<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)
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
HOMESTAKE MINING COMPANY
[HOMESTAKE LOGO]
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1996
To the Shareholders of Homestake Mining Company:
The annual meeting of shareholders of Homestake Mining Company will be held
at the Fairmont Hotel, California and Mason Streets, San Francisco, California,
on Tuesday, May 14, 1996, at 11:00 a.m. local time, for the following purposes:
1. Election of four Class III Directors.
2. Approval of Stock Option and Share Rights Plan -- 1996.
3. Approval of the appointment of Coopers & Lybrand LLP as
independent auditors for 1996.
4. Transaction of such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 18, 1996,
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
18, 1996, 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
/s/ WAYNE KIRK
WAYNE KIRK
Secretary
March 27, 1996
<PAGE> 3
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
March 27, 1996
PROXY STATEMENT
MAY 14, 1996 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 Fairmont Hotel, California and Mason Streets, San Francisco,
California, on Tuesday, May 14, 1996, 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 27, 1996.
MATTERS TO BE CONSIDERED.
The following matters will be acted on at the annual meeting:
1. Election of four Class III Directors.
2. Approval of Stock Option and Share Rights Plan -- 1996.
3. Approval of the appointment of Coopers & Lybrand LLP as
independent auditors for 1996.
4. Transaction of such other business as may properly come before the
meeting.
VOTING SECURITIES AND VOTING RIGHTS.
Only shareholders of record on March 18, 1996, or their proxies, will be
entitled to vote at the annual meeting of shareholders. On March 18, 1996,
Homestake had 146,489,575 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 director nominees named in this Proxy Statement, to approve
the Stock Option and Share Rights Plan -- 1996, and to approve the appointment
of Coopers & Lybrand LLP as independent auditors for 1996. 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.
<PAGE> 4
On voting for Class III Directors, the four nominees receiving the highest
number of votes will be elected. Approval of the Stock Option and Share Rights
Plan -- 1996 and 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.
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 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, an abstention 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 a matter,
those shares 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 18, 1996, there were 23,530 record holders of Homestake common
stock.
As of the close of business on March 18, 1996, no person was known to
Homestake to own beneficially five percent or more of the outstanding Homestake
common stock.
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 29, 1996 (excluding shares which such
persons have the right to acquire within 60 days of February 29, 1996 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 29, 1996 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
29, 1996. The shares so shown include shares held in Homestake's Savings Plan
for the accounts of executive officers and share rights 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.
Including the shares held by Case, Pomeroy & Company, Inc. (described in
footnote 2) and 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
2
<PAGE> 5
a group represent approximately 5.30 percent of the total number of shares of
Homestake common stock outstanding.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED RIGHT TO TOTAL
AS OF ACQUIRE SHARES NUMBER
FEBRUARY 29, 1996, WITHIN OF SHARES
EXCLUDING RIGHT TO 60 DAYS OF BENEFICIALLY
NAME ACQUIRE SHARES(1) FEBRUARY 29, 1996 OWNED
- ------------------------------------------------ ------------------ ----------------- ----------
<S> <C> <C> <C>
M. Norman Anderson.............................. 2,529 5,914 8,443
Robert H. Clark, Jr.(2)......................... 6,535,276 1,736 6,537,012
Harry M. Conger(3).............................. 175,442 438,000 613,442
G. Robert Durham................................ 5,000 1,295 6,295
Douglas W. Fuerstenau........................... 1,478 1,728 3,206
Henry G. Grundstedt............................. 1,000 866 1,866
William A. Humphrey............................. 61,187 110,946 172,133
Robert K. Jaedicke.............................. 400 1,715 2,115
John Neerhout, Jr. ............................. 1,000 1,254 2,254
Stuart T. Peeler................................ 8,500 1,885 10,385
Carol A. Rae.................................... 0 142 142
Berne A. Schepman............................... 3,524 1,749 5,273
Jack E. Thompson................................ 13,405 67,950 81,355
Gene G. Elam.................................... 3,780 73,450 77,230
Wayne Kirk(4)................................... 4,211 46,600 50,881
Gil J. Leathley................................. 2,125 24,767 26,892
All Directors, Nominees and Executive Officers
as a Group (22 persons)....................... 6,832,494 991,259 7,823,753
</TABLE>
- ------------
(1) In some instances voting and investment power is shared with the spouse of
the identified person.
(2) Includes 26,000 shares owned by Mr. Clark's spouse and one of his children.
Also includes 6,485,276 shares owned by Case Pomeroy & Company, Inc. Mr.
Clark is the President and Chief Executive Officer and, with family members,
is a controlling shareholder of Case Pomeroy.
(3) Includes 446 shares held of record by a Savings Plan Trust for Mr. Conger's
spouse. Mr. Conger disclaims beneficial ownership of these shares.
(4) Includes 400 shares held of record by two of Mr. Kirk's children. Mr. Kirk
disclaims beneficial ownership of these shares.
Section 16(a) of the Securities Exchange Act of 1934 and related rules
require the Company's directors and executive officers 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 1995 all of
its directors and executive officers 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 Carol A. Rae, a director
elected in 1995, was filed late. No directors or executive officers reported in
1995 a transaction or ownership of shares that should have been reported in an
earlier year.
3
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of Homestake consists of 13 members, divided into
three classes with staggered terms of three years each. Four Class III Directors
are to be elected at this annual meeting to serve until the annual meeting in
1999 or until their successors are elected and qualified.
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 FOUR CLASS III NOMINEES 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 four nominees for election as a Class
III Director is set forth in the table below. The information appearing in the
table and certain 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 III DIRECTORS TO SERVE UNTIL 1999 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 14, 1996 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Harry M. Conger............... 65 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.............. 67 1990 Mr. Durham has been a director and
Chief Executive Officer of Walter
Industries, Inc. (building materials,
home building, mortgage financing and
natural resource development) since
June 1991, President from June 1991 to
October 1995, and Chairman since
October 1995. 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 corpo-
rations beginning in 1977. He is a
director of FINOVA Group Inc.
(financial services), a director of
Mincorp Ltd. (engineering services),
and a trustee of Mutual Life Insur-
ance Company of New York.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 14, 1996 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Robert K. Jaedicke............ 67 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.
Carol A. Rae.................. 50 1995 Ms. Rae was the President and Chief
Executive Officer of Magnum Diamond
Corporation (manufacturer of surgical
instruments) from 1989 to 1995. She
was Senior Vice President and General
Manager of the Refractive Division of
Chiron Vision Corporation
(manufacturer of ophthalmic
intraocular lenses) from 1994 until
1995 and since 1995 has been Senior
Vice President of Government Affairs
of the Refractories Division of Chiron
Vision. She has also been the Presi-
dent 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
certain information regarding beneficial ownership of securities by such
directors contained in this Proxy Statement has been furnished to Homestake by
the directors.
CONTINUING CLASS I DIRECTORS TO SERVE UNTIL 1997 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 14, 1996 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
M. Norman Anderson............ 65 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. (gold mining),
Solv-ex Corporation (tar sands
processing), Finning Ltd.
(construction equipment sales and
service), and Toronto Dominion Bank.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 14, 1996 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Robert H. Clark, Jr.*......... 55 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).
Douglas W. Fuerstenau......... 67 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.
Berne A. Schepman............. 69 1973 Mr. Schepman has been President of
Adair Company (management consulting)
since 1982 and President of Russian
Technology Group (technology
marketing) since July 1992.
</TABLE>
CONTINUING CLASS II DIRECTORS TO SERVE UNTIL 1998 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 14, 1996 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Henry G. Grundstedt........... 67 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.
William A. Humphrey........... 69 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.
John Neerhout, Jr............. 65 1989 Mr. Neerhout has been Executive Vice
President of Bechtel Group Inc.
(engineering and construction) since
1986. He is a director of and holds
executive positions with Bechtel Group
Inc. and other of its affiliated
companies.
</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.
6
<PAGE> 9
<TABLE>
<CAPTION>
AGE AT DIRECTOR
MAY 14, 1996 SINCE BIOGRAPHICAL INFORMATION
------------ -------- --------------------------------------
<S> <C> <C> <C>
Stuart T. Peeler.............. 66 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 (aggre-
gates, asphalt, and property
development), Chieftain International,
Inc. (oil and gas exploration and
production) and Chieftain In-
ternational Funding Corp. (financial
services).
Jack E. Thompson.............. 46 1994 Mr. Thompson has been President and
Chief Operating Officer and a director
of Homestake since August 1994. He was
Executive Vice President-Canada of
Homestake and President and Chief
Executive Officer of Prime Resources
Group Inc. and Homestake Canada Inc.
from July 1992 to August 1994. He was
President of Homestake Mineral De-
velopment Company and North American
Metals Corp. (gold mining) from 1988
until July 1992.
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD.
Homestake's Board of Directors held 14 meetings during calendar year 1995.
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. Conger (Chairman), Clark, Humphrey, Peeler,
Schepman and Thompson. The Executive Committee held one meeting during 1995.
The Finance Committee reviews and makes recommendations to the Board of
Directors about proposed dividends, investments and financial matters, and
oversees pension and savings plan investments. The members of the Committee are
Messrs. Conger, Grundstedt, Humphrey, Peeler (Chairman) and Thompson, and Ms.
Rae. The Finance Committee held four meetings during 1995.
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) and Neerhout, and Ms. Rae, all non-employee directors. The Committee
held three meetings during 1995.
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 and its Deferred Compensation Plan and Executive Supplemental
Retirement Plan. 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 1995.
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, Durham,
7
<PAGE> 10
Fuerstenau (Chairman) and Schepman, all non-employee directors. The Nominating
Committee held two meetings during 1995.
The Environment, Health and Safety 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. The Environment, Health and Safety Committee held one
meeting during 1995.
Each incumbent director attended at least 75 percent of the total number of
meetings of the Board of Directors and the respective committees on which he or
she served. The aggregate average attendance at meetings of the Board of
Directors and its committees was 96.1 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, receive attendance fees of $900 for each meeting of the Board of
Directors and $800 for each committee meeting. Directors are entitled to defer
compensation under the Deferred Compensation Plan described below under
"Compensation of Executive Officers--Summary Compensation Table."
The Company has adopted a Retirement Plan for Outside Directors. 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"), 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 after Homestake's annual earnings for the preceding year are
released, each non-employee director on that date is granted share rights
entitling him or her to receive shares of Homestake common stock for no
consideration on the date he or she 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 1995, a total of 2,114
share rights were granted under the 1988 Plan. No director was credited with
more than 225 share rights for 1995.
During 1996, a director of Prime Resources Group Inc. ("Prime"), 50.6%
owned by Homestake, who is not an employee of Homestake or Prime will receive an
annual retainer of C$10,000 and attendance fees of C$750 for each board or
committee meeting. M. Norman Anderson is a non-employee director of Prime.
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 1995, the Company paid $22,781 to Mr. Peeler under the
agreement.
8
<PAGE> 11
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 involving Latin America. The
agreement is terminable by either party at will. Mr. Humphrey receives
compensation at a rate of $1,000 for each day of service under the agreement. No
compensation was paid to Mr. Humphrey under the agreement during 1995.
COMPENSATION OF EXECUTIVE OFFICERS.
Summary Compensation Table
The following table sets forth summary information regarding compensation
paid by Homestake and its subsidiaries for the years ended December 31, 1995,
1994 and 1993 to the chief executive officer and the other four highest
compensated executive officers of Homestake for 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------------
-------------------------------
OTHER AWARDS PAYOUTS
ANNUAL ---------- -------
COMPEN- SECURITIES LTIP ALL OTHER
NAME AND SATION UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS(#) ($) ($)
- ------------------------- ----- --------- -------- ------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harry M. Conger 1995 $ 517,500 $105,000 66,953(2) 59,900 $ 0 $ 9,000(3)
Chairman of the 1994 500,000 225,000 14,900(4) 49,200 0 6,750
Board and Chief 1993 465,000 210,000 17,500(4) 91,500 0 8,254
Executive Officer
Gene G. Elam 1995 261,000 41,000 8,150(5) 16,100 0 9,005(6)
Vice President, 1994 252,000 88,200 8,100(7) 13,200 0 6,750
Finance and Chief 1993 235,000 83,000 900(7) 24,700 0 8,230
Financial Officer
Wayne Kirk 1995 326,000 52,000 -- 20,100 0 9,010(8)
Vice President, 1994 315,000 110,250 -- 16,500 0 6,750
General Counsel 1993 300,000 105,000 -- 31,500 0 8,254
and Corporate Secretary
Gil J. Leathley 1995 198,088 30,000 49,631(10) 21,500 0 10,592(11)
Vice President, 1994 171,740 55,600 692(12) 9,700 0 9,623
Operations(9) 1993 161,345 46,909 266(12) 18,500 0 6,858
Jack E. Thompson 1995 336,000 68,000 29,146(13) 31,100 0 9,077(14)
President and Chief 1994 263,575 146,250 157,438(16) 29,700 0 6,750
Operating Officer(15) 1993 215,000 75,300 104,810(17) 28,200 0 7,532
</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) Consists of $49,543 (financial planning) and $17,500 (directors' fees).
(3) Matching contribution to Savings Plan.
(4) Directors' fees.
(5) Consists of $7,200 (directors' fees paid by publicly held subsidiary) and
$950 (financial planning).
(6) Consists of matching contribution to Savings Plan ($9,000) and above-market
component of interest paid on deferred compensation plan ($5).
(7) Directors' fees paid by publicly held subsidiary.
(8) Consists of matching contribution to Savings Plan ($9,000) and above-market
component of interest paid on deferred compensation plan ($10).
(9) Mr. Leathley served as Vice President, Canadian Operations during a portion
of 1995, and during all of 1994 and 1993, and was resident in Vancouver.
Accordingly, a portion of Mr. Leathley's Annual Compensation and All Other
Compensation was paid in Canadian dollars during such time periods. The
following conversion rates were used to convert such amounts: 1995-.7324;
1994-.7128; and 1993-.7566. Mr. Leathley became Vice President, Operations,
of the Company in May 1995.
(10) Consists of $717 (premiums paid on life and accidental death and
dismemberment policy), $39,600 (relocation expenses paid by or on behalf of
Mr. Leathley) and $9,254 (tax gross-up for relocation
9
<PAGE> 12
expenses). In connection with his appointment as Vice President,
Operations, Mr. Leathley relocated from Canada to the San Francisco area.
(11) Consists of matching contribution to Savings Plan and Registered Retirement
Savings Plan ($10,542) and above-market component of interest paid on
deferred compensation plan ($50).
(12) Premiums paid on life and accidental death and dismemberment policy.
(13) Consists of $17,500 (directors' fees), $11,030 (financial planning) and
$616 (tax gross-up for payment made in connection with the sale of Mr.
Thompson's Canadian residence in 1994).
(14) Consists of matching contribution to Savings Plan ($9,000) and above-market
component of interest paid on deferred compensation plan ($177).
(15) Mr. Thompson served as Executive Vice President until August 9, 1994, when
he was appointed President.
(16) Consists of $53,844 (cost-of-living adjustment in connection with Mr.
Thompson's foreign assignment), $47,700 (payment 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.
(17) 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).
Under the Company's Deferred Compensation 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 $2,000 nor more than 100 percent of compensation. Amounts
deferred are credited with interest in an amount equivalent to 120% of (i) the
monthly Moody's Corporate Bond Yield Average as published by Moody's Investors
Service, Inc. and (ii) such additional amount as the Compensation Committee
determine as to be appropriate.
Agreements with Certain Executives
By an agreement between Harry M. Conger and Homestake, Mr. Conger will
receive upon retirement, for life, monthly compensation equal to 65 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. 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, Leathley and
Thompson under which they are entitled to benefits in the event of a merger or
takeover. A merger or takeover is defined 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. 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 Plans," (iv) full vesting and acceleration of
exercisability of options, and (v) relocation
10
<PAGE> 13
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.
STOCK OPTION PLANS.
Options Granted
The following table sets forth certain information with respect to options
to acquire common stock that were granted during 1995 to each named executive
officer under the 1988 Plan.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NO. OF OPTIONS EXERCISE ANNUAL RATES OF STOCK
SECURITIES GRANTED TO OR PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(1) YEAR ($/SH) DATE 5%(2) 10%(2)
- ------------------------------------ ---------- -------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harry M. Conger 59,900 16.73 $ 15.375 Mar. 2, 2005 $ 579,188 $1,467,777
Gene G. Elam 16,100 4.50 15.375 Mar. 2, 2005 155,675 394,511
Wayne Kirk 20,100 5.61 15.375 Mar. 2, 2005 194,352 492,526
Gil J. Leathley 11,500 3.21 15.375 Mar. 2, 2005 111,196 281,794
10,000(3) 2.79 18.000 Apr. 20, 2005 116,255 291,737
Jack E. Thompson 31,100 8.69 15.375 Mar. 2, 2005 300,714 762,068
</TABLE>
- ------------
(1) Granted at fair market value. Granted on March 2, 1995 (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.
(3) Granted on April 20, 1995.
Options Exercised
The following table sets forth certain information with respect to options
exercised during 1995 by each named executive officer.
AGGREGATED OPTION EXERCISES IN 1995
AND OPTION VALUES AT 1995 YEAR END
<TABLE>
<CAPTION>
NO. OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NO. OF 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 22,816 $102,672 404,416/157,800 $427,235/166,209
Gene G. Elam -- -- 55,850/ 47,700 65,329/ 56,601
Wayne Kirk -- -- 37,825/ 51,975 89,506/ 65,512
Gil J. Leathley 8,375 44,130 21,092/ 46,775 19,578/ 53,068
Jack E. Thompson 56,375/ 81,350 73,819/ 76,767
</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
1995, no optionee under Homestake stock option plans had indebtedness to the
Company in respect of stock options.
11
<PAGE> 14
RETIREMENT PLANS.
Retirement Plan
All full-time non-union employees of Homestake (approximately 635 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.
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, 1995 for
Messrs. Conger, Elam, Kirk, Leathley and Thompson are 20 years, 5 years, 3
years, 8 years and 14 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 Internal Revenue Code
("IRC") qualified retirement plans. For 1995, that annual limit was $120,000. In
addition, the IRC limits the amount of annual compensation that may be
considered under qualified retirement plans. In 1995, 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. The SRP is funded by Company contributions into a
"rabbi trust." All of the officers identified in the Summary Compensation Table
are participants in the SRP.
12
<PAGE> 15
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 4 1/3 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 benefits payable
under all other Homestake retirement plans and, commencing at age 65, by
one-half of Social Security and comparable foreign social security plan
benefits. Retirement is permitted at age 62 after 10 years of service, although
a participant who has attained age 55 and 10 years of service may elect early
retirement and receive a reduced benefit if approved by the Compensation
Committee. The Supplemental Plan is funded by Company contributions into a
"rabbi trust." 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 comparable foreign plans, and also before reduction for
other Homestake retirement plans. 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 Supplemental Plan, the years of service as of December 31, 1995 for Messrs.
Conger, Elam, Kirk, Leathley and Thompson are 15 years, 9 years, 3 years, 9
years and 14 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 $ 65,000 $ 84,500 $ 97,500
200,000 86,667 112,667 130,000
250,000 108,333 140,833 162,500
300,000 130,000 169,000 195,000
350,000 151,667 197,167 227,500
400,000 173,333 225,333 260,000
450,000 195,000 253,500 292,500
500,000 216,667 281,667 325,000
550,000 238,333 309,833 357,500
600,000 260,000 338,000 390,000
</TABLE>
13
<PAGE> 16
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, 1995,
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>
12/90 100 100 100
12/91 84 130 81
12/92 59 140 76
12/93 118 155 139
12/94 93 157 112
12/95 85 215 126
</TABLE>
- ------------
* $100 invested on December 31, 1990 in stock or index, including reinvestment
of dividends. Fiscal years ending December 31.
14
<PAGE> 17
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 administers
the Company's stock option plans and determines the amount of stock options
granted to officers and key employees. The Compensation Committee also
administers the Deferred Compensation Plan, the Supplemental Retirement Plan and
the Executive Supplemental Retirement Plan. 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 Compensation 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 of companies believed to be comparable to the
Company (for 1995, ASARCO, Barrick Gold, Cypress Amax Minerals, Freeport McMoran
Inc., Magma Copper, Newmont Gold, Phelps Dodge and Placer Dome), 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 both a
profitability multiplier and a subjective individual performance multiplier. 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 1995, the Compensation Committee
recommended and the Board of Directors adopted a profitability multiplier of
45%.
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.
15
<PAGE> 18
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.
During 1995, the Compensation Committee commissioned an independent
compensation survey by Compensation Resource Group, Inc. ("CRG") to evaluate the
Company's executive compensation program. After taking account of certain
adjustments in the Company's executive compensation program in response to
recommendations of CRG, the Company's executive compensation program is believed
to be comparable to the programs of similarly situated companies. The
Compensation Committee will continue to review the Company's executive
compensation program to ensure that the Company's program continues to be
comparable to those of other companies that compete with Homestake for executive
personnel.
Chief Executive Officer. Evaluation of the Chief Executive Officer's
compensation is conducted by the Compensation Committee without the Chief
Executive Officer or any other officer being present. In November 1994, after
reviewing the proposed levels of 1995 compensation for other mining company
executives and also considering the Company's 1994 performance, the Compensation
Committee determined that it would be appropriate for the 1995 base salary for
the Chief Executive Officer to be increased from $500,000 to $517,500, and that
recommendation was accepted by the Board of Directors. In November 1995, after
considering the Company's estimated profit performance for 1995 and evaluating
the individual performance of Mr. Conger, the Committee recommended a 1995 bonus
of $105,000, equal to the target bonus multiplied by a performance multiplier of
100% and multiplied by a profitability multiplier of 45%, and that
recommendation was accepted by the Board of Directors.
Other Executive Officers. In November 1994, after reviewing the proposed
levels of 1995 compensation for other mining company executives and also
considering the Company's 1994 performance, the Compensation Committee
determined that it would be appropriate for the 1995 base salary for all
executive officers to be increased in amounts ranging from 2.6% to 11.7% of 1994
base salary, and that recommendation was accepted by the Board of Directors. In
November 1995, after considering the Company's estimated profit performance and
evaluating the individual performances of the executive officers, the Committee
recommended 1995 bonuses for such officers equal to the target bonuses
multiplied by performance multipliers ranging from 88% to 111%, and multiplied
by a profitability multiplier of 45%, 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 21, 1996
COMPENSATION COMMITTEE
G. ROBERT DURHAM
DOUGLAS W. FUERSTENAU
HENRY G. GRUNDSTEDT
ROBERT K. JAEDICKE
JOHN NEERHOUT, JR.
BERNE A. SCHEPMAN, Chairman
16
<PAGE> 19
PROPOSAL NO. 2:
APPROVAL OF STOCK OPTION AND SHARE RIGHTS PLAN -- 1996
The Homestake Mining Company Stock Option and Share Rights Plan -- 1996
("Plan"), adopted by the Company's Board of Directors on January 25, 1996, is
being submitted for approval by the shareholders of the Company. A copy of the
Plan is attached hereto as Appendix A, and the following description of the Plan
is qualified in its entirety by reference to the Plan.
The Plan is neither subject to the provisions of the Employee Retirement
Income Security Act of 1974 nor qualified under Section 401(a) of the Internal
Revenue Code of 1986 ("Code").
PURPOSE.
The Plan is intended to promote the Company's interests by assisting the
Company, its affiliates, and joint ventures and other entities in which the
Company has at least a 20% interest in recruiting and retaining highly qualified
personnel, in rewarding such personnel for high levels of performance, and in
encouraging such personnel to acquire and hold a meaningful stock ownership
interest in the Company.
The Plan provides for the grant of stock options, stock appreciation rights
("SARs") and share rights to key employees. The Plan also includes a separate
share rights program for non-employee directors.
Options granted under the Plan may be either incentive stock options within
the meaning of Section 422 of the Code ("Incentive Stock Options"), or
non-statutory stock options which are intended not to meet the requirements of
such section.
ADMINISTRATION.
The share rights program for non-employee directors will be administered by
the full Board of Directors. All other aspects of the Plan will be administered
by the Compensation Committee of the Board of Directors (the "Committee").
Except for the share rights program for non-employee directors, the Committee is
authorized to select participants under the Plan, determine the terms and
conditions of awards under the Plan, interpret the Plan, establish rules and
regulations relating to the Plan, and make all other decisions relating to the
operation of the Plan.
The members of the Committee must be "disinterested persons" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor rule ("Rule 16b-3"), and "outside directors"
within the meaning of Section 162(m) of the Code. Members of the Committee are
appointed by the Board of Directors and are subject to removal by the Board of
Directors at any time.
ELIGIBILITY.
Persons eligible to receive options, SARs and employee share rights under
the Plan are key employees of the Company and its affiliates (approximately 50
persons), and key employees of joint ventures and other entities in which the
Company has at least a 20% equity or profits interest, who the Committee
determines have the opportunity to make significant contributions to the success
of the Company. Non-employee directors of the Company are eligible only to
receive share rights under the share rights program for directors.
SECURITIES SUBJECT TO THE PLAN.
The maximum number of shares of the Company's common stock issuable under
the Plan is 6,000,000 shares, (subject to certain adjustments, as provided
below), which is equal to approximately 4.1% of the Company shares outstanding
at March 18, 1996. The Plan limits to 250,000 the number of shares that may be
subject to options granted to any one person during any calendar year, and has a
similar annual limitation on the number of shares or units subject to grants of
SARs and share rights. Upon approval of the Plan, no further options or other
rights may be granted under the Company's existing stock option plans. At March
18, 1996 there were 2,187,977 Company shares subject to outstanding options
granted under the Company's
17
<PAGE> 20
existing plans and 441,754 Company shares subject to International Corona
Corporation options which have been converted in options for Homestake common
stock.
If an option, SAR or share right granted under the Plan is terminated for
any reason prior to the issuance of the total number of shares subject thereto,
the number of unissued shares thereunder again becomes available for subsequent
grants under the Plan. The exercise of an SAR is treated as the exercise of an
option for the number of shares subject to the SAR (in the case of an SAR in
combination with an option, that portion of the related option which is
surrendered in connection with the exercise of the SAR), and that number of
shares will not again be available for the purposes of the Plan. If cash is paid
in lieu of the issuance of shares under an option, SAR or share right, the
number of shares with respect to which cash is paid will not again be available
for the purposes of the Plan.
Each share of the Company's common stock subject to the Plan carries with
it one Right to purchase Series A Participating Cumulative Preferred Stock, $1
par value, of the Company pursuant to the Company's Stockholder Rights Plan
adopted by the Board of Directors of the Company on October 16, 1987. Prior to
the date which is ten days after any person or group acquires 20% or more of the
Company's outstanding common stock or announces a tender offer for 20% or more
of the common stock (the "Distribution Date"), the Rights are not exercisable
and will be attached to and trade with shares of the common stock. Following the
Distribution Date, the Rights will trade separately from the common stock and
separate certificates representing the Rights will be issued.
On March 18, 1996, the closing sale price per share of the Company's common
stock on the New York Stock Exchange was $18.25.
TERMS AND CONDITIONS OF OPTIONS.
Each option granted under the Plan will be evidenced by a stock option
agreement. The option price per share may not be less than 100% of the fair
market value of a share of common stock on the date of the option grant,
computed by such method as the Committee deems appropriate. However, if on the
date of grant the optionee is an owner of stock (as determined under Section
425(d) of the Code) that possesses more than 10% of the total combined voting
power of all classes of stock of the Company or a parent or subsidiary
corporation ("Ten Percent Shareholder"), the option price per share of any
Incentive Stock Options may not be less than 110% of the fair market value of a
share of common stock on the date of the option grant.
Each option will be exercisable at such times and during such periods as is
set forth in the stock option agreement evidencing such option, but in no event
may the option term exceed ten years from the date of grant, or, in the case of
an Incentive Stock Option granted to a Ten Percent Shareholder, five years from
the date of grant. The Committee may provide in any option agreement that the
option may be exercised during a specified limited period following termination
of employment. In determining the applicable periods, the Committee may provide
that service as a consultant or service with a business enterprise in which the
Company has at least a 20% interest may be treated as employment.
Unless otherwise authorized by the Committee, the option price will become
immediately due upon the exercise of an option and may be payable in cash or, to
the extent authorized by the Committee, in shares of common stock valued at fair
market value on the date of exercise. The Committee has the authority to extend
Company credit or guarantees to or for the benefit of an optionee to assist the
optionee in the exercise of an option, and also has the authority to forgive
such loans in whole or in part. The Committee also has the authority to provide
Company financial assistance to an optionee in satisfying tax obligations
arising in connection with options and loans and loan forgiveness. See "Tax
Assistance; Loans or Guarantees" below.
Within Plan limits, the Committee may modify or extend outstanding options.
The Committee may not cancel outstanding options in return for the grant of new
options and may not reduce the exercise price of outstanding options.
Each Incentive Stock Option granted under the Plan will be subject to a
special rule: to the extent that the aggregate fair market value (determined at
the time the option is granted) of the shares with respect to which options that
would otherwise be Incentive Stock Options are exercisable for the first time by
an
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individual during any one calendar year (under the Plan or any other stock
option plan of the individual's employer corporation, a parent or subsidiary
corporation, or predecessor thereof) exceeds the sum of $100,000, such options
will be treated as options which are not Incentive Stock Options.
STOCK APPRECIATION RIGHTS.
SARs may be granted in combination with any option granted under the Plan,
either at the time of grant or any time thereafter (only at the time of grant in
the case of an Incentive Stock Option), and may also be granted separate from
and not in combination with options. SARs in combination with an option will
give the holder the right to surrender all or a portion of an unexercised option
(to the extent then exercisable) for the difference between (i) the fair market
value of the shares of common stock (at the date of surrender) with respect to
which the option is surrendered and (ii) the option price payable for such
shares. SARs not in combination with an option (and SARs which are subsequently
granted and included in combination with a previously outstanding option) will
give the holder the right to exercise any portion of the unexercised SAR (to the
extent then exercisable) for the difference between (i) the fair market value of
one share of common stock (at the date of surrender) and (ii) the SAR Grant
Price (which may not be less than the fair market value of one share of common
stock on the SAR Grant Date), multiplied by the number of SAR units exercised.
The Committee may, in its sole discretion, establish at the time of grant a
maximum amount that will be payable upon exercise of an SAR. Payments on
exercise of an SAR may be in any combination of shares of common stock (valued
at fair market value at the date of surrender) or cash as the Committee
determines.
The Committee has the authority to provide Company financial assistance to
an SAR holder in satisfying tax obligations arising in connection with SARs,
including but not limited to payments for taxes, and loans and loan forgiveness.
See "Tax Assistance; Loans or Guarantees" below.
Within Plan limits, the Committee may modify or extend outstanding SARs.
The Committee may not cancel outstanding SARs in return for the grant of new
SARs and may not reduce the Grant Price of outstanding SARs.
EMPLOYEE SHARE RIGHTS.
The Committee may, in its sole discretion, grant employee share rights that
provide grantees with the right to receive shares of common stock for no
consideration, subject to such terms, conditions and restrictions as the
Committee shall determine. The terms, conditions and restrictions to which share
rights shall be subject may vary from grant to grant. The Committee may impose
restrictions on the issuance of shares of common stock and may impose repurchase
rights or other limitations on the transferability of shares of common stock
acquired on exercise of employee share rights. Shares issued in connection with
employee share rights may have such limitations in respect of voting and
dividend rights as the Committee may determine. The Committee may, but is not
required to, establish performance goals for share rights. Performance goals may
include improvements in one or more of (i) earning per share, (ii) gross
revenues, (iii) net income, (iv) production, (v) costs, (vi) fair market value
of the Company's shares, and (vii) return on shareholders' equity.
The Committee has the authority to provide Company financial assistance to
a holder of share rights in satisfying tax obligations arising in connection
with share rights, including but not limited to payments for taxes, loans and
loan forgiveness. See "Tax Assistance; Loans or Guarantees" below.
Within Plan limits, the Committee may modify or extend outstanding share
rights. The Committee may not cancel outstanding share rights in return for the
grant of new share rights.
SHARE RIGHTS PROGRAM FOR NON-EMPLOYEE DIRECTORS.
A separate share rights program for non-employee directors is included as
part of the Plan. The purpose is to assist in recruiting and retaining highly
qualified directors by enabling directors to acquire a proprietary interest in
the Company. Non-employee directors are not otherwise eligible to participate in
the Plan.
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On the eighth business day following the day on which the Company's annual
earnings for the preceding year are released, each non-employee director is
granted a share right entitling that director to receive shares of common stock
for no consideration on the date of ceasing to serve as a director. The number
of shares covered by such share right is calculated by dividing 10 percent of
the director's compensation for the preceding calendar year by the average fair
market value of one share of common stock for the third through the seventh
business days, inclusive, following release of the Company's annual earnings.
Except as provided below, the right to receive the shares subject to such share
rights vests on the third anniversary of the grant date. The three year vesting
requirement lapses and the director share rights vest immediately if the
director ceases to serve as a director by reason of death, disability,
retirement at mandatory retirement age for directors, or if the director ceases
to serve as a director within one year following a "Change of Control," as
defined in the Plan (but without regard to the Board adopting a resolution
approving the Change of Control or determining that a Change of Control has not
occurred). In addition, if a "Corporate Transaction," as defined in the Plan,
occurs, all outstanding director share rights immediately vest unless the
agreement with respect to the Corporate Transaction requires the existing
director share rights to continue unimpaired (if Homestake is the surviving
company) or the existing director share rights are replaced with comparable
share rights granted by the surviving company or one of its affiliates.
EFFECT OF CORPORATE TRANSACTION OR CHANGE OF CONTROL.
Except as provided below, in the event that (i) the Company is a party to a
consolidation or merger or other acquisition or reorganization transaction
pursuant to which less than 75% of the voting power in the surviving company is
held by the shareholders of the Company immediately preceding such event (except
for a transaction intended primarily to change the state of the Company's
incorporation), (ii) more than 75% of the assets of the Company are sold or
otherwise disposed of, or (iii) the Company dissolves or liquidates or effects a
partial liquidation involving more than 75% of its assets, then (x) all options
and SARs outstanding under the Plan and not fully exercisable will become fully
exercisable five business days prior to the effective date of any of the above
transactions ("Corporate Transactions") and may be exercised for all or any
portion of the shares and cash payments for which the options and SARs are
accelerated, and (y) all shares and cash to which holders of share rights are
entitled shall be delivered to such holders five business days before the
Corporate Transaction, free of all risks of forfeiture and other restriction. No
such acceleration will occur in connection with a Corporate Transaction
described in (i) above if Homestake is the surviving company and all of the
options, SARs and share rights continue unimpaired or, if Homestake is not the
surviving company, all outstanding options, SARs and share rights are assumed by
or replaced with comparable options, SARs and share rights of the surviving
company or its affiliates, as determined in the Committee's discretion. No such
acceleration will occur in connection with a Corporate Transaction described in
(ii) or (iii) above unless the Committee, in its discretion, determines that
such acceleration is appropriate. Notwithstanding the above, in the event of any
Corporate Transaction, the Committee has discretion to cancel outstanding
options, SARs or share rights in whole or in part upon payment in cash of the
value thereof.
In the event that (i) a person becomes the beneficial owner of 20% or more
of the voting power of the Company's shares, unless within 30 business days the
Board adopts a revocable resolution that approves the transaction or determines
that for purposes of the Plan no Change of Control has occurred, (ii) during any
two consecutive years members of the Board at the beginning of such period cease
to constitute a majority thereof, unless the election or nomination of each
director is approved by the vote of at least two-thirds of the directors still
in office who were directors at the beginning of such period, or (iii) there
occurs any other change of control reportable under the Exchange Act, unless
within 30 business days the Board adopts a revocable resolution that approves
the transaction or determines that for purposes of the Plan no Change of Control
has occurred, then all options and SARs outstanding under the Plan and not fully
exercisable will immediately become fully exercisable as of the date of the
Change of Control, and all shares and cash payments to which a holder of a share
right (other than non-employee director share rights) is entitled shall be
delivered to the holder on or as soon as practicable following the Change of
Control, free of all risks or forfeiture and other restriction.
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TAX ASSISTANCE; LOANS OR GUARANTEES.
In order to assist an optionee in the exercise of any outstanding option
under the Plan, the Committee may, in its discretion, authorize (i) financial
assistance from the Company to the optionee to pay all or part of income and
employment taxes arising in connection with options and loans to the optionee,
(ii) loans from the Company to assist in paying all or part of the option price,
which loans may be forgivable in whole or in part on such terms as the Committee
may determine, (iii) payment of the option price in installments over a period
of years, or (iv) guarantee by the Company of loans obtained by the optionee
from a third party. The terms of any such assistance, loan, loan forgiveness,
installment payment or guarantee (including the interest rate, if any, and terms
of repayment) will be subject to the discretion of the Committee, and may be
granted with or without collateral or security.
In connection with SARs and share rights granted to employees, the
Committee may also provide for loans and other financial assistance from the
Company to pay all or part of income and employment taxes arising in connection
with SARs and share rights, including loans which may be forgivable in whole or
in part, on such terms as the Committee may determine. The terms of any such
assistance, loan or loan forgiveness (including the interest rate, if any, and
terms of repayment of loans) will be subject to the discretion of the Committee,
and may be granted with or without collateral or security.
CORPORATE ADJUSTMENTS.
If any change is made to the outstanding shares of the Company's common
stock, whether by reason of a merger, consolidation, reorganization,
recapitalization, stock split, stock dividend, combination of shares, exchange
of shares or other change in corporate structure, then, unless such change
results in termination of all outstanding options, the Committee (or the Board,
as applicable) may make appropriate adjustments in the maximum number and class
of shares issuable under the Plan to reflect the effect of such change on the
Company's capital structure, and may make appropriate adjustments to the number
and kind of shares and the option price per share of the securities subject to
outstanding options and share rights to prevent the dilution of benefits
thereunder.
AMENDMENT AND TERMINATION.
The Board of Directors has complete and exclusive power and authority to
amend or modify the Plan, except that amendments in respect of non-employee
director share rights can only be made once every six months. The Committee may
amend or modify outstanding options or share rights issued under the Plan (other
than non-employee director share rights), but may not cancel options or rights
in exchange for new options or rights and may not reduce the exercise price or
grant price of options or SARs. In addition, no such amendment or modification
may adversely affect rights and obligations of the holder of an option or other
right under the Plan without the consent of the holder. The Board of Directors
may not amend the Plan without shareholder approval if such amendment would (i)
increase the maximum number of shares issuable thereunder (except for certain
adjustments in the event of changes in the Company's capital structure), (ii)
modify the class of individuals eligible to receive options or share rights
under the Plan, (iii) materially increase the benefits accruing to participants
under the Plan, or (iv) modify the share rights program for directors.
Unless the Plan is sooner terminated, no option, SAR or share right may be
granted under the Plan after the earlier of (i) May 14, 2006 or (ii) the date on
which all shares available for issuance under the Plan have been issued or
cancelled pursuant to the exercise or surrender of options granted under the
Plan.
OTHER.
Common stock issuable under the Plan may be subject to restrictions on
transfer, repurchase rights or such other restrictions as may be determined by
the Committee. Unless the stock subject to the Plan has been registered or
qualified under applicable securities laws, awards under the Plan may be subject
to the condition
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that the participant agree that shares must be acquired for investment and not
with a view to resale or distribution, and otherwise in compliance with
applicable laws.
No participant will have any rights of a shareholder with respect to any
shares covered by an option, SAR or share right until such individual has
exercised the option, paid the option price and been issued a stock certificate
for the purchased shares, or otherwise satisfied conditions applicable to
options, SARs and share rights.
Awards under the Plan are not assignable or transferable by participants
other than by will or by the laws of descent and distribution or, to the extent
permitted by Rule 16b-3, to a trust established for the benefit of the optionee
or in connection with the optionee's estate planning or to participants' family
or household members; during the lifetime of participants, awards are
exercisable only by the participants or such permitted transferees.
FEDERAL TAX CONSEQUENCES.
The following is a general description of the federal income tax
consequences of awards granted under the Plan. It does not purport to be
complete. In addition, this general description does not discuss the
applicability of the income tax laws of any state or foreign country.
Non-Statutory Options
No taxable income is recognized by the optionee upon the grant of a
non-statutory stock option. Generally, the optionee will recognize ordinary
income on the date the option is exercised. Such ordinary income will be in an
amount equal to the excess of the fair market value of the purchased shares on
such date of recognition over the exercise price. The Company will be entitled
to a business expense deduction equal to the amount of ordinary income
recognized by the optionee as a result of the exercise of the option. Any gain
or loss recognized upon the subsequent disposition of the issued shares will
normally be a capital gain or loss. The gain or loss will be long term if the
shares are held for more than one year prior to the disposition.
Incentive Stock Options
No taxable income is recognized by the optionee upon the grant of an
Incentive Stock Option, and no taxable income is recognized at the time the
option is exercised if the optionee remains an employee of the Company (or a
parent or subsidiary corporation) at all times during the period beginning on
the date of the option grant and ending on the date three months before the date
of exercise. However, the difference between the fair market value of the
purchased shares and the exercise price generally constitutes a tax preference
item for purposes of the alternative minimum tax. If the optionee does not
dispose of the purchased shares within two years of the date of the option
grant, nor within one year of the date of exercise, any profit or loss
recognized upon a subsequent disposition will be long-term capital gain or loss.
If the optionee disposes of purchased shares within either the two-year
period or one-year period mentioned above, the optionee will recognize ordinary
income in the year of disposition equal to the amount of ordinary income the
optionee would have recognized from the exercise of the option with respect to
such shares had it been a nonstatutory option at the time of exercise or, if
less, the difference between the amount received upon disposition and the
exercise price. For this purpose, the delivery of purchased shares, within the
two-year period or one-year period, as payment of part or all of the exercise
price of an incentive stock option will constitute a disposition.
So long as the optionee does not dispose of any shares purchased under an
Incentive Stock Option before the expiration of the one- and two-year holding
periods described above, no business expense deduction may be taken by the
Company. To the extent that the optionee recognizes ordinary income due to a
disqualifying disposition of stock, the Company may take a business expense
deduction.
Stock Appreciation Rights
If an SAR granted under the Plan (whether or not the SAR is in combination
with a surrendered stock option) is surrendered for shares of common stock or
cash, the holder will generally realize ordinary income on
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the date of the surrender equal in amount to the fair market value of the shares
and cash received. The Company will be entitled to a deduction equal to the
amount of ordinary income realized by the participant in connection with the
surrender of an SAR. Any gain or loss recognized upon the subsequent disposition
of the issued shares will normally be a capital gain or loss. The gain or loss
will be long term if the shares are held for more than one year prior to the
disposition.
Share Rights
An employee or director who is granted share rights under the Plan
recognizes no taxable income by reason of such grant. When the shares (or other
amounts) payable pursuant to the share rights have been issued, the employee or
director will recognize ordinary income equal in amount to the fair market value
of the shares issuable pursuant to the share rights, unless the shares are
subject to "substantial risk of forfeiture" (as defined in Section 83(c) of the
Code). If the shares issued pursuant to share rights are subject to a
substantial risk of forfeiture, ordinary income will be recognized on the date
of lapse of such risk of forfeiture, rather than the date of issue of the
shares, and will be equal in amount to the fair market value of the shares on
the date of such lapse, unless the participant has elected pursuant to Section
83(b) of the Code to be taxed on such shares at their date of issue without
regard to such risk of forfeiture. Any such election must be made within 30 days
of issue of the shares and will result in the disallowance of any loss upon a
subsequent forfeiture of the shares. The Company will be entitled to a business
expense deduction equal to the amount of ordinary income recognized by the
employee or director. Any gain or loss recognized upon the subsequent
disposition of the shares will normally be a capital gain or loss. The gain or
loss will be long term if the shares are held for more than one year prior to
the disposition.
Change of Control
If the exercisability of an option or SAR or the right under a share right
is accelerated as a result of a Change of Control, all or a portion of the value
of the option or SAR or share right may be a parachute payment for purposes of
determining whether a 20 percent excise tax is payable by the employee as a
result of the receipt of an excess parachute payment pursuant to Section 4999 of
the Code.
Limitation on Deductibility of Certain Compensation
Section 162(m) of the Code generally makes non-deductible to the Company
taxable compensation in excess of $1,000,000 paid in any calendar year to the
Chief Executive Officer and the next four highest paid executive officers unless
such excess compensation is considered to be "performance based" under Section
162(m). In addition to certain other requirements, the material terms of a
compensation plan must be approved by shareholders for the plan to be considered
as "performance based." The Plan is intended to qualify as a performance based
plan for purposes of Section 162(m) with respect to options, SARs and share
rights. However, in light of ambiguities in and uncertainties regarding the
interpretation of Section 162(m), no assurances can be given that compensation
received by any executive officer under the Plan will in fact be deductible if
it should, together with other non-exempt compensation paid to such executive
officer in any calendar year, exceed $1,000,000.
RESTRICTIONS ON RESALE.
Under Section 16(b) of the Exchange Act, any "profit" deemed realized by a
director, beneficial owner of more than 10% of the outstanding stock of the
Company or executive officer of the Company from any purchase and sale, or sale
and purchase, of common stock within any period of less than six months (without
regard to whether the purchase and sale involved the same shares), is
recoverable by the Company. Under applicable SEC rules, an exercise of an option
or the surrender of an SAR under the Plan resulting in the acquisition of shares
generally will not constitute a purchase of common stock. However, if the shares
so acquired are sold within six months of the grant of the option or the SAR,
the grant of the option or SAR will be treated as a purchase of the underlying
security. The Plan provides that so long as the rules promulgated under Section
16(b) of the Exchange Act so require, no shares acquired on exercise of options
or SARs may
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be sold within six months of the date of grant of the option or SAR, and no
shares acquired pursuant to a share right may be sold within six months of the
acquisition of the shares.
VOTE REQUIRED FOR APPROVAL.
The affirmative vote of a majority of the shares of Common Stock present
and voting at the Meeting is necessary to approve the Plan. THE BOARD OF
DIRECTORS BELIEVES THAT THE PLAN IS NECESSARY TO PROVIDE EQUITY INCENTIVES TO
ATTRACT AND RETAIN THE VALUABLE SERVICES OF OFFICERS, DIRECTORS AND EMPLOYEES.
FOR THIS REASON, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A VOTE AGAINST THIS PROPOSAL OR ABSTENTION IS SPECIFICALLY
INDICATED.
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PROPOSAL NO. 3
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
1996. 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 1996.
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 1996. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A VOTE AGAINST THIS PROPOSAL OR ABSTENTION IS SPECIFICALLY
INDICATED.
CERTAIN TRANSACTIONS WITH AFFILIATES
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, together with family members, is a controlling
shareholder of Case Pomeroy. 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 (a current director of the Company) 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. (Case Pomeroy, Mr. Case and all persons
controlled by either of them owned approximately 4.48 percent of all voting
power of Homestake at February 29, 1996.) Mr. Case elected to resign as a
director immediately prior to the 1995 annual meeting. He continues as a
Director Emeritus. In that capacity he is eligible to attend all directors'
meetings but he is not 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
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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.
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Proxy Statement for the 1997 annual
meeting, proposals of shareholders must be received by Homestake no later than
November 28, 1996. Such proposals should be directed to the Secretary of
Homestake.
By Order of the Board of Directors
/s/ WAYNE KIRK
WAYNE KIRK
Secretary
San Francisco, California
March 27, 1996
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APPENDIX A
HOMESTAKE MINING COMPANY
STOCK OPTION AND SHARE RIGHTS PLAN -- 1996
The Plan was adopted by the Board on January 25, 1996, and will be
submitted for approval by Homestake's shareholders at the 1996 Annual Meeting,
and, contingent upon shareholder approval, is effective as of May 14, 1996.
The purpose of the Plan is to promote the long-term success of Homestake
and the creation of shareholder value by (a) encouraging the attraction and
retention of key Employees with exceptional qualifications, (b) encouraging
Participants to focus on critical long-range objectives, and (c) linking
Participants directly to shareholder interests through increased stock
ownership. The Plan seeks to achieve this purpose by providing for Awards in the
form of incentive stock options, nonstatutory stock options, stock appreciation
rights and share rights.
ARTICLE 1. ADMINISTRATION.
1.1 COMMITTEE COMPOSITION. Except as provided in Section 1.3, the Plan
shall be administered by the Committee. The Committee shall consist of two or
more Directors of Homestake, who are disinterested Outside Directors, and who
shall be appointed by the Board. A Director shall be deemed to be
"disinterested" if he or she satisfies requirements the Securities and Exchange
Commission may establish for disinterested administration acting under plans
intended to qualify for exemption under Rule 16b-3 (or its successor) under the
Exchange Act or, if Section 16 of the Exchange Act is repealed, such
requirements as the Board may determine.
1.2 COMMITTEE RESPONSIBILITIES. The Committee shall administer the Plan.
The Committee shall have all powers and discretion necessary or appropriate to
administer the Plan including, but not limited to, the power to (a) select the
Participants under the Plan, (b) determine the type, number, vesting
requirements and other features and conditions of Awards, (c) interpret the Plan
and (d) make all other decisions relating to the operation of the Plan. The
Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons. No member of the Committee shall be liable for any
action or decision made in good faith in connection with the exercise of the
Committee's duties under the Plan.
1.3 NON-EMPLOYEE DIRECTOR SHARE RIGHTS. Notwithstanding any contrary
provision in this Article, the Board shall administer Article 7 of the Plan. In
the Board's administration of Article 7, the Board shall have all of the
authority and discretion otherwise granted to the Committee with respect to Plan
administration.
ARTICLE 2. AWARDS; AGREEMENTS.
Except as otherwise provided, Awards may be made in any one or a
combination of NSOs, ISOs, SARs and Share Rights. Non-Employee Directors shall
only be entitled to receive Share Rights in accordance with Article 7. All
Awards shall be evidenced by an Agreement signed by the Participant and
Homestake (or by a foreign affiliate where applicable pursuant to Article 12).
Each Award shall be subject to the terms and conditions of the Plan and to such
other terms and conditions as may be established by the Committee (or the Board
in the case of Non-Employee Directors.). Determinations by the Committee under
the Plan, including (without limitation) determinations of Participants, the
form, amount and timing of Awards, and the terms and provisions of Awards and
the Agreements, need not be uniform and may be made selectively among Employees
who receive or are eligible to receive Awards, whether or not such Employees are
similarly situated.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 BASIC LIMITATION. Shares issued pursuant to the Plan shall be
authorized but unissued Shares or treasury Shares. The aggregate number of
Shares reserved for Awards under the Plan shall be 6,000,000
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Shares, subject to adjustment pursuant to Section 3.3. Upon approval of the Plan
by Homestake's shareholders, no more grants of options or other rights may be
made under the Homestake Mining Company Employees' Stock Option And Share Rights
Plan -- 1988, but all grants previously made thereunder shall continue
unimpaired.
3.2 ADDITIONAL SHARES. If Options, SARs or Share Rights are forfeited or
terminate for any reason before being exercised, then the Shares subject to such
Options, SARs or Share Rights shall again become available for Awards under the
Plan. The exercise of an SAR which is in combination with an Option shall be
treated as the exercise of the Option for the number of Shares subject to that
portion of the Option which is surrendered, and the number of Shares subject to
that portion of the Option shall not again be available under the Plan. If cash
is paid in lieu of the issuance of Shares under an SAR or a Share Right, the
number of Shares with respect to which such payment is made shall not again be
available under the Plan.
3.3 ADJUSTMENTS. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of Shares, merger, consolidation, rights
offering, or any other change in the corporate structure or Shares of Homestake,
the Committee (or the Board in respect of Share Rights granted under Article 7)
shall make such adjustment, if any, as it may deem appropriate in the number and
kind of Shares authorized by the Plan, in the number and value of Shares covered
by Awards, and in any Exercise Price specified in an Award.
ARTICLE 4. OPTIONS.
4.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time as determined by the Committee
in its sole discretion. The Committee may grant ISOs, NSOs or any combination of
the two. Options may also be awarded in combination with SARs. During any
calendar year, no Participant may receive an Award of Options covering more than
250,000 Shares.
4.2 EXERCISE PRICE. The Exercise Price for each Option shall be set by the
Committee and shall not be less than the Fair Market Value of a Share on the
Grant Date.
4.3 EXPIRATION OF OPTIONS. Each Option shall expire 10 years after the
date on which it was granted, or after a shorter term as may be fixed by the
Committee when granting the Option. An Agreement granting Options in combination
with SARs shall provide that upon and to the extent of exercise of the Options
the related SARs are forfeited. An Agreement may provide that the Option expires
at the end of a limited period (to be determined by the Committee) following
termination of employment.
4.4 EXERCISABILITY. Options granted under the Plan shall become
exercisable in accordance with this section.
(a) Vesting. In the Committee's discretion, the right to exercise Options
may accrue in installments, which need not be equal, at a rate which shall be
set forth in the Agreement. In addition, the Committee may, at any time, and
from time to time, determine that an Option shall, notwithstanding any vesting
period or deferral of the right to exercise otherwise applicable, be immediately
exercisable, in whole or in part, effective on and after a date determined by
the Committee. To the extent not exercised, Option installments shall accumulate
and be exercisable, in whole or in part, at any time after the date upon which
they first accrue, but not later than the date the Option by its terms expires.
(b) Change of Control. To the extent provided in Article 13, an Option
shall become fully exercisable as to all Shares subject to such Option in the
event of a Corporate Transaction or a Change of Control.
4.5 PAYMENT. The Exercise Price shall be paid in full upon exercise of an
Option either in cash or, to the extent authorized by the Committee, by delivery
of Shares, duly endorsed for transfer and valued at the Fair Market Value of the
Shares on the Exercise Date. The Agreement may provide for assistance to any
Participant in the exercise of Options, including (a) the satisfaction by
Homestake or an Affiliate of all or part of any income and employment tax
obligations arising in connection with such Option or related loan, (b)
authorizing the extension of a loan from Homestake or an Affiliate to such
Participant (which loan may be forgivable on such terms as the Committee shall
determine), (c) permitting the Participant to pay the Exercise Price in
installments over a period of years, or (d) authorizing a guarantee by Homestake
or an
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Affiliate of a third party loan to the Participant, in each case with or without
security or interest. Upon payment of the aggregate Exercise Price, Homestake
shall issue the Shares so acquired as soon as is reasonably possible.
4.6 MODIFICATION OR EXTENSION OF OPTIONS. Within the limitations of the
Plan, the Committee may modify or extend outstanding Options. The foregoing
notwithstanding, and except as provided in Sections 11.3 or 11.4, no
modification of an Option shall, without the consent of the Participant, alter
or impair his or her rights or obligations under such Option.
4.7 ADDITIONAL PROVISIONS FOR ISOS. The terms and conditions set forth in
this section shall apply to all Options granted under the Plan that are intended
to be ISOs. Any Option the terms of which provide that it will not be treated as
an ISO shall not be subject to such terms and conditions.
(a) Eligible Persons. ISOs shall be granted only to Employees of Homestake
or its Affiliates.
(b) Exercise Price. The Exercise Price shall not be less than 100% of the
Fair Market Value of a Share on the Grant Date; provided, however, the Exercise
Price of an ISO granted to a Ten Percent Owner shall not be less than 110% of
the Fair Market Value of a Share on the Grant Date.
(c) Expiration for Ten Percent Owners. An ISO granted to a Ten Percent
Owner shall expire either five years after the date on which it was granted, or
after a shorter term as may be fixed by the Committee.
(d) $100,000 Limitation. To the extent that the aggregate Fair Market
Value (determined in accordance with this paragraph) of the Shares subject to
ISOs (determined without regard to this paragraph) held by a Participant under
all plans of Homestake or its Affiliates that become exercisable for the first
time by a Participant during any calendar year exceeds $100,000, the most
recently granted Option shall be treated as a NSO to the extent of the excess
Shares. For purposes of this paragraph, all Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of the Shares
subject to such Options shall be determined as of the Grant Date with respect to
each Option.
(e) Termination. ISOs shall expire one year after termination of the
Participant's employment with Homestake or any of its Affiliates due to
disability or three months after termination of employment due to any other
reason.
4.8 SERVICE AS CONSULTANT. For purposes of Sections 4.3 and 4.4, an
Agreement may provide that service as a consultant to Homestake or an Affiliate
or any corporation, joint venture, partnership or other entity in which
Homestake has, directly or indirectly, at least a 20% equity ownership or
profits interest, shall be treated as employment by Homestake.
ARTICLE 5. SARS.
5.1 GRANT OF SARS. Subject to the terms and provisions of the Plan, SARs
may be granted to Employees at any time as determined by the Committee in its
sole discretion. SARs may, but need not, be granted in combination with Options
granted hereunder. An SAR may be included in an ISO only at the time of grant
but may be included in an NSO at the time of grant or at any subsequent time.
During any calendar year, no Participant shall receive an Award of SARs covering
more than 250,000 Shares.
5.2 SAR GRANT PRICE. Each SAR not included in combination with an Option
(or which is subsequently included in combination with a previously outstanding
Option) shall have an SAR Grant Price which shall be set by the Committee and
which shall not be less than the Fair Market Value of a Share on the Grant Date.
5.3 EXPIRATION OF SARS. Each SAR included in combination with an Option
shall expire at the time the related Option expires, or after a shorter term as
may be fixed by the Committee. Each SAR not included in combination with an
Option shall expire 10 years after the date on which it was granted, or after a
shorter term as may be fixed by the Committee. An Agreement may provide that the
SAR expires at the end of a limited period (to be determined by the Committee)
following termination of employment.
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5.4 EXERCISABILITY.
(a) SARs granted under the Plan which are not in combination with Options
shall become exercisable in accordance with this section.
(1) Vesting. In the Committee's discretion, the right to exercise
SARs may accrue in installments, which need not be equal, at a rate which
shall be set forth in the Agreement. In addition, the Committee may, at any
time, and from time to time, determine that an SAR shall, notwithstanding
any vesting period or deferral of the right to exercise otherwise
applicable, be immediately exercisable, in whole or in part, effective on
and after a date determined by the Committee. To the extent not exercised,
SAR installments shall accumulate and be exercisable, in whole or in part,
at any time after the date upon which they first accrue, but not later than
the date the SAR by its terms expires.
(2) Change of Control. To the extent provided in Article 13, an SAR
shall become fully exercisable as to all Shares subject to such SAR in the
event of Corporate Transaction or a Change of Control.
(b) Each SAR included in combination with an Option shall be exercisable at
the same time as the related Option. Each SAR included in combination with an
Option shall provide that the SAR will not be exercisable unless the related
Option is forfeited to the extent the SAR is exercised.
5.5 VALUE OF SARS. Upon exercise of an SAR not in combination with an
Option (or an SAR which was subsequently granted and included in combination
with a previously outstanding Option), the Participant will be entitled to
receive in exchange therefor, unless a lesser amount is specified in the
Agreement, an amount equal to the excess of the Fair Market Value of a Share on
the date the election to exercise the SAR is received by Homestake (or its
Affiliate) over the SAR Grant Price multiplied by the number of SARs exercised.
Except as provided above in respect of an SAR which was subsequently granted and
included in combination with a previously outstanding Option), upon exercise of
an SAR in combination with an Option, the Participant will be entitled to
receive the excess of the Fair Market Value of a Share on the date the election
to surrender is received by Homestake (or its Affiliate) over the Option
Exercise Price multiplied by the number of Shares covered by the Option which
are surrendered. An Agreement may provide a maximum amount payable upon exercise
of an SAR, expressed as a dollar amount or as a percentage or multiple of the
SAR Grant Price or the Exercise Price of any related Option.
5.6 PAYMENT OF SARS. Payment on exercise of an SAR shall be in the form of
(a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee
shall determine either on the Grant Date of the SAR or upon exercise of the SAR.
5.7 ASSISTANCE WITH TAX OBLIGATIONS. The Agreement may provide for
assistance to any Participant in connection with an SAR, including (a) the
satisfaction by Homestake or its Affiliates of all or part of any income and
employment tax obligations arising in connection with an SAR or related loan, or
(b) authorizing the extension of a loan from Homestake or its Affiliates to such
Participant (which loans may be forgivable on such terms as the Committee shall
determine), in each case with or without security or interest.
5.8 MODIFICATION OR EXTENSION OF SARS. Within the limitations of the Plan,
the Committee may modify or extend outstanding SARs. The foregoing
notwithstanding, and except as provided in Sections 11.3 or 11.4, no
modification of an SAR shall, without the consent of the Participant, alter or
impair his or her rights or obligations under such SAR.
5.9 SERVICES AS CONSULTANT. For purposes of Sections 5.3 and 5.4, an
Agreement may provide that service as a consultant to Homestake or an Affiliate
or any corporation, joint venture, partnership or other entity in which
Homestake has, directly or indirectly, at least a 20% equity ownership or
profits interest, shall be treated as employment by Homestake.
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ARTICLE 6. SHARE RIGHTS.
6.1 GRANT OF SHARE RIGHTS. Subject to the terms and provisions of the
Plan, Share Rights may be granted to Employees at any time as determined by the
Committee in its sole discretion. During any calendar year, no Participant shall
receive an Award of Share Rights covering more than 250,000 Shares.
6.2 RESTRICTIONS AND LEGENDS. The Committee may impose restrictions on the
issuance of Shares in accordance with Share Rights, and may impose repurchase
rights or limitations on the transferability of the acquired Shares as it may
deem advisable. Any restrictions shall be described in the Agreement and may be
based on the passage of time, the achievement of performance goals, or the
occurrence of other events as determined by the Committee, in its sole
discretion. Performance goals may include improvements in any one or more of (a)
earnings per Share, (b) gross revenues, (c) net income, (d) production, (e)
costs, (f) the Fair Market Value of Shares (g) and return on shareholders'
equity. Each certificate for Shares acquired pursuant to an Award of Share
Rights and subject to repurchase rights or limitations on transferability shall
contain a legend giving appropriate notice of the restrictions.
6.3 LAPSE OF RESTRICTIONS. All restrictions imposed under an Agreement
shall lapse upon the satisfaction of the conditions described in the Agreement.
Restrictions subject to achievement of performance goals shall lapse only upon
certification by the Committee that the performance goals have been achieved.
Upon lapse of repurchase rights or limitations on transferability, the
Participant shall be entitled to have the legend describing the restrictions
removed from the certificates. The Committee, in its sole discretion, may
accelerate the time at which any restrictions shall lapse, and may remove any
restrictions.
6.4 TERM. Each Share Right Agreement shall specify the date on which Share
Rights shall expire if any restrictions described in the Agreement have not
previously lapsed. An Agreement may provide that the Share Right expires at the
end of a limited period (to be determined by the Committee) following
termination of Employment.
6.5 VOTING RIGHTS. Prior to lapse of repurchase rights or restrictions on
transferability, Participants holding Shares acquired pursuant to Share Rights
may exercise full voting rights with respect to those Shares, unless the
Committee determines otherwise.
6.6 DIVIDENDS. Prior to issuance of Shares pursuant to Share Rights,
Participants holding Share Rights shall not be entitled to receive dividends or
other distributions paid with respect to Shares subject to such Share Rights,
unless otherwise provided in the Agreement. After issuance of Shares pursuant to
Share Rights, Participants holding Shares shall be entitled to receive all
dividends and other distributions paid with respect to Shares, unless the
Committee determines otherwise.
6.7 ASSISTANCE WITH TAX OBLIGATIONS. The Agreement may provide for
assistance to any Participant in connection with the Share Rights, including (a)
the satisfaction by Homestake or its Affiliates of all or part of any income and
employment tax obligations arising in connection with the Share Rights or
related loan, and (b) authorizing the extension of a loan from Homestake or its
Affiliates to such Participant (which loans may be forgivable on such terms as
the Committee shall determine), in each case with or without security or
interest.
6.8 MODIFICATION OR EXTENSION OF SHARE RIGHTS. Within the limitations of
the Plan, the Committee may modify or extend outstanding Share Rights. The
foregoing notwithstanding, and except as provided in Sections 11.3 or 11.4, no
modification of a Share Right shall, without the consent of the Participant,
alter or impair his or her rights or obligations under such Share Right.
6.9 SERVICE AS CONSULTANT. For purposes of Section 6.4, an Agreement may
provide that service as a consultant to Homestake or an Affiliate or any
corporation, joint venture, partnership or other entity in which Homestake has,
directly or indirectly, at least a 20% equity ownership or profits interest,
shall be treated as employment by Homestake.
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ARTICLE 7. NON-EMPLOYEE DIRECTORS.
Any other provision of the Plan notwithstanding, the participation in the
Plan of Non-Employee Directors shall be subject to the following restrictions:
7.1 GRANT OF SHARE RIGHTS. On the eighth business day following the day on
which Homestake's annual earnings are released, each person who is a
Non-Employee Director on that date shall be granted Share Rights providing for
the issuance of Shares with a Fair Market Value, on the Grant Date, equal to 10%
of the compensation received by the Non-Employee Director during the preceding
calendar year for service as a Director.
7.2 RESTRICTIONS. Except as provided in Section 7.3, a Non-Employee
Director Share Right shall be canceled if the Non-Employee Director ceases to be
a Director before the third anniversary of the Grant Date.
7.3 LAPSE OF RESTRICTIONS. The restriction imposed on Non-Employee
Director Share Rights shall lapse (a) on the third anniversary of the Grant
Date, or (b) on the date the Non-Employee Director ceases to be a Director, if
the Non-Employee Director ceases to serve as a Director before the third
anniversary of the Grant Date (1) because of death, disability, retirement at
mandatory retirement age for directors, (2) within one year following a Change
of Control (without regard to whether the Board adopts a resolution approving
the transaction or determining that no Change of Control has occurred), or (3)
immediately prior to the specified effective date for a Corporate Transaction,
unless the terms of the agreement for the Corporate Transaction require as a
condition to consummation that outstanding Non-Employee Director Share Rights
shall continue unimpaired if Homestake is the resulting or surviving corporation
or entity or, if Homestake is not the resulting or surviving corporation or
entity, that outstanding Non-Employee Director Share Rights shall be replaced
with a comparable share right to receive shares of capital stock of the
successor corporation or its affiliate.
7.4 PAYMENT OF SHARE RIGHTS. If the restrictions imposed on a Non-Employee
Director Share Right lapse, the Shares shall be issued to the Non-Employee
Director on the date the Non-Employee Director ceases to be a Director.
7.5 OTHER TERMS. All provisions of the Plan not inconsistent with this
Article 7 shall apply to Share Rights granted to Non-Employee Directors.
ARTICLE 8. WITHHOLDING TAXES.
8.1 GENERAL. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to Homestake for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. Homestake shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.
8.2 SHARE WITHHOLDING. The Committee may permit a Participant to satisfy
all or part of his or her tax obligations by having Homestake or its Affiliates
withhold all or a portion of any Shares that otherwise would be issued to him or
her or by surrendering all or a portion of any Shares that he or she previously
acquired. Such Shares shall be valued at their Fair Market Value on the date
when taxes otherwise would be withheld in cash. Any payment of taxes by
assigning Shares to Homestake may be subject to restrictions, including any
restrictions required by rules of the Securities and Exchange Commission.
ARTICLE 9. TERM OF THE PLAN; AMENDMENT; TERMINATION.
9.1 TERM OF THE PLAN. The Plan, as set forth herein, shall be effective on
the date it is approved by Homestake's shareholders at the 1996 Annual Meeting.
Unless terminated sooner in accordance with Section 9.2, no Award may be granted
after the earlier of (i) May 14, 2006, or (ii) the date on which all Shares
available for issuance under the Plan have been issued or canceled pursuant to
the exercise or surrender of Awards under the Plan.
9.2 AMENDMENT OR TERMINATION. Except as hereafter provided, the Board may,
at any time and for any reason, amend or terminate the Plan, except that the
provisions of Article 7 relating to the amount, price and
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timing of Share Rights grants to Non-Employee Directors shall not be amended
more than once in any six-month period, except any amendments which may be
required by the Code, the Employee Retirement Income Security Act, or the rules
thereunder. The foregoing notwithstanding, any amendment of the Plan shall be
subject to the approval of Homestake's shareholders to the extent required by
applicable laws, regulations or rules, or to the extent any such amendment shall
(a) increase the maximum number of Shares issuable under the Plan (except in
accordance with Section 3.3), (b) materially increase the benefits accruing to
Participants, (c) modify the eligibility requirements for Awards, or (d) modify
Article 7. No Awards shall be granted under the Plan after the termination
thereof. The termination of the Plan, or any amendment thereof, shall not affect
any Award previously granted under the Plan.
ARTICLE 10. REGULATORY APPROVAL, REGISTRATION, AND INVESTMENT PURPOSE.
10.1 REGULATORY APPROVAL. The implementation of the Plan, the granting of
Options or SARs or Share Rights, and the issuance of Shares hereunder shall be
subject to procurement of all approvals and permits required by regulatory
authorities having jurisdiction in respect thereof.
10.2 REGISTRATION. The Plan, the Shares subject thereto, and the Options,
SARs and Share Rights granted thereunder may, in the discretion of the Board, be
registered and qualified under the Securities Act of 1933 as amended or under
the securities laws of any state, province or country. Unless the Share Rights
or the Shares subject to an Option or SAR shall have been registered or
qualified under applicable law, any Share Right or Option or SAR may be granted
on the condition that the Participant agree that purchases or grant of Shares
thereunder shall be for investment and not with a view to resale or distribution
of such Shares contrary to any applicable securities laws or otherwise subject
to such restrictions as Homestake shall determine to be required by applicable
law. As a condition to the issuance of any securities pursuant to the Plan which
are not registered or qualified under applicable securities laws, the
Participant, his legal representative, executor, administrator, heir or legatee,
as the case may be, receiving such Shares shall deliver to Homestake or its
Affiliate a writing, in form and substance satisfactory to Homestake and its
counsel, implementing such agreement.
ARTICLE 11. MISCELLANEOUS.
11.1 EMPLOYMENT RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee or
Director of Homestake, an Affiliate or any other person. Homestake and its
Affiliates reserve the right to terminate the service of any Employee or
Director at any time, and for any reason, subject to applicable laws and a
written employment agreement (if any).
11.2 SHAREHOLDERS' RIGHTS. Except as otherwise provided in an Agreement, a
Participant shall have no dividend rights, voting rights or other rights as a
shareholder with respect to any Shares covered by his or her Award prior to the
issuance of a stock certificate for such Shares.
11.3 CODE SECTION 162(M). The Committee, in its sole discretion, may
require that one or more Agreements contain provisions which provide that, in
the event Code Section 162(m), or any successor provision relating to excessive
employee remuneration, would operate to disallow a deduction by Homestake for
all or part of any payment of an Award under the Plan, a Participant's receipt
of the portion that would not be deductible by Homestake shall be deferred until
the next succeeding year or years in which the Participant's remuneration either
does not exceed the limit set forth in Code Section 162(m) or is not subject to
Code Section 162(m).
11.4 RULE 16B-3. Homestake intends that, with respect to persons subject
to Section 16 of the Exchange Act, this Plan will qualify under Rule 16b-3
promulgated thereunder. So long as Homestake has any class of equity securities
registered under the Exchange Act and the rules promulgated under Section 16(b)
of the Exchange Act so require as a condition for exemption of the Plan from the
application of Section 16(b), any equity security (as defined in the Exchange
Act or the rules and regulations thereunder) offered pursuant to the Plan must
be held for six months from the Grant Date and, in the case of any derivative
security (as defined in the rules and regulations promulgated under Section 16)
offered pursuant to the Plan, at least six months must elapse from the date of
acquisition of the derivative security to the date of
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disposition of the derivative security (other than upon exercise or conversion)
or its underlying equity security, except in the event of the death or
disability of the holder thereof. If any provision of the Plan or an Agreement
requires modification to comply with the requirements of Section 16 and the
rules thereunder, the Committee may waive, amend or modify the Plan or the
Agreement accordingly. To the extent that any provision of this Plan or action
by the Committee fails to comply with the Section 16 rules, it shall be null and
void to the extent permitted by law and deemed advisable by the Committee.
11.5 TRANSFERABILITY. Options, SARs and Share Rights granted under the
Plan shall not be transferable other than by will or the laws of descent or
distribution; and shall be exercisable only by the Participant during the
Participant's lifetime; provided, however, to the extent permitted by Rule 16b-3
or any successor rule and an Agreement, an Agreement with respect to NSOs, SARs
(other than SARs issued in connection with ISOs) or Share Rights may permit
transfers, (a) in connection with a Participant's estate plan, to (1) a
Participant's family members, (2) a trust for the benefit of the Participant or
the Participant's family members, or (3) other members of the Participant's
household, or (b) pursuant to a qualified domestic relations order as defined by
the Code, or Title I of the Employee Retirement Income Security Act, or the
rules thereunder.
11.6 GOVERNING LAW. The Plan and all Agreements shall be construed in
accordance with and governed by the laws of the State of California.
ARTICLE 12. ADOPTION OF PLAN AND AWARDS BY FOREIGN AFFILIATES.
Any foreign Affiliate of Homestake may adopt the Plan and grant NSOs, SARs
and Share Rights if the grant of such NSOs, SARs and Share Rights and the form
of the Agreement has been approved by the Committee. Any such foreign Affiliate
shall enter into agreements with Homestake pursuant to which Homestake shall
make available to the foreign Affiliate the Shares to be delivered on exercise
of any such NSOs, SARs and Share Right.
ARTICLE 13. CHANGES IN CORPORATE STRUCTURE OR CONTROL.
13.1 CORPORATE TRANSACTION.
(a) In the event of one or more of the following transactions ("Corporate
Transaction"), and subject to the further provisions of this Article 13:
(1) A consolidation or merger of Homestake, or an acquisition by
Homestake or any of its Affiliates of another corporation or entity or its
assets, or other corporate reorganization or acquisition transaction in
which Homestake or any of its Affiliates is a participant, under the terms
of which less than 75% of the voting power in the resulting or surviving
corporation or entity is held by the shareholders of Homestake immediately
preceding such event, except for a transaction, the principal purpose of
which is to change the state of Homestake's incorporation;
(2) more than 75% of the assets of Homestake are sold or otherwise
disposed of; or
(3) Homestake dissolves or liquidates or effects a partial liquidation
involving more than 75% of its assets;
then (i) all Options and SARs at the time outstanding under the Plan and not
then otherwise fully exercisable shall, five business days immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable for up to the total number of Shares subject to such Option or SAR
and may be exercised for all or any portion of the Shares or cash for which the
Option or SAR is so accelerated and (ii) all Shares and cash payments to which
the holder of a Share Right is entitled under any Share Rights granted pursuant
to this Plan shall be delivered to the Participant five business days prior to
the specified effective date for the Corporation Transaction, free of all risks
of forfeiture and other restrictions on ownership and transferability.
(b) In no event shall any such acceleration in connection with a Corporate
Transaction described in subparagraph (1) of paragraph (a) above occur if (1)
Homestake is the resulting or surviving corporation or
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entity and each outstanding Option, SAR or Share Right continues in existence
without change in its terms, or (2) if Homestake is not the resulting or
surviving corporation or entity, the terms of the agreement in respect of the
Corporate Transaction require as a condition to consummation that each such
outstanding Option, SAR, or Share Right shall either be assumed by the resulting
or surviving corporation or entity or Affiliate thereof or be replaced with a
comparable Option and SAR or Share Right to purchase or receive shares of the
resulting or surviving corporation or entity or Affiliate thereof. The
determination of such comparability shall be made by the Committee (as
constituted at least five business days prior to such event), and its
determination shall be final, binding and conclusive.
(c) In no event shall any such acceleration occur in connection with a
Corporate Transaction described in subparagraph (2) or (3) of paragraph (a)
above unless the Committee (as constituted at least five business days prior to
such event) determines, in its discretion, that such acceleration is
appropriate.
(d) Notwithstanding the above, in the event of any Corporate Transaction
the Committee shall have the discretion to cancel outstanding Options, SARs or
Share Rights, in whole or in part, subject to such conditions as the Committee
may determine, upon payment to (1) Option holders and SAR holders, with respect
to each Option and SAR to be canceled, an amount in cash equal to the difference
between (i) the Fair Market Value (at the effective date of such Corporate
Transaction) of the consideration the Option holder or SAR holder would have
received if the Option or SAR had been exercised immediately prior to the
effective date of such Corporate Transaction and (ii) any amount payable by such
holder upon exercise of the Option or SAR, and (2) holders of Share Rights, an
amount in cash equal to the Fair Market Value of the Shares subject to such
Share Right.
13.2 CHANGE OF CONTROL.
(a) In the event of one or more of the following occurrences ("Change of
Control"):
(1) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 20% or more of the
combined voting power of Homestake's then outstanding shares, unless, not
later than 30 business days after notice to Homestake of such event, the
Board (as constituted immediately prior to such event) adopts a resolution
that approves the transaction or determines that for purposes of the Plan
no Change of Control has occurred (which resolution may be revoked by the
Board at any time, in which case a Change of Control will be deemed to have
occurred as of the date such revocation becomes effective);
(2) During any period of two consecutive years, Directors who at the
beginning of such period constitute the Board cease for any reason to
constitute a majority thereof, unless the election, or nomination for
election by Homestake's shareholders, of each Director is approved by the
vote of at least two-thirds of the Directors then still in office and who
were Directors at the beginning of such period; or
(3) The occurrence of any other change of control of a nature that
would be required to be reported in accordance with Item 1(a) of Form 8-K
pursuant to Sections 13 or 15(d) of the Exchange Act or in Homestake's
proxy statement in accordance with Item 5(f) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, or in any successor forms or
regulations to the same effect;
unless, within 30 business days after notice to Homestake of such event, the
Board (as constituted immediately prior to such event) adopts a resolution that
approves the transaction or determines that for purposes of the Plan no Change
of Control has occurred (which resolution may be revoked at any time, in which
case a Change of Control will be deemed to have occurred on the date such
revocation becomes effective); then (i) all Options and SARs at the time
outstanding under the Plan and not then otherwise fully exercisable shall
immediately become fully exercisable as of the date of the Change of Control and
may be exercised for all or any portion of the Shares or cash for which the
Option or SAR is so accelerated and (ii) all Shares and cash payments to which a
holder of Share Rights is entitled under any Share Rights granted pursuant to
this Plan (other than Non-Employee Director Share Rights) shall be delivered to
the Participant on or as soon as practicable following the Change of Control,
free of all risks of forfeiture and other restrictions on ownership and
transferability.
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13.3 ADJUSTMENTS. If any change is made to the Shares issuable under the
Plan by reason of a Corporate Transaction or a Change of Control pursuant to the
provisions of this Article 13, the Committee (or the Board, as applicable) shall
adjust the maximum number and class of Shares issuable under the Plan, the
number and class of Shares subject to Options, SARs and Share Rights, and the
price, as provided in Section 3.3.
13.4 NO EFFECT ON RIGHTS OF COMPANY. The grant of Options, SARs and Share
Rights under the Plan shall not affect the right of Homestake to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
ARTICLE 14. DEFINITIONS.
14.1 GENERAL DEFINITIONS. The following words and phrases, when used in the
Plan, unless otherwise specifically defined or unless the context clearly
otherwise requires, shall have the following meanings:
"AFFILIATE" means any "parent corporation" or "subsidiary
corporation," as such terms are defined in Code Sections 424(e) and 424(f).
"AGREEMENT" means the written agreement setting forth the terms and
provisions applicable to each Award granted under the Plan.
"AWARD" means, individually or collectively, any award of an Option,
an SAR or a Share Right under the Plan.
"BOARD" means Homestake's Board of Directors, as constituted from time
to time.
"CHANGE OF CONTROL" shall have the meaning as defined in Article 13.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board.
"CORPORATE TRANSACTION" shall have the meaning as defined in Article
13.
"DIRECTOR" means a member of the Board.
"EMPLOYEE" means any key employee of Homestake, an Affiliate or any
corporation, joint venture, partnership or other entity in which Homestake
has, directly or indirectly, at least a 20% equity ownership or profits
interest. Neither service as a Director nor payment of a director's fee by
Homestake shall be sufficient to constitute employment by Homestake.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE PRICE" means the amount for which one Share may be purchased
upon exercise of such Option, as specified in the applicable Agreement.
"FAIR MARKET VALUE" means the fair market value of Shares, determined
by the Committee, in its sole discretion, provided, however, for purposes
of Article 7, "Fair Market Value" shall mean the average of the closing
price of the Shares on the third through the seventh business days,
inclusive, following the release of Homestake's annual earnings press
release.
"GRANT DATE" means, with respect to an Award, the date that the Award
was granted by the Committee (or by the Board in the case of Article 7).
Within a reasonable time thereafter, Homestake (or its foreign Affiliate
where applicable pursuant to Article 12) will execute and deliver an
Agreement to the Participant.
"HOMESTAKE" means Homestake Mining Company, a Delaware Corporation.
"ISO" means an incentive stock option described in Code Section
422(b).
"NSO" means an Option not described in Code Sections 422 or 423.
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"NON-EMPLOYEE DIRECTOR" means a Director who is not an Employee.
"OPTION" means an ISO or NSO granted under the Plan and entitling a
Participant to purchase one Share.
"OUTSIDE DIRECTOR" shall mean a Non-Employee Director who is an
outside director as defined in Code Section 162(m).
"PARTICIPANT" means an individual or estate who holds an Award.
"PLAN" means this Homestake Mining Company Stock Option And Share
Rights Plan -- 1996, as it may be amended from time to time.
"SAR" means a stock appreciation right granted under the Plan.
"SAR GRANT PRICE" means the amount established by the Committee as the
grant price of an SAR.
"SHARE" means one share of the common stock of Homestake.
"SHARE RIGHT" means the right to acquire a Share for no consideration.
"TEN PERCENT OWNER" means any Employee of Homestake or an Affiliate
who is, on the Grant Date of an ISO, the owner of Shares (determined with
application of ownership attribution rules of Code Section 424(d))
possessing more than 10% of the total combined voting power of all classes
of stock of Homestake or any of its Affiliates.
14.2 OTHER DEFINITIONS. In addition to the above definitions, certain
words and phrases used in the Plan and any Agreement may be defined in other
portions of the Plan or in an Agreement.
IN WITNESS WHEREOF, HOMESTAKE MINING COMPANY has executed this Plan as of
May 14, 1996.
HOMESTAKE MINING COMPANY
By:
---------------------------------
Its:
--------------------------------
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[RECYCLE LOGO]
PRINTED ON RECYCLED PAPER
<PAGE> 41
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
ANNUAL MEETING OF SHAREHOLDERS - MAY 14, 1996
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 18, 1996 at the Annual Meeting of Shareholders, or any
postponement or adjournment thereof.
Y
CONTINUED AND TO SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE> 42
DETACH HERE
/X/ Please mark
votes as in
this example
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS NUMBER 1, 2 AND 3.
1. Election of four Class III Directors (term of three years).
Nominees: Harry M. Conger, G. Robert Durham, Robert K. Jaedicke and
Carol A. Rae.
FOR WITHHELD
/ / / /
/ / ______________________________________
For all nominees except as noted above
2. Approval of Stock Option and Share Rights Plan - 1996.
FOR AGAINST ABSTAIN
/ / / / / /
3. Appointment of Coopers & Lybrand L.L.P. as independent auditors for 1996.
FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE FOR ADDRESS / /
CHANGE AND NOTE AT LEFT
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.
Sign exactly as name appears on this proxy
card. If shares are held jointly, each holder
should sign. Executors, administrators,
trustees, guardians, attorneys and agents
should give their full titles. If shareholder
is a corporation, sign in full corporate
name by an authorized officer.
Signature: _______________ Date: _____ Signature: _______________ Date: _____
