<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
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 by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
MISSISSIPPI CHEMICAL CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
[MISSISSIPPI CHEMICAL CORPORATION LOGO]
P.O. BOX 388
YAZOO CITY, MISSISSIPPI 39194
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 7, 2000
As a shareholder of Mississippi Chemical Corporation, a Mississippi
corporation, you are hereby given notice of, and invited to attend in person or
by proxy, the Annual Meeting of Shareholders to be held at the Owen Cooper
Administration Building, Highway 49 East, Yazoo City, Mississippi 39194, on
Tuesday, November 7, 2000, at 9:00 a.m. local time, for the following purposes:
1. To elect four members to the Board of Directors to serve until the 2003
Annual Meeting of Shareholders and one member to serve until the 2001
Annual Meeting of Shareholders.
2. To consider and vote upon approval of the Mississippi Chemical
Corporation Amended and Restated 1995 Stock Option Plan for Nonemployee
Directors.
3. To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on August 30, 2000,
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.
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 of Directors,
/s/ ROSALYN B. GLASCOE
ROSALYN B. GLASCOE
Corporate Secretary
Yazoo City, Mississippi
September 26, 2000
YOUR VOTE IS IMPORTANT. PLEASE DATE, EXECUTE, AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" EACH OF THE NOMINEES FOR DIRECTOR AND "FOR" THE APPROVAL OF THE
MISSISSIPPI CHEMICAL CORPORATION AMENDED AND RESTATED 1995 STOCK OPTION PLAN FOR
NONEMPLOYEE DIRECTORS.
<PAGE> 3
MISSISSIPPI CHEMICAL CORPORATION
2000 PROXY STATEMENT
VOTING INFORMATION
PURPOSE
This Proxy Statement and the accompanying proxy card are being mailed to
the Company's shareholders beginning September 26, 2000. The Board of Directors
(the "Board") is soliciting proxies to be used at the 2000 Annual Meeting of
Shareholders which will be held on November 7, 2000, at the time and place
stated in the Notice of Annual Meeting accompanying this Proxy Statement
("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 August 30, 2000, are entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
SHARES OUTSTANDING
On August 30, 2000, 26,142,890 shares of the Company's common stock were
issued and outstanding.
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 such holder's name on the
Company's books on August 30, 2000, on any matter submitted to a vote of
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 presented 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
Director nominees are required to receive a plurality of votes present and
voting at the Annual Meeting in order to be elected. Receipt of a majority of
the votes present and voting at the Annual Meeting on the Mississippi Chemical
Corporation Amended and Restated 1995 Stock Option Plan for Nonemployee
Directors is required for its approval.
REVOCABILITY OF PROXIES
A proxy for use at the Annual Meeting is enclosed with this Proxy
Statement. A shareholder executing and returning a proxy may revoke it at any
time prior to the voting thereof (unless the proxy conspicuously states that it
is irrevocable and that appointment is coupled with an interest) either by
revoking the proxy in person at the Annual Meeting or by delivering a signed
written notice of revocation to the office of our Corporate Secretary (P.O. Box
388, Yazoo City, Mississippi 39194) before the Annual Meeting begins.
SOLICITATION OF PROXIES
The expense of soliciting proxies for the Annual Meeting, including the
cost of preparing, assembling, and mailing the notice, proxy card, and Proxy
Statement and the reasonable costs of brokers, nominees, and
<PAGE> 4
fiduciaries in supplying proxies to beneficial owners, will be paid by the
Company. The solicitation will be made by the use of the mails. We have engaged
Morrow & Co., a firm specializing in solicitation of proxies, to assist in the
current solicitation for an estimated fee of $6,000 plus reimbursement for their
out-of-pocket expenses.
PLAIN ENGLISH INITIATIVE
We are participating in the Securities and Exchange Commission's "plain
English" initiative by offering proxy information to our shareholders in
language that is easier to read and understand. The terms "Company," "we," "us,"
and "our" refer to Mississippi Chemical Corporation and its wholly owned
subsidiaries.
PROPOSAL -- ELECTION OF DIRECTORS
(PROXY ITEM #1)
The Company's Articles of Incorporation provide that the 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 is currently fixed at 13. Four directors are nominated for
election at the Annual Meeting to serve until the 2003 Annual Meeting of
Shareholders. One director, Mr. Reuben Anderson, is nominated for election at
the Annual Meeting to serve until the 2001 Annual Meeting of Shareholders. The
Board appointed Mr. Reuben Anderson to the Board on January 27, 2000, to fill a
vacancy created by an increase in the size of the Board from 12 to 13. To
maintain equally apportioned classes of directors, and since Mr. John Anderson
has stated his intention to retire upon the expiration of his term at the 2001
Annual Meeting of Shareholders, Mr. Reuben Anderson has been nominated to serve
with the class of directors whose term expires at the 2001 Annual Meeting of
Shareholders. The persons named as proxies in the accompanying proxy card have
indicated that they intend to vote for the election of the five nominees set
forth hereinafter. See "Nominees for Election to Serve Until 2003," and "Nominee
for Election to Serve Until 2001."
In the event that any of the nominees for election as director are not
available to serve as a director at the time of election at the Annual 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 BELOW.
NOMINEES FOR ELECTION TO SERVE UNTIL 2003
Coley L. Bailey, Age 49
Director of the Company since 1978 and 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.
Woods E. Eastland, Age 55
Director of the Company since July 1994. Since 1986, Mr. Eastland has been
President and Chief Executive Officer of Staple Cotton Cooperative Association
(Staplcotn) and its subsidiary Staple Cotton Discount Corporation
(Stapldiscount), a cotton marketing cooperative and a financing cooperative,
respectively, each located in Greenwood, Mississippi.
John Sharp Howie, Age 60
Director of the Company since 1966 and 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.
2
<PAGE> 5
W. A. Percy II, Age 60
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 currently President and Chief Executive Officer
of Greenville Compress Company, a commercial warehouse and real estate company,
and a partner in Trail Lake Enterprises, a cotton farm and gin. Mr. Percy also
serves as the Chairman of the Board of ChemFirst Inc.; the Chairman of the Board
of Staple Cotton Cooperative Association (Staplcotn); and a director of Entergy
Corporation.
NOMINEE FOR ELECTION TO SERVE UNTIL 2001
Reuben V. Anderson, Age 58
Director of the Company since his appointment by the Board of Directors on
January 27, 2000, to fill a vacancy created by an increase in the size of the
Board from 12 to 13. For more than the past five years, Mr. Anderson has been a
partner in the law firm of Phelps Dunbar L.L.P. in Jackson, Mississippi. He is a
director of Trustmark National Bank, BellSouth Corporation, and The Kroger Co.
DIRECTORS CONTINUING TO SERVE UNTIL 2002
Haley Barbour, Age 52
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 of Barbour,
Griffith & Rogers in Washington, D.C. From 1993-1997, Mr. Barbour served as
Chairman of the Republican National Committee.
Wayne Thames, Age 64
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 61
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 51
Director of the Company since 1994. Mr. Ratcliffe became the President and
Chief Executive Officer of Georgia Power, an electric utility, in 1999. From
1998 until becoming President, Mr. Ratcliffe was Georgia Power's Executive Vice
President and Chief Financial Officer. From 1995 to 1998, he served as Senior
Vice President of External Affairs of the Southern Company, a utility holding
company based in Atlanta, Georgia. From 1991 to 1995, Mr. Ratcliffe served as
President and Chief Executive Officer of Mississippi Power Company, an electric
utility.
DIRECTORS CONTINUING TO SERVE UNTIL 2001
John W. Anderson, Age 65
Director of the Company since 1989. From 1989 to 1995, Mr. Anderson was the
President and Chief Executive Officer of Alabama Farmers Cooperative, Inc.
("AFC") Since Mr. Anderson's retirement from AFC in 1995, he has been engaged in
the business of providing consulting services.
Frank R. Burnside, Jr., Age 51
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.
3
<PAGE> 6
Charles O. Dunn, Age 52
Director of the Company since 1992. Mr. Dunn has been employed by the
Company since 1978 and was elected President and Chief Executive Officer in
April 1993. Prior to becoming President and Chief Executive Officer, he served
in various positions within the Company, including Executive Vice President.
George Penick, Age 52
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.
PROPOSAL -- APPROVAL OF THE COMPANY'S AMENDED AND RESTATED
1995 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
(PROXY ITEM NO. 2)
The Directors' Stock Plan was originally adopted by the Board on July 20,
1995, and approved by the shareholders at their annual meeting on November 14,
1995. The Directors' Stock Plan reserved 300,000 shares of common stock for
issuance to nonemployee directors of the Company through grants of stock
options. The Board amended the Directors' Stock Plan on August 19, 1996, to
change the grant date to July 1 to correspond with the beginning of the
Company's fiscal year. The Directors' Stock Plan was amended and restated by the
Board on April 17, 1997, and approved by the shareholders at their annual
meeting on November 11, 1997. In its current form, the Directors' Stock Plan
will expire on November 14, 2000. As of August 31, 2000, options to purchase
191,000 shares of common stock have been granted under the Directors' Stock Plan
and all of those options to purchase shares remain outstanding. Only 109,000
shares of common stock remain available for future grants under the Directors'
Stock Plan.
To continue the issuance of stock incentives to our nonemployee directors,
the Board adopted an amended and restated version of the Directors' Stock Plan
(the "Restated Directors' Stock Plan") on August 15, 2000, that (i) makes the
term of the Restated Directors' Stock Plan unlimited in duration, (ii) increases
the number of shares of common stock reserved for issuance under the Restated
Directors' Stock Plan from 300,000 to 400,000, and (iii) makes certain other
clarifications to the Directors' Stock Plan. REPRICING OF OPTIONS IS NOT
PERMITTED UNDER THE RESTATED DIRECTORS' STOCK PLAN.
The Board requests that the shareholders approve the Restated Directors'
Stock Plan to enable us to continue to attract and retain outstanding
nonemployee directors.
The following description of the Restated Directors' Stock Plan is a
summary of its terms and is qualified in its entirety by reference to the
complete text of the Restated Directors' Stock Plan, a copy of which appears as
Appendix A to this Proxy Statement:
SHARES RESERVED. There have been reserved for issuance under the Restated
Directors' Stock Plan 400,000 shares of common stock. This represents an
increase of 100,000 authorized shares of common stock over the authorization
under the Directors' Stock Plan.
GRANT OF OPTIONS. New nonemployee directors are granted an option to
purchase 5,000 shares of common stock on the first business day of the Company's
next succeeding fiscal year after their election. Any person who becomes
Chairman of the Board will be granted an additional option to purchase 5,000
shares of common stock on the first business day of the Company's next
succeeding fiscal year after his election (except that the additional option for
a person who previously served as Vice Chairman will be for 3,000 shares). Any
person who becomes Vice Chairman of the Board will be granted an additional
option to purchase 2,000 shares of our common stock on the first business day of
the Company's next succeeding fiscal year after his election. Each nonemployee
director (except the Chairman and the Vice Chairman) will also be granted an
annual option to purchase 2,000 shares of common stock as of each July 1 (or if
not a business day, the first business day thereafter) on which such director is
a member of the Board. The annual options for the Chairman and the Vice Chairman
will be 4,000 shares and 3,000 shares, respectively. THE NUMBER OF OPTIONS TO BE
GRANTED TO ANY NONEMPLOYEE DIRECTOR HAS NOT BEEN CHANGED UNDER THE RESTATED
DIRECTORS' STOCK PLAN.
4
<PAGE> 7
OPTION PRICE. The option price with respect to each option granted to
nonemployee directors shall be not less than 100% of the fair market value of
our common stock on the date the stock option is granted. The Board has
determined that "fair market value" shall be defined as the average of the
closing price of our common stock as reported on the New York Stock Exchange for
the last 20 trading days prior to the date of option grant or as otherwise
required by applicable law or regulation. The purchase price may be paid by
check or by the delivery of shares of our common stock then owned by the
participant or by cashless exercise.
OPTION TERM. The option term shall be 10 years. All options granted to
nonemployee directors shall become exercisable beginning one year after the date
of the option grants in installments of 20% per year and shall be fully
exercisable six years from the date of the option grants, or earlier upon
retirement of the director or upon a change of control of the Company. A change
of control with respect to the Company occurs if:
(a) any "person" (as that term is used in Sections 13(d) and 14(d) of
the Exchange Act, but excluding the Company, its affiliates and any
qualified or nonqualified plan maintained by the Company or its affiliates)
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of the Company
representing more than 20% of the combined voting power of the Company's
then outstanding securities;
(b) individuals who constitute a majority of the Board immediately
prior to a contested election for positions on the Board cease to
constitute a majority as a result of such contested election;
(c) the Company is combined (by merger, share exchange, consolidation,
or otherwise) with another entity and, as a result of such combination,
less than 75% of the outstanding securities of the surviving or resulting
entity are owned in the aggregate by the former shareholders of the
Company; or
(d) the Company sells, leases, or otherwise transfers all or
substantially all of its properties or assets to another person or entity.
The period of exercise following death, disability or retirement shall be three
years. In the event of any other termination of service on the Board, each
option shall expire three months after the date of optionee's termination of
service.
NONTRANSFERABILITY. Options granted under the Restated Directors' Stock
Plan are not transferable other than by will or the laws of descent and
distribution or as approved by the Board. Under the Directors' Stock Plan, the
Board did not have the authority to approve option transfers.
ADJUSTMENT. The number of shares of our common stock subject to a benefit
shall be adjusted if there is an increase in the number of issued shares without
the payment of new consideration to the Company (for example, due to a stock
dividend or stock split). In connection with any merger, consolidation,
acquisition of property or stock, or reorganization, the Board may (i) authorize
the issuance or assumption of benefits or (ii) substitute on an equitable basis
for shares reserved for issuance or granted under the Restated Directors' Stock
Plan the consideration to be received by holders of our common stock.
TERM. The term of the Restated Directors' Stock Plan will be unlimited in
duration. The term of the Directors' Stock Plan is for a period of five years
and will expire on November 14, 2000, if the Restated Directors' Stock Plan is
not approved.
AMENDMENT; SUSPENSION; TERMINATION. The Board may suspend or terminate the
Restated Directors' Stock Plan at any time and may amend the Restated Directors'
Stock Plan at any time to conform to or benefit from changes in the law.
Shareholder approval is required for any amendments to (i) increase the number
of shares reserved under the Restated Directors' Stock Plan, (ii) materially
modify the eligibility requirements for participation under the Restated
Directors' Stock Plan, or (iii) permit repricing of option grants. An amendment,
suspension, or termination cannot impair the rights under outstanding options or
affect the exempt status of the Restated Directors' Stock Plan under Section
16(b) of the Securities Exchange Act of 1934.
ADMINISTRATION. The Restated Directors' Stock Plan provides that the Board
will administer the Restated Directors' Stock Plan. The Board has the authority
to approve the form of grant agreements,
5
<PAGE> 8
interpret the Restated Directors' Stock Plan, and establish rules to administer
the Restated Directors' Stock Plan. The Board has delegated its authority to
administer the Directors' Stock Plan to the Corporate Governance Committee of
the Board, which will continue to administer the Restated Directors' Stock Plan
until such time as the Board assumes administration of the Restated Directors'
Stock Plan or the Board delegates its authority to another committee of the
Board.
FEDERAL INCOME TAX CONSEQUENCES. Under current U.S. federal tax law, a
participant who is granted an option will not realize any taxable income at the
time of grant. The participant will have taxable income at the time of exercise
of a nonqualified stock option equal to the difference between the option price
and the fair market value of the shares on the date of exercise, and the Company
generally will be entitled to a corresponding deduction.
SHAREHOLDER APPROVAL. The Restated Directors' Stock Plan shall be null and
void if shareholder approval is not obtained at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF THE RESTATED DIRECTORS' STOCK PLAN.
BOARD OF DIRECTORS AND COMMITTEES
The Board manages the business affairs of the Company in accordance with
the Mississippi Business Corporation Act, as implemented by the Company's
Articles of Incorporation and Bylaws. All of the Company's directors are
independent, nonemployee directors except Mr. Dunn, who is President and Chief
Executive Officer. Mr. Dunn does not participate in any action of the Board that
relates to executive compensation. The Board met four times in fiscal 2000. Each
director spends considerable time in preparing for and attending Board and
committee meetings. During fiscal 2000, each director attended at least 75% of
the aggregate of all meetings of the Board and of all committees on which such
director served.
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 are as follows:
<TABLE>
<CAPTION>
AUDIT COMPENSATION CORPORATE GOVERNANCE EXECUTIVE
----- ------------ -------------------- ---------
<S> <C> <C> <C>
John W. Anderson, Chairman John Sharp Howie, Chairman W. R. Dyess, Chairman Coley L. Bailey, Chairman
Reuben V. Anderson Frank R. Burnside, Jr. George Penick John W. Anderson
Haley Barbour W. A. Percy II W. A. Percy II Charles O. Dunn
Woods E. Eastland David M. Ratcliffe Woods E. Eastland
Wayne Thames John Sharp Howie
</TABLE>
AUDIT COMMITTEE
The Audit Committee met four times in fiscal 2000. The primary duties and
responsibilities of the Audit Committee include recommending the appointment of
independent auditors and monitoring the accounting and audit functions of the
Company. The complete duties and responsibilities of the Audit Committee are set
forth in its written Charter which is attached hereto as Appendix B. Each member
of the Audit Committee is an independent, nonemployee director. All of the
members of the Audit Committee are considered by the Board to be financially
literate and at least two, Mr. John Anderson and Mr. Eastland, are considered by
the Board to have accounting or related financial management expertise.
COMPENSATION COMMITTEE
The Compensation Committee met four times in fiscal 2000. 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 of our qualified and nonqualified benefit plans (except
the Directors' Stock Plan); and
6
<PAGE> 9
establishes executive officers' salaries, bonuses, perquisites, stock and other
plans. During fiscal 2000, the Compensation Committee was also responsible for
administering the Directors' Stock Plan and recommending to the full Board
compensation for directors' service to the Company, which recommendations are
now made by the Corporate Governance Committee. Each member of the Compensation
Committee is an independent, nonemployee director.
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee met four times in fiscal 2000. 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. Effective July 1, 2000, the Corporate Governance Committee
administers the Directors' Stock Plan and recommends to the full Board
compensation for directors' service to the Company. 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 once in fiscal 2000. To the extent permitted by
law and the Company's Bylaws, the Executive Committee has the authority between
meetings of the Board to take all actions that the Board as a whole can take.
DIRECTORS' COMPENSATION
FEES AND EXPENSES
During fiscal 2000, 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
nonemployee director except Mr. Bailey received a $1,000 attendance fee for, and
was reimbursed expenses related to, each Board and Committee meeting.
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. 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. Mr. Dunn, as President and Chief Executive Officer,
received no remuneration for serving as a director.
NONEMPLOYEE DIRECTORS' STOCK OPTIONS
Pursuant to the Company's 1995 Stock Option Plan for Nonemployee Directors
("Directors' Stock Plan"), each nonemployee director, except Mr. Bailey, Mr.
Howie, and Mr. Reuben Anderson, received in fiscal 2000 an annual grant of
nonqualified stock options to purchase 2,000 shares of the Company's common
stock. Mr. Bailey, as Chairman of the Board, received options to purchase 4,000
shares, and Mr. Howie, as Vice Chairman of the Board, received options to
purchase 3,000 shares. Since Mr. Reuben Anderson was appointed a director on
January 27, 2000, he was not eligible to receive any stock options in fiscal
2000 as provided by the Directors' Stock Plan. The options granted to
nonemployee directors become exercisable in 20% 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, as determined in accordance with the
Directors' Stock Plan.
7
<PAGE> 10
NONEMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
The Nonemployee Directors' Deferred Compensation Plan more closely aligns
nonemployee directors' interests with those of the shareholders by requiring
that they place at least 50% 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.
All nonemployee directors exercised their rights to irrevocably elect to defer
the remaining 50% of their 2000 annual retainer with the exception of Mr. Bailey
who deferred 4%. We have opened a "deferred stock account" in each nonemployee
director's name on our books. This account reflects a number of shares of
"deferred stock" in the Company equal to 150% 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 (January 1) or the market price as of the July 1 immediately
prior to the retainer period. Deferred stock credited to a director's account is
phantom stock that provides no voting rights or other incidents of ownership of
stock and constitutes merely a bookkeeping entry reflecting an unsecured 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. Distribution from each nonemployee director's
deferred stock account is made in the form of common stock of the Company or
cash as elected by the director at the time of deferral.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
a. Security Ownership of Certain Beneficial Owners. The following table
shows shares of the Company's stock that we believe were beneficially owned as
of June 30, 2000, based on filings required of such owners by the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------- ----------------------- ----------------
<S> <C> <C>
Pioneer Investment Management, Inc. ............... 1,880,000 7.19
a/k/a Pioneering Management Corporation
60 State Street
Boston, MA 02109
Dimensional Fund Advisors, Inc. ................... 2,007,261 7.67
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
8
<PAGE> 11
b. Security Ownership of Management. The following table shows the number
of shares of the Company's common stock which was beneficially owned by each
director and Named Executive Officer (as defined below under the heading "Base
Salary") as of June 30, 2000, together with the aggregate number of shares owned
beneficially by all directors and executive officers as a group. No director or
executive officer listed below beneficially owned more than 1% of the shares
outstanding as of June 30, 2000, except Mr. Dunn who owned approximately 1.2% of
the shares outstanding. The sum of the beneficial ownership of the directors and
executive officers as a group represents approximately 5% of the shares
outstanding as if the options and deferred stock units among those shares had
all been outstanding on June 30, 2000.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NON-EMPLOYEE DIRECTORS OF BENEFICIAL OWNERSHIP(1)
---------------------- --------------------------
<S> <C>
John W. Anderson(2)......................................... 29,942
Reuben V. Anderson(3)....................................... 6,708
Coley L. Bailey(4).......................................... 43,722
Haley Barbour(5)............................................ 14,615
Frank R. Burnside, Jr.(6)................................... 51,414
W. R. Dyess(7).............................................. 36,846
Woods E. Eastland(8)........................................ 24,272
John Sharp Howie(9)......................................... 31,990
George Penick(10)........................................... 18,010
W. A. Percy II(11).......................................... 16,352
David M. Ratcliffe(12)...................................... 18,318
Wayne Thames(13)............................................ 32,022
NAMED EXECUTIVE OFFICERS
Charles O. Dunn(14)......................................... 304,272
C. E. McCraw(15)............................................ 150,391
Robert E. Jones(16)......................................... 145,492
Timothy A. Dawson(17)....................................... 99,700
David W. Arnold(18)......................................... 101,600
All Directors and Executive Officers as a Group(19)......... 1,346,487
</TABLE>
---------------
(1) Beneficial ownership is the ownership of stock, either direct or indirect,
which includes the power to vote or the power to dispose of the stock.
Stock which an individual may acquire by exercising options or by
distribution from an employee benefits plan is beneficially owned under
certain circumstances even if such an exercise or distribution has not
taken place.
The figures in the table include shares of stock that the named individuals
own directly. In addition, these figures include shares that certain named
individuals own, or are presumed to own, indirectly as a result of their
relationship with another person or entity.
The table reflects deferred stock units credited to individual directors
under the Nonemployee Directors' Deferred Compensation Plan and to
individual executive officers under the Executive Deferred Compensation
Plan. The figures in the table assume that deferred stock units could be
converted into common stock and distributed to the named individuals within
60 days of June 30, 2000, even though many of the units referenced in the
table will not be eligible for conversion and distribution within that time
frame.
The table also reflects shares subject to nonqualified stock options issued
to the named individuals pursuant to the Directors' Stock Plan or the
Amended and Restated Mississippi Chemical Corporation 1994 Stock Incentive
Plan which could have been exercised by the named individuals on June 30,
2000, or that will become exercisable within 60 days after June 30, 2000.
If exercised as described above, 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 the options which could
have been exercised through that date.
9
<PAGE> 12
For each named individual, a footnote indicates the number of deferred
stock units, options, and other indirectly held shares included in the
total number. The footnote also identifies the extent to which each of the
named individuals shares voting power and/or the power to dispose of any of
the beneficially owned shares.
(2) Includes 8,017 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days;
and 1,000 shares which are owned by his wife, Evelyn Anderson. Mr. Anderson
disclaims beneficial ownership of the 1,000 shares owned by his wife.
(3) Includes 5,708 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan.
(4) Includes 15,465 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 15,200 shares
which are currently exercisable or will become exercisable within 60 days.
Mr. Bailey shares investment power over 2,000 shares belonging to Joe N.
Bailey, Jr. Family Trust.
(5) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 4,200 shares
which are currently exercisable or will become exercisable within 60 days;
and 250 shares which are owned by the Barbour, Griffith & Rogers Profit
Sharing Trust.
(6) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days;
100 shares owned by Mr. Burnside's daughter, Berry Jane Burnside; 100
shares owned by Mr. Burnside's son, Frank Burnside, III; and 28,736 shares
which are owned by Newellton Elevator Company, Inc., which is an affiliate
of Mr. Burnside's. Mr. Burnside disclaims beneficial ownership of the 100
shares owned by his daughter and the 100 shares owned by his son. Mr.
Burnside shares the power to vote and dispose of the shares owned by
Newellton Elevator Company, Inc.
(7) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days;
16,100 shares which are owned by Dyess Farm Center, Inc.; and 2,704 shares
which are owned by ABC Ag Center, Inc. Dyess Farm Center, Inc., and ABC AG
Center, Inc., are affiliates of Mr. Dyess's.
(8) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days.
(9) Includes 14,650 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 10,800 shares
which are currently exercisable or will become exercisable within 60 days;
and 1,903 shares which are owned by Pauline W. Howie and John Sharp Howie
DBA Cedar Grove Plantation.
(10) Includes 8,618 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days.
(11) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 2,400 shares
which are currently exercisable or will become exercisable within 60 days.
(12) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days.
(13) Includes 9,771 deferred stock units under the Nonemployee Directors'
Deferred Compensation Plan; also includes options to purchase 7,600 shares
which are currently exercisable or will become exercisable within 60 days.
10
<PAGE> 13
(14) Includes 7,717 deferred stock units under the Executive Deferred
Compensation Plan; also includes options to purchase 272,288 shares which
are currently exercisable or will become exercisable within 60 days.
(15) Includes 2,131 deferred stock units under the Executive Deferred
Compensation Plan; also includes options to purchase 139,210 shares which
are currently exercisable or will become exercisable within 60 days.
(16) Includes 2,705 deferred stock units under the Executive Deferred
Compensation Plan; also includes options to purchase 133,750 shares which
are currently exercisable or will become exercisable within 60 days.
(17) Includes 3,475 deferred stock units under the Executive Deferred
Compensation Plan; also includes options to purchase 88,225 shares which
are currently exercisable or will become exercisable within 60 days.
(18) Includes options to purchase 100,600 shares which are currently exercisable
or will become exercisable within 60 days.
(19) Includes 25,885 shares owned by executive officers not named in the table;
1,346 deferred stock units credited to such officers under the Executive
Deferred Compensation Plan; and options to purchase 193,590 shares granted
to such officers which are currently exercisable or will become exercisable
within 60 days.
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.
Our executive compensation 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 executive compensation program seeks to align the interests of
management with the interests of our shareholders and to promote the enhancement
of shareholder value by encouraging our executive officers to maintain a certain
level of stock ownership and providing stock-based performance compensation
arrangements. Through its bonus programs, the executive compensation program
also motivates management to attain preset commercial goals for the Company. The
2000 fiscal year executive compensation 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
Company's 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 five highest compensated 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 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
11
<PAGE> 14
performance measures, such as employee, 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. The Committee's evaluation of Mr. Dunn 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 Board and customers, as well as
with our employees.
ANNUAL BONUSES
The Officer and Key Employee Incentive Plan permits annual bonuses to
participants selected by the Compensation Committee based on an "economic value
added" concept. No bonuses are paid under the Officer and Key Employee Incentive
Plan unless our "Consolidated Performance" equals our "Weighted Average Cost of
Capital," all as defined in the Officer and Key Employee Incentive Plan as
"Threshold Performance." We achieve Superior Performance and Extraordinary
Performance when our Consolidated Performance exceeds our Weighted Average Cost
of Capital by 8% and 20%, respectively. When our 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 our Consolidated Performance
exceeds our Threshold Performance but is less than our Superior Performance, or
exceeds our Superior Performance but is less than our Extraordinary Performance,
each participant receives a bonus adjusted to reflect the extent to which our
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% of his base salary, his Superior Bonus is 60% of his base salary and his
Extraordinary Bonus is 90% of his base salary. The four other Named Executive
Officers are also included in the Incentive Plan. Their Threshold Bonuses are
15%, their Superior Bonuses are 30%, and their Extraordinary bonuses are 45%. No
bonuses were paid under the Incentive Plan during fiscal 1999 or 2000 because we
did not reach Threshold Performance.
The Named Executive Officers, along with all of our other corporate
headquarters and nitrogen employees, were also eligible for a profit sharing
payment of up to 10% of their base annual salaries, based solely on our
consolidated operating results during fiscal 2000. The Named Executive Officers
did not receive a profit sharing payment for services rendered in fiscal 1999 or
2000.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Executive Deferred Compensation Plan more closely aligns the interests
of the Company's executive officers and certain key employees selected by the
Compensation Committee with those of the shareholders by allowing the
participants to risk certain payments otherwise payable to them for deferred
compensation based on future growth in the value of the Company's common stock.
Participants may irrevocably elect, prior to the beginning of a calendar year,
to defer for a minimum period of 18 months from the date of the election some or
all of any profit sharing, bonus payment, and/or up to 10% of their salaries
that they would otherwise receive in such calendar year. The Company has opened
a "deferred stock account" in each participant's name on the Company's books.
This account reflects a number of shares of "deferred stock" in the Company
equal to 150% 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 an unsecured 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 until distribution of the stock is made from the stock
deferral account. The amount taken into income will be the
12
<PAGE> 15
then market value of the Company's common stock. Although all Named Executive
Officers except Dr. Arnold elected to defer 100% of any profit sharing and bonus
payments they were entitled to receive as a result of services rendered in
fiscal 2000, no credits were posted to their deferred stock accounts due to the
fact that no bonus or profit sharing payments were made to these individuals in
fiscal 2000.
STOCK INCENTIVE PLAN
The Compensation Committee also administers the Company's Amended and
Restated 1994 Stock Incentive Plan (the "Stock Incentive Plan"). The Committee
evaluated the contribution of executive officers and key employees, including
the Named Executive Officers, and based on its evaluation, granted options to
purchase an aggregate of 398,000 shares of the Company's common stock during the
fiscal year ended June 30, 2000. The specific grants made to the Named Executive
Officers are set forth in the Stock Option Grants Table below under the caption
"Stock Options" contained in the description of "Executive Compensation."
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, as determined in accordance with the Stock Incentive Plan.
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 our federal
income tax deduction for such arrangements to the extent practicable should
compensation for the Named Executive Officers ever approach $1,000,000 in any
given year. 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 the $1,000,000 limit for
fiscal year 2000. It is not anticipated that any of the Named Executive Officers
will exceed the limit for fiscal year 2001.
COMPENSATION COMMITTEE COMPOSITION
The foregoing report is submitted by the members of the Compensation
Committee as of June 30, 2000: John Sharp Howie (Chairman), Frank R. Burnside,
Jr., W. A. Percy II, and David Ratcliffe.
13
<PAGE> 16
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The table below sets forth the compensation paid by the Company to each of
the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
--------------------------- ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Charles O. Dunn....................... 2000 501,692 0 15,207 76,000
President and Chief 1999 489,456 0 14,071 38,000
Executive Officer 1998 424,836 0 12,026 38,000
C. E. McCraw.......................... 2000 272,051 0 7,964 40,000
Senior Vice President -- 1999 265,416 0 7,779 20,000
Operations 1998 241,851 0 7,396 19,000
Robert E. Jones....................... 2000 272,051 0 7,964 40,000
Senior Vice President -- 1999 265,416 0 7,664 20,000
Corporate Development 1998 233,643 0 6,765 18,000
Timothy A. Dawson..................... 2000 220,736 0 6,573 30,000
Senior Vice President 1999 215,352 0 6,213 15,000
and Chief Financial Officer 1998 195,204 0 5,826 14,000
David W. Arnold....................... 2000 215,471 0 6,736 28,000
Senior Vice President -- 1999 210,216 0 6,207 14,000
Technical Group 1998 199,980 9,739 6,076 14,000
</TABLE>
---------------
(1) Although each of the Named Executive Officers is normally entitled to a
raise in excess of 2 1/2% under the Company's salary administration program,
raises effective July 1, 1999, for all executive officers were limited to
2 1/2% by the Compensation Committee as a result of the Company's
performance. The Compensation Committee did not award raises to any
executive officer for fiscal year 2001, which would have been effective July
1, 2000, as a result of the Company's performance.
(2) None of the Named Executive Officers received a bonus or profit sharing
payment for fiscal 1999 or 2000. 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 $9,506, respectively, pursuant to the Executive
Deferred Compensation Plan. These amounts are excluded from the table, and
the amounts of deferred stock units credited to these individuals pursuant
to the Executive Deferred Compensation Plan are reflected in the Beneficial
Ownership of Stock Table.
(3) Amounts represent the Company's matching contributions on the employee's
salary deferral contributions under the 401(k) Plan and Supplemental Benefit
Plan.
14
<PAGE> 17
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the Named Executive Officers during fiscal 2000. We used the
Black-Scholes option pricing model to develop the theoretical values set forth
under the "Grant Date Present Value" column. The Black-Scholes option pricing
model includes assumptions which may or may not be realized or realistic. Each
Named Executive Officer realizes value from the stock options only to the extent
that the price of the Company's common stock on the exercise date exceeds the
price of the stock on the grant date. Thus, there is no assurance that the value
realized by the Named Executive Officers will be at or near the value estimated
by the Black-Scholes model. These amounts should not be used to predict
performance of the Company's common stock.
STOCK OPTION GRANTS DURING FISCAL YEAR 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING STOCK OPTIONS PURCHASE, GRANT DATE
OPTIONS GRANTED TO EXERCISE, OR PRESENT
GRANTED EMPLOYEES IN BASE PRICE(2) EXPIRATION VALUE(3)
NAME (#) FISCAL YEAR(1) ($/SHARE) DATE ($)
---- ---------- -------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Charles O. Dunn................... 76,000 19.10 9.87 07/01/09 304,760
C. E. McCraw...................... 40,000 10.05 9.87 07/01/09 160,400
Robert E. Jones................... 40,000 10.05 9.87 07/01/09 160,400
Timothy A. Dawson................. 30,000 7.54 9.87 07/01/09 120,300
David W. Arnold................... 28,000 7.03 9.87 07/01/09 112,280
</TABLE>
---------------
(1) Total options to purchase the Company's common stock granted during fiscal
2000 were for 398,000 shares to the Named Executive Officers and all other
employees. All options granted are exercisable within six months of their
July 1, 1999, grant date. No stock appreciation rights ("SARs") were granted
in fiscal 2000. 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
New York Stock Exchange 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 6.25%, (c) a 33% volatility, and (d) an expected
dividend yield of 1.19%. If exercised on August 31, 2000, the stock options
granted in fiscal 2000 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
$9.87 per share.
15
<PAGE> 18
OPTION EXERCISES AND HOLDINGS
The following table sets forth information relating to the exercise of
options during fiscal 2000 by the Named Executive Officers and unexercised
options held by the Named Executive Officers as of June 30, 2000:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000 AND
VALUE OF UNEXERCISED OPTIONS FOR FISCAL YEAR ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT STOCK OPTIONS AT
ACQUIRED FY-END 06/30/00 FY-END 06/30/00
ON VALUE (#) ($)
EXERCISE REALIZED ------------------------------ ---------------------------
NAME (#) ($) EXERCISABLE(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles O. Dunn........... 0 0 272,288 0 0 0
C. E. McCraw.............. 0 0 139,210 0 0 0
Robert E. Jones........... 0 0 133,750 0 0 0
David W. Arnold........... 0 0 100,600 0 0 0
Timothy A. Dawson......... 0 0 88,225 0 0 0
</TABLE>
---------------
(1) Exercisable numbers are the number of options that could have been exercised
as of June 30, 2000.
PENSION AND OTHER RETIREMENT BENEFITS
The following table sets forth the estimated single-life annual pension
annuity benefit provided to eligible participants at age 65 under the Company's
Retirement Plan and Supplemental Benefit Plan combined, based on the specified
levels of pay and years of credited service. Since certain Internal Revenue Code
provisions limit the benefits available to executive officers and certain key
employees under the Company's qualified defined benefit ("Retirement Plan") and
defined contribution ("401(k) Plan") plans, the Company sponsors the
Supplemental Benefit Plan to provide to such employees the benefits that are
available to all other participants in the Retirement Plan and 401(k) Plan.
Listed benefits are not subject to deductions for social security or other
offset amounts.
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...................................... 23,183 30,100 36,838 43,800 50,943
150,000...................................... 38,183 50,100 61,838 73,800 85,943
200,000...................................... 53,183 70,100 86,838 103,800 120,943
250,000...................................... 68,183 90,100 111,838 133,800 155,943
300,000...................................... 83,183 110,100 136,838 163,800 190,943
350,000...................................... 98,183 130,100 161,838 193,800 225,943
400,000...................................... 113,183 150,100 186,838 223,800 260,943
450,000...................................... 128,183 170,100 211,838 253,800 295,943
500,000...................................... 143,183 190,100 236,838 283,800 330,943
</TABLE>
16
<PAGE> 19
Pension benefits are based on the average of the participant's five highest
annual earnings amounts during employment and do not include bonus, overtime or
shift differentials. The table below shows the average earnings (calculated as
described above) of, and the number of years of credited service obtained by,
the Named Executive Officers as of the end of fiscal 2000.
<TABLE>
<CAPTION>
AVERAGE YEARS OF
NAME EARNINGS SERVICE
---- -------- --------
<S> <C> <C>
Charles O. Dunn............................................. $423,248 21
C. E. McCraw................................................ $248,796 26
Robert E. Jones............................................. $232,193 25
David W. Arnold............................................. $199,224 33
Timothy A. Dawson........................................... $190,566 18
</TABLE>
SEVERANCE AGREEMENTS
The Compensation Committee has approved the entering of severance
agreements between the Company and each 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 within three years following a change of control "without cause" (as
defined in the agreements); if the executive terminates employment for "good
reason" (as defined in the agreements) within three years following a change of
control; or if the executive terminates employment 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 the Company's
favor, 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.
17
<PAGE> 20
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total returns of an
investment of $100 in the Company's common stock, the S&P 600, and the 6-Stock
Custom Composite Index, a self-selected peer group of fertilizer manufacturers
that consists of Agrium Inc., IMC Global Inc., Norsk Hydro AS-ADR, Phosphate
Resource Partners, Potash Corporation of Saskatchewan and Terra Industries Inc.
<TABLE>
<S> <C> <C>
Mississippi Chemical S&P 600
Jun-95 100.00 100.00
Jun-96 102.00 126.00
Jun-97 108.00 153.00
Jun-98 87.00 183.00
Jun-99 54.00 179.00
Jun-00 27.00 205.00
<S> <C>
Custom Composit Index
Jun-95 100.00
Jun-96 122.00
Jun-97 127.00
Jun-98 110.00
Jun-99 88.00
Jun-00 89.00
</TABLE>
AUDIT COMMITTEE REPORT
The Audit Committee has: (a) reviewed and discussed the audited financial
statements with the management of the Company; (b) discussed with the Company's
independent auditors, Arthur Andersen LLP, the matters required to be discussed
by Statement on Auditing Standards No. 61; (c) received from the Company's
independent auditors the written disclosures and the letter required by
Independence Standard Board Standard No. 1, and has discussed with the Company's
independent auditors their independence; and (d) based on the review and
discussions referred to in clauses (a), (b) and (c) above, recommended to the
Board that the audited financial statements be included in the Company's Annual
Report on Form 10-K for fiscal year 2000 for filing with the Securities and
Exchange Commission.
The foregoing report is submitted by the members of the Audit Committee as
of June 30, 2000.
<TABLE>
<S> <C>
'/s/ JOHN W. ANDERSON' '/s/ WOODS E. EASTLAND'
----------------------------------------------------- -----------------------------------------------------
John W. Anderson (Chairman) Woods E. Eastland
'/s/ Ruben V. ANDERSON' '/s/ WAYNE THAMES'
----------------------------------------------------- -----------------------------------------------------
Reuben V. Anderson Wayne Thames
'/s/ WOODS E. EASTLAND'
-----------------------------------------------------
Haley Barbour
</TABLE>
18
<PAGE> 21
GENERAL INFORMATION
SHAREHOLDER PROPOSALS
Any proposals that shareholders desire to have presented at the 2001 Annual
Meeting of Shareholders must be received by us at our principal executive
offices no later than July 1, 2001, for inclusion in our 2001 proxy materials.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities and Exchange Act of 1934 requires all of the Company's
executive officers and directors to report any changes in their ownership of the
Company's common stock to the Securities and Exchange Commission and to us.
Based solely upon a review of these reports, or representations from certain
reporting persons that no reports on Form 5 were required to be filed by them,
we believe that during fiscal 2000 our executive officers and directors complied
with all Section 16 filing requirements.
INDEPENDENT AUDITORS
Arthur Andersen LLP, independent certified public accountants, served as
the Company's independent auditor for fiscal year 2000. Representatives of
Arthur Andersen LLP are expected to be present at our 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. Upon the recommendation of the
Audit Committee, the Board has selected Arthur Andersen LLP as the Company's
independent auditor for fiscal year 2001.
MISSISSIPPI CHEMICAL CORPORATION
By: /s/ ROSALYN B. GLASCOE
----------------------------------
Rosalyn B. Glascoe, Corporate
Secretary
19
<PAGE> 22
APPENDIX A
MISSISSIPPI CHEMICAL CORPORATION
AMENDED AND RESTATED
1995 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
EFFECTIVE NOVEMBER 7, 2000
1. Purpose. The purpose of the Mississippi Chemical Corporation Amended and
Restated 1995 Stock Option Plan for Nonemployee Directors (the "Plan") is to
encourage members of the Board of Directors, including emeritus directors (the
"Board"), who are not officers or full-time employees of Mississippi Chemical
Corporation (the "Company") or any of its subsidiaries ("Nonemployee
Directors"), to become shareholders in the Company thereby giving them a stake
in the growth and profitability of the Company, to enable them to represent the
viewpoint of the shareholders of the Company more effectively, to encourage them
to continue serving as directors, and to provide them with long-term incentives
competitive with the median level of such incentives among companies of a
similar size and industry.
2. Shares Reserved. There is hereby reserved for issuance under the Plan an
aggregate of 400,000 shares of common stock of the Company, subject to
adjustment pursuant to Section 7 below, which may be authorized but unissued or
treasury shares. If there is a lapse, expiration, termination or cancellation of
any option granted under this Plan, all unissued shares subject to the option
may again be used for new options granted under this Plan.
3. Grant of Options. Each person who becomes a Nonemployee Director shall
be granted an initial option to purchase 5,000 shares of common stock as of the
first business day of the next succeeding fiscal year of the Company. Any person
who becomes Chairman of the Board shall be granted an additional option to
purchase 5,000 shares of common stock as of the first business day of the next
succeeding fiscal year of the Company (except that the additional option for a
person who previously served as Vice Chairman shall be for 3,000 shares). Any
person who becomes Vice Chairman of the Board shall be granted an additional
option to purchase 2,000 shares of common stock as of the first business day of
the next succeeding fiscal year of the Company.
Each Nonemployee Director who is granted an initial option hereunder shall
be granted an additional option to purchase 2,000 shares of common stock as of
each July 1 (or if not a business day, the first business day thereafter) on
which the Nonemployee Director is a member of the Board. The annual options for
the Chairman and Vice Chairman of the Board shall be for 4,000 and 3,000 shares,
respectively.
4. Option Price. The option price for each option granted to Nonemployee
Directors shall be not less than 100% of the fair market value of the common
stock of the Company on the date the stock option is granted, and repricing of
options shall not be permitted. "Fair market value" shall be defined as the
average of the closing price of the shares subject to option as reported on the
New York Stock Exchange for the last 20 trading days prior to the date of option
grant or as required by applicable law or regulation. The option price may be
paid by check or by the delivery of shares of common stock then owned by the
participant. A director may also pay the option price by use of cashless
exercise as permitted under the Federal Reserve Board's Regulation T.
5. Option Term; Termination of Service. The option term shall be ten years.
Any option granted to a Nonemployee Director may not be exercised for the first
year from the date of its grant. Any option granted to a Nonemployee Director
may be exercisable for 20 percent of the shares subject to option during the
second year from the date of grant, 40 percent for the third year from the date
of grant, 60 percent for the fourth year from the date of grant, 80 percent for
the fifth year from the date of grant, and shall be fully exercisable commencing
with the sixth year from the date of grant. Each option shall become fully
exercisable upon the retirement of the director or upon a change of control of
the Company as defined in paragraph 10 of the Company's 1994 Stock Incentive
Plan, or any successor provision or plan. Each option shall expire three months
after the date of optionee's termination of service for any reason other than
death, disability or
A-1
<PAGE> 23
retirement. In the event of death, disability or retirement, each option shall
be exercisable for a period of three years after termination. For these
purposes, retirement shall mean termination of service on the Board after the
Nonemployee Director has attained age 55 and completed at least five years of
service as a member of the Board. Except in the case of retirement, any option
granted to a Nonemployee Director may be exercised during the indicated periods
following termination only to the extent the option was exercisable on the date
of termination.
6. Nontransferability. Any option granted under this Plan shall not be
transferable other than by will or the laws of descent and distribution or as
provided by the Board. If a director dies during the option period, any option
granted to the director may be exercised by his or her estate or the person to
whom the option passes by will or the laws of descent and distribution.
7. Adjustment Provisions. (a) If at any time the Company changes the number
of issued shares of common stock without new consideration to it (such as by
stock dividends, stock splits or similar transactions), the total number of
shares reserved for issuance under this Plan and the number of shares covered by
each outstanding option shall be automatically adjusted to the number of shares
as is equitably required, together with an appropriate adjustment to the
exercise price of each outstanding option, so that the aggregate consideration
payable to the Company upon exercise of each outstanding option will not be
changed.
(b) (i) Notwithstanding any other provision of this Plan, and without
affecting the number of shares reserved or available hereunder, the Board may
authorize the issuance or assumption of benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate.
(ii) In the event of any merger, consolidation or reorganization of the
Company with any other entity, there may be substituted, on an equitable basis
as determined by the Board, for each share of common stock then reserved for
issuance under the Plan and for each share of common stock then subject to a
benefit granted under the Plan, the number and kind of shares of stock, other
securities, cash or other property to which holders of common stock of the
Company will be entitled pursuant to the transaction.
8. Registration and Legal Compliance. The grant of any option under the
Plan may also be subject to other provisions as counsel to the Company deems
appropriate, including, without limitation, provisions as may be appropriate to
comply with federal and state securities laws and stock exchange requirements.
The Company shall not be required to issue or deliver any certificate for common
stock purchased upon the exercise of any option granted under this Plan prior to
the admission of such shares to listing on any stock exchange on which common
stock of the Company may at that time be listed. If the Company shall be advised
by its counsel that the shares deliverable upon exercise of an option are
required to be registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities law, or that delivery of such shares must be
accompanied or preceded by a prospectus meeting the requirements of such Act,
the Company will use its best efforts to effect such registration or provide
such prospectus not later than a reasonable time following each exercise of such
option, but delivery of shares by the Company may be deferred until such
registration is effective or such prospectus is available.
9. Term of Plan; Amendment, Suspension and Termination of Plan. The Plan
will be unlimited in duration. The Board may suspend or terminate the Plan at
any time and may amend it from time to time in such respects as the Board may
deem advisable in order that any grants thereunder shall conform to or otherwise
reflect any change in applicable laws or regulations or to permit the Company or
the Nonemployee Directors to enjoy the benefits of any change in applicable laws
or regulations; provided, however, that no amendment shall, without shareholder
approval, increase the number of shares of common stock which may be issued
under the Plan, materially modify the requirements as to eligibility for
participation in the Plan, or permit repricing of option grants. No such
amendment, suspension or termination shall impair the rights of Nonemployee
Directors under any outstanding options, or make any change that would
disqualify the Plan or any other plan of the Company intended to be so qualified
from the exemption provided by Securities and Exchange Commission Rule 16b-3.
A-2
<PAGE> 24
10. Administration and Interpretation of the Plan. The Plan shall be
administered by the Board. The Board will approve the forms of agreements
relating to the benefits granted hereunder, containing such terms and conditions
consistent with the provisions of the Plan as are determined by the Board, which
agreements may be executed on behalf of the Company by the Chairman of the
Board, the Chairman of the Corporate Governance Committee of the Board, the
President of the Company, or any Vice President of the Company. The Board will
have complete authority to construe, interpret, and administer the provisions of
this Plan and the provisions of the agreements relating to the benefits granted
hereunder; to prescribe, amend and rescind rules and regulations pertaining to
this Plan; and to make all other determinations necessary or deemed advisable in
the administration of the Plan. The determinations, interpretations and
constructions made by the Board are final and conclusive. No member of the Board
may be held liable for any action taken, or failed to be taken, made in good
faith relating to the Plan or any benefit hereunder, and the members of the
Board will be entitled to defense, indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including attorneys'
fees) arising therefrom to the fullest extent permitted by law and by the
Articles of Incorporation of the Company.
11. Shareholder Approval. This Plan was originally adopted by the Board on
July 20, 1995, approved by the shareholders at their Annual Meeting held
November 14, 1995, and amended by the Board effective as of August 19, 1996.
This Plan was amended and restated by the Board effective April 17, 1997, and
approved by the shareholders at their annual meeting held November 11, 1997.
This amended and restated Plan was authorized and approved by the Board on
August 15, 2000, subject to shareholder approval at their annual meeting on
November 7, 2000.
A-3
<PAGE> 25
APPENDIX B
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
AS ADOPTED BY THE BOARD OF DIRECTORS
ON JULY 27, 2000
I. PURPOSES AND RESPONSIBILITIES
The primary purpose of the Audit Committee is to provide independent and
objective oversight to the accounting functions of Mississippi Chemical
Corporation (the "Company") and its subsidiaries and to ensure the objectivity
of the Company's financial statements.
The Audit Committee has responsibility to:
- oversee the integrity of the audit process, financial reporting and
internal accounting controls of the Company;
- oversee the work of the Company's financial management ("Management"),
internal auditors (the "Internal Auditors") and independent auditors (the
"Outside Auditors") in these areas;
- ensure that Management properly develops and adheres to a sound system of
internal accounting and financial controls and that the Internal Auditors
and the Outside Auditors objectively assess the Company's financial
reporting, accounting practices and internal controls; and
- provide an open avenue of communication between the Outside Auditors, the
Internal Auditors and the Board.
The Audit Committee will adopt policies and procedures for carrying out its
responsibilities. Such policies and procedures should be flexible so the Audit
Committee may react to changing conditions.
II. MEMBERSHIP OF THE COMMITTEE
A. The Audit Committee will consist of three or more directors as
determined annually by the Board and appointed in accordance with the Company's
bylaws.
B. Each member of the Audit Committee must:
1. not have a relationship with the Company that would interfere with
the exercise of his or her independence from Management and the Company;
2. be financially literate, as that qualification is interpreted by
the Board in its business judgment from time to time, or must become
financially literate within a reasonable period of time after his or her
appointment to the Audit Committee;
3. not be or have been during the three years preceding his or her
appointment to the Audit Committee an employee or non-employee executive
officer of the Company or any of its Affiliates (as defined in the
paragraph 303.02 of the New York Stock Exchange, Inc.'s NYSE Listed Company
Manual [the "NYSE Definitions"]);
4. not be or have been during the three years preceding his or her
appointment to the Audit Committee a partner, controlling shareholder or
executive officer of an organization that has a material business
relationship with the Company unless the Board determines in its business
judgment that the business relationship does not interfere with the
Director's exercise of independent judgment;
5. not have or have had within the three years preceding his or her
election to the Audit Committee a direct business relationship with the
Company unless the Board determines in its business judgment that the
relationship does not interfere with the Director's exercise of independent
judgment;
B-1
<PAGE> 26
6. not be employed as an executive of another corporation for which
any of the Company's executive officers serve as a member of the other
corporation's compensation committee; and
7. not be an Immediate Family (as defined in the NYSE Definitions)
member of an individual who is or had been during the three years preceding
his or her appointment to the Audit Committee an executive officer of the
Company or its Affiliates.
At least one member of the Audit Committee must have accounting or related
financial management expertise, as the Board interprets such qualification
in its business judgment from time to time.
C. The Board will determine a director's eligibility to serve on the Audit
Committee. The Board may elect one director to the Audit Committee who is no
longer an employee or non-employee executive of the Company or any of its
Affiliates or an Immediate Family member of an executive officer of the Company
or any of its Affiliates, but who has been so with the three years prior to the
date of his or her appointment to the Audit Committee, under exceptional and
limited circumstances if the Board determines in its business judgment that such
director's membership on the Audit Committee is required by the best interests
of the Company and its shareholders and the nature of the relationship and
reasons for the determination are disclosed in the Company's next annual proxy
statement.
III. MEETINGS OF THE AUDIT COMMITTEE
A. The Audit Committee will meet as often as it deems appropriate to
discharge its responsibilities, but shall meet at least two times each year. The
Audit Committee may ask members of Management, the Outside Auditors, the
Internal Auditors or others to attend any of its meetings and to provide any
information it may deem appropriate. Meetings may be telephonic.
B. To the extent it deems necessary in its business judgment, the Audit
Committee will meet with Management, the Outside Auditors and the Internal
Auditors, either with all or one or more of such group being present at any
meeting, to discuss matters for which the Audit Committee has responsibility.
IV. SPECIFIC RESPONSIBILITIES OF THE AUDIT COMMITTEE
A. Selection and Oversight of the Outside Auditors.
1. The Outside Auditors are ultimately accountable to the Board and the
Audit Committee. The Board and Audit Committee shall select and, where
appropriate, replace the Outside Auditors.
2. The Audit Committee will approve the terms of the engagement and
compensation of the Outside Auditors.
3. The Audit Committee will, as it deems necessary in its business
judgment, evaluate the Outside Auditors and their impact on the accounting
practices, internal controls and financial reporting of the Company.
4. The Audit Committee shall be responsible for ensuring that the Outside
Auditors submit to it on a periodic basis a formal written statement delineating
all relationships between the Outside Auditors and the Company, including the
disclosures regarding the Outside Auditors independence required by the
Independence Board Standard No. 1, as in effect from time to time.
5. Audit Committee shall be responsible for actively engaging in a dialogue
with the Outside Auditors with respect to any disclosed relationships or
services that may impact the objectivity and independence of the Outside
Auditors and for recommending that the Board take appropriate action in response
to the Outside Auditors' report to satisfy itself of the Outside Auditors'
independence.
B. Appointment and Oversight of Internal Auditors.
1. The Audit Committee will review and concur in the appointment,
replacement, reassignment or dismissal of the Company's Chief Audit Executive.
B-2
<PAGE> 27
2. The Audit Committee will, as it deems necessary in its business
judgment, evaluate the Internal Auditors and their impact on the accounting
practices, internal controls and financial reporting of the Company.
C. Oversight and Review of Accounting Principles and Practices and Internal
Controls.
The Audit Committee will, as it deems necessary in its business judgment,
exercise oversight of, and review and discuss with Management, the Outside
Auditors and the Internal Auditors:
1. the quality, appropriateness and acceptability of the Company's
accounting principles used in its financial reporting, the clarity of the
financial disclosures made, changes in the Company's accounting principles
or practices, the application of particular accounting principles and
disclosure practices by Management to new transactions or events;
2. potential major changes in generally accepted accounting principles
and the effect of those changes on the Company's financial statements;
3. changes in accounting principles and financial reporting policies
proposed to be implemented by the Company;
4. significant litigation, contingencies and claims against the
Company and material accounting issues that require disclosure in the
Company's financial statements;
5. information regarding any "second" opinions sought by management
from an independent auditor with respect to the accounting treatment of a
particular event or transaction;
6. Management's compliance with the Company's processes, procedures
and internal controls;
7. the adequacy and effectiveness of the Company's internal accounting
and financial controls and the recommendations of Management, the Outside
Auditors and Internal Auditors for the improvement of accounting practices
and internal controls; and
8. disagreements between Management and the Outside Auditors or the
Internal Auditors regarding the application of any accounting principles or
any other matter.
D. Oversight and Monitoring of the Company's Financial Statements and Audits.
The Audit Committee will, as it deems necessary in its business judgment:
1. review with the Outside Auditors, the Internal Auditors and
Management the audit function generally, the scope of proposed audits of
the Company's financial statements and the audit procedures to be used in
those audits;
2. review the audit efforts with the Outside Auditors, the Internal
Auditors and Management to ensure effective use of audit resources;
3. review information regarding internal audits;
4. review with the Outside Auditors and Management each set of audited
financial statements and the notes to those financial statements and, with
respect to the Company's audited financial statements for the preceding
fiscal year, to recommend whether those audited financial statements should
be included in the Company's Annual Report on Form 10-K relating to that
fiscal year; and
5. discuss with the Outside Auditors any serious difficulties or
disputes with Management encountered during the course of the audit,
including any adjustments to the financial statements recommended by the
Outside Auditors and rejected by Management.
B-3
<PAGE> 28
E. Communications with the Outside Auditors.
The Audit Committee will, as it deems necessary in its business judgment,
communicate with the Outside Auditors:
1. to obtain information concerning accounting principles adopted by
the Company, internal controls of the Company, Management, the Company's
financial, accounting and internal auditing personnel and the impact of
each on the quality and reliability of the Company's financial reporting;
2. obtain the information required to be disclosed to the Company by
generally accepted auditing standards in connection with the conduct of an
audit, including topics covered by SAS 54, 60, 61 and 82; and
3. require the Outside Auditors to review the financial information
included in the Company's Quarterly Reports on Form 10-Q in accordance with
Rule 10-01(d) of Regulation S-X of the Securities and Exchange Commission
(the "Commission") prior to the Company filing such reports with the
Commission and to provide to the Company for inclusion in the Company's
Quarterly Reports on Form 10-Q any reports of the Outside Auditors required
by Rule 10-01(d).
F. Communications with the Internal Auditors.
The Audit Committee will, as it deems necessary in its business judgment,
communicate with the Internal Auditors to obtain information concerning
accounting principles adopted by the Company, internal controls of the Company,
Management, the Company's financial and accounting personnel and the impact of
each on the quality and reliability of the Company's financial statements.
G. Communications with Management.
The Audit Committee will, as it deems necessary in its business judgment,
communicate with Management to obtain information concerning accounting
principles adopted by the Company, internal controls of the Company, the Outside
Auditors, the Company's financial, accounting and internal auditing personnel
and the impact of each on the quality and reliability of the Company's financial
statements.
H. Audit Committee Reports.
1. The Audit Committee will prepare annually a report for inclusion in the
Company's proxy statement relating to its annual shareholders meeting. In that
report, the Audit Committee will state whether it has: (a) reviewed and
discussed the audited financial statements with Management; (b) discussed with
the Outside Auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, as that statement may be modified or supplemented
from time to time; (c) received from the Outside Auditors the written
disclosures and the letter required by Independence Standard Board Standard No.
1, as that standard may be modified or supplemented from time to time, and has
discussed with the Outside Auditors, the Outside Auditors' independence; and (d)
based on the review and discussions referred to in clauses (a), (b) and (c)
above, recommended to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the last fiscal year
for filing with the Commission.
2. To the extent such information is not included in the annual report of
the Audit Committee to be included in the Company's proxy statement relating to
its annual shareholders meeting, the Audit Committee will also report at least
annually to the Board on significant results of its activities and compliance
with this Charter.
I. Additional Responsibilities.
The Audit Committee will:
1. As it deems necessary in its business judgment, conduct or
authorize investigations into any matters within the Audit Committee's
scope of responsibilities. The Audit Committee shall be
B-4
<PAGE> 29
empowered to retain independent counsel and other professionals to assist
in the conduct of any investigation.
2. Review annually with the General Counsel the controls and policies
pertaining to hedging activities with respect to natural gas and fertilizer
products.
3. Review annually with the Chief Financial Officer the Company's
Interest Rate Risk Management Policy. There should also be reviewed at
least annually a report showing outstanding interest rate derivatives
transactions and market positions.
4. Review annually risk management with the Company's risk manager.
This review would include the cost and coverage.
5. Review annually with the full Board of Directors the adequacy of
the Audit Committee Charter.
B-5
<PAGE> 30
PROXY MISSISSIPPI CHEMICAL CORPORATION PROXY
ANNUAL MEETING OF SHAREHOLDERS -- NOVEMBER 7, 2000
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 7, 2000, 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 2003: Coley L. Bailey, Woods
E. Eastland, John Sharp Howie, and W.A. Percy II.
NOMINEE FOR ELECTION TO SERVE AS DIRECTOR UNTIL 2001: Reuben V. Anderson.
APPROVAL OF THE MISSISSIPPI CHEMICAL CORPORATION AMENDED AND RESTATED 1995
STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS.
SEE REVERSE SIDE. If you wish to vote in accordance with the Board's
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 reverse side.)
<PAGE> 31
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
ALL
FOR WITHHOLD EXCEPT
1. Election of Directors (see reverse) [ ] [ ] [ ]
-------------------------
Nominee Exceptions
FOR AGAINST ABSTAIN
2. Amended and Restated 1995 Stock Option [ ] [ ] [ ]
Plan for Nonemployee Directors
3. In their discretion, to act on any other matters which may properly come
before the meeting and any adjournments thereof.
The shares represented by this Proxy will be voted at the meeting. This Proxy
is solicited on behalf of the Board 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 AND "FOR" APPROVAL OF THE AMENDED AND RESTATED 1995 STOCK OPTION
PLAN FOR NONEMPLOYEE DIRECTORS.
Dated: , 2000
------------------------------
------------------------------------------
------------------------------------------
(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.)
