SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12.
LONE STAR INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
(1)Title of each class of securities to which
transaction applies:
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applies:
(3)Per unit price or other underlying value of
transaction computedpursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and
state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number,or the Form
or Schedule and the date of its filing.
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(4) Date Filed:
[LONE STAR INDUSTRIES, INC. LOGO]
300 First Stamford Place
Stamford, CT 06912-0014
203-969-8600
March , 1999
Dear Stockholder,
On behalf of the Lone Star Board of Directors, I cordially
invite you to attend the Company's 1999 Annual Meeting of
Stockholders to be held on Thursday, May 13, 1999, commencing
at 10:00 a.m. in the Hyatt Regency Hotel in Old Greenwich,
Connecticut.
The business to be considered and voted upon at the meeting
is explained in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement.
Your vote is important, regardless of the number of shares
that you own. I urge you to read the Proxy Statement and then
complete, sign and date the enclosed proxy card and return it
in the envelope provided as soon as possible, even if you
currently plan to attend the meeting. Returning the proxy card
will not prevent you from voting in person, but will assure
that your vote is counted.
Sincerely,
/s/ DAVID W. WALLACE
David W. Wallace
Chairman of the Board
[LONE STAR INDUSTRIES, INC. LOGO]
LONE STAR INDUSTRIES, INC.
300 FIRST STAMFORD PLACE
STAMFORD, CT 06912-0014
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of Lone Star Industries,
Inc., a Delaware corporation, will be held on Thursday, May
13, 1999, at 10:00 a.m. in the Hyatt Regency Hotel, 1800 East
Putnam Avenue, Old Greenwich, Connecticut 06870 for the
following purposes:
Proposal 1. To elect three directors for a three-year term
ending in 2002.
Proposal 2. To increase the Company's authorized common stock
from 50,000,000 shares to 75,000,000 shares.
Proposal 3. To ratify the appointment by the board of
directors of PricewaterhouseCoopers LLP as auditors of the
Company for 1999.
Proposal 4. To transact such other business as may properly
come before the meeting and any adjournments thereof.
Stockholders of record at the close of business on March 19,
1999 will be entitled to vote at the meeting and at any
adjournment thereof.
By Order of the Board of Directors,
JAMES W. LANGHAM
Vice President, General
Counsel and Secretary
March , 1999
IMPORTANT
If you cannot attend the meeting in person, you are urged to
sign and date the enclosed proxy card and return it promptly
in the envelope provided so that your stock may be represented
at the meeting.
[LONE STAR INDUSTRIES, INC. LOGO]
LONE STAR INDUSTRIES, INC.
300 FIRST STAMFORD PLACE
STAMFORD, CT 06912-0014
_______________
PROXY STATEMENT
_______________
ANNUAL MEETING OF STOCKHOLDERS, MAY 13, 1999
The enclosed proxy is solicited on behalf of the board of
directors of Lone Star Industries, Inc. ("Lone Star" or the
"Company") in connection with the annual meeting of
stockholders to be held on Thursday, May 13, 1999, and is
being mailed to you on or about March 29, 1999. Only
stockholders of record at the close of business on March 19,
1999 will be entitled to notice of and to vote at this
meeting. As of that date, the Company had outstanding
approximately __________ shares of common stock (all share
numbers contained in this proxy statement reflect the
Company's recent two-for-one stock split). Each share of
common stock is entitled to one vote on all proposals. Neither
the certificate of incorporation nor the by-laws of the
Company provide for cumulative voting of stock.
Directors are elected by plurality vote. The affirmative
vote of a majority of the shares of common stock outstanding
is required for the approval of Proposal 2. The affirmative
vote of a majority of those shares of common stock represented
and entitled to vote at the meeting is required for the
approval of Proposal 3. Both abstentions and broker non-votes
are counted for purposes of determining the presence or
absence of a quorum, but broker non-votes on any matter are
not considered present and entitled to vote on that matter.
Consequently, only abstentions will have the effect of a vote
against Proposal 3.
A stockholder executing and returning a proxy in the
accompanying form has the power to revoke such proxy by
written notice to the Secretary of Lone Star prior to the
meeting or by attending the meeting and voting in person. All
proxies properly executed and returned to Lone Star will be
voted at the meeting. Proxies may be solicited by mail,
telephone, telecopy or personally by directors, officers and
other employees of the Company and by Morrow & Co., 909 Third
Avenue, 20th Floor, New York, New York 10022, which has been
engaged for a fee of $7,500 plus expenses for this purpose.
The cost of soliciting proxies will be paid by the Company.
PROPOSAL 1. ELECTION OF DIRECTORS
Lone Star's certificate of incorporation provides for the
division of the board of directors into three classes, with
the directors in each class serving for a term of three years.
Each class of directors consists, as nearly as possible, of
one third of the number of directors constituting the entire
board of directors.
Since the terms of the directors of Class III expire at the
1999 annual meeting, three Class III directors are to be
elected to serve until the 2002 annual meeting and until their
successors are elected and qualified. While the board of
directors has no reason to believe that any of the named
nominees is unavailable or will not serve if elected, if this
occurs the proxies will be voted for a substituted nominee
selected by the board of directors or, at its option, the
board may reduce the number of its members.
Nominees for Director (Class III)
Theodore F. Brophy, 75, has been a director since 1992 and
is a member of the executive and audit committees of the
board. He has been a consultant and director of various
companies. Until May 1988, Mr. Brophy was Chairman and Chief
Executive Officer of GTE Corporation, a telecommunications
company. In 1988, he was Chairman, United States Delegation to
the World Administrative Conference on Space Communications.
Robert G. Schwartz, 71, has been a director since 1994 and
is a member of the executive and compensation and stock option
committees of the board. Mr. Schwartz retired as Chairman of
the Board of Directors, President and Chief Executive Officer
of the Metropolitan Life Insurance Company in 1993, having
held these positions since 1989. He has continued as a
director of the Metropolitan Life Insurance Company, and is
also a director of COMSAT Corporation, Lowe's Companies, Inc.,
Mobil Corporation, Potlatch Corporation and The Reader's
Digest Association, Inc., and a member of the Board of
Trustees of the Consolidated Edison Company of New York. Mr.
Schwartz is a member of the Business Council, a Trustee of the
Committee for Economic Development and a director of the
Horatio Alger Association of Distinguished Americans, Inc.
Jack R. Wentworth, 70, has been a director since 1992 and is
Chairman of the compensation and stock option committee of the
board. From 1984 to 1993, he was Dean of the Graduate School
of Business, and is Arthur M. Weimer Professor Emeritus of
Business Administration at Indiana University. Professor
Wentworth is also a director of Kimball International, Inc.
and Market Facts, Inc.
Continuing Directors - Term to expire 2000 (Class I)
Arthur B. Newman, 55, has been a director since 1994 and is
a member of the audit committee of the board. Since May 1991,
he has been a senior managing director of The Blackstone Group
L.L.C., a private investment banking firm. Mr. Newman is a
director of Toys "R" Us, Inc.
Allen E. Puckett, 79, has been a director since 1976 and is
Chairman of the audit committee of the board. Since April
1987, he has been Chairman Emeritus of Hughes Aircraft
Company, a manufacturer of aerospace and missile systems, data
processing systems and industrial electronics equipment. From
1978 to 1987, he was Chairman of the Board and Chief Executive
Officer of Hughes Aircraft Company. Dr. Puckett is also a
director of the University of Southern California, the Museum
of Flying and the Center for Russian and Eurasian Studies.
David W. Wallace, 75, has been a director since 1970 and has
served as Chairman of the Board of Lone Star since January
1991. He is also Chairman of the executive committee of the
board. Mr. Wallace is a director of The Northstar Mutual
Funds, a family of mutual funds, and The Emigrant Savings
Bank.
Continuing Directors - Term to expire 2001 (Class II)
James E. Bacon, 68, has been a director since 1992 and is a
member of the executive, audit and compensation and stock
option committees of the board. He is a private investor and
consultant. From 1986 to 1990, he was Executive Vice President
and a Director of United States Trust Company, a bank holding
company, and a Trustee of United States Trust Company of New
York. Mr. Bacon is a trustee of the funds advised by Nuveen
Institutional Advisory Corp.
William M. Troutman, 58, has been a director since 1992 and
is a member of the executive committee of the board. Since
1986, he has been President and, since May 1997, Chief
Executive Officer of Lone Star.
Committees of the Board of Directors
The board has standing audit, compensation and stock option
and executive committees.
The audit committee recommends the principal auditors of
Lone Star, consults with the principal auditors with regard to
the plan of audit, reviews the report of audit and the
accompanying management letter, consults with the principal
auditors with regard to the adequacy of internal controls, and
consults with Lone Star's internal auditor on these matters.
The compensation and stock option committee approves
compensation arrangements for senior management, approves and
recommends to the board of directors the adoption of any
compensation plans in which officers and directors are
eligible to participate, and grants stock options and other
benefits under these plans.
The executive committee is empowered to exercise all of the
authority of the board of directors, except that it does not
have the power to rescind any action previously taken by the
board of directors or to take certain actions enumerated in
the Company's by-laws (such as amending the Company's
certificate of incorporation, changing the Company's dividend
policy or adopting an agreement of merger or consolidation).
Lone Star has no nominating committee or other committee of
the board performing a similar function.
Meetings of the Board and Committees
Five meetings of the board of directors, two meetings of the
audit committee, and three meetings of the compensation and
stock option committee were held during 1998. Each director
attended at least 75% of the aggregate number of meetings of
the board and committees on which he served.
Directors' Compensation
All directors, other than Messrs. Wallace and Troutman, are
compensated for their services pursuant to the Lone Star
Industries, Inc. Voluntary Deferred Compensation Plan for Non-
Employee Directors (the "Plan"). Under the Plan, non-employee
directors receive an annual retainer fee of 800 shares of
common stock, subject to adjustment in certain circumstances,
and $10,000 in cash. These retainer fees are paid quarterly in
arrears. The Plan permits non-employee directors to defer all
or a part of the cash portion of their annual retainer fee in
an interest-bearing account (an "Interest Account"). Interest
is credited to the Interest Account at the prime rate,
compounded monthly. The Plan also permits participants to
defer receipt of all or a part of the common stock portion of
their annual retainer fee in a stock equivalent account (the
"Phantom Share Account"). The Phantom Share Account contains
phantom units, each of which is equivalent in value to a share
of common stock. Phantom units are credited with dividends
which are reinvested in additional phantom units. In addition
to these annual retainers, non-employee directors receive
$1,000 for each board and board committee meeting attended and
$2,500 annually for any board committee they chair.
Non-employee directors also are provided $100,000 of life
insurance, and if they leave service as a director after
having served a minimum of five years, are entitled to
continued life insurance and they (or their estates) are
entitled to annual payments of $15,000 for 10 years after the
date they leave service (the "Director Deferred
Compensation"). Having served as a director for more than five
years prior to becoming an employee of Lone Star, Mr. Wallace
is entitled to the Director Deferred Compensation and the
continuation of his life insurance.
The Company's Directors Stock Option Plan provides for the
grant to non-employee directors of options to purchase up to
100,000 shares of common stock, subject to adjustment under
certain circumstances. Under this plan, each non-employee
director annually is granted a ten-year option to purchase
2,000 shares of common stock at an exercise price equal to the
fair market value of a share of common stock on the date of
grant. All such options vest six months from the date of
grant. The plan is administered by the board of directors and
expires on March 10, 2004.
EXECUTIVE COMPENSATION
The following table shows, for the three fiscal years ended
December 31, 1998, the compensation paid by the Company to its
Chief Executive Officer and four other most highly paid
executive officers.
Summary Compensation Table
Annual Compensation
________________________________
(a) (b) (c) (d) (e)
Other
Annual
Name and Principal Year Salary Bonus(1) Compensation
Position (2)
David W. Wallace 1998 $ 213,500 $ 210,000 -
Chairman of
the Board 1997 204,166 200,000 -
1996 170,833 75,000 -
William M. Troutman 1998 406,667 400,000 -
President and
Chief Executive 1997 382,788 350,000 -
Officer 1996 306,250 137,500 -
Roger J. Campbell 1998 193,167 190,000 -
Vice President - 1997 187,083 185,000 -
Cement Operations 1996 176,250 85,000 -
Michael W. Puckett 1998 183,000 180,000 -
Vice President -
Cement Sales 1997 177,083 175,000 -
and Concrete 1996 166,250 80,000 -
Operations
William E. Roberts 1998 188,083 185,000 -
Vice President,
Chief 1997 179,166 175,000 -
Financial Officer,1996 166,250 80,000 -
Controller and
Treasurer
Long Term Compensation
_______________________________
Awards Payouts
(a) (b) (f) (g) (h) (i)
Securities All
Restricted Underlying Other
Stock Options/ LTIP Compensation
Name and Principal Year Award(s) SARs Payouts (3)
Position
David W. Wallace 1998 - - - $ 28,071
Chairman of
the Board 1997 - - - 27,019
1996 - - - 465,489
William M. Troutman 1998 - - - 19,630
President and
Chief Executive 1997 - - - 88,134
Officer 1996 - - - 477,948
Roger J. Campbell 1998 - - - 13,686
Vice President - 1997 - - - 13,660
Cement Operations 1996 - - - 65,909
Michael W. Puckett 1998 - - - 11,842
Vice President - 1997 - - - 12,231
Cement Sales and 1996 - - - 33,339
Concrete Operations
William E. Roberts 1998 - - - 10,833
Vice President,
Chief Financial 1997 - - - 10,319
Officer, 1996 - - - 384,282
Controller and
Treasurer
(1) Bonuses under the Company's Executive Incentive Plan are
paid during the first quarter of the year following the year
for which the bonuses are earned.
(2) Perquisites and other personal benefits were less than
either $50,000 or 10% of the total annual salary and bonus
for 1996, 1997 and 1998 for each of the named executive
officers.
(3) Other Compensation in 1996 consisted principally of (i) a
one-time nonrecurring payment by Rosebud Holdings, Inc., the
Company's liquidating subsidiary, under the Rosebud
Incentive Plan, which was established with the approval of
the Company's creditors and the bankruptcy court in
connection with the Company's emergence from bankruptcy in
1994; (ii) one-time premium payments to insurance companies
for fully paid policies covering litigation costs, if any,
that may arise in connection with enforcing change of
control agreements previously entered into with executives
as described below; and (iii) in the case of Messrs. Wallace
and Troutman, one-time premium payments to insurance
companies for fully paid policies covering the costs of
certain retiree medical and life insurance benefits
previously granted to the executives as described below in
the event that the Company fails to provide such benefits
following a change of control, together with payments to
Messrs. Wallace and Troutman for the taxes paid on the
noncash compensation represented by these premiums.
Additional components of Other Compensation include (a)
Company contributions under the Savings Plan for Salaried
Employees; (b) Company contributions under the Employees
Stock Purchase Plan; (c) group term life insurance premiums;
and (d) in 1997, relocation costs reimbursed to Mr.
Troutman.
Employment and Change of Control Agreements
The Company has employment agreements with each of David W.
Wallace and William M. Troutman. Pursuant to their respective
agreements, Mr. Wallace is Chairman of the Company at an
annual salary of $218,400, and Mr. Troutman is President and
Chief Executive Officer of the Company at an annual salary of
$416,000. Each of these employment agreement's initial term
runs through June 30, 2000 and, thereafter renews for
successive two-year terms unless terminated at the end of the
then current term by either the Company or the executive on at
least six months prior notice (in which case, if terminated by
the Company, the executive receives one year's salary as
severance pay and receives medical and certain other benefits
during this one-year period). Upon a "change in control", as
defined in his agreement, each of Messrs. Wallace and Troutman
may terminate his employment and receive severance pay equal
to two and one-half years' salary and receive medical and
certain other benefits during this severance period. These
termination payments will be "grossed up" to reimburse the
executive for any excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, (the "Code"). The
agreements require the Company to establish a grantor trust to
fulfill its financial obligations under the agreements (such
trust to be funded upon a change of control).
Mr. Troutman is entitled to receive annual retirement
benefits at age 65 which amount to 50% of his salary and
bonus, and in no event shall such benefits be less than
$350,000 annually. These benefits will be reduced by the sum
of the annual retirement benefits paid to him pursuant to the
Salaried Employees Pension Plan. These benefits will be paid
under an annuity purchased by Lone Star in 1989 and another
annuity the Company is required to purchase on Mr. Troutman's
behalf within 30 days after his termination of employment. If
Mr. Troutman's employment terminates prior to his 62nd
birthday, for reasons other than a change in control or a
disability, his retirement benefits will be reduced by 5% for
each year between the date of his termination and his 62nd
birthday. There will be no reduction if Mr. Troutman's
termination occurs as a result of a change in control or
disability or if the termination occurs on or after his 62nd
birthday. Upon his death, the retirement benefits will be
paid to his spouse until her death.
Upon retirement, Messrs. Wallace and Troutman, and their
respective spouses, will be entitled to full payment for
certain medical services and expenses pursuant to agreements
between each of them and the Company. These medical benefit
payments are to be reduced by an annual deductible per insured
of $1,000 prior to age 65 and $750 thereafter, with benefit
payments coordinated with medicare and with a lifetime benefit
limit to each person of $1.0 million. Upon retirement, Lone
Star also will provide Messrs. Wallace and Troutman retiree
life insurance on the same basis as that presently in effect
for Lone Star's salaried retirees.
The Company has entered into change of control agreements
with Messrs. Campbell, Puckett and Roberts. Pursuant to these
agreements, in the event his employment is not continued on a
substantially equivalent basis for a year following a change
of control, or if for any reason he elects to terminate his
employment during a thirty-day period commencing on the first
anniversary of the change of control, the officer is entitled
to severance pay equal to two and one-half years' base salary
and to medical and certain other benefits for this two and
one-half year period. From and after a change of control, the
Company is required to provide these executives (if they are
eligible after taking into consideration the two and one-half
year termination period) retiree life insurance and medical
benefits at least as favorable as under the Company's then
existing retiree medical insurance and retiree life insurance
program. The agreements remain in effect until July 1, 2001.
Upon a change of control, the named executives also are
entitled to a bonus equal to 100% of their then base salary
under the Company's Executive Incentive Plan and, except for
Mr. Troutman, to certain pension benefits under a Supplemental
Executive Retirement Plan described below. The termination
payments under the change in control agreements will be
"grossed up" to reimburse the executive for any excise tax
imposed by Section 4999 of the Code.
Stock Options
The following table provides information on stock options
exercised during the year ended December 31, 1998 and option
holdings as of that date by executive officers named in the
Summary Compensation Table.
Number of Securities
Underlying Unexercised
Options At Fiscal Year End
Number of
Shares
Acquired On Value
Name Exercise Realized Exercisable Unexercisable
David W. Wallace - $ - - -
William M. Troutman - - 100,000 -
Roger J. Campbell - - - -
Michael W. Puckett - - - -
William E. Roberts 1,600 43,800 41,400 -
Value of Unexercised
In-the-Money Options at
Fiscal Year End(1)
Name Exercisable Unexercisable
David W. Wallace $ - $ -
William M. Troutman 2,912,250 -
Roger J. Campbell - -
Michael W. Puckett - -
William E. Roberts 1,205,670 -
______________
(1) The closing price of a share of common stock on the New
York Stock Exchange for the last trading day of 1998 was
$36.81.
Pension Plan
The following table shows the estimated annual benefit
payable upon retirement to persons in specified compensation
and years of credited service classifications under the Lone
Star Salaried Employees' Pension Plan and Supplemental
Executive Retirement Plan:
Estimated Annual Pension Benefit
Payable at Normal Retirement
Assumed Assuming the Following
Average Annual Years of Credited Service
Compensation 10 15 20
$ 125,000 $ 17,700 $ 26,500 $ 35,300
150,000 21,700 32,500 43,300
175,000 25,700 38,500 51,400
200,000 29,700 44,500 59,400
250,000 37,700 56,600 75,500
300,000 45,800 68,600 91,500
350,000 53,800 80,700 107,600
400,000 61,800 92,700 123,600
Estimated Annual Pension Benefit
Payable at Normal Retirement
Assumed Assuming the Following
Average Annual Years of Credited Service
Compensation 25 30 35
$ 125,000 $ 44,100 $ 53,000 $ 62,200
150,000 54,200 65,000 76,200
175,000 64,200 77,000 90,300
200,000 74,200 89,100 104,300
250,000 94,300 113,200 132,400
300,000 114,400 137,300 160,500
350,000 134,500 161,300 188,600
400,000 154,500 185,400 216,700
The compensation covered by the qualified plan includes base
pay, subject to ERISA limitations of $228,860 for 1992,
$235,840 for 1993, and $150,000 for 1994 through 1996 and
$160,000 for 1997, 1998 and later years. The compensation
covered by the supplemental executive retirement plan includes
base pay plus bonuses with no limitation.
The years of credited service for David W. Wallace, William
M. Troutman, Roger J. Campbell, Michael W. Puckett and William
E. Roberts are 8, 16, 13, 29 and 24, respectively. Mr.
Troutman is not a participant in the supplemental executive
retirement plan.
The qualified plan benefits are payable for the lifetime of
the individuals, while the supplemental benefits are payable
as a lump sum. The benefits shown are payable without
reduction at age 62 or later, and are not subject to any
deductions or offsets. However, ERISA currently limits
benefits payable at age 65 to $118,800 for 1994, $120,000 for
1995 and 1996, $125,000 for 1997 and $130,000 for 1998.
Certain Relationships and Related Transactions
The Company and Metropolitan Life Insurance Company and its
affiliate, Metropolitan Insurance and Annuity Company
(together, "Met Life") are parties to a registration rights
agreement pursuant to which the Company has registered Company
securities held by Met Life. Pursuant to this agreement, the
Company is obligated to pay all expenses incident to the
registration, offering and sale of the securities offered to
the public, other than underwriting commissions, and to
indemnify these parties against certain civil liabilities,
including liabilities under the Securities Act of 1933. In
late 1998, Met Life sold in an underwritten public offering
4.6 million shares of the Company's common stock, resulting in
Met Life's no longer being a five percent stockholder.
Expenses from such offering paid by the Company approximated
$350,000. In connection with the offering, the Company
purchased from Met Life 135,000 warrants to purchase 270,000
shares of common stock at a price per warrant of $46.97, which
price was below the then trading price of the warrants and was
calculated so as to result in Met Life's receiving the amount
which it would have received, net of underwriting discounts,
if it had exercised the warrants and sold the stock in the
offering.
On August 28, 1998, the Company purchased 800,000 shares of
common stock from J. Allan Mactier, a five percent
stockholder, at a price of $32.875 per share, a price which
reflected the then trading price of the common stock.
Met Life provides various services in connection with the
Company's sponsorship and administration of its salaried and
hourly employee 401(k) savings plans and holds the $50 million
principal amount of Lone Star's 7.31% Senior Notes due 2007.
REPORT AND PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of
Lone Star's previous filings under the Securities Act of 1933
or the Securities Exchange Act of 1934 that might incorporate
future filings, in whole or in part, including the Company's
Annual Report on Form 10-K for 1998 and the Company's
currently effective Registration Statements on Form S-3 and S-
8, the following Report and Performance Graph shall not be
incorporated by reference into any such filings.
Report of the Compensation and Stock Option
Committee on Executive Compensation
General Philosophy
The Company's general philosophy for the compensation of its
executives is based on the premise that levels and types of
compensation should be established to support the Company's
business strategy and long-term development and to enhance
stockholder value. Such compensation must also be competitive
with that offered by comparable companies in order to attract,
retain and reward executives capable of achieving those
objectives.
When the Compensation and Stock Option Committee considers
executive compensation it is guided by the experience of the
executive involved, future initiatives for and challenges to
the Company, the executive's expected contribution to the
Company's performance and compensation arrangements in
businesses similar to that of the Company. The Committee
believes that a significant portion of a senior executive's
compensation should be dependent on value created for the
stockholders. Performance bonuses as well as options and
other stock ownership programs are excellent vehicles to
accomplish this by tying an executive's interests directly to
the stockholders' interests.
If appropriate in the judgment of the Committee,
recommendations of a compensation consulting firm are sought
in connection with the determination of executive
compensation. The Committee considers annually the
compensation of the Company executives and held two meetings
in 1998.
Base Salary
In 1998 the base salaries of the named executive officers
were increased four percent. In setting these salaries, the
Committee remains cognizant of the Company's continuing
efforts to manage costs, the cyclical nature of the Company's
business and the need to recognize the contribution of these
individuals. The Company anticipates that it will continue to
emphasize incentive compensation rather than change salary
structures significantly. In setting salaries no particular
formulas or measures were used.
Bonuses
The Company has an Executive Incentive Plan. This Plan
provides for bonuses to be paid in an amount equal to certain
percentages of salary determined from formulas tied to various
earnings benchmarks. The maximum bonus under the plan is 100%
of base salary. All such benchmarks were exceeded in 1998, and
each of the named executives received the maximum bonus.
Stock Options
The Company has two option plans, and under the first plan
implemented in 1994, all 1,400,000 shares have been granted
and all but 241,400 of the options have been exercised. The
second option plan was approved by the board of directors and
stockholders in 1996 and covers options to purchase, and/or
stock appreciation rights that may be exercised with respect
to, 3,000,000 shares of common stock. No grants of options or
SARs have been made, and the Committee has not made any
determination of which executives and managers will receive
grants, or the amounts of the grants. The Committee expects
that, when made, grants will be based on the recipient's
performance and level of responsibility.
General
The Committee believes that the Company has an appropriate
and competitive compensation program comprised of a sound base
salary structure combined with effective long and short term
incentives.
No member of the Committee is a former or current executive
officer or employee of the Company or of any of its
subsidiaries.
James E. Bacon
Robert G. Schwartz
Jack R. Wentworth, Chairman
Performance Graph
Set forth below is a line graph comparing, for the period
commencing May 3, 1994 (the date the Company's common stock
began trading) and ending December 31, 1998, the cumulative
total return on the Company's common stock against the
cumulative total return of the Standard & Poor's 500 and a
peer group.
The graph assumes: (1) investment of $100 at the opening of
trading on May 3, 1994 in Lone Star's common stock, the S&P
500 and the peer group; and (2) the reinvestment of all
dividends.
Measurement
Period
(Fiscal
Year Lone Star Standard &
Covered) Industries, Inc. Poors 500 Peer Group (i)
5/3/94 100 100 100
1994 115.7 104 83.52
1995 166.37 143 95.21
1996 246.93 176.25 122.11
1997 357.29 235.09 187.18
1998 496.65 301.86 240.34
(i) The peer group is comprised of five cement companies:
Centex Construction Products, Inc., Giant Cement Company,
Lafarge Corp., Medusa Corporation and Southdown, Inc. Medusa
Corporation and Southdown, Inc. merged in 1998. The peer
group included both companies until the merger and thereafter
included the merged company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding
the beneficial ownership of common stock at December 31, 1998
provided to the Company by (a) each stockholder known by the
Company to be the beneficial owner of more than five percent
of the outstanding shares of common stock, (b) each director,
(c) each executive officer named in the Summary Compensation
Table, and (d) all directors and executive officers as a
group.
Amount and
Nature of
Beneficial Percentage of
Name and Address of Ownership of Outstanding Shares
Beneficial Owners Common Stock of Common Stock(1)
FMR Corp. and Affiliates 2,868,400(2) 14.25%
82 Devonshire Street
Boston, Massachusetts 02109
James E. Bacon 14,198(3) (4)
Theodore F. Brophy 16,000(3) (4)
Arthur B. Newman 20,000(3) (4)
Allen E. Puckett 12,398(3) (4)
Robert G. Schwartz 17,600(3) (4)
William M. Troutman 108,362(3)(5) (4)
David W. Wallace 1,360,142(6) 6.76
Jack R. Wentworth 10,266(3) (4)
Roger J. Campbell 3,826 (4)
Michael W. Puckett 1,062 (4)
William E. Roberts 81,458(3) (4)
All directors and executive
officers as a group (16
persons) 1,779,616(7) 8.84
__________
(1) The percentage of outstanding shares of common stock
calculation assumes for each beneficial owner that all of
the currently exercisable options and warrants beneficially
owned by such person or entity are exercised in full by such
beneficial owner and that no other options or warrants are
exercised by any other stockholders.
(2) Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp. ("FMR"), as investment
advisor to various investment companies and as sub-advisor
to a trust, beneficially owns an aggregate of 1,583,400 of
these shares. A bank subsidiary of FMR beneficially owns
1,241,400 of these shares as a result of its serving as
investment manager for certain institutional accounts.
Members of a family, including Edward C. Johnson 3d, the
Chairman of FMR, and Abigail Johnson, a director of FMR,
through their stockholdings and a voting agreement, may be
deemed a controlling group with respect to FMR. A former
subsidiary of FMR, Fidelity International Limited ("FIL"),
of which Mr. Johnson and members of his family are
significant stockholders, beneficially owns 131,800 shares,
of which 88,200 are included in the foregoing numbers as
beneficially held by FMR. FMR and FIL are of the view that
they are not acting as a "group" for purposes of Section
13(d) under the Securities Exchange Act of 1934. The
information contained herein is derived from a Schedule 13G
dated February 1, 1999.
(3) Includes shares of common stock which the directors and
executive officers had the right to acquire through the
exercise of warrants held by them as follows: James E. Bacon
- - 166 shares; Allen E. Puckett - 826 shares; William M.
Troutman - 1,076 shares; Jack R. Wentworth - 66 shares; Also
includes shares of common stock underlying exercisable
options, as follows: James E. Bacon - 10,000 shares;
Theodore F. Brophy - 10,000 shares; Arthur B. Newman -
10,000 shares; Allen E. Puckett - 10,000 shares; Robert G.
Schwartz - 10,000 shares; William M. Troutman - 100,000
shares; Jack R. Wentworth - 10,000 shares; and William E.
Roberts - 41,400 shares.
(4) Represents less than 1% of the outstanding shares of
common stock.
(5) Excludes 200 shares of common stock held by Mr. Troutman's
son, as to which shares he disclaims beneficial ownership.
(6) Excludes 186,196 shares of common stock held by Mr.
Wallace's wife. Includes 1,234,000 shares of common stock
held by The Robert R. Young Foundation, a charitable
foundation (the "Foundation"). Mr. Wallace is an officer and
trustee of the Foundation, but has no pecuniary interest in,
and receives no compensation, expense reimbursement or other
monies from, the Foundation. He disclaims beneficial
ownership of all shares held by his wife and the Foundation.
(7) Includes or excludes, as the case may be, shares of common
stock as indicated in the preceding footnotes. With respect
to the executive officers not named above, (i) includes 42
shares of common stock issuable upon exercise of warrants
and 100,000 shares of common stock underlying exercisable
options and (ii) excludes an aggregate of 1002 shares of
common stock, and warrants to purchase 10 shares, held by
the wives of two such officers, as to which shares
beneficial ownership is disclaimed by such officers.
PROPOSAL 2. INCREASE IN AUTHORIZED COMMON STOCK
In December 1998, the Company effected a two-for-one
stock split and as a result, at December 31, 1998, 20,122,694
shares of common stock were issued and outstanding; 6,047,606
shares were reserved for issuance upon exercise of the
Company's outstanding warrants; and 3,341,400 shares were
reserved for issuance in connection with the Company's stock
option plans. The Company's common stock is listed on the New
York Stock Exchange. As a result of the stock split, the
board of directors believes that an increase in the number of
authorized shares of common stock will be in the Company's
best interests and, consequently, it has approved, has
declared advisable and recommends to the stockholders the
adoption of an amendment to the Company's certificate of
incorporation, increasing the number of authorized shares of
common stock from 50,000,000 to 75,000,000.
The additional shares will give the Company greater
flexibility in its affairs by making them available for
issuance in transactions (including acquisitions, financings,
stock splits or dividends, and grants under employee benefit
plans) and at times the board of directors approves. The
additional shares of common stock also could be used for
issuance or exchange under the terms of the Company's Rights
Agreement, dated November 10, 1994 (the "Rights Agreement").
The Rights Agreement provides that, in certain circumstances,
including ownership by any person of 15% or more of the
Company's common stock, holders of the Company's common stock
(other than the 15% or greater holder) would have the right to
purchase at the right's then current exercise price,
additional shares of such common stock (or, in the event of a
subsequent merger of the Company or sale of more than 50% of
its assets, the common stock of the surviving or acquiring
corporation) valued at twice the exercise price.
Except for the options, warrants and rights described in
the preceding two paragraphs, the Company has no plan,
agreement or understanding relating to the issuance of
additional shares of common stock. If such an issuance were
to occur, further stockholder authorization might be required
by the rules of the New York Stock Exchange. Stockholders do
not have preemptive rights. Accordingly, certain issuances
could be dilutive to existing stockholders.
The proposed amendment, if passed, would become effective
by the Company filing with the Secretary of State of Delaware
a Certificate of Amendment. This filing would take place
shortly after the stockholders approve the amendment.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF AUDITORS
The board of directors has recommended that stockholders
ratify its appointment of PricewaterhouseCoopers LLP as
principal independent auditors of the Company for the year
ending December 31, 1999. PricewaterhouseCoopers LLP has
performed the annual audits of the Company's accounts for many
years. A representative of PricewaterhouseCoopers LLP is
expected to be present at the meeting to respond to any
questions stockholders may have concerning the audited
financial statements of the Company and to make a statement,
if he or she so desires.
STOCKHOLDER PROPOSALS FOR YEAR 2000 ANNUAL MEETING
Stockholder proposals for the Year 2000 annual meeting
should be received by the Company no later than November 30,
1999 in order to be considered for inclusion in the Year 2000
annual meeting proxy statement and form of proxy. Stockholder
proposals will be considered untimely for purposes of the Year
2000 annual meeting if the Company does not receive notice
thereof on or before February 14, 2000.
OTHER MATTERS
The board of directors knows of no other business to be
presented at the meeting. If other matters do properly come
before the meeting, the persons acting pursuant to the proxy
will vote on them in their discretion. A copy of the 1998
Annual Report on Form 10-K is being mailed with this Proxy
Statement.
By Order of the Board of Directors,
JAMES W. LANGHAM
Vice President, General Counsel
and Secretary
March , 1999
PROXY
[LONESTAR LOGO]
LONE STAR INDUSTRIES, INC.
STAMFORD, CONNECTICUT
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DAVID W. WALLACE, WILLIAM M.
TROUTMAN AND JAMES W. LANGHAM, and each of them, proxies, with
full power of substitution, to vote with all powers the
undersigned would possess if personally present at the Annual
Meeting of Stockholders of Lone Star Industries, Inc. to be
held May 13, 1999 at 10:00 a.m. at the Hyatt Regency Hotel,
Old Greenwich, Connecticut, for each of the matters listed
below and the transaction of such other business as may
properly come before the meeting (including adjournments).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3. THE COMPANY
HAS NOT RECEIVED TIMELY NOTICE OF A STOCKHOLDER PROPOSAL AND,
AS A RESULT, ON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE
ABOVE-NAMED PERSONS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
_________________________________________________________
FOLD AND DETACH HERE
Please mark
your votes as [X]
indicated in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1,2 AND 3.
FOR (except as
withheld below) WITHHELD
Proposal 1 - Election of Directors. / / / /
Nominees: Theodore F. Brophy; Robert G. Schwartz and Jack R.
Wentworth
(To withhold authority to vote for any individual
nominee write that nominee's name in the space
provided below.)
FOR AGAINST ABSTAIN
Proposal 2 - Approval of Amendment / / / / / /
to Certificate of
Incorporation to Increase
Authorized Common Stock
from 50,000,000 shares to
75,000,000 shares.
FOR AGAINST ABSTAIN
Proposal 3 - Ratification of / / / / / /
Appointment of
Independent Auditors.
Please date Proxy, sign Proxy as your name appears above and
return Proxy in the enclosed envelope. If acting as executor,
administrator, trustee, guardian, partner, etc., you should so
indicate when signing. If the signer is a corporation, please
sign the full corporate name, by duly authorized officer. If
shares are held jointly, each stockholder named should sign.
Signature(s)__________________________________________________
____________________________Date_______, 1999
FOLD AND DETACH HERE
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