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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MISSISSIPPI CHEMICAL CORPORATION
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(Name of Registrant as Specified in its Charter)
BOARD OF DIRECTORS OF MISSISSIPPI CHEMICAL CORPORATION
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF MISSISSIPPI CHEMICAL APPERS HERE]
P.O. BOX 388
YAZOO CITY, MISSISSIPPI 39194
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 10, 1998
As a shareholder of Mississippi Chemical Corporation, a Mississippi
corporation (the "Company"), you are hereby given notice of and invited to
attend in person or by proxy the Annual Meeting of Shareholders of the Company
to be held at the Owen Cooper Administration Building, Highway 49 East, Yazoo
City, Mississippi 39194, on Tuesday, November 10, 1998, at 9:00 a.m. local
time, for the following purposes:
1. To elect four members to the Board of Directors (the "Board") to serve
for three years or until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Board has fixed the close of business on September 2, 1998, as the
Record Date for the determination of shareholders entitled to notice of and to
vote at such meeting and any adjournments or postponements thereof. Election
of each nominee for director requires a plurality of the votes cast.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING, TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING, PLEASE DATE, EXECUTE, AND MAIL PROMPTLY THE ENCLOSED PROXY CARD
IN THE ENCLOSED STAMPED ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
By Order of the Board,
/s/ ROSALYN B. GLASCOE
ROSALYN B. GLASCOE
Corporate Secretary
Yazoo City, Mississippi
September 28, 1998
YOUR VOTE IS IMPORTANT.
PLEASE DATE, EXECUTE, AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
THE BOARD OF THE COMPANY UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR EACH OF THE NOMINEES FOR DIRECTOR.
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MISSISSIPPI CHEMICAL CORPORATION
1998 PROXY STATEMENT
VOTING INFORMATION
PURPOSE
This Proxy Statement and the accompanying proxy card are being mailed to
Mississippi Chemical Corporation (the "Company") shareholders beginning
September 28, 1998. The Company's Board of Directors (the "Board") is
soliciting proxies to be used at the 1998 Annual Meeting of Shareholders which
will be held on November 10, 1998, at the time and place stated in the Notice
of Annual Meeting accompanying this Proxy Statement (the "Annual Meeting").
Proxies are solicited to give all shareholders of record an opportunity to
vote on matters presented at the Annual Meeting.
RECORD DATE
Only holders of record on September 2, 1998 (the "Record Date"), are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof.
SHARES OUTSTANDING
There were issued and outstanding 26,999,785 shares of the Company's common
stock on the Company's Record Date.
VOTING OF THE SHARES
Each holder of the Company's common stock will be entitled to one vote, in
person or by proxy, for each share standing in his or her name on the books of
the Company on the Company's Record Date on any matter submitted to a vote of
the Company's shareholders. The presence, in person or by proxy, of holders of
record of a majority of the shares entitled to vote constitutes a quorum for
action at the Annual Meeting. Abstentions and broker nonvotes are counted for
purposes of determining the presence or absence of a quorum for transaction of
business. All shares represented by a properly executed proxy will be voted in
accordance with the directions on such proxy. If no directions are given to
the contrary on such proxy, the shares of the Company's common stock
represented by such proxy will be voted FOR approval of all proposals
addressed at the meeting. It is not anticipated that any matters will be
presented at the Annual Meeting other than as set forth in the Notice of
Annual Meeting. If, however, other matters are properly presented at the
Annual Meeting, the proxy will be voted in accordance with the best judgment
of the person or persons voting the proxy.
VOTE REQUIRED TO ELECT DIRECTOR NOMINEES
Director nominees are required to receive a plurality of votes cast by the
shares entitled to vote in order to be elected.
REVOCABILITY OF PROXIES
A proxy for use at the Annual Meeting is enclosed with this Proxy Statement.
A shareholder of the Company executing and returning a proxy may revoke it at
any time prior to the voting thereof either by revoking the proxy in person at
the Annual Meeting or by delivering a signed written notice of revocation to
the office of the Corporate Secretary of the Company (P.O. Box 388, Yazoo
City, Mississippi 39194) before the Annual Meeting begins.
SOLICITATION OF PROXIES
The expense of soliciting proxies for the meeting, including the cost of
preparing, assembling, and mailing the notice, proxy card, and Proxy Statement
and the reasonable costs of brokers, nominees, and fiduciaries in
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supplying proxies to beneficial owners, will be paid by the Company. The
solicitation will be made by the use of the mails and directly by directors,
officers, and regular employees of the Company. In addition, the Company has
engaged Morrow & Co., a firm specializing in solicitation of proxies, to
assist in the current solicitation for an estimated fee of $5,000 plus
reimbursement for their out-of-pocket expenses.
PROPOSAL--ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that its Board shall
consist of not fewer than nine nor more than 15 directors, with the exact
number of directors to be fixed by the Board and that the Board shall be
divided into three classes, with one class being elected each year for a
three-year term. The number of directors had been fixed at 13, but on July 23,
1998, the Board, upon Robert P. Dixon's announcement of his plans not to seek
re-election at the Annual Meeting, voted to decrease its number to 12. Four
directors are to be elected at the Annual Meeting to serve for three years or
until the 2001 Annual Meeting of Shareholders and until their respective
successors shall have been elected and qualified. The persons named as proxies
in the accompanying proxy card have indicated that they intend to vote for the
election of the four nominees set forth hereinafter. See "Nominees for
Election to Serve Until 2001."
In the event that any of the nominees for election as director is not
available to serve as a director at the time of election at the meeting, proxy
cards may be voted for a substitute nominee as well as for the remaining
nominees named herein. However, the Company's management has no reason to
anticipate that any nominees will be unavailable.
THE BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE "FOR" EACH OF THE
NOMINEES FOR DIRECTOR SET FORTH HEREIN.
NOMINEES FOR ELECTION TO SERVE UNTIL 2001
John W. Anderson, Age 63
Director of the Company since 1989. Mr. Anderson is the former President and
Chief Executive Officer of Alabama Farmers Cooperative, Inc. He served in that
capacity from 1989 to 1995 when he retired.
Frank R. Burnside, Jr., Age 49
Director of the Company since 1985. For more than the past five years, Mr.
Burnside has been a farm supply dealer and Vice President and Manager of
Newellton Elevator Company, Inc., Newellton, Louisiana.
Charles O. Dunn, Age 50
Director of the Company since 1992. Mr. Dunn has been employed by the
Company since 1978 and was elected President and Chief Executive Officer of
the Company in April 1993. Prior to becoming President, he served in various
positions within the Company, including Executive Vice President.
George Penick, Age 50
Director of the Company since July 1994. Mr. Penick is President of the
Foundation for the Mid-South, a private philanthropic foundation, and has
served in that position since 1990.
DIRECTORS CONTINUING TO SERVE UNTIL 2000
Coley L. Bailey, Age 47
Director of the Company since 1978 and has served as Chairman of the Board
since 1988. For more than the past five years, Mr. Bailey has been engaged in
farming activities in Yalobusha County, Mississippi.
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Woods E. Eastland, Age 53
Director of the Company since July 1994. Since 1986, Mr. Eastland has been
President and Chief Executive Officer of Staplcotn & Stapldiscount, a cotton
marketing and financing cooperative located in Greenwood, Mississippi.
John Sharp Howie, Age 58
Director of the Company since 1966 and has served as Vice Chairman of the
Board since 1988. For more than the past five years, Mr. Howie has been
engaged in farming activities in Yazoo County, Mississippi.
W. A. Percy II, Age 58
Director of the Company since 1997. Previously served as Director of the
Company from 1988-1994. For more than the past five years, Mr. Percy has been
engaged in farming activities in Washington County, Mississippi, and other
agribusiness enterprises. He is a director of ChemFirst Inc.
DIRECTORS CONTINUING TO SERVE UNTIL 1999
Haley Barbour, Age 50
Director of the Company since January 1997. For more than the past five
years, Mr. Barbour has been a partner and attorney in the law firm Barbour,
Griffith and Rogers in Washington, D.C. From 1993-1997, Mr. Barbour served as
Chairman of the Republican National Committee. He is a director of SkyTel
Communications, Inc., and Blount International, Inc.
Wayne A. Thames, Age 62
Director of the Company since 1973. For more than the past five years, Mr.
Thames has been a cattleman in Evergreen, Alabama.
W. R. Dyess, Age 59
Director of the Company since 1991. For more than the past five years, Mr.
Dyess has served as President of Dyess Farm Center, Inc., in Bardwell, Texas,
and ABC Ag Center, Inc., in Corsicana, Texas.
David M. Ratcliffe, Age 49
Director of the Company since 1994. Mr. Ratcliffe became the Executive Vice
President and Chief Financial Officer of Georgia Power, an electric utility,
in 1998. From 1995 to 1998, Mr. Ratcliffe served as Senior Vice President of
External Affairs of the Southern Company, an Atlanta, Georgia-based utility
holding company. Mr. Ratcliffe served as President and Chief Executive Officer
of Mississippi Power Company, an electric utility from 1991 to 1995.
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BOARD OF DIRECTORS AND COMMITTEES
The Board manages the business affairs in accordance with the Mississippi
Business Corporation Act, as implemented by the Company's Articles of
Incorporation and Bylaws. All of the directors are independent, nonemployee
directors except Mr. Dunn, President and Chief Executive Officer of the
Company. Mr. Dunn does not participate in any action of the Board that relates
to executive compensation. Each director spends considerable time in preparing
for and attending Board and Committee meetings. During the Company's most
recent fiscal year, each director attended at least 80 percent of the meetings
of the Board and of all Committees on which such director served, with the
exception of Mr. Ratcliffe who attended 60 percent. The Company retained an
international consulting firm, IEP Advisors, in which Mr. Barbour is an equity
owner, to provide consulting services to the Company in fiscal 1998 at a fee
of $10,000 per month. This arrangement is expected to remain in place
throughout fiscal 1999.
BOARD COMMITTEES
The Board has established four standing committees: the Audit Committee, the
Compensation Committee, the Corporate Governance Committee, and the Executive
Committee. The members of the committees as of June 30, 1998, were as follows:
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AUDIT COMPENSATION CORPORATE GOVERNANCE EXECUTIVE
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<S> <C> <C> <C>
John W. Anderson, Chairman John Sharp Howie, Chairman W. R. Dyess, Chairman Coley L. Bailey, Chairman
Haley Barbour Frank R. Burnside, Jr. Robert P. Dixon John W. Anderson
Woods E. Eastland David M. Ratcliffe George Penick Robert P. Dixon
Tom C. Parry W. A. Percy II Charles O. Dunn
Wayne Thames John Sharp Howie
</TABLE>
AUDIT COMMITTEE
The Audit Committee met four times in fiscal 1998. The primary duties and
responsibilities of the Audit Committee are to recommend the appointment of
independent auditors and oversee the accounting and audit functions of the
Company. Each member of the Audit Committee is an independent, nonemployee
director.
COMPENSATION COMMITTEE
The Compensation Committee met five times in fiscal 1998. Except when an
applicable statute, regulation, or plan provision requires action by the full
Board, the Compensation Committee establishes any general changes in wages,
salaries, perquisites and profit sharing of nonexempt and exempt employees;
amends and monitors all qualified and nonqualified benefit plans of the
Company; establishes executive officers' salaries, bonuses, perquisites, stock
and other plans; and recommends to the full Board compensation for directors'
service to the Company. Each member of the Compensation Committee is an
independent, nonemployee director.
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee met three times in fiscal 1998. Its
duties and responsibilities include acting as a nominating committee for the
slate of directors and officers, periodically reviewing the performance of the
Board and establishing the criteria by which Board members are to be selected
and evaluated. Shareholder recommendations for director nominees may be
considered, but there are no established procedures for the submission of such
recommendations to the Corporate Governance Committee. Each member of the
Corporate Governance Committee is an independent, nonemployee director.
EXECUTIVE COMMITTEE
The Executive Committee met two times in fiscal 1998. To the extent
permitted by law and the Company's Bylaws, the Executive Committee has the
authority to take all actions that the Board as a whole can take.
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DIRECTOR'S COMPENSATION
FEES AND EXPENSES
During fiscal 1998, all nonemployee directors except Mr. Bailey and Mr.
Howie received or, absent the effect of the Deferred Compensation Plan
described below and any irrevocable deferral election pursuant thereto, would
have been entitled to receive an annual retainer of $20,000. In addition, each
such director received a $1,000 attendance fee for each Board and Committee
meeting and expenses related to such attendance.
Mr. Bailey, as Chairman of the Board, received or, absent the effect of the
Deferred Compensation Plan described below and any irrevocable deferral
election pursuant thereto, would have been entitled to receive a $50,000
annual retainer. In addition, he received or was reimbursed expenses, but did
not receive meeting attendance fees. Mr. Howie, as Vice Chairman of the Board,
received or, absent the effect of the Deferred Compensation Plan described
below and any irrevocable deferral election pursuant thereto, would have been
entitled to receive an annual retainer of $30,000. In addition, he received
$1,000 and expenses for each meeting attended. Mr. Dunn, as President and
Chief Executive Officer, received no remuneration for serving as a director.
NONEMPLOYEE DIRECTORS' STOCK OPTIONS
Pursuant to the 1995 Stock Option Plan for Nonemployee Directors
("Directors' Stock Plan"), each nonemployee director received an annual grant
of nonqualified stock options to purchase 2,000 shares of the Company's common
stock except for Mr. Bailey, Mr. Howie, and Mr. Barbour. Mr. Bailey and Mr.
Howie received options to purchase 4,000 and 3,000 shares, respectively. Mr.
Barbour received options to purchase 5,000 shares due to the fact that this
was his initial option grant under the Directors' Stock Plan. These options
become exercisable in 20 percent increments over a six-year period of time
after the grant date. The exercise price for each option granted pursuant to
the Directors' Stock Plan is the market price for the Company's common stock
on the date of the grant, determined in accordance with the Directors' Stock
Plan.
NONEMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
The Nonemployee Directors' Deferred Compensation Plan, approved at the 1997
Annual Meeting of Shareholders, more closely aligns nonemployee directors'
interests with those of the shareholders by requiring that they place at least
one-half of their annual retainer at risk in exchange for receipt of deferred
compensation based on future growth in the value of the Company's common
stock. In addition, each nonemployee director has the option to place the
other half of his annual retainer at risk for receipt of deferred compensation
based on future growth in the value of the Company's common stock. The Company
has opened a "deferred stock account" in each nonemployee director's name on
the Company's books. This account reflects a number of shares of "deferred
stock" in the Company equal to 150 percent of the number of shares that could
have been purchased at the lesser of the market price on the first day of the
retainer period year (January 1) or the market price as of the July 1
immediately prior to the retainer period. Deferred stock credited to a
directors' account provides no voting rights or other incidents of ownership
of stock and constitutes merely a bookkeeping entry reflecting a debt owed by
the Company to the nonemployee director. Each nonemployee director's account
will be credited with dividends (expressed as a number of deferred shares) and
adjusted to reflect stock splits, exchanges of stock in connection with a
merger, and the like. All nonemployee directors irrevocably elected to defer
100 percent of their annual retainer with the exception of Mr. Bailey, who
deferred 52 percent of his annual retainer.
NONEMPLOYEE DIRECTORS' RESTRICTED STOCK PURCHASE PLAN
Because of the shareholders' approval of the Nonemployee Directors' Deferred
Compensation Plan, the Nonemployee Directors' Restricted Stock Purchase Plan
(the "Restricted Stock Plan") was terminated effective December 31, 1997.
Under the Restricted Stock Plan, each nonemployee director received one-half
of his annual retainer in shares of restricted stock and had the option to
receive the other half in restricted stock. In fiscal 1998,
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the number of shares of restricted stock that each nonemployee director was
entitled to receive was determined by dividing 125 percent of the pro rata
portion of his retainer for the period between September 1, 1997, and December
31, 1997, that each nonemployee director elected to receive in restricted
stock, by the fair market value of the Company's common stock based on the
average of the closing price of the stock for the 20 trading days prior to
September 1, 1997, which was $21.28 per share.
MANAGEMENT OWNERSHIP OF THE COMPANY'S STOCK
The following table sets forth the ownership of Company shares of common
stock by each director, the Named Executive Officers in the Summary
Compensation Table and all directors and executive officers as a group as of
June 30, 1998. The sum of the beneficial holdings and shares subject to
options represents 2.6 percent of the outstanding shares of the Company's
common stock.
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<CAPTION>
SHARES BENEFICIALLY
OWNED
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CURRENT SHARES STOCK UNITS HELD
DIRECT SUBJECT TO UNDER
NAME HOLDINGS OPTIONS(1) DEFERRED PLANS(2) TOTAL
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<S> <C> <C> <C> <C>
John W. Anderson................. 4,278 4,000 1,662 9,940
Coley L. Bailey.................. 9,057 8,000 2,159 19,216
Haley Barbour(3)................. 644 1,000 1,662 3,306
Frank R. Burnside, Jr.(4)........ 34,043 4,000 1,662 39,705
Robert P. Dixon(5)............... 2,235 4,000 1,662 7,897
W. R. Dyess(6)................... 19,475 4,000 1,662 25,137
Woods E. Eastland................ 2,807 4,000 1,662 8,469
John Sharp Howie(7).............. 8,579 5,600 2,491 16,670
George Penick.................... 1,792 4,000 1,662 7,454
W. A. Percy II................... 4,181 0 1,662 5,843
David M. Ratcliffe............... 947 4,000 1,662 6,609
Wayne Thames..................... 9,651 4,000 1,662 15,313
Tom C. Parry..................... 7,793 4,000 832 12,625
Charles O. Dunn.................. 8,267 158,288 2,000 168,555
C. E. McCraw..................... 1,000 79,210 1,139 81,349
Robert E. Jones.................. 5,667 73,750 1,100 80,517
David W. Arnold.................. 1,000 58,600 0 59,600
Timothy A. Dawson................ 4,100 43,225 919 48,244
Other............................ 13,207 106,495 2,040 121,742
Directors and Executive Officers
as a Group (22 persons)......... 138,723 570,168 29,300 738,191
</TABLE>
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(1) Includes shares which may be acquired within 60 days after August 31,
1998, through the exercise of stock options. Directors and officers
realize value from options when exercised only to the extent that the
price of the Company's common stock on the exercised date exceeds the
price of the stock on the grant date. If exercised on August 31, 1998, the
stock options listed in the above table would have no value since the
price of the Company's common stock on that date was less than the
exercise price on all of the options which could have been exercised
through that date.
(2) Represents deferred stock units of the Company's common stock and accrued
dividends on those units, receipt of which has been deferred under the
Nonemployee Directors' Deferred Compensation Plan or the Executive
Deferred Compensation Plan.
(3) Mr. Barbour is the beneficial owner of 250 shares owned by Barbour,
Griffith & Rogers Profit Sharing Trust.
(4) Mr. Burnside is the beneficial owner of 28,736 shares owned by Newellton
Elevator Company, Inc., and 200 shares as guardian of his minor children.
(5) Mr. Dixon is the beneficial owner of 360 shares owned by Robert P. Dixon
DBA Benchmark Farms.
(6) Mr. Dyess is the beneficial owner of 16,100 shares owned by Dyess Farm
Center, Inc., and 2,704 shares owned by ABC Ag Center, Inc.
(7) Mr. Howie is the beneficial owner of 1,903 shares owned by Pauline W.
Howie and John Sharp Howie DBA Cedar Grove Plantation.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
The Board has established a four-member Compensation Committee. Each member
of the Committee is an independent, nonemployee director.
The Company's Executive Compensation Program (the "Program") is designed to
attract and retain qualified executives by providing a total compensation
package that is competitive with compensation packages provided by comparable
organizations. In addition, the Program seeks to align the interests of
management with the interests of the Company's shareholders and promote the
enhancement of shareholder value by encouraging its executive officers to
maintain a certain level of stock ownership and providing stock-based
performance compensation arrangements. Through its bonus programs, the Program
also motivates management to attain preset commercial goals for the Company.
The 1998 fiscal year Program and a specific discussion as to the compensation
of Mr. Dunn, the President and Chief Executive Officer, are set forth below.
STOCK OWNERSHIP GUIDELINES
In order to advance its belief that shareholder value will be enhanced by
tying the interests of the Company's executive officers to those of the
shareholders, the Compensation Committee established stock ownership
guidelines for the executive officers which encourage or, in some
circumstances, require each executive officer to own and maintain a certain
amount of the Company's common stock at his own expense. The specific
guideline amount applicable to each individual is dependent on his position
with the Company.
BASE SALARY
The Compensation Committee approved the individual salary levels set forth
on the Summary Compensation Table for the named executive officers
(collectively, the "Named Executive Officers") after (i) reviewing factors
such as position and compensation levels for comparable positions in similar
organizations (including companies represented in the New Custom Composite
Index now shown in the Performance Graph), (ii) conducting subjective
individual performance evaluations that focused upon key financial criteria,
such as earnings per share, return on equity and growth in shareholder value
and nonfinancial performance measures, such as customer and supplier
relationships, environmental compliance, employee safety, productivity
enhancements and management development, and (iii) considering the
recommendations of Mr. Dunn regarding individual pay treatment for the Named
Executive Officers other than himself. Mr. Dunn's evaluation was based on the
same criteria plus the following additional subjective criteria: his
representation of the Company to investors and financial analysts, his
participation in industry and community affairs, and his relationship with the
Company's employees, the Board and customers.
ANNUAL BONUSES
In November 1997, the Company's shareholders approved the Officer and Key
Employee Incentive Plan (the "Incentive Plan") effective for the Company's
1998 fiscal year. The Incentive Plan permits annual bonuses, including to the
Named Executive Officers, based on an "economic value added" concept; however,
no such bonuses were paid with respect to fiscal 1998. No bonuses are paid
unless the Company's "Consolidated Performance" equals the Company's "Weighted
Average Cost of Capital," all as defined in the Incentive Plan as "Threshold
Performance." The Company achieves Superior Performance and Extraordinary
Performance when its Consolidated Performance exceeds the Company's Weighted
Average Cost of Capital by 8 percent and 20 percent, respectively. When the
Company's Consolidated Performance equals Threshold, Superior or Extraordinary
Performance, each participant receives a bonus equal to his "Threshold Bonus,"
"Superior Bonus," or "Extraordinary Bonus" as established by the Compensation
Committee. When the Company's Consolidated Performance exceeds its Threshold
Performance but is less than its Superior Performance, or exceeds its Superior
Performance but is less than its Extraordinary Performance, each participant
receives a
7
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bonus adjusted to reflect the extent to which the Company's Performance
exceeds Threshold or Superior Performance, as the case may be. The
Compensation Committee has the discretion to reduce any Bonus down to the
Threshold Bonus. The President and Chief Executive Officer's Threshold Bonus
is 30 percent of his base salary, his Superior Bonus is 60 percent of his base
salary and his Extraordinary Bonus is 90 percent of his base salary. The four
other Named Executive Officers are also included in the Incentive Plan. Their
Threshold Bonuses are 15 percent; their Superior Bonuses are 30 percent; and
their Extraordinary bonuses are 45 percent. Because the Company did not reach
Threshold Performance during fiscal year 1998, no bonuses were paid under the
Incentive Plan.
The Named Executive Officers, along with all other Company employees, are
also eligible for a profit sharing payment of up to 10 percent of their base
annual salaries. This profit sharing payment is based solely on the operating
results of the Company. With respect to fiscal 1998, the Named Executive
Officers received a profit sharing payment equal to 4.87 percent of their
annual base salaries.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Executive Deferred Compensation Plan, approved at the 1997 Annual
Meeting of Shareholders, was adopted by the Compensation Committee to provide
incentives for executive officers and certain key employees of the Company or
its subsidiaries selected by the Compensation Committee to more closely align
their interests with those of the shareholders by their risking certain
payments otherwise payable to them in calendar year 1998 for deferred
compensation based on future growth in the value of the Company's common
stock. Participants are allowed to irrevocably elect, prior to the beginning
of the calendar year, to defer some or all of any profit sharing or bonus
payment due them with respect to fiscal year 1998 for a minimum period of 18
months from the date of the election. The Company has opened a "deferred stock
account" in each participant's name on the books of the Company. This account
will reflect a number of shares of "deferred stock" in the Company equal to
150 percent of the number of shares that could be purchased at the lesser of
the market price as of the July 1 immediately prior to the calendar year in
which the payment in question would otherwise have occurred or the market
price on the date the deferred amount would otherwise have been paid. Deferred
stock provides no voting rights or other incidents of ownership of stock and
constitutes merely a bookkeeping entry reflecting a debt from the Company to
the participant. Each participant's account will be credited with dividends
(expressed as a number of deferred shares) and adjusted to reflect stock
splits, exchanges of stock in connection with a merger, and the like. Payment,
when made, will be in the form of actual Company common stock, and the number
of shares received will equal the number of deferred shares then credited to a
participant's deferral account. The deferred payment will not be included in a
participant's income for 1998 but will be taken into income in the year
distribution of the Company's stock is made from the stock deferral account.
The amount taken into income will be the then market value of the Company's
common stock. All Named Executive Officers except Dr. Arnold elected to defer
100 percent of the profit sharing and bonus they were entitled to receive as a
result of services rendered in fiscal 1998.
STOCK INCENTIVE PLAN
The Compensation Committee also administers the Stock Incentive Plan. The
Committee evaluated the contribution of key officers and employees, including
the Named Executive Officers, and based on its evaluation, options to purchase
an aggregate of 170,625 shares of the Company's common stock were awarded
during the fiscal year ended June 30, 1998. The specific grants made to the
Named Executive Officers are set forth in the Stock Option Grants Table.
Individual grants are based primarily on the grantee's level of responsibility
and potential impact on the Company's consolidated performance. The exercise
or purchase price applicable to all options to purchase shares granted
pursuant to the Stock Incentive Plan is equal to the fair market value of such
stock on the date of option grant, determined by averaging the closing price
of the Company's common stock on the 20 trading days prior to the grant date.
8
<PAGE>
INTERNAL REVENUE CODE SECTION 162(m) IMPLICATIONS FOR EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code generally limits the Company's
federal income tax deduction for compensation paid to each of the Named
Executive Officers to $1,000,000 per year. The Internal Revenue Code provides
an exemption from the deduction limit for certain types of "performance based
compensation." The Compensation Committee's general philosophy has been to
qualify incentive compensation arrangements for the Named Executive Officers
for the "performance based compensation" exemption, so as to preserve the
Company's federal income tax deduction for such arrangements to the extent
practicable. Specifically, the Stock Incentive Plan, the Officer and Key
Employee Incentive Plan and the Executive Deferred Compensation Plan are
generally intended to provide benefits that qualify as "performance based
compensation" that is exempt from the $1,000,000 deduction limit. However, the
Compensation Committee has not adopted a blanket policy limiting executive
compensation to fully tax-deductible amounts in every case, and nondeductible
payments could occur, for example, in the event of a change of control.
None of the Named Executive Officers exceeded this limit for fiscal year
1998. It is not anticipated that any of the Named Executive Officers will
exceed the limit for fiscal year 1999.
COMPENSATION COMMITTEE COMPOSITION
The foregoing report is submitted by the members of the Compensation
Committee as of June 30, 1998: John Sharp Howie, Chairman; Frank R. Burnside,
Jr.; and David Ratcliffe.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The table below sets forth the compensation paid by the Company to each of
the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING
POSITION YEAR SALARY ($) BONUS(1)($) COMPENSATION(2)($) OPTIONS(#)
- ------------------------ ---- ---------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Charles O. Dunn......... 1998 424,836 0 12,026 38,000
President and Chief 1997 362,256 155,770 10,684 37,219
Executive Officer 1996 350,000 150,500 9,965 37,219
C. E. McCraw............ 1998 241,851 0 7,396 19,000
Senior Vice President-- 1997 238,188 73,838 7,025 18,630
Operations 1996 230,136 71,343 6,852 18,630
Robert E. Jones......... 1998 233,643 0 6,765 18,000
Senior Vice President-- 1997 205,212 63,616 6,052 17,250
Corporate 1996 198,276 49,569 5,872 17,250
Development
David W. Arnold......... 1998 199,980 9,739 6,076 14,000
Senior Vice President-- 1997 188,412 47,103 5,557 13,800
Technical Group 1996 182,040 45,510 5,434 13,800
Timothy A. Dawson....... 1998 195,204 0 5,826 14,000
Vice President--Finance 1997 176,544 44,136 5,111 12,500
and 1996 154,026 35,054 4,533 10,350
Chief Financial Officer
</TABLE>
- --------
(1) Mr. Dunn, Mr. McCraw, Mr. Jones and Mr. Dawson elected to defer their 1998
profit sharing payments of $20,690; $11,778; $11,378 and $9,506,
respectively, pursuant to the Executive Deferred Compensation Plan. These
amounts are excluded from the table, and the amounts of deferred stock
units credited to these individuals pursuant to the Executive Deferred
Compensation Plan are reflected in the Share Ownership Table.
(2) Amounts represent the Company's matching contribution on the employee's
salary deferral contributions under its 401(k) plan and Supplemental
Benefit Plan.
10
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the Named Executive Officers during fiscal 1998. The Company used
the Black-Scholes option pricing model to develop the theoretical values set
forth under the "Grant Date Present Value" column. Each Named Executive
Officer realizes value from the stock options only to the extent that the
price of the Company's common stock on the exercise date exceeds the price of
the stock on the grant date. Thus, there is no assurance that the value
realized by the Named Executive Officers will be at or near the value
estimated by the Black-Scholes model. These amounts should not be used to
predict performance of the Company's common stock.
STOCK OPTION GRANTS DURING 1998 FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL STOCK PURCHASE,
UNDERLYING OPTIONS GRANTED EXERCISE, OR GRANT DATE
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION "PRESENT
NAME (#) IN FISCAL YEAR(1) ($/SHARE)(2) DATE VALUE"(3)($)
- ------------------------ --------------- ----------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Charles O. Dunn......... 38,000 22.27 21.00 07/01/07 254,264
C. E. McCraw............ 19,000 11.14 21.00 07/01/07 127,132
Robert E. Jones......... 18,000 10.55 21.00 07/01/07 120,441
David W. Arnold......... 14,000 8.20 21.00 07/01/07 93,676
Timothy A. Dawson....... 14,000 8.20 21.00 07/01/07 93,676
</TABLE>
- --------
(1) Total options to purchase the Company's common stock granted during fiscal
1998 were for 170,625 shares to the Named Executive Officers and all other
employees. All options granted are exercisable within six months from the
date of their grant and must be exercised within a definitive period of
time. No stock appreciation rights were granted in fiscal 1998. All
options vest immediately in the event of a change of control as defined in
the Stock Incentive Plan.
(2) Determined by the average closing price of the Company's common stock on
the 20 trading days prior to the grant date.
(3) The model assumptions include (a) an option term of six years, (b) a risk-
free rate of return of 5.47 percent, (c) a 33 percent volatility, and (d)
an expected dividend yield of 1.99 percent. If exercised on August 31,
1998, the stock options granted in fiscal 1998 would have no value since
the market value of the Company's common stock as of that date was less
than the exercise price of $21 per share.
OPTIONS EXERCISES AND HOLDINGS
The following table sets forth information relating to the exercise of
options during fiscal 1998 by the Named Executive Officers and unexercised
options held by the Named Executive Officers as of June 30, 1998:
AGGREGATED OPTION EXERCISES IN 1998 FISCAL YEAR AND
FISCAL YEAR ENDED JUNE 30, 1998, VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY STOCK OPTIONS
SHARES OPTIONS AT FY-END 06/30/98 AT FY-END 06/30/98
ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
- ------------------------ ----------- -------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles O. Dunn......... 0 0 158,288 0 66,024 0
C. E. McCraw............ 0 0 79,210 0 33,048 0
Robert E. Jones......... 0 0 73,750 0 30,600 0
David W. Arnold......... 0 0 58,600 0 24,480 0
Timothy A. Dawson....... 0 0 43,225 0 9,180 0
</TABLE>
- --------
(1) Exercisable numbers are the number of options that could have been
exercised as of June 30, 1998.
11
<PAGE>
PENSION AND OTHER RETIREMENT BENEFITS
The following table sets forth the estimated single-life annual pension
annuity benefit provided to eligible participants under the Mississippi
Chemical Corporation Retirement Plan and the Mississippi Chemical Corporation
Supplemental Benefit Plan combined, based on the specified levels of pay and
years of credited service. The Supplemental Benefit Plan provides benefits
that would otherwise be denied participants by reason of certain Internal
Revenue Code limitations on the Company's qualified defined benefit
("Retirement Plan") and defined contribution ("401(k) Plan") plans. Listed
benefits are not subject to deductions for social security or other offset
amounts.
RETIREMENT PROGRAM
PENSION PLAN
PENSION PLAN TABLE
(IN DOLLARS)
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
25,000 4,688 6,250 7,813 9,375 10,938
50,000 9,375 12,500 15,625 18,750 21,875
100,000 23,858 31,000 38,075 45,285 52,833
150,000 38,858 51,000 63,075 75,285 87,833
200,000 53,858 71,000 88,075 105,285 122,833
250,000 68,858 91,000 113,075 135,285 157,833
300,000 83,858 111,000 138,075 165,285 192,833
350,000 98,858 131,000 163,075 195,285 227,833
400,000 113,858 151,000 188,075 225,285 262,833
450,000 128,858 171,000 213,075 255,285 297,833
500,000 143,858 191,000 238,075 285,285 332,833
</TABLE>
Pension benefits are based on the average earnings over the five-year period
of time preceding retirement and do not include bonus, overtime or shift
differentials. The table below shows the average earnings of the Named
Executive Officers for the last five fiscal years. In addition, the table
includes the number of years of credited service obtained by the Named
Executive Officers as of the end of fiscal 1998.
<TABLE>
<CAPTION>
AVERAGE YEARS OF
NAME EARNINGS SERVICE
---- -------- --------
<S> <C> <C>
Charles O. Dunn......................................... $345,422 19
C. E. McCraw............................................ $227,724 24
Robert E. Jones......................................... $197,434 23
David W. Arnold......................................... $182,926 31
Timothy A. Dawson....................................... $150,850 16
</TABLE>
SEVERANCE AGREEMENTS
The Compensation Committee has approved the entering of severance agreements
between the Company and all five of the Named Executive Officers. Each of the
agreements with the Named Executive Officers provides certain additional
compensation in the event of termination of the executive's employment in
connection with a change of control (as defined in the agreements) of the
Company. Payments are triggered under each agreement if the executive is
terminated by the Company within three years following a change of control
"without cause" (as defined in the agreement); if the executive terminates
employment for "good reason" (as defined) within three years following a
change of control, or if the executive terminates employment with the
12
<PAGE>
Company for any reason within 90 days of a change of control. The benefits
paid generally include an amount equal to the executive's annual base salary;
a pro rata portion of the executive's target bonus ("Superior Bonus" as
defined in the Officer and Key Employee Incentive Plan) for the current fiscal
year; a cash payment equal to 36 or more months of medical plan premiums; and
continuation of, and payment of premiums for, certain welfare benefits. If the
executive executes a liability release in favor of the Company, he will be
entitled to benefits equal to another two times his base salary. Total
benefits contingent on termination of employment in connection with a change
of control (including special change of control benefits under the
Supplemental Benefit Plan and Stock Incentive Plan) are generally limited so
that the Company will not pay any "excess parachute payment" within the
meaning of Section 280G of the Internal Revenue Code unless the amounts that
would be reduced to avoid any such excess parachute payment are more than the
additional taxes (including the excise tax under Internal Revenue Code Section
4999) that would be due if such amounts were paid to the executive.
PERFORMANCE GRAPH
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
AUG-94 DEC-94 JUN-95 JUN-96 JUN-97 JUN-98
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Mississippi Chemical Corporation..... $100 $109 $126 $129 $136 $110
S&P 600(R)........................... $100 $ 97 $111 $140 $171 $204
New Custom Composite Index (6
Stocks)............................. $100 $102 $120 $146 $153 $133
Old Custom Composite Index (9
Stocks)............................. $100 $102 $139 $175 $174 $157
</TABLE>
The 6-Stock New Custom Composite Index consists of Agrium Inc., IMC Global
Inc., Norsk Hydro AS-ADR, Phosphate Resource Partners, Potash Corporation of
Saskatchewan and Terra Industries Inc.
The 9-Stock Old Custom Composite Index consists of Arcadian Partners L.P.-
Pfd. (through 8/9/95), Agrium Inc. (beginning 5/31/95), ChemFirst Inc.
(through 12/23/96), IMC Global Inc., Potash Corporation of
13
<PAGE>
Saskatchewan Inc., Terra Industries Inc., Phosphate Resource Partners, L.P.
(f/k/a Freeport-McMoRan Resource Partners), Vigoro Corporation (through
2/29/96), and Arcadian Corporation (beginning 8/9/95 through 2/28/97).
Arcadian Partners L.P.-Pfd., Arcadian Corporation and Vigoro Corporation
were eliminated from the New Custom Composite Index due to their
consolidations with certain existing members of the New Custom Composite
Index. ChemFirst Inc., is no longer included due to its sale of all
fertilizer-related assets to the Company on December 23, 1996.
GENERAL INFORMATION
SHAREHOLDER PROPOSALS
Any proposals that shareholders of the Company desire to have presented at
the 1999 Annual Meeting of Shareholders must be received by the Company at its
principal executive offices no later than July 1, 1999, for inclusion in the
Company's 1999 proxy materials.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Exchange Act requires all executive officers and directors to report any
changes in their ownership of the Company's common stock to the Securities and
Exchange Commission and the Company. Based solely upon a review of these
reports, the Company believes that during fiscal 1998 its executive officers
and directors complied with all Section 16 filing requirements, except in one
instance. Mr. Barbour filed an Initial Statement of Beneficial Ownership of
Securities on Form 3 late. However, such filing was made during fiscal 1998.
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, Arthur Andersen LLP,
independent certified public accountants, has been selected by the Board as
the Company's independent auditor for the fiscal year 1999. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting. They
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
14
<PAGE>
PROXY PROXY
MISSISSIPPI CHEMICAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS--NOVEMBER 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Mississippi Chemical Corporation hereby
appoints Coley L. Bailey and Charles O. Dunn, and each of them, attorneys
and proxies, with full power of substitution, to vote at the Annual Meeting
of Shareholders to be held at the Owen Cooper Administration Building,
Highway 49 East, Yazoo City, Mississippi, at 9:00 a.m. (local time) on
Tuesday, November 10, 1998, and at any adjournments thereof, in the name of
the undersigned and with the same force and effect as the undersigned could
do if personally present, upon the matters set forth below as indicated.
NOMINEES FOR ELECTION TO SERVE AS DIRECTORS UNTIL 2001: John W. Anderson,
Frank R. Burnside, Jr., Charles O. Dunn and George Penick.
SEE REVERSE SIDE. If you wish to vote in accordance with the Board of
Directors' recommendations, just sign on the reverse side. You need not mark
any ovals.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reserve side.)
FOLD AND DETACH HERE
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. 0
1. Election of Directors (see reverse)
- --------------------------------------------------------------------------------
(Except Nominee(s) written above)
For
0
Withhold
0
All
Except
0
2. In their discretion, to act on any other matters which may properly come
before the meeting and any adjournments or postponements thereof.
For
0
Against
0
Abstain
0
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING. THIS PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ABOVE. IF NO CONTRARY INSTRUCTIONS ARE
INDICATED, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE "FOR" ALL
NOMINEES AS DIRECTORS.
Dated: ___________________________________________________________________, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature(s) of Shareholder(s))
(Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your full title.)
