash incentives and stock options.
The Committee believes that the company's executive compensation program should:
o Motivate executives toward effective long-term management through stock
programs that focus executives' attention on increasing shareholder
value, as measured by stock price.
o Reward effective, efficient ongoing management of operations through
annual incentives that are tied to company and individual performance.
o Provide the ability to attract and retain executives through salary
levels that are competitive with other leading industrial companies.
Our executive compensation program includes base salary, annual incentives
and stock options, each of which is tied to the company's and the executive's
performance.
BASE SALARY: It is the Committee's policy that salaries should reflect
company and individual performance in meeting the Committee's goal of
maximizing shareholder value. The Committee considers company performance
measures including profitability, positive stock price trends and effective
cash flow and balance sheet management. The Committee also considers
individual performance measures that vary depending on the executive's
sphere of responsibility, but which 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 annually the performance of each senior executive officer other than
the Chief Executive Officer, whose performance is reviewed annually by the
whole Board. Salary increases are granted to senior executive officers only
in years during which both the Company's and individual's performance
justify an increase and are limited to ranges competitive with other
industrial companies.
INCENTIVE PLAN: The Annual Incentive Plan or bonus plan is based upon
performance measures set by the Board at the beginning of the year. The
performance measures for 1998 were (1) a comparison of the company's
earnings before interest, taxes, depreciation and amortization to a targeted
earnings projection and (2) the Company's return on average equity as
compared to the return on average equity of a peer group. Each of these
measures is weighted at 35%. The remaining 30% of the award is discretionary
based upon individual performance.
KEY EXECUTIVE SECURITY OPTION PLAN: Under our Key Employee Security
Option Plan key employees, including the Named Officers, may elect to forgo
payment of all or a portion of amounts due them under the Annual Incentive
Plan and instead receive an option to purchase investment securities from
the company. The investment securities available for purchase under the
option are publicly-traded mutual funds of varying investment risk. The
option, which is not exercisable until six months after the date of grant,
calls for an exercise price of 70% of the fair market value of the
investment securities on the date of exercise. The fair market value of the
option on the date of grant equals the amount of the forfeited bonus
payment. This plan is structured to defer recognition of taxable income by
the employee until the option is exercised.
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 regarding the grant of options to senior
executive officers. These guidelines provide that (1) 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 our stock price appreciates and (2) 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 our ability to retain senior executive
officers while encouraging such officers to take a long-term view in their
management decisions.
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<PAGE>
RESTRICTED STOCK: The Committee believes that significant positive
events for the company may occur which merit additional executive
compensation awards. During 1998, the company consummated the merger with
Medusa, which resulted in an increase of approximately 50% in the company's
revenues and a significant increase in net earnings. To recognize
management's contribution to the successful completion of the merger and the
company's financial performance, and to maintain competitive compensation
awards in such circumstances, the Committee awarded restricted stock from
the company's treasury to certain members of senior management. The stock
vests in three years, which the Committee believes enhances the company's
ability to retain its senior officers, to align their interests with those
of the other shareholders and to encourage them to take a long-term view in
their management decisions.
COMPENSATION AGREEMENTS: The company has entered into employment
agreements with certain of its executives that specify the terms and
conditions of their employment. Central to these agreements are
post-takeover employment arrangements. 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 of
retaining the company's 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.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER: 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 Board's judgment
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, the Board
gives primary consideration 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 companies
of similar size, are the main factors in determining the CEO's total
compensation package.
THE EMPLOYEE COMPENSATION AND BENEFITS COMMITTEE
V. H. Van Horn III, Chairman
Robert S. Evans
Robert G. Potter
Frank J. Ryan
David J. Tippeconnic
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<PAGE>
FIVE YEAR PERFORMANCE GRAPH
THE GRAPH BELOW COMPARES THE CUMULATIVE TOTAL SHAREHOLDER RETURN OF OUR
COMPANY WITH THE CUMULATIVE RETURN ON THE S&P 500 STOCK INDEX AND A PEER GROUP.
THE PEER GROUP IS COMPOSED OF A NUMBER OF COMPANIES WITH WHICH WE COMPETE (SEE
FOOTNOTE 2). WE BELIEVE OUR OVERALL PERFORMANCE GOALS MAKE THE PEER GROUP AN
APPROPRIATE BENCHMARK.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS (1)
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Southdown ........ 100 59.18 79.59 129.10 246.96 249.75
Peer Group ....... 100 79.45 88.75 108.40 158.46 216.25
S & P 500 ........ 100 101.32 139.40 171.40 228.58 293.91
(1) The graph assumes that $100 was invested on December 31, 1993 in the
Company's common stock, the S&P 500 index and the peer group and that
dividends on those purchases were reinvested quarterly.
(2) 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. thereafter.
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.
Information for Medusa Corporation is included only for years prior to 1998
when it merged with the Company.
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<PAGE>
BOARD COMPENSATION ARRANGEMENTS AND TRANSACTIONS
Mr. Ryan receives a fee of $12,500 per month for his services as Chairman
of the Board. Members of our Board, other than the Chairman of the Board and
those directors who are employees, receive a fee of $3,000 per month for their
services as directors.
At least 50% of the director's fees are paid in fair market value of
common stock under our Phantom Stock and Deferred Compensation Plan for
Non-Employee Directors. The plan defers the recognition of compensation by the
director by deferring the issuance of the common stock earned until he or she
leaves the Board. At that time directors also receive fair market value of
common stock equal to cash dividends on the common stock that would have been
received had the common stock been issued when earned.
The 1991 Nonqualified Stock Option Plan for Non-Employee Directors
provides for the grant of stock options to our non-employee directors. Each
director who is not an employee 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 2,000 shares of common stock will thereafter be
awarded to each eligible director on the date of each annual meeting of
shareholders after which he or she remains on the Board.
The Directors' Retirement Plan provides a retirement benefit to all
directors who are not covered by our qualified retirement plan and who have
served on the Board for a minimum of five years. 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.
The Board believes that it would be appropriate for the compensation of
Board members who are not employees to depend on the company's stock
performance. Consequently, the Board has approved amendments to its compensation
arrangements, subject to shareholder approval of the amendments to the
directors' stock option plan at the annual meeting. For additional information
about these amendments, see "Approval of Amendments to Non-Employee Directors
Stock Option Plan."
Mr. Uding performs consulting services under an agreement dated July 1,
1998 that provides for the payment, through June 30, 2003, of an annual retainer
of $250,000 plus out-of-pocket expenses. This agreement also calls for an annual
payment of up to $13,000 to Mr. Uding for the purchase of disability, life and
health insurance. Mr. Uding was paid a total of $128,543 under this agreement in
1998.
Mr. Wolitzer is a managing director of Lehman Brothers Inc., which has
provided investment banking services for us from time-to-time for which it has
received customary fees and commissions.
EMPLOYMENT AND OTHER AGREEMENTS
The company has employment agreements with Messrs. Comer, Tompkins and
Thies. Under the employment agreements, the company employs Mr. Comer as
President and Chief Executive Officer at an annual salary of $590,000, Mr.
Tompkins as Executive Vice President and Chief Operating Officer at an annual
salary of $410,000 and Mr. Thies as Executive Vice President-Finance and Chief
Financial Officer at an annual salary of $277,000. Under the terms of the
employment agreements, the salaries of Messrs. Comer, Tompkins and Thies may be
increased by the Board (or the appropriate Board committee) from time to time.
Each executive is entitled to receive, in addition to his annual salary,
bonuses pursuant to our Annual Incentive Plan and certain fringe benefits,
including the right to participate in our group benefit plans. The Agreements
have a one year term and are automatically extended unless there is notice of
termination by either the company or the executive. If 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 (as
determined by three-quarters of our 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 other than for
cause (as defined in the agreements), death or disability, the executive shall
be entitled to a lump sum payment equal to two times his base annual salary.
Upon the occurrence of a change in control event, vesting will be accelerated on
all outstanding stock options and restricted stock previously granted to the
executive. If the executive's employment terminates following a 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 target annual bonus.
Payments made to such
-9-
<PAGE>
executives under the employment agreements and other incentive agreements after
a change in control event which are subject to the provisions of Section 280G
and 4999 of the Internal Revenue Code ("Code"), shall be "grossed up" so that
the executives shall not be required to bear any of the costs associated with
any of the 20% excise tax payable in respect of any such payment. As used in the
agreements, a "change in control event" is defined to be the acquisition by any
person or entity of (1) beneficial ownership of more than 40% of Southdown's
outstanding voting securities or (2) all or substantially all of Southdown's
assets. For a period of one year after termination of an executive's employment
under an agreement, the executive may not engage in the business of
manufacturing or selling cement or ready-mixed concrete products within the
United States unless the company consents.
PENSION PLANS
Substantially all of our employees, including the Named Officers, are
covered by a noncontributory, defined benefit pension plan sponsored by us. The
retirement benefits to which an employee is entitled under the plan depend on,
among other things, the employee's length of service, his average compensation
level for the five consecutive years during his participation in the plan
yielding the highest average and his social security covered compensation. The
compensation used in the calculation of benefits under the plan is a
participant's base salary excluding any bonuses or other compensation and is
limited by Section 401(a) of the Code. The maximum amount any employee may
receive under the defined benefit pension plan is subject to the annual benefit
limitations proscribed by the provisions of Section 415(b) of the Code.
Certain key employees, including Messrs. Comer, Tompkins and Thies, are
also covered by the Supplemental Executive Retirement Plan. The purpose of this
plan is to attract and retain executives whose skills and talents are important
to our operations by providing retirement income in excess of the benefits
payable under the defined benefit pension plan. The plan benefit is calculated
under the same formula as the defined benefit pension plan with two exceptions.
The compensation used to calculate the five-year average includes not only base
salary but also bonuses received under our Annual Incentive Plan. In addition,
the computation of the annual benefit does not take into account the limitations
of Sections 401 and 415 of the Code. The annual benefit is reduced for amounts
payable under social security and the defined benefit pension plan.
The following table sets forth the aggregate annual retirement benefit
payable under the Supplemental Executive Retirement Plan and the defined benefit
pension plan before reduction for amounts to be paid under social security.
YEARS OF SERVICE AT AGE 65
FINAL AVERAGE -------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ----------- -------- --------- -------- -------- -----------
$ 300,000...... $ 74,250 $ 99,999 $123,750 $148,500 $ 173,250
600,000...... 148,500 198,000 247,000 297,000 346,500
900,000...... 222,750 297,000 371,250 445,500 519,750
1,200,000...... 297,000 396,000 495,000 594,000 693,000
1,500,000...... 371,250 495,000 619,750 742,500 866,250
1,800,000...... 445,500 594,000 742,500 891,000 1,039,500
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OPTION GRANTS FOR 1998
Our 1987 Stock Option Plan and 1989 Stock Option Plan provide for the
grant of stock options to our key employees. The plans authorize the issuance of
options to purchase a total of 7,000,000 shares of common stock (2,000,000
shares under the 1987 Plan and 5,000,000 shares under the 1989 Plan). The plans
are administered by the Employee Benefits and Compensation Committee. Members of
the committee are not eligible to participate in the plans or any other plan
administered by the committee 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.
OPTION/SAR GRANTS TO NAMED OFFICERS IN 1998
<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) 1998 SHARE(2) DATE 5% 10%
---- ---------- ---- -------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer 35,200 14.71 $ 60.31 1/21/08 $1,335,088 $3,383,375
J. Bruce Tompkins 16,700 6.97 60.31 1/21/08 633,408 1,605,181
Dennis M. Thies .. 4,500 1.88 60.31 1/21/08 170,679 432,534
David J. Repasz .. 4,400 1.83 60.31 1/21/08 166,886 422,922
Patrick S. Bullard 1,800 0.75 60.31 1/21/08 68,272 173,013
Patrick S. Bullard 2,600 1.09 65.78 5/20/08 107,679 272,575
</TABLE>
__________________
(1) All options were granted under our 1989 Plan and become exercisable in
annual increments of 25%.
(2) All options were granted with an exercise price equal to the fair market
value 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 1998
AND YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT FISCAL IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1998 AT DECEMBER 31, 1998*
ACQUIRED ON VALUE --------------------------- -------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer ......... 30,750 $1,179,764 9,500 96,700 $367,531 $2,043,094
J. Bruce Tompkins ......... 16,100 622,608 -0- 38,950 -0- 749,394
Dennis M. Thies ........... 8,325 328,701 -0- 14,225 -0- 327,763
David J. Repasz ........... -0- -0- 6,550 7,050 254,194 80,831
Patrick S. Bullard ........ 1,250 50,681 2,775 9,250 100,500 165,256
</TABLE>
___________
* Based upon the closing price of our common stock on the New York Stock
Exchange on December 31, 1998 which was $59.1875.
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<PAGE>
APPROVAL OF AMENDMENTS TO NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Board has embraced a fundamental change in the way the company's
non-employee directors should be compensated The Board believes that it would be
preferable for all of the compensation of Board members who are not employees to
depend on the development of shareholder value as reflected by the company's
stock performance. Consequently, the Board has approved amendments to its
compensation arrangements, subject to approval of the amendments to the
directors' option plan by the shareholders at the annual meeting. The amendments
adopted by the Board are:
DIRECTORS' FEES: After the annual meeting, no more directors' fees would
be paid in cash. All such fees would be replaced by option grants, as described
below. The Chairman of the Board would no longer receive $12,500 per month, and
the other directors who are not employees would no longer receive $3,000 per
month for their services as directors.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS: This plan would be the
source of all payments for future service as directors. The Board has approved
the following amendments, subject to approval by the shareholders at the annual
meeting:
o Starting with this annual meeting, each director who is not an
employee would receive 7,500 options at each annual meeting after
his first election. At the same time, chairmen of Board committees
would annually receive an additional 500 options, and the Chairman
of the Board would annually receive an additional 18,500 options.
o The total number shares on which options could be issued under the
plan would be increased from 400,000 to 725,000 shares. Today,
224,000 options have been issued under the plan, leaving 176,000
available for grant.
The other material provisions of the plan would not be amended. Options
will not be issued under this plan to directors who are employees of the
company. Each new director who is not an employee would still be granted 10,000
options when first elected. Annual grants would be made to each non-employee
director on the date of each annual meeting where they continue to serve as a
director after their first election. The exercise price of each option would
still be the fair market value of the common stock on the date of grant. Each
option would become exercisable six months after the date of grant. However, if
while the director was serving he dies or was disabled, or there was a change of
control of the company, the options would become exercisable immediately. Each
option would still be exercisable until the first to occur (1) ten years from
the date of grant or (2) 90 days after the director's service as a director
terminates for any reason other than death, disability or retirement under a
company retirement plan. If a director's service is terminated for any reason
after a change of control, as defined in the plan, the options continue to be
exercisable for the full ten-year period. Options can be exercised using cash or
common stock owned by the director.
PHANTOM STOCK AND DEFERRED COMPENSATION PLAN: Benefits under this plan
would be frozen, and no new phantom stock in lieu of directors' fees would be
paid. Common stock already earned under the plan would still be received by the
director when he or she leaves the board. At that time, directors will also
receive the fair market value of common stock equal to cash dividends on the
common stock that would have been received had the common stock been issued when
the directors' fees were earned.
DIRECTORS' RETIREMENT PLAN: Benefits under this plan would be frozen,
and no new retirement benefits would accrue. Directors would have two choices
with respect to benefits already accrued under the plan. They could (1) do
nothing, and receive those cash benefits when they retire under the present plan
provisions or (2) elect to give up their cash retirement benefits under the plan
and instead get phantom stock which they receive upon retirement.
APPROVAL OF AMENDMENT TO THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The amendments to the non-employee directors stock option plan require
the approval of the company's shareholders. The other changes to the company's
directors compensation arrangements described above - changes to the directors'
fees, the phantom stock plan and the retirement plan - do not require
shareholder approval.
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<PAGE>
However, the Board has made its adoption of those changes subject to the
shareholders' approval of the amendments to the non-employee directors stock
option plan. If the amendments to the stock option plan are not approved, the
other amendments will not go into effect. In that case, the directors'
compensation arrangements would stay in effect, including fees, retirement
benefits and annual option grants under the present non-employee directors
option plan, as described under "Executive Compensation and Other Matters -
Board Compensation Arrangements and Transactions."
The amendments to the stock option plan will be approved if a majority
of the shares voting vote in favor of the proposal, as long as at least 50% of
the outstanding shares vote. Abstentions will have the same effect as votes
against the proposal. Broker non-votes are not counted as votes cast either for
or against the proposal. The Board of Directors recommends a vote FOR the
amendments of the non-employee directors stock option plan.
RATIFICATION OF INDEPENDENT AUDITORS
The Audit and Finance Committee of the Board and the full Board have
approved the appointment of Deloitte & Touche LLP to audit Southdown's books and
accounts for 1999. The shareholders will be asked to ratify the appointment of
Deloitte & Touche LLP as independent auditors of the books and accounts for the
year ending December 31, 1999. 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.
Although the Board is not required to submit the appointment of Deloitte
& Touche to a shareholder vote, the Board will reconsider that appointment if it
is not ratified by the shareholders. The appointment will be deemed ratified if
approved by a majority of the votes cast on the proposal. Abstentions will have
the same effect as votes against the proposal. Broker non-votes will not be
counted as votes cast for or against the proposal. The Board of Directors
recommends a vote FOR the ratification of Deloitte & Touche LLP as our
independent auditors for 1999.
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<PAGE>
STOCK OWNERSHIP
THIS SECTION DESCRIBES HOW MUCH STOCK OUR DIRECTORS AND EXECUTIVE
OFFICERS OWN. IT ALSO DESCRIBES SHAREHOLDERS THAT OWN MORE THAN 5% OF OUR VOTING
STOCK.
STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information we know concerning
common stock ownership of each of our directors and Named Officers and all of
our executive officers and directors as a group as of March 1, 1999.
AMOUNT
AND
NAM E OF INDIVIDUAL NATURE OF
OF BENEFICIAL PERCENT
GROUP OWNERSHIP(1) OF CLASS
----- ------------- --------
Clarence C. Comer 162,722(2) *
Patrick S. Bullard 6,577(3) *
Robert S. Evans 582,532(4) 1.46
Robert G. Potter 15,452(5) *
David J. Repasz 10,186(6) *
Frank J. Ryan 50,048(7) *
Whitson Sadler 16,726(8) *
Robert J. Slater 29,430(9) *
Dennis M. Thies 13,897(10) *
David J. Tippeconnic 20,452(11) *
J. Bruce Tompkins 22,199(12) *
George E. Uding, Jr. 26,336(13) *
V. H. Van Horn III 25,452(14) *
Steven B. Wolitzer 19,726(15) *
All executive officers
and directors
as a group
(Seventeen persons) 1,126,744(16) 2.81
____________
* 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 common
stock listed in the table.
(2) Includes 39,800 shares of common stock as to which Mr. Comer holds stock
options that will be exercisable on April 30, 1999 and 7,534 restricted
shares over which he has voting power but no investment power.
(3) Includes 3,775 shares of common stock as to which Mr. Bullard holds stock
options that will be exercisable on April 30, 1999, 392 shares held in
the Retirement Savings Plan and 1,600 restricted shares over which he has
voting power but no investment power.
(4) Includes 10,000 shares of common stock as to which Mr. Evans holds stock
options that will be exercisable on April 30, 1999 and 170 shares held in
the Phantom Stock Plan.
(5) Includes 14,000 shares of common stock as to which Mr. Potter holds stock
options that will be exercisable on April 30, 1999 and 1,452 shares held
in the Phantom Stock Plan.
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<PAGE>
(6) Includes 8,200 shares of common stock as to which Mr. Repasz holds stock
options that will be exercisable on April 30, 1999, 351 shares held in
the Retirement Savings Plan and 1,635 restricted shares over which he has
voting power but no investment power.
(7) Includes 19,000 shares of common stock as to which Mr. Ryan holds stock
options that will be exercisable on April 30, 1999 and 6,048 shares held
in the Phantom Stock Plan.
(8) Includes 14,000 shares of common stock as to which Mr. Sadler holds stock
options that will be exercisable on April 30, 1999 and 726 shares held in
the Phantom Stock Plan.
(9) Includes 19,000 shares of common stock as to which Mr. Slater holds stock
options that will be exercisable on April 30, 1999 and 726 shares held in
the Phantom Stock Plan.
(10) Includes 3,950 shares of common stock as to which Mr. Thies holds stock
options that will be exercisable on April 30, 1999, 2,339 shares held in
the Retirement Savings Plan and 2,559 restricted shares over which he has
voting power but no investment power.
(11) Includes 14,000 shares of common stock as to which Mr. Tippeconnic holds
stock options that will be exercisable on April 30, 1999 and 1,452 shares
held in the Phantom Stock Plan.
(12) Includes 11,625 shares of common stock as to which Mr. Tompkins holds
stock options that will be exercisable on April 30, 1999, 1,678 shares
held in the Retirement Savings Plan and 4,833 restricted shares over
which he has voting power but no investment power.
(13) Includes 10,000 shares of common stock as to which Mr. Uding holds stock
options that will be exercisable on April 30, 1999, 1,201 shares held in
the Medusa Corporation Savings Plan and 341 shares held in our Phantom
Stock Plan.
(14) Includes 24,000 shares of common stock as to which Mr. Van Horn holds
stock options that will be exercisable on April 30, 1999 and 1,452 shares
held in the Phantom Stock Plan.
(15) Includes 19,000 shares of common stock as to which Mr. Wolitzer holds
stock options that will be exercisable on April 30, 1999 and 726 shares
held in the Phantom Stock Plan.
(16) Includes 223,571 shares of common stock subject to stock options held by
the officers and directors that will be exercisable on April 30, 1999,
22,638 shares held in various company plans and 19,308 restricted shares
over which the officers hold voting power but no investment power.
VOTING STOCK OWNED BY "BENEFICIAL OWNERS"
The following table sets forth information with respect to each person
who, as of the dates indicated in the footnotes below, was known by us to be the
beneficial owner of more than 5% of any class of our voting securities.
AMOUNT AND
NATURE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL PERCENT
OR SERIES BENEFICIAL OWNER OWNERSHIP OF CLASS
--------- ---------------- --------- --------
Common FMR Corp.
Stock 82 Devonshire Street 5,430,763(1) 14.04
Boston, MA 02109
Common Brinson Partners, Inc.
Stock 209 LaSalle 3,555,728(2) 9.19
Chicago, IL 60604
(1) FMR Corp. and various affiliates have filed with the SEC a Schedule 13G
and five amendments dated through February 1, 1999 reporting that FMR
Corp. is the beneficial owner of these shares because it has sole power
to vote 1,745,651 of such shares and sole power to dispose of all such
shares.
(2) Brinson Partners, Inc. and an affiliate, UBS AG, filed with the SEC a
Schedule 13G dated February 3, 1999 reporting beneficial ownership of
these shares because of shared voting power and disposal power of such
shares.
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<PAGE>
COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT
Under the securities laws of the United States, our directors, executive
officers, and any persons holding more than ten percent of our common stock are
required to report their initial ownership of common stock and any subsequent
changes in that ownership to the SEC and the New York Stock Exchange. Specific
due dates for these reports have been established and we are required to
disclose in this proxy statement any failure to file by these dates. All
required 1998 filings were satisfied on a timely basis except for a Form 5 filed
late by Thomas E. Daman reporting an exchange of Medusa common stock for our
common stock in connection with our merger with Medusa. In making these
disclosures, we relied solely on written statements of 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 our present
executive officers serving until the annual meeting of the Board of Directors to
be held in May 1999. The periods during which they have served in these
capacities are indicated in the description of business experience of such
persons below.
Clarence C. Comer (51)..... President, Chief Executive Officer and a Director
J. Bruce Tompkins (49)..... Executive Vice President, Chief Operating Officer
and a Director
Dennis M. Thies (50)....... Executive Vice President-Finance and
Chief Financial Officer
David J. Repasz (49)....... Senior Vice President-Cement Operations
Patrick S. Bullard (37).... Senior Vice President-General Counsel
and Secretary
Stephen R. Miley (51)...... Senior Vice President-Cement Sales
Thomas E. Daman (43)....... Vice President and Treasurer
Allan B. Korsakov (56)..... Vice President and Corporate Controller
Mr. Comer was elected President and Chief Executive Officer in February
1987.
Mr. Tompkins was elected Executive Vice President and Chief Operating
Officer in October 1997. For more than five years prior to this Mr. Tompkins was
Executive Vice President - Cement Group.
Mr. Thies was elected Executive Vice President-Finance and Chief
Financial Officer in March 1998. From May 1995 to March 1998, Mr. Thies was
Senior Vice President-Corporate Development. From April 1992 to May 1995, Mr.
Thies was Senior Vice President-Environmental Systems.
Mr. Repasz was elected Senior Vice President-Cement Operations in March
1998. From January 1997 to March 1998, Mr. Repasz was Vice President-Operations
and from August 1995 to January 1997, Mr. Repasz was Director of Manufacturing
Services of the Company. For more than five years prior to this, Mr. Repasz was
a Plant Manager for Essroc Cement Corporation.
Mr. Bullard was elected Senior Vice President-General Counsel and
Secretary in December 1998. From May 1996 to December 1998, Mr. Bullard was Vice
President-General Counsel and Secretary. From August 1995 to May 1996, Mr.
Bullard was Vice President and General Counsel. From May 1993 to that time Mr.
Bullard was associated with the law firm of Bracewell & Patterson, L.L.P.,
Houston, Texas.
Mr. Miley was elected Senior Vice President-Cement Sales in March 1998.
From September 1994 to March 1998, Mr. Miley served as Corporate Vice
President-Sales. From September 1990 to September 1994 Mr. Miley was Corporate
Vice President-Sales & Marketing.
Mr. Daman was elected Vice President and Treasurer in May 1997. From
February 1996 to May 1997, Mr. Daman was Treasurer. For more than five years
prior to that time he served as Assistant Treasurer.
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<PAGE>
Mr. Korsakov was elected Vice President and Corporate Controller in
February 1998. For more than five years prior to that time he served as
Corporate Controller.
OTHER INFORMATION
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
In order for proposals submitted by shareholders of the company pursuant
to Rule 14a-8 of the Securities Exchange Act of 1934 to be included in our proxy
statement and proxy relating to our 2000 annual meeting of shareholders, such
proposals must be received by us at our principal executive offices not later
than December 7, 1999. If notice of a shareholder proposal for the 2000 annual
meeting being submitted outside of Rule 14a-8 is received by us at our principal
executive offices after February 28, 2000, it will be considered untimely.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the company.
Solicitations of proxies are being made through the mail, and may also be made
in person or by telephone. Our employees and directors may be utilized in
connection with the solicitation. In addition, we retained Georgeson & Company,
Inc. to assist in soliciting proxies for a fee of $7,500 plus out-of-pocket
expenses. We will also request brokers and nominees to forward soliciting
materials to the beneficial owners of the common 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. If any other matters properly come before the Annual
Meeting, the persons named in the enclosed form of proxy will vote all proxies
according to their best judgment. The form of proxy provides that the persons
named as proxies have discretionary authority to vote on matters not known or
determined on the date of this proxy statement.
ADDITIONAL INFORMATION AVAILABLE
WE FILE AN ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES AND EXCHANGE
COMMISSION. SHAREHOLDERS MAY OBTAIN A PAPER COPY OF THIS REPORT (WITHOUT
EXHIBITS), WITHOUT CHARGE, BY WRITING TO SOUTHDOWN, INC., 1200 SMITH STREET,
SUITE 2400, HOUSTON, TEXAS 77002-4486; ATTENTION PATRICK S. BULLARD, SENIOR VICE
PRESIDENT - GENERAL COUNSEL AND SECRETARY -- TELECOPY (713) 653-8010.
By Order of the Board of Directors
Patrick S. Bullard
SENIOR VICE PRESIDENT-GENERAL COUNSEL AND SECRETARY
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<PAGE>
SOUTHDOWN, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Clarence C. Comer, Robert G.
Potter and Robert J. Slater, and each of them, attorneys and agents, with full
power of substitution to vote as proxy all the shares of Common Stock standing
in the name of the undersigned at the Annual Meeting of Shareholders of
Southdown, Inc. to be held at the Doubletree Hotel at Allen Center, 400 Dallas
Street, Houston, Texas at 8:30 A.M., Houston time, on Thursday, May 20, 1999,
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 date of the Proxy Statement referred to below, as may
properly come before said meeting or any adjournment(s) thereof. Receipt of
notice of the meeting and Proxy Statement dated April 5, 1999 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 "FOR" EACH NOMINEE FOR DIRECTOR AND
"FOR" PROPOSALS 2 AND 3.
The undersigned hereby revokes any proxies previously given and directs said
attorneys to act or vote as follows:
1. ELECTION OF DIRECTORS |_| FOR all nominees listed (except
as marked to the contrary below)
|_| WITHHOLD AUTHORITY to vote
for all nominees listed
NOMINEES -- FRANK J. RYAN, WHITSON SADLER, J. BRUCE TOMPKINS,
GEORGE E. UDING, JR. AND ROBERT S. EVANS
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
2. PROPOSAL TO APPROVE THE AMENDMENTS TO 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 COMPANY FOR 1999.
|_| FOR |_| AGAINST |_| ABSTAIN
Dated ___________________________,1999
______________________________________
______________________________________
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.
