SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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SOUTHDOWN, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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SOUTHDOWN, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
Southdown, Inc. will hold its Annual Meeting of Shareholders on Thursday,
May 18, 2000, 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 four directors to serve until 2003;
2. Ratification of the appointment of Deloitte & Touche LLP as our
independent auditors for 2000; and
3. 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 27, 2000
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
March 31, 2000
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SOUTHDOWN, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
SUMMARY
PROPOSALS TO BE VOTED ON
Two proposals.
o Election of four directors
o Ratification of Deloitte & Touche LLP as our independent auditors for
2000.
RECORD DATE
Only shareholders of record at the close of business on March 27, 2000 are
entitled to vote. Holders of our common stock are entitled to one vote per
share.
MEETING ATTENDANCE
All shareholders as of the record date, or their duly appointed proxies, may
attend the meeting.
PROCEDURE FOR VOTING
You can vote in person or by proxy. Proxies may be submitted by mail or other
delivery, by telephone or by the internet. Instructions are included in your
proxy material for each methods of voting. To vote in person, you must attend
the meeting and submit a written ballot which will be provided there.
VOTE OF PROXY RETURNED WITHOUT INSTRUCTIONS
If you return your signed proxy card but do not indicate how you wish to vote,
your shares will be voted FOR election of all the nominees for director
(Proposal 1) and FOR ratification of appointment of Deloitte & Touche LLP
(Proposal 2).
CHANGING YOUR VOTE
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.
QUORUM
As of the record date there were 35,911,473 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.
NECESSARY VOTE FOR APPROVAL
o 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.
o 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.
VOTE TABULATION
Representatives of American Stock Transfer & Trust Company will tabulate the
votes and act as the inspectors of election.
SHARES HELD IN BROKERAGE ACCOUNT
If your shares are held in a brokerage account or similar type account, you are
considered the beneficial owner of these shares. The card enclosed is a request
from your broker for instructions as to how you want your beneficially owned
shares voted on each proposal.
TWO OR MORE CARDS RECEIVED
It indicates that your shares are held in more than one account, such as two
brokerage accounts and registered in different names or that you hold some
shares in your name and other shares in "street" name through your broker. You
should return each of the proxy cards in accordance with its instructions to
ensure that all of your shares are voted.
DATE OF MAILING
This Proxy Statement was first sent to shareholders on or about April 17, 2000.
FURTHER QUESTIONS
You may call Georgeson Shareholder Communication Inc. at (800) 223-2064 if you
have any questions.
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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 III will expire at the Annual
Meeting. The Board has selected Clarence C. Comer, Robert G. Potter, Robert J.
Slater, and George E. Uding, Jr., each of whom currently serves on the Board, as
nominees for election at the Annual Meeting. If elected, Messrs. Comer, Potter,
Slater, and Uding will each serve for a three-year term expiring at the Annual
Meeting of Shareholders in 2003.
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 four nominees.
- - --------------------------------------------------------------------------------
CLASS III DIRECTORS NOMINATED FOR ELECTION - TERM EXPIRING 2003
- - --------------------------------------------------------------------------------
CLARENCE C. COMER Director since 1986
Mr. Comer, 52, 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, 61, was Chairman and Chief Executive Officer of Solutia Inc.,
a diversified manufacturer of specialty chemical products, from 1997 until
his retirement in 1999. 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 Solutia Inc. and
of Stepan Co., a manufacturer of specialty and intermediate chemicals.
ROBERT J. SLATER Director since 1993
Mr. Slater, 62, is President of Jackson Consulting, Inc., a private
consulting and investment company specializing in advising basic
industries, and has served in that position for more than five years. He
is also a director of First Industry Realty Trust, Inc., an owner and
operator of industrial real estate.
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GEORGE E. UDING, JR. Director since 1998
Mr. Uding, 68, 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.
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 I DIRECTORS - TERM EXPIRING 2001
- - --------------------------------------------------------------------------------
ROBERT S. EVANS Director since 1998
Mr. Evans, 56, is Chairman and Chief Executive Officer of Crane Co., a
diversified manufacturer of engineered products, a position he has held
for more than five years. He is also a director of Fansteel, Inc., a
specialty metals manufacturer, of Hexcel Corporation, a manufacturer of
advanced structural materials, of Huttig Building Products, Inc., a
distributor of building materials, and of HBD Industries, Inc., a holding
company of a diversified manufacturer.
DAVID J. TIPPECONNIC Director since 1996
Mr. Tippeconnic, 60, 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, when he
assumed his present position, 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.
V. H. VAN HORN III Director since 1988
Mr. Van Horn, 61, 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, 47, is Managing Director, Head of Mergers and Acquisitions
Group, of Lehman Brothers Inc., an investment banking firm. He has held
this position for more than five years.
- - --------------------------------------------------------------------------------
CONTINUING CLASS II DIRECTORS - TERM EXPIRING 2002
- - --------------------------------------------------------------------------------
FRANK J. RYAN Director since 1993
Mr. Ryan, 68, has been Chairman of Southdown's Board since 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, 59, is President and Chief Executive Officer of Solvay
America, Inc., a United States subsidiary of Solvay S.A, a position he has
held for more than five years. Solvay S.A. is a major European chemical
company headquartered in Brussels, Belgium.
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J. BRUCE TOMPKINS Director since 1998
Mr. Tompkins, 50, 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 for more than five years.
THE BOARD AND ITS COMMITTEES
NUMBER OF MEETINGS
The Board met six times during 1999 and its committees met as noted below.
All of our directors attended 75% or more of all applicable Board and committee
meetings during 1999.
FINANCE AND AUDIT COMMITTEE
The Finance and Audit Committee reviews our financial statements with our
independent auditors, including a discussion of our accounting principles and
the integrity and clarity of our financial reporting processes. The committee
reviews audit plans and results; inquires into the effectiveness of our
financial and accounting controls and our internal auditing procedures; and
reviews the adequacy of our information systems. The committee also reviews the
financial performance of our defined benefit employee retirement plan. In
addition, the committee makes recommendations to the whole Board regarding
selection of independent auditors, current and proposed financing strategies,
issuance and repurchases of our securities and dividend and other distribution
policies.
The members of the Finance and Audit Committee are Mr. Sadler (Chairman),
Mr. Ryan, Mr. Slater, Mr. Van Horn and Mr. Wolitzer. No member of the committee
is an officer or employee of the company. The committee met eleven times in
1999.
COMPENSATION AND DEVELOPMENT COMMITTEE
The Compensation and Development Committee reviews compensation policies
of the company, reviews performance and approves compensation for our Named
Officers and administers our stock option plans other than our 1991 Stock Option
Plan for Non-Employee Directors, which is administered by the Nominating and
Governance Committee. The committee also reviews the Company's management
resources and its executive selection and development processes; and reviews and
evaluates long-range planning for an orderly succession of senior executives.
The members of the Compensation and Development Committee are Mr. Potter
(Chairman), Mr. Evans, Mr. Ryan, Mr. Tippeconnic and Mr. Van Horn. No member of
the committee is an officer or employee of the company. The committee met seven
times during 1999.
NOMINATING AND GOVERNANCE COMMITTEE
The Nominating and Governance Committee researches and recommends to the
Board nominees for election to the Board. The committee will review candidates
for director suggested by any shareholder in writing to the Secretary of the
company at least 60 days prior to the anniversary date of this proxy statement.
The committee reviews Board governance practices generally, including the
structure and size of the Board. The committee also develops recommendations to
set and monitor Board performance goals, including the process for developing
and implementing Board performance assessment.
The members of the Nominating and Governance Committee are Mr. Ryan
(Chairman), Mr. Potter, Mr. Sadler, Mr. Uding and Mr. Wolitzer. No member of the
committee is an officer or employee of the company, although Mr. Uding provides
consulting services to the Company under a consulting agreement. See "Board
Compensation Arrangements and Transactions." The committee met four times during
1999.
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PUBLIC POLICY COMMITTEE
The Public Policy Committee reviews, monitors and makes recommendations
regarding the company's health, safety and environmental affairs policies; the
company's policies on important social, political and public issues, including
governmental relations, community relations and charitable contributions; the
company's equal employment opportunity policies; and the company's Code of
Business Conduct.
The members of the Public Policy Committee are Mr. Tippeconnic (Chairman),
Mr. Slater, Mr. Tompkins and Mr. Uding. The Board formed the committee in May
1999 and it met three times during the year.
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 1999 (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>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------------- ----------------------------------------
OTHER
FISCAL ANNUAL RESTRICTED STOCK ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
------------------------- ---- ------ ----- ------------ ------------ ------- ------------
(2) (3) (4)
<S> <C> <C> <C> <C> <C> <C> <C>
Clarence C. Comer 1999 $590,000 $1,036,630 - - 145,000 -0-
President and Chief 1998 546,000 700,000 - $424,000 35,200 -0-
Executive Officer 1997 546,000 645,372 - - 36,000 -0-
J. Bruce Tompkins 1999 410,000 602,700 - - 84,000 $4,800
Executive Vice President 1998 350,000 344,750 - 272,000 16,700 4,800
and Chief Operating Officer 1997 313,500 278,075 - - 11,800 4,800
Dennis M. Thies 1999 277,000 337,386 - - 41,000 4,800
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
David J. Repasz 1999 210,000 230,160 - - 21,500 4,800
Senior Vice President- 1998 180,000 136,850 (1) - 92,000 4,400 4,800
Cement Operations 1997 142,033 85,835 - - 2,200 4,800
Patrick S. Bullard 1999 200,000 216,600 (1) - - 21,500 4,800
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
</TABLE>
(1) These amounts include the following amounts deferred under our Key
Employee Security Option Plan: in 1999, $108,300 by Mr. Bullard, and in
1998, $136,850 and $93,058, respectively, by Mr. Repasz and Mr. Bullard.
For a description of this plan, see the Employee Compensation and
Development 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 these 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. Dividends
will be paid on the restricted stock.
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(4) These amounts represent our contribution to the Retirement Savings Plan on
behalf of the executive.
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Development Committee includes only directors who are
not employees. The Committee approves base salary, bonus, stock options grants
and other remuneration for the five most highly compensated executive officers
of the company. The Committee recommends to the whole Board compensation plans
in which senior management and directors are eligible to participate.
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, stock options and other methods described below.
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; and
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 the following
components, each of which is tied to the company's and the executive's
performance.
BASE SALARY: The Committee believes 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
and earnings 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 senior
executive officers. The Chief Executive Officer also is reviewed
comprehensively by the whole Board annually. Salary increases are granted
to senior executive officers only in years during which the company's and
the 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 1999 were (1) a comparison of the company's
diluted earnings per share to a targeted earnings projection and (2) the
company's return on assets as compared to the return on assets 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 EMPLOYEE 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
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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 crucial
to motivate 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 and performance 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 these officers to take a long-term view in their management
decisions.
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 more
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
CEO's individual contribution to the business, level of responsibility and
career experience. None of these factors has a specific weight and no
particular formulas or procedures are used. 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.
EXECUTIVE SHARE OWNERSHIP GUIDELINES. The Committee believes
strongly that another way to reinforce the link between the executives'
interests and your interests is for the executives to own a significant
amount of Southdown stock. As a result, the company adopted formal share
ownership guidelines in 1999 for the Named Officers. To comply with the
guidelines, the following executives would own shares of the company's
stock with values equal to the following multiples of their base salary:
MULTIPLE OF
POSITION SALARY
-------- -----------
Chief Executive Officer Three
Executive Vice Presidents Two
Senior Vice Presidents who are Named Officers One
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THE COMPENSATION AND DEVELOPMENT COMMITTEE
Robert G. Potter, Chairman
Robert S. Evans
Frank J. Ryan
David J. Tippeconnic
V. H. Van Horn III
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)
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
Southdown .......... 100.00 134.48 218.14 417.30 422.02 372.43
Peer Group ......... 100.00 111.70 136.44 199.45 272.19 213.18
S & P 500 .......... 100.00 137.58 169.17 225.60 290.08 351.11
(1) The graph assumes that $100 was invested on December 31, 1994 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 Cement Holding, Inc., Lafarge
Corporation, Lone Star Industries, Medusa Corporation and Centex
Construction Products, Inc. Information for Medusa Corporation is
included only for years prior to 1998 when it merged with the Company.
Information for Lone Star Industries is included only for years prior
to 1999 when it was acquired by another company and ceased being a
publicly-held company.
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BOARD COMPENSATION ARRANGEMENTS AND TRANSACTIONS
As approved by shareholders in May 1999, compensation for Board members
who are not employees depends exclusively on the company's stock performance.
Accordingly, the non-employee members of the Board of Directors are compensated
for their services through grants of stock options under the 1991 Stock Option
Plan for Non-Employee Directors. The plan calls for each non-employee director
to be granted options to acquire 10,000 shares of common stock on the date of
such director's first election to the Board and an additional option to acquire
7,500 shares at each subsequent annual meeting of shareholders. Board committee
chairmen receive an additional 500 options annually. The Chairman of the Board
receives an additional 18,500 options annually. All options are granted with an
exercise price equal to the fair market value of the common stock on the grant
date and become fully exercisable in six months.
Until May 1999, Mr. Ryan received a fee of $12,500 per month for his
services as Chairman of the Board. Members of the Board, other than the Chairman
and those directors who were employees, received a fee of $3,000 per month for
their services as directors. At least 50% of these fees were paid in fair market
value of common stock under our Phantom Stock and Deferred Compensation Plan for
Non-employee Directors. That plan deferred the recognition of compensation by
the director by deferring the issuance of the common stock earned until he
leaves the Board. Also, until May 1999, we had a Directors' Retirement Plan
which provided retirement benefits to all directors who were not covered by our
qualified retirement plan and who had 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 was equal to two-thirds of the total fees paid to the director during
his last twelve months of service on the Board and was payable for a period
equal to the period of his service on the Board.
After our 1999 Annual Meeting of Shareholders, future awards under the
Phantom Stock and Deferred Compensation Plan were suspended. At the same time,
benefits under the Directors' Retirement Plan were frozen, and each director
elected to forego those benefits in exchange for phantom stock units similar to
those issued under the phantom stock plan. The directors remain entitled to the
stock accrued in their accounts under these phantom stock plans, although no
future awards will be made. When cash dividends are paid on the common stock,
common shares equal in fair market value to the amount of those dividends will
be added to the unissued deferred common stock in the directors' accounts under
these phantom stock plans.
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 $268,000 under this agreement in
1999.
Mr. Wolitzer is a managing director of Lehman Brothers Inc., which
provides investment banking services for us from time-to-time for which it
receives customary fees and commissions.
EMPLOYMENT AND OTHER AGREEMENTS
The company has employment agreements with Messrs. Comer, Tompkins, Thies,
Repasz and Bullard. Under the employment agreements, the company employs Mr.
Comer as President and Chief Executive Officer at an annual salary of $663,000,
Mr. Tompkins as Executive Vice President and Chief Operating Officer at an
annual salary of $429,000, Mr. Thies as Executive Vice President-Finance and
Chief Financial Officer at an annual salary of $299,000, Mr. Repasz as Senior
Vice President-Cement Operations at an annual salary of $250,000 and Mr. Bullard
as Senior Vice President-General Counsel and Secretary at an annual salary of
$236,000. Under the terms of the employment agreements, the salaries of Messrs.
Comer, Tompkins, Thies, Repasz and Bullard 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,
discretionary 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 rolling one year term and are automatically extended unless
there is notice of termination by either the company or the executive, except
that in the event of a change in control (as defined in the respective
agreements) the agreement shall be for two years from the date of the change in
control. If the executive's employment is terminated because of his death,
disability or voluntary termination of employment
10
<PAGE>
prior to the occurrence of a "change in control" (as defined at the end of this
paragraph) or if the executive is terminated for cause (as defined in the
agreement), 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 (except Messrs. Repasz and
Bullard, who would be entitled to a lump sum payment equal to 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
the greater of the executive's most recent annual bonus or his target annual
bonus. Payments made to such executives under the employment agreements and
other 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" occurs if (1) the
company reports a change of control in a filing with the SEC, (2) any person,
entity or group (other than any employee benefit plan sponsored by the company)
is or becomes the beneficial owner of more than 40% of the company's voting
stock, or (3) 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 a directors representing at least a majority of the directors then in office
who were directors at the beginning of the two-year period. 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.
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 payable in a lump sum or in any other manner
permitted by the defined benefit pension plan, and 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.
Upon a change in control event, Messrs. Comer, Tompkins and Thies would be
entitled to credit for additional age and years of service to age 65 with no
penalty for early retirement. These individuals would receive a lump sum payment
promptly after a change in control regardless of any retirement or other
termination of employment.
The following table sets forth for each of the Named Officers the
estimated annual benefit payable upon normal retirement at age 65, assuming
current remuneration levels without any salary increase and participation in the
plans until normal retirement at age 65 under the provisions of the foregoing
retirement plans:
11
<PAGE>
<TABLE>
<CAPTION>
CURRENT ESTIMATED CREDITED ESTIMATED ANNUAL
CREDITED YEARS YEARS OF SERVICE AT CURRENT COMPENSATION BENEFIT PAYABLE UPON
NAME OF SERVICE AGE 65 COVERED BY PLANS RETIREMENT (1)
---- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Clarence C. Comer ................... 23 36 $ 1,699,630 $ 1,009,580
J. Bruce Tompkins ................... 12 26 1,031,700 442,599
Dennis M. Thies ..................... 13 27 636,386 283,510
David J. Repasz ..................... 5 20 170,000(2) 56,100
Patrick S. Bullard .................. 5 32 170,000(2) 89,760
</TABLE>
- - --------------------
(1) Before reduction for amounts to be paid under social security.
(2) Current compensation limit under Section 401(a).
OPTION GRANTS FOR 1999
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 Compensation and Development 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, except the 1991 Non-Employee Director plan.
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 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM (4)
OPTIONS/SARS EMPLOYEES IN PRICE PER EXPIRATION ----------------------------
NAME GRANTED 1999 SHARE (3) DATE 5% 10%
- - ---- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer ............... 45,000(1) 7.72 56.28 01/20/09 $ 1,592,739 $ 4,036,312
Clarence C. Comer ............... 100,000(2) 17.15 56.28 01/20/09 3,539,419 8,969,583
J. Bruce Tompkins ............... 24,000(1) 4.12 56.28 01/20/09 849,461 2,152,700
J. Bruce Tompkins ............... 60,000(2) 10.29 56.28 01/20/09 2,123,651 5,381,750
Dennis M. Thies ................. 11,000(1) 1.89 56.28 01/20/09 389,336 986,654
Dennis M. Thies ................. 30,000(2) 5.15 56.28 01/20/09 1,061,826 2,690,875
David J. Repasz ................. 6,500(1) 1.11 56.28 01/20/09 230,062 583,023
David J. Repasz ................. 15,000(2) 2.57 56.28 01/20/09 530,913 1,345,437
Patrick S. Bullard .............. 6,500(1) 1.11 56.28 01/20/09 230,062 583,023
Patrick S. Bullard .............. 15,000(2) 2.57 56.28 01/20/09 530,913 1,345,437
</TABLE>
- - --------------------
(1) Options were granted under the 1989 Plan and become exercisable in annual
increments of 25%.
(2) Options were granted under the 1989 Plan and become exercisable five years
from date of grant.
(3) All options were granted with an exercise price equal to the fair market
value of the common stock on the date of the grant.
(4) 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.
12
<PAGE>
NAMED OFFICERS'
AGGREGATED OPTION/SAR EXERCISES IN 1999
AND YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS
FISCAL DECEMBER 31, 1999 AT DECEMBER 31, 1999*
---------------------------- ----------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Clarence C. Comer .................. 31,000 $ 1,309,011 18,300 201,900 $ 295,688 $ 731,438
J. Bruce Tompkins .................. 7,450 290,278 8,575 106,925 136,950 251,681
Dennis M. Thies .................... 0 0 6,700 48,525 156,614 97,603
David J. Repasz .................... 0 0 8,700 26,400 229,538 35,913
Patrick S. Bullard ................. 0 0 6,650 26,875 159,028 49,064
</TABLE>
- - --------------------
* Based upon the closing price of our common stock on the New York Stock
Exchange on December 31, 1999, which was $51.625
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 2000. 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, 2000. 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 2000.
13
<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, 2000.
AMOUNT
AND
NAME OF INDIVIDUAL NATURE OF
OF BENEFICIAL PERCENT
GROUP OWNERSHIP (1) OF CLASS
---------------------- -------------- --------
Clarence C. Comer 166,712 (2) *
Patrick S. Bullard 12,160 (3) *
Robert S. Evans 500,508 (4) 1.39
Robert G. Potter 24,983 (5) *
David J. Repasz 14,051 (6) *
Frank J. Ryan 89,673 (7) *
Whitson Sadler 25,996 (8) *
Robert J. Slater 39,514 (9) *
Dennis M. Thies 23,468 (10) *
David J. Tippeconnic 29,922 (11) *
J. Bruce Tompkins 32,823 (12) *
George E. Uding, Jr. 124,670 (13) *
V. H. Van Horn III 37,023 (14) *
Steven B. Wolitzer 28,515 (15) *
All executive officers
and directors as a group 1,184,646 (16) 3.26
(17 persons)
- - ---------
* 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 59,850 shares of common stock as to which Mr. Comer holds stock
options that will be exercisable on April 30, 2000 and 7,534 restricted
shares over which he has voting power but no investment power.
14
<PAGE>
(3) Includes 9,275 shares of common stock as to which Mr. Bullard holds stock
options that will be exercisable on April 30, 2000, 476 shares held in the
Retirement Savings Plan and 1,599 restricted shares over which he has
voting power but no investment power.
(4) Includes 17,500 shares of common stock as to which Mr. Evans holds stock
options that will be exercisable on April 30, 2000 and 646 shares held in
the phantom stock plans.
(5) Includes 22,000 shares of common stock as to which Mr. Potter holds stock
options that will be exercisable on April 30, 2000 and 2,983 shares held
in the phantom stock plans.
(6) Includes 11,975 shares of common stock as to which Mr. Repasz holds stock
options that will be exercisable on April 30, 2000, 441 shares held in the
Retirement Savings Plan and 1,635 restricted shares over which he has
voting power but no investment power.
(7) Includes 45,000 shares of common stock as to which Mr. Ryan holds stock
options that will be exercisable on April 30, 2000 and 19,673 shares held
in the phantom stock plans.
(8) Includes 22,000 shares of common stock as to which Mr. Sadler holds stock
options that will be exercisable on April 30, 2000 and 1,996 shares held
in the phantom stock plans.
(9) Includes 26,500 shares of common stock as to which Mr. Slater holds stock
options that will be exercisable on April 30, 2000 and 3,310 shares held
in the phantom stock plans.
(10) Includes 13,400 shares of common stock as to which Mr. Thies holds stock
options that will be exercisable on April 30, 2000, 2,460 shares held in
the Retirement Savings Plan and 2,559 restricted shares over which he has
voting power but no investment power.
(11) Includes 22,000 shares of common stock as to which Mr. Tippeconnic holds
stock options that will be exercisable on April 30, 2000 and 2,922 shares
held in the phantom stock plans.
(12) Includes 26,200 shares of common stock as to which Mr. Tompkins holds
stock options that will be exercisable on April 30, 2000, 1,790 shares
held in the Retirement Savings Plan and 4,833 restricted shares over which
he has voting power but no investment power.
(13) Includes 17,500 shares of common stock as to which Mr. Uding holds stock
options that will be exercisable on April 30, 2000, 1,201 shares held in
the Medusa Corporation Savings Plan and 1,175 shares held in the phantom
stock plans.
(14) Includes 31,500 shares of common stock as to which Mr. Van Horn holds
stock options that will be exercisable on April 30, 2000 and 5,523 shares
held in the phantom stock plans.
(15) Includes 26,500 shares of common stock as to which Mr. Wolitzer holds
stock options that will be exercisable on April 30, 2000 and 2,015 shares
held in the phantom stock plans.
(16) Includes 374,400 shares of common stock subject to stock options held by
the officers and directors that will be exercisable on April 30, 2000,
49,945 shares held in various company plans and 19,297 restricted shares
over which the officers hold voting power but no investment power.
15
<PAGE>
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. 3,967,804 (1) 11.0
Stock 82 Devonshire Street
Boston, MA 02109
Common Brinson Partners, Inc. 3,340,108 (2) 9.3
Stock 209 LaSalle
Chicago, IL 60604
Common Mellon Financial 2,108,618 (3) 5.9
Stock Corporation
One Mellon Bank Center
500 Grant Street
Pittsburgh, PA
15258-0001
(1)FMR Corp. and various affiliates have filed with the SEC a Schedule 13G and
seven amendments dated through February 14, 2000 reporting that FMR Corp. is
the beneficial owner of these shares because it has sole power to vote
1,866,532 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 and one amendment dated February 4, 2000 reporting beneficial
ownership of these shares because of sole voting power and shared dispositive
power of such shares.
(3)Mellon Financial Corporation and various affiliates have filed with the SEC
a Schedule 13G dated January 25, 2000. Mellon Financial Corporation serves as
the trustee under Southdown's benefit plans. The shares reported include all
shares held of record by Mellon Financial Corporation or its direct or
indirect subsidiaries. They report beneficial ownership of these shares
because they have sole voting power and sole dispositive power of 1,775,780
and 2,010,913, respectively, of such shares, and shared voting power and
dispositive power of 28,862 and 51,617, respectively, of such shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1999 filings were satisfied on a timely basis. In making this
disclosure, we have relied solely on written statements of directors, executive
officers and shareholders and copies of the reports that they have filed with
the SEC.
16
<PAGE>
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 2000. The periods during which they have served in these
capacities are indicated in the description of their business experience below.
Clarence C. Comer (52)........ President, Chief Executive Officer and a
Director
J. Bruce Tompkins (50)........ Executive Vice President, Chief Operating
Officer and a Director
Dennis M. Thies (51).......... Executive Vice President-Finance and
Chief Financial Officer
David J. Repasz (50).......... Senior Vice President-Cement Operations
Patrick S. Bullard (38)....... Senior Vice President-General Counsel and
Secretary
Stephen R. Miley (52)......... Senior Vice President-Cement Sales
Thomas E. Daman (44).......... Vice President and Treasurer
Ricardo Arredondo (47)........ Vice President and 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 that time, 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 that time, 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.
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.
Mr. Arredondo was elected Vice President and Controller in August, 1999.
From February 1998 to August 1999, Mr. Arredondo was Vice President and
Controller-Concrete Products. From August 1995 to February 1998, Mr. Arredondo
was Director of Internal Audit and from September 1994 to August 1995, Mr.
Arredondo was Director of Purchasing.
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 2001 annual meeting of shareholders, such
proposals must be received by us at our principal executive offices not later
than December 2, 2000. If notice of a shareholder proposal for the 2001 annual
meeting being submitted outside of
17
<PAGE>
Rule 14a-8 is received by us at our principal executive offices after February
28, 2001, 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 Shareholder Communications Inc.
to assist in soliciting proxies for a fee of $8,000 plus out 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
18
<PAGE>
SOUTHDOWN, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints J. Bruce Tompkins, M.
Whitson Sadler and Frank J. Ryan, 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 18, 2000,
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 March 31, 2000 is hereby
acknowledged.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
<PAGE>
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" PROPOSAL 2.
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 [ ] WITHHOLD AUTHORITY
listed (except to vote for all
as marked to the nominees listed
contrary below)
Nominees-- CLARENCE C. COMER, ROBERT G. POTTER, ROBERT
J. SLATER AND GEORGE E. UDING, JR.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated ______________________________, 2000
____________________________________________
____________________________________________
Signature of Shareholder(s)*
o 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.
