<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
Homestake Mining Company
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Homestake Mining Company
--------------------------------------------------------------------------------
(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:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
/ / 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 registrations 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:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO] HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1995
To the Shareholders of Homestake Mining Company:
The annual meeting of shareholders of Homestake Mining Company will be held
at the Hyatt Regency Hotel, 5 Embarcadero Center, San Francisco, California, on
Tuesday, May 9, 1995, at 11:00 a.m. local time, for the following purposes:
1. Election of five Class II Directors and one Class III Director.
2. Approval of the appointment of Coopers & Lybrand LLP as
independent auditors for 1995.
3. Transaction of such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 13, 1995,
as the record date for the determination of shareholders entitled to vote at the
annual meeting. Only shareholders of record at the close of business on March
13, 1995, will be entitled to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person. TO
ENSURE THAT YOU ARE REPRESENTED AT THE MEETING, PLEASE FILL IN, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, using the return envelope which
requires no postage if mailed in the United States. Your early attention to the
proxy will be greatly appreciated because it will reduce the cost your Company
incurs in obtaining voting instructions from its shareholders.
By Order of the Board of Directors
[SIG]
WAYNE KIRK
Secretary
March 24, 1995
<PAGE> 3
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
March 24, 1995
PROXY STATEMENT
MAY 9, 1995 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Homestake Mining Company ("Homestake" or
the "Company") for use at the annual meeting of shareholders of Homestake to be
held at the Hyatt Regency Hotel, 5 Embarcadero Center, San Francisco,
California, on Tuesday, May 9, 1995, at 11:00 a.m. local time, or any
postponement or adjournment thereof.
This Proxy Statement and the enclosed proxy card are first being sent to
Homestake's shareholders on or about March 24, 1995.
MATTERS TO BE CONSIDERED.
The following matters will be acted on at the annual meeting:
1. Election of five Class II Directors and one Class III Director.
2. Approval of the appointment of Coopers & Lybrand LLP as
independent auditors for 1995.
3. Transaction of such other business as may properly come before the
meeting.
VOTING SECURITIES AND VOTING RIGHTS.
Only shareholders of record on March 13, 1995, or their proxies, will be
entitled to vote at the annual meeting of shareholders. On March 13, 1995,
Homestake had 137,857,427 shares of common stock outstanding.
A majority of the shares of Homestake common stock outstanding must be
represented at the annual meeting in person or by proxy to constitute a quorum
for the transaction of business. Each share of common stock is entitled to one
vote on all matters other than the election of directors. In the election of
directors, each share of common stock is entitled to one vote for a nominee for
each director position. Homestake does not have cumulative voting. A
shareholders' list will be available for examination by shareholders at the
annual meeting.
VOTING PROCEDURE.
The shares represented by each properly executed proxy returned to
Homestake will be voted at the meeting as indicated on the proxy. If no
instructions are given, the persons authorized by the proxy will vote in favor
of election of the nominees named in this Proxy Statement and to approve the
appointment of Coopers & Lybrand LLP as independent auditors for 1995. Any
person giving a proxy has the right to revoke it at any time before it is
exercised (1) by filing with the Secretary of Homestake a duly signed revocation
or proxy bearing a later date or (2) by voting in person at the meeting.
The Board of Directors is not aware of any matters other than those set
forth above which may come before the annual meeting. If any other matters are
properly presented to the meeting for action, unless contrary instructions are
given, the persons named in the enclosed form of proxy and acting thereunder
have the power to vote in accordance with their best judgment on such matters.
On voting for Class II Directors, the five nominees receiving the highest
number of votes will be elected. On voting for the Class III Director, the
nominee receiving the highest number of votes will be elected. Approval of the
appointment of independent auditors will require the affirmative vote of a
majority of the shares of Homestake common stock represented at the meeting.
<PAGE> 4
If a proxy is marked with instructions to withhold authority to vote for
one or more director nominees or to abstain from voting on any matter, those
shares will be treated as represented at the meeting and entitled to vote in
determining whether a quorum is present. Withholding authority to vote for a
director nominee will not prevent that director nominee from being elected
except to the extent the failure to vote for the nominee results in another
nominee receiving a larger number of votes. In other matters where approval is
required by a majority of shares outstanding or represented at the meeting,
abstentions from voting on a matter will have the effect of a vote against the
matter.
If a broker indicates on a proxy that it is not voting shares on any
matter, the shares not voted will be counted for purposes of determining the
presence of a quorum at the meeting but will not be treated as represented at
the meeting or entitled to vote in respect of that matter.
SOLICITATION OF PROXIES.
The cost of solicitation of proxies will be borne by Homestake.
Solicitation of proxies may be made by officers, directors and employees of
Homestake in person, by telephone or by mail. In addition, brokers, banks and
other nominee holders will be reimbursed for expenses they incur in forwarding
proxy materials to and obtaining voting instructions from beneficial owners of
Homestake common stock. D.F. King & Co., Inc. has been engaged to assist with
proxy solicitation for a fee not to exceed $12,000 plus expenses.
PRINCIPAL HOLDERS OF HOMESTAKE COMMON STOCK.
On March 13, 1995, there were 25,463 record holders of Homestake common
stock.
As of the close of business on March 13, 1995, the only person known to
Homestake to own beneficially five percent or more of the outstanding Homestake
common stock was:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
----------------------------------------------------------------------------- ----------
<S> <C> <C>
Case, Pomeroy & Company, Inc.......................... 6,836,776 5.0%
529 Fifth Avenue, Suite 1600 Common Shares
New York, NY 10017-4608
</TABLE>
2
<PAGE> 5
The following table shows: (i) the number of shares of Homestake common stock
beneficially owned by directors, nominees for directors and the five highest
paid executive officers, and all directors, nominees and executive officers as a
group, as of February 28, 1995 (excluding shares which such persons have the
right to acquire within 60 days of February 28, 1995 but do not actually own),
(ii) the number of shares of Homestake common stock which such persons have the
right to acquire within 60 days of February 28, 1995 but do not actually own,
and (iii) the total number of shares of Homestake common stock which such
persons own and have the right to acquire within 60 days of February 28, 1995.
The shares so shown include shares held in Homestake's Savings Plan (determined
as of December 31, 1994) for the accounts of executive officers and share rights
(determined as of February 28, 1995) granted under the Employees' Stock Option
and Share Rights Plan--1988, which entitle outside directors to receive shares
on the date of ceasing to serve as a director. Excluding the shares held by
Case, Pomeroy & Company, Inc., but including the shares which the identified
persons have the right to acquire but do not own, the shares of Homestake common
stock beneficially owned by all directors, nominees and executive officers as a
group represent approximately one percent of the total number of shares of
Homestake common stock outstanding.
<TABLE>
<CAPTION>
TOTAL
NUMBER OF SHARES NUMBER
BENEFICIALLY OWNED, RIGHT TO OF SHARES
EXCLUDING RIGHT TO ACQUIRE SHARES BENEFICIALLY
NAME ACQUIRE SHARES(1) WITHIN 60 DAYS OWNED
----------------------------------------------- ------------------- -------------- ---------
<S> <C> <C> <C>
M. Norman Anderson............................. 2,529 5,487 8,016
Hadley Case(2)................................. 128,099 1,103 129,202
Robert H. Clark, Jr.(3)........................ 50,000 1,292 51,292
Harry M. Conger(4)............................. 174,351 427,232 601,583
G. Robert Durham............................... 5,000 842 5,842
Douglas W. Fuerstenau.......................... 1,300 1,315 2,615
Henry G. Grundstedt............................ 1,000 406 1,406
William A. Humphrey............................ 61,117 110,566 171,683
Robert K. Jaedicke............................. 400 1,291 1,691
John Neerhout, Jr.............................. 1,000 905 1,905
Stuart T. Peeler............................... 5,000 1,440 6,440
Carol A. Rae................................... 0 0 0
Glen L. Ryland................................. 2,800 1,276 4,076
Berne A. Schepman.............................. 1,300 1,336 2,636
Gene G. Elam................................... 3,279 50,600 53,879
Wayne Kirk(5).................................. 2,681 34,075 36,756
Jack E. Thompson............................... 4,600 41,375 45,975
Allen S. Winters............................... 12,830 39,075 51,905
All Directors, Nominees and Executive Officers
as a Group (24 persons)...................... 472,219 911,863 1,384,082
</TABLE>
------------
(1) In some instances voting and investment power is shared with the spouse of
the identified person.
(2) Includes 20,000 shares owned by Mr. Case's spouse. Does not include
6,836,776 shares owned by Case Pomeroy. Hadley Case, with family associates,
is the controlling shareholder of Case Pomeroy.
(3) Includes 26,000 shares owned by Mr. Clark's spouse and one of his children.
Does not include 6,836,776 shares owned by Case Pomeroy. Mr. Clark, with
family members, is a principal shareholder of Case Pomeroy. Mr. Clark is a
son-in-law of Hadley Case.
(4) Includes 553 shares held of record by a Savings Plan Trust for Mr. Conger's
spouse. Mr. Conger disclaims beneficial ownership of these shares.
(5) Includes 400 shares held of record by two of Mr. Kirk's children. Mr. Kirk
disclaims beneficial ownership of these shares.
Messrs. Fuerstenau, Peeler and Schepman respectively hold 2,000, 35,000,
and 35,000 common shares of Homestake Gold of Australia Limited ("HGAL"), an
81.5 percent owned subsidiary of the Company which is publicly traded in
Australia. The total HGAL shares owned by all directors and executive officers
of the Company is less than 0.02 percent of the outstanding HGAL common shares.
3
<PAGE> 6
Section 16(a) of the Securities Exchange Act of 1934 and related rules
require the Company's directors, executive officers and more than 10%
shareholders to file reports of beneficial ownership and changes in beneficial
ownership with the Securities and Exchange Commission and with the Company.
Based on its review of reports of beneficial ownership filed with the Company
and written representations of directors and executive officers, the Company
believes that during 1994 all of its directors, executive officers and more than
10% shareholders timely filed all reports of beneficial ownership and changes in
beneficial ownership required under Section 16(a), except that the Form 3
Initial Report of Ownership of Ronald D. Parker, a Vice President elected in
1994, was filed approximately one month late. No directors, executive officers
or more than 10% shareholders reported in 1994 a transaction or ownership of
shares that should have been reported in an earlier year.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of Homestake currently consists of 14 members,
divided into three classes with staggered terms of three years each. Five Class
II Directors are to be elected to serve until the annual meeting in 1998 or
until their successors are elected and qualified. In addition, one Class III
Director is to be elected to replace Hadley Case. Mr. Case, a director since
1984, has elected to retire immediately prior to the annual meeting, and to
assume the status of Director Emeritus. As Director Emeritus, Mr. Case will be
eligible to attend all Board of Directors' meetings but will not be a voting
member of the Board of Directors. The newly elected Class III Director will
serve until the annual meeting in 1996 or until a successor is elected and
qualified.
Mr. Glen L. Ryland, a Class I Director, became age 70 during 1994. Pursuant
to the Company's retirement policy for directors, Mr. Ryland will retire as a
director immediately prior to the annual meeting. At the time of Mr. Ryland's
retirement, it is expected that the Board of Directors will amend the Company's
by-laws to reduce the number of directors to 13, thereby eliminating the
resulting vacancy.
Each nominee has consented to be named in this Proxy Statement and to serve
if elected. If any nominee should become unable to serve as a director prior to
the annual meeting, the persons authorized by the proxy will vote for the
election of a substitute nominee recommended by the Nominating Committee of the
Board of Directors in place of that nominee.
THE BOARD OF DIRECTORS OF HOMESTAKE RECOMMENDS A VOTE FOR THE ELECTION OF
THE FIVE CLASS II NOMINEES AND THE ONE CLASS III NOMINEE NAMED BELOW. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE NAMED NOMINEES UNLESS
INSTRUCTIONS ARE GIVEN TO THE CONTRARY.
INFORMATION CONCERNING NOMINEES FOR ELECTION.
Certain information as to each of the five nominees for election as a Class
II Director and the nominee for election as a Class III Director is set forth in
the table below. The information appearing in the table and the information
regarding beneficial ownership of securities by such nominees contained in this
Proxy Statement has been furnished to Homestake by the nominees.
NOMINEES FOR CLASS II DIRECTORS TO SERVE UNTIL 1998 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Henry G. Grundstedt........... 66 1992 Mr. Grundstedt is a mining consultant.
He was Senior Vice President of
Capital Guardian Trust Company (money
manager of pension and mutual funds)
from 1973 to 1991 and held other
executive positions with that firm
beginning in 1972, specializing in the
mining and metals industry. He is a
director of Azco Mining Company
(copper mining).
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
William A. Humphrey........... 68 1982 Mr. Humphrey has been a mining
consultant since March 1993. He has
been Vice Chairman of Homestake since
July 1992, was President and Chief
Operating Officer of Homestake from
April 1991 to July 1992, and was an
Executive Vice President of Homestake
from 1981 to April 1991. He is a
director of Homestake Gold of
Australia Limited (gold mining).
John Neerhout, Jr............. 64 1989 Mr. Neerhout has been Executive Vice
President of Bechtel Group Inc.
(engineering and construction) since
1986. He is a director and holds
executive positions with Bechtel Group
Inc. and other of its affiliated
companies.
Stuart T. Peeler.............. 65 1981 Mr. Peeler has been a petroleum
industry consultant since 1989. From
1982 until 1988 he was Chairman of the
Board and Chief Executive Officer of
Statex Petroleum, Inc. He is a director
of CalMat Company (aggregates, asphalt,
and property development), Chieftain
International, Inc. (oil and gas
exploration and production), Chieftain
International Funding Corp. (financial
services), and Homestake Gold of
Australia Limited.
Jack E. Thompson.............. 44 1994 Mr. Thompson has been President and
Chief Operating Officer and a director
of Homestake since August 1994. He has
been Chairman of the Board of Prime
Resources Group Inc. (gold mining)
since July 1992 and was Executive Vice
President-Canada of Homestake and
President and Chief Executive Officer
of Prime and Homestake Canada Inc.
from July 1992 to August 1994. He was
President of Homestake Mineral
Development Company and North American
Metals Corp. (gold mining) from 1988
until July 1992. Prior to 1988, Mr.
Thompson was general manager of Home-
stake's McLaughlin mine.
</TABLE>
5
<PAGE> 8
NOMINEE FOR CLASS III DIRECTOR TO SERVE UNTIL 1996 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Carol A. Rae.................. 49 -- Ms. Rae has been the President and
Chief Executive Officer of Magnum
Diamond Corporation (manufacturer of
surgical instruments) since 1989, and
she has been Senior Vice President and
General Manager of the Refractive
Division of Chiron Vision Corporation
(manufacturer of ophthalmic intraocu-
lar lenses) since March, 1994. She has
also been the President of MedVal
Technologies International, Inc.
(manufacturer of orthopedic splints)
since 1982. She is a member of the
board of directors of the U.S. Chamber
of Commerce.
</TABLE>
INFORMATION CONCERNING CONTINUING DIRECTORS.
Certain information as to each director who will continue in office is set
forth in the following tables. The information appearing in the tables and the
information regarding beneficial ownership of securities by such directors
contained in this Proxy Statement has been furnished to Homestake by the
directors.
CONTINUING CLASS III DIRECTORS TO SERVE UNTIL 1996 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Harry M. Conger............... 64 1977 Mr. Conger has been Chairman of the
Board of Homestake since 1982 and
Chief Executive Officer since 1978. He
was also President of Homestake from
1977 to 1986. He is a director of ASA
Limited (investment company), Baker
Hughes Incorporated (oil service and
equipment manufacturing), CalMat
Company (aggregates, asphalt, and
property development), and Pacific Gas
and Electric Company.
G. Robert Durham.............. 66 1990 Mr. Durham has been President and
Chief Executive Officer and a director
of Walter Industries, Inc. (building
materials, home building, mortgage
financing and natural resource
development) since June 1991. He was
Chairman of the Board and President of
Phelps Dodge Corporation (mining) from
1987 to 1989, President and Chief
Operating Officer from 1985 to 1987,
and held other executive positions
with Phelps Dodge Corporation or
affiliated corporations beginning in
1977. He is a director of Atlantic
Gulf Communities Corporation (planned
community development), a director of
GFC Financial Corporation (financial
services), a director of Mincorp Ltd.
(engineering services), and a trustee
of Mutual Life Insurance Company of
New York.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Robert K. Jaedicke............ 66 1983 Mr. Jaedicke is a Professor (emeritus)
of Accounting at Stanford University
Graduate School of Business. He has
been a member of the Stanford faculty
since 1961 and was Dean of the
Graduate School of Business from 1983
to 1990. He is a director of Boise
Cascade Corporation (forest products
and paper), California Water Service
Company, Enron Corp. (natural gas and
liquid fuels), GenCorp (aerospace,
auto, polymer products), State Farm
Insurance Companies, and Wells Fargo &
Company and Wells Fargo Bank, N.A.
</TABLE>
CONTINUING CLASS I DIRECTORS TO SERVE UNTIL 1997 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
M. Norman Anderson............ 64 1992 Mr. Anderson is President of Norman
Anderson & Associates Ltd. (mining
consultants). Mr. Anderson was a
director of Homestake Canada Inc. from
1987 to 1993, and was the Chairman of
the Board of Directors of Homestake
Canada Inc. from February 1991 to July
1992, when the Company acquired the
outstanding voting shares of Homestake
Canada Inc. He is a director of Prime
Resources Group Inc., Solv-ex Corpo-
ration (tar sands processing), Finning
Ltd. (construction equipment sales and
service), Toronto Dominion Bank, and
Western Star Truck Holdings Ltd.
(truck manufacturing).
Robert H. Clark, Jr.*......... 54 1984 Mr. Clark has been Chief Executive
Officer since 1993, President since
1983, and a director since 1968 of
Case, Pomeroy & Company, Inc. (mining,
oil and gas, real estate). He is a
director of Putnam Trust Company
(banking).
Douglas W. Fuerstenau......... 66 1977 Mr. Fuerstenau has been a Professor of
Metallurgy, Department of Materials
Science and Mineral Engineering,
University of California, Berkeley
since 1959. He was P. Malozemoff
Professor of Mineral Engineering from
1987 to 1993, professor emeritus from
1993 to July 1994, and has been a
professor in the Graduate School since
July 1994.
</TABLE>
---------------
* See "Certain Transactions with Affiliates and Indebtedness of Directors and
Officers--Shareholder Agreement with Case Pomeroy" regarding the agreement
with the Company under which Mr. Clark is entitled to be nominated as a
director. Mr. Clark is the son-in-law of Hadley Case, one of the directors
who will retire immediately before the annual meeting.
7
<PAGE> 10
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 9, 1995 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Berne A. Schepman............. 68 1973 Mr. Schepman has been President of
Adair Company (management consulting)
since 1982 and President of Russian
Technology Group (technology
marketing) since July 1992. He is a
director of Homestake Gold of
Australia Limited.
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD.
Homestake's Board of Directors held 12 meetings during calendar year 1994.
The Board of Directors has six standing committees: Executive, Finance,
Audit, Compensation, Nominating, and Environment, Health and Safety.
The Executive Committee has authority to exercise most of the powers of the
Board of Directors. It is intended to function on a standby basis. The members
of the Committee are Messrs. Case, Conger (Chairman), Humphrey, Peeler, Schepman
and Thompson. The Executive Committee did not meet during 1994.
The Finance Committee reviews and makes recommendations to the Board of
Directors about proposed dividends, investments and financial matters. The
members of the Committee are Messrs. Clark, Conger, Grundstedt, Humphrey, Peeler
(Chairman), Ryland and Thompson. The Finance Committee held four meetings during
1994.
The Audit Committee recommends to the Board of Directors appointment of the
firm of independent auditors to examine and report to shareholders on the
consolidated financial statements of Homestake, and receives and considers the
reports of the auditors. The Committee also oversees Homestake's internal
auditing. The members of the Committee are Messrs. Anderson, Clark, Jaedicke
(Chairman), Neerhout and Ryland, all non-employee directors. The Committee held
two meetings during 1993.
The Compensation Committee evaluates and recommends to the full Board of
Directors the levels of compensation and benefits for officers and key
employees. The Compensation Committee also administers the Company's stock
option plans. The members of the Committee are Messrs. Durham, Fuerstenau,
Grundstedt, Jaedicke, Neerhout and Schepman (Chairman), all non-employee
directors. The Committee held four meetings during 1994.
The Nominating Committee reviews and evaluates candidates for director,
including nominees recommended by shareholders, and makes recommendations on
candidates to the Board of Directors. Applications and communications relating
to candidates for director may be sent to the Secretary of Homestake at the
corporate offices in San Francisco. The members of the Committee are Messrs.
Anderson, Case, Durham, Fuerstenau (Chairman), Ryland and Schepman, all
non-employee directors. The Nominating Committee did not meet during 1994.
The Environment, Health and Safety Committee was formed in March 1995. The
Committee oversees Homestake's compliance with environmental, health and safety
laws and policies. The members are Messrs. Anderson (Chairman), Durham,
Fuerstenau, Humphrey and Neerhout, all non-employee directors.
Each director attended at least 75 percent of the total number of meetings
of the Board of Directors and the respective committees on which he served. The
aggregate average attendance at meetings of the Board of Directors and its
committees was 97.5 percent.
COMPENSATION OF DIRECTORS.
A director of Homestake who is not an employee of the Company or its
subsidiaries receives an annual retainer fee of $16,000 and each chairman of a
committee of the Board of Directors who is not an employee of Homestake receives
an additional annual retainer of $2,000. All directors, including employee
directors,
8
<PAGE> 11
receive attendance fees of $900 for each meeting of the Board of Directors and
$800 for each committee meeting. Directors who are non-residents of the State of
California also receive an additional amount equal to 13% of their retainers and
fees for meetings held in the State of California in order to compensate them
for possible double taxation of such amounts by the State of California and
their states or provinces of residence. Directors are entitled to defer
compensation under the Deferred Income Plan described below under "Compensation
of Executive Officers--Summary Compensation Table."
During 1994, the Board of Directors adopted a Retirement Plan for Outside
Directors who retire after July 21, 1994, and Outside Directors who retired
prior to that date as designated by the Company. Under the Plan, directors who
do not have a fully vested interest under any tax-qualified Homestake retirement
plan are eligible to receive benefits. The total retirement benefit payable is
an amount equal to the annual retainer fee payable to Outside Directors at the
date of retirement (presently $16,000 per year) multiplied by the number of
years such retiring Director was an Outside Director (i.e., not an employee of
the Company or its subsidiaries). The retirement benefit is payable in monthly
installments over the number of months the retiring Outside Director served as
an Outside Director, beginning on the later of retirement or attaining of age 70
(later of retirement or age 65 in the case of an Outside Director who has served
at least 10 years). Benefits payable to a participant who dies prior to
completion of payout are payable to the participant's spouse.
Under the Employees' Stock Option and Share Rights Plan--1988 ("1988
Plan"), certain automatic share rights are made available to directors who are
not employees of Homestake. For each year that the 1988 Plan is in effect, on
the eighth business day following the day on which Homestake's annual earnings
for the preceding year are released, each non-employee director on that date is
granted share rights entitling him to receive shares of Homestake common stock
for no consideration on the date he ceases to serve as a director. The number of
shares covered by each annual share right grant is calculated by dividing 10
percent of the compensation received for services as a director of Homestake for
the preceding calendar year by the average fair market value of one share of
Homestake common stock for the third through the seventh business days following
release of Homestake's earnings for the preceding calendar year. Share rights
are cancelled if an individual ceases to serve as a director within three years
from the date of grant, other than by reason of death, disability, retirement at
mandatory retirement age for directors, or termination within one year following
a change of control as defined in the 1988 Plan. For 1994, a total of 2,651
share rights were granted under the 1988 Plan. No director was credited with
more than 257 share rights for 1994.
A director of Homestake Gold of Australia Limited ("HGAL"), 81.5% owned by
Homestake, who is not an employee of Homestake or HGAL receives an annual
retainer fee of A$25,000. All directors, including employee directors, receive
attendance fees of $1,800 for each meeting held outside of the continental
United States and $900 for each meeting held in the continental United States.
Messrs. Humphrey, Peeler and Schepman are non-employee directors of HGAL, and
Gene G. Elam is an employee director.
A director of Prime Resources Group Inc. ("Prime"), 50.6% owned by
Homestake, who is not an employee of Homestake or Prime receives an annual
retainer of C$5,000 and attendance fees of C$500 for each board or committee
meeting. M. Norman Anderson is a non-employee director of Prime, and Jack E.
Thompson is an employee director.
Under a consulting agreement with Hadley Case, Homestake Sulphur Company (a
wholly-owned subsidiary of the Company) paid Mr. Case an annual retainer of
$30,000, up to a maximum of $300,000. A total of $285,000 had been paid under
this agreement through December 31, 1993, and the remaining $15,000 was paid to
Mr. Case in 1994.
In July 1992, Homestake entered into a consulting agreement with Stuart T.
Peeler under which Mr. Peeler provides advisory services to the Company with
respect to its investment in the Main Pass 299 oil and sulphur project in the
Gulf of Mexico. The agreement is terminable by either party on 30 days' notice.
Mr. Peeler receives compensation at a rate of $1,000 for each day of service
under the agreement. For 1994, the Company paid $21,812 to Mr. Peeler under the
agreement.
In March 1993, Homestake entered into a consulting agreement with William
A. Humphrey under which Mr. Humphrey provides advisory services to the Company
with respect to various mining matters, principally
9
<PAGE> 12
involving Latin America. The agreement is terminable by either party at will.
Mr. Humphrey receives compensation at a rate of $1,000 for each day of service
under the agreement. For 1994, the Company paid $2,000 to Mr. Humphrey under the
agreement.
During the year 1994, Messrs. Anderson, Fuerstenau and Grundstedt were paid
consulting fees of $1,000, $7,000 and $945, respectively, for consulting
services.
COMPENSATION OF EXECUTIVE OFFICERS.
Summary Compensation Table
The following table sets forth summary information regarding compensation
paid by Homestake and its subsidiaries for the years ended December 31, 1994,
1993 and 1992 to the chief executive officer and the other four highest
compensated executive officers of Homestake for 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ---------- -------
OTHER
ANNUAL
COMPEN- SECURITIES LTIP ALL OTHER
NAME AND SATION UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS(#) ($) ($)
-------------------------- ----- --------- -------- -------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harry M. Conger 1994 $500,000 $225,000 $14,900(2) 49,200 $ 0 $ 6,750(3)
Chairman of the 1993 465,000 210,000 17,500(2) 91,500 0 8,254
Board and Chief 1992 465,000 0 17,400(2) 61,000 0 13,738
Executive Officer
Gene G. Elam 1994 252,000 88,200 8,100(4) 13,200 0 6,750(3)
Vice President, 1993 235,000 83,000 900(4) 24,700 0 8,230
Finance and Chief 1992 235,000 0 -- 37,400 0 13,732
Financial Officer
Wayne Kirk 1994 315,000 110,250 -- 16,500 0 6,750(3)
Vice President, 1993 300,000 105,000 -- 31,500 0 8,254
General Counsel 1992 120,000(5) 0 -- 35,000 0 0
and Corporate Secretary
Jack E. Thompson 1994 263,575(6) 146,250 157,438(7) 14,700 0 6,750(3)
President 1993 215,000 75,300 104,810(8) 28,200 0 7,532
1992 177,082 0 116,903(9) 55,500 0 10,630
Allen S. Winters 1994 217,200 72,000 -- 14,200 0 7,795(10)
Vice President 1993 203,000 71,000 -- 26,600 0 10,688
1992 203,000 0 46,714(11) 54,800 0 16,566
</TABLE>
------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"SEC"), the Company is not required to report the value of personal
benefits for any year unless the aggregate dollar value exceeds the lesser
of 10 percent of the executive officer's salary and bonus or $50,000.
(2) Directors' fees.
(3) Matching contribution to Savings Plan.
(4) HGAL directors' fees.
(5) Mr. Kirk joined the Company as Vice President, General Counsel and
Corporate Secretary in September 1992.
(6) Mr. Thompson served as Executive Vice President until August 9, 1994, when
he was appointed President.
(7) Consists of $53,844 (cost-of-living adjustment in connection with Mr.
Thompson's foreign assignment), $47,700 (payment made to Mr. Thompson in
connection with sale of residence in Canada), $45,131 (tax gross-up for
payment made in connection with sale of residence), $7,263 (financial
planning) and $3,500 (directors' fees). In connection with his appointment
as President, Mr. Thompson relocated from Canada to the San Francisco area.
10
<PAGE> 13
(8) Consists of $92,600 (cost-of-living adjustment in connection with Mr.
Thompson's foreign assignment), $9,000 (forgiveness of prior relocation
loan) and $3,210 (tax return preparation).
(9) Consists of $60,432 (relocation expenses paid to or on behalf of Mr.
Thompson), $29,167 (cost-of-living adjustment in connection with Mr.
Thompson's foreign assignment), $15,614 (tax gross-up for relocation
expenses), $9,000 (forgiveness of prior relocation loan), $2,180 (financial
planning), and $510 (tax return preparation). During 1992, Mr. Thompson
relocated from the San Francisco area to Canada.
(10) Consists of $6,750 (matching contribution to Savings Plan) and $1,045
(above-market component of interest earned on deferred income).
(11) Consists of $29,340 (relocation expenses paid to or on behalf of Mr.
Winters), $8,430 (financial planning), $6,000 (forgiveness of prior
relocation loan) and $2,944 (tax gross-up in connection with relocation
expenses).
Under the Company's Deferred Income Plan, directors, officers and other key
employees selected by the Compensation Committee are permitted to defer income.
Under the plan, participants may elect to defer each year an amount not less
than $2,500 nor more than 100 percent of compensation. Amounts deferred are
credited with interest in an amount equivalent to the monthly Moody's Corporate
Bond Yield Average as published by Moody's Investors Service, Inc.
Agreements with Certain Executives
By an agreement between Harry M. Conger and Homestake dated July 16, 1982,
as amended February 23, 1990 ("Conger Agreement"), Mr. Conger will receive upon
retirement, for life, monthly compensation equal to 55 percent of the average of
his 36 consecutive months of highest compensation less one-half of his Social
Security benefits. On Mr. Conger's death before retirement (or for the remaining
portion of a ten-year period from the date of his retirement if his death occurs
after retirement), his surviving spouse will receive monthly for ten years the
amounts Mr. Conger would have received had he survived and thereafter 50 percent
of such amounts for her life. Under certain circumstances, retirement benefits
payable to Mr. Conger before age 65 will be suspended if he serves as a senior
executive of another enterprise with annual sales of over $100 million in the
preceding year other than following a merger or takeover of Homestake. A merger
or takeover is defined in the Conger Agreement as any of the following events:
(i) Homestake is a party to a merger or combination under the terms of which
less than 75 percent of the shares in the resulting company are owned by the
shareholders of Homestake immediately preceding such event; (ii) at least 75
percent in fair market value of Homestake's assets are sold; or (iii) at least
25 percent in voting power in election of directors of Homestake's capital stock
is acquired by any one person or group as that term is used in Rule 13d-5 under
the Securities Exchange Act of 1934. On termination of Mr. Conger's employment
with Homestake, all unexercised stock options become immediately exercisable and
may be surrendered to Homestake in exchange for a cash payment equal to the
excess of the market price over the option price. Mr. Conger is not entitled to
benefits if his employment is terminated for material acts of willful misconduct
or gross negligence.
Homestake has severance agreements with Messrs. Elam, Kirk, Thompson and
Winters under which they are entitled to benefits in the event of a merger or
takeover (defined as in the Conger Agreement). Entitlement to benefits arises if
within three years of a merger or takeover, the executive's employment is
terminated or if he elects to terminate his employment following (i) a reduction
in salary or certain other benefits, (ii) a change in location of employment,
(iii) a change in position, duties, responsibilities or status inconsistent with
the executive's prior position or (iv) a reduction in responsibilities, titles,
or offices as in effect immediately before such merger or takeover. Benefits
payable under the agreements consist of (i) a lump sum cash payment equal to two
times the highest annual salary and bonus, including deferred compensation,
during the three-year period preceding termination, (ii) continuation of
participation in insurance and certain other fringe benefits for two years,
(iii) full vesting in the Company's Executive Supplemental Retirement Plan
described below under "Retirement Plan," (iv) full vesting and acceleration of
exercisability of options, and (v) relocation assistance to the extent not
provided by another employer. Benefits payable under the agreements are in lieu
of any severance benefits under Homestake's general severance policy. In July
and August 1992, Homestake acquired the outstanding voting securities of
Homestake Canada
11
<PAGE> 14
Inc. (formerly named International Corona Corporation). The acquisition is
deemed to be a "merger" for the purposes of the severance agreements held by
Messrs. Elam, Thompson and Winters.
STOCK OPTION PLANS.
Options Granted
The following table sets forth certain information with respect to options
granted during 1994 to each named executive officer under the 1988 Plan.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NO. OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS EXERCISE ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO OR PRICE APPRECIATION FOR
OPTIONS EMPLOYEES BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (#)(1) YEAR ($/SH) DATE 5%(2) 10%(2)
-------------------------------------- ---------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harry M. Conger 49,200 18.5% $20.625 2/25/04 $638,171 $1,617,250
Gene G. Elam 13,200 4.9 20.625 2/25/04 171,217 433,896
Wayne Kirk 16,500 6.2 20.625 2/25/04 214,021 542,370
Jack E. Thompson 14,700 5.5 20.625 2/25/04 190,673 483,203
15,000 5.6 17.875 8/16/04 168,622 427,322
Allen S. Winters 14,200 5.3 20.625 2/25/04 184,187 466,767
</TABLE>
------------
(1) Granted at fair market value. Granted on February 25, 1994 (except as
otherwise noted), and vest in 25 percent increments on the first through
fourth anniversaries of the grant date. Vesting of options is accelerated in
specified circumstances, including upon certain reorganizations and the
commencement of certain tender offers.
(2) Compounded annually.
12
<PAGE> 15
Options Exercised
The following table sets forth certain information with respect to options
exercised during 1994 by each named executive officer.
AGGREGATED OPTION EXERCISES IN 1994
AND OPTION VALUES AT 1994 YEAR END
<TABLE>
<CAPTION>
NO. OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT YEAR END (#) AT YEAR END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
------------------------------------------- ------------ ------------------- --------------------
<S> <C> <C> <C> <C>
Harry M. Conger 9,992 $42,466 363,357/161,775 $924,182/$421,544
Gene G. Elam -- -- 33,775/ 53,675 63,691/ 155,836
Wayne Kirk 5,000 51,250 22,075/ 47,625 94,450/ 153,225
400 1,600
7,500 71,812
Jack E. Thompson 7,565 50,875 25,700/ 80,925 58,569/ 208,252
5,000 51,625
2,050 21,038
Allen S. Winters 8,625 37,087 20,500/ 65,475 49,109/ 197,543
9,250 79,087
6,650 62,842
</TABLE>
Homestake's stock option plans permit optionees designated by the
Compensation Committee to pay part of the option price by delivering to
Homestake a promissory note. Each note bears interest and is secured by a pledge
of Homestake common shares with an aggregate market value at the time of
delivery of the note at least equal to the principal amount of the note. In
1994, no optionee under Homestake stock option plans had indebtedness to the
Company in respect of stock options.
RETIREMENT PLANS.
Retirement Plan
All full-time salaried employees of Homestake (approximately 500 persons)
participate in the Homestake Retirement Plan, a noncontributory defined benefit
plan ("Retirement Plan").
Under the Retirement Plan, participants accrue benefits at the rate of two
percent per year of service during the first 25 years and one-half percent for
each year of service thereafter. Normal retirement age under the Retirement Plan
is 65. Early retirement, with reduced benefits, is permitted after age 55 with
five years of service. The Retirement Plan is integrated with Social Security.
For a participant who retires at age 65 with 25 years of service, the monthly
benefit payable will be 50 percent of the average monthly compensation during
the 60 consecutive months of highest compensation (salary and bonus), less
one-half of the participant's Social Security benefits. Benefits paid upon
retirement are subject to a cost-of-living increase, up to a maximum of three
percent per year. Vesting requires five years of service. Homestake makes annual
actuarially determined contributions to the Retirement Plan to provide the
benefits to retirees. Funding contributions are not segregated as to individual
employees.
13
<PAGE> 16
The following table shows selected estimated annual benefits payable upon
retirement at age 65 under the Retirement Plan for persons having specified
years of service and the indicated remuneration. The table includes amounts that
may be payable under the Supplemental Retirement Plan described below ("SRP").
Amounts shown are calculated on a straight life annuity basis and are shown
before deduction for one-half of Social Security benefits. For purposes of the
Retirement Plan and the SRP, the years of service as of December 31, 1994 for
Messrs. Conger, Elam, Kirk, Thompson and Winters are 19 years, 4 years, 2 years,
13 years and 21 years, respectively. For purposes of these plans, earnings
include salary and bonus but exclude directors' fees and other benefits that are
included in the Summary Compensation Table.
YEARS OF SERVICE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL EARNINGS
(60 CONSECUTIVE
HIGHEST MONTHS) 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 78,750 $ 82,500
200,000 40,000 60,000 80,000 100,000 105,000 110,000
250,000 50,000 75,000 100,000 125,000 131,250 137,500
300,000 60,000 90,000 120,000 150,000 157,500 165,000
350,000 70,000 105,000 140,000 175,000 183,750 192,500
400,000 80,000 120,000 160,000 200,000 210,000 220,000
450,000 90,000 135,000 180,000 225,000 236,250 247,500
500,000 100,000 150,000 200,000 250,000 262,500 275,000
550,000 110,000 165,000 220,000 275,000 288,750 302,500
600,000 120,000 180,000 240,000 300,000 315,000 330,000
</TABLE>
Supplemental Retirement Plan
The Employee and Retirement Income Security Act of 1974 ("ERISA") imposes a
maximum limit on annual retirement benefits payable under retirement plans. For
1994, that annual limit was $118,800. In addition, the Internal Revenue Code
("IRC") limits the amount of annual compensation that may be considered under
qualified retirement plans. In 1994, that annual limit was $150,000. Under the
SRP, executive officers and key employees selected by the Compensation Committee
will be entitled to a supplemental retirement benefit equal to the difference
between the full amount of their pension benefits determined under the
Retirement Plan and the maximum amount permitted to be paid under ERISA and the
IRC. All of the officers identified in the Summary Compensation Table are
participants in the SRP.
Executive Supplemental Retirement Plan
Homestake has established an Executive Supplemental Retirement Plan
("Supplemental Plan") for executive officers and key employees selected by the
Compensation Committee. Under the Supplemental Plan, participants accrue
benefits under the following formula. Service credit is determined by
multiplying 3 2/3 percent by years of service, up to a maximum of 15 years.
Service credit is then multiplied by average monthly compensation during the 36
consecutive months of highest compensation (salary and bonus) to determine a
monthly retirement benefit. The monthly benefit is reduced by one-half of Social
Security benefits and by benefits payable under all other Homestake retirement
plans and those of prior employers. Retirement is permitted at age 62 after 10
years of service, although a participant who has attained age 60 and 10 years of
service may elect early retirement and receive a reduced benefit if approved by
the Compensation Committee. The Supplemental Plan is unfunded. The following
table shows selected estimated annual benefits payable under the Supplemental
Plan, calculated on a straight life annuity basis, assuming retirement at age
62, to persons having specified years of service and the indicated average
earnings before reductions for integration with Social Security and also before
reduction for other Homestake retirement plans or those of prior employers.
Payments under the Supplemental Plan are not limited by ERISA or the IRC. All of
the officers identified in the Summary Compensation Table are participants in
the Supplemental Plan. For purposes of the
14
<PAGE> 17
Supplemental Plan, the years of service as of December 31, 1994 for Messrs.
Conger, Elam, Kirk, Thompson and Winters are 15 years, 8 years, 2 years, 13
years and 15 years, respectively.
YEARS OF SERVICE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL EARNINGS
(36 CONSECUTIVE
HIGHEST MONTHS) 10 YEARS 13 YEARS 15 YEARS
--------------- -------- -------- --------
<S> <C> <C> <C>
$150,000 $ 55,000 $ 71,500 $ 82,500
200,000 73,333 95,334 110,000
250,000 91,667 119,167 137,500
300,000 110,000 143,000 165,000
350,000 128,333 166,835 193,500
400,000 146,668 190,668 220,000
450,000 165,000 214,500 247,500
500,000 183,333 238,335 275,000
550,000 201,667 262,169 302,500
600,000 220,000 286,002 330,000
</TABLE>
15
<PAGE> 18
PERFORMANCE GRAPH.
Set forth below is a line graph comparing the cumulative total shareholder
return on Homestake common stock for the five years ended December 31, 1994,
based on the market price of the Homestake common stock and assuming
reinvestment of dividends, with the cumulative total return of companies on the
Standard & Poor's 500 Index and Standard & Poor's Gold Index.
THE FOLLOWING PERFORMANCE GRAPH SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY FILING BY HOMESTAKE UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Homestake S & P 500 S & P GOLD
<S> <C> <C> <C>
1989 100 100 100
1990 102 97 88
1991 86 126 72
1992 60 136 67
1993 120 150 123
1994 94 152 99
</TABLE>
------------
* $100 invested on December 31, 1989 in stock or index, including reinvestment
of dividends. Fiscal years ending December 31.
16
<PAGE> 19
COMPENSATION COMMITTEE REPORT*
The Compensation Committee is responsible for administering the policies
that govern executive compensation. The Compensation Committee evaluates the
performance of management and recommends to the full Board of Directors the
compensation level for all officers and key employees. The Committee also
administers the Company's stock option plans and determines the amount of stock
options granted to officers and key employees. The Committee is comprised of six
non-employee directors.
The Company's executive compensation program has the following objectives:
- Attract and retain key executives critical to the long-term success of
the Company.
- Reward performance that benefits the shareholders.
The basic compensation program consists of both cash and long-term,
equity-based compensation. In addition, officers and key employees may
participate in the Company's Retirement Plan, the Supplemental Retirement Plan,
and the Executive Supplemental Retirement Plan (described elsewhere in this
Proxy Statement), and the Company's Savings Plan, which is generally available
to all salaried employees and which provides for Company matching contributions
with employee contributions. Officers and key employees may also defer income
under the Deferred Income Plan.
Annual cash compensation consists primarily of a base salary and an annual
bonus under the Company's Bonus Plan. In order to emphasize performance and
success, the Company's policy is to pay base salaries that are generally
competitive with the median of base salaries paid by comparable companies, and
to reward performance by paying bonuses when the Company is profitable and when
individual performance or other extraordinary circumstances warrant special
recognition. The Compensation Committee determines and recommends to the Board
of Directors a base salary for each of the officers and key employees, based
upon individual performance, responsibility and competitive factors, including
compensation in the mining industry. To that end, the Company, under the
direction of the Compensation Committee, conducts an annual survey of salary
increases nationally and also by companies believed to be comparable to the
Company (for 1994, Amax Gold, Barrick Gold, Battle Mountain Gold, BHP Gold,
Cypress Minerals, Echo Bay Mining, Hecla Mining, Newmont, Pegasus Gold, Placer
Dome and Santa Fe Minerals), and the Compensation Committee uses that
information in recommending base salary levels.
Although the Compensation Committee gives some consideration to
profitability in determining base salaries, substantial weight is given to
profitability as well as individual performance and level of responsibility in
determining whether to recommend annual bonuses and the amount of bonuses. Under
the Bonus Plan, each officer and key employee is assigned a target bonus amount
at the beginning of each year determined under the Bonus Plan and based on the
individual's salary grade, ranging from 20% to 45% of base salary. At the end of
each year, the Compensation Committee evaluates estimated Company profitability
and individual officer and key employee performance and applies a multiplier
which has both a profitability component and a subjective individual performance
component. The dollar amount of the bonus as so calculated is equal to the
target bonus amount times the profitability multiplier and times the individual
performance multiplier. The Compensation Committee then recommends the bonuses
for approval by the Board of Directors. For the year 1994, the Compensation
Committee adopted a profitability multiplier of 50% for estimated net income of
$30 million, increasing to 100% for estimated net income of $50 million.
Long-term, equity-based compensation is provided through the grant of stock
options. The purpose is to provide officers and key employees with an incentive
to continue as employees of the Company over a long term and to align their
long-range interests with those of the shareholders by providing the opportunity
to have a stake in the Company. The Compensation Committee reviews and approves
stock option awards to officers and key employees of the Company and its
subsidiaries. The number of options awarded annually is generally based on a
formula. For each optionee an annual target gain is established based on salary
and a subjective
---------------
* The Compensation Committee Report shall not be deemed to be incorporated
by reference in any filings of the Company under the Securities Act of 1933 or
the Securities Exchange Act of 1934.
17
<PAGE> 20
evaluation of the perceived impact that the optionee may have on the Company's
success through performance of his or her responsibilities. A number of options
are granted which, assuming an appreciation of 12 percent per year over five
years, will give an amount of appreciation equal to the target gain. The
Compensation Committee does not consider the number of outstanding options in
determining annual option awards. The Compensation Committee has the authority
to determine the recipients of stock option awards, the terms of options, and
the number of shares subject to options. Stock options generally vest over a
four year period and have a 10 year term. Based on an independent survey
commissioned by the Company, as of September 1992 the value of Homestake's
long-term incentive grants have generally been equal to or somewhat below those
of comparable mining companies.
Chief Executive Officer. Evaluation of the Chief Executive Officer's
compensation is conducted by the Compensation Committee without the Chief
Executive Officer being present. In November 1993, after reviewing the proposed
levels of 1994 compensation for other mining company executives and also
considering the Company's 1993 performance, the Compensation Committee
determined that it would be appropriate for the 1994 base salary for the Chief
Executive Officer to be increased from $465,000 (the rate in effect for 1991,
1992 and 1993) to $500,000, and that recommendation was accepted by the Board of
Directors. In November 1994, after considering the Company's estimated profit
performance for 1994 and evaluating the individual performance of Mr. Conger,
the Committee recommended a 1994 bonus of $210,000, equal to 100% of the target
bonus, and that recommendation was accepted by the Board of Directors.
Other Executive Officers. In November 1993, after reviewing the proposed
levels of 1994 compensation for other mining company executives and also
considering the Company's 1993 performance, the Compensation Committee
determined that it would be appropriate for the 1994 base salary for all
executive officers to be increased in amounts ranging from 4% to 11.8% of 1993
base salary, and that recommendation was accepted by the Board of Directors. In
November 1994, after considering the Company's estimated profit performance and
evaluating the individual performances of the executive officers, the Committee
recommended 1994 bonuses ranging from 90% to 107% of the target bonuses for such
officers, and that recommendation was accepted by the Board of Directors.
Limitation on Deductibility of Compensation. Section 162(m) of the
Internal Revenue Code limits the deductibility of compensation of the Chief
Executive Officer and four other highest paid executive officers to $1,000,000
per year (subject to certain exceptions). None of the Company's officers receive
annual compensation in excess of the maximum deductible amount. If, because of
competitive factors and individual performance, the Compensation Committee
should determine that it was appropriate to pay one or more executive officers
in excess of annual maximum deductible amount, the Compensation Committee would
expect to recommend such compensation.
March 13, 1995
COMPENSATION COMMITTEE
G. ROBERT DURHAM
DOUGLAS W. FUERSTENAU
HENRY G. GRUNDSTEDT
ROBERT K. JAEDICKE
JOHN NEERHOUT, JR.
BERNE A. SCHEPMAN, Chairman
18
<PAGE> 21
CERTAIN TRANSACTIONS WITH AFFILIATES AND
INDEBTEDNESS OF DIRECTORS AND OFFICERS
SHAREHOLDER AGREEMENT WITH CASE POMEROY.
In connection with Homestake's acquisition of Felmont Oil Corporation in
1984, Homestake, Case, Pomeroy & Company, Inc., and Hadley Case entered into a
Shareholder Agreement, which agreement was amended in 1989, and further amended
on March 27, 1992. Mr. Case, with family associates including Robert H. Clark,
Jr., is the controlling shareholder of Case Pomeroy. See "Principal Holders of
Homestake Common Stock." The Shareholder Agreement provides that neither Case
Pomeroy nor Mr. Case nor persons controlled by them will acquire additional
Homestake shares without prior written consent of Homestake if the effect would
be to increase the voting power represented by their holdings of Homestake
shares on January 1, 1989. The Shareholder Agreement grants to Homestake certain
rights of first refusal in the event Case Pomeroy or Mr. Case elects to sell
Homestake shares other than (a) to Homestake or persons approved by Homestake,
(b) to Mr. Case or wholly-owned subsidiaries of Case Pomeroy (who, if they are
to receive more than two percent of the outstanding Homestake voting shares,
must agree to be bound by the terms of the Shareholder Agreement), (c) in
underwritten public offerings registered under the Securities Act of 1933
("Securities Act"), (d) in transactions complying with the volume limitations of
Rule 144 under the Securities Act, (e) to persons who would not hold one percent
or more of the outstanding Homestake voting shares or, (f) pursuant to a tender
or exchange offer.
Until the Shareholder Agreement terminates, Homestake has agreed that so
long as Mr. Case and Mr. Clark are able to serve as directors of Homestake, Case
Pomeroy is entitled to designate Mr. Case and Mr. Clark as nominees. If both Mr.
Case and Mr. Clark are unable to serve or cease to serve as directors of
Homestake for any reason, Case Pomeroy is entitled to designate one person,
approved by Homestake, to fill the vacancy until such other nominee is elected
and qualified. Most provisions of the Shareholder Agreement will terminate on
the earlier of December 31, 1996, or the date on which Case Pomeroy, Mr. Case
and all persons controlled by either of them cease to own, in the aggregate,
securities having at least three percent of the voting power of Homestake. Mr.
Case has elected to resign as a director immediately prior to the 1995 annual
meeting. He will continue as a Director Emeritus. In that capacity he will be
eligible to attend all directors' meetings but he will not be a voting member of
the Board of Directors.
Each of Homestake and Case Pomeroy indirectly owns a 25 percent undivided
co-tenancy interest in the Round Mountain mine in Nye County, Nevada, under the
terms of an Operating Agreement with Round Mountain Gold Corporation, the owner
of a 50 percent undivided interest and the manager of the mine. The Shareholder
Agreement provides that whenever any action is to be taken pursuant to the
Operating Agreement that requires consent or approval of a majority of the
co-tenancy interests, Case Pomeroy and Homestake will cause their respective
subsidiaries to agree to take such action as they agree upon in advance. The
Shareholder Agreement also provides that neither Case Pomeroy, nor Homestake,
nor their respective subsidiaries will, directly or indirectly, transfer any
interest in the Round Mountain mine without the approval of the other. Approval
of a majority of the co-tenancy interests is required for budgets and work
programs carried out by the manager of the Round Mountain mine.
TRANSACTIONS WITH CASE POMEROY.
Under a 1985 agreement, Case Pomeroy transferred to Homestake all of Case
Pomeroy's interests in certain unpatented mining claims and other mineral
properties in the United States and Canada previously jointly owned by Case
Pomeroy and Homestake Sulphur. Case Pomeroy reserved a 2.5 percent net smelter
return royalty interest in each property transferred, as well as an option to
convert all or part of the reserved royalty into a 40 percent participating
interest in the property if commercial production appears feasible. No royalties
have been paid. The transferee has no obligation to explore, develop or make any
expenditures on any property transferred and may drop any property at any time
after first offering to quitclaim it to Case Pomeroy.
19
<PAGE> 22
TRANSACTION WITH PETER STEEN.
Peter Steen, former President and a director of the Company, resigned in
August 1994. As consideration of the immediate cancellation of all stock options
held by Mr. Steen, the Company paid to Mr. Steen $384,277, representing the
difference between the closing price of the Company's stock on the day prior to
his resignation and the exercise price of the options having an exercise price
less than that closing price.
PROPOSAL NO. 2
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of the Audit Committee, has
engaged the firm of Coopers & Lybrand LLP as independent auditors to audit and
report to the shareholders on the financial statements of Homestake for the year
1995. Representatives of the firm are expected to be present at the annual
meeting and will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions. Although
shareholder approval of the engagement is not required by law, the Board of
Directors desires to solicit such approval. If the appointment of Coopers &
Lybrand LLP is not approved by a majority of the shares represented at the
meeting, the Board of Directors will consider the appointment of other
independent auditors for 1995.
On March 3, 1993, pursuant to the recommendation of the Audit Committee,
the Company terminated Deloitte & Touche LLP as independent accountants for the
Company and its subsidiaries upon completion of their 1992 audit engagement.
Deloitte & Touche LLP's reports on the financial statements of the Company for
1991 and 1992 did not contain an adverse opinion or a disclaimer of opinion and
the reports were not qualified or modified as to uncertainty, audit scope, or
accounting principles. During 1991 and 1992 and the interim period through the
date of termination, there were no disagreements with Deloitte & Touche LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Deloitte & Touche LLP would have caused Deloitte & Touche LLP to
make a reference to the subject matter of the disagreement in connection with
its reports. During 1991 and 1992 and the interim period through the date of
termination, there did not occur any kind of event listed in paragraphs
(a)(1)(v)(A) through (D) of SEC Regulation S-K, Item 304.
THE BOARD OF DIRECTORS OF HOMESTAKE UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF APPOINTMENT OF COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS FOR THE
YEAR 1995. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A VOTE AGAINST THIS PROPOSAL OR ABSTENTION IS SPECIFICALLY
INDICATED.
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Proxy Statement for the 1996 annual
meeting, proposals of shareholders must be received by Homestake no later than
November 24, 1995. Such proposals should be directed to the Secretary of
Homestake.
By Order of the Board of Directors
[SIG]
WAYNE KIRK
Secretary
San Francisco, California
March 24, 1995
20
<PAGE> 23
(LOGO)
<PAGE> 24
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
ANNUAL MEETING OF SHAREHOLDERS - MAY 9, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
P
PROXY - The undersigned hereby appoints HARRY M. CONGER, JACK E. THOMPSON
R and WAYNE KIRK as proxies, each with the power to appoint a substitute, and
hereby authorizes a majority (or if only one, then that one) of them to
O represent and to vote, as designated on the reverse side, all shares of
common stock of Homestake Mining Company held of record by the undersigned
X on March 13, 1995 at the Annual Meeting of Shareholders, or any
postponement or adjournment thereof.
Y
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE> 25
----- Please mark
X your votes
----- as this
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE INDICATED, THIS PROXY
WILL BE VOTED FOR ITEMS NUMBER 1 AND 2.
1. Election of five Class II Directors (term of three years) and one Class III
Director (term of one year)
Nominees:
Class II Director: Henry G. Grunstedt, William A. Humphrey, John Neerhout,
Jr., Stuart T. Peeler and Jack E. Thompson
Class III Director: Carol A. Rae
2. Appointment of Coopers & Lybrand as independent auditors for 1995.
FOR AGAINST ABSTAIN
/ / / / / /
FOR WITHHELD
/ / / /
MARK HERE
FOR ADDRESS
CHANGE AND / /
NOTE AT BELOW
LEFT
/ /
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Instruction: To withhold authority to vote for one or more of the nominees,
print name(s) of nominee(s) on line above.
By execution of this proxy the undersigned hereby authorizes such proxies or
their substitutes to vote in their discretion on such other business as may
properly come before the meeting.
(This Proxy should be marked, dated signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
Signature: Date
---------------------------------------------------- ----------
Signature: Date
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