<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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NEWMONT MINING CORPORATION
(Name of Registrant as Specified in Its Charter)
NEWMONT MINING CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
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NEWMONT MINING CORPORATION
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NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of NEWMONT MINING CORPORATION will be
held on Thursday, May 12, 1994 at 9:30 a.m. in the John D. Hershner Room, 1700
Lincoln Street, Denver, Colorado to:
1. Elect directors,
2. Consider and act upon a stockholder proposal set forth in the
accompanying Proxy Statement, if introduced at the meeting, and
3. Transact such other business that may properly come before the
meeting.
Stockholders are cordially invited to attend the meeting.
TIMOTHY J. SCHMITT
Secretary
1700 Lincoln Street
Denver, Colorado 80203
March 29, 1994
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IF YOU ARE UNABLE TO ATTEND THE MEETING IN PERSON, PLEASE MARK,
SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE.
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<PAGE> 3
PROXY STATEMENT
GENERAL INFORMATION
STOCKHOLDERS ENTITLED TO VOTE. Holders of the common stock of the
Corporation of record at the close of business on March 24, 1994 are entitled to
vote at the Annual Meeting of Stockholders. As of March 17, 1994, there were
68,783,275 shares of common stock outstanding. Each share of common stock
entitles its owner to one vote. The holders of a majority of the shares entitled
to vote at the Annual Meeting of Stockholders must be present in person or
represented by proxy in order to constitute a quorum for all matters to come
before the meeting.
Votes at the Annual Meeting of Stockholders will be tabulated by two
inspectors of election, who shall be appointed by the Chairman of the meeting
and who shall not be candidates for election to the Board of Directors. The
inspectors of election will treat shares of common stock represented by a
properly signed and returned proxy as present at the Annual Meeting of
Stockholders for purposes of determining a quorum, without regard to whether the
proxy is marked as casting a vote or abstaining.
Directors will be elected by a favorable vote of a plurality of the shares
of common stock present and entitled to vote, in person or by proxy, at the
Annual Meeting of Shareholders. All other matters to come before the Annual
Meeting require the approval of a majority of the votes cast on such matters.
Under the Corporation's Certificate of Incorporation, By-Laws or Delaware law,
abstentions and broker "non-votes" as to particular matters will not count as
votes cast for or against any matters, and are counted only for purposes of
determining whether a quorum is present at the Annual Meeting. Abstentions and
"non-votes" have the same effect as votes against proposals presented to
stockholders except with respect to the election of directors. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions to do so from
the beneficial owner.
PROXY SOLICITATION. The accompanying proxy is solicited by the Board of
Directors of the Corporation. This Proxy Statement is being mailed to the
stockholders on or about March 29, 1994 concurrently with the mailing of the
Corporation's 1993 Annual Report. In addition to solicitation by mail,
solicitation of proxies may be made by certain officers and regular employees of
the Corporation by mail, telephone, telegraph or personal interview. The
Corporation also has retained Georgeson & Company Inc. to aid in the
solicitation of brokers, banks and other institutional stockholders for a fee of
$8,000. All costs of the solicitation of proxies will be borne by the
Corporation. The Corporation will also reimburse brokerage firms and others for
their expenses in forwarding proxy materials to beneficial owners of the
Corporation's common stock. A stockholder who executes a proxy may revoke it by
(i) delivering to the Secretary of the Corporation, at any time before the
proxies are voted, a written notice of revocation bearing a later date than the
proxy or (ii) attending the Annual Meeting of Stockholders and voting in person
(although attendance at the Annual Meeting of Stockholders will not in and of
itself constitute a revocation of a proxy). Written notice revoking a proxy
should be sent to the attention of the Secretary of the Corporation at 1700
Lincoln Street, Denver, Colorado 80203. A stockholder may substitute another
person in place of those persons presently named as proxies.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS. Arthur Andersen & Co. has
acted as principal auditors for the Corporation since 1967. The Board of
Directors has selected Arthur Andersen & Co. to continue in that capacity for
the current year. In addition to audit services, Arthur Andersen & Co. has
regularly provided tax consulting services to the Corporation. Representatives
of Arthur Andersen & Co. will be present at the Annual Meeting of Stockholders
and will be allowed to make a statement if they wish. Additionally, they will be
available to respond to appropriate questions from stockholders during the
meeting.
STOCKHOLDER PROPOSALS. To be included in the Board of Directors' Proxy
Statement for the 1995 Annual Meeting of Stockholders, stockholder proposals
must be received by the Corporation on or
<PAGE> 4
before November 28, 1994. Proposals should be sent to the attention of the
Secretary of the Corporation at 1700 Lincoln Street, Denver, Colorado 80203.
(1) ELECTION OF DIRECTORS
NOMINEES. Each of the nine persons named below is a nominee for election as
a director at the Annual Meeting of Stockholders for the term of one year and
until his successor is elected and qualifies. Unless authority is withheld, the
proxies will be voted for the election of such nominees. Except for Messrs.
Bolduc and Cambre who were elected to the Board of Directors in March 1994 and
October 1993, respectively, all of the nominees were elected to the Board of
Directors at the last Annual Meeting of Stockholders and are all currently
serving as directors of the Corporation. If any such nominee cannot be a
candidate for election at the Annual Meeting of Stockholders, the proxies will
be voted either for a substitute nominee designated by the Board of Directors or
for the election only of the remaining nominees.
The following table contains a summary of the background and principal
occupations of the nominees.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE SINCE
<S> <C>
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RUDOLPH I. J. AGNEW (59)........................................................... 1981
Former Chairman and Chief Executive Officer of Consolidated Gold Fields PLC, a
natural resources company; Chairman, World Conservation Monitoring Centre, a
charitable organization for environmental data gathering
Director of Newmont Gold Company, Global Stone Corporation, New London PLC and
Standard Chartered PLC
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J. P. BOLDUC (54).................................................................. 1994
President since 1990 and Chief Executive Officer effective January 1, 1993 of W.
R. Grace & Co., a specialty chemical and health care company; previously, he
held various senior positions with W. R. Grace & Co. since 1983.
Director of Newmont Gold Company, Brothers Gourmet Coffee, Inc., Marshall &
Ilsley Corporation, Sunstrand Corporation and Unisys Corporation
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RONALD C. CAMBRE (55).............................................................. 1993
Vice Chairman and Chief Executive Officer of the Corporation since November 1,
1993; previously Vice President and Senior Technical Advisor to the Office of
the Chairman of Freeport-McMoRan Inc., a natural resources company, since
1988.
Vice Chairman and Chief Executive Officer and Director of Newmont Gold Company
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JOSEPH P. FLANNERY (61)............................................................ 1982
Chairman, President and Chief Executive Officer of Uniroyal Holding, Inc., a
holding company; Partner in Clayton & Dubilier, Inc., an investment firm, from
September 1, 1988 through December 31, 1990
Director of Newmont Gold Company, APS Holding Corporation, Arvin Industries,
Inc., Ingersoll-Rand Company, K-Mart Corporation and The Scotts Company
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THOMAS A. HOLMES (70).............................................................. 1979
Retired Chairman and Chief Executive Officer of Ingersoll-Rand Company, a
manufacturer of machinery
Director of Newmont Gold Company, Arvin Industries, Inc., Becton Dickinson and
Co. and W.R. Grace & Co.
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</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE SINCE
<S> <C>
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GORDON R. PARKER (58).............................................................. 1983
Chairman of the Corporation; Retired Chief Executive Officer of the Corporation;
President of the Corporation through October 29, 1991
Chairman and Director of Newmont Gold Company
Director of The Williams Companies, Inc.
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T. PETER PHILIP (61)............................................................... 1991
President and Chief Operating Officer of the Corporation since October 30, 1991;
previously Senior Vice President of the Corporation
President and Chief Operating Officer and Director of Newmont Gold Company
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ROBIN A. PLUMBRIDGE (58)........................................................... 1983
Chairman and Chief Executive Officer of Gold Fields of South Africa Limited, a
natural resources company
Director of Newmont Gold Company, Driefontein Consolidated Limited and Kloof Gold
Mining Company Limited
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WILLIAM I. M. TURNER, JR. (65)..................................................... 1986
Chairman and Chief Executive Officer of EXSULTATE INC., a holding company, since
July 1, 1990; previously Chairman and Chief Executive Officer of PCC
Industrial Corporation, a holding company, from February 1, 1989 through June
30, 1990; previously Chairman and Chief Executive Officer of Consolidated
Bathurst Inc., a forest products company
Director of Newmont Gold Company and Schroders PLC
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</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE FOREGOING
NOMINEES AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE
CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO VOTE.
RECENT DEVELOPMENTS. Effective as of January 1, 1994, the Corporation
agreed to transfer all of its assets, other than 85,850,101 shares of common
stock of Newmont Gold Company ("NGC") to NGC for (i) the assumption by NGC of
all existing and future liabilities of the Corporation other than (A) the
Corporation's obligations with respect to its $5.50 convertible preferred stock,
but including all liability for accrued and unpaid dividends in respect of such
preferred stock as of December 31, 1993 and (B) the Corporation's obligations in
respect of employee stock options; (ii) the issuance to the Corporation by NGC
of 2,875,000 shares of convertible preferred stock of NGC having terms identical
to the terms of the Corporation's preferred stock; and (iii) the issuance to the
Corporation by NGC of options exercisable for NGC common stock on the same terms
as the existing employee options for the Corporation's common stock. As a result
of the foregoing (sometimes referred to herein as the "NGC Transaction") the
Corporation owns 89.22% of NGC's issued and outstanding common stock, but has no
other assets and has no employees. The Corporation and NGC, which will hereafter
operate as a single economic unit, are sometimes referred to herein as the
"Companies".
STOCK OWNERSHIP. Except as described under "Principal Stockholders," as of
March 17, 1994, all directors and executive officers of the Corporation as a
group beneficially owned 475,707 shares of the Corporation's common stock,
constituting in the aggregate less than 1% of the Corporation's outstanding
common stock. The nature of beneficial ownership of all such shares is sole
voting and investment power. As of March 17, 1994, all directors and executive
officers of the Corporation as a group beneficially owned 3,375 shares of common
stock of NGC constituting in the aggregate less than 1% of
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<PAGE> 6
NGC's outstanding common stock. The nature of beneficial ownership of all such
shares is sole voting and investment power.
<TABLE>
<CAPTION>
NAME OF SHARES OF CORPORATION SHARES OF NGC
BENEFICIAL OWNER COMMON STOCK OWNED(1) COMMON STOCK OWNED
- -------------------------------------------------- --------------------- ------------------
<S> <C> <C>
Rudolph I. J. Agnew............................... 2,000 --
John P. Bolduc.................................... -- --
Ronald C. Cambre.................................. 27,840(2) --
Graham M. Clark, Jr. ............................. 20,050(2) --
Joseph P. Flannery................................ 2,200 --
Pierre Haas....................................... 2,000 2,000
Thomas A. Holmes.................................. 5,568 --
Walter R. Lawrence................................ 63,555(2) --
Wayne W. Murdy.................................... 29,579(2) --
Gordon R. Parker.................................. 127,886(2) 1,200
T. Peter Philip................................... 33,763(2) 100
Robin A. Plumbridge............................... 2,000 --
William I. M. Turner, Jr. ........................ 5,700 --
All directors and executive officers as a group,
including those named above (28 persons)........ 475,707(2) 3,375
</TABLE>
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(1) None of the directors or executive officers of the Corporation beneficially
own any shares of the Corporation's convertible preferred stock.
(2) Includes 24,000, 55,500, 20,840, 24,000, 15,750, 60,159 and 347,717 shares
which Messrs. Cambre, Parker, Philip, Murdy, Clark, Lawrence and all
directors and executive officers as a group, respectively, have the right to
acquire on or within 60 days after March 17, 1994 by the exercise of options
granted by the Corporation.
PRINCIPAL STOCKHOLDERS. The description of the beneficial ownership of the
outstanding common stock of the Corporation and the other information which is
set forth below is based upon the Schedules 13D under the Securities Exchange
Act of 1934 filed with the Securities and Exchange Commission by the persons
reporting such beneficial ownership and certain additional information provided
by such persons to the Corporation. The power of such persons to vote and
dispose of the Corporation's common stock is subject to the contractual
arrangements described below.
Soros Restricted Group. According to a Schedule 13D dated April 23, 1993
(as amended by Amendment 1 thereto dated May 10, 1993, the "Soros Schedule 13D")
and Statements of Changes in Beneficial Ownership on Form 4, dated January 7,
1994, filed by Mr. George Soros ("Soros") with the Commission under the
Securities Exchange Act of 1934, as of December 21, 1993, Quota Fund N.V.
("Quota"), Quantum Fund N.V. ("Quantum") and Quasar International Partners C.V.
("Quasar") beneficially owned in the aggregate 8,461,450 shares of the
Corporation's common stock, or approximately 12.3% of the Corporation's
outstanding common stock. The shares of the Corporation's common stock were
acquired by Quota, Quantum and Quasar at the direction of Soros Fund Management
("SFM"), an investment advisory firm whose sole proprietor is Soros. SFM acts as
the principal investment manager or asset manager to Quota, Quantum and Quasar.
The sole power to direct the disposition of the shares of the Corporation's
common stock currently owned by Quota, Quantum and Quasar is held by SFM. In
addition, the authority to vote such shares of the Corporation's common stock is
shared by SFM with Quota, Quantum and Quasar, acting through their respective
corporate officers, but, according to the Soros Schedule 13D, SFM anticipates
that, if exercised, such voting power would be exercised in accordance with
recommendations given by SFM. SFM shares the power to direct the disposition of
8,200 shares of the Corporation's convertible preferred stock, par value $5.50
per share, held by Quasar with D. Nolan Management Company, Inc. ("Nolan"). The
authority to vote these securities is shared by SFM and Nolan with Quasar,
acting through the corporate officers
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<PAGE> 7
of Quasar's managing general partner, but SFM anticipates that, if exercised,
such voting power would be exercised in accordance with recommendations given by
Nolan or SFM. According to the Soros Schedule 13D, Soros , as sole proprietor of
SFM, may be deemed to be the beneficial owner of the shares of the Corporation's
common stock beneficially owned by Quota, Quantum and Quasar.
According to the Soros Schedule 13D and Statements of Changes in Beneficial
Ownership on Form 4 filed with the Commission on January 10, 1994 by Duquesne
Capital Management Incorporated ("Duquesne") and Mr. Stanley S. Druckenmiller
("Druckenmiller"), chief executive officer and principal stockholder of
Duquesne, as of December 9, 1993, certain clients of Duquesne, for which
Duquesne has investment discretion, beneficially owned 459,650 shares of the
Corporation's common stock, or approximately 0.7% of the Corporation's
outstanding common stock and Druckenmiller's spouse had an interest in 17,704
shares of the Corporation's common stock, or approximately 0.03% of the
Corporation's outstanding common stock, for an aggregate number of 477,354
shares of the Corporation's common stock, or approximately 0.7% of the
Corporation's outstanding common stock, for which Druckenmiller may be deemed to
have a beneficial ownership interest. According to the Soros Schedule 13D,
Druckenmiller and Duquesne may be deemed to be beneficial owners of the shares
of the Corporation's common stock beneficially owned by the clients of Duquesne.
Soros Standstill Agreement. In connection with the acquisitions of the
shares of the Corporation's common stock described above, the Corporation
entered into an agreement dated as of May 10, 1993 (the "Soros Standstill
Agreement") with Soros, SFM, Druckenmiller, Duquesne, Quantum, Quasar and Quota
(collectively, with certain other entities, the "Soros Restricted Group")
relating to permitted stockholdings and certain other matters.
The following is a summary of provisions of the Soros Standstill Agreement.
This summary contains all material provisions of, but does not purport to be
complete and is qualified in its entirety by reference to, the Soros Standstill
Agreement, a copy of which was filed as an exhibit to the Corporation's
Registration Statement on Form S-3 (Registration Number 33-65271) (the
"Registration Statement"), filed with the Securities and Exchange Commission
with respect to the offering of certain shares of the Corporation's common stock
owned by DIA Holdings (Overseas) B.V., RIT Capital Partners plc, each as more
fully described below, and Newgold Limited, an indirect, wholly owned subsidiary
of RIT Capital Partners plc.
Under the Soros Standstill Agreement, members of the Soros Restricted Group
are prohibited, with certain exceptions, from acquiring, prior to November 1,
1997, beneficial ownership of any Outstanding Voting Securities (as defined
therein) of the Corporation if, after such acquisition, the Soros Restricted
Group would beneficially own in the aggregate more than 13.5% of the Voting
Power (as defined therein) of all Outstanding Voting Securities, without
obtaining the prior consent of a majority of the Board of Directors of the
Corporation, including a majority of the directors who are not nominees of James
M. Goldsmith ("Goldsmith"). Goldsmith, a former director of the Corporation and
NGC resigned from such positions as of March 9, 1994. Since such date, he has
had no affiliation with the Corporation or with NGC other than through his
direct and indirect ownership of the Corporation's common stock.
Members of the Soros Restricted Group (other than any Fund, as defined
therein) may acquire beneficial ownership of any Outstanding Voting Securities
from the Goldsmith/Rothschild Restricted Group (as defined below) so long as the
aggregate percentage of the acquired Outstanding Voting Securities reduces the
percentage limitation set forth in the Goldsmith/Rothschild Standstill Agreement
(as defined below) (currently 36.4%) by an amount equal to the aggregate
percentage of Outstanding Voting Securities so transferred to the Soros
Restricted Group and members of the Goldsmith/Rothschild Group may acquire
beneficial ownership of any Outstanding Voting Securities from the Soros
Restricted Group so long as the aggregate percentage of the acquired Outstanding
Voting Securities reduces the percentage limitation set forth in the Soros
Standstill Agreement (currently 13.5%) by an amount equal to the aggregate
percentage of Outstanding Voting Securities so transferred to the
Goldsmith/Rothschild Group.
5
<PAGE> 8
Subject to certain exceptions and, except as otherwise provided in the
Soros Standstill Agreement, no member of the Soros Restricted Group may assign,
sell or otherwise transfer any Voting Securities if such member or any of its
affiliates knows or, after reasonable inquiry, should have known, that the
transferee will beneficially own, after giving effect to such transfer, more
than an aggregate of 9.9% of the Voting Power of all Outstanding Voting
Securities, unless such transferee agrees to be bound by the provisions of the
Soros Standstill Agreement.
The Soros Restricted Group is obligated with respect to the election of
directors of the Corporation to vote, upon the request of the Corporation, the
Voting Securities held by the Soros Restricted Group for the nominees
recommended by the Board of Directors. On all other matters the Soros Restricted
Group may vote such Voting Securities as it determines in its sole discretion.
The Soros Standstill Agreement will terminate on the earlier of November 1,
1997, or the date of the occurrence of certain specified events, including (i)
the issuance by the Corporation of any new class of securities having the right
to vote, separately as a class, for directors, or to approve, separately as a
class, mergers or any other major transactions involving the Corporation unless
the issuance and specific terms of such new class of securities has been
approved in advance by the affirmative vote of a majority of the outstanding
stock of the Corporation entitled to vote thereon at an annual or special
meeting called for the purpose of acting thereon or (ii) upon notice by SFM that
it has determined to terminate the Soros Standstill Agreement effective on a
date stated in such notice given within ninety days after the execution or
approval by the Corporation of (a) the disposition of its interest in NGC which
would result in the Corporation holding less than 51% of the outstanding common
stock of NGC, (b) the sale, lease or exchange of all or substantially all of the
property or assets of the NGC or (c) any plan of reorganization or liquidation
of the Corporation, in each case, without the prior approval of a majority of
the holders of the Outstanding Voting Securities.
The Goldsmith/Rothschild Restricted Group. As of July 15, 1993, DIA
Holdings (Overseas) B.V. ("DIA Overseas"), Jupiterstraat 158, 2130 AH Hoofddorp,
The Netherlands, was the direct beneficial owner with sole voting and investment
power of 3,400,000 shares, or 4.98%, of the Corporation's outstanding common
stock. Goldsmith is Chairman of the indirect parent corporation of DIA Overseas
and has certain authority with respect to the ultimate parent corporation of
both DIA Overseas and its direct and indirect parent corporations.
As of July 15, 1993, RIT Capital Partners plc ("RIT"), 27 St. James's
Place, London SW1A 1NR, England, was the direct beneficial owner with shared
voting and investment power of 1,000,000 shares, or 1.46%, of the outstanding
shares.
J. Rothschild Capital Management Limited ("JRCML") is an indirect,
wholly-owned subsidiary of St. James's Place Capital plc ("SJPC"). Pursuant to
the terms of an investment management agreement between RIT and JRCML, JRCML
serves as the investment manager of RIT's portfolio investments and has
authority on behalf of RIT to vote and sell RIT's shares of the Corporation's
common stock (subject to the terms of the Goldsmith/Rothschild Standstill
Agreement (as defined below)). As a result of JRCML's investment management
agreement with RIT, and the indirect ownership of JRCML by SJPC, SJPC may be
deemed to own beneficially the shares beneficially owned by RIT. The address of
both SJPC and JRCML is 27 St. James's Place, London SW1A 1NR, England.
Goldsmith/Rothschild Standstill Agreement. The Corporation is a party to an
agreement dated as of December 7, 1990, as amended by an Amendment thereto dated
May 10, 1993 and certain other letter agreements with respect thereto (the
"Goldsmith/Rothschild Standstill Agreement") with certain entities including
Goldsmith (collectively, with those other entities, the "Goldsmith Group") and
with certain entities including Hornwood Investments N.V., SJPC, RIT and Jacob
Rothschild (collectively, with those other entities, the "Rothschild Group")
(the Goldsmith Group and the Rothschild Group, together the
"Goldsmith/Rothschild Restricted Group") relating to permitted stockholdings and
certain other matters.
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<PAGE> 9
The following is a summary of certain provisions of the
Goldsmith/Rothschild Standstill Agreement. This summary contains all material
provisions of, but does not purport to be complete and is qualified in its
entirety by reference to, the Goldsmith/Rothschild Standstill Agreement, a copy
of which was filed as an exhibit to the Registration Statement. Reference should
also be made to the entire Goldsmith/Rothschild Standstill Agreement for the
provisions not summarized below.
Under the Goldsmith/Rothschild Standstill Agreement, members of the
Goldsmith/Rothschild Restricted Group are prohibited except as described above
under "Soros Standstill Agreement" and except as otherwise provided in the
Goldsmith/Rothschild Standstill Agreement, from acquiring, prior to November 1,
1997, beneficial ownership of any Outstanding Voting Securities (as defined
therein) of the Corporation if, after such acquisition, the Goldsmith/Rothschild
Restricted Group would beneficially own in the aggregate more than 36.4% of the
Voting Power (as defined therein) of all Outstanding Voting Securities. However,
in certain circumstances, Goldsmith has the right to make a tender offer, and
any member of the Rothschild Group shall have the right to participate as a
bidder in such tender offer, for any and all Outstanding Voting Securities.
If, at any time as the Goldsmith/Rothschild Restricted Group shall
beneficially own 9.9% or more of the Voting Power of all Outstanding Voting
Securities, Goldsmith will have the right to recommend for nomination for
election as directors of the Corporation a number of persons relative to the
number of persons constituting the whole Board of Directors that is proportional
to the percentage of Voting Power of all Outstanding Voting Securities then
beneficially held by the Goldsmith/Rothschild Restricted Group, subject to
certain limitations. The Board of Directors is obligated to nominate for
election as directors of the Corporation (i) the number of qualified, acceptable
persons recommended by Goldsmith as described above, and (ii) so long as the
Goldsmith/Rothschild Restricted Group beneficially owns more than 25% of the
Voting Securities (as defined therein), a number of qualified persons who are
independent of the management of the Corporation and of the Goldsmith/Rothschild
Restricted Group (the "Independent Directors") such that, if all such persons
were elected, the total number of Independent Directors and persons whom
Goldsmith is entitled to recommend as directors would constitute at least a
majority of all directors of the Corporation. The Goldsmith/Rothschild
Restricted Group is obligated with respect to the election of directors of the
Corporation to vote the Voting Securities held by the Goldsmith/Rothschild
Restricted Group for the nominees recommended by the Board of Directors. On all
other matters the Goldsmith/Rothschild Restricted Group may vote such Voting
Securities as it determines in its sole discretion.
The Goldsmith/Rothschild Standstill Agreement provides certain registration
rights to the Goldsmith/Rothschild Restricted Group in connection with a bona
fide public offering by the Goldsmith/ Rothschild Restricted Group.
Subject to certain exceptions and, except as otherwise provided in the
Goldsmith/Rothschild Standstill Agreement, no member of the Goldsmith/Rothschild
Restricted Group may assign, sell or otherwise transfer any Voting Securities if
such member or any of its affiliates knows or, after reasonable inquiry, should
have known, that the transferee will beneficially own, after giving effect to
such transfer, more than an aggregate of 9.9% of the Voting Power of all
Outstanding Voting Securities, unless such transferee agrees to be bound by the
provisions of the Goldsmith/Rothschild Standstill Agreement.
The Goldsmith/Rothschild Standstill Agreement will terminate on November 1,
1997 unless terminated earlier in certain cases, including (i) the issuance by
the Corporation of any new class of securities having the right to vote,
separately as a class, for directors, or to approve, separately as a class,
mergers or any other major transactions involving the Corporation unless the
issuance and specific terms of such new class of securities has been approved in
advance by the affirmative vote of a majority of the outstanding stock of the
Corporation entitled to vote thereon at an annual meeting or special meeting
called for the purpose of acting thereon, (ii) by Goldsmith after the execution
or approval by the Corporation of (a) the disposition of its interest in NGC
which would result in the Corporation holding less than 51% of the outstanding
common stock of NGC, (b) the sale, lease or
7
<PAGE> 10
exchange of all or substantially all of the property or assets of NGC or (c) any
plan of reorganization or liquidation of the Corporation, in each case, without
the prior approval of a majority of the holders of the Outstanding Voting
Securities, (iii) by Goldsmith at any time during which the Goldsmith/Rothschild
Restricted Group holds more than 50% of the Voting Power of all Outstanding
Voting Securities acquired as a result of a tender offer or (iv) the earlier of
the final adjournment of the first annual meeting of the stockholders of the
Corporation or the creation of a Board of Directors of the Corporation of which
a majority of the directors are nominees of the Goldsmith/Rothschild Restricted
Group, in either such case after the Goldsmith/Rothschild Restricted Group
beneficially owns more than 50% of the Voting Power of all Outstanding Voting
Securities acquired as a result of a tender offer.
DIRECTORS' FEES, COMMITTEES AND MEETINGS. Directors who are neither
officers nor employees of the Corporation or its subsidiaries are entitled to
receive $25,000 per annum for services on the Corporation's Board of Directors.
All directors are entitled to receive an attendance fee of $1,000 per meeting of
the Board of Directors and each director who is neither an officer nor an
employee of the Corporation or its subsidiaries is entitled to receive an
attendance fee of $750 per meeting of a committee of which he is a member and
$1,000 per meeting in the case of the Chairman of the committee. In addition,
pursuant to the Corporation's Directors' Stock Award Plan, adopted in February
1990 by the Board of Directors, directors who are neither officers nor employees
of the Corporation or its subsidiaries are granted 500 shares of common stock of
the Corporation annually following the election of qualifying directors at the
Annual Meeting of Stockholders. In addition, pursuant to such plan, if a person
who is neither an officer nor employee of the Corporation or its subsidiaries
becomes a director either by election of the Board of Directors without a
meeting of stockholders or by election of the stockholders at a Special Meeting,
such director shall receive 500 shares of common stock of the Corporation. Such
shares are transferable only after five years or on such earlier date as such
person is no longer a director.
On retirement from the Board of Directors at any time after attaining age
65, a director who is not entitled to a pension under the Corporation's Pension
Plan (i.e. a director who has not been an officer or employee of the Corporation
or its subsidiaries) and who has served for at least ten consecutive years as a
director is entitled to be paid an annual sum of $20,000 and an amount equal to
the per annum fee paid to him in his capacity as a director during his final
year of service on the Board of Directors, in each case, for life.
Mr. Parker has entered into a Consultation Agreement with the Corporation
and NGC effective as of October 31, 1993. Such Agreement provides that Mr.
Parker will act as a consultant to each of NGC and the Corporation. Mr. Parker
is entitled to receive in the aggregate, compensation under the Agreement equal
to $400,000 per annum from December 1, 1993 through December 31, 1994 and
$300,000 per annum through December 31, 1995. Mr. Parker is not entitled to any
compensation as a director of either of the Companies, other than compensation
for meetings actually attended. Mr. Parker is not entitled to participate in any
directors' stock award plan, although all stock options awarded to Mr. Parker
under the Corporation's 1987 Key Employees Stock Option Plan and 1992 Key
Employees Stock Plan prior to his retirement as an employee of the Corporation
on November 30, 1993 will continue to vest during 1994.
During 1993, the Board of Directors held ten meetings and each incumbent
director attended more than 75% in the aggregate of all meetings of the Board of
Directors and committees of the Board of Directors on which he served for the
period during which he was a member.
The Board of Directors has, in addition to other standing committees,
audit, compensation and nominating committees. Members of these three committees
are not, and have not been, officers or
8
<PAGE> 11
employees of the Corporation or its subsidiaries. The members of these
committees during all of 1993 were:
<TABLE>
<CAPTION>
AUDIT COMPENSATION NOMINATING
- ---------------------- -------------------------- ----------------------
<S> <C> <C>
Joseph P. Flannery(1) Rudolph I. J. Agnew Rudolph I. J. Agnew
Pierre Haas Joseph P. Flannery Joseph P. Flannery(1)
Robin A. Plumbridge Thomas A. Holmes(1) Thomas A. Holmes
William I. M. Turner, Jr.
</TABLE>
- ---------------
(1) Chairman
The Audit Committee recommends independent public accountants to act as
auditors for the Corporation for consideration by the Board of Directors,
reviews the Corporation's financial statements, confers with the independent
public accountants with respect to the scope and results of their audit of the
Corporation's financial statements and their reports thereon, reviews the
Corporation's accounting policies, tax matters and internal controls and
oversees compliance by the Corporation with requirements of the Financial
Accounting Standards Board and federal regulatory agencies. The Audit Committee
also reviews non-audit services furnished to the Corporation by the independent
public accountants, primarily consultation on tax matters. Access to the Audit
Committee is given to the Corporation's Controller. During 1993, the Audit
Committee held three meetings.
The Compensation Committee's duties include recommending to the Board of
Directors the levels and forms of compensation to be paid to the officers and
key employees of the Corporation and its subsidiaries and, in general, to be
paid to salaried employees of the Corporation and its subsidiaries, granting
options under the Corporation's stock option plans and recommending bonus awards
under the Corporation's Annual Incentive Compensation Plan. During 1993, the
Compensation Committee held seven meetings.
The Nominating Committee's function is to propose to the Board of Directors
slates of directors to be elected at the Annual Meetings of Stockholders and
slates of officers to be elected by the Board of Directors. During 1993, the
Nominating Committee held four meetings. The Nominating Committee will consider
for nomination to become directors any persons recommended by stockholders.
Recommendations may be submitted to the Nominating Committee in care of the
Secretary of the Corporation.
EXECUTIVE COMPENSATION
As of November 1, 1993, Mr. Parker stepped down as Chief Executive Officer
of the Corporation and of NGC. On November 30, 1993 he retired as an employee of
the Corporation and NGC after serving the Companies in various capacities for
over 34 years. Mr. Parker will continue to serve as Chairman of the Corporation
and of NGC, however, and has been retained by the Corporation and NGC as a
consultant. (See "Directors' Fees, Committees and Meetings" above.) On November
1, 1993, Mr. Cambre was elected to the offices of Chief Executive Officer and
Vice Chairman of the Corporation and of NGC.
Prior to the consummation of the NGC Transaction (see "Recent Developments"
above) the Corporation's business was carried out by employees of NGC under a
Management Services Agreement between the Corporation and NGC which initially
paid the salaries and other compensation and benefits of such employees. All
executive officers of the Corporation were and continue to be employees of NGC.
All salaried employees of NGC participate in the Corporation's benefit plans.
Pursuant to the Management Services Agreement, the Corporation was charged on an
allocable basis for such salaries and other compensation and benefit costs.
Effective, January 1, 1994 all such costs were assumed by NGC. All of the
executive officers named in the following tables are also executive officers of
NGC.
9
<PAGE> 12
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The following table shows
the cash compensation paid by the Corporation and its subsidiaries, as well as
certain other compensation paid or accrued for 1993, 1992 and 1991, to the Chief
Executive Officer, to Mr. Parker, who served as Chief Executive Officer through
October 31, 1993 and to each of the Corporation's four most highly compensated
executive officers, other than the Chief Executive Officer, for services
rendered in all capacities to the Corporation, NGC and their subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION
------------------------------------ ----------------------
OTHER RESTRICTED SECURITIES
NAME/ ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(5) OPTIONS(#) COMPENSATION
- -------------------------------- ---- -------- -------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre 1993 $ 80,000(1) $ 75,000(4) $ -- $ -- 242,000 $ --
Vice Chairman and 1992 N/A N/A N/A N/A N/A N/A
Chief Executive Officer 1991 N/A N/A N/A N/A N/A N/A
Gordon R. Parker 1993 440,583(2) 424,995 -- -- -- 528,295(7)(8)
Chairman 1992 472,500 314,800 -- 86,000 240,000(6) 9,000
1991 461,000 540,000 N/R -- 30,000 N/R
T. Peter Philip 1993 331,000(3) 182,474 -- 67,084 -- 9,000(7)
President and 1992 311,500 180,405 -- 45,000 88,000(6) 9,000
Chief Operating Officer 1991 258,333 260,000 N/R -- 17,500 N/R
Wayne W. Murdy 1993 215,000 109,930 -- 38,832 -- 6,450(7)
Senior Vice President 1992 827 -- -- -- 120,000 242,500(9)
and Chief Financial 1991 N/A N/A N/A N/A N/A N/A
Officer
Graham M. Clark, Jr. 1993 215,000 102,814 -- 31,969 -- 9,000(7)
Senior Vice President 1992 200,000 105,243 -- 24,000 120,000(6) 9,000
and General Counsel 1991 179,096 135,000 N/R -- 12,500 N/R
Walter R. Lawrence 1993 184,000 82,117 -- 21,503 -- 9,000(7)
Senior Vice President, 1992 175,000 97,119 -- 24,000 120,000(6) 9,000
Operations 1991 147,125 100,000 N/R -- 10,000 N/R
</TABLE>
- ---------------
N/R -- Not reportable
N/A -- Not applicable
(1) Based on an annualized base salary of $450,000 for the period from November
1, 1993 through December 31, 1993. See "Executive Agreements" below. Such
amount also includes director's fees of $5,000.
(2) Based on an annualized base salary of $461,000 for the period from January
1, 1993 through November 30, 1993. Such amount also includes director's fees
of $18,000.
(3) Includes director's fees of $16,000.
(4) The amount of Mr. Cambre's bonus was stipulated by the terms of his
employment agreement. See "Executive Agreements" below.
(5) Value of restricted stock awarded under the Corporation's Annual Incentive
Compensation Plan for 1993 at the election of the Corporation's Compensation
Committee in lieu of cash. Dividends are payable on the shares awarded.
These shares, which are subject to two year vesting, were issued in December
1993 in the following amounts:
<TABLE>
<S> <C>
T. Peter Philip........................................ 1,173 shares
Wayne W. Murdy......................................... 679 shares
Graham M. Clark, Jr. .................................. 559 shares
Walter R. Lawrence..................................... 376 shares
</TABLE>
10
<PAGE> 13
The number and value of restricted shares held by Messrs. Philip, Murdy,
Clark and Lawrence on December 31, 1993 was as follows:
<TABLE>
<S> <C> <C>
T. Peter Philip..................................... 2,336 $133,876
Wayne W. Murdy...................................... 679 38,913
Graham M. Clark, Jr. ............................... 1,179 67,568
Walter R. Lawrence.................................. 996 57,081
</TABLE>
Messrs. Parker and Cambre held no restricted shares as of such date.
(6) In 1992, the practice of making semi-annual stock option grants to Messrs.
Parker, Philip, Clark and Lawrence was suspended. Special equity option
grants made to these individuals vest over a period of five years except in
the case of Mr. Philip whose options vest over a period of approximately
three years. In addition, Messrs. Cambre and Murdy were awarded special
equity option grants in November 1993 and December 1992, respectively, which
generally vest over a period of five years.
(7) The amount shown represents or includes the Corporation's contributions and
credits to its Employee Savings Plan and nonqualified supplemental Savings
Equalization Plan of $9,000 each for Messrs. Parker, Philip, Clark and
Lawrence and of $6,450 for Mr. Murdy.
(8) Includes a cash payment of $519,295 to Mr. Parker upon his retirement (after
34 years and 4 months of service) pursuant to a resolution of the Board of
Directors stipulating that Mr. Parker's aggregate years of pensionable
service be deemed to be 36 years and five months.
(9) Mr. Murdy became an executive officer on December 31, 1992. The amount shown
includes a "sign-on" bonus of $75,000, not to be repeated on an annual
basis, and a one-time payment of $117,500 to compensate Mr. Murdy for a
bonus foregone as a result of his agreement to undertake his current duties
with the Corporation and NGC. In addition, the amount shown includes a
reimbursement to Mr. Murdy of $50,000 for expenses incurred in connection
with the cancellation of a home construction contract in Mr. Murdy's former
city of residence.
STOCK OPTIONS. The following table contains information concerning the
grant of stock options in 1993 under the Corporation's stock option plans with
respect to the named executive officers:
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ------------------------------------------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO MARKET PRICE FOR OPTION TERM
OPTIONS PARTICIPANTS EXERCISE ON GRANT EXPIRATION -----------------------
NAME GRANTED (#) IN 1993 PRICE ($/SH) DATE ($/SH) DATE 5% 10%
- ------------------------ ----------- ------------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre........ 50,000(1) 9.9 51.07 51.07 10/31/03 $1,608,705 $4,060,065
96,000(2) 19.1 51.07 51.07 10/31/03 3,088,714 7,795,325
24,000(3) 4.8 55.00 51.07 10/31/03 677,858 1,854,511
24,000(3) 4.8 60.00 51.07 10/31/03 557,858 1,734,511
24,000(3) 4.8 65.00 51.07 10/31/03 437,858 1,614,511
24,000(3) 4.8 70.00 51.07 10/31/03 317,858 1,494,511
</TABLE>
- ---------------
(1) These options were granted on November 1, 1993 and become exercisable in
four annual increments of 25% each commencing on June 23, 1994.
(2) These options were granted on November 1, 1993 and become exercisable in
four annual increments of 25% each commencing on April 28, 1994. All of
these options are exercisable at the indicated exercise price but only if on
the day prior to exercise the price of the Corporation's common stock is at
least 125% of the exercise price ($63.84).
11
<PAGE> 14
(3) These options were granted on November 1, 1993 and become exercisable in
full, as follows:
<TABLE>
<CAPTION>
EXERCISE DATE ON
PRICE ($/SH) WHICH EXERCISABLE
- ------------ -----------------
<S> <C>
55.00.......................................... June 23, 1994
60.00.......................................... June 23, 1995
65.00.......................................... June 23, 1996
70.00.......................................... June 23, 1997
</TABLE>
OPTION EXERCISES AND HOLDINGS. The following table sets forth information
with respect to the named executive officers concerning the exercise of options
in 1993 and unexercised options held as of the end of 1993.
AGGREGATED OPTION EXERCISES IN 1993 AND
1993 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT 1993 IN-THE-MONEY OPTIONS
ACQUIRED ON YEAR-END (#) AT 1993 YEAR-END
EXERCISE VALUE --------------------------- --------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre..................... -- $ -- -- 242,000 $ -- $ 367,440(1)
Gordon R. Parker..................... 162,167 2,913,296 31,500 48,000 309,015 545,760
T. Peter Philip...................... 51,680 474,874 5,000 56,320 89,050 611,899
Wayne W. Murdy....................... 12,000 126,143 12,000 96,000 180,872 1,008,360
Graham M. Clark, Jr. ................ 69,250 1,130,214 3,750 96,000 66,788 1,008,360
Walter R. Lawrence................... -- -- 48,159 96,000 763,162 1,008,360
</TABLE>
- ---------------
(1) Does not include any value with respect to options with an exercise price of
$51.07 which are exercisable only if on the day prior to exercise the price
of the Corporation's common stock is at least 125% of the exercise price
($63.84) since the fair market value of the Corporation's common stock on
December 31, 1993 was $57.31.
12
<PAGE> 15
PENSION PLANS AND OTHER RETIREMENT BENEFITS. The following table shows the
estimated pension benefits payable to a covered participant at normal retirement
age under the Corporation's qualified defined benefit pension plan (the "Pension
Plan"), as well as under its nonqualified supplemental pension plan (the
"Pension Equalization Plan") that provides benefits that would otherwise be
denied participants by reason of certain Internal Revenue Code limitations on
qualified plan benefits, based on remuneration that is covered under the plans
and years of service with the Corporation and its subsidiaries.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 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
650,000................................ 170,625 227,500 284,375 341,250 398,125
700,000................................ 183,750 245,000 306,250 367,500 428,750
750,000................................ 196,875 262,500 328,125 393,750 459,375
800,000................................ 210,000 280,000 350,000 420,000 490,000
850,000................................ 223,125 297,500 371,875 446,250 520,625
900,000................................ 236,250 315,000 393,750 472,500 551,250
950,000................................ 249,375 332,500 415,625 498,750 581,875
1,000,000................................ 262,500 350,000 437,500 525,000 612,500
1,050,000................................ 275,625 367,500 459,375 551,250 643,125
1,100,000................................ 288,750 385,000 481,250 577,500 673,750
</TABLE>
A participant's remuneration covered by the Pension Plan is his or her
average base salary and bonus, including amounts paid in the form of restricted
stock, (as reported in the Summary Compensation Table) for the five consecutive
plan years during the last ten years of the participant's career for which such
average is the highest or, in the case of a participant who has been employed
for less than five full years, the period of his or her employment with the
Corporation and its subsidiaries. The approximate term of service as of the end
of 1993 for each named executive is: Mr. Cambre two months; Mr. Philip 35 years;
Mr. Clark 10 years; Mr. Murdy one year; Mr. Lawrence 17 years. Benefits shown
are computed on a straight single life annuity beginning at age 62. Such amounts
have not been reduced for Social Security benefits.
In connection with his retirement as Chief Executive Officer of the
Corporation in November 1993, after approximately 34 years of service, Mr.
Parker is receiving benefits under the Pension Plan, in accordance with the
terms of the Pension Plan. Such payments are payable monthly in an annual amount
of $70,072 and will continue throughout his life. Upon Mr. Parker's death, such
payments will be made to his surviving spouse, reduced by one-third. Mr. Parker
also received a lump-sum cash benefit under the Pension Equalization Plan of
$8,075,374. No further payments will be made to Mr. Parker under the Pension
Equalization Plan. In addition, pursuant to a resolution of the Board of
Directors, Mr. Parker's aggregate years of pensionable service with the
Corporation were deemed to be 36 years and 5 months. Accordingly, Mr. Parker
received an additional cash payment upon his retirement of $519,295 (See
"Summary Compensation Table", above).
13
<PAGE> 16
OFFICERS' DEATH BENEFIT PLAN AND GROUP LIFE INSURANCE PROGRAM. The
Corporation has an Officers' Death Benefit Plan for the benefit of the executive
officers of the Corporation and certain subsidiaries. The plan provides a death
benefit of three times annual base salary for an executive officer who dies
while an active employee and a death benefit of one times final annual base
salary for an executive officer who dies after retiring at or after normal
retirement age. Messrs. Parker, Philip and Clark were participants in a prior
plan and have a death benefit of the greater of $770,000 or three times annual
base salary while an active employee and a post-retirement death benefit for
these three executive officers based on retirement at or after normal retirement
age, of the greater of $385,000 or one times final annual base salary. For
retirement prior to normal retirement age, the post-retirement death benefit is
30% to 100% of the greater of $385,000 or one times final annual base salary
depending on the number of years to normal retirement age. Coverage under the
Officers' Death Benefit Plan includes group life insurance maintained for the
benefit of all salaried employees of the Corporation and certain subsidiaries.
EXECUTIVE AGREEMENTS. Employment agreements are currently in effect between
the Corporation and Messrs. Cambre and Philip.
Mr. Cambre's employment agreement provides for a base salary of $450,000
per annum through December 31, 1993 and $500,000 per annum through December 31,
1994. Thereafter, the amount of Mr. Cambre's base salary will be established by
the Board of Directors. Pursuant to his employment agreement, Mr. Cambre was
awarded a bonus for 1993 in the amount of $75,000. Such amount was awarded in
respect of Mr. Cambre's 1993 services and was based on the level of
performance-based bonus that the Board of Directors determined was commensurate
with the responsibilities undertaken by Mr. Cambre on behalf of the Corporation.
Mr. Cambre's employment agreement is effective until his 62nd birthday,
unless terminated earlier as provided in the agreement. In the event Mr.
Cambre's employment is terminated without "cause" (as defined below) and without
any breach by Mr. Cambre of his agreement, Mr. Cambre will be entitled to
receive a lump sum payment equal to twice his base salary for each twelve-month
period in the remaining term of his employment, provided that such term will not
exceed two years.
Mr. Philip's employment agreement provides for a base salary, as adjusted
through 1993, of $315,000 per annum. In the event Mr. Philip's employment is
terminated without "cause" (as defined below) and without any breach by Mr.
Philip of his agreement, Mr. Philip will be entitled to receive an amount equal
to the total base salary and incentive compensation that would have been payable
to him during the remaining term of his employment, which term expires on April
1, 1995. The amount of "incentive compensation" payable to Mr. Philip after such
a termination will be based on prior annual incentive compensation payments, but
will, in no event, be less than 70% of Mr. Philip's base salary in effect at the
time of termination. In addition, Mr. Philip will continue to participate in the
Corporation's health and welfare plans throughout the succeeding two-year period
and to enjoy all rights under the Corporation's pension and other benefit plans.
Disputes as to any termination of Mr. Philip's employment are subject to binding
arbitration. The agreement states that it shall be binding upon any successor to
the Corporation.
Mr. Philip has announced his intention of retiring from his position as
President and Chief Operating Officer and as a director of the Corporation and
NGC as of December 31, 1994. From January 1, 1995 through April 1, 1995, he will
continue to be employed by the Corporation in an advisory capacity, at a salary
(on an annualized basis) of $200,000 per year. It is anticipated that, from
April 2, 1995 through December 31, 1995, Mr. Philip will act as a consultant to
the Corporation pursuant to an agreement to be negotiated.
Supplemental severance agreements are currently in effect between the
Corporation and Messrs. Clark and Lawrence. These agreements expire on December
31, 1994. In the event their employment is terminated other than for "cause" (as
defined below), then they will be entitled to twelve months pay and benefits.
Included in such amount is an incentive compensation payment, which is based on
prior years' incentive payments, but which will in no event be less than 25% of
the
14
<PAGE> 17
executive's base salary for the applicable measurement period. In the event of
termination of employment within two years following a defined change in control
of the Corporation, they will be entitled to eighteen months pay and benefits.
If Mr. Murdy's employment is terminated other than for "cause" before
December 31, 1997, he will be entitled to receive 35 months of severance
benefits; thereafter, he will be entitled to 24 months of severance benefits.
Any benefits to which Messrs. Cambre, Philip, Clark, Lawrence and Murdy may
be entitled from the Corporation's Severance Pay Plan reduce the benefits due
under these agreements.
"Cause" as a basis for termination in the Corporation's agreements with its
executive officers is generally limited to (i) misappropriation of funds of the
Corporation, (ii) conviction of a felony, (iii) obtaining personal benefit from
any transaction between the Corporation and a third party without the prior
approval of such profit by the Board of Directors or (iv) obtaining a personal
profit from the sale of the Corporation's trade secrets.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of directors who are neither officers nor employees of the
Corporation. The Committee is responsible to the Board and by extension to the
stockholders for setting and administering the policies which govern both annual
compensation and stock incentive programs for the Corporation's executive
officers and other key employees. There are three elements to the Corporation's
executive compensation program: base salaries, annual incentives and stock
options.
BASE SALARY. The base salaries of Mr. Cambre and other executive officers
fall within salary ranges that reflect competitive pay levels within the mining
industry as a whole for the positions they hold. The Corporation subscribes to
and participates in executive level surveys that address compensation in the
mining industry and in U.S. industry, generally. Such surveys include some, but
not all of, and are not limited to, the companies that are represented in the
S&P Gold Index shown on the Corporation's Performance Graph, below. Based on
such information, the Committee believes that salaries of the Corporation's
executive officers are generally at the median of executive salaries for
comparable positions in the mining industry.
Base salary increases are considered on the basis of changes in industry
levels, subject to evaluated individual contribution and the Corporation's
performance in the prior year. Mr. Parker's base salary was not increased in
1993, because the Committee believed that increases in Mr. Parker's total
compensation for this period would be better implemented through year-end
incentive performance awards rather than through base salary adjustments.
ANNUAL INCENTIVES. Annual incentive awards are made pursuant to the
Corporation's Annual Incentive Compensation Plan. Executive officers (and other
employees at specified salary levels) are eligible to receive both a corporate
performance award and a personal performance award. Corporate performance awards
are paid in cash and are based upon attainment of production and cost-of-
production goals which are established annually in advance by the Corporation's
Board of Directors on the recommendation of the Committee and are generally more
demanding than budgeted production and cost-of-production goals. At year-end,
actual cash costs of production are adjusted to consider the effect of actual
production over or under targeted production. Such adjusted costs are then
compared with targeted costs to determine a "corporate performance percentage".
The Corporation must achieve a minimum percentage (designated by the Board of
Directors to be 85%) before any awards based on corporate performance can be
made to participants in the Plan. Corporate performance awards are incrementally
increased in accordance with incrementally higher performance percentages (with
the maximum percentage being 120%). In 1993, the Corporation achieved a
performance
15
<PAGE> 18
percentage of 104%. In addition, each year the Corporation's Board of Directors
designates a minimum average price of gold per ounce when the corporate
performance target is determined. No incentive awards may be paid in respect of
any year in which the Corporation does not realize such minimum average price of
gold per ounce.
Personal performance awards are based upon an evaluation of a participant's
personal contribution to the Corporation's success and are also typically paid
in cash. However, for 1993 personal performance awards to Messrs. Philip, Murdy,
Clark and Lawrence were paid 50% in cash and 50% in the form of restricted
shares of the Corporation's common stock, subject to two-year vesting
provisions. The restricted stock component of the annual incentive award program
is intended to align the interests and motivation of such recipients with the
Corporation's stockholders. It is the Committee's view that such ownership will
positively influence long-term decision making, since awards for current
performance will be impacted by future stock prices. In making incentive awards
based on the personal performance of the Corporation's executive officers, the
Committee considers a variety of factors, including the success of each
executive in accomplishing significant tasks on behalf of the Corporation. In
1993, for example, the Corporation's senior management devoted considerable
effort to planning and preparing for the NGC Transaction. In addition, the
viability of projects in various global locations, such as Uzbekistan, Indonesia
and Peru, depended on the Corporation's ability to manage and resolve
regulatory, financial, technological, operational and other issues in new and
challenging environments. The 1993 personal performance awards made to the
Corporation's senior executives were strongly influenced by each executive's
contributions to the ongoing success of such projects and to the positioning of
the Corporation for future worldwide activity.
Corporate and personal performance awards are calculated as a percentage of
base salary. In general, performance awards represent a higher percentage of
salary for recipients holding positions of greater responsibility in the
Corporation.
The Chief Executive Officer's corporate performance award is based on the
corporate performance percentage described above, while his personal performance
award is based on his individual accomplishments as well as the overall results
of the Corporation. Mr. Parker's total all cash annual incentive award for 1993
of $424,995 was approximately equal to his prorated base salary for the portion
of the year prior to his retirement on November 30, 1993. Approximately $170,000
of such incentive award (40% of the total award) was based on a "corporate
performance percentage" of 104% pursuant to the Corporations Annual Incentive
Compensation Plan as described above. Approximately $255,000 (60% of the total
award) was based on Mr. Parker's personal performance evaluation, which reflects
Mr. Parker's continuing leadership in developing and executing the Corporation's
projects in Uzbekistan, Indonesia and Peru, in structuring and working toward
completion of the NGC Transaction and in the positioning of the Corporation for
future growth. Such award was also influenced by a 52% increase in the
Corporation's net income per share (over 1992 net income per share). Mr.
Parker's total 1993 incentive award exceeded his 1992 award (which consisted of
cash and restricted stock) by 6%.
Mr. Cambre was awarded a bonus for 1993 in the amount of $75,000 as a
condition to his agreement to join the Corporation as its Chief Executive
Officer and Vice Chairman. Such bonus reflects, on a prorated basis, the bonus
that the Committee believes is commensurate with the responsibilities undertaken
by Mr. Cambre as the Corporation's Chief Executive.
STOCK OPTIONS. The third element of executive compensation -- stock
options -- is long-term in nature. In 1992, the Committee, which is also
responsible for administering the Corporation's stock option plans, suspended
its practice of making semi-annual stock option grants to Messrs. Parker,
Philip, Clark and Lawrence. Instead, the Committee awarded special equity option
grants to these executives. In addition, Messrs. Cambre and Murdy were also
awarded special equity option grants in November 1993 and in December 1992,
respectively, when they joined the Corporation. The awards were based upon
recommendations contained in a study undertaken for the Committee by an
independent compensation consultant who had been asked to design an option
program which would
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<PAGE> 19
align the financial interests of its key executives more closely with those of
the stockholders of the Corporation.
The equity awards are essentially stock options with special pricing
features. With respect to half of the special grant the options have no value
unless the Corporation's common stock price rises to 125% of the exercise price
on the day prior to exercise. With respect to the other half of the special
grants the exercise prices are set at succeedingly higher levels above the value
of the Corporation's common stock on the grant date. Termination of employment
before vesting for any reason (other than a defined change-in-control) generally
causes cancellation of the unvested portion. Individuals must own and place on
deposit with the Corporation a number of shares equal to 2% of the option shares
they were granted. The purpose of the deposited shares is to evidence a
commitment to ownership and risk on the part of the executive in exchange for
the leveraged opportunity to participate in the growth in share value
represented by the options, which are otherwise a "riskless" grant. The shares
come off deposit when an option is exercised or expires. If the required number
of shares are not placed on deposit, or if they are taken off deposit early, the
option is proportionately reduced. No new grants to Messrs. Cambre, Philip,
Clark, Murdy and Lawrence are contemplated for several years. Mr. Parker is no
longer eligible to receive grants.
SUMMARY. The Committee believes that, with respect to Messrs. Cambre,
Philip, Clark, Murdy and Lawrence, the combination of competitive base salaries,
potentially significant performance-based annual incentives paid partially in
restricted stock, and a highly leveraged equity incentive represented by
premium-priced options combined with an ownership commitment, represents a
highly motivational and effective senior executive compensation program that
strongly aligns the interests of management with those of the stockholders in
achieving above average long-term returns on investment.
RECENT TAX LAW CHANGES. Under the Revenue Reconciliation Act of 1993,
section 162 of the Internal Revenue Code was amended to eliminate, with certain
exceptions, the deduction for certain compensation in excess of $1 million to
any named executive officer, including the Chief Executive Officer. The
Committee believes that the Corporation's stock option plans comply with the
exceptions to this new limitation. Because the exceptions to such limitation as
applicable to the Corporation's incentive compensation awards, however, could
inhibit the Committee's ability to adjust performance criteria as it deems
appropriate, and because the Committee does not currently anticipate any
significant increase in tax liability to the Corporation as a result of the
section 162 amendments, the Committee has not altered its approach to setting
executive compensation in response to such amendments. Should the compensation
levels of the Chief Executive Officer or any of the other named executive
officers materially affect the Corporation's tax position in the future, the
Committee will consider establishing performance criteria that will allow the
Corporation to avail itself of all appropriate tax deductions.
Submitted by the Compensation Committee of the Corporation's Board of
Directors:
<TABLE>
<S> <C>
Thomas A. Holmes, Chairman Joseph P. Flannery
Rudolph I. J. Agnew William I. M. Turner, Jr.
</TABLE>
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<PAGE> 20
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The following graph assumes $100 investment on December 31, 1988 in the
Corporation's common stock, the S&P 500 Index and the S&P Gold Index.
CUMULATIVE VALUE OF A $100 INVESTMENT
ASSUMING REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
NEWMONT
MEASUREMENT PERIOD MINING COR- S&P 500 IN- S&P GOLD
(FISCAL YEAR COVERED) PORATION DEX INDEX
<S> <C> <C> <C>
1988 100 100 100
1989 146 132 145
1990 127 128 128
1991 127 166 104
1992 132 179 97
1993 187 197 178
</TABLE>
(2) STOCKHOLDER PROPOSAL
The Corporation has been advised that the following resolution and
statement in support thereof may be presented by or on behalf of two beneficial
owners of shares of the Corporation's common stock at the Annual Meeting of
Stockholders. The names and addresses of such beneficial owners will be
furnished by the Securities and Exchange Commission, 450 5th Street, N.W.,
Washington D.C. 20549, or by the Corporation, to any person, orally or in
writing as requested, promptly upon the receipt of such request.
"WHEREAS WE BELIEVE:
The responsible implementation of sound environmental policy increases
long-term shareholder value by increasing efficiency, decreasing cleanup costs,
reducing litigation, and enhancing public image and product attractiveness;
Adherence to public standards for environmental performance gives a company
greater public credibility than is achieved by following standards created by
industry for itself. In order to maximize public credibility and usefulness,
such standards also need to reflect what investors and other stakeholders want
to know about the environmental records of their companies;
Standardized environmental reports will provide shareholders with useful
information which allows comparisons of performance against uniform standards
and comparisons of progress over time. Companies can also attract new capital
from investors seeking investments that are environmentally responsible,
responsive, progressive, and which minimize the risk of environmental liability.
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<PAGE> 21
AND WHEREAS:
The Coalition for Environmentally Responsible Economies (CERES), which
comprises large institutional investors with $150 billion in stockholdings
(including shareholders of this company), public interest representatives and
environmental experts -- consulted with dozens of corporations and produced
comprehensive public standards for both environmental performance and reporting.
Over 50 companies have endorsed the CERES Principles, including the Sun Company,
a Fortune-500 company, to demonstrate their commitment to public environmental
accountability.
In endorsing the CERES Principles a company commits to work toward:
<TABLE>
<S> <C>
1. Protection of the biosphere 6. Safe products and services
2. Sustainable use of natural 7. Environmental restoration
resources 8. Informing the public
3. Waste reduction and disposal 9. Management commitment
4. Energy conservation 10. Audits and reports
5. Risk reduction
</TABLE>
The full text of the CERES Principles and the accompanying CERES Report Form are
available from CERES, 711 Atlantic Ave., Boston, MA 02110 (tel. # 617/451-0927).
Concerned investors are asking the Company to be publicly accountable for
its environmental impact, including collaboration with this corporate,
environmental, investor, and community coalition to develop: a) standards for
environmental performance and disclosure; b) appropriate goals relative to these
standards; c) evaluation methods and tools for measurement of progress toward
these goals; d) a format for public reporting of progress.
We believe this request is consistent with regulation adopted by the
European Community for companies' voluntary participation in verified and
publicly reported eco-management and auditing.
RESOLVED: Shareholders request the company to prepare a report at reasonable
cost and omitting proprietary information, describing company programs, progress
and future plans relative to these Principles, and using the standard CERES
Report Form as a guideline.
SUPPORTING STATEMENT
We believe the investors and customers are expecting comprehensive and
impartial environmental reports by business, as a sign of corporate commitment
to environmental excellence. Without this public scrutiny, corporate
environmental policies and reports lack the critical component of adherence to
standards set not only by management, but also by other stakeholders.
Shareholders are invited to support this resolution, to encourage our Company to
demonstrate environmental leadership and account for its environmental impact."
POSITION OF THE BOARD OF DIRECTORS
The Board of Directors is in sympathy with the objectives of the proponents
of the CERES principles proposal, and considers it vital to the interests of the
stockholders that the Corporation be fully committed to a policy of strict
compliance with federal and state environmental laws and regulations. The Board
of Directors strongly supports the spirit of these laws, and takes the position
that the Corporation should meet or exceed all environmental legal requirements.
The Corporation's operations are subject to a comprehensive body of state
and federal environmental laws and regulations and the Corporation has an
effective organization and compliance program in place to ensure that these
environmental requirements are met. The Corporation's operations in Nevada
already are subject to specific environmental laws and regulations that fill
more than 8,000 pages and contain an estimated 3.5 million words, all of which
govern the Corporation's actions. Fines for failure to comply with these laws
and regulations range up to $25,000 per day per violation.
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<PAGE> 22
Compliance with such laws, which have been devised by well ordered
legislative and regulatory processes, would not, however, satisfy the language
of the CERES principles. The Board of Directors believes that the CERES
principles, and the private regulatory scheme they envision, are both
environmentally unnecessary and economically harmful if adopted and literally
applied by a mining company such as the Corporation.
Unlike the vast body of applicable environmental laws and regulations which
demand specific and quantifiable performance by the Corporation and other mining
companies, the CERES principles are a vague and imprecise description of the
environmental values sought to be achieved and the environmental negatives
sought to be avoided.
The Board of Directors believes that the elected members of Congress and
state legislatures, and the environmental protection agencies they have
established, are more responsible and better equipped to reconcile the various
public interests that are inherent in environmental regulation than is a private
special interest group, however well intentioned, that cannot be held
accountable for the effects -- economic and otherwise -- of its attempted
influence.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "AGAINST" THE
FOREGOING PROPOSAL AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY
CARD TO THE CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO VOTE.
(3) OTHER MATTERS
The Board of Directors does not intend to bring other matters before the
Annual Meeting of Stockholders except items incident to the conduct of the
meeting. However, on all matters properly brought before the meeting by the
Board of Directors or by others, the persons named as proxies in the
accompanying proxy, or their substitutes, will vote in accordance with their
best judgment.
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<PAGE> 23
PROXY
NEWMONT MINING CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1994
THIS PROXY IS SOLICITED ON BEHALF OF NEWMONT MINING
CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby appoints Graham M. Clark, Jr., Wayne W. Murdy and
Timothy J. Schmitt, and each or any of them as proxies, with full power of
substitution and revocation, to represent the undersigned and to vote all
shares of the common stock of Newmont Mining Corporation which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of the Corporation to
be held on Thursday, May 12, 1994, at 9:30 a.m., local time, in the John D.
Hershner Room, 1700 Lincoln Street, Denver, Colorado, and any adjournments
thereof, upon the matters listed on the reverse side hereof. The proxies
appointed hereby may act by a majority of said proxies present at the meeting
(or if only one is present, by that one).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOX, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(Continued and to be signed on the other side)
<PAGE> 24
(X)PLEASE MARK
YOUR VOTE
AS THIS
_________________
COMMON
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
WITHHELD
FOR FOR ALL
Item 1 -- ELECTION OF DIRECTORS
Nominees: R.I.J. Agnew, J.P. Bolduc, ( ) ( )
R.C. Cambre, J.P. Flannery, P. Haas,
T.A. Holmes, G.R. Parker, T.P. Philip,
R.A. Plumbridge and W.I.M. Turner, Jr.
WITHHELD FOR: (Write that nominees's name in the
space provided below).
________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 2.
FOR AGAINST ABSTAIN
Item 2 -- Stockholder Proposal ( ) ( ) ( )
SIGNATURE(S)____________________________________________ DATE____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
