FLORIDA ROCK INDUSTRIES, INC.
155 East 21st Street, Jacksonville, Florida 32206
-----------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To The Shareholders:
The Annual Meeting of Shareholders of Florida Rock Industries, Inc. will be
held at 9 o'clock in the morning, local time, on Wednesday, February 4, 1998, at
the general offices of the Company, 155 East 21st Street, Jacksonville, Florida
32206, for the following purposes, as more fully described in the attached proxy
statement:
1. To amend ARTICLE VII of the Restated Articles of Incorporation to reduce
the number of classes of directors from four to three and to reduce the
term of office of directors from four years to three years.
2. To elect four directors to serve for a term of four years (or, if proposal
1 is adopted, for a term of three years).
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Shareholders of record at the close of business on December 8, 1997 are
entitled to vote at said Annual Meeting or any adjournment or adjournments
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
December 15, 1997 Dennis D. Frick
Secretary
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE. IF YOU ATTEND THE MEETING,
YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
155 East 21st Street, Jacksonville, Florida 32206
PROXY STATEMENT
ANNUAL MEETING - February 4, 1998
The attached proxy is solicited by the Board of Directors of Florida Rock
Industries, Inc. (the "Company") for use at the annual meeting of the
shareholders to be held on Wednesday, February 4, 1998 at 9 o'clock in the
morning, local time, and any adjournments thereof, at the principal offices of
the Company, 155 East 21st Street, Jacksonville, Florida 32206. The proxy is
revocable by written notice to the Secretary of the Company at any time before
its exercise.
Shares represented by properly executed and returned proxies will be voted
at the meeting in accordance with the shareholders' directions or, if no
directions are indicated, will be voted in favor of the amendment to the
Company's Restated Articles of Incorporation reducing the number of directors
from four to three classes and in favor of the election of the nominees proposed
in this proxy statement and, if any other matters properly come before the
meeting, in accordance with the best judgment of the persons designated as
proxies.
This proxy statement and the accompanying proxy are being distributed to
shareholders on or about December 15, 1997.
VOTING PROCEDURES
The holders of record of common stock at the close of business on December
8, 1997, may vote at the meeting. On such date there were outstanding 18,805,684
shares of common stock of the Company. Under the Company's Restated Articles of
Incorporation and Bylaws each share of common stock is entitled to one vote.
Under the Company's Bylaws, the holders of a majority of the outstanding shares
entitled to vote shall constitute a quorum for the transaction of business at
the meeting.
<PAGE>
Under the Florida Business Corporation Act ("FBCA"), directors are elected
by a plurality of the votes cast and other matters are approved if the
affirmative votes cast by the holders of the shares represented at the meeting
and entitled to vote on the subject matter exceed the votes opposing the action,
unless a greater number of affirmative votes is required by this act or the
Company's Restated Articles of Incorporation. The Company's Restated Articles of
Incorporation require that the proposal to amend ARTICLE VII thereof be adopted
by the affirmative vote of the holders of at least 75% of the shares of stock of
the Company entitled to vote thereon. Abstentions and broker non-votes will have
no effect on the vote for election of directors and most routine matters.
However, abstentions and broker non-votes will have the same effect as negative
votes against the proposal to amend ARTICLE VII of the Company's Restated
Articles of Incorporation. A broker non-vote generally occurs when a broker who
holds shares in street name for a customer does not have authority to vote on
certain non-routine matters because its customer has not provided any voting
instructions on the matter.
1. AMENDMENT TO ARTICLE VII OF THE RESTATED ARTICLES OF INCORPORATION
The Company is considering applying to the New York Stock Exchange ("NYSE")
for listing of its common stock. Although the Company's common stock is
presently listed on the American Stock Exchange, the Company believes listing on
the NYSE will be beneficial because there is a perception that: (a) the NYSE is
a more prestigious exchange; (b) NYSE listed companies receive more attention
from the investment community; and (c) the liquidity for the Company's shares
may be increased by trading on the NYSE.
The NYSE requires its listed companies to have boards of directors with no
more than three classes of directors. Before the Company can pursue listing on
the NYSE, the Company's Board of Directors must have its number of classes
reduced. Therefore, the Company's Board of Directors proposes ARTICLE VII of the
Company's Restated Articles of Incorporation be amended to reduce the number of
authorized classes of directors from four to three.
<PAGE> 2
The proposed amendment to ARTICLE VII of the Company's Restated Articles of
Incorporation was adopted on December 3, 1997, by the Company's Board of
Directors which recommend shareholder approval.
After shareholder approval of four classes in 1983, the Company, in 1984,
divided its Board of Directors into four classes with staggered four year terms.
FBCA was amended in 1989 to limit a staggered board to three classes and three
year terms, but "grandfathered" existing corporations such as the Company which
had four classes. During the Company's last fiscal year, two directors in the
existing Class II were lost to the Company. Mr. Robert D. Davis resigned and Mr.
Thompson S. Baker died. In addition, on December 3, 1997, Mr. Frank M. Hubbard
resigned. This leaves no incumbent directors continuing in office as a Class II
director.
The Board of Directors does not believe that the amendment to ARTICLE VII
will have a significant impact on any attempt by a third party to obtain control
of the Company. The Board of Directors believes that by retaining three classes,
the Company retains an anti-takeover defense that may deter a third party from
conducting a solicitation of proxies to elect its own slate of directors or
otherwise attempting to obtain control of the Company or effect a change in
management, irrespective of whether such action would be beneficial to
shareholders generally.
The Board of Directors has no present intention to put before the
shareholders any other proposal which would change the Company's anti-takeover
defenses.
In addition to a staggered Board of Directors, the Company's Restated
Articles of Incorporation currently provide the Company with the following
anti-takeover defenses: (i) certain business combinations with persons who hold
10% or more of the shares of the Company must be approved by the holders of at
least 75% of the shares of the Company, (ii) the Board of Directors may
authorize issuance of, and determine the voting and other rights of, up to
10,000,000 shares of Preferred Stock (none of which are presently authorized and
outstanding), (iii) action by holders of 50% of the shares entitled to vote is
required to compel the call of a special
<PAGE> 3
meeting of shareholders; (iv) shareholder action may be accomplished only
through a shareholder meeting; (v) advance notice to the Company for shareholder
nomination of directors must be made; and (vi) cumulative voting is not allowed.
The FBCA generally limits Florida corporations, including the Company, in
engaging in a broad range of transactions with any shareholder who owns more
than 10% of a corporation's outstanding voting shares or with any affiliate of
such shareholder. The FBCA provides that a Florida corporation may not engage in
such transactions unless, among other things, the transaction is: (a) approved
by two-thirds of the corporation's outstanding voting shares other than the
shares owned by the interested shareholders; (b) approved by a majority of the
corporation's disinterested directors; or (c) the corporation's shareholders
receive a "fair price" for their shares as such price is defined in the
statutes. The FBCA further provides that a corporation may opt out of these
provisions by including in its articles of incorporation a provision expressly
electing not to be governed by these provisions. The Company has not elected to
opt out of these provisions.
Taken together, the provisions of the Restated Articles of Incorporation
and the FBCA described in the preceding paragraphs may have the effect of
discouraging or making more difficult an attempt to effect a change in control
of the Company.
Approval of the amendment to ARTICLE VII requires the affirmative vote of
the holders of 75% of the shares outstanding and entitled to vote on the
proposal.
The text of the proposed amendment to the Company's Restated Articles of
Incorporation is as follows:
ARTICLE VII
NUMBER OF DIRECTORS
"The number of directors of this corporation is twelve (12), but may
be changed, but not to less than three (3), by the affirmative vote of a
majority of the
<PAGE> 4
whole Board of Directors at the time in office or by the affirmative vote
of the holders of at least 75% of the shares of stock of this
corporation entitled to vote thereon. The directors shall be divided into
three classes, apportioned as follows: Class I shall consist of four
directors; Class II shall consist of four directors; and Class III shall
consist of four directors. The respective initial terms of office for each
class of directors shall be as follows: the initial term of Class I
(previously designated as Class IV and Class II directors prior to amending
this ARTICLE VII at the Annual Meeting of Shareholders in 1998) will expire
at the Annual Meeting of Shareholders in 1999; the initial term of Class II
directors (previously designated as Class I directors prior to amending
this ARTICLE VII at the Annual Meeting of Shareholders in 1998) will expire
at the Annual Meeting of Shareholders in 2000; and the initial term of
Class III directors (previously designated as Class III directors prior to
amending this ARTICLE VII at the Annual Meeting of Shareholders in 1998)
will expire at the Annual Meeting of Stockholders in 2001. After the
expiration of the applicable initial term, each successive term of office
for each class of directors shall be three years. If the number of
directors is changed, any increase or decrease shall be apportioned among
the classes so as to maintain, as nearly as may be practicable, an equal
number of directors in each class. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum. Any director of any class
elected to fill a vacancy, including a vacancy resulting from an increase
in the number of directors, shall hold office for a term that shall
coincide with the remaining term of that class. In no case, however, will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify. A director may only be removed for 'cause', which shall be
defined for these purposes as a conviction of a felony,
<PAGE> 5
declaration of unsound mind by a court order, adjudication of
bankruptcy, non-acceptance of office or such director having been adjudged
by a court of competent jurisdiction to be liable for negligence or
misconduct in the performance of his duty to this corporation in a matter
of substantial importance to this corporation and such adjudication is no
longer subject to direct appeal. This Article may be amended or repealed
only by the affirmative vote of the holders of at least 75% of the shares
of stock of this corporation entitled to vote thereon."
The Board of Directors recommends shareholder approval.
2. ELECTION OF DIRECTORS
Under the Company's Restated Articles of Incorporation, the Board of
Directors is divided into four classes. One class of directors is elected at
each annual meeting of shareholders for a four-year term of office. The
below-named directors are nominated to be re-elected to hold office until the
2002 annual meeting. However, if the proposal to amend ARTICLE VII of the
Company's Restated Articles of Incorporation to reduce the number of classes of
directors from four to three and the directors' term of office from four years
to three years is adopted by the shareholders, then in such event such
re-election shall be for a term of three years and until the 2001 annual
meeting. The enclosed proxy will be voted for the election of the persons named
as directors of the Company unless otherwise indicated by the shareholders. If
any of the nominees named should become unavailable for election for any
presently unforeseen reason, the persons named in the proxy shall have the right
to vote for a substitute as may be designated by the Board of Directors to
replace such nominee, or the Board may reduce the number of directors
accordingly.
The following table sets forth information with respect to each nominee for
election as a director and each director whose term of office continues after
the 1998 annual meeting. Reference is made to the sections entitled "Common
Stock Ownership of Certain Beneficial Owners" and "Common Stock Ownership by
Directors and Officers" for information concerning stock ownership of the
nominees and directors.
<PAGE> 6
NAME AND PRINCIPAL DIRECTOR OTHER
OCCUPATION AGE SINCE DIRECTORSHIPS
- ------------------ --- -------- -------------
Class III - Nominees for Terms Expiring in 2002
(If proposal 1 is adopted, designated as
Class III, Nominees for Terms Expiring in 2001)
Thompson S. Baker II 39 1991 FRP Properties, Inc.
Vice President of the
Company
Albert D. Ernest, Jr. 67 1989 FRP Properties, Inc.
President of Albert Regency Realty
Ernest Enterprises, an Corporation
investment and consulting Stein Mart, Inc.
firm Wickes Lumber Company
The Emerald Fund
Luke E. Fichthorn III 56 1972 Bairnco Corporation
Partner in Twain FRP Properties, Inc.
Associates (a private
investment banking firm);
Chairman of the Board
and Chief Executive Officer
of Bairnco Corporation
(manufacturing)
C. J. Shepherdson 81 1972
Vice President of the
Company
<PAGE> 7
Class IV - Terms Expiring in 1999
(If proposal 1 is adopted, redesignated as
Class I - Terms Expiring in 1999)
A. R. Carpenter 55 1993 Barnett Banks, Inc.
President and Chief Barnett Banks of
Executive Officer of CSX Jacksonville, N.A.
Transportation, Inc. Regency Realty
Corporation
American Heritage
Life Insurance Co.
Stein Mart, Inc.
John D. Baker, II 49 1979 FRP Properties, Inc.
President and Chief Hughes Supply, Inc.
Executive Officer
of the Company
Charles H. Denny III 65 1975
Investments
Class I - Terms Expiring in 2000
(If proposal 1 is adopted, redesignated as
Class II - Terms Expiring in 2000)
Edward L. Baker 62 1970 FRP Properties, Inc.
Chairman of the Board Regency Realty
of the Company Corporation
American Heritage
Life Investment
Corporation
Flowers Industries,
Inc.
<PAGE> 8
Francis X. Knott 52 1988 FRP Properties, Inc.
Chief Executive Officer
of Partners Management
Company
Radford D. Lovett 64 1984 First Union Cor-
Chairman of the Board of poration
Commodores Point Terminal Winn-Dixie Stores,
Corp. (marine terminal) Inc.
American Heritage
Life Investment
Corporation
FRP Properties,
Inc.
Class II- Terms Expiring in 2001
(If proposal 1 is adopted, redesignated as
Class I - Terms Expiring in 1999)
No incumbents
All of the nominees and directors have been employed in their respective
positions for the past five years, except John D. Baker II. In February, 1996,
John D. Baker II was elected to the additional position of Chief Executive
Officer of the Company.
Edward L. Baker and John D. Baker II are brothers. Thompson S. Baker II is
the son of Edward L. Baker.
See "Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Transactions" for a discussion of the
relationships between the Company and FRP Properties, Inc.
<PAGE> 9
Other Information About the Board and Its Committees
Meetings. During the fiscal year ended September 30, 1997 the Company's
Board of Directors held five meetings. Directors who are not employees of the
Company or its subsidiaries are paid annual fees of $10,000 plus $2,000 for each
directors' meeting attended. Members of the Company's Audit and Compensation
Committees receive $300 and the Chairman of each committee receives $500 for
each committee meeting attended. Members of the Long Range Planning Committee
received $1,250 for each committee meeting held. All such directors currently
participate in the Company's Directors Stock Purchase Plan under which a
director may designate all, or any part, of his director's compensation for
investment in the Company's Stock purchased in the open market through a broker.
The Company matches 25% of the director's designated portion and pays all broker
commissions.
Executive Committee. Edward L. Baker and John D. Baker II. To the extent
permitted by law, the Executive Committee exercises the powers of the Board
between meetings of the Board of Directors. During the fiscal year ended
September 30, 1997, the Executive Committee held no formal meetings, but acted
on various resolutions by unanimous written consents.
Audit Committee. During the past year, Messrs. Denny, Fichthorn, Hubbard,
Knott and Rice. The Audit Committee recommends the appointment of independent
accountants to audit the Company's consolidated financial statements and to
perform professional services related to the audit, meets with the independent
accountants and reviews the scope and results of their audit, and reviews the
fees charged by the independent auditors. The Committee also reviews the scope
and results of internal audits. During fiscal 1997, the Audit Committee held two
meetings.
Compensation Committee. During the past year Messrs. Carpenter, Ernest,
Hubbard, Lovett and Rice. The Committee determines the compensation for the
Chief Executive Officer and reviews and approves compensation for other
corporate officers and certain other members of management. In addition, the
Committee administers the Company's stock option plans, subject to control of
the Board of Directors, and the Management Incentive Compensation program.
During fiscal 1997, the Compensation Committee held five meetings.
<PAGE> 10
Long Range Planning Committee. During the past year Messrs. Edward L.
Baker, John D. Baker II, Carpenter, Ernest, Fichthorn and Lovett. The Committee
reviews the Company's long term strategic initiatives. During fiscal 1997, the
Long Range Planning Committee held two meetings.
The full Board of Directors acts as the Nomination Committee.
During the last fiscal year each of the directors attended 75% or more of
all meetings of the Board and its Committees on which the director served,
except for A. R. Carpenter who attended 70% of such meetings.
Executive Compensation
Summary Compensation Table
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and its other four most highly compensated
executive officers who served in such capacities at any time during the fiscal
year ended September 30, 1997:
<PAGE> 11
Long Term
Annual Compensation Compensation
------------------- ------------
Options All Other
Name and Principal Salary Bonus Granted Compensation
Position Year ($)(a) ($)(a) (e) ($)(b)
- ------------------ ---- ------- ------- ------- ------------
John D. Baker, II 1997 307,500 141,750 100,000 26,997(c)
President and 1996 281,250 85,500 - 25,556(c)
Chief Executive 1995 266,250 81,000 35,000 24,770(c)
Officer
Edward L. Baker 1997 395,000 177,750 100,000 37,251(d)
Chairman of the 1996 390,000 118,500 - 36,005(d)
Board 1995 368,563 112,500 - 35,391(d)
C. J. Shepherdson 1997 272,500 137,500 30,000 14,194
Vice President 1996 261,250 79,500 - 12,543
1995 247,500 75,000 - 11,591
H. B. Horner 1997 223,750 101,250 30,000 14,194
Executive Vice 1996 218,750 64,020 - 12,543
President 1995 213,750 64,500 - 11,591
Fred W. Cohrs 1997 220,750 101,250 30,000 14,194
Vice President 1996 206,200 40,000 - 12,793
1995 151,760 25,000 - 4,250
(a) Includes amounts deferred under the Company's Profit Sharing and Deferred
Earnings Plan. Bonuses are accrued in the year earned and paid in the
following year.
(b) Represents the contribution to the Company's Profit Sharing and Deferred
Earnings Plan.
(c) Includes $12,803 in 1997, $13,013 in 1996 and $13,179 in 1995, the present
value of the benefit of a split-dollar premium paid during the fiscal year.
<PAGE> 12
(d) Includes $23,057 in 1997, $23,462 in 1996 and $23,800 in 1995, the present
value of the benefit of a split-dollar premium paid during the fiscal year.
(e) See Option Grant Table below for more detail concerning the option grant.
Options granted were adjusted for the two for one stock split effective
October 31, 1997.
Option Grants in the Last Fiscal Year
The following table sets forth certain information concerning options
granted during the fiscal year ended September 30, 1997, to each executive
officer named in the Summary Compensation Table.
Number % of
of Total Potential Realizable
Securi- Options Value at Assumed
ties Granted Exercise Annual Rates of
Under- to Em- or Base Stock Price
lying ployees Price Appreciation for
Options in Per Expir- Option Term (2)
Granted Fiscal Shares ation ---------------------
Name (1) Year ($)(1) Date 5%($) 10%($)
---- ------- ------ -------- ------ ---------------------
John D. Baker II 100,000 10.89% 16.40625 5/4/07 1,031,780 2,614,700
Edward L. Baker 100,000 10.89% 16.40625 5/4/07 1,031,780 2,614,700
C.J. Shepherdson 30,000 3.27% 16.40625 5/4/07 309,534 784,420
H. B. Horner 30,000 3.27% 16.40625 5/4/07 309,534 784,420
Fred W. Cohrs 30,000 3.27% 16.40625 5/4/07 309,534 784,420
(1) Reflects nonqualified options granted pursuant to the Company's 1996 Option
Plan. The grant and exercise price have been adjusted to reflect the two
for one stock split effective October 31, 1997 to shareholders of record on
October 15, 1997. The option exercise price of all options granted equals
the fair market value of the shares of common stock of the Company on the
date of grant. The options are subject to vesting in 20% increments over a
five year period, unless accelerated upon the optionee's retirement or a
change in control of the Company.
<PAGE> 13
(2) Potential realizable value is 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.
Option Exercises and Year End Values
The following table shows information with respect to stock options
exercised during the fiscal year ended September 30, 1997 and the number and
value of unexercised options held by each executive officer named in the Summary
Compensation Table.
Number of Value of Unexercised
Unexercised In-The-Money Options
Shares Options at at September 30,
Acquired September 30, 1997 1997 (1)
on Value ------------------ ---------------------
Exercise Real- Exercis- Unexer- Exercis- Unexer-
Name (1) ized able# cisable# able$ cisable$
- -------------- ------- ----- -------- -------- -------- --------
John D. Baker II - - 99,000 121,000 1,576,875 1,665,781
Edward L. Baker - - 130,000 100,000 2,129,375 1,334,375
C.J. Shepherdson 30,000 378,000 36,000 30,000 618,750 400,313
H. B. Horner 27,000 296,177 - 30,000 - 400,313
Fred W. Cohrs - - - 30,000 - 400,313
(1) The options and shares acquired have been adjusted to reflect the two for
one stock split effective October 31, 1997 to shareholders of record on
October 15, 1997. The closing price of the company's common stock as
adjusted for the stock split on the American Stock Exchange composite
transactions on September 30, 1997 of $29.75 less the exercise price, was
used in calculating the value of unexercised and exercisable options.
<PAGE> 14
Pension Plan
The Company has a Management Security Plan (the "MSP Plan") for certain
officers, including directors who are officers, and certain key employees.
Benefit levels have been established on the basis of base compensation and job
responsibility. The MSP Plan provides that in the event a participant dies prior
to his retirement his beneficiary will receive twice the amount of such
participant's benefit level in monthly payments for a period of 12 months and
thereafter the benefit level in monthly payments for the next 168 months or
until such time as such participant would have reached age 65, whichever is
later. Upon reaching normal retirement age, a participant is entitled to receive
twice the amount of his benefit level in equal monthly payments for 12 months
and thereafter until his death, the benefit level in monthly payments. If a
participant dies after his retirement, his beneficiary, if any, will receive
such participant's benefit for a period of 15 years from the date of the
participant's retirement or until the death of the beneficiary, whichever occurs
first. The annual retirement benefit levels in effect at September 30, 1997 for
the executive officers named above participating in the MSP Plan were:
John D. Baker II $142,500
Edward L. Baker $197,500
C. J. Shepherdson $132,500
H. B. Horner $110,000
In addition to amounts stated in the above table, the Company has entered into a
retirement benefit contract with C. J. Shepherdson which provides for annual
retirement benefits of $20,000. The benefits are payable to Mr. Shepherdson or
his spouse until the death of the survivor.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that incorporate future filings, including
this Proxy Statement, in whole or in part, the following Compensation Committee
Report and Shareholder Return Performance shall not be incorporated by reference
into any such filings.
<PAGE> 15
Compensation Committee Report
The Compensation Committee of the Board of Directors ("the Committee")
determines the compensation of the Chief Executive Officer and reviews and
approves compensation of other officers and members of management reaching a
salary level established by the Board. In addition, the Committee administers
the Company's stock option plans, subject to control of the Board, and the
Management Incentive Compensation ("MIC") program. The full Board ratifies the
recommendations of the Committee.
The Committee's goals are to develop and maintain executive compensation
programs that preserve and enhance shareholder value. Under the direction of the
Committee, management has developed a compensation structure designed to
compensate fairly executives for their performance and contribution to the
Company, to attract and retain skilled and experienced personnel, to reward
superior performance and to align executive and shareholder long-term interests.
Base salary levels for executives are established taking into consideration
business conditions, the Company's size and performance and peer group and
industry compensation levels. The Chief Executive Officer's salary is based on
these factors and his performance in leading the Company and its businesses.
The MIC program provides officers and key employees an opportunity for
annual incentive compensation. The program provides an annual cash bonus as a
financial incentive to participants who achieve their business unit's and the
Company's goals and objectives. Profit levels are set for various segments of
the business. Depending on the level of profitability obtained, an individual
may become eligible for a bonus equal to a certain percentage of his year end
base salary ranging up to a maximum of 50%. However, that bonus may then be
adjusted down based on the degree by which the individual accomplishes his
individual goals and objectives for the year. The total amount of MIC for the
entire Company in any year is limited to 15% of consolidated income before
income taxes. At the beginning of each year, after taking into consideration the
outlook for the general economy, the construction materials industry, the
Company's markets, prior year performance and the budget for the upcoming year
the Committee approves target levels of net income as adjusted by certain items
<PAGE> 16
as profit levels on which the Chief Executive Officer's MIC is based.
The Committee believes that long-term compensation in the form of stock
options is critical in motivating and rewarding the creation of long-term
shareholder value by linking the compensation provided to officers and other key
management personnel with gains realized by the shareholders. In addition, the
vesting periods associated with stock options encourage this key group to
continue in the employ of the Company. All options granted have been granted at
an option price equal to the fair market value of the Company's common stock on
the date of grant. In subjectively determining the number of options to be
granted to an individual, including the Chief Executive Officer, the Committee
takes into account the cost to exercise the option and the individual's relative
base salary, scope of responsibility, ability to affect profits and value to the
Company.
This report is submitted by the members of the Compensation Committee: W.
Thomas Rice, Chairman, A. R. Carpenter, Albert D. Ernest, Jr., Frank M. Hubbard
and Radford D. Lovett.
Compensation Committee Interlocks and Insider Participation
Two members of the Compensation Committee, Messrs. Lovett and Ernest, are
among the seven directors of the Company who are also directors of FRP
Properties, Inc. ("FRPP"). The other five directors of both FRPP and the Company
who are not members of the Compensation Committee are Edward L. Baker, John D.
Baker II, Thompson S. Baker II, Luke E. Fichthorn III and Francis X. Knott. The
seven directors own approximately 40% of the stock of FRPP and 30% of the stock
of the Company. Accordingly, the Bakers, who own approximately 29% of the stock
of the Company and 37% of the stock of FRPP, may be considered to be control
persons of both the Company and FRPP.
Messrs. Edward L. Baker, Albert D. Ernest, Jr. and A. R. Carpenter serve as
members of the Compensation Committee of the Board of Directors of Regency
Realty Corporation. Mr. Martin E. Stein, Jr., who is a director of FRPP, is a
director, Chairman and Chief Executive Officer of Regency Realty Corporation.
<PAGE> 17
There were no other interlocks of executive officers or board members of
the Company serving on the compensation or equivalent committee of another
entity which has any director or executive officer serving on the Compensation
Committee, other committees or Board of Directors of the Company.
Shareholder Return Performance
The following graph compares the performance of the Company's Common Stock
to that of the AMEX Market Value Index and a peer group of industry companies
for the period commencing September 30, 1992 and ending on September 30, 1997.
The graph assumes that $100 was invested on September 30, 1992 in the Company's
common stock and in each of the indices and assumes the reinvestment of
dividends. The Peer Group consists of the following companies: CalMat Co.,
Florida Rock Industries, Inc., Lafarge Corporation, Martin Marietta Materials,
Inc., Medusa Corporation, Southdown, Inc., Texas Industries, Inc. and Vulcan
Materials Company. This group is consistent with the group used in the 1996
Proxy Statement.
<PAGE> 18
Index as of September 30
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Florida Rock 100 114 114 123 129 270
AMEX 100 122 122 145 152 191
Peer Group 100 135 150 152 171 280
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Seven of the Company's directors (Edward L. Baker, John D. Baker II,
Thompson S. Baker II, Albert D. Ernest, Jr., Luke E. Fichthorn III, Francis X.
Knott and Radford D. Lovett) are directors of FRPP. Such directors own
approximately 40% of the stock of FRPP and 30% of the stock of the Company.
Accordingly, the Bakers, who own approximately 29% of the stock of the Company
and 37% of the stock of FRPP, may be considered to be control persons of both
the Company and FRPP. See "Compensation Committee Interlocks and Insider
Participation" for further information on the relationship between the Company
and FRPP.
The Company and FRPP routinely are engaged in business together through the
hauling by FRPP of construction aggregates and other products for the Company
and the leasing to the Company of construction aggregates mining and other
properties. FRPP has numerous aggregates hauling competitors at all terminal and
plant sites and the rates charged are, accordingly, established by competitive
conditions. Approximately 9% of FRPP's revenue was attributed to the Company
during fiscal year 1997.
On October 9, 1996, a subsidiary of the Company sold a 134 acre tract of
surplus real estate in Edgewood, Maryland, formerly used for mining, to a
subsidiary of FRPP for $500,000 and the assumption of certain reclamation costs
and benefits relating to the site. An appraisal of the property was obtained and
the transaction was approved by the Company's Board of Directors with those
directors who are also directors of FRPP abstaining.
Edward L. Baker is entitled to receive sand mining royalty payments of $.05
per ton from the Company under lease agreements which terminate in 2002 and 2048
relating to approximately 489 acres. No payments were made during fiscal 1997
under these agreements.
On May 14, 1974, the Company exercised its option to purchase the sand on
71 acres of land in Putnam County, Florida. The land is owned 25% by Edward L.
Baker, 25% by a trust in which Edward L. Baker and John D. Baker II each have a
one-third beneficial interest and 50% by certain other interests. The term of
the agreement ends on June 30, 2004. The landowners are entitled to receive $.08
per ton (subject to escalation provisions) for sand as
<PAGE> 20
it is mined with an annual minimum payment of $6,000. The minimum payment only
was paid in fiscal 1997. The mining agreement may be terminated at any time by
the Company.
Mr. Fichthorn provided the Company with financial consulting and other
services during fiscal 1997 for which he received $60,000.
In the opinion of the Company, the terms, conditions, transactions and
payments under the agreements with the persons described above were not less
favorable to the Company than those which would have been available from
unaffiliated persons.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes set forth the beneficial ownership of common
stock of the Company by each person known by the Company to own beneficially
more than 5% of the common stock of the Company. The stock has been adjusted to
reflect the two for one stock split effective October 31, 1997.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------- -------------------- --------
Baker Investments, Ltd. 4,108,172 (1) 21.5%
P.O. Box 4667
Jacksonville, FL 32201
Quest Advisory Corp. 1,652,200 (2) 8.6%
Quest Management Company 63,200 (2) .3%
1414 Avenue of the Americas ----
New York, NY 10019 1,715,400 (2) 8.9%
(1) Baker Investments, Ltd. is a limited partnership in which Edward L. Baker
and John D. Baker II are general partners and as such have shared voting
and dispositive power over the shares owned by the partnership. Directly as
general partners and through trusts which are limited partners, each of
Edward L. Baker and John D. Baker II have a pecuniary interest in 1,369,390
shares. Ownership is reported as of October 31, 1997.
<PAGE> 21
(2) Quest Advisory Corp. ("Quest"), Quest Management Company ("QMC") and
Charles M. Royce reported that they are members of a group pursuant to
Securities and Exchange Commission Rule 13d-(1)(b)(ii)(H). Mr. Royce, who
may be deemed to be a controlling person of Quest and QMC, does not own any
shares outside of Quest and QMC and disclaims beneficial ownership of the
shares held by Quest and QMC. Quest and QMC are investment advisers. Each
has sole voting and dispositive power as to the shares shown. Ownership is
reported as of February 3, 1997.
COMMON STOCK OWNERSHIP BY DIRECTORS AND OFFICERS
The following table and notes set forth the beneficial ownership of common
stock of the Company by each director and each non-director named in the Summary
Compensation Table and by all officers and directors of the Company as a group
as of October 30, 1997 and also includes shares held under options as of October
30, 1997 which are exercisable within 60 days of December 15, 1997.
NAME OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ---------------- -------------------- ----------
Edward L. Baker 4,594,508 (1)(2)(3)(4) 24.0%
John D. Baker II 932,776 (1)(2)(3)(4)(5)(6) 4.9%
Thompson S. Baker II 61,228 (2) *
A. R. Carpenter 1,130 *
Charles H. Denny III 255,892 (7) 1.3%
Albert D. Ernest, Jr. 3,475 *
Luke E. Fichthorn III 45,337 *
H. B. Horner 1,800 *
Frank M. Hubbard 4,590 *
Francis X. Knott 5,888 *
Radford D. Lovett 19,419 *
W. Thomas Rice 17,202 *
C. J. Shepherdson 97,290 *
All Directors and
Officers as a group
(20 people) 6,140,285 (8) 32.0%
*Less than 1%
<PAGE> 22
The preceding table includes the following shares held under the Company's
Tax Reduction Act Employee Stock Ownership Plan ("TRAESOP") as of October 30,
1997, as to which the named person has sole voting power, and shares held under
options which are exercisable within 60 days of December 15, 1997.
SHARES UNDER TRAESOP SHARES UNDER OPTION
-------------------- -------------------
Edward L. Baker 12,060 130,000
John D. Baker II 7,236 106,000
Thompson S. Baker II 58 35,000
All directors and
officers as a group 64,548 350,000
(1) 746 of the shares shown opposite Edward L. Baker are held in a fiduciary
account in which Edward L. Baker and John D. Baker II each have a one-third
pecuniary interest. Edward L. Baker and John D. Baker II are co-trustees
with a corporate trustee as to these shares and have shared voting power;
however, the individual trustees have the power to remove the corporate
trustee and appoint a successor corporate trustee and the individual
trustees share investment power to the exclusion of the corporate trustee
in the event of disagreement. Such shares are excluded from those shown
opposite the name of John D. Baker II.
(2) Edward L. Baker, John D. Baker II and Thompson S. Baker II may be
considered to be control persons of the Company.
(3) Shares shown opposite the name of Edward L. Baker include 4,108,172 shares
owned by Baker Investments, Ltd. See note (1) on page 19. Such shares are
excluded from those shown opposite the name of John D. Baker II.
<PAGE> 23
(4) Includes 5,364 shares owned by Mrs. Edward L. Baker, as to which he
disclaims any beneficial interest. Includes 106,920 shares held by Edward
L. Baker as trustee for the children of John D. Baker II, as to which
Edward L. Baker has sole investing and voting power but disclaims any
beneficial interest. Such shares are excluded from those shown opposite the
name of John D. Baker II.
(5) Includes 2,800 shares owned by Mrs. John D. Baker II, as to which he
disclaims any beneficial interest.
(6) Regency Square II, a Florida general partnership, owns 54,000 shares of the
Company. Trust B under the will of Martin E. Stein, deceased, as a general
partner, holds a 46.2128% interest in the partnership. John D. Baker II is
a co-trustee of the trust and as such has a one-third shared voting and
dispositive power as to the trust. The partnership's shares in the Company
are included in the above table for John D. Baker II, who disclaims any
pecuniary or other beneficial interest in such shares.
(7) Includes 4,000 shares owned by Mrs. Charles H. Denny III, as to which he
disclaims any beneficial interest.
(8) Includes, in addition to all of the individual holdings for persons named
above, 57,790 shares owned by other officers of the Company, of which 200
shares are owned by the wife of one officer and 29,122 shares are held
under the Company's Tax Reduction Act Employee Stock Ownership Plan as to
which such other officers, respectively, have sole voting power and 33,000
shares held under options which were exercisable within 60 days December
15, 1997.
INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as independent
certified public accountants to examine the consolidated financial statements of
the Company for fiscal 1998. Representatives of Deloitte & Touche LLP are
expected to be present at the shareholders' meeting with the opportunity to make
a statement if they so desire and will be available to respond to appropriate
questions.
<PAGE> 24
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be included in the Company's proxy
statement and form of proxy relating to the 1999 Annual Meeting must be
delivered in writing to the principal executive offices of the Company no later
than August 17, 1998. The inclusion of any proposal will be subject to the
applicable rules of the Securities and Exchange Commission.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and beneficial owners of 10% or more of the
Company's outstanding common stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission, The
American Stock Exchange and the Company. Based solely on a review of the copies
of such forms furnished to the Company and written representations from the
Company's executive officers and directors, the Company believes all persons
subject to these reporting requirements filed the required reports on a timely
basis.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company, including
expenses in connection with the preparation and mailing of this proxy statement.
The Company will reimburse brokers and nominees their reasonable expenses for
sending proxy material to principals and obtaining their proxies. In addition to
solicitation by mail, proxies may be solicited in person or by telephone or
other electronic means by directors, officers and other employees of the
Company.
OTHER MATTERS
The Board of Directors does not know of any other matters to come before
the meeting. However, if any other matters come before the meeting, the persons
named in the enclosed form of proxy or their substitutes will vote said proxy in
respect of any such
<PAGE> 25
matters in accordance with their best judgment pursuant to the discretionary
authority conferred thereby.
BY ORDER OF THE BOARD OF DIRECTORS
December 15, 1997 Dennis D. Frick
Secretary
PLEASE RETURN THE ENCLOSED FORM OF PROXY,
DATED AND SIGNED, IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE.
SHAREHOLDERS MAY RECEIVE WITHOUT CHARGE A COPY OF FLORIDA ROCK INDUSTRIES,
INC.'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K
INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES BY
WRITING TO THE TREASURER AT POST OFFICE BOX 4667, JACKSONVILLE, FLORIDA 32201.
<PAGE> 26
FLORIDA ROCK INDUSTRIES, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS CALLED FOR FEBRUARY 4, 1998
The undersigned hereby appoints Edward L. Baker and John D. Baker II, or
either of them, the attorneys, agents and proxies of the undersigned with full
power of substitution to vote all the shares of common stock of Florida Rock
Industries, Inc. which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company to be held at the general offices of the Company,
155 East 21st Street, Jacksonville, Florida on February 4, 1998, at 9 o'clock in
the morning, and all adjournments thereof, with all the powers the undersigned
would possess if then and there personally present. Without limiting the general
authorization and power hereby given, the above proxies are directed to vote as
instructed on the matters below:
1. To amend ARTICLE VII of the Restated Articles of Incorporation to reduce
the number of classes of directors from four to three and to reduce the
term of office from four years to three years.
/ / FOR / / AGAINST
2. The election of four directors to serve for a term of four years (or if
proposal 1 is adopted, for a term of three years).
/ / FOR the nominees listed below / / WITHHOLD AUTHORITY to vote for
(except as marked to the contrary all nominees listed below
below)
Thompson S. Baker II, Albert D. Ernest, Jr.,
Luke E. Fichthorn III and C. J. Shepherdson
To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided.
---------------------------------------------
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
(Continued and to be signed on other side)
- - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby revokes any proxy heretofore given with respect to
said stock, acknowledges receipt of the Notice and the Proxy Statement for the
meeting accompanying this proxy, each dated December __, 1997, and authorizes
and confirms all that the said proxies or their substitutes, or any of them, may
do by virtue hereof.
Dated:________________________, 199__
-------------------------------------
Signature
-------------------------------------
Signature if Held Jointly
IMPORTANT: Please date this proxy and sign exactly as your
name or names appear(s) hereon. If the stock is held
jointly, signatures should include both names. Personal
representatives, trustees, guardians and others signing in a
representative capacity should give full title. If you
attend the meeting you may, if you wish, withdraw your proxy
and vote in person.
