==============================================================================
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:
<TABLE>
<S> <C>
/ / 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
</TABLE>
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/ No fee required.
/ / 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>
===========================================================================
(MEDUSA CORPORATION LOGO)
LEE AND MONTICELLO -- CLEVELAND HEIGHTS, OHIO -- 216/371-4000
MAIL ADDRESS
P.O. BOX 5668
CLEVELAND, OHIO
44101
March 14, 1997
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, April 21, 1997, 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 1996, 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,
/s/ R. S. EVANS
R. S. EVANS
Chairman and
Chief Executive Officer
<PAGE>
MEDUSA CORPORATION
P.O. BOX 5668, CLEVELAND, OHIO 44101
_______________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1997
DATED: MARCH 14, 1997
_______________
The 1997 Annual Meeting of Shareholders of Medusa Corporation will be
held at the Sheraton Stamford Hotel, One First Stamford Place, Stamford,
Connecticut, on Monday, April 21, 1997, at 2:00 P.M. Eastern Daylight Time,
for the following purposes:
1. To elect three Directors to serve three-year terms; and
2. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 3, 1997 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 OF SHAREHOLDERS. 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>
MEDUSA CORPORATION
P.O. BOX 5668, CLEVELAND, OHIO 44101
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1997
DATED: MARCH 14, 1997
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, April
21, 1997, at 2:00 P.M., Eastern Daylight Time. The Board of Directors
has fixed the close of business on March 3, 1997, as the record date
for the determination of shareholders entitled to notice of and to vote
at the Annual Meeting of Shareholders.
OUTSTANDING SHARES AND REQUIRED VOTES
On March 3, 1997, Medusa had outstanding and entitled to vote at
the Annual Meeting of Shareholders 16,996,006 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.
Medusa is incorporated under the laws of the State of Ohio. In
accordance with the General Corporation Law of Ohio and the Company's
Code of Regulations, the holders of shares entitling them to exercise
a majority of the voting power of the Company, present by person or by
proxy, will constitute a quorum for the meeting. Proxies returned by
shareholders will be voted in accordance with the instructions
indicated thereon. 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. Three Directors have been nominated to hold office
for three-year terms until the Annual Meeting of Shareholders to be held
in 2000 and until their successors are elected and qualified. Unless
instructed otherwise, the proxy will be voted for election of the three
Nominees for Director named in the following table, whose election has
been proposed and recommended by the Board of Directors. In the
<PAGE> 1
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.
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 2000
R. S. EVANS
Age 52; 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
1992 to 1995. Other Directorships: Crane Co., Fansteel Inc., HBD
Industries, Inc.
DWIGHT C. MINTON
Age 62; Director since 1988; Chairman of the Board, Church & Dwight
Co., Inc., Princeton, NJ (Manufacturer of Consumer and Specialty
Products). Other Directorships: Church & Dwight Co., Inc., Crane
Co., First Brands Corporation.
GEORGE E. UDING, JR.
Age 64; Director since 1993; President and Chief Operating Officer of
Medusa, 1994 to present; Consultant, 1992 to 1993; Senior Vice
President, ESSROC Corporation through 1991.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1998
MONE ANATHAN, III
Age 57; Director since 1992; President of Filene's Basement Corp.,
Wellesley, MA (Retailer), 1984 to present. Other Directorships:
Filene's Basement Corp., Crane Co., Brookstone, Inc.
RICHARD S. FORTE
Age 52; Director since 1988; Chairman, Forte Cashmere Company, Inc.,
Woonsocket, RI (Processor and Dealer of Luxury Natural Fibers), 1987
to present; President, Dawson Forte Cashmere Co. Other Directorships:
Crane Co.
DORSEY R. GARDNER
Age 54; Director since 1989; President, Kelso Management Company,
Inc., Boston, MA. (Investment Management). Other Directorships:
Crane Co., Filene's Basement Corp.
JEAN GAULIN
Age 54; Director since 1995; Vice Chairman, President and Chief
Operating Officer of Ultramar Diamond Shamrock Corporation, San
Antonio, TX (Petroleum Refining and Marketing), December, 1996 to
present; Chairman and Chief Executive Officer of Ultramar
Corporation, Greenwich, CT, 1992 to November, 1996; Chief Executive
Officer of Ultramar PLC and President, Chief
<PAGE> 2
Executive Officer and Chairman of American Ultramar Limited, 1989
to 1992. Other Directorships: Ultramar Diamond Shamrock
Corporation, Crane Co., Quebec Telephone.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999
E. THAYER BIGELOW, JR.
Age 55; Director since 1988; President and Chief Executive Officer,
Time Warner Cable Programming, Inc., Stamford, CT, a subsidiary of
Time Warner Entertainment LP (Basic Cable Television Program
Services), 1991 to present. Other Directorships: Crane Co., Lord
Abbett Mutual Funds.
CHARLES J. QUEENAN, JR.
Age 66; Director since 1988; Senior Counsel, Kirkpatrick &
Lockhart LLP, Pittsburgh, PA. (Attorneys-at-Law). Other
Directorships: Crane Co., Allegheny Teledyne Corporation.
BORIS YAVITZ
Age 73; Director since 1988; Principal, Lear, Yavitz & Associates
(Consultants); Paul Garrett Professor Emeritus of Public Policy
and Business Responsibility and Dean Emeritus, Columbia University
Graduate School of Business, New York, NY. Other Directorships:
Crane Co., Israel Discount Bank of New York.
MEETINGS AND BOARD COMMITTEES
The Board of Directors met nine times during 1996. The average
attendance of Directors at those meetings was approximately 94%. Each
Director attended 75% or more of the Board of Directors 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 current
members of which are, Messrs. Bigelow, Forte, Gardner and Queenan
(Chairman), met three times in 1996 with management and with Medusa's
internal and 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. Gardner,
Gaulin, Minton and Yavitz (Chairman), met three times in 1996. (See
the Organization and Compensation Committee Report beginning on page 12.)
COMPENSATION OF DIRECTORS
STANDARD ARRANGEMENTS
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
1988 Non-Employee Director Restricted Stock Plan. Once awarded, the
Common Shares are subject to forfeiture if the Director ceases to
remain a Director until Medusa's next annual meeting of shareholders,
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 of 1996, each non-employee
<PAGE> 3
Director received 510 restricted Common Shares pursuant to the 1988
Non-Employee Director Restricted Stock Plan. Non-employee Directors
also receive $250 for each Board of Directors meeting attended.
Further, non-employee Directors who are members of Committees of the
Board of Directors receive $250 for each Committee meeting attended.
OTHER ARRANGEMENTS
In fiscal 1996, 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, 1996, of Common Shares, including Common
Shares as to which a right to acquire ownership exists (including,
without limitation, 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:
<TABLE>
BENEFICIAL OWNERSHIP AT DECEMBER 31, 1996
<CAPTION>
Common Percent
Name Shares of Class
---- --------- --------
<S> <C> <C>
Mone Anathan, III ........................ 3,100 ---
E. Thayer Bigelow, Jr. ................... 7,469 ---
R. S. Evans .............................. 679,301 4.0%
Richard S. Forte ......................... 8,034 ---
Dorsey R. Gardner ........................ 4,952 ---
Jean Gaulin .............................. 2,650 ---
Dwight C. Minton ......................... 20,657 0.1
Charles J. Queenan, Jr. .................. 16,654 0.1
George E. Uding, Jr. ..................... 106,634 0.6
Boris Yavitz ............................. 11,631 ---
Robert J. Kane ........................... 109,503 0.6
R. Breck Denny ........................... 27,150 0.2
John P. Siegfried ........................ 94,637 0.6
All of the above and other executive
officers as a group (16 persons) ....... 1,161,448 6.8%
</TABLE>
Notes:
- - -----
- - -- Each person has sole voting and investment power with respect to
the Common Shares listed, unless otherwise indicated.
<PAGE> 4
- - -- 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.
- - -- The shareholdings shown in the above table do not include Common
Shares held under the Medusa Corporation Savings and Investment
Plan (the "401(k) Plan") for Messrs. Uding, Kane, Denny,
Siegfried and all executive officers as a group, which are 774,
1,208, 257, 3,293 and 7,507 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 3, 1997 by Messrs. Evans,
Uding, Kane, Denny, Siegfried and all executive officers as a
group, which are 37,500, 15,000, 3,000, 6,000, 6,000 and 80,000
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); or 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 3, 1997:
<TABLE>
<CAPTION>
Number of Percent
Common of
Name and Address Shares Class
---------------- --------------- --------
<S> <C> <C>
FMR Corp.
82 Devonshire St.
Boston, MA 02109 ............. 1,927,004 (1) 11.3%
The Crane Fund
100 First Stamford Place
Stamford, CT 06902 ........... 1,560,370 (2) 9.2
</TABLE>
- - ---------------
(1) As reported in a Schedule 13G received by Medusa on February 19,
1997 from FMR Corp. ("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.
<PAGE> 5
(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. On March 3,
1997, the trustees of The Crane Fund were G. A. Dickoff, A. I.
duPont, R. B. Phillips, M. L. Raithel and D. S. Smith, 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 have any direct beneficial interest in, and all disclaim
beneficial ownership of Common Shares held by The Crane Fund.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows information concerning annual and long-term
compensation for the fiscal years ended December 31, 1996, 1995 and
1994 for the Chief Executive Officer and the four other Named
Executive 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 ................ 1996 $275,000 $211,971 $342,660 $ -0- 30,000 $323,438 $10,000
Chairman of the Board & 1995 250,000 139,466 397,117 -0- 30,000 275,625 8,047
Chief Executive Officer 1994 250,000 175,000 209,725 -0- 30,000 225,000 -0-
George E. Uding, Jr.(4) .... 1996 330,000 254,366 237,124 97,224(5) 30,000 -0- 10,000
President & 1995 300,000 167,360 169,764 99,181(5) 30,000 -0- 7,536
Chief Operating Officer 1994 220,000 154,000 22,500 -0- 30,000 -0- 4,686
Robert J. Kane ............. 1996 162,000 124,870 239,258 -0- 15,000 107,813 7,454
Senior Vice President 1995 155,000 86,469 157,339 -0- 15,000 91,875 5,395
1994 118,333 82,833 99,356 -0- 12,000 75,000 4,008
R. Breck Denny(6) .......... 1996 156,750 120,824 47,693 -0- 13,500 -0- 7,213
Vice President-Finance 1995 150,000 83,680 37,626 -0- 12,000 -0- -0-
and Treasurer 1994 78,598 29,167 -0- -0- 9,000 -0- 102,609
John P. Siegfried .......... 1996 135,000 104,059 203,986 -0- 12,000 107,813 6,226
Vice President, Secretary 1995 130,000 72,522 173,326 -0- 12,000 91,875 5,527
and General Counsel 1994 115,000 80,500 112,224 -0- 10,500 75,000 5,237
</TABLE>
__________________
(1) Other Annual Compensation reported in Column (e) includes non-
preferential dividends paid on restricted shares, for which the
restrictions have not lapsed ("Restricted Shares"). As noted
below, where the performance restricted shares ("Performance
Restricted Shares") achieve an established target on an
established test date and the restrictions lapse, the participant
qualifies for
<PAGE> 6
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
("Tax Gross-up"). On May 6, 1996, the 5-year test date for the
May 6, 1991 award, Messrs. Evans, Kane and Siegfried received Tax
Gross-ups of $264,163, $99,425 and $99,425, respectively. On
December 26, 1996, income adjustments were made due to fiscal 1995
tax gross-ups for Messrs. Evans, Uding, Kane, Denny and Siegfried
of $9,183, $3,185, $3,225, $706 and $3,605, 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.
(2) The number of Restricted Shares for which the restrictions have
not lapsed, held by each of the Named Executive Officers and the
aggregate value thereof, as of December 31, 1996 were as follows:
<TABLE>
<CAPTION>
# of
Restricted Aggregate
Shares Held Value
----------- ------------
<S> <C> <C>
R. S. Evans ..................... 89,908 $3,113,065
George E. Uding, Jr. ............ 89,119 3,085,745
Robert J. Kane .................. 38,130 1,320,251
R. Breck Denny .................. 24,235 839,137
John P. Siegfried ............... 33,908 1,174,065
</TABLE>
Non-preferential dividends are paid on Restricted Shares for
which the restrictions have not lapsed. The "Aggregate Value" in
the above chart has been calculated based upon the fair market
value of one Medusa Corporation Common Share, which, on December
31, 1996, was $34.625 (the "Fair Market Value"). Included in the
above are Performance Restricted Shares granted to the Named
Executive Officers since fiscal 1991, which are reported either
in the above table or in the Summary Compensation Table as "LTIP
Payouts".
(3) All Other Compensation reported in column (i) includes; a)
amounts contributed for fiscal 1996 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, on up to
$9,000, which was the maximum amount of compensation which could
have been deferred in a 401(k) Plan in fiscal 1996, the 401(k)
Plan ("Company Match")), and b) the Top Hat Plan Company Match
received in fiscal 1996 by Messrs. Evans, Uding, Kane, Denny and
Siegfried of $10,000, $5,500, $2,954, $2,712 and $1,725,
respectively. (The "Top Hat Plan" is an Executive Savings Plan
which supplements the 401(k) Plan and includes as participants,
the Named Executive Officers. The only other Top Hat Plan benefit
which participants receive from the Company is interest at the 10-
year Treasury rate on compensation which the participants elect
to defer under the Top Hat Plan.) In fiscal 1994, Mr. Denny
received a reimbursement from Medusa of moving expenses of $98,234.
(4) Mr. Uding was elected President of Medusa as of January 1, 1994.
(5) In May of 1995 and 1996, Mr. Uding received a net of 2,647 and
2,166, respectively, SERP-Equivalent shares (as defined below),
the restrictions upon which shares immediately lapsed under the
terms of the plan because he had attained age 62.
(6) Mr. Denny was elected Vice President-Finance and Treasurer of
Medusa as of September 1, 1994.
<PAGE> 7
STOCK OPTION GRANTS IN LAST FISCAL YEAR:
The table below shows all individual grants of Stock Options to
the Named Executive Officers of the Company during the fiscal year
ended December 31, 1996:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/
Underlying SAR's(1)
Options/ Granted to
SAR's(1) Employees Exercise or Grant Date
Granted in Fiscal Base Price Expiration Present
Name (#) Year ($/Sh) (2) Date Value ($)(3)
- - ------------------------ ---------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
R. S. Evans ............ 30,000 11.41% $28.8125 05/06/06 $365,700
George E. Uding, Jr. ... 30,000 11.41 28.8125 05/06/06 365,700
Robert J. Kane ......... 15,000 5.70 28.8125 05/06/06 182,850
R. Breck Denny ......... 13,500 5.13 28.8125 05/06/06 164,565
John P. Siegfried ...... 12,000 4.56 28.8125 05/06/06 146,280
</TABLE>
_____________
(1) Since fiscal 1990, the Company has not granted any stock
appreciation rights ("SAR's").
(2) 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 unless exercised (with respect to fiscal 1996
awards), expire ten years after grant. Except with respect to
Senior Executive Officers (the Chairman and the President), 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.
(3) The Stock Options were valued using the Black-Scholes Method
which indicated a value of $12.19 per option. The assumptions
used were: Volatility .318, Risk-Free Interest Rate 6.48% based
on the Bear, Stearns & Co.'s Treasury Strip Rate Maturing May
2006; Dividend Yield 2.08% and a ten-year time of exercise.
Since the actual value, if any, which an optionee may realize
depends on the excess of the stock price over the exercise price
on the date the option is exercised, there is no assurance that
the value will be at or near the value estimated using the Black-
Scholes Method.
OPTION/SAR'S EXERCISES AND UNEXERCISED VALUES AT YEAR-END
The table below shows information with respect to the exercise(s)
of Stock Options which were granted from fiscal 1994 through fiscal
1996 under the Medusa Corporation 1991 Long-Term Incentive Plan (the
"1991 LTIP") to the Named Executive Officers, the value realized in
fiscal 1996 as a result of
<PAGE> 8
such exercise(s), the Stock Options which remained unexercised at
December 31, 1996 and the value thereof:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options/SAR's at Options/SAR's at
on Value December 31, 1996(#) December 31, 1996($)
Exercise Realized -------------------------- --------------------------
Name (#)(1) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. S. Evans ........... -0- $ -0- 37,500 52,500 $387,187 $405,937
George E. Uding, Jr. .. 3,020 182,968 15,000 52,500 153,750 405,937
Robert J. Kane ........ 1,630 108,468 3,000 25,500 31,125 195,187
R. Breck Denny ........ 515 33,796 6,000 21,750 61,500 154,171
John P. Siegfried ..... 1,090 74,320 6,000 20,625 61,500 158,484
</TABLE>
- - ---------------
(1) Since fiscal 1990, the Company has not granted any stock
appreciation rights (SAR's).
(2) Since fiscal 1995, no Named Executive Officer has received any
value from any exercise of an SAR.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The table below shows information with respect to Performance
Restricted Shares awarded pursuant to the 1991 LTIP to the Named
Executive Officers during the fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
Estimated Future Payouts under Non-Stock
Price-Based Plans
------------------------------------------
(a) (b) (c) (d) (e) (f)
Number of
Share, Units Performance or
Or Other Other Period Until
Rights Maturation or Threshold Target Maximum
Name (#)(1) Payout (2) ($ or #) ($ or #) ($ or #)
- - ----------------------- ------------ --------------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
R. S. Evans ........... 17,787 20% per year; 3,559 shares 3,557 shares; 17,787 shares
from 5/7/97 to 5/6/01 on 5/7/97 next 3 years on 5/6/01
George E. Uding, Jr. .. 16,669 20% per year; 3,337 shares 3,333 shares; 16,669 shares
from 5/7/97 to 5/6/01 on 5/7/97 next 3 years on 5/6/01
Robert J. Kane ........ 9,624 20% per year; 1,928 shares 1,924 shares; 9,624 shares
from 5/7/97 to 5/6/01 on 5/7/97 next 3 years on 5/6/01
R. Breck Denny ........ 8,265 20% per year; 1,653 shares 1,653 shares; 8,265 shares
from 5/7/97 to 5/6/01 on 5/7/97 next 3 years on 5/6/01
John P. Siegfried ..... 6,233 20% per year; 1,249 shares 1,246 shares; 6,233 shares
from 5/7/97 to 5/6/01 on 5/7/97 next 3 years on 5/6/01
</TABLE>
- - ---------------
(1) The fair market value (the average of the high and low prices on
the New York Stock Exchange Composite Transactions Tape) of one
Medusa Corporation Common Share on the May 6, 1996 award date
(the "Award Date") was $28.8125.
(2) In respect to fiscal 1996 awards, the number of Restricted Shares
was divided into two portions, as follows: a) a Supplemental
Executive Retirement Plan ("SERP-Equivalent") portion, consisting
of actuarially-determined time-based Restricted Shares, which for
Messrs. Evans, Uding, Kane,
<PAGE> 9
Denny and Siegfried were 2,213, 3,331, 376, 735 and 1,767,
respectively; and b) a Performance Restricted Share portion, the
balance of the award, which consisted of the performance-based
shares listed on the chart above. A 20% portion of the Performance
Restricted Share award is tested annually during the 5-year
restriction period on each anniversary of the Award Date (the
"Test Date"). In order for the share restrictions to fully lapse,
two requirements must be met: (i) the value of one Common Share
(adjusted for stock distributions, but not reflecting dividends)
may not decline from the Award Date to a Test Date; and (ii) the
Common Share growth rate must meet or exceed 110% of the growth
rate of the Cement Industry Peer Group (see page 16 of the Proxy
Statement), when measured from the Award Date to a Test Date.
There is also a provision for "Partial Lapses" with respect to
proportionate amounts of the shares in 10% increments, if more
than 101%, but less than 110% of the growth rate performance
objective is attained (i.e., a 101% growth rate causes the
restrictions to lapse with respect to 10% of the shares, etc.).
If, when tested, the restrictions on all or part of a 20% portion
of the award fail to lapse, then such portion or portions are not
forfeit until they are retested, as applicable, during the 5-year
restriction period. Upon the lapse of restrictions on Performance
Restricted Shares, the participant will receive a Tax Gross-up.
During the performance period, the Performance Restricted Shares
may be voted and pay non-preferential dividends to the participant.
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 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 1997 at age 65 with selected periods of service and
assumes payments are made on a straight life annuity basis:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Estimated Annual Benefits upon Retirement in 1997
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 $ 6,727 $13,500 $20,274 $27,048 $33,822 $40,596 $ 47,370
125,000 8,423 16,983 25,542 34,102 42,662 51,221 59,781
150,000 10,119 20,464 30,810 41,155 51,501 61,846 72,192
175,000 11,816 23,947 36,078 48,209 60,340 72,471 84,602
200,000 13,512 27,429 41,346 55,263 69,179 83,096 97,013
225,000 15,209 30,911 46,612 62,316 78,019 93,721 109,424
250,000 16,905 34,393 51,882 69,370 86,858 104,346 121,834
</TABLE>
- - ---------------
(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
<PAGE> 10
the Pension Plan in 1997 is $160,000 and the maximum annual
benefit payable under the Pension Plan in 1997 is $125,000.
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.
The above table covers all of the Named Executive 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 14, 1997,
the years of credited service for Messrs. Evans, Uding, Kane, Denny
and Siegfried were: 9, 3, 17, 2 and 17 years, respectively.
In fiscal 1995, the Board of Directors approved a Supplemental
Executive Retirement Equivalent Plan (the "SERP-Equivalent Plan") for
executive officers. The SERP-Equivalent Plan awards to the Named
Executive Officers in fiscal 1996 are described on page 9 of the Proxy
Statement. As stated below in its report, the Board of Directors or
the Organization and Compensation Committee, as applicable, has annually
awarded a comparable number of restricted shares to the executive
officers. From fiscal 1991 through fiscal 1994, such were solely
Performance Restricted Shares. However, beginning in fiscal 1995 and
continuing in fiscal 1996, an actuarially-based number of shares were
"carved-out" from the restricted share award and restricted for a period
of five years, or until the participant reaches age 62, whichever occurs
sooner. The SERP-Equivalent Plan awards are designed to supplement the
Medusa qualified pension plan by providing the maximum pension benefit
at 15 rather than 35 years of service, and are based upon the Annual
Incentive Plan (the "AIP") compensation in addition to base salary.
In fiscal 1996, the balance of the 1991 LTIP awards to the Named
Executive Officers were in Performance Restricted Shares (see page 9
of the Proxy Statement) or Stock Options (see page 8 of the Proxy
Statement).
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.
<PAGE> 11
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 is responsible for the compensation of the Chief Executive
Officer. The Committee has been delegated authority by the Board 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, hereby reports to the shareholders of the
Company, as follows:
COMPENSATION PHILOSOPHY
The fundamental compensation philosophy of the Board 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 extent possible, the Company bases
compensation upon objective Company and individual performance
criteria.
The executive officers of the Company currently receive
compensation from four "quadrants", as follows: a) base salary; b)
awards under 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 all four quadrants, 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 competitive.
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. 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 1996, the Company budgeted 3.9% for merit
salary increases during calendar 1997. 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
<PAGE> 12
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. In its 1997 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.
ANNUAL INCENTIVE PLAN. Each executive officer is eligible for
additional compensation under Medusa's AIP, 70% of which is contingent
upon the Company's results against objective pre-established financial
goals, with up to an additional 30% being discretionary for extra-
ordinary individual contributions. 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
individual contributions. 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 indicator of financial results used by the
Committee to determine whether an executive officer receives an AIP
award for the year. For fiscal 1996, the ROCE target for which 100% of
the corporate bonus pool could be awarded was 40.3% (the "AIP Target").
As of December 31, 1996, the Company's ROCE (for corporate AIP purposes)
was 45.5%, which significantly exceeded the corporate AIP Target. For
fiscal 1996, the Company also utilized other AIP targets for its cement,
aggregates and minerals divisions and made AIP awards to participants
in those divisions based upon results attained verses such targets.
If the corporate results merely attain the AIP Target, then AIP
compensation does not exceed 50% of base compensation. However, since
in fiscal 1996, the corporate results significantly exceeded the AIP
Target, the maximum amount of the AIP award for Named Executive Officers
was 158% of the AIP Target. For key employee AIP participants, target
awards are either 50%, 40% or 30% of such employee's base salary, based
upon the participants' responsibilities, subject to the same adjustments
described above. If the Company's target results are not achieved, the
Committee has the discretion to pay a smaller percentage than an AIP
target. However, by policy, no AIP awards are made unless the Company
is profitable.
LONG-TERM INCENTIVE PLAN. In 1991, the shareholders of the
Company approved the 1991 LTIP, and in 1994 and 1996, the shareholders
approved amendments to the 1991 LTIP. The 1991 LTIP is an "omnibus
plan", which allows the Committee significant flexibility and
discretion in granting restricted shares, stock options, stock
appreciation rights, performance awards and other awards. Since 1991,
the Committee has made six consecutive annual grants of Performance
Restricted Shares under the 1991 LTIP. In fiscal 1996, the Committee
also granted Stock Options to executive officers. In fiscal 1996, the
Company did not adjust or amend the exercise price of any Stock
Options previously awarded to the Named Executive Officers. Stock
Options were also awarded to certain key employees of the Company
under the 1991 LTIP. (See page 9 and page 8 of the Proxy Statement
for a more detailed description of Performance Restricted Share and
Stock Option awards.)
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 shareholders. On May 6, 1996,
the second (5-year) test date for the 1991 award, the Performance
Restricted Shares had
<PAGE> 13
grown by 24% per year and thus the restrictions lapsed. During fiscal
1996, there were three other tests of awards made in 1993, 1994 and
1995 for which the restrictions did not lapse. The Committee cites
these mixed results as evidence that, performance goals originally
selected were a "reach", thus successfully aligning the interests of
management with those of the Company's shareholders.
In 1995, the Committee amended its criteria for Performance
Restricted Share awards by changing the peer group comparison, the test
date intervals, and providing for greater flexibility over the five-year
restriction period. Shareholders continue to be able to monitor the
performance of Performance Restricted Shares, since the Cement Industry
Peer Group comparison is a required market measure in the Performance
Graph which appears on page 16 of the Proxy Statement.
SECURITY PACKAGE. One of the reasons why the Committee retains
outside executive compensation consultants is the Committee's desire
for assurance that the Company's executive compensation remains
sufficient to attract, retain and motivate highly qualified executive
officers. In fiscal 1996, with such consultants' help, the substantive
elements in Medusa's executive compensation security package were the
qualified Pension Plan (see page 10 of the Proxy Statement), Severance
Agreements (see page 11 of the Proxy Statement), the 401(k) Plan (see
page 7 of the Proxy Statement), the Top Hat Plan (see page 7 of the
Proxy Statement), and the SERP-Equivalent Plan (see page 11 of the Proxy
Statement).
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,
following a process similar to that described above for executive
officers, except that the full Board is included in the approval
process for the Chief Executive Officer's compensation. In January of
1997, 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 Board seeks not only to be
competitive with other companies, both generally and in the
construction products industry, but also to have the compensation of
the Chief Executive Officer largely dependent upon the Company's
attainment of objective performance goals. This arrangement provides
an incentive for the Chief Executive Officer to provide the leadership
necessary to attain the Company's strategic objectives, while also
providing compensation stability in the form of the base salary
quadrant of the total compensation of the Chief Executive Officer. In
January of 1997, the Board increased Mr. Evans' base salary for fiscal
1997 to $285,000.
ANNUAL INCENTIVE PLAN. When it evaluated the performance of the
Chief Executive Officer in January of 1997, the Board also concluded
that, during fiscal 1996, the Company had substantially attained its
objectives, including, without limitation, setting record shipment
levels, profits and earnings per share. Therefore, for fiscal 1996,
the Board granted Mr. Evans an AIP award of $211,971.
LONG-TERM INCENTIVE PLAN. In May of 1996, the Board awarded Mr.
Evans 20,000 restricted shares. Of these, 2,213 were SERP-Equivalent
Plan restricted shares, the restriction upon which lapse after five
years, and 17,787 were Performance Restricted Shares with five annual
test dates from May 7, 1997
<PAGE> 14
to May 6, 2001. In May of 1996, the Board also awarded Mr. Evans 30,000
non-qualified Stock Options at an option price of $28.8125.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Organization and Compensation
Committee is now or was formerly an officer or employee of Medusa, or
any of Medusa's subsidiaries. During fiscal 1996, 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
(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 for the Company
and for 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 for the Company and maximize the after-tax income for
executive officers. On occasion, these dual objectives diverge, and
the Committee is faced with a difficult choice. Section 162(m) of the
Code (the so-called "Million Dollar Compensation Cap") may confront
the Committee with such a choice. While to-date, the Committee has
not been required to confront this issue in practice, the Committee
recognizes that deferral of compensation to a future tax year would be
an acceptable method to preserve the deductibility of any compensation
to the Named Executive Officers which exceeds the Million Dollar
Compensation Cap.
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 in order to make them more effective in achieving
their respective objectives.
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
Dorsey R. Gardner
Jean Gaulin
Dwight C. Minton
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a line graph which compares 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 (as defined below), for the period using
December 31, 1991 as the base and showing the total return for five
fiscal years commencing January 1, 1992 and ending December 31, 1996:
Comparison of Five-Year Cumulative Total Return
Medusa Common Shares, S&P 500 and Cement Industry Peer Group Indices
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Medusa 100 118.32 317.41 245.21 270.52 357.68
S&P 500 100 107.62 118.46 120.03 165.13 203.05
Peer Group 100 111.93 173.87 140.88 171.77 201.65
</TABLE>
- - ---------------
(1) The Performance Graph assumes that the value of the investment in
Medusa Common Shares and each other index was $100 on December
31, 1991 and that all dividends were reinvested.
<PAGE> 16
(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. The
above peer group index includes most of the publicly-traded U.S.
cement companies; Giant Group, Ltd. (through August 1994) and its
cement business successor, Giant Cement Holding, Inc. (since
September 1994), Lafarge Corporation, Lone Star Industries, Puerto
Rican Cement Co., Inc., Southdown, Inc. and Texas Industries. 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.
OTHER TRANSACTIONS AND RELATIONSHIPS
The law firm of Kirkpatrick & Lockhart LLP, of which Mr. Queenan
is Senior Counsel, furnished legal services to Medusa in fiscal 1996.
Such legal fees did not exceed five percent of the gross revenues of
Kirkpatrick & Lockhart LLP in 1996. 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 any fees for legal services which Kirkpatrick &
Lockhart LLP provided to Medusa in fiscal 1996.
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, 1995 to December 31, 1996 all
Section 16(a) filing requirements applicable to Medusa's executive
officers, Directors and 10% shareholders were materially complied
with. In making the above statement, Medusa has relied upon the
written representations of its Directors and executive officers.
SELECTION OF AUDITORS
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 & Touche LLP acted as independent
auditors for Medusa for the year ended December 31, 1996, 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 1997. In accordance with Medusa's practice, a member of
the firm of Deloitte & Touche LLP will attend the Annual Meeting of
Shareholders, 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.
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 three directors to serve three-
year terms ending in 2000. Should any other business be
<PAGE> 17
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,
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 $1,500 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 Code of Regulations provides that annual meetings 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 1997 Annual
Meeting of Shareholders is to be held on April 21, 1997, the
comparable date in 1998 will be April 20. Therefore, appropriate
proposals of shareholders intended to be presented at the Annual
Meeting of Shareholders to be held in 1998 must be received by Medusa
for inclusion in the Proxy Statement and form of proxy relating to
that meeting no later than November 14, 1997.
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 14, 1997
<PAGE> 18
========================================================================
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 of the Common Shares of Medusa Corporation held of record by the
undersigned on March 3, 1997, at the Annual Meeting of Shareholders to
be held on April 21, 1997, or any adjournment thereof.
1. ELECTION OF THREE DIRECTORS TO SERVE THREE-YEAR TERMS.
Nominees: R. S. Evans
Dwight C. Minton
George E. Uding, Jr.
(Continued, to be voted and signed on the other side)
================================================================================
<TABLE>
<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 authorized to
Directors transact such other business as may properly come
(see reverse) 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 FOR THE ELECTION OF THREE DIRECTORS TO
SERVE THREE-YEAR TERMS (ITEM 1).
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature _____________________________________ Dated ____________
Signature _____________________________________ Dated ____________
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.
</TABLE>
==========================================================================
