<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Homestake Mining Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
[LOGO]
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 25, 1997
To the Shareholders of Homestake Mining Company:
The annual meeting of shareholders of Homestake Mining Company will be held
in the Gold Room of the Fairmont Hotel, California and Mason Streets, San
Francisco, California, on Friday, July 25, 1997, at 11:00 a.m. local time, for
the following purposes:
1. Election of four Class I Directors and one Class III Director.
2. Approval of the appointment of Coopers & Lybrand LLP as
independent auditors for 1997.
3. Transaction of such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 29, 1997, 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 May 29,
1997, 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
June 12, 1997
<PAGE> 3
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
June 12, 1997
PROXY STATEMENT
1997 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 in the Gold Room of the Fairmont Hotel, California and Mason Streets, San
Francisco, California, on Friday, July 25, 1997, 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 June 12, 1997.
MATTERS TO BE CONSIDERED.
The following matters will be acted on at the annual meeting:
1. Election of four Class I Directors and one Class III Director.
2. Approval of the appointment of Coopers & Lybrand LLP as
independent auditors for 1997.
3. Transaction of such other business as may properly come before the
meeting.
VOTING SECURITIES AND VOTING RIGHTS.
Only shareholders of record on May 29, 1997, or their proxies, will be
entitled to vote at the annual meeting of shareholders. On May 29, 1997,
Homestake had 146,727,797 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 and to
approve the appointment of Coopers & Lybrand LLP as independent auditors for
1997. Any person giving a proxy has the right to revoke it at any time before it
is exercised (1) by filing with the Secretary of Homestake a duly signed
revocation or proxy bearing a later date or (2) by voting in person at the
meeting.
The Board of Directors is not aware of any matters other than those set
forth above which may come before the annual meeting. If any other matters are
properly presented to the meeting for action, unless contrary instructions are
given, the persons named in the enclosed form of proxy and acting thereunder
have the power to vote in accordance with their best judgment on such matters.
On voting for Class I Directors, the four nominees receiving the highest
number of votes will be elected. On voting for the Class III Director, the
nominee receiving the highest number of votes will be elected. Approval of the
appointment of independent auditors will require the affirmative vote of a
majority of the shares of Homestake common stock represented at the meeting.
<PAGE> 4
If a proxy is marked with instructions to withhold authority to vote for
one or more director nominees or to abstain from voting on any matter, those
shares will be treated as represented at the meeting 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 May 29, 1997, there were 22,221 record holders of Homestake common
stock.
As of the close of business on May 29, 1997, 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 director and the five
highest paid executive officers, and all directors, nominees and executive
officers as a group, as of May 15, 1997 (excluding shares which such persons
have the right to acquire within 60 days of May 15, 1997, 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 May 15, 1997, 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 May 15, 1997. The
shares so shown include shares held in Homestake's Savings Plan for the accounts
of executive officers and directors share rights granted under the Homestake
Employees' Stock Option and Share Rights Plan -- 1988 and under the Homestake
Stock Option and Share Rights Plan -- 1996, 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 below) and
the shares which the identified persons have the right to acquire but do not
own, the shares of Homestake
2
<PAGE> 5
Common Stock beneficially owned by all directors, nominees and executive
officers as a group represent approximately 5.50 percent of the total number of
shares of Homestake Common Stock outstanding.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICALLY
OWNED RIGHT TO
AS OF ACQUIRE TOTAL
MAY 15, 1997, SHARES NUMBER
EXCLUDING WITHIN OF SHARES
RIGHT TO ACQUIRE 60 DAYS OF BENEFICIALLY
NAME SHARES(1) MAY 15, 1997 OWNED
-------------------------------------------- ---------------- ------------ ---------
<S> <C> <C> <C>
M. Norman Anderson.......................... 2,529 6,193 8,722
Richard R. Burt............................. 0 0 0
Robert H. Clark, Jr.(2)..................... 6,448,776 1,961 6,450,737
Harry M. Conger(3).......................... 176,206 545,725 721,931
G. Robert Durham............................ 5,000 1,536 6,536
Douglas W. Fuerstenau....................... 1,478 1,972 3,450
Henry G. Grundstedt......................... 1,000 1,105 2,105
William A. Humphrey......................... 61,230 111,187 172,417
Robert K. Jaedicke.......................... 400 1,936 2,336
John Neerhout, Jr........................... 1,000 1,506 2,506
Stuart T. Peeler............................ 10,000 2,124 12,124
Carol A. Rae................................ 500 383 883
Berne A. Schepman........................... 3,524 1,993 5,517
Jack E. Thompson............................ 27,825 115,475 143,300
Jeffrey L. Zelms............................ 50 0 50
Gene G. Elam................................ 9,985 96,675 106,660
Wayne Kirk(4)............................... 6,859 72,950 79,809
Gil J. Leathley............................. 2,940 49,792 52,732
William F. Lindqvist........................ 0 65,425 65,425
All Directors, Nominees and Executive
Officers as a Group (27 persons).......... 6,784,471 1,336,018 8,120,489
</TABLE>
- ---------------
(1) In some instances voting and investment power is shared with the spouse of
the identified person.
(2) Includes 13,000 shares owned by Mr. Clark's spouse. Also includes 6,411,776
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 447 shares held of record by a Savings Plan Trust for Mr. Conger's
spouse. Mr. Conger disclaims beneficial ownership of these shares.
(4) Includes 410 shares held of record by two of Mr. Kirk's children. Mr. Kirk
disclaims beneficial ownership of these shares.
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. On July 25, 1997,
William A. Humphrey, Robert K. Jaedicke and Berne A. Schepman will retire as
directors. At that time, the Board of Directors will amend the By-laws to reduce
the number of directors to 12 members, divided into three Classes of four
members each. Four Class I Directors are to be elected at this annual meeting to
serve until the annual meeting in 2000 or until their successors are elected and
qualified, except that Douglas W. Fuerstenau will be age 70 at the time of the
1999 annual meeting and will retire at that time under the directors' mandatory
retirement policy (unless waived). One Class III Director is to be elected to
serve until the annual meeting in 1999 or until his successor is 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 I NOMINEES AND THE CLASS III NOMINEE NAMED BELOW. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE NAMED NOMINEES UNLESS
INSTRUCTIONS ARE GIVEN TO THE CONTRARY.
4
<PAGE> 7
INFORMATION CONCERNING NOMINEES FOR ELECTION.
Certain information as to each of the four nominees for election as a Class
I Director and as to the nominee 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 I DIRECTORS TO SERVE UNTIL 2000 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
JULY 25, 1997 SINCE BIOGRAPHICAL INFORMATION
------------- -------- --------------------------------------------
<S> <C> <C> <C>
M. Norman Anderson....... 66 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 International
(construction equipment sales and service),
Buenaventura S.A. (gold and silver mining)
and Toronto Dominion Bank.
Robert H. Clark, Jr...... 56 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). Mr. Clark is a director of FINOVA
Group Inc. (financial services).
Douglas W. Fuerstenau.... 68 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.
Jeffrey L. Zelms......... 53 -- Mr. Zelms has been the President since 1986
and the Chief Executive Officer since 1992
of The Doe Run Company (lead, zinc and
copper mining, lead fabrication and
recycling). He is a director of Phoenix
Textile Corporation (linen supplier for the
health industry) and BW/IP International,
Inc. (provider of engineered pumps and seals
for refinery and chemical industries).
</TABLE>
NOMINEE FOR CLASS III DIRECTOR TO SERVE UNTIL 1999 ANNUAL MEETING:
<TABLE>
<S> <C> <C> <C>
Richard R. Burt.......... 50 -- Mr. Burt has been the Chairman of IEP
Advisors (strategic and financial advisory
services) since June 1993. From April 1991
to June 1993, he was a partner in McKinsey &
Company (management consultants). Mr. Burt
was the United States Ambassador to the
Federal Republic of Germany from 1985 to
1989. He is a director of Archer Daniels
Midland Company (processing and sales of
agricultural commodities), Hollinger
International Inc. (publishing), Weirton
Steel Company (integrated steel producer)
and VLT, Inc. (gaming software design).
</TABLE>
5
<PAGE> 8
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 II DIRECTORS TO SERVE UNTIL 1998 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
JULY 25, 1997 SINCE BIOGRAPHICAL INFORMATION
------------- -------- --------------------------------------------
<S> <C> <C> <C>
Henry G. Grundstedt...... 68 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.
John Neerhout, Jr........ 66 1989 Mr. Neerhout has been the Managing Director
of Union Railways Limited (rail
transportation) since April 1997, and a
director of London and Continental Railways
Ltd. since March 1997. He has been a
director of The Energy Group Plc (gas and
coal production, power generation and sales)
since February 1997. Mr. Neerhout retired as
Executive Vice President of Bechtel Group
Inc. (engineering and construction) in
October, 1996, a position he held since
1986. Mr. Neerhout was also a director of
and held executive positions with Bechtel
Group Inc. and other of its affiliated
companies prior to his retirement.
Stuart T. Peeler......... 67 1981 Mr. Peeler has been a petroleum industry
consultant since 1989. From 1982 until 1988
he was Chairman of the Board and Chief
Executive Officer of Statex Petroleum, Inc.
He is a director of CalMat Company
(aggregates, asphalt, and property
development), Chieftain International, Inc.
(oil and gas exploration and production) and
Chieftain International Funding Corp.
(financial services).
Jack E. Thompson......... 47 1994 Mr. Thompson has been the Chief Executive
Officer of Homestake since May 1996, and
President 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 until August 1994. He
was President of Homestake Mineral
Development Company and of North American
Metals Corp. (gold mining) from 1988 until
1992.
</TABLE>
6
<PAGE> 9
CONTINUING CLASS III DIRECTORS TO SERVE UNTIL 1999 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT DIRECTOR
JULY 25, 1997 SINCE BIOGRAPHICAL INFORMATION
------------- -------- --------------------------------------------
<S> <C> <C> <C>
Harry M. Conger.......... 67 1977 Mr. Conger has been Chairman of the Board of
Homestake since 1982. In May 1996, he
retired as Chief Executive Officer of
Homestake, a position he had held since
1978. He was also President of Homestake
from 1977 to 1986. He is a director of ASA
Limited (investment company), CalMat Company
(aggregates, asphalt, and property
development), and Pacific Gas and Electric
Company.
G. Robert Durham......... 68 1990 In May, 1996, Mr. Durham retired as Chairman
of the Board, Chief Executive Officer and a
director of Walter Industries, Inc.
(building materials, home building, mortgage
financing and natural resources
development). He was Chief Executive Officer
and a director of Walter Industries, Inc.
from June 1991, and Chairman from October
1995, until his retirement. He was also
President from June 1991 until October 1995.
He was Chairman of the Board, President and
Chief Executive Officer of Phelps Dodge
Corporation (mining) from 1987 to 1989,
President and Chief Operating Officer from
1984 to 1987, and held other executive
offices with Phelps Dodge Corporation or
affiliated companies beginning in 1977. He
is a director of FINOVA Group Inc.
(financial services), and a trustee of
Mutual Life Insurance Company of New York.
Carol A. Rae............. 51 1995 Ms. Rae has been the President and Chief
Executive Officer of Integrated Media and
Marketing, LLC (producer of educational
video and multimedia products) since 1995,
and the President of MedVal Technologies
International, Inc. (manufacturer of
orthopedic splints) since 1984. She has been
a member of the Board of Directors of the
U.S. Chamber of Commerce since 1994. She was
Senior Vice President and General Manager of
the Refractive Division of Chiron Vision
Corporation (manufacturer of ophthalmic
intraocular lenses) from 1993 until 1995 and
since 1995 she has been Senior Vice
President of Government Affairs of the
Refractive Division of Chiron Vision
Corporation. She was President and Chief
Executive Officer of Magnum Diamond
Corporation (manufacturer of surgical
instruments) from 1989 to 1995.
</TABLE>
7
<PAGE> 10
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD.
Homestake's Board of Directors held 15 meetings during the calendar year
1996.
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. Thompson (Chairman), Conger, Clark, Humphrey,
Peeler and Schepman. The Executive Committee held two meetings during 1996.
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. Peeler (Chairman), Conger, Grundstedt, Humphrey, and Thompson, and Ms.
Rae. The Finance Committee held four meetings during 1996.
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. Jaedicke (Chairman),
Anderson, Clark, and Neerhout, and Ms. Rae, all non-employee directors. The
Committee held three meetings during 1996.
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. Schepman (Chairman),
Durham, Fuerstenau, Grundstedt, Jaedicke and Neerhout, all non-employee
directors. The Committee held four meetings during 1996.
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.
Fuerstenau (Chairman), Anderson, Durham and Schepman, all non-employee
directors. The Nominating Committee did not meet during 1996.
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, and
Ms. Rae, all non-employee directors. The Environment, Health and Safety
Committee held three meetings during 1996.
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 96.9 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
8
<PAGE> 11
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 Stock Option and Share Rights Plan -- 1996 ("1996 Plan"),
automatic share rights are made available to directors who are not employees of
Homestake. For each year that the 1996 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 1996 Plan. For 1996, a total of 2,791 share rights
were granted under the 1996 Plan. No director was credited with more than 279
share rights for 1996.
During 1996, Prime Resources Group Inc. ("Prime"), 50.6% owned by the
Company, paid directors who were not employees of the Company or its
subsidiaries an annual retainer of C$10,000 per year and C$750 for each meeting
of the Board or any committee which they attended. Beginning in August 1996,
Prime paid directors who were employees of the Company or its subsidiaries C$750
for each meeting of the Board they attended. Effective January 1, 1997, the fee
for meetings attended in person increased to C$1,000, but remains at C$750 for
telephone meetings. M. Norman Anderson, a non-employee director of the Company
and Prime, received C$17,500 in directors fees from Prime for 1996.
In 1996, M. Norman Anderson provided special consulting services to the
Company with respect to various mining matters. For 1996, the Company paid Mr.
Anderson $12,000 for such services.
In May 1996, upon Harry M. Conger's retirement as Chief Executive Officer
of the Company, Homestake entered into a consulting agreement with Mr. Conger
under which he would act as a consultant to the Board and the Chief Executive
Officer of Homestake for one year, subject to renewal for an additional year.
Mr. Conger agreed to provide at least 500 hours of consulting services,
including continuing to act as a director and non-executive Chairman of the
Board. Mr. Conger is paid a total of $150,000 per year, which is in lieu of any
other payments, including directors fees that would otherwise be payable.
Homestake also agreed to provide office facilities at a cost of up to $1,500 per
month. For the year 1996, Mr. Conger received a total of $112,500 in
compensation and $12,114 in office expense reimbursement under the consulting
agreement. The consulting agreement has been renewed at the request of the
Company for an additional year.
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 1996.
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 1996, the Company paid $17,062 to Mr. Peeler under the
agreement.
9
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS.
Summary Compensation Table
The following table discloses, for the years indicated, compensation
received by Homestake's executive officers named therein (the "Homestake Named
Executive Officers") for the fiscal years ended December 31, 1996, 1995 and
1994. Such officers served as Chief Executive Officer or were one of the four
most highly compensated executive officers (other than the Chief Executive
Officer) for the fiscal year ended December 31, 1996. Harry M. Conger retired in
May 1996 as the Chief Executive Officer of Homestake. He continued as the
non-executive Chairman of the Board of Directors following his retirement.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ---------- ----------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(#) PAYOUTS($) COMPENSATION
- -------------------------------- ---- -------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harry M. Conger................. 1996 $202,500 $ 0 $ 32,243(3) 66,400 $0 $212,252(4)
Chairman of the Board(2) 1995 517,500 105,000 66,953(5) 59,900 0 9,000
1994 500,000 225,000 14,900(6) 49,200 0 6,750
Jack E. Thompson................ 1996 422,452 225,000 25,212(8) 56,100 0 12,044(9)
President and Chief 1995 336,000 68,000 29,146(10) 31,100 0 9,174
Executive Officer(7) 1994 263,575 146,250 157,438(11) 29,700 0 6,750
Gene G. Elam.................... 1996 272,000 95,700 24,167(12) 17,900 0 11,546(13)
Vice President, 1995 261,000 41,000 8,150(14) 16,100 0 9,010
Finance and Chief 1994 252,000 88,200 8,100(15) 13,200 0 6,750
Financial Officer
Wayne Kirk...................... 1996 340,000 121,400 1,110(16) 22,300 0 10,908(17)
Vice President, 1995 326,000 52,000 0 20,100 0 9,010
General Counsel and 1994 315,000 110,250 0 16,500 0 6,750
Corporate Secretary
Gil J. Leathley................. 1996 208,000 71,700 18,995(19) 15,400 0 10,438(20)
Vice President, 1995 198,088 30,000 49,571(21) 21,500 0 10,655
Operations(18) 1994 171,740 55,600 692(22) 9,700 0 9,623
William F. Lindqvist............ 1996 224,000 77,300 19,731(24) 16,500 0 10,916(25)
Vice President, 1995 91,667 12,000 125,525(26) 30,000 0 3,663
Exploration(23) 1994 n/a n/a n/a n/a n/a n/a
</TABLE>
- ---------------
(1) In accordance with the rules of the Commission, Homestake 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) Mr. Conger also served as Chief Executive Officer until May 1996.
(3) Consists of $23,543 (financial planning) and $8,700 (directors fees).
(4) Consists of $51,241 (accrued vacation paid on retirement), $3,375 (matching
contribution to savings plan), $10,745 (imputed income on split dollar life
insurance), $9,434 (tax gross-up related to split dollar life insurance),
$12,843 (reimbursement for spousal travel expense and related tax
gross-up), $112,500 (consulting fees following retirement) and $12,114
(office expense reimbursement).
(5) Consists of $49,453 (financial planning) and $17,500 (directors' fees).
(6) Directors' fees.
(7) Mr. Thompson served as President and Chief Operating Officer until May
1996, when he was appointed President and Chief Executive Officer.
(8) Consists of $6,012 (financial planning) and $19,200 (directors' fees).
(9) Consists of $9,000 (matching contribution to savings plan), $1,422 (imputed
income on split dollar life insurance), $1,248 (tax gross-up related to
split dollar life insurance) and $374 (above market component of interest
paid on deferred compensation plan).
(10) 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).
10
<PAGE> 13
(11) 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.
(12) Consists of $1,620 (financial planning) and $22,547 (directors' fees paid
by publicly held subsidiaries).
(13) Consists of $9,000 (matching contributions to savings plan), $1,297
(imputed income on split dollar life insurance), $1,138 (tax gross-up
related to split dollar life insurance) and $111 (above market component of
interest paid on deferred compensation plan).
(14) Consists of $7,200 (directors' fees paid by publicly held subsidiary) and
$950 (financial planning).
(15) Directors' fees paid by publicly held subsidiary.
(16) Directors' fees paid by publicly held subsidiary.
(17) Consists of $9,000 (matching contribution to savings plan), $995 (imputed
income on split dollar life insurance), $873 (tax gross-up related to split
dollar life insurance), and $40 (above market component of interest paid on
deferred compensation plan).
(18) Mr. Leathley served as Vice President, Canadian Operations during a portion
of 1995, and during all of 1994, 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: 1995-0.7324
and 1994-0.7128. Mr. Leathley became Vice President, Operations, of
Homestake in May 1995.
(19) Consists of $4,967 (financial planning), $563 (directors' fees paid by
publicly held subsidiary), $10,000 (forgiveness of relocation loan) and
$3,465 (tax gross-up related to relocation expenses).
(20) Consists of $9,000 (matching contribution to savings plan), $248
(reimbursement for spousal travel expense and related tax gross-up), $619
(above market component of interest paid on deferred compensation plan),
and $571 (interest on Canadian retirement account).
(21) 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 expenses). In
connection with his appointment as Vice President, Operations, Mr. Leathley
relocated from Canada to the San Francisco area.
(22) Premiums paid on life and accidental death and dismemberment policy.
(23) Mr. Lindqvist became an employee of Homestake on June 30, 1995.
(24) Consists of $6,497 (financial planning), $10,000 (forgiveness of relocation
loan) and $3,234 (tax gross-up related to relocation expenses).
(25) Consists of $9,000 (matching contribution to savings plan), $721 (imputed
income on split dollar life insurance), $633 (tax gross-up related to split
dollar life insurance), and $562 (above market component of interest paid
on deferred compensation plan).
(26) Consists of $91,394 (relocation expenses for move from Australia to the San
Francisco area) and $34,131 (tax gross-up related to relocation expenses).
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 $2,000 nor more than 100 percent of compensation. Amounts
deferred are credited with interest in an amount equivalent to 120% of (i) the
monthly Moody's Corporate Bond Yield Average as published by Moody's Investors
Service, Inc. and (ii) such additional amount as the Compensation Committee
determines to be appropriate.
11
<PAGE> 14
STOCK OPTION PLANS.
Options Granted.
The following table sets forth certain information with respect to options
to acquire common stock that were granted during 1996 to each Homestake Named
Executive Officer under Homestake's stock option plans.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NO. OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(1) YEAR ($/SH) DATE 5%(2) 10%(2)
- ---------------------------------- ---------- ---------- ---------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harry M. Conger................... 66,400 14.27 $ 19.125 Feb. 27, 2006 $812,153 $2,045,422
Jack E. Thompson.................. 46,100 9.91 19.125 Feb. 27, 2006 563,859 1,420,089
10,000(3) 2.15 19.725 May 28, 2006 127,511 319,877
Gene G. Elam...................... 17,900 3.85 19.125 Feb. 27, 2006 218,939 551,401
Wayne Kirk........................ 22,300 4.80 19.125 Feb. 27, 2006 272,756 686,941
Gil J. Leathley................... 15,400 3.31 19.125 Feb. 27, 2006 188,361 474,390
William F. Lindqvist.............. 16,500 3.55 19.125 Feb. 27, 2006 201,815 508,275
</TABLE>
- ---------------
(1) Granted at fair market value. Granted on February 27, 1996 (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 May 28, 1996.
Option Exercises and Year-End Values
The following table sets forth certain information with respect to options
exercised during 1996 by each Homestake Named Executive Officer.
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT 1996 YEAR END
<TABLE>
<CAPTION>
NO. OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
NO. OF SHARES AT YEAR END AT YEAR END
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- ------------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Harry M. Conger.................... 31,816 $234,643 596,800/0 $ 196,263/$0
Jack E. Thompson................... 9,550 73,279 82,950/101,325 39,848/14,629
Gene G. Elam....................... 0 0 78,700/42,750 53,008/12,813
Wayne Kirk......................... 8,250 67,634 50,350/53,500 47,966/16,341
Gil J. Leathley.................... 8,750 57,359 33,517/41,000 17,691/9,597
William F. Lindqvist............... 0 0 61,300/31,500 0/0
</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 Stock with an aggregate market value at the time of delivery
of the note at least equal to the principal amount of the note. In 1996, no
optionee under Homestake stock option plans had indebtedness to Homestake in
respect of stock options.
12
<PAGE> 15
RETIREMENT PROGRAMS.
Homestake Retirement Plan.
In general, all full-time, non-union U.S. employees of Homestake
(approximately 615 persons) participate in the Homestake Retirement Plan, a
noncontributory defined benefit plan ("Homestake Retirement Plan").
Under the Homestake 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
Homestake Retirement Plan is 65. Early retirement, with reduced benefits, is
permitted after age 55 with five years of service. The Homestake 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
Homestake 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 Homestake 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 ("Homestake 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 Homestake Retirement Plan and the Homestake SRP, the years
of service as of December 31, 1996, for Messrs. Elam, Kirk, Leathley, Lindqvist
and Thompson are 6 years, 4 years, 10 years, 4 years and 15 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. Mr. Conger retired in May 1996 and is receiving his retirement benefits.
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>
Homestake Supplemental Retirement Plan.
The Internal Revenue Code of 1986 ("Code") imposes a maximum limit on
annual retirement benefits payable under qualified retirement plans. For 1996,
that annual limit was $120,000. In addition, the Code limits the amount of
annual compensation that may be considered under qualified retirement plans. In
1996, that annual limit was $150,000. Under the Homestake 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 Homestake
Retirement Plan and the maximum amount permitted to be paid under the Employee
Retirement Income Security Act of 1974
13
<PAGE> 16
("ERISA") and the Code. The Homestake SRP is funded by Homestake contributions
into a "rabbi trust." All of the officers identified in the Summary Compensation
Table are participants in the Homestake SRP except Mr. Conger, who is retired
and receiving his retirement benefits.
Homestake Executive Supplemental Retirement Plan.
Homestake has established the Homestake ESRP for executive officers and key
employees selected by the Compensation Committee. Under the Homestake ESRP,
participants accrue benefits under the following formula. Service credit is
determined by multiplying 4 1/3% 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 continuous 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 Homestake ESRP is funded by Homestake contributions
into a "rabbi trust." The following table shows selected estimated annual
benefits payable under the Homestake ESRP, 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 (except the Homestake Mining Company Savings
Plan). Payments under the Homestake ESRP are not limited by ERISA or the Code.
All of the officers identified in the Homestake Summary Compensation Table are
participants in the Homestake ESRP except Mr. Conger, who is retired and is
receiving his retirement benefits. For purposes of the Homestake ESRP, the years
of service as of December 31, 1996, for Messrs. Elam, Kirk, Leathley and
Thompson are 10 years, 4 years, 10 years and 15 years, respectively. Mr.
Lindqvist was previously employed by Homestake and following Homestake's 1992
acquisition of International Corona, Mr. Lindqvist was fully vested in his
benefits under the Homestake ESRP with 15 years of deemed service. In connection
with his reemployment by Homestake in 1995, Homestake agreed to recalculate Mr.
Lindqvist's Homestake ESRP benefits based on the 36 consecutive months of
highest compensation following the date of reemployment, subject however to his
completing five years of service from the date of reemployment, unless his
employment is terminated by Homestake for reasons other than cause.
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>
SEVERANCE AGREEMENTS.
Homestake has severance agreements with Messrs. Elam, Kirk, Leathley,
Lindqvist and Thompson under which they are entitled to benefits in the event of
a change of control followed by certain events. A change of control 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% of fair market value of
14
<PAGE> 17
Homestake's assets are sold; or (iii) at least 25% 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 following such a change of
control, the executive's employment is terminated (other than for cause) 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 change of control. 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 above under
"Retirement Plans," (iv) continued vesting of stock options, and (v) relocation
assistance to the extent not provided by another employer. Benefits payable
under the agreements are in lieu of any severance benefits under Homestake's
general severance policy.
Under an agreement between Harry M. Conger and Homestake that was in effect
at the time of his retirement in May 1996, Mr. Conger will receive, for life,
monthly compensation equal to 65% of the average of his 36 consecutive months of
highest compensation prior to retirement, less one-half of his Social Security
benefits ($36,969 per month). Following Mr. Conger's death, his spouse is
entitled to receive the monthly benefit he would otherwise have been entitled to
receive until the 10th anniversary of his retirement, and thereafter 50% of that
amount until her death. Also on his retirement, all of Mr. Conger's stock
options vested and became immediately exercisable and, at his election, may be
surrendered to Homestake in exchange for a cash payment equal to the excess of
the market price of Homestake shares over the option price at the date of
retirement.
15
<PAGE> 18
PERFORMANCE GRAPH.
Set forth below is a line graph comparing the cumulative total shareholder
return on Homestake common stock for the five years ended December 31, 1996,
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 & Precious Metals Mining
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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG HOMESTAKE MINING COMPANY, THE S&P 500 INDEX
AND THE S&P GOLD & PRECIOUS METALS MINING INDEX
<TABLE>
<CAPTION>
S & P GOLD &
MEASUREMENT PERIOD HOMESTAKE MINING PRECIOUS METALS
(FISCAL YEAR COVERED) COMPANY S & P 500 MINING
<S> <C> <C> <C>
12/91 100 100 100
12/92 70 108 93
12/93 140 118 171
12/94 110 120 138
12/95 101 165 156
12/96 94 203 154
</TABLE>
- ---------------
* $100 invested on December 31, 1991 in stock or index, including reinvestment
of dividends. Fiscal years ending December 31.
COMPENSATION COMMITTEE REPORT.(1)
The Compensation Committee of the Board of Directors is comprised of six
outside directors, none of whom is an employee or former employee and none of
whom has any consulting or other services arrangement with the Company. The
Compensation Committee is responsible for the development of the Company's
executive compensation policies and the administration of those policies. 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 and other stock
based compensation plans and determines the amount of stock options and other
stock-based incentives 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.
- ---------------
(1)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.
16
<PAGE> 19
The Company's executive compensation program has the following objectives:
- Attract and retain key executives critical to the long-term success of
the Company by offering competitive compensation packages.
- Make a significant portion of compensation variable, rewarding superior
performance.
- Align the interests of the Company's management with the interests of the
Company's shareholders by developing compensation programs that link
compensation directly to increases in shareholder value.
- Maintain an appropriate balance between base salary and performance-based
compensation, with a higher proportion of compensation being
performance-based as salary grade increases.
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 Savings Plan, which is generally available to all
salaried employees and which provides for Company matching contributions with
employee contributions, and the Company's Retirement Plan, the Supplemental
Retirement Plan, and the Executive Supplemental Retirement Plan. Officers and
key employees may also defer income under the Deferred Compensation Plan.
Annual Cash Compensation. Annual cash compensation consists primarily of a
base salary and an annual bonus under the Company's Bonus Plan. The Company's
objective is to provide a level of compensation that will enable the Company to
offer a competitive compensation package, but one which emphasizes and rewards
performance and success. With this objective in mind, the Company's policy is to
pay base salaries that are generally competitive with the median of base
salaries paid by comparable companies. 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, level of responsibility,
experience and competitive factors. Competitive factors include general
compensation levels in other businesses, particularly in the mining industry, in
the countries where the Company has operations. To that end, the Company, under
the direction of the Compensation Committee, participates in several surveys
conducted by outside executive compensation consultants. Mining companies
included in the survey, in addition to the Company, are Amax Gold, Barrick Gold,
Battle Mountain Gold, Coeur d'Alene Mines, Echo Bay Mines, Getchell Gold, Hecla
Mining, Independence Mining, Kennecott Corporation, Newmont Mining, Pegasus
Gold, Place Dome and Santa Fe Pacific Gold. In addition, the Company conducts a
separate annual survey of salary increases in the mining industry. In addition
to the companies listed above, this survey includes BHP, Cypress Amax Minerals,
Kinross, Phelps Dodge, Teck Mining and TVX. The Compensation Committee uses all
of this information in recommending base salary levels, but does not assign
specific weight to any particular factor.
The variable component of annual compensation is paid in the form of an
annual bonus. The Company's Bonus Plan takes into consideration both the
Company's performance and the individual and (where appropriate) the
departmental performance for each individual. Under the Bonus Plan, each officer
and key employee is assigned a target bonus amount at the beginning of each year
based on the individual's salary grade, ranging from 20% to 50% of base salary.
In addition, at the beginning of each year, both (i) Corporate Performance
Objectives and (ii) Department and Individual Performance Objectives are
established. The relative importance of each of the Corporate Performance
Objectives and the Department and Individual Performance Objectives is
identified by a weighting percentage assigned to the objective. To determine the
recommended bonus, the "performance factor" for each of the Corporate
Performance Objectives and the Department and Individual Performance Objectives
is multiplied by the weight assigned to each, with the product multiplied by the
target bonus amount. If results significantly exceed the goals established for
both the Company and the Department and Individual, it is possible to earn a
bonus which is up to two times the target bonus. As a result bonuses payable to
particular individuals could equal as much as 40% to 100% of base salary. Based
upon this analysis, the Compensation Committee then recommends the bonuses for
approval by the Board of Directors.
For 1996, the Corporate Performance Objectives included (i) improved
relative stock price performance measured against the S&P Gold & Precious Metals
Mining Index (33.3%), (ii) significant progress in the acquisition and/or
discovery of additional deposits with large reserve potential (33.3%), and (iii)
achievement
17
<PAGE> 20
of specified improvements in production, cost targets and environmental, health
and safety performance (33.3%). Also for 1996, 50% of each Bonus Plan
participant's bonus was based on the achievement of the Corporate Performance
Objectives, and 50% was based on the achievement of that participant's
Department and Individual Performance Objectives. In November 1996, after review
of the year's performance by the Company, the Compensation Committee approved a
92% performance factor in respect of the achievement of the Corporate
Performance Objectives. Also in November 1996, the Compensation Committee
approved performance factors for achievement of Department and Individual
Performance Objectives by Bonus Plan participants ranging from 79% to 120%.
Long-term, equity-based compensation. The Company's executive compensation
program also provides for equity related compensation. 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 and
to receive share based value which will increase as the value of the Company's
stock increases. The Compensation Committee believes that equity-based
compensation programs encourage key employees to maintain a long-term
perspective.
For many years, including 1996, the Company has used stock options to
provide equity-based compensation. 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. The Compensation Committee has limited
the grant of stock options to those employees whom the Committee believes can
have a significant influence on Company policies and performance. Consequently,
in 1996, a total of 49 employees (approximately 2.8% of total Company employees)
were granted stock options. The Compensation Committee also believes that the
number of options granted should be sufficient in amount to provide a strong
incentive to increase share value, with the number of options increasing in
proportion to the relative potential influence of the employee on overall
Company performance.
In the first quarter of each year, the Compensation Committee awards stock
option to officers and key employees of the Company and its subsidiaries. The
number of options awarded has been based on a formula which has been in effect
for many years. For each optionee an annual target gain is established based on
salary and a subjective 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 granted has been a number which, assuming
an appreciation of 12% per year over five years, will given 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 exercise price for options is determined by averaging the closing prices of
the Company's common stock on the New York Stock Exchange for the five trading
days ending on the grant date. Stock options generally vest over a four-year
period and have a 10-year term. In addition to annual grants in the first
quarter of each year, from time to time the Compensation Committee grants
additional options to particular individuals in connection with significant
promotions of such individuals. Such grants are in recognition of the fact that
those persons have been identified as having the potential to have a greater
impact on the Company's future success.
In 1996, the shareholders approved the Stock Option and Share Rights
Plan-1996, which authorizes the issuance of stock options and other stock-based
incentives, such as restricted stock awards. Stock options were granted under
the 1996 Plan in February 1997, using the formula described above. In March
1997, based on the recommendation of Compensation Resource Group, Inc., an
executive compensation consulting firm, the Compensation Committee determined to
change the formula used for granting options. In place of the assumed 12% growth
model, the Compensation Committee adopted a Black-Scholes valuation formula
which is widely used by publicly held companies in the United States in granting
stock options. That formula will be used for future annual stock option grants.
In March 1997, the Compensation Committee determined that in the future it
would also use restricted stock grants as a part of the Company's equity-based
compensation system, as a means of encouraging members of senior management to
increase their ownership in the Company and to remain with the Company. The
Compensation Committee also determined that it would establish stock ownership
guidelines for the members of the Company's top management as a further means of
aligning management's long term interests
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with the interests of the Company's shareholders. In order to achieve these
objectives, the Compensation Committee expects to makes restricted stock grants
to members of senior management which will vest over time and which will be
dependent on achievement of one or more performance goals including, for
example, improvements in earnings per share, increases in the value of the
Company's stock, and return on shareholders' equity. The Committee also expects
to grant matching restricted stock to senior managers on the basis of one
restricted share for each three shares owned by the senior manager and
"enrolled" by the senior manager for matching grants. The matching grants will
vest after a number of years, but only to the extent the senior manager
maintains ownership of the "enrolled" shares throughout the vesting period. In
addition, the Committee expects to implement a stock bonus program which will
provide senior managers with an opportunity to exchange a portion of their
annual cash bonuses for awards of restricted stock. The award of restricted
stock will be equal to 1.5 times the amount of the cash bonus to be exchanged,
divided by the market value of the Company's shares on the date of grant. The
restricted stock award will vest over a number of years. The Compensation
Committee believes that the use of these kinds of restricted stock programs will
encourage members of senior management to increase their ownership in the
Company, and that such increased ownership will further the objective of
aligning the interests of management with the interests of the Company's
shareholders.
The Compensation Committee will continue to regularly review the Company's
executive compensation program to ensure that the Company's program continues to
be competitive with those of other companies that compete with Homestake for
executive personnel.
Chief Executive Officers' 1996 Compensation. 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 1995, after reviewing the proposed levels of 1996 compensation for
other mining company executives and also considering the Company's 1995
performance, the Compensation Committee determined that it would be appropriate
for the 1996 base salary for Harry M. Conger, then Chief Executive Officer, to
be increased from an annual rate of $517,500 to $540,000, and that
recommendation was accepted by the Board of Directors. In May 1996, Harry M.
Conger retired, and Jack E. Thompson was elected as the Company's Chief
Executive Officer. After reviewing the compensation levels of other mining
company chief executive officers, and considering both Mr. Thompson's level of
experience in comparison to the experience of chief executive officers of other
mining companies and that the Company does not have a chief operating officer,
the Compensation Committee recommended that Mr. Thompson's 1996 base salary be
increased from an annual rate of $375,000 to $450,000. That recommendation was
accepted by the Board of Directors.
In March 1996, the Compensation Committee set a target bonus for Mr.
Thompson at 50% of his annual base salary, and also determined that one half of
his bonus would be based on the extent of the achievement of the Corporate
Performance Objectives and one half on the extent of the achievement of Mr.
Thompson's Individual Performance Objectives. In November 1996, the Compensation
Committee made its annual bonus recommendations. As noted above, the
Compensation Committee approved a 92% performance factor in respect of the
achievement of the 1996 Corporate Performance Objectives. After evaluating the
Individual Performance Objectives established for Mr. Thompson earlier in 1996,
and after considering his performance during the year, including the leadership
ability shown by Mr. Thompson as Chief Executive Officer, the Compensation
Committee approved a 108% performance factor in respect of Mr. Thompson's
achievement of his Individual Performance Objectives, resulting in a recommended
bonus of $225,000. That recommendation was accepted by the Board of Directors.
As Mr. Conger retired in May 1996, he was not eligible for and did not receive a
bonus for 1996.
Other Executive Officers' 1996 Compensation. In November 1995, after
reviewing the proposed levels of 1996 compensation for other mining company
executives and also considering the Company's 1995 performance, the Compensation
Committee determined that it would be appropriate for the 1996 base salary for
all executive officers (other than the Chief Executive Officer) to be increased
in amounts ranging from 1.8% to 4.3% of 1995 base salary, and that
recommendation was accepted by the Board of Directors. In March 1996, the
Compensation Committee set target bonuses for executive officers (other than Mr.
Thompson) at 30% to 35% of their annual base salaries. The Compensation
Committee also determined that one half of each executive officer's bonus would
be based on the achievement of the Corporate Performance Objectives and
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that one half of each executive officer's bonus would be based on the
achievement of such executive officer's Department and Individual Performance
Objectives. In November 1996, the Compensation Committee made its annual bonus
recommendations. As noted above, the Compensation Committee approved a 92%
performance factor in respect of the achievement of the 1996 Corporate
Performance Objectives. Evaluation of the Department and Individual Performance
Objectives established for each executive officer earlier in 1996 was made by
the Company, and the Committee subsequently approved Department and Individual
Performance factors for executive officers ranging from 79% to 119%. The
resulting bonus recommendations ranged from 85% to 105% of the target bonuses
for the executive officers, and those recommendations were 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 27, 1997
COMPENSATION COMMITTEE
G. ROBERT DURHAM
DOUGLAS W. FUERSTENAU
HENRY G. GRUNDSTEDT
ROBERT K. JAEDICKE
JOHN NEERHOUT, JR.
BERNE A. SCHEPMAN, Chairman
PROPOSAL NO. 2
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of the Audit Committee, has
engaged the firm of Coopers & Lybrand LLP as independent auditors to audit and
report to the shareholders on the financial statements of Homestake for the year
1997. 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 1997.
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 1997. 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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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AGREEMENT WITH CASE POMEROY.
In connection with Homestake's acquisition of Felmont Oil Corporation (now
Homestake Sulphur Company) in 1984, Homestake, Case, Pomeroy & Company, Inc.
entered into an Agreement, which agreement was amended in 1989, and further
amended on March 27, 1992. Mr. Robert H. Clark, Jr., a director of Homestake,
together with family members, is a controlling shareholder of Case Pomeroy. 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 50
percent undivided interest and the manager of the mine. The Agreement provides
that whenever any action is to be taken pursuant to the Operating Agreement that
requires consent or approval of a majority of the co-tenancy interests, Case
Pomeroy and Homestake will cause their respective subsidiaries to agree to take
such action as they agree upon in advance. The 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 interest 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.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 of beneficial ownership with the Securities and
Exchange Commission and with the Company. Based on its review of reports of
beneficial ownership and changes in beneficial ownership required under Section
16(a), the Company believes that during 1996 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 Stephen A. Orr, a Vice President elected in 1996,
was filed late; one Form 4 Statement of Changes in Beneficial Ownership for
Carol A. Rae, a Director of the Company, reporting a purchase of Company shares,
was filed late; and one Form 4 Statement of Changes in Beneficial Ownership for
Ronald D. Parker, a Vice President of the Company, reporting an exercise of
Company stock options and the sale of the shares so acquired, was filed late (in
1997). No directors or executive officers reported in 1996 a transaction that
should have been reported in an earlier year.
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SHAREHOLDER PROPOSALS
The 1998 annual meeting of shareholders will be held on May 12, 1998 unless
the date is subsequently changed by the Board of Directors. To be considered for
inclusion in the Proxy Statement for the 1998 annual meeting, proposals of
shareholders should be received by Homestake no later than November 25, 1997.
Such proposals should be directed to the Secretary of Homestake.
Under the Company's By-Laws, as amended in May 1997, any shareholder who
intends to present any matter of business to be considered and voted upon at the
1998 annual meeting must give timely notice thereof, in writing, to the
Secretary of the Company. To be timely, such notice must be given on or after
November 13, 1997 and on or before February 27, 1998.
By Order of the Board of Directors
/s/ Wayne Kirk
----------------------
WAYNE KIRK
Secretary
San Francisco, California
June 12, 1997
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<PAGE> 25
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
ANNUAL MEETING OF SHAREHOLDERS - JULY 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harry M. Conger, Jack E. Thompson 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 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 on May 29, 1997 at
the annual meeting of shareholders, or any postponement or adjournment thereof.
[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 AND 2.
1. Election of four Class I Directors (term of three years) and One Class III
Director (term of two years).
CLASS I NOMINEES: M. Norman Anderson, Robert H. Clark, Jr., Douglas W.
Fuerstenau and Jeffrey L. Zelms.
CLASS III NOMINEE: Richard R. Burt.
[ ] For All [ ] Withhold From
Nominees All Nominees
[ ] For all nominees except as noted above.
2. Appointment of Coopers & Lybrand LLP as independent auditors for 1997.
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: ________
