<PAGE> 1
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:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LAFARGE 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
LAFARGE CORPORATION
11130 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1999
Notice is hereby given that the annual meeting of stockholders of Lafarge
Corporation (the "Company") will be held on Tuesday, May 4, 1999 at 9:00 a.m.,
local time, at the Ritz Carlton Hotel, 1700 Tysons Boulevard, McLean, Virginia,
for the following purposes:
(1) To elect a Board of Directors for the ensuing year;
(2) To ratify the appointment of Arthur Andersen LLP as auditors to
audit the financial statements of the Company for the fiscal year
ending December 31, 1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof, according to the proxies'
discretion, and in their discretion.
Only holders of record of the Voting Stock and Common Stock of the Company
at the close of business on March 8, 1999 are entitled to notice of and to vote
at the meeting or any adjournment thereof. Holders of record of Exchangeable
Preference Shares of Lafarge Canada Inc. ("LCI"), a subsidiary of the Company,
are entitled to voting rights in the Company through a trust that holds shares
of the Voting Stock of the Company.
A record of the Company's activities and consolidated financial statements
for the fiscal year ended December 31, 1998 are contained in the enclosed 1998
Annual Report.
Dated: March 29, 1999
By Order of the Board of Directors,
DAVID C. JONES
Vice President--Legal
Affairs and Secretary
---------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF
YOU DO ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON.
<PAGE> 3
LAFARGE CORPORATION
11130 SUNRISE VALLEY DRIVE
RESTON, VIRGINIA 20191
PROXY STATEMENT
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors of Lafarge
Corporation ("Lafarge Corp." or the "Company") for use at the annual meeting of
stockholders of the Company to be held at the time and place and for the
purposes set forth in the foregoing notice.
Shares represented by a proxy in the form enclosed, duly signed, dated and
returned to the Company and not revoked, will be voted at the meeting in
accordance with the directions given, but in the absence of directions to the
contrary, such shares will be voted for the election of the Board's nominees for
director and in favor of the other proposals set forth in the foregoing notice.
Any stockholder of the Company may revoke his or her proxy, at any time before
it has been exercised, by notice in writing to the Secretary of the Company. Any
holder of exchangeable preference shares (the "Exchangeable Shares") of Lafarge
Canada Inc. ("LCI"), a subsidiary of the Company, may revoke his or her voting
instructions to the Montreal Trust Company (the "Trustee"), at any time before
the Trustee has acted upon such instructions, by notice in writing to the
Trustee.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, certain officers and employees of the Company, who will
receive no additional compensation for their services, may solicit proxies in
person or by telephone or telefax.
The approximate date on which this proxy statement and the form of proxy
are first being sent to stockholders is March 29, 1999.
VOTING SECURITIES
The securities with voting rights in the Company which were outstanding at
March 8, 1999, the record date, consisted of 67,462,741 shares of common stock,
par value $1.00 per share (the "Common Stock"), and 4,924,041 shares of voting
stock (the "Voting Stock") of the Company. The Company has deposited shares of
Voting Stock in trust under an arrangement which entitles each holder (other
than LCI and the Company) of Exchangeable Shares to vote at meetings of
stockholders of the Company on the basis of one vote in the Company for each
whole share of Common Stock for which the Exchangeable Shares held by such
holder are then exchangeable. Exchangeable Shares are presently exchangeable, at
the option of the holder, into Common Stock on a one for one basis. Each holder
of record of Common Stock or Exchangeable Shares (collectively, the "Voting
Securities") is entitled to one vote for each such share so held, with all
stockholders voting together as a single class.
Each holder of shares of any class of Voting Securities is entitled to one
vote for each share owned of record on the record date; provided, however, that
any bona fide transferee of Exchangeable Shares after the close of business on
such record date shall be entitled to instruct the Trustee with respect to the
exercise of the voting rights pertaining to such shares or to attend the annual
meeting of stockholders of the Company and to personally exercise such voting
rights if, not later than ten business days prior to such meeting, such
transferee delivers written notice to the Trustee of his or her intention to so
instruct the Trustee or to so attend and vote and, within five business days of
such meeting, produces for inspection by the Trustee at its principal corporate
trust office in Montreal, Quebec, properly endorsed certificates for such
shares, or otherwise establishes to the satisfaction of the Trustee that he or
she is the bona fide owner of such shares.
<PAGE> 4
The affirmative vote of a majority of all of the votes cast at a meeting at
which a quorum is present is necessary for the election of directors. For
purposes of the election of directors, abstentions will not be counted as votes
cast and will have no effect on the result of the vote.
The affirmative vote of a majority of all of the votes cast at a meeting at
which a quorum is present is necessary for ratification of the appointment of
independent auditors. For purposes of the vote regarding independent auditors,
abstentions and broker non-votes will not be counted as votes cast and will have
no effect on the result of the vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 8, 1999, information with
respect to stockholders who were known to be beneficial owners of more than five
percent of any class of Voting Securities.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------------------------ ----------------- --------
<S> <C> <C> <C>
Common Stock(1) Lafarge S.A. 37,531,239(2) 51.9%
61-63 rue des Belles Feuilles
76116 Paris France
Common Stock FMR Corp.(3) 4,760,967(3) 7.1%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Under the rules and regulations of the Securities and Exchange Commission, a
"beneficial owner" is defined generally as any person who, directly or
indirectly, has or shares voting power or investment power with respect to a
security, and a person is deemed to be the beneficial owner of a security if
that person has the right to acquire beneficial ownership of such security
within 60 days. Accordingly, the table includes Exchangeable Shares, which
are presently exchangeable at the option of the holder into Common Stock on
a one for one basis. In addition, any securities not outstanding but which
may be so acquired are deemed to be outstanding for the purpose of computing
the percentage of outstanding securities of the class owned by such person
but are not deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person. Holders of Exchangeable
Shares (other than LCI and the Company) have voting rights in the Company
through a trust holding shares of the Voting Stock and are entitled to
direct the voting of one share of Voting Stock for each Exchangeable Share
held.
(2) Includes 22,365,902 shares of Common Stock held of record by Lafarge (U.S.)
Holdings, a New York trust in which Lafarge S.A. owns 100% of the beneficial
interest ("Lafarge Holdings"), 14,603,259 shares of Common Stock held of
record by Paris-Zurich Holdings, a New York trust in which the beneficial
owners are Lafarge (U.S.) Holdings and Cementia Holdings A.G., a Swiss
corporation and a majority-owned subsidiary of Lafarge S.A. and additional
Voting Securities held by certain other affiliates of Lafarge S.A.
(3) This information is based on a Schedule 13G dated February 1, 1999 filed
with the U.S. Securities and Exchange Commission and received by the
Company. The Schedule 13G reports beneficial ownership by FMR Corp. of
4,760,967 shares, with sole power to dispose or direct the disposition of
all of these shares, and with sole power to vote or direct the vote for
137,300 of these shares. The Schedule 13G further reports that various
persons have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, these shares, and that the
interest of one person, Fidelity Magellan Fund, an investment company
registered under the Investment Company Act of 1940, in the shares of Common
Stock beneficially owned by FMR Corp. amounted to 4,437,859 shares, or 6.6%
of the Voting Securities.
On November 1, 1993, Lafarge S.A. and the Company entered into an option
agreement (the "Option Agreement") intended to enable Lafarge S.A. to maintain
its existing margin of voting control in the event of future issuances by the
Company of its Voting Securities. The Option Agreement grants the Lafarge S.A.
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<PAGE> 5
Group the right, until October 31, 2003, to purchase from the Company additional
Voting Securities. The Option Agreement is essentially a renewal of an option
agreement between Lafarge S.A. and the Company dated October 31, 1983 and which
expired on October 31, 1993. The Option Agreement was approved by the vote of
the independent directors of the Company (being those directors who have no
affiliation with Lafarge S.A.) based upon the business advantages for the
Company which result from Lafarge S.A.'s majority ownership of the Company.
Lafarge S.A. has informed the Company that it presently intends to maintain
ownership of a majority of the outstanding Voting Securities and to control the
election of the Board of Directors.
Lafarge S.A. is a public company whose voting securities are traded on
various European securities exchanges. In the opinion of Lafarge S.A.'s
directors and its management, Lafarge S.A. is controlled by its Board of
Directors. The Lafarge Group is principally engaged in the manufacture and sale
of cement, concrete, aggregates, gypsum products, specialty materials and
roofing. Active in 65 countries, the Lafarge Group had 1998 sales of $11.4
billion.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 8, 1999, the beneficial
ownership of the Company's Voting Securities held by each of the Company's
current directors who is standing for reelection, nominees for directors, each
executive officer named in the Summary Compensation Table, and all directors and
executive officers as a group, based upon information obtained from such
persons:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF THE COMPANY'S OF LAFARGE S.A.
COMMON STOCK(1) COMMON STOCK(2)
------------------------ --------------------
NUMBER PERCENT NUMBER PERCENT
NAME POSITION OF SHARES OF CLASS OF SHARES OF CLASS
---- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Thomas A. Buell Current director and nominee 10,500(3) * 0 *
Marshall A. Cohen Current director and nominee 10,000(4) * 0 *
Bertrand P. Collomb Current director, nominee and 105,101(5) * 61,210(6) *
executive officer
Philippe P. Dauman Current director and nominee 3,500(7) * 0 *
Bernard L. Kasriel Current director, nominee and 9,500(8) * 12,879(9) *
executive director
Jacques Lefevre Current director and nominee 2,100(10) * 16,566(11) *
Paul W. MacAvoy Current director and nominee 11,000(3) * 0 *
Claudine B. Malone Current director and nominee 9,250(12) * 0 *
Robert W. Murdoch Current director and nominee 11,100(3) * 1,536 *
Bertin F. Nadeau Current director and nominee 10,023(13) * 0 *
John D. Redfern Current director and nominee 19,730(3) * 559 *
Joe M. Rodgers Current director and nominee 10,500(14) * 0 *
Michel Rose Current director and nominee 60,500(7) * 4,934(15) *
Ronald D. Southern Current director and nominee 10,130(16) * 0 *
John M. Piecuch Current director, nominee and 113,371(17) * 6,103(18) *
executive officer
Edward T. Balfe Executive officer 90,658(19) * 2,223(7) *
Peter H. Cooke Executive officer 34,174(20) * 0 *
Duncan S. Gage Executive officer 19,618(21) * 2,244(22) *
Larry J. Waisanen Executive officer 18,940(23) * 2,888(24) *
All directors and executive officers of the 694,421(25) * 112,740(26) *
Company as a group (28 persons)
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise indicated, all shares are directly owned. Under the rules
and regulations of the Securities and Exchange Commission, a "beneficial
owner" is defined generally as any person who,
3
<PAGE> 6
directly or indirectly, has or shares voting power or investment power with
respect to a security, and a person is deemed to be the beneficial owner of
a security if that person has the right to acquire beneficial ownership of
such security within 60 days. Accordingly, the table includes (a)
Exchangeable Shares which are presently exchangeable at the option of the
holder into Common Stock on a one for one basis; and (b) Common Stock and
Exchangeable Shares covered by stock options that were exercisable on the
record date or within 60 days thereafter (referred to in the following
footnotes as "currently exercisable options"). In addition, any securities
not outstanding but which may be so acquired are deemed to be outstanding
for the purpose of computing the percentage of outstanding securities of
the class owned by such person but are not deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other person.
Holders of Exchangeable Shares have voting rights in the Company through a
trust holding shares of the Voting Stock and are entitled to direct the
voting of one share of Voting Stock for each Exchangeable Share held.
(2) Lafarge S.A. is the Company's "parent" as that term is defined in
regulations promulgated under the Securities Exchange Act of 1934, as
amended.
(3) Includes 9,000 shares not outstanding but subject to currently exercisable
options.
(4) Includes 9,000 shares not outstanding but subject to currently exercisable
options and 1,000 shares are owned by Adroit Investments Ltd., which is
controlled by Mr. Cohen.
(5) Includes 97,500 shares not outstanding but subject to currently exercisable
options.
(6) Includes 59,997 shares not outstanding but subject to currently exercisable
options.
(7) These shares are not outstanding but are subject to currently exercisable
options.
(8) Includes 7,500 shares not outstanding but subject to currently exercisable
options.
(9) Includes 11,111 shares not outstanding but subject to currently exercisable
options.
(10) Includes 2,000 shares not outstanding but subject to currently exercisable
options.
(11) Includes 15,366 shares not outstanding but subject to currently exercisable
options.
(12) Includes 9,000 shares not outstanding but subject to currently exercisable
options and 250 shares are owned by Financial & Management Consulting, Inc.
which is controlled by Ms. Malone.
(13) Includes 9,000 shares not outstanding but subject to currently exercisable
options and 1,023 shares are owned by La Financiere Nadeau Ltd. which is
controlled by Mr. Nadeau.
(14) Includes 9,000 shares not outstanding but subject to currently exercisable
options and 1,500 shares are owned by JMR Investments which is controlled
by Mr. Rodgers and his wife.
(15) Includes 4,446 shares not outstanding but subject to currently exercisable
options and 488 shares owned by Mr. Rose's wife.
(16) Includes 9,000 shares not outstanding but subject to currently exercisable
options and 1,130 shares are owned by Sentgraf Enterprises Ltd., which is
controlled by Mr. Southern.
(17) Includes 108,750 shares not outstanding but subject to currently
exercisable options.
(18) Includes 5,993 shares not outstanding but subject to currently exercisable
options.
(19) Includes 86,250 shares not outstanding but subject to currently exercisable
options.
(20) Includes 32,500 shares not outstanding but subject to currently exercisable
options.
(21) Includes 18,750 shares not outstanding but subject to currently exercisable
options.
(22) Includes 2,223 shares not outstanding but subject to currently exercisable
options.
(23) Includes 18,125 shares not outstanding but subject to currently exercisable
options.
(24) Includes 2,771 shares not outstanding but subject to currently exercisable
options.
(25) Includes 649,000 shares not outstanding but subject to currently
exercisable options.
(26) Includes 105,482 shares not outstanding but subject to currently
exercisable options.
4
<PAGE> 7
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of
the Board of Directors, which exercises all corporate powers of the Company and
establishes broad corporate policies. When the Board is not in session, the
Executive Committee may exercise the powers of the Board of Directors in the
management of the business and affairs of the Company with specified
limitations. The Executive Committee of the Board of Directors is presently
composed of Bertrand P. Collomb, Bernard L. Kasriel, John D. Redfern and John M.
Piecuch. The Board of Directors held five meetings in 1998. During 1998, Ronald
D. Southern attended fewer than 75 percent of the aggregate of the number of
meetings of the Board of Directors and the meetings of the committees on which
he served.
As permitted by the by-laws of the Company, the Board of Directors has also
designated several other committees from its members, including a Board
Governance Committee, a Management Development and Compensation Committee and an
Audit Committee. One of the functions of the Board Governance Committee is to
recommend nominees for election as directors at the annual meeting of
stockholders and to recommend candidates for election to fill vacancies on the
Board if they occur. The Board of Directors considers and takes action upon the
recommendations of the Board Governance Committee. Although this committee has
no formal policy on the subject, the Board believes that any nominee recommended
by a stockholder in writing to the Secretary of the Company with complete
biographical data regarding the nominee would be considered by the Board
Governance Committee. The Board Governance Committee is presently composed of
Thomas A. Buell, Bertrand P. Collomb, Philippe P. Dauman, Claudine B. Malone and
John D. Redfern. This Committee met three times in 1998. The Management
Development and Compensation Committee is presently composed of Thomas A. Buell,
Claudine B. Malone, John D. Redfern and Ronald D. Southern. This Committee met
four times in 1998.
At the annual meeting of stockholders, 15 directors are to be elected to
serve until the next annual meeting of stockholders and until their successors
have been elected and qualified. Holders of Voting Securities having the right
to vote shall be entitled to vote each share of stock held on the record date
for as many individuals as there are directors to be elected. Cumulative voting
is not permitted.
All duly submitted and unrevoked proxies will be voted for the nominees for
director selected by the Board of Directors, except where authorization so to
vote is withheld. If any nominee should become unavailable for election for any
presently unforeseen reason, the persons designated as proxies will have full
discretion to cast votes for another person designated by the Board. Certain
background information regarding the 15 nominees of the Board for directors of
the Company is set forth below. Each of the nominees has consented to serve as a
director if elected. All of the nominees are currently directors of the Company.
NAME, PRINCIPAL OCCUPATION, OTHER DIRECTORSHIPS AND AGE
THOMAS A. BUELL, Director/Consultant of Weldwood of Canada Limited (diversified
manufacturer of paper products). Mr. Buell has served in such capacity since May
1996. Mr. Buell, age 67, was Chairman of the Board of Weldwood of Canada Limited
from January 1979 to April 1996 and President and Chief Executive Officer of
such company from August 1975 to December 1992. He is also a director of Placer
Dome Inc., B.C. Gas, Inc., Swiss Bank Corporation (Canada), Trans Mountain Pipe
Line Company Ltd., TimberWest Forest Limited and Air Liquide Canada Inc. He has
served as a director of the Company since January 1, 1993.
MARSHALL A. COHEN, Counsel, Cassels, Brock & Blackwell, Barristers and
Solicitors. Mr. Cohen, age 63, has served in such capacity since October 1996.
From November 1988 to September 1996, he was President and Chief Executive
Officer and a director of The Molson Companies Limited. He is also a director of
Barrick Gold Corporation, American International Group, Inc. and Clark USA. He
has served as a director of the Company since 1991.
BERTRAND P. COLLOMB, Chairman of the Board of the Company and Chairman of the
Board and Chief Executive Officer of Lafarge S.A. Mr. Collomb, age 56, has
served as Chairman of the Board of the Company since January 1989 and as
Chairman of the Board and Chief Executive Officer of Lafarge S.A. since August
1,
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<PAGE> 8
1989. He served as Vice Chairman of the Board and Chief Operating Officer of
Lafarge S.A. from January 1989 to August 1, 1989. He was Vice Chairman of the
Board and Chief Executive Officer of the Company and Senior Executive Vice
President of Lafarge S.A. from 1987 until January 1989. He has served as a
director of the Company since 1985.
PHILIPPE P. DAUMAN, Deputy Chairman and Executive Vice President of Viacom, Inc.
(entertainment). Mr. Dauman, age 45, has served as Deputy Chairman since January
1996 and as Executive Vice President since March 1994. He has served as Chief
Administrative Officer of such company since March 1994 and also held the title
of General Counsel from January 1993 to October, 1998. Previously Mr. Dauman was
a partner of the law firm Shearman & Sterling. He is also a director of Viacom's
parent company, National Amusements, Inc. as well as Spelling Entertainment
Group, Inc. He has served as a director of the Company since 1997.
BERNARD L. KASRIEL, Vice Chairman of the Board of the Company and Vice Chairman
and Chief Operating Officer of Lafarge S.A. Mr. Kasriel, age 52, was elected to
his current position in May 1996. He has served as Vice Chairman and Chief
Operating Officer of Lafarge S.A. since January 1, 1995. Prior to that he served
as Managing Director of Lafarge S.A. from 1989 to 1994, Senior Executive Vice
President of Lafarge S.A. from 1987 to 1989 and Executive Vice President of
Lafarge S.A. from 1982 until March 1987. Mr. Kasriel is also a director of
Sonoco Products Company. He has served as a director of the Company since 1989.
JACQUES LEFEVRE, Vice Chairman and Chief Operating Officer of Lafarge S.A. Mr.
Lefevre, age 60, has served as Vice Chairman and Chief Operating Officer of
Lafarge S.A. since January 1, 1995. From August 1, 1989 to 1994, he served as
Managing Director of Lafarge S.A. He served as Senior Executive Vice President
of Lafarge S.A. from 1987 to August 1, 1989 and as Executive Vice President of
Lafarge S.A. from 1983 to 1987. He has served as a director of the Company since
1983.
PAUL W. MACAVOY, Williams Brothers Professor of Management Studies, Yale School
of Management ("SOM"). Mr. MacAvoy, age 64, has been Williams Brothers Professor
since 1992. He served as Dean of the Yale SOM from 1992 to 1994, as McLaughlin
Visiting Professor of Business Administration, Amos Tuck School, Dartmouth
College in 1991, as Lester Crown Visiting Professor, Yale SOM from 1990 to 1991
and as Dean and John M. Olin Professor of Public Policy, W.E. Simon Graduate
School of Business Administration, University of Rochester from 1983 to 1991. He
has served as a director of the Company since 1993.
CLAUDINE B. MALONE, President of Financial & Management Consulting, Inc. Ms.
Malone, age 62, has served in such capacity since 1982. Ms. Malone is also a
director of Dell Computer Corp., the Federal Reserve Bank of Richmond, Hannaford
Bros. Co., Hasbro, Inc., Houghton Mifflin Company, The Limited Inc., Lowe's
Companies, Mallinckroot Group Inc., SAIC Corp. and Union Pacific Resources
Corporation. She has served as a director of the Company since May 1994.
ROBERT W. MURDOCH, Corporate Director. Mr. Murdoch, age 57, was formerly
President and Chief Executive Officer of the Company from January 1989 to August
1992, President and Chief Executive Officer of LCI from 1985 to 1992, Senior
Executive Vice President of Lafarge S.A. from August 1989 to September 1992 and
President and Chief Operating Officer of the Company from 1987 to 1989. Mr.
Murdoch is also a director of Lafarge S.A., LCI, Usinor S.A., Sierra Systems
Group Inc. and Power Corporation International Limited. He has served as a
director of the Company since 1987.
BERTIN F. NADEAU, Chairman of the Board and Chief Executive Officer of GescoLynx
Inc. (a private holding company). Mr. Nadeau has served in such capacity since
September 30, 1994. He was also Chairman of the Board, President and Chief
Executive Officer of Unigesco Inc. from 1982 to September 1994 and Chairman of
the Board of Unigesco's affiliate, Univa Inc. (a marketer and distributor in the
food sector) from October 1989 to July 1993. Mr. Nadeau, age 58, is also a
director of Sun Life Assurance Company of Canada. He has served as a director of
the Company since 1988.
JOHN M. PIECUCH, President and Chief Executive Officer of the Company and Group
Executive Vice President of Lafarge S.A. Mr. Piecuch, age 50, has served as
President and Chief Executive Officer of the Company since October 1, 1996 and
as Group Executive Vice President of Lafarge S.A. since July 1, 1994. He served
as Senior Executive Vice President of the Company from 1992 to June 30, 1994 and
as Executive
6
<PAGE> 9
Vice President of the Company from 1989 to 1992. He has served as a director of
the Company since August 1, 1994.
JOHN D. REDFERN, Chairman of the Board of LCI. Mr. Redfern has served as
Chairman of the Board of LCI since 1984. Mr. Redfern served as Vice Chairman of
the Board of the Company from January 1989 to May 1996, as Chairman of the Board
of the Company from 1985 until January 1989, as President and Chief Executive
Officer of the Company from 1983 until 1985 and as Chief Executive Officer of
LCI from 1977 to 1985. Mr. Redfern, age 63, is also a director of LCI. He has
served as a director of the Company since 1983.
JOE M. RODGERS, Chairman, The JMR Group (investment company). Mr. Rodgers, age
65, served as the United States Ambassador to France from 1985 until 1989. He is
also a director of AMR Corporation/American Airlines, Inc., Gaylord
Entertainment Company, SunTrust Bank, Nashville, N.A., Thomas Nelson, Inc.,
Towne Services, Inc., and Tractor Supply Company. He has served as a director of
the Company since 1989.
MICHEL ROSE, Group Senior Executive Vice President of Lafarge S.A. Mr. Rose has
served as Senior Executive Vice President of Lafarge S.A. since 1989. Mr. Rose,
age 56, served as President and Chief Executive Officer of the Company from
September 1, 1992 until September 30, 1996. He served as Chairman and Chief
Executive Officer of Orsan S.A., a subsidiary of Lafarge S.A., from 1987 to
1992. He has served as a director of the Company since 1992.
RONALD D. SOUTHERN, Chairman of the Board and Chief Executive Officer of ATCO
Ltd. (a diversified industrial company) and Chairman of the Board and Chief
Executive Officer of Canadian Utilities Limited (a utility company). Mr.
Southern has served ATCO Ltd. as Chairman of the Board since May 1990 and as CEO
since 1968. He was also President of such company from June 1988 until the end
of 1993. He has been Chairman of the Board of Canadian Utilities Limited since
1981 and he became CEO of such company in January 1994. Mr. Southern, age 68, is
also a director of Canadian Pacific Limited, Canadian Airlines Corporation,
Fletcher Challenge Canada Limited, Royal & Sun Alliance Insurance Company of
Canada, Chrysler Canada Ltd., Imasco Limited and Southam Inc. He has served as a
director of the Company since 1985.
There is no family relationship between any of the nominees or between any
of the nominees and any executive officer of the Company or any of its
subsidiaries. For information regarding certain business relationships between
certain nominees and the Company, see "Executive Compensation -- Transactions
with Management and Others."
On March 18, 1998, a shareholder derivative lawsuit was filed in the
Circuit Court for Montgomery County, Maryland. The lawsuit, filed against all of
the directors of the Company, alleges that they committed breach of fiduciary
duty, corporate waste, and gross negligence in connection with the Company's
purchase of a number of construction materials businesses in North America from
Lafarge S.A., its majority stockholder (the "Redland Transaction"). Lafarge S.A.
took control of these businesses in late 1997, when it acquired the British
construction materials firm Redland PLC.
The Redland Transaction was proposed to the Company in late 1997. The
Company's Board of Directors appointed a special committee of independent
directors to evaluate the Redland Transaction. The special committee conducted
extensive due diligence and retained independent professionals to assist with
its evaluation, including an investment banking firm which advised the committee
regarding the fairness of the price and terms of the proposed Redland
Transaction. Based on its due diligence and the opinions of its
specially-retained advisers, the special committee recommended the Redland
Transaction for approval by the full Board of Directors of the Company. On March
16, 1998, the full Board, consisting of a majority of independent directors,
approved the Redland Transaction. The Redland Transaction was publicly announced
on March 17, 1998.
The Company has been advised by its directors that the lawsuit against
them, which challenges their conduct in evaluating and approving the Redland
Transaction, is without merit. The directors have been vigorously defending
against the lawsuit. The initial complaint was filed on March 18, 1998. The
directors filed a motion to dismiss on May 19, 1998, which was granted on July
20, 1998. With the court's permission, the plaintiff filed an amended complaint
on August 28, 1998. The directors filed a motion to dismiss the amended
7
<PAGE> 10
complaint on September 10, 1998. That motion was argued on February 22, 1999,
and is currently under advisement with the court.
EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Management Development and Compensation Committee of the Board of Directors (the
"Compensation Committee") and, with respect to stock-based compensation, the
Stock Option Committee of the Board of Directors (the "Stock Option Committee").
None of the directors serving on the Compensation Committee or Stock Option
Committee is an employee of the Company. All decisions made by the Compensation
Committee relating to the compensation of the Company's executive officers are
presented to, and available for review by, the full Board. All decisions
relating to awards to employees under the Company's Stock Option Plan are made
solely by the Stock Option Committee.
The following is a report submitted by members of the Compensation
Committee and Stock Option Committee, addressing the Company's compensation
policy as it related to the executive officers for fiscal 1998.
REPORT TO STOCKHOLDERS BY THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE AND THE STOCK OPTION
COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS
TO THE STOCKHOLDERS OF LAFARGE CORPORATION:
COMPENSATION POLICY
The goal of the Company's executive compensation policy is to ensure that
an appropriate relationship exists between executive pay and the creation of
stockholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate competitive levels of annual base compensation with bonuses based upon
corporate performance and individual initiatives and performance. This annual
cash compensation, together with the payment of equity-based, incentive
compensation, is designed to attract and retain qualified executives and to
ensure that such executives have a continuing stake in the long-term success of
the Company. All executive officers and certain key managers participate in the
Company's incentive compensation plans.
In 1998, the Company's executive compensation program consisted primarily
of (i) base salary adjusted from the prior year, (ii) a bonus opportunity, based
upon the performance measurements described below, and (iii) options granted
under the Company's 1993 Stock Option Plan.
Base Salary. In establishing base salaries for executive officers of the
Company, the Company participates in executive compensation surveys with other
construction materials and cement companies in the United States and Canada,
reviews market data of general industry companies of similar size, and utilizes
Hay & Associates, independent compensation consultants. The comparison group
utilized by Hay & Associates for the Company for cash compensation matters
generally includes industrial companies with annual sales in excess of $1
billion, that employ more than 1,000 full time employees, with a unionized labor
force, which have been profitable over the most recent two to three year period
and which participate in the Hay & Associates compensation survey. Individual
performance among the companies included in the comparison group is not
separately evaluated. None of the five companies in the peer group index
constructed by the Company for the performance graph which appears in this proxy
statement is a participant in the Hay & Associates survey and therefore none of
them is included in the comparison group utilized by Hay & Associates for the
Company.
The Company annually sets base salary targets, or midpoints, for each of
its executives, including the President and Chief Executive Officer, at levels
within the range of those persons holding comparably responsible positions at
other companies in the Company's comparison group. Such midpoints are
established based upon a point system devised by the Company's consultants to
assign a value for each executive office,
8
<PAGE> 11
taking into account the various responsibilities and duties of the specific
position. Due to Lafarge's long-term approach to compensation and the cyclical
nature of the Company's business, historically a greater percentage of the
annual compensation (base salary plus bonus) paid to executive officers has been
represented by the salary component. Consequently, the Company has paid slightly
higher base salaries and lower annual bonuses than other companies in its
comparison group. However, the annual cash compensation targets for the
Company's executive officers have generally been set at the middle point of the
range for annual cash compensation totals in the comparison group.
Salaries for executive officers are reviewed by the Board's Management
Development and Compensation Committee (the "Compensation Committee") in the
first quarter of each year and may be increased at that time on the basis of the
individual performance of the executive, as evaluated by senior management, the
Company's expected financial performance, and changes in competitive pay levels.
An annual overall budget of salary increases for the year is prepared, based
upon the Company's expected financial performance and taking into consideration
the expected pay increases, if any, indicated by the various industry surveys
and the Company's compensation consultant. The Compensation Committee then
utilizes this budget in establishing salaries based upon management's evaluation
of each officer's prior year's performance. In 1998, in view of the Company's
long-term compensation objectives and improvements in the Company's financial
results, the budgeted salary increases were comparable to projected salary
increases for the comparison group utilized by Hay & Associates for the Company.
The base salary of $490,000 for the President and Chief Executive Officer
was established in accordance with the policies established for all executive
officers and was slightly above the midpoint of the range for persons holding
comparable positions at other companies in the comparison group. The Chairman of
the Board reviews on an annual basis the Chief Executive Officer's performance
and makes a salary recommendation which is acted upon by the Compensation
Committee. The 1998 salaries of the other executive officers of the Company
listed in the Summary Compensation Table in this proxy statement (the "named
executive officers") ranged from approximately 94% to 109% of the midpoints
established with respect to each of such positions.
Annual Incentives. The Company has an annual bonus plan that provides for
the payment of bonuses to certain executive officers and key managers contingent
upon the achievement of certain financial targets and/or individual objectives.
The bonus plan is intended to reward the accomplishment of corporate objectives,
reflect the Company's priority on maximizing earnings, and provide a fully
competitive compensation package which will attract, reward and retain quality
individuals. Under the plan, one-half of the total bonus opportunity for a
participant is based upon the attainment of financially based Company
performance objectives and one-half of the total bonus opportunity is based upon
the achievement of individual objectives. If both the Company and individual
performance objectives are attained or surpassed, participants will be eligible
to receive maximum amounts ranging from 15% to 70% of their base salary,
depending upon their position with the Company.
Financially based performance objectives measure the Company's performance
for the year against certain return on equity and return on net asset criteria.
Subjective performance criteria are used to evaluate each officer's individual
performance with respect to the individual objectives defined for such officer
at the beginning of each year. Individual objectives may include the performance
of a specific division or product line for which an officer is responsible, the
reduction of Company or division expenses or debt, or other specific tasks or
goals, and typically include a series of non-quantifiable objectives.
Annual incentives are paid only upon the achievement of either financial
performance objectives or individual performance objectives for the year.
Because of the Company's improved earnings performance, financial performance
bonuses were paid with respect to 1998 in amounts in the range of 25% to 35% of
the salaries of the Chief Executive Officer and the named executive officers.
The individual performance bonuses paid to these persons with respect to 1998
were in the range of 24% to 41% of such salaries.
Mr. Piecuch's total bonus amount was equal to approximately 76% of his 1998
salary. The Company performance objective on which a portion of such bonus was
based was the achievement by the Company of return on equity and return on net
assets targets specified by the Compensation Committee. The factors
9
<PAGE> 12
considered by the Compensation Committee in determining the portion of the bonus
based on individual objectives included his leadership role with respect to the
Company's improved financial performance in 1998 and the successful integration
of the Redland Transaction.
Long-Term Incentives. Long-term incentive awards strengthen the ability of
the Company to attract, motivate and retain executives of superior capability
and more closely align the interests of management with those of shareholders.
Long-term awards granted in 1998 consisted of non-qualified stock options
granted under the Company's 1993 Stock Option Plan. Unlike cash, the value of a
stock option will not be immediately realized and does not result in a current
expense to the Company. Stock options are granted with exercise prices equal to
the prevailing market value of the Common Stock and will have value only if the
Company's stock price increases, resulting in a commensurate benefit for the
Company's stockholders. Generally, grants may vest in equal amounts over four
years. Executives generally must be employed by the Company or an affiliate of
the Company at the time of vesting.
The Board's Stock Option Committee (the "Stock Option Committee") considers
on an annual basis the grant of options to executive officers and key managers.
The number of options granted is generally based upon the position held by a
participant and the Stock Option Committee's subjective evaluation of such
participant's contribution to the Company's future growth and profitability. In
accordance with the policy maintained by the Stock Option Committee, the total
number of options granted annually under the Company's stock option program
represents approximately 1% of the approximately 72,000,000 outstanding shares
of Common Stock of the Company (including LCI Exchangeable Shares). Generally,
the grant of options is an annual determination, but the Stock Option Committee
may consider the size of past awards and the total amounts outstanding in making
such a determination. In 1998, the Stock Option Committee granted to Mr. Piecuch
options to purchase 35,000 shares of the Company's Common Stock based upon the
foregoing factors.
Lafarge S.A., the Company's principal stockholder, has advised the Company
that it intends to grant to certain executive officers of the Company options to
purchase shares of Lafarge S.A. common stock from time to time, in recognition
of their contributions to the overall performance of Lafarge S.A. and its
affiliated companies. Options granted by Lafarge S.A. are not considered by the
Stock Option Committee in determining the number of options to be granted by the
Company.
The Compensation Committee and the Stock Option Committee believe that
linking executive compensation to corporate performance results in a better
alignment of compensation with corporate goals and stockholder interests. As
performance goals are met or exceeded, resulting in increased value to
stockholders, executives are rewarded commensurately. The Committees believe
that compensation levels during 1998 adequately reflect the Company's
compensation goals and policies.
March 1, 1999
<TABLE>
<CAPTION>
MANAGEMENT DEVELOPMENT AND COMPENSATION
COMMITTEE STOCK OPTION COMMITTEE
<S> <C>
Thomas A. Buell, Chairman Thomas A. Buell, Chairman
Claudine B. Malone Claudine B. Malone
John D. Redfern Ronald D. Southern
Ronald D. Southern
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the directors who constitute the Compensation Committee and the Stock
Option Committee, only John D. Redfern has been an officer of the Company or of
LCI. Mr. Redfern's current and previous positions with the Company and LCI are
described under "Election of Directors".
Mr. Buell is a director of B.C. Gas, Inc. from which LCI purchased natural
gas ($1,161,000) in 1998. Mr. Southern is a director of Canadian Pacific Limited
from which LCI purchased railroad transportation
10
<PAGE> 13
($7,381,000) in 1998. All of these purchases were made in the ordinary course of
business at competitive rates.
Ms. Malone is a director of Lowe's Companies, to which the Company sold
gypsum wallboard ($5,811,000) in 1998. Mr. Buell is a director of Placer Dome
Inc. to which the Company sold fly ash, cement and ready-mixed concrete
($2,164,000) in 1998. All of these sales were made in the ordinary course of
business at competitive rates.
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the Chief
Executive Officer and the other four executive officers of the Company who were
the most highly compensated for the year ended December 31, 1998 who were
serving as executive officers at year end.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
---------------------------------------------- STOCK
NAME AND OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) (#) COMPENSATION
- ---------------------------- ---- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John M. Piecuch 1998 $416,500(2) $315,775(2) 35,000 $ 24,148(3)
President and Chief 1997 382,500(4) 230,648(4) 35,000 24,316
Executive Officer of 1996 148,095(5) 47,260(5) 10,000 150,282(6)
Lafarge Corp.; President
and Chief Executive
Officer of LCI
Edward T. Balfe 1998 323,000 210,000 25,000 27,000(7)
Executive Vice President 1997 264,000 149,200 $28,483(8) 20,000 27,359
and President, 1996 246,400 120,700 20,000 27,430
Construction Materials
Duncan S. Gage 1998 265,000 141,775 20,000 27,452(9)
Executive Vice President 1997 253,200 131,800 20,000 27,975
and President, U.S. Cement 1996 237,967 114,900 20,000 27,986
Operations
Peter H. Cooke 1998 195,489 106,508 20,000 4,360(10)
Executive Vice President 1997 190,661 99,230 20,000 5,468
and President, Canadian 1996 173,168 79,647 20,000 5,913
Cement Operations
Larry J. Waisanen 1998 230,000 133,800 17,500 19,720(11)
Executive Vice President 1997 195,000 86,200 12,500 19,678
and Chief Financial 1996 175,000 66,000 10,000 35,666(12)
Officer
</TABLE>
- ---------------
(1) Excludes perquisites and other benefits, unless the aggregate amount of
such benefits exceeded the lesser of $50,000 or 10 percent of the total
annual salary and bonus reported for the named executive officer.
(2) The salary amount in the table reflects the Company's payment of 85% of Mr.
Piecuch's salary (based on an annual salary rate of $490,000) which is the
percentage of time and effort devoted to the Company during 1998. The bonus
amount in the table reflects the Company's payment of 85% of his total
bonus amount of $371,500. The portion of Mr. Piecuch's aggregate salary and
bonus paid by Lafarge S.A. for services rendered to Lafarge S.A. is not
included in the table.
(3) Includes $12,419 contributed or allocated by the Company to Mr. Piecuch's
account under the Company's Thrift Savings Plan and Thrift Savings
Restoration Plan (including interest earned); $2,822 in term life insurance
premiums paid by the Company; and $8,907 of interest that would have been
payable by him on his interest free loan if the Company did require
interest payments (calculated at the average prime rate for the year).
(4) The salary amount in the table reflects the Company's payment of 85% of Mr.
Piecuch's salary (based on an annual salary rate of $450,000) which is the
percentage of time and effort devoted to the Company during 1997. The bonus
amount in the table reflects the Company's payment of 85% of his total
bonus amount of $271,350. The portion of
11
<PAGE> 14
Mr. Piecuch's aggregate salary and bonus paid by Lafarge S.A. for services
rendered to Lafarge S.A. is not included in the table.
(5) The salary amount in the table reflects the Company's payment of 20% of Mr.
Piecuch's salary from January 1 through September 30, 1996 (during which
time Mr. Piecuch was primarily working for Lafarge S.A. and was based in
Paris, France) and 85% of Mr. Piecuch's salary (based on an annual salary
rate of $425,000) from October 1 through December 31, 1996, which are the
respective percentages of time and effort devoted to the Company during
such periods. The bonus amount in the table reflects the Company's payment
of 85% of his total bonus amount of $55,600. The portion of Mr. Piecuch's
aggregate salary and bonus paid by Lafarge S.A. for services rendered to
Lafarge S.A. is not included in the table.
(6) Includes expenses of $127,681 in connection with Mr. Piecuch's relocation
from France to the United States.
(7) Includes $11,935 contributed or allocated by the Company to Mr. Balfe's
account under the Company's Thrift Savings Plan and Thrift Savings
Restoration Plan (including interest earned); $1,705 in term life insurance
premiums paid by the Company; and $13,360 of interest that would have been
payable by him on his interest free loan if the Company did require
interest payments (calculated at the average prime rate for the year).
(8) This amount was paid as a tax equalization payment to reimburse Mr. Balfe
for taxes and related expenses which he paid to the Canadian revenue
authorities as a result of his performance of services in Canada (such
payment being equal to the difference between the total tax paid in both
the U.S. and Canada and the tax that would have been paid if only a U.S.
tax return had been required, plus tax return preparation fees.)
(9) Includes $12,355 contributed or allocated by the Company to Mr. Gage's
account under the Company's Thrift Savings Plan and Thrift Savings
Restoration Plan (including interest earned); $1,459 in term life insurance
premiums paid by the Company; and $13,638 of interest that would have been
payable by him on his interest free loan if the Company did require
interest payments (calculated at the average prime rate for the year).
(10) Includes $650 in term life insurance premiums paid by the Company on behalf
of Mr. Cooke; and $3,440 of interest that would have been payable by him on
his interest free loan if the Company did require interest payments
(calculated at the average prime rate for the year); and $270 in personal
financial services paid for by the Company.
(11) Includes $11,147 contributed or allocated by the Company to Mr. Waisanen's
account under the Company's Thrift Savings Plan and Thrift Savings
Restoration Plan (including interest earned); $1,267 in term life insurance
premiums paid by the Company; and $7,306 of interest that would have been
payable by him on his interest free loan if the Company did require
interest payments (calculated at the average prime rate for the year).
(12) Includes moving expenses of $18,739 in connection with Mr. Waisanen's
relocation in 1996.
OPTION EXERCISES AND YEAR END VALUES
The following table shows information with respect to stock options
exercised during 1998 and unexercised options to purchase the Company's Common
Stock granted to the Chief Executive Officer and the other named executive
officers and held by them at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT DECEMBER 31, 1998 AT DECEMBER 31, 1998(2)
ACQUIRED VALUE ------------------------------- ------------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John M. Piecuch 12,000 $266,375 86,250 68,750 $1,878,594 $922,344
Edward T. Balfe 18,750 589,594 65,000 55,000 1,403,750 798,438
Duncan S. Gage 28,750 533,750 -- 48,750 -- 733,750
Peter H. Cooke -- -- 15,000 47,500 300,938 705,625
Larry J. Waisanen 6,000 141,000 8,125 31,875 167,891 415,391
</TABLE>
- ---------------
(1) Market value on exercise date minus option price times number of options
exercised.
(2) Market value at year end minus option price times number of options.
Year-end market value per share ($40.50) of the Company's Common Stock.
12
<PAGE> 15
OPTION GRANTS
The following table shows information with respect to grants of stock
options pursuant to the Company's 1993 Stock Option Plan during 1998 to the
Chief Executive Officer and the other named executive officers. No stock
appreciation rights were granted under the Plan during 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER AT ASSUMED ANNUAL RATES
OF SECURITIES OF STOCK PRICE
UNDERLYING PERCENTAGE OF APPRECIATION FOR
OPTIONS TOTAL OPTIONS OPTION TERM(2)
GRANTED(1) GRANTED TO EMPLOYEES EXERCISE EXPIRATION -----------------------------
NAME (#) IN 1998 PRICE ($/SH) DATE 5% 10%
---- ------------- -------------------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John M. Piecuch 35,000 4.2% $33.188 2/10/08 $1,892,062.91 $3,012,793.98
Edward T. Balfe 25,000 3.0% 33.188 2/10/08 1,351,473.51 2,151,995.70
Duncan S. Gage 20,000 2.4% 33.188 2/10/08 1,081,178.81 1,721,596.56
Peter H. Cooke 20,000 2.4% 33.188 2/10/08 1,081,178.81 1,721,596.56
Larry J. Waisanen 17,500 2.1% 33.188 2/10/08 946,031.46 1,506,396.99
</TABLE>
- ---------------
(1) All of the options granted become exercisable in annual increments of 25%
beginning one year after the date of grant and expire ten years after the
date of grant.
(2) These assumed 5% and 10% rates of stock price appreciation are set forth in
the Securities and Exchange Commission's executive compensation disclosure
rules. Actual gains, if any, on stock options exercised, will depend on
future performance of the Common Stock. The amounts shown represent the
assumed market price of the Common Stock underlying the stock options (less
exercise price) at the end of the ten-year period beginning on the date of
grant and ending on the option expiration date. Based on a ten-year period
beginning February 10, 1998 with the closing price on the New York Stock
Exchange of the Company's Common Stock of $33.188, a share of the Company's
Common Stock would have a value on February 10, 2008 of approximately
$54.0589 at an assumed appreciation rate of 5% and approximately $86.0798 at
an assumed appreciation rate of 10%.
13
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock with the cumulative total
return of the Wilshire 5000 Index (a broad market equity index) and with the
cumulative total return of a group of peer companies in the construction
materials and cement industry selected by the Company for the period of five
years commencing December 31, 1993 and ended December 31, 1998. The companies in
the peer group index constructed by the Company are as follows: St. Lawrence
Cement, Inc., Texas Industries, Inc., Southdown, Inc., Vulcan Materials Company
and CalMat Co. In 1998, Medusa Corporation was merged with and into Southdown,
Inc. Subsequently, Medusa terminated the registration of its outstanding common
shares and has been eliminated from the peer group.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG LAFARGE CORPORATION, WILSHIRE 5000 INDEX AND PEER GROUP
<TABLE>
<CAPTION>
LAFARGE WILSHIRE 5000 PEER GROUP**
------- ------------- -------------
<S> <C> <C> <C>
1993 $ 100.00 $ 100.00 $ 100.00
1994 $ 78.85 $ 99.91 $ 91.27
1995 $ 84.51 $ 136.36 $ 111.99
1996 $ 93.31 $ 165.28 $ 122.06
1997 $ 139.34 $ 217.00 $ 199.75
1998 $ 193.73 $ 267.86 $ 249.52
</TABLE>
* Assumes $100 invested on December 31, 1993 in Lafarge Corporation Common
Stock, Wilshire 5000 Index and Peer Group Index (constructed by the Company
as described above). Total return assumes reinvestment of dividends.
** Includes St. Lawrence Cement, Inc. (converted to U.S. currency at a constant
rate), Texas Industries, Inc., Southdown, Inc., Vulcan Materials Company and
CalMat Co.
RETIREMENT PLANS
The Company has a trusteed noncontributory defined benefit pension plan for
salaried U.S. employees. The normal retirement age of participants is 65. The
amount of retirement income available to participants under the plan is based
upon the years of credited service (not in excess of 35) and final average
earnings, which is defined to be the average of the highest annual earnings
(which includes salary, bonus and overtime payments) for any 60 consecutive
months during the last 120 months of employment. The annual retirement income
for each year of credited service is equal to 1.50% of the final average
earnings, less 1.50% of annual primary social security benefits. A participant's
accrued benefit under the plan is fully vested on the date on which such
participant completes five years of service under the plan.
14
<PAGE> 17
Certain U.S.-domiciled executives of the Company are participants in a
supplemental executive retirement plan (the "SERP") which supplements their
benefits under the Lafarge Corp. retirement plan. Except as described below, the
SERP will not be funded in advance for payment of future benefits; the general
assets of the Company are the source of funds for the SERP. Pursuant to the
SERP, the annual retirement income for each year of credited services for
selected executives will be increased from that stated above to 1.75% of final
average earnings, less 1.5% of annual primary social security benefits. Further,
under the SERP, pension payments will be permitted in excess of the limit of
$90,000 per year (as increased annually according to U.S. Internal Revenue
Service rules) applicable under the Lafarge Corp. retirement plan. Mr. Piecuch
and Mr. Waisanen are participants in the SERP.
In October 1996, the Company established a trust to securitize SERP
benefits upon a change of control of the Company or of Lafarge S.A. The trust
will remain unfunded until a change in control is imminent, at which time the
trust would become irrevocable and would be funded with cash sufficient to pay
the benefits under the SERP. Also, the SERP was amended to provide that in the
event of a change of control, the eligibility for SERP benefits will be expanded
to cover SERP participants who are vested upon termination of employment but who
are not otherwise eligible for retirement under the Company's retirement plan.
The Board of Directors also adopted a resolution requiring the Company, in the
event of a change of control, to make contributions to the Company's retirement
plan to the maximum extent allowable as a current deduction for federal income
tax purposes.
The table set forth below illustrates the amount of combined annual pension
benefits payable under the Lafarge Corp. retirement plan and the SERP to
participants in specified average annual earnings and years-of-service
classifications, without taking into account offsets for primary social security
benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FIVE-YEAR ANNUAL PENSION
AVERAGE COVERED YEARS OF SERVICE AT AGE 65
ANNUAL ----------------------------------------------------
EARNINGS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$50,000.......................................... $ 13,125 $ 17,500 $ 21,875 $ 26,250 $ 30,625
100,000.......................................... 26,250 35,000 43,750 52,500 61,250
150,000.......................................... 39,375 52,500 65,625 78,750 91,875
200,000.......................................... 52,500 70,000 87,500 105,000 122,500
250,000.......................................... 65,625 87,500 109,375 131,250 153,125
300,000.......................................... 78,750 105,000 131,250 157,500 183,750
350,000.......................................... 91,875 122,500 153,125 183,750 214,375
400,000.......................................... 105,000 140,000 175,000 210,000 245,000
450,000.......................................... 118,125 157,500 196,875 236,250 275,625
500,000.......................................... 131,250 175,000 218,750 262,500 306,250
550,000.......................................... 144,375 192,500 240,625 288,750 336,875
600,000.......................................... 157,500 210,000 262,500 315,000 367,500
</TABLE>
The years of service credited under the retirement plan and the SERP at
March 1, 1999 to each individual named in the compensation table above who is a
participant in the plan were as follows: Mr. Piecuch -- 12 years (retirement),
21 years (SERP) and Mr. Waisanen -- 22 years (retirement), 22 years (SERP).
Compensation of Directors. Directors of the Company who are also full-time
employees of the Company or any subsidiary thereof receive no fees or
remuneration for services as members of the Board of Directors or any committee
of the Board. All other directors receive annual fees of $34,000 each, payable
in quarterly installments, for their services as directors. In addition, such
other directors receive an annual fee of $3,000 for each committee of the Board
on which they serve (and an additional $3,000 per year for being chairperson of
a committee), payable in quarterly installments, and a $1,000 fee for each Board
meeting
15
<PAGE> 18
attended. The Company also reimburses directors for travel, lodging and related
expenses they may incur attending Board and committee meetings.
The Company has adopted a plan which permits directors to defer the payment
of directors' fees until the termination as members of the Board. Elections must
be made prior to the date of the annual meeting of stockholders in each year and
must specify the settlement option in the event of such termination (lump sum or
annual installments over a period not to exceed 10 years). Deferred directors'
fees under the plan bear interest computed quarterly at the average prime rate
for the quarter.
The Company has a retirement plan for directors of the Company who are not
employees of the Company or any of its subsidiaries. Under the plan, an eligible
director who is 70 years of age or older (or, with the approval of the Board
Governance Committee, between the ages of 65 and 69) and has seven or more years
of credited service as a director is entitled to receive upon his or her
retirement from the Board of Directors an annual payment of $20,000 for the
remainder of his or her life, and his or her surviving spouse is entitled to
receive $10,000 per year for the remainder of his or her life following such
director's death. Any nonemployee director who retires from the Board prior to
age 70, who is 55 years of age or older and has three or more years of credited
service is entitled under the plan to receive at retirement an annual payment of
$20,000 per year for a period of time equal to his or her period of credited
service as a director and, in the event of death prior to the end of such
period, his or her surviving spouse shall be entitled to receive $10,000 per
year for the balance of such period.
Directors of LCI who are also full-time employees of the Company or any of
its subsidiaries receive no fees or remuneration for services as members of the
Board of Directors or any committee of the Board. All other directors of LCI are
compensated for their services by payment of a retainer of Cdn. $14,000 per
annum, payable semi-annually, plus Cdn. $1,000 for each meeting attended. In
addition, such other directors receive Cdn. $1,000 for each committee meeting
attended. Directors are reimbursed for costs of travel, meals and lodging
incurred in connection with attendance at meetings. LCI does not provide any
pension plan or plan of deferred compensation for directors. LCI has five
directors who are not full-time employees of the Company or any of its
subsidiaries.
In 1998, Bertrand Collomb received a salary of $220,000 for serving as
Chairman of the Board of the Company; Bernard Kasriel received a salary of
$110,000 for serving as Vice Chairman of the Board; and John D. Redfern received
a fee of Cdn. $36,400 for serving as Chairman of the Board of LCI.
Effective October 1, 1997, the Company entered into a three-year consulting
agreement with Robert W. Murdoch pursuant to which Mr. Murdoch is paid $4,000
per day for consulting services, not to exceed $100,000 per contract year nor
$300,000 in the aggregate during the term of the agreement. During 1998, Mr.
Murdoch was paid $26,000 for consulting services pursuant to the agreement.
Five directors served on a special committee to review the Redland
Transaction. In 1998, Claudine B. Malone, Ronald D. Southern and Joe M. Rodgers
each received $16,000 for their participation on the special committee. Marshall
Cohen received $25,000 as vice chairman of the special committee and Alonzo L.
McDonald received $32,000 as chairman of the special committee.
Directors who are not officers or employees of the Company or any
subsidiary are entitled to receive certain automatic grants of stock options
("Director Options") under the Company's 1993 Stock Option Plan, as amended and
restated in May 1995 (the "1993 Plan"), and in 1999, under the 1998 Stock Option
Plan (the "1998 Plan"). The material terms and conditions of the 1993 Plan and
the 1998 Plan are the same. Nonemployee directors each were granted an option
for 5,000 shares in February, 1995 and each nonemployee director subsequently
elected or appointed to the Board of Directors automatically receives a one-time
grant of an option for 5,000 shares. In February of each year, each nonemployee
director automatically is granted an option for 1,000 shares. A nonemployee
director may not be granted Director Options for more than the lesser of 20,000
shares or 5% of the outstanding shares of Common Stock. The exercise price per
share is 100% of the per share fair market value of the Company's Common Stock
on the option grant date.
The vesting schedule for Director Options is based on the years of service
by the director on the Board of Directors. If a nonemployee director has served
on the Board continuously for more than four years at the time of option grant,
then the Director Option will be fully vested on the date of grant. If the
nonemployee director
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has served on the Board for less than four years at the time of option grant,
then the Director Option will be vested at the date of grant with respect to
one-fourth of the shares for each continuous full year of service on the Board
prior to the grant date and will vest with respect to one-fourth of the shares
on each subsequent anniversary of the date of commencement of the nonemployee
director's service on the Board, so that the option will be fully vested as to
all of the underlying shares on the date which is four years from such date of
commencement. A Director Option will expire and become null and void no later
than the first to occur of (i) 10 years from the grant date, (ii) three years
from the date of termination of the director's service on the Board of Directors
by reason of death or retirement under the normal or early retirement provisions
of any retirement plan maintained by the Company for nonemployee directors or
(iii) three months from the date of termination of the director's service on the
Board of Directors for any reason other than death or retirement as described in
clause (ii). If, however, the director's service is terminated by reason of his
(i) fraud or intentional misrepresentation or (ii) embezzlement,
misappropriation or conversion of assets or opportunities of the Company or any
affiliate, his or her Director Options will expire and become null and void
immediately.
INDEBTEDNESS OF MANAGEMENT
The Company and LCI have extended non-interest bearing loans to certain of
their officers for the purpose of assisting in the purchase of housing in the
course of relocations. With respect to loans with an outstanding balance in
excess of $60,000 at any time during 1998, the largest aggregate amount of such
indebtedness outstanding during 1998 and the amount thereof outstanding as of
December 31, 1998, respectively, were as follows with respect to the following
individuals: Bertrand P. Collomb, Chairman of the Board -- $75,560, $67,676;
John M. Piecuch, President and Chief Executive Officer -- $111,667, $101,667;
Edward T. Balfe, Executive Vice President and President Construction Materials
Group -- $165,000, $155,000; Duncan Gage, Executive Vice President and
President -- U.S. Cement Region, $168,333, $158,333; Larry J. Waisanen,
Executive Vice President and Chief Financial Officer, $90,000, $85,000; Thomas
W. Tatum, Senior Vice President -- Human Resources (until January 1, 1999),
$67,708, $60,712; James Nealis, Vice President -- Human Resources (effective
January 1, 1999), $181,000; $181,000.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company, LCI and Lafarge S.A. are parties to three agreements
concerning the sharing of costs for research and development, strategic
planning, human resources, communications activities, marketing and technical
assistance for the gypsum wallboard division and the use of certain trademarks.
In 1998, the Company and LCI recorded expenses under these agreements for the
approximate sums of $3,880,000 and Cdn. $3,227,000, respectively. The Company
and LCI have entered into agreements with Lafarge S.A. under which Lafarge S.A.
pays for certain services provided to Lafarge S.A. by the Company and LCI. In
1998, charges to Lafarge S.A. totaled approximately $222,000.
During 1998, the Company and LCI purchased products from the Lafarge S.A.
Group in the ordinary course of business. These purchases totaled approximately
$59,992,000 and Cdn. $838,000 for the Company and LCI, respectively.
Messrs. Collomb, Kasriel, Lefevre, Murdoch, Piecuch and Rose are also
directors or officers of Lafarge S.A.
Mr. Buell is a director of B.C. Gas Utility from which LCI purchased
natural gas ($1,161,000) in 1998. Mr. Southern is a director of Canadian Pacific
Limited from which LCI purchased railroad transportation ($7,381,000) in 1998.
All of these purchases were made in the ordinary course of business.
Ms. Malone is a director of Lowe's Companies, to which the Company sold
gypsum wallboard ($5,811,000) in 1998. Mr. Buell is a director of Placer Dome
Inc., to which the Company sold flyash, cement and ready-mixed concrete
($2,164,000) in 1998. All of these sales were made in the ordinary course of
business.
One of the banks with which the Company maintains banking relations is the
Canadian Imperial Bank of Commerce. Mr. Collomb was a director of the bank. Mr.
Collomb resigned as a director of the Canadian Imperial Bank of Commerce
effective October, 1998. The Company maintains borrowing relations with Sun
Trust Bank, Nashville. Mr. Rodgers is a director of the bank. Mr. Nadeau is a
director of Sun Life Assurance
17
<PAGE> 20
Company which is an insurance provider to LCI. Mr. Cohen is a director of
American International Group, Inc., which is an insurance provider to the
Company.
AUDITORS
The firm of Arthur Andersen LLP audited the consolidated financial
statements of the Company for the fiscal year ended December 31, 1998. Upon the
recommendation of the Audit Committee, Arthur Andersen LLP has been appointed by
the Board of Directors to audit the consolidated financial statements of the
Company for the fiscal year ending December 31, 1999, and stockholder approval
of such appointment is requested. While there is no legal requirement that this
proposal be submitted to stockholders, it will be submitted at the meeting
nonetheless, as the Board believes that the selection of auditors to audit the
consolidated financial statements of the Company is of sufficient importance to
seek stockholder approval. In the event the proposal is defeated, the Board will
reconsider its appointment of auditors of the Company. It is expected that one
or more representatives of Arthur Andersen LLP will be present at the meeting
and available to respond to appropriate questions. Such representatives will
also have an opportunity to make a statement if they desire to do so.
The Audit Committee of the Board of Directors is presently composed of
Thomas A. Buell, Marshall A. Cohen, Philippe P. Dauman, Bertin F. Nadeau and Joe
M. Rodgers. The Audit Committee makes an annual recommendation to the Board of
Directors as to the appointment of auditors of the Company for the ensuing
fiscal year. The Audit Committee also reviews the results and scope of and the
fees for the annual audit, reviews the financial statements and any significant
transactions or events and any changes in accounting principles and practices
with the auditors and reviews the internal controls and internal audit
procedures and programs of the Company. The Audit Committee held two meetings in
1998.
OTHER MATTERS
Management of the Company does not intend to present any other matters at
the meeting and knows of no other matters which will be presented. However, if
any other matters come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their judgment on such
matters.
STOCKHOLDER PROPOSALS
The 2000 annual meeting of stockholders of the Company is scheduled to be
held during the first week of May 2000. In order to be considered for inclusion
in the proxy material for that meeting, stockholder proposals must be received
at the Company's principal executive office not later than November 25, 1999. In
addition, under the Securities and Exchange Commission's Rule 14a-4, the Company
will be able to use proxies given to it for the 2000 annual meeting to vote for
or against any stockholder proposal submitted, other than pursuant to Rule
14a-8, at the Company's discretion, unless the proposal is submitted to the
Company on or before February 8, 2000.
FORM 10-K ANNUAL REPORT
The Company will provide without charge to each person from whom a proxy is
solicited by this proxy statement, upon the written request of any such person,
a copy of the Company's Annual Report on Form 10-K, including the financial
statements and the schedules thereto, required to be filed with the Securities
and Exchange Commission pursuant to Section 13(a)(2) under the Securities
Exchange Act of
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<PAGE> 21
1934 for the Company's most recent fiscal year. Requests should be directed to
David C. Jones, Vice President -- Legal Affairs and Secretary, Lafarge
Corporation, P.O. Box 4600, Reston, Virginia 20195.
By Order of the Board of Directors,
DAVID C. JONES
Vice President--Legal
Affairs and Secretary
Reston, Virginia
March 29, 1999
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<PAGE> 22
LAFARGE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bertrand P. Collomb, John D. Redfern and John
M. Piecuch (acting by majority or, if only one be present, by that one alone),
and each of them, proxies, with power of substitution in each, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
shares of Common Stock of Lafarge Corporation (the "Company") standing in the
name of the undersigned on March 8, 1999, at the Annual Meeting of Stockholders
to be held on May 4, 1999 in McLean, Virginia, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. HOWEVER, IF NO VOTE
IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR DIRECTOR
AND "FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
AUDITORS; ALL OF WHICH MATTERS ARE MORE FULLY DESCRIBED IN THE PROXY STATEMENT
OF WHICH THE UNDERSIGNED STOCKHOLDER ACKNOWLEDGES RECEIPT.
THIS PROXY GRANTS DISCRETIONARY AUTHORITY TO VOTE IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE NAMED PROXIES ON OTHER MATTERS THAT MAY COME BEFORE THE MEETING.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON THE OTHER SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
This proxy should be signed exactly as your name(s) appear(s) hereon. Joint
owners should both sign. If signing as attorney, executor, guardian, or in some
other representative capacity, or as officer of a corporation, please indicate
your capacity or title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
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<PAGE> 23
\[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
------------------------------ For All With- For All
LAFARGE CORPORATION Nominees held Except
------------------------------ 1. Election of Directors. [ ] [ ] [ ]
The nominees are:
THOMAS A. BUELL PAUL W. MACAVOY JOHN D. REDFERN
Mark box at right if an address MARSHALL A. COHEN CLAUDINE B. MALONE JOE M. RODGERS
change or comment has been noted [ ] BERTRAND P. COLLOMB ROBERT W. MURDOCH MICHEL ROSE
on the reverse side of this card. PHILIPPE P. DAUMAN BERTIN F. NADEAU RONALD D. SOUTHERN
BERNARD L. KASRIEL JOHN M. PIECUCH
I PLAN TO ATTEND THE MEETING. [ ] JACQUES LEFEVRE
INSTRUCTIONS. TO WITHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEE(S) IN THE LIST PROVIDED ABOVE.
The signer hereby revokes all proxies 2. Approval of appointment of Arthur Andersen For Against Abstain
heretofore given by the signer to LLP as auditors of the Company. [ ] [ ] [ ]
vote at said meeting or any
adjournments thereof. 3. In their discretion, the Proxies are authorized
to vote on such other business as may properly
----------------- come before the meeting or any adjournment thereof.
Please be sure to Date
sign and date this -----------------
Proxy
- ---------------------------------------
Stockholder sign here Co-owner sign here
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</TABLE>
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