<PAGE> 1
==============================================================================
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
/X/ Definitive Proxy Statement BY RULE 14A-6(E)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
MEDUSA CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MEDUSA CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:______
(2) Aggregate number of securities to which transaction applies:_________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):___________
(4) Proposed maximum aggregate value of transaction:_____________________
(5) Total fee paid:______________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_______________________________________________
(2) Form, Schedule or Registration Statement No.:_________________________
(3) Filing Party:_________________________________________________________
(4) Date Filed:___________________________________________________________
<PAGE> 2
[Logo] MEDUSA CORPORATION
LEE AND MONTICELLO * CLEVELAND HEIGHTS, OHIO * 216/371-4000
MAIL ADDRESS
P.O. BOX 5668
CLEVELAND 44101
March 24, 1995
DEAR MEDUSA CORPORATION SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Medusa Corporation, to be held at 2:00 P.M. Eastern Daylight Time on Monday,
May 8, 1995, at the Sheraton Stamford Hotel, One First Stamford Place, Stamford,
Connecticut. We hope that many of our shareholders will be able to attend.
At the meeting, management will report on current operations and there will
be an opportunity for a discussion of the Company and its activities. The formal
Notice of Meeting and Proxy Statement are attached. Our Annual Report for fiscal
1994, which accompanies this Proxy Statement, gives additional background
material for the meeting.
If you are unable to attend in person, we urge you to participate by voting
your shares by proxy. You may do so by filling out and returning the enclosed
Proxy Card.
Sincerely,
R. S. EVANS
R. S. EVANS
Chairman and
Chief Executive Officer
<PAGE> 3
MEDUSA CORPORATION
P.O. Box 5668, Cleveland, Ohio 44101
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 1995
DATED: MARCH 24, 1995
------------------
The 1995 Annual Meeting of Shareholders of Medusa Corporation will be held
at the Sheraton Stamford Hotel, One First Stamford Place, Stamford, Connecticut,
on Monday, May 8, 1995, at 2:00 P.M. Eastern Daylight Time, for the following
purposes:
1. To elect four Directors to serve three-year terms;
2. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 13, 1995 are
entitled to notice of and to vote at the meeting. Please sign, date and return
the enclosed Proxy Card promptly.
By Order of the Board of Directors
JOHN P. SIEGFRIED
Secretary
WE HOPE YOU WILL RETURN THE ENCLOSED PROXY IN THE ADDRESSED ENVELOPE WHICH
REQUIRES NO POSTAGE. IF YOU DESIRE FOR ANY REASON TO WITHDRAW YOUR PROXY, YOU
MAY DO SO PRIOR TO THE VOTE BY GIVING NOTICE TO MEDUSA IN WRITING OR AT THE
ANNUAL MEETING. IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, WE REQUEST THAT
YOU WRITE FOR YOUR CARD OF ADMISSION TO THE SECRETARY, MEDUSA CORPORATION, P.O.
BOX 5668, CLEVELAND, OHIO 44101. YOU MAY USE THE ENCLOSED ENVELOPE.
<PAGE> 4
MEDUSA CORPORATION
P.O. Box 5668, Cleveland, Ohio 44101
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 1995
DATED: MARCH 24, 1995
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are furnished in connection
with the solicitation by the Board of Directors of Medusa Corporation ("Medusa"
or the "Company") of proxies to be voted at the Annual Meeting of Shareholders
to be held at the Sheraton Stamford Hotel, One First Stamford Place, Stamford,
Connecticut, on Monday, May 8, 1995, at 2:00 P.M., Eastern Daylight Time. The
Board of Directors has fixed the close of business on March 13, 1995, as the
record date for the determination of shareholders entitled to notice of and to
vote at the annual meeting.
OUTSTANDING SHARES AND REQUIRED VOTES
On March 13, 1995, Medusa had outstanding and entitled to vote at the
annual meeting 16,228,579 Common Shares without par value ("Common Shares"). All
Common Shares are to be voted as shares of a single class. Each Common Share is
entitled to one vote. Directors will be elected by a plurality of the votes of
the Common Shares present in person or represented by proxy at the meeting.
Abstentions from the election of Directors will be treated as such.
The proxy may be revoked at any time before it is voted by giving notice to
Medusa in writing, and shareholders who execute proxies may, nevertheless,
attend the meeting and vote their shares in person.
ELECTION OF DIRECTORS
The Board of Directors of Medusa consists of ten members divided into three
classes. Four Directors have been nominated to hold office for three-year terms
until the 1998 Annual Meeting and until their successors are elected and
qualified. The proxy will be voted for election of the four Directors named in
the following table, whose election has been proposed and recommended by the
Board of Directors. In the event of the unavailability of any nominee,
management will either vote all shares represented by management proxies in
favor of a resolution reducing the size of the Board of Directors in order to
eliminate the position for which that person was nominated, or without further
notice to the shareholders, nominate a new candidate for election to the Board
of Directors in place of the person who is unavailable.
1
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The respective ages, positions with Medusa, periods of service as Directors
of Medusa, business experience during the past five years and directorships in
other companies of both the Nominees for Director and those Directors whose
terms will continue, are set forth below:
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS TO EXPIRE IN 1998
MONE ANATHAN, III
Age 56; Director since 1992; President of Filene's Basement Corp.,
Wellesley, MA (Retailer), 1984 to present. Other Directorships: Filene's
Basement Corp., Advest Advantage Trust, Brookstone, Inc., Crane Co.
RICHARD S. FORTE
Age 50; Director since 1988; President, Forte Cashmere Company, Inc.,
Woonsocket, RI (Processor and Dealer of Luxury Natural Fibers), 1987 to
present. Other Directorships: Crane Co., Intelligent Computer Engineering,
Inc.
DORSEY R. GARDNER
Age 52; Director since 1989; President, Kelso Management Company, Inc.,
Boston, MA. (Investment Management). Other Directorships: Crane Co.
JEAN GAULIN
Age 52; Has not previously served as a Director; Chairman and Chief
Executive Officer of Ultramar Corporation, Greenwich, CT (Petroleum
Refining and Marketing), 1992 to present; Chief Executive Officer of
Ultramar PLC and President, Chief Executive Officer and Chairman of
American Ultramar Limited (Refining and Marketing of Gas and Petroleum
Products, Oil and Gas Exploration), 1984 to 1992. Other Directorships:
Ultramar Corporation, Consolidated Hydro, Inc., Quebec Telephone.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1996
E. THAYER BIGELOW, JR.
Age 53; Director since 1988; President and Chief Executive Officer, Time
Warner Cable Programming, Inc., Stamford, CT, a subsidiary of Time Warner
Inc. (Basic Cable Television Program Services), September 1991 to present;
President, Home Box Office, Inc., a subsidiary of Time Warner Inc., June
1988 to September 1991; President, American Television and Communications
Corporation, a subsidiary of Time Inc., February 1988 to June 1988. Other
Directorships: Crane Co., Lord Abbett Mutual Funds.
CHARLES J. QUEENAN, JR.
Age 64; Director since 1988; Partner, Kirkpatrick & Lockhart, Pittsburgh,
PA. (Attorneys at Law). Other Directorships: Allegheny Ludlum Corporation,
Crane Co., Fansteel, Inc.
BORIS YAVITZ
Age 71; Director since 1988; Paul Garrett Professor of Public Policy and
Business Responsibility, 1982 to present; Dean, 1975 to 1982, Columbia
University, Graduate School of Business, New York, NY. Other Directorships:
Crane Co., Israel Discount Bank of New York.
2
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DIRECTORS WHOSE TERMS WILL EXPIRE IN 1997
R. S. EVANS
Age 51; Director since 1979; Chairman and Chief Executive Officer of
Medusa, 1987 to present; Chairman and Chief Executive Officer of Crane Co.,
Stamford, CT (Diversified Manufacturer of Engineered Products), 1984 to
present; President of Crane Co., 1987 to 1991 and July 1992 to present.
Other Directorships: Crane Co., Fansteel Inc., HBD Industries, Inc.,
Mid-Ocean Reinsurance Company Ltd.
DWIGHT C. MINTON
Age 60; Director since 1988; Chairman of the Board and Chief Executive
Officer, Church & Dwight Co., Inc., Princeton, NJ (Manufacturers of
Consumer and Specialty Products). Other Directorships: Church & Dwight Co.,
Inc., Chemical Bank of New Jersey, Crane Co., First Brands Corporation.
GEORGE E. UDING, JR.
Age 63; Director since October 1993; President and Chief Operating Officer
of Medusa since January 1, 1994; Consultant, March 1992 to September 1993;
Senior Vice President, ESSROC Corporation through March 1992.
The Board of Directors met nine times during 1994. The average attendance
of Directors at those meetings was approximately 88%. Each Director attended 75%
or more of the Board and Committee meetings which he was scheduled to attend,
except for Mr. Minton, who attended 65% of the Board and Committee meetings
which he was scheduled to attend.
Medusa's Board of Directors has standing Audit and Organization and
Compensation Committees. Medusa's Board of Directors does not have a standing
nominating committee. The Audit Committee, the members of which are Messrs.
Anathan, Forte, Gardner and Queenan (Chairman), met three times in 1994 with
management and with Medusa's independent auditors to review matters relating to
the quality of financial reporting and internal accounting control and the
nature, extent and results of their audits. The Organization and Compensation
Committee, the members of which are Messrs. Bigelow, Gardner, Minton and Yavitz
(Chairman), met eight times in 1994. (See the Organization and Compensation
Committee Report beginning on page 13.)
COMPENSATION OF DIRECTORS
STANDARD ARRANGEMENTS
Effective in 1995, Medusa's standard retainer payable to each non-employee
Director is $15,000 per annum. Pursuant to the Medusa Corporation 1988
Non-Employee Director Restricted Stock Plan, non-employee Directors are awarded
Common Shares with a fair market value equal to the annual retainer. All
Directors who are not full-time employees of Medusa, of which there are
currently eight, are eligible to participate in the plan. Once awarded, the
Common Shares are subject to forfeiture if the Director ceases to remain a
Director until Medusa's next annual meeting, except in the case of death,
permanent disability or change in control, and may not be sold for a period of
five years thereafter. In May, 1994, each non-employee Director received 390
restricted Common Shares pursuant to the plan. Non-employee Directors also
receive $250 for each Board meeting attended. Further, non-employee Directors
who are members of Committees of the Board receive $250 for each Committee
meeting attended.
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<PAGE> 7
OTHER ARRANGEMENTS
In fiscal 1994, there were no other arrangements pursuant to which any
Director of Medusa was compensated for any service provided as a Director.
OWNERSHIP BY MANAGEMENT OF EQUITY SECURITIES
The following table shows beneficial ownership, reported to Medusa as of
December 31, 1994 of Common Shares, including Common Shares as to which a right
to acquire ownership exists (for example, through the exercise of stock options)
within the meaning of Rule 13d-3(d)(1) under the Securities Exchange Act of
1934, of each Director, Nominee for Director, the chief executive officer and
the four other most highly compensated executive officers (which five persons
constitute the "Named Executive Officers") and, as a group, of such persons and
other executive officers.
BENEFICIAL OWNERSHIP AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
COMMON PERCENT
NAME SHARES OF CLASS
---- --------- --------
<S> <C> <C>
Mone Anathan, III................................................. 1,950 --
E. Thayer Bigelow, Jr............................................. 6,319 --
R. S. Evans....................................................... 631,893 3.9%
Richard S. Forte.................................................. 6,884 --
Dorsey R. Gardner................................................. 3,802 --
Jean Gaulin....................................................... -0- --
Dwight C. Minton.................................................. 19,507 0.1%
Charles J. Queenan, Jr............................................ 15,164 0.1%
Arthur A. Seeligson, Jr........................................... 6,230 --
George E. Uding, Jr............................................... 54,346 0.3%
Boris Yavitz...................................................... 10,264 0.1%
Robert J. Kane.................................................... 85,243 0.5%
John P. Siegfried................................................. 75,027 0.5%
Alan E. Redeker................................................... 9,200 0.1%
All of the above and other executive officers
as a group (17 persons)......................................... 940,729 5.8%
</TABLE>
---------------
Notes:
- Each person has sole voting and investment power with respect to the Common
Shares listed, unless otherwise indicated.
- The number of Common Shares owned by each person, or by the group, has been
adjusted and the percentage owned (where such percentage exceeds 0.1%) has
been computed, in accordance with Rule 13d-3(d)(1) of the Securities Exchange
Act.
- Includes Common Shares held jointly, or in other capacities, as to which, in
some cases, beneficial ownership is disclaimed.
4
<PAGE> 8
- The shareholdings shown in the above table do not include Common Share
equivalents held under the Medusa Corporation Savings and Investment Plan (the
"401(k) Plan") for Messrs. Uding, Kane, Siegfried, Redeker and all executive
officers as a group, which are 161, 842, 2,880, 666 and 4,738 Common Shares,
respectively.
- The shareholdings shown in the above table do not include Common Shares
subject to non-qualified stock options ("Stock Options") exercisable within 60
days of March 13, 1995 by Messrs. Evans, Uding, Kane, Siegfried, Redeker and
all executive officers as a group, which are 15,000, 15,000, 6,000, 5,250,
18,281 and 70,281 Common Shares, respectively.
- The shareholdings shown in the above table do not include 1,560,370 Common
Shares owned by The Crane Fund, a charitable trust, which are voted by the
trustees thereof, all of whom are officers of Crane Co. (see Principal
Shareholders); nor the Common Shares held by trusts for the pension plans of
Medusa and certain of its subsidiaries which may be voted or disposed of at
the discretion of the trustees unless the sponsor of the particular plan
directs otherwise. None of the Directors, Nominees for Director, executive
officers or trustees have direct beneficial interest in, and all disclaim
beneficial ownership of the Common Shares held by the trusts.
PRINCIPAL SHAREHOLDERS
The following table shows information with respect to the only persons
known to Medusa to be beneficial owners who have the sole voting and investment
power of more than five percent of the Common Shares outstanding at March 13,
1995:
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS COMMON SHARES OF CLASS
------------------------------------------------------ ------------- ---------
<S> <C> <C>
FMR Corporation
82 Devonshire St.
Boston, MA 02109.................................... 2,490,450(1) 15.3%
The Crane Fund
100 First Stamford Place
Stamford, CT 06902.................................. 1,560,370(2) 9.6%
The Capital Group Companies, Inc.
333 South Hope Street
Los Angeles, CA 90071............................... 1,070,220(3) 6.6%
Atalanta/Sosnoff Capital Corporation
101 Park Avenue, Sixth Floor
New York, NY 10178.................................. 836,300(4) 5.2%
-----------------------------
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<FN>
(1) As reported in a Schedule 13G received by Medusa on February 17, 1995 from
FMR Corporation ("FMR"). FMR filed the Schedule 13G for certain affiliates,
Fidelity Management & Research Company, Fidelity Management Trust Company,
Fidelity Magellan Fund and Fidelity International Limited, which entities
are the beneficial owners of the Common Shares. In the Schedule 13G, FMR and
its principals indicated that they had filed on a voluntary basis and
disclaimed that they were a "group" and thus, that their shares did not need
to be aggregated for purposes of Section 13(d) of the Securities Exchange
Act.
(2) As reported in a Schedule 13D received by Medusa on October 31, 1988. The
Crane Fund is a charitable trust managed by trustees appointed by the Board
of Directors of Crane Co. The incumbent trustees of The Crane Fund are P. R.
Hundt, Jr., R. B. Phillips and M. L. Raithel, all of whom are officers of
Crane Co. Pursuant to the trust instrument, Common Shares held by such trust
shall be voted by the trustees as directed by the Board of Directors of
Crane Co., the distribution of the income of the trust for its charitable
purposes is subject to the control of the Crane Co. Board of Directors, and
Common Shares may be sold by the trustees only upon the direction of the
Crane Co. Board of Directors acting by a two-thirds vote. None of the
trustees of The Crane Fund, Directors of Crane Co. or Directors or Nominees
for Director of Medusa has any direct beneficial interest in, and all
disclaim beneficial ownership of Common Shares held by The Crane Fund.
(3) As reported in a Schedule 13G received by Medusa on February 21, 1995 from
The Capital Group Companies, Inc. ("Capital"), certain operating
subsidiaries of Capital: Capital Guardian Trust Company, a bank; Capital
Guardian Research and Management Company, a registered investment advisor;
and Capital International, S.A., another operating subsidiary of Capital;
each of which had investment discretion with respect to a portion of the
shareholdings listed above.
(4) As reported in a Schedule 13D received by Medusa on December 29, 1994 from
Atalanta/Sosnoff Capital Corporation ("Atalanta/Sosnoff"). Atalanta/Sosnoff
filed the Schedule 13D for certain affiliates, Atalanta/Sosnoff Capital
Corporation, Atalanta/Sosnoff Capital Corporation (Delaware),
Atalanta/Sosnoff Management Corporation and Martin T. Sosnoff, the reporting
persons.
</TABLE>
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows information concerning annual and long-term
compensation for the fiscal years ended December 31, 1994, 1993 and 1992 for the
Chief Executive Officer, the four other Named Executive Officers and two former
executive officers, Phillip W. Gutmann and Brian P. Bammel (the "Former
Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- -----------------------------------
AWARDS PAYOUTS
----------------------- ---------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS SAR'S PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#) ($) ($)(3)
--------------------------- ---- --------- --------- ------------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. S. Evans................ 1994 $ 250,000 $ 175,000 $ 209,725 $ -0- 30,000 $ 225,000 $ -0-
Chairman of the Board & 1993 186,300 185,000 245,003 -0- -0- 296,719 -0-
Chief Executive Officer 1992 180,000 15,000 579,521(4) -0- -0- -0- -0-
George E. Uding, Jr.(5).... 1994 220,000 154,000 22,500 -0- 30,000 -0- 4,686
President & 1993
Chief Operating Officer 1992
Robert J. Kane............. 1994 118,333 82,833 99,356 -0- 12,000 75,000 4,008
Senior Vice President 1993 106,600 32,000 87,685 -0- -0- 98,906 3,780
1992 103,000 7,500 3,500 -0- -0- -0- 3,840
John P. Siegfried.......... 1994 115,000 80,500 112,224 -0- 10,500 75,000 5,237
Vice President, Secretary 1993 97,400 39,001 87,685 -0- -0- 98,906 3,651
and General Counsel 1992 92,800 14,500 3,500 -0- -0- -0- 4,770
Alan E. Redeker(6)......... 1994 108,333 75,833 1,875 -0- 7,500 -0- 4,782
Vice President 1993
1992
Phillip W. Gutmann(7)...... 1994 173,260 121,310 136,758 -0- -0- 135,000 7,655
(Former Officer) 1993 167,400 66,000 160,094 -0- -0- 178,031 8,099
1992 161,700 14,600 6,500 -0- -0- -0- 7,398
Brian P. Bammel(8)......... 1994 134,060 40,234 86,917 -0- 9,000 90,000 87,105
(Former Officer) 1993 119,000 44,000 106,118 -0- -0- 118,688 4,488
1992 114,900 13,200 4,200 -0- -0- -0- 4,630
---------------
<FN>
(1) Other Annual Compensation reported in Column (e) includes non-preferential
dividends paid on unvested performance restricted shares ("Performance
Restricted Shares"). As noted below, where the Performance Restricted Shares
achieve an established target on an established test date and vest, the
participant qualifies for a cash award equal to the taxes payable with
respect to income on the award, as well as a gross-up of income to cover
such taxes ("Performance Restricted Share Tax Gross-up"). On November 8,
1994, the 2 1/2 year Test Date for the May 8, 1992 award, Messrs. Evans,
Kane, Siegfried, Gutmann and Bammel received Performance Restricted Share
Tax Gross-ups of $175,506, $66,245, $66,245, $120,727 and $79,979,
respectively. On January 24, 1994, the Committee (as defined below)
authorized officers to elect to take their 1993 bonuses in Common Shares,
instead of cash, accepting a two-year Common Share restriction period,
making an election under Section 83(b) of the Internal Revenue Code (the "Code")
and receiving a
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<PAGE> 11
reimbursement for Section 83(b) taxes due, as well as a gross-up of
income to cover such taxes ("Section 83(b) Gross-up"). Messrs. Kane and
Siegfried elected to take Common Shares and received Section 83(b)
Gross-ups of $21,205 and $34,448, respectively. No other perquisites or
other personal benefits, securities or property have been reported, unless
the aggregate amount of such compensation is the lesser of either $50,000
or 10% of the total of annual salary and bonuses reported to the Named
Executive Officers, or unless a particular perquisite or personal benefit
exceeds 25% of the value of the perquisites reported in the table for a
Named Executive Officer or a Former Officer.
(2) The number of unvested Performance Restricted Shares held by each of the
Named Executive Officers and the aggregate value thereof, as of December 31,
1994 were as follows:
# OF
RESTRICTED AGGREGATE
SHARES HELD VALUE
----------- -----------
R. S. Evans........................... 65,000 $ 1,592,000
George E. Uding, Jr................... 50,000 1,225,000
Robert J. Kane........................ 23,000 563,500
John P. Siegfried..................... 22,000 539,000
Alan E. Redeker....................... 5,000 122,500
Non-preferential dividends are paid on unvested Performance Restricted
Shares. As of December 30, 1994, the fair market value for each Medusa
Corporation Common Share was $24.50 (the "Fair Market Value"). The Former
Officers surrendered their entitlements to any unvested Performance
Restricted Shares as of December 30, 1994. The Performance Restricted Shares
granted to the Named Executive Officers since fiscal 1991 are reported
either in the above table or in the Summary Compensation Table as "LTIP
Payouts". (See pages 11, 15 and 17 of the Proxy report for additional
information on LTIP awards in fiscal 1994.)
(3) All Other Compensation reported in column (i) includes; a) amounts
contributed for fiscal 1994 for the Named Executive Officers, except for Mr.
Evans, under the 401(k) Plan (50% of the voluntary plan savings of the Named
Executive Officers and the Former Officers, on up to $9,240, which was the
maximum amount of compensation which could have been deferred in fiscal
1994; the "Company Match"); b) imputed cost of group term life insurance in
fiscal 1994 for Messrs. Uding, Siegfried, Redeker, Gutmann and Bammel of
$3,036, $1,163, $362, $3,035 and $702, respectively; and c) severance
benefits accrued by the Company in 1994 payable to Mr. Bammel in 1995 of
$82,112.
(4) $569,021 of the $579,521 shown above relates to an adjustment required by a
1989 tax gross-up, based upon a tax assessment received by Mr. Evans in
fiscal 1992.
(5) Mr. Uding was elected President of Medusa as of January 1, 1994.
(6) Mr. Redeker was elected a Vice President of Medusa as of March 28, 1994.
(7) Mr. Gutmann terminated his employment as an executive officer of the Company
effective November 11, 1994.
(8) Mr. Bammel terminated his employment as an executive officer of the Company
effective August 31, 1994.
</TABLE>
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<PAGE> 12
STOCK OPTION GRANTS IN LAST FISCAL YEAR:
The table below shows all individual grants of Stock Options to the Named
Executive Officers of the Company during the fiscal year ended December 31,
1994:
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SAR'S(2)
OPTIONS/ GRANTED TO
SAR'S(2) EMPLOYEES EXERCISE OR GRANT DATE
(#) IN FISCAL BASE PRICE EXPIRATION PRESENT
NAME(1) GRANTED YEAR ($/SH)(3) DATE VALUE ($)(4)
------- ---------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
R. S. Evans.............................. 30,000 13.22% $ 24.25 05/09/99 $241,800
George E. Uding, Jr...................... 30,000 13.22% 24.25 05/09/99 241,800
Robert J. Kane........................... 12,000 5.29% 24.25 05/09/99 96,720
John P. Siegfried........................ 10,500 4.63% 24.25 05/09/99 84,630
Alan E. Redeker.......................... 7,500 3.30% 24.25 05/09/99 60,450
---------------
<FN>
(1) The Stock Options awarded to Mr. Bammel in fiscal 1994 were surrendered when
he terminated his employment effective August 31, 1994.
(2) Since fiscal 1990, the Company has not granted any stock appreciation rights
("SAR's").
(3) All Stock Options were granted at the fair market value of the Common Shares
on the date of grant. Options granted become exercisable 50% one year, 75%
two years and 100% three years after grant and expire, unless exercised,
five years after grant. If employment terminates, the participant may
exercise his or her Stock Options only to the extent such could have been
exercised on the date the participant's employment terminated and within
three months thereof. In the event a participant's employment terminates by
reason of death, retirement, permanent disability or change in control,
Stock Options become fully exercisable. The exercise price may be paid by
delivery of Common Shares owned by the participant for more than six months
and the participant's income tax obligations related to exercise may be
satisfied by surrender of Common Shares received upon exercise, subject to
certain conditions.
(4) The Stock Options were valued using the Black-Scholes Method which indicated
a value of $8.06 per option. The assumptions used were: volatility .321,
risk free rate of return 6.76% based on the Salomon Brothers' 5-Year
Treasury Strip Rate for the May 9, 1994 date of grant; the Assumed Dividend
Pay-Out Rate was 2.06% and a five year time of exercise. Since the actual
value, if any, which an optionee may realize depends on the excess of the
stock price over the exercise price on the date the option is exercised,
there is no assurance that the value will be at or near the value estimated
using the Black-Scholes Method.
</TABLE>
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<PAGE> 13
OPTION/SAR'S EXERCISES AND UNEXERCISED VALUES AT YEAR-END
The table below shows aggregated information with respect to the
exercise(s) of Stock Options and SAR's which were granted in fiscal 1990 and
prior years under the Medusa Corporation 1988 Stock Option Plan and the Medusa
Corporation 1988 Stock Appreciation Rights Plan to the Named Executive Officers
and the value realized in the fiscal year 1994 as a result of such exercise(s).
The table below also shows information with respect to the Stock Options which
were granted to the Named Executive Officers in fiscal 1994 under the Medusa
Corporation 1991 Long-Term Incentive Plan (the "1991 LTIP") and which remained
unexercised at December 31, 1994 and the value thereof:
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SAR'S AT OPTIONS/SAR'S AT
ON VALUE DECEMBER 31, 1994(#) DECEMBER 31, 1994($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#)(1) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. S. Evans............... 22,162 $545,974 -0- 30,000 $ -0- $18,750
George E. Uding, Jr. ..... -0- -0- -0- 30,000 -0- 18,750
Robert J. Kane............ 296 7,250 -0- 12,000 -0- 7,500
John P. Siegfried......... 848 20,785 -0- 10,500 -0- 6,562
Alan E. Redeker........... -0- -0- -0- 7,500 -0- 4,688
------------------
<FN>
(1) As shown in column (b) of the above table, where appropriate, the "Shares
Acquired" from SAR's have been theoretically calculated by dividing fiscal
1994 proceeds by the Fair Market Value.
(2) The Medusa Corporation 1988 Stock Appreciation Rights Plan provides for
payment of one-third of the value realized at time of valuation (exercise)
and delayed payments of one-third of the value realized on each of the first
and second anniversaries of the date of valuation and only if the
participant is employed by Medusa on such anniversaries. Thus, in column (c)
of the above table, the Value Realized for SAR's does not fully correlate
for fiscal 1994 with the Value Realized for Stock Options.
</TABLE>
10
<PAGE> 14
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The table below shows information with respect to Performance Restricted
Shares awarded pursuant to the 1991 LTIP to the Named Executive Officers during
the fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE
BASED PLANS
-------------------------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER OF PERFORMANCE OR
SHARES UNITS OTHER PERIOD UNTIL
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#)(1) PAYOUT (2) ($ OR #) ($ OR #) ($ OR #)
----------------------- -------------- ----------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
R. S. Evans............ 20,000 50% on 11/9/96; 10,000 shares 10,000 shares 20,000 shares
50% to 100% on 5/9/99 on 11/9/96 on 5/9/99
George E. Uding, Jr.... 20,000 50% on 11/9/96; 10,000 shares 10,000 shares 20,000 shares
50% to 100% on 5/9/99 on 11/9/96 on 5/9/99
Robert J. Kane......... 8,000 50% on 11/9/96; 4,000 shares 4,000 shares 8,000 shares
50% to 100% on 5/9/99 on 11/9/96 on 5/9/99
John P. Siegfried...... 7,000 50% on 11/9/96; 3,500 shares 3,500 shares 7,000 shares
50% to 100% on 5/9/99 on 11/9/96 on 5/9/99
Alan E. Redeker........ 5,000 50% on 11/9/96; 2,500 shares 2,500 shares 5,000 shares
50% to 100% on 5/9/99 11/9/96 on 5/9/99
------------------
<FN>
(1) The fair market value (the closing price on the New York Stock Exchange;
composite transactions) of the Common Shares of Medusa Corporation on the
May 9, 1994 award date (the "Award Date") was $23.875.
(2) In order for the Performance Restricted Shares to vest to the participant,
the total return of Common Shares (market appreciation, dividends and
distributions) during the performance period, when tested 2 1/2 years from
the Award Date (the "11/9/96 Test Date") and 5 years from the Award Date
(the "5/9/99 Test Date"), must; a) meet or exceed 125% of the rate of growth
of the Standard & Poor's 500 Composite Index (the "S&P 500"); and b) the
value of Common Shares may not decline in the absolute (collectively, the
"125% Performance Target"). If the 50% (2 1/2 year) portion of the award
fails to vest when tested on the 11/9/96 Test Date, the 50% portion is
retested on the 5/9/99 Test Date. If the total return of Common Shares fails
to meet or exceed the 125% Performance Target on the 5/9/99 Test Date, then
the Performance Restricted Shares are forfeited. If the Performance
Restricted Shares achieve the 125% Performance Target on either the 11/9/96
Test Date or the 5/9/99 Test Date and vest, the participant also receives a
cash award equal to the taxes payable with respect to the income on the
award, as well as a gross-up of income to cover such taxes. During the
performance period, the Performance Restricted Shares may be voted and pay
non-preferential dividends to the participant.
</TABLE>
RETIREMENT BENEFITS
The Medusa Corporation Pension Plan for Certain Covered Employees (the
"Pension Plan") is a defined benefit pension plan. The amount of contribution
with respect to a specified person is not, and cannot be, individually
calculated. Benefits under the Pension Plan are based on the participant's base
11
<PAGE> 15
salary, which includes overtime, but excludes annual and long-term incentive
compensation and commissions and reflects credited years of service up to a
maximum of 35 years of service. The table below sets forth estimated annual
benefits under the Pension Plan which are payable to an employee upon normal
retirement in 1994 at age 65 with selected periods of service and assumes
payments are made on a straight life annuity basis.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT IN 1994
WITH YEARS OF SERVICE INDICATED(1)
------------------------------------------------------------------------------------------------------------------
REMUNERATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 6,786 $ 13,571 $ 20,357 $ 27,143 $ 33,929 $ 40,714 $ 47,500
125,000 8,482 16,964 25,446 33,929 42,411 50,893 59,375
150,000 10,179 20,357 30,536 40,714 50,893 61,071 71,250
175,000 11,875 23,750 35,625 47,500 59,375 71,250 83,125
200,000 13,571 27,143 40,714 54,286 67,857 81,429 95,000
225,000 15,268 30,536 45,804 61,071 76,339 91,607 106,875
250,000 16,964 33,929 50,893 67,857 84,821 101,786 118,750
275,000 18,661 37,321 55,982 74,643 93,304 111,964 130,625
300,000 19,728 39,455 59,183 78,911 98,638 118,366 138,094
325,000 21,021 42,043 63,064 84,086 105,107 126,129 147,150
350,000 22,618 45,237 67,855 90,474 113,092 135,711 158,329
375,000 24,280 48,560 72,840 97,120 121,401 145,681 169,961
------------------
<FN>
(1) The amounts shown exclude any benefits under the Pension Plan provided
solely through optional employee contributions. In accordance with
amendments to the Code made by the Tax Reform Act of 1986 and the Omnibus
Budget Reconciliation Act of 1993 ("OBRA"), the maximum amount of
compensation which may be included in the determination of any participant's
benefit under the Pension Plan in 1995 is $150,000 and the maximum annual
benefit payable under the Pension Plan in 1995 is $120,000. However, these
limitations may not reduce a participant's accrued benefit under the Pension
Plan below such participant's accrued benefit under the Pension Plan as of
December 31, 1988.
</TABLE>
The above table covers all of the Named Executive Officers, the Former
Officers, other executive officers and other salaried employees on a
non-contributory basis. The Pension Plan also provides for the payment of
benefits to an employee's surviving spouse or other beneficiary and various
other optional methods of payment. The calculation of retirement benefits under
the Pension Plan is based upon average earnings for the highest five consecutive
years in the ten years preceding retirement. The benefits listed in the above
table are not subject to any deductions for Social Security or other offset
amounts. As of March 13, 1995, the current compensation covered by the Pension
Plan and years of credited service for Messrs. Evans, Uding, Kane, Siegfried and
Redeker were: $250,000 and 7 years, $300,000 and 1 year, $155,000 and 15 years,
$130,000 and 15 years, and $120,000 and 3 years, respectively.
12
<PAGE> 16
SEVERANCE AGREEMENTS
Medusa has special termination agreements with each of its executive
officers including the Named Executive Officers. Prior to a change of control of
Medusa, the beneficiaries are employees at will and as such may be discharged
without being entitled to contractual benefits (change of control includes
tender offers and certain other change of control transactions). The agreements
provide for a lump sum cash payment of three times the amount of the employee's
annual base salary and a pro-rata portion of any annual incentive compensation
from the previous year if; (a) within two years from the date of a change of
control such employee is terminated without cause by Medusa; (b) within such
two-year period such employee terminates his or her employment for good reason;
or (c) at the end of a one-year period from the date of a change of control such
employee terminates his or her employment within a 30-day period for any reason.
All of the agreements provide for reimbursement of the employee on an after-tax
basis in the event excise taxes are imposed on employee benefits under Section
4999 of the Code, irrespective of whether such benefits are paid by reason of
the agreement or otherwise.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
INTRODUCTION
The responsibilities of the Organization and Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board") currently
include: the organization of the Company, the Company's compensation plans, and
the specific forms and levels of compensation granted to executive officers and
division presidents. The Board of Directors is responsible for the compensation
of the Chief Executive Officer. The Committee has been delegated authority by
the Board of Directors with respect to the compensation of the other Named
Executive Officers. The Committee, which is comprised of four members, each of
whom is a non-employee Director, makes this report to the shareholders of the
Company, as follows:
COMPENSATION PHILOSOPHY
The fundamental compensation philosophy of the Board (and the Committee) is
to provide compensation levels which are sufficient to attract and retain highly
qualified executive officers, and to motivate such executive officers to provide
superior products and services to the Company's customers, thereby maximizing
the financial returns to the Company's shareholders. To the greatest possible
extent, the Company bases compensation upon objective Company and individual
performance criteria.
The executive officers of the Company currently receive compensation from
four quadrants; a) base salary; b) awards under the annual incentive program
(the "AIP"); c) awards under the 1991 LTIP; and d) a "security package" which
includes miscellaneous other executive compensation benefits. The Committee's
executive compensation policies provide for competitive levels of compensation
which integrate base salary with the AIP, the 1991 LTIP and the security
package, make executive compensation dependent upon corporate performance and
recognize individual initiative and achievement. The Committee obtains and
monitors formal surveys of executive compensation, both generally and for the
construction products industry, from public and private sources, in order to
ensure that the compensation paid under the Committee's executive compensation
policy is competi-
13
<PAGE> 17
tive. During 1994, the Committee commissioned two studies by outside
consultants, one from Towers Perrin, with regard to all forms of compensation
awarded to the executive officers and a second, from the Wyatt Company, with
regard to base salary compensation throughout the Company, including the
executive officers. Both studies utilized compensation databases from general
industry and peer group (construction products industry) sources. (See below for
actions taken by the Committee in response to the findings and recommendations
of these consultants.) The Committee intends to continue to monitor executive
compensation both from formal and informal surveys, and may make adjustments, as
deemed appropriate, in order that the compensation of the Company's executive
officers may remain competitive in 1995 and thereafter.
The Committee believes that the compensation of the Chief Executive Officer
and the other executive officers (including the Named Executive Officers) should
be primarily dependent on the Company's performance. Consistent with this
philosophy, executive compensation from two quadrants, the AIP and the 1991
LTIP, is contingent upon corporate and individual performance. The Committee
also endorses the view that stock ownership by management and stock-based
performance compensation arrangements are beneficial in aligning the interests
of management with those of the shareholders of the Company in order to provide
management with a direct financial incentive to enhance shareholder value. Since
1988, the Committee has utilized stock-based arrangements, and since 1991, such
arrangements have been tied to stock performance. Thus, over time, stock-based
arrangements have become an increasingly important element in the compensation
of the executive officers of the Company.
EXECUTIVE COMPENSATION
ANNUAL BASE SALARY. In 1994, the Company budgeted 3.7% for merit salary
increases during calendar 1995. This merit increase "pool" was only available
because of the Company's satisfactory performance. On occasion, the Company has
not granted increases because of the Company's unsatisfactory performance. In
those years when the Company's performance justifies establishing a merit
increase pool, the Committee reviews and makes recommendations with regard to
changes in each executive officer's salary, including in the Committee's review
process, without limitation, such factors as job performance for the prior year
(generally by way of an annual written performance review conducted by the
person to whom the individual reports), comparable levels of salary both
generally and in the construction products industry, internal compensation
equity considerations, level of current responsibilities, future growth
potential in the Company, changes in cost of living expense since the prior year
and maximization of after-tax income. As a general rule, and in its 1995
executive officer compensation review, the Committee assigned the highest weight
to the individual's job performance in the prior year and a lesser weight to the
individual's future growth potential in the Company. The Committee considered no
other material factors in its executive officer compensation review in 1995.
Generally, the factors of internal compensation equity considerations and level
of current responsibilities enter into the Committee's decision to elect a new
officer, or to change the assignment of responsibilities of an existing officer.
As a result of the findings and recommendations contained in the Towers Perrin
and Wyatt Company studies in 1995, the Committee reviewed and adjusted, as
necessary, the base salaries of executive officers.
ANNUAL INCENTIVE PLAN. Each executive officer is eligible for additional
cash or stock compensation under Medusa's AIP, awards under which are contingent
upon the Company's performance against specific pre-established financial goals,
with discretionary awards for extraordinary individual
14
<PAGE> 18
performance. Certain key employees of the Company are also eligible for awards
under the AIP. And, discretionary awards may also be made to non-AIP
participants who make extraordinary contributions to the success of the Company.
At the beginning of each fiscal year, the Committee, in consultation with
management, approves the AIP financial target for the Company. Currently, the
Return on Capital Employed by the Company ("ROCE") is the threshold indicator of
financial performance used by the Committee to determine whether awards are paid
under the AIP and the amount of incentive compensation for each executive
officer for the year. Each executive officer's award is based; (a) 70% solely
upon Company performance; and (b) an additional award of 30% is discretionary,
to be awarded only if the individual made an extraordinary contribution to the
success of the Company. The financial goal selected for fiscal 1994 was 30.6% of
ROCE. As of December 31, 1994, the actual ROCE for the Company had increased to
33.3%.
Generally, AIP compensation does not exceed 50% of the base salary of an
executive officer. However, when the Company's performance exceeds the AIP
financial goal, awards may represent a higher percentage of base salary. As of
December 31, 1994, the actual bonuses paid to the Named Executive Officers
increased 40% over the amount targeted as of January 1, 1994. For key employee
AIP participants, the threshold bonus is generally either 50%, 40% or 30% of
such employee's base salary, based upon each participant's responsibilities,
subject to the same adjustments described above, with respect to executive
officers. If the Company's performance threshold is not achieved, the Committee
has the discretion to pay a smaller percentage than the threshold amount.
However, by policy, no awards under the AIP are made unless the Company is
profitable.
The structure and elements of each year's AIP have historically been
similar from year-to-year. However, in 1993, the Committee amended the financial
target for the Company to ROCE from the previous basis, which was profit
achieved under the Company's annual operating plan and average capital employed.
This change was made to better focus the attention of participants on the
effective utilization of facilities on a long-range basis, rather than a
particular year's business forecast. Further, in 1993, consistent with the
philosophy of the Committee to align the interests of management with those of
our shareholders, the Committee also amended the AIP to offer the executive
officers the option of taking all or a portion (in 25% increments) of their
awards in restricted stock by paying a premium over cash, while subjecting such
stock awards to a two-year holding requirement. As a result of the findings and
recommendations contained in the Towers Perrin study, the Committee has no
current plans to make any substantive changes to the AIP for 1995.
LONG-TERM INCENTIVE PLAN. In 1991, the shareholders of the Company
approved the 1991 LTIP, and in 1994, the shareholders approved increasing the
number of shares available for the 1991 LTIP awards by 750,000, as well as
approving the material terms of performance goals for Performance Restricted
Shares awarded under the 1991 LTIP. The 1991 LTIP is an "omnibus plan", which
allows the Committee significant flexibility and discretion in granting
restricted stock, stock options, stock appreciation rights, performance awards
and other awards. Since 1991, the Committee has generally discontinued the
practice of making non-performance-based restricted stock awards, and stock
appreciation rights awards to the executive officers under the Company's 1988
plans, and has substituted four consecutive annual grants of Performance
Restricted Shares under the 1991 LTIP. In fiscal 1994, the Company did not
adjust or amend the exercise price of Stock Options or SAR's previously awarded
to the Named Executive Officers. In fiscal 1994, the Committee reinstituted the
practice of granting Stock Options to executive officers. Stock Options have
also been awarded to certain key employees of the Company under the 1991 LTIP.
(This discussion is qualified by the more
15
<PAGE> 19
detailed description of Performance Restricted Share and Stock Option awards
located elsewhere in the Proxy statement.)
Awards of Performance Restricted Shares to executive officers have been
made consistent with the Committee's philosophy to align the interests of
management with those of our shareholders. For example, when awarded in 1991 and
1992, the value of the awards were less than 50% of each of the executive
officer's base salary compensation and were made contingent upon the stock
growth (fair market value, dividends and distributions) exceeding, cumulatively,
15% per year. On November 8, 1993, the first (2 1/2 year) Test Date for the 1991
award, the Performance Restricted Shares had grown by 48% per year. On November
6, 1994, the first (2 1/2 year) Test Date for the 1992 award, the Performance
Restricted Shares had grown by 21% per year. In the opinion of the Committee,
the excellent stock growth achieved at such Test Dates is a strong indication of
the success of the awards under the 1991 LTIP in aligning the interests of
management with those of the shareholders of the Company.
The Committee considered prior grants of stock-based awards and/or other
stock holdings by management in determining the size of awards of time-based
restricted stock under the 1988 Restricted Stock Plan. The Committee's intent in
making such awards in 1988 and 1989 was to assure continuity of management in
the newly-independent Medusa. Thereafter, in 1990 and 1991, time-based
restricted stock awards were only made to two executive officers who did not
receive significant awards in fiscal 1988, based upon internal equity
considerations and the future growth potential of such officers to Medusa. With
respect to awards of Performance Restricted Shares under the 1991 LTIP, the
Committee has generally not considered prior grants of stock-based awards and/or
other stock holdings, as the Committee does not feel that the objective of
aligning the interests of management with those of shareholders is consistent
with setting an upper limit on the percent of shareholdings by management.
Further, such Committee philosophy is consistent with the executive compensation
policy of the federal government, which is to allow "performance-based
compensation", when approved by shareholders, to be excluded from compensation
deduction limits.
As noted in greater detail below, in 1993, the Committee amended its
criteria for Performance Restricted Share awards, substituting a two-pronged
approach for the 1991 and 1992 criteria of 15% annual stock growth.
(Specifically, the Performance Restricted Share awarded in 1993 and 1994 require
both; (a) stock growth of 125% of the S&P 500; and (b) that the value of the
stock maintain its value at or above the grant price.) One benefit of this
change was to facilitate monitoring of Performance Restricted Share performance
by shareholders, since the S&P 500 comparison is a required market measure in
the Performance Graph which appears on page 19 of the Proxy report. In May 1995,
the Committee will consider whether it is appropriate to make additional 1991
LTIP awards to the Named Executive Officers for fiscal 1995, and the terms of
any such awards.
SECURITY PACKAGE. One of the purposes for the 1994 Towers Perrin executive
compensation review was the Committee's desire for assurance that the Company's
executive compensation was sufficient to attract, retain and motivate highly
qualified executive officers. Of particular concern were the limitations over
pension plans and 401(k) plans made under OBRA. At present, the substantive
elements in Medusa's executive compensation security package are the qualified
Pension Plan (See Page 12 of the Proxy report), Severance Agreements (See Page
13 of the Proxy report), and the 401(k) Plan (See Pages 7 and 8 of the Proxy
report). In February 1995, the Board of Directors approved a Supplemental
Executive Savings Plan (the "Top Hat Plan") for the Company. Participants
include executive officers and certain key employees. The Top Hat Plan
supplements the existing 401(k) Plan.
16
<PAGE> 20
The Top Hat Plan provides an incentive for executive officers to increase their
pre-tax income deferrals. Any overflow of the Company Match from the Company's
401(k) Plan is paid in Common Share equivalents. Income deferrals receive
interest at the 10-year Treasury rate, adjusted annually. Since the Top Hat Plan
is not funded by Medusa, participants have an unsecured claim against the
Company's assets for their income deferrals, Company Match (where applicable)
and interest, which benefits are paid in a lump sum at retirement, termination
of a participant's employment, plan termination or change of control.
DETERMINATION OF THE COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation for the Chief Executive Officer, R. S. Evans, is reviewed
and recommended by the Committee for approval by the Board of Directors,
following a process similar to that described above for the executive officers,
except that the full Board of Directors is included in the approval process of
the Chief Executive Officer's compensation. In January 1995, the Board met in
executive session to conduct a comprehensive review of the performance of the
Chief Executive Officer. Subsequently, the Board had a dialogue with the Chief
Executive Officer. Outlined below, are the performance criteria and the action
taken with respect to such review.
ANNUAL BASE SALARY. In determining the annual compensation for the Chief
Executive Officer, the Committee and the Board seek not only to be competitive
with other companies, both generally and in the construction products industry,
but also to have a significant percentage of the compensation of the Chief
Executive Officer based upon the Company's attainment of objective performance
goals, including ROCE and the fair market value growth of Company stock. This
arrangement provides an incentive for the Chief Executive Officer to provide the
leadership necessary to attain the Company's strategic objectives, while
providing compensation stability in the form of the base salary quadrant of the
total compensation of the Chief Executive Officer. In January 1995, the
Committee and the Board continued Mr. Evans' 1994 base salary for fiscal 1995 at
$250,000.
ANNUAL INCENTIVE PLAN. In January 1995, in evaluating the performance of
the Chief Executive Officer, the Committee and the Board also considered the
Company's accomplishments during fiscal 1994. Further, the Committee and the
Board generally noted that, in fiscal 1994, the Company had achieved record
profits and the Company's stock had substantially held its value since October
18, 1993, the date of the 3:2 stock split; both of which were evidence of Mr.
Evans' leadership ability. Therefore, the Committee granted Mr. Evans an award
of $175,000 under the AIP for 1994.
LONG-TERM INCENTIVE PLAN. In May 1994, Mr. Evans was awarded 20,000
Performance Restricted Shares; 10,000 with a Test Date of November 9, 1996 and
10,000 with a Test Date of May 9, 1999. In the event that such shares do not
both; (a) achieve a growth rate of 125% over the S&P 500; and (b) maintain their
value at or above the $23.875 grant price, then such shares will revert to the
Company. The Committee and the Board made similar-sized grants of Performance
Restricted Shares to Mr. Evans in 1993, 1992 and 1991. In each case, the grant
was at fair market value and was performance-based. Further, the number of
Performance Restricted Shares granted to Mr. Evans by the Committee and the
Board was based upon the same internal compensation equity considerations which
are reflected in the 1994 grants to each of the Named Executive Officers shown
in the table on page 11 of the Proxy report. In May 1994, Mr. Evans was also
awarded 30,000 Stock Options at an option price of $24.25. In May 1995, the
Board will evaluate whether it is appropriate to make additional 1991 LTIP
awards to the Chief Executive Officer for fiscal 1995, and the terms of any such
awards.
17
<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Organization and Compensation Committee are now
or were formerly officers or employees of Medusa, or any of Medusa's
subsidiaries. During fiscal year 1994, none of the executive officers of Medusa
served as a member of the board of directors, or a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
any of whose executive officers served on the Committee, or on the Board of
Directors of Medusa (such relationships are commonly known as "interlocks").
TAX MATTERS
One of the executive compensation factors which the Committee regularly
reevaluates is the anticipated tax treatment to the Company and to the executive
officers of various forms of compensation. To the greatest extent possible, the
Committee's general objectives are to both maximize the deductibility as a
business expense of executive compensation to the Company and maximize the
after-tax income of executive officers. On occasion, these dual objectives
diverge, and the Committee is faced with a difficult choice. Section 162(m) of
OBRA (the socalled "Million Dollar Compensation Cap") may confront the Committee
with such a choice. The regulatory interpretation of Section 162(m) is still
being developed and is subject to change. The Committee's intentions are also
dependent upon changes in the regulatory interpretation. It should be noted that
in 1994, in order to exclude such compensation from Section 162(m), the Board
obtained shareholder approval of the performance goals for Performance
Restricted Shares awarded under the 1991 LTIP. For 1995, the Committee wishes to
report that its present intention is to preserve the deductibility of executive
compensation to the extent reasonably practicable and to the extent such is
consistent with the Committee's other executive compensation objectives.
GENERAL MATTERS
The Committee continues to make regular evaluations, both by itself and
with the advice of independent incentive compensation consultants, and may from
time-to-time in the future, either change the type of incentive compensation
awards granted to executive officers and key employees under the 1991 LTIP, or
(with shareholder approval, as appropriate) recommend the adoption of new
incentive compensation plans.
The purpose of this report is to inform shareholders of the
responsibilities and the philosophy of the Committee with respect to executive
compensation. Neither this report nor the Performance Graph which follows is
intended to be used for any other purpose or to be incorporated by reference in
any of the Company's past or future filings with the Securities and Exchange
Commission.
THE ORGANIZATION AND COMPENSATION
COMMITTEE
Boris Yavitz, Chairman
E. Thayer Bigelow, Jr.
Dorsey R. Gardner
Dwight C. Minton
18
<PAGE> 22
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return of Medusa Corporation Common Shares against
the cumulative total return of the S&P 500 and a "Cement Industry Peer Group"
for the period using December 31, 1989 as the base and showing total return for
five fiscal years commencing January 1, 1990 and ending December 31, 1994.
<TABLE>
Comparison of Five-Year Cumulative Total Return
Medusa Common Shares, S&P 500 and Cement Industry Peer Group Indices
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Medusa Corp. 100 92.86 114.85 135.89 364.55 281.64
S&P 500 100 96.89 126.42 136.05 149.76 151.74
Peer Group 100 67.03 77.53 73.96 132.03 98.77
---------------
<FN>
(1) The Performance Graph assumes that the value of the investment in Medusa
Common Shares and each other index was $100 on December 31, 1989 and that
all dividends were reinvested.
(2) In selecting a representative Cement Industry Peer Group, Medusa was limited
by the small number of U.S.-based, publicly-traded companies which
principally manufacture portland cement.
19
<PAGE> 23
The above peer group index includes Giant Group, Ltd. (through August
1994), and its cement business successor Giant Cement Holding, Inc.
(September through December 1994) (collectively, "Giant Cement"), Holnam,
Inc. (from January 1, 1991 to December 31, 1993), Lafarge Corporation and
Southdown, Inc. Of these, Giant Cement is smaller than Medusa, and the
other three companies are larger, based upon a comparison of net sales for
calendar 1993. In order to prepare the peer group index, the cumulative
total returns of the companies were weighted at the beginning of each
measurement period on the basis of the companies' market capitalization.
Three other publicly-traded portland cement companies, which were
considered for inclusion in the peer group, were rejected due to their
smaller size, financial viability, non-U.S. operations, etc.
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OTHER TRANSACTIONS AND RELATIONSHIPS
The law firm of Kirkpatrick & Lockhart, of which Mr. Queenan is a partner,
furnished legal services to Medusa in fiscal 1994. Such legal fees did not
exceed five percent of the gross revenues of Kirkpatrick & Lockhart in 1994.
Apart from the standard director compensation arrangements (annual retainer and
meeting fees) which Mr. Queenan received, as described above on page 3, Mr.
Queenan did not personally receive fees for any legal services provided to
Medusa in fiscal 1994.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Medusa's
Officers and Directors and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "S.E.C.")
and the New York Stock Exchange. Executive officers, Directors and greater than
10% shareholders are required by S.E.C. regulation to furnish Medusa with
copies of all Section 16(a) forms which they file (Form 3, Form 4 or Form 5).
Medusa believes that during the period from January 1, 1993 to December 31,
1994 all Section 16(a) filing requirements applicable to Medusa's executive
officers, Directors and 10% shareholders were materially complied with, except
for Richard A. Brown (who was elected a Vice President on September 26, 1994),
who purchased 100 Common Shares on October 25, 1994, which purchase was not
reported to the S.E.C. until February 14, 1995. In making the above statement,
Medusa has relied upon the written representations of its executive officers
and Directors.
SELECTION OF AUDITORS
Medusa is incorporated under the laws of the State of Ohio. The General
Corporation Law of the State of Ohio, Section 1701.01 et seq. does not require
approval by shareholders of the selection of auditors. The firm of Deloitte and
Touche acted as independent auditors for Medusa for the year ended December 31,
1994 and the firm or its predecessors have acted as auditors of Medusa since
1979. As allowed by law, the Board of Directors will select the auditors for
Medusa for 1995. In accordance with Medusa's practice, a member of the firm of
Deloitte and Touche will attend the Annual Meeting, have an opportunity to make
a statement if he or she so desires and to respond to appropriate questions
which may be asked by shareholders.
20
<PAGE> 24
MATTERS NOT DETERMINED AT THE TIME OF SOLICITATION
The Board of Directors is not aware of any matters to come before the
meeting other than the election of four directors to serve three-year terms
ending in 1998. Should any other business be transacted at the meeting, then the
persons named in the enclosed form of proxy will have discretionary authority to
vote all proxies with respect thereto in accordance with their judgment.
OTHER INFORMATION
SOLICITATION OF PROXIES
The enclosed proxy is being solicited by the Board of Directors of Medusa,
and the entire cost of the solicitation will be paid by Medusa. Solicitations
may be made by personal interview, mail, telephone, and telegram and may include
requests to brokerage houses, banks, custodians, nominees, fiduciaries and other
nominee holders ("Brokers and Nominees") to forward soliciting materials to the
beneficial owners of the Common Shares held of record by such persons. To aid in
the solicitation of proxies, the Company has retained Beacon Hill Partners, Inc.
which will receive a fee for its services of $3,500 plus up to $1,000 in
expenses. Brokers and Nominees will be requested to forward the proxy materials
to the beneficial owners of the Company's Common Shares held of record by such
persons and entities and will be reimbursed for their reasonable expenses in
forwarding such material.
NEXT ANNUAL MEETING
Medusa's Regulations provide that the annual meeting of its shareholders
shall be held during the first six months following the end of each fiscal year
at such time as may be designated by the Board of Directors, the Chairman or the
President. Since the 1995 annual meeting is to be held on May 8, 1995, the
comparable date in 1996 will be May 6. Therefore, appropriate proposals of
shareholders intended to be presented at the Annual Meeting of Shareholders to
be held in 1996 must be received by Medusa for inclusion in the Proxy Statement
and form of proxy relating to that meeting no later than November 22, 1995.
VOTING BY PROXY
Shareholders who do not expect to attend in person are urged to sign, date
and return the enclosed proxy in the envelope provided. In order to avoid
unnecessary expense, we ask your cooperation in mailing in your proxy promptly,
irrespective of how large or small your shareholdings may be.
By Order of the Board of Directors
JOHN P. SIEGFRIED
Secretary
March 24, 1995
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<PAGE> 26
MEDUSA CORPORATION P R O X Y
P. O. BOX 5668 THIS PROXY IS SOLICITED ON BEHALF OF
CLEVELAND, OHIO 44101 THE BOARD OF DIRECTORS
The undersigned hereby appoints R. S. EVANS and G. E. UDING, JR. as Proxies,
each with the power to appoint his or her substitute, and hereby authorizes
them to represent and to vote, as designated below, all the Common Shares of
Medusa Corporation held of record by the undersigned on March 13, 1995, at the
Annual Meeting of Shareholders to be held on May 8, 1995, or any adjournment
thereof.
1. ELECTION OF FOUR DIRECTORS TO SERVE THREE-YEAR TERMS.
Nominees: Mone Anathan, III
Richard S. Forte
Dorsey R. Gardner
Jean Gaulin
(Continued, to be voted and signed on the other side)
No. 00000
<PAGE> 27
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<S> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD
1. Election of / / / / 2. In their discretion, the Proxies are
Directors authorized to transact such other business
(see reverse) as may properly come before the meeting.
FOR, except vote withheld with respect to the following nominee(s):
_____________________________________________________________________ THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED TO
ELECT FOUR DIRECTORS TO SERVE THREE-YEAR TERMS.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
SIGNATURE _____________________________________________________ DATE ___________
(Signature of Shareholder or Authorized Representative)
SIGNATURE _____________________________________________________ DATE ___________
(Signature if Held Jointly)
Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
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