<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
(415) 981-8150
LOGO
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 24, 1998
To the Shareholders of Homestake Mining Company:
The annual meeting of shareholders of Homestake Mining Company will be held
in the Colonial Room of the Westin St. Francis Hotel, 335 Powell Street, San
Francisco, California, on Friday, July 24, 1998, at 11:00 a.m. local time, for
the following purposes:
1. Election of four Class II Directors.
2. Approval of the appointment of Coopers & Lybrand LLP as independent
auditors for 1998.
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 28, 1998, 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
28, 1998, 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 24, 1998
<PAGE>
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
(415) 981-8150
June 24, 1998
PROXY STATEMENT
1998 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 Colonial Room of the Westin St. Francis Hotel, 335 Powell
Street, San Francisco, California, on Friday, July 24, 1998, 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 24, 1998.
MATTERS TO BE CONSIDERED.
The following matters will be acted on at the annual meeting:
1.Election of four Class II Directors.
2.Approval of the appointment of Coopers & Lybrand LLP as independent
auditors for 1998.
3.Transaction of such other business as may properly come before the
meeting.
VOTING SECURITIES AND VOTING RIGHTS.
Only shareholders of record on May 28, 1998, or their proxies, will be
entitled to vote at the annual meeting of shareholders. On May 28, 1998,
Homestake had 211,149,500 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 (i) election
of the director nominees named in this Proxy Statement and (ii) the
appointment of Coopers & Lybrand LLP as independent auditors for 1998. 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.
1
<PAGE>
On voting for Class II Directors, the four nominees 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
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 of $12,000 plus expenses.
PRINCIPAL HOLDERS OF HOMESTAKE COMMON STOCK.
Ownership of Common Stock by Homestake's Management
The following table shows: (i) the number of shares of Homestake Common
Stock owned by directors, nominees for director, the five highest paid
executive officers, and all directors, nominees and executive officers as a
group, as of June 1, 1998, (ii) the number of shares of Homestake Common Stock
which such persons have the right to acquire within 60 days of June 1, 1998,
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 June 1, 1998. The shares so shown include shares held in Homestake's
Savings Plan for the accounts of executive officers and directors share rights
granted under Homestake's Stock Option and Share Rights Plan--1988 and 1996,
which entitle outside directors to receive shares on the date of ceasing to
serve as a director. Other than Mr. Clark (see footnote 2 below), no director
or executive officer beneficially owns greater than 1 percent of the total
number of shares of Homestake Common Stock outstanding. The shares of
Homestake Common Stock beneficially owned by all directors, nominees for
director and executive officers as a group represent approximately 3.84% of
the 211,149,500 shares of Homestake Common Stock outstanding as of June 1,
1998, which includes 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.
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED RIGHT TO
AS OF JUNE 1, ACQUIRE SHARES TOTAL NUMBER
1998, EXCLUDING WITHIN 60 DAYS OF SHARES
RIGHT TO ACQUIRE OF BENEFICIALLY
NAME SHARES JUNE 1, 1998 OWNED
---- ------------------ -------------- ------------
<S> <C> <C> <C>
M. Norman Anderson.............. 2,529 6,686 9,215
Richard R. Burt................. 0 84 84
Robert H. Clark, Jr.(2)......... 6,448,776 2,334 6,451,110
Harry M. Conger(3).............. 176,223 497,056 673,279
G. Robert Durham................ 10,000 1,943 11,943
Douglas W. Fuerstenau........... 1,478 2,367 3,845
Henry G. Grundstedt............. 1,000 1,497 2,497
Paul McClintock(4).............. 11,230 0 11,230
John Neerhout, Jr. ............. 1,000 1,869 2,869
Peter J. Neff................... 0 0 0
Stuart T. Peeler(5)............. 10,000 2,503 12,503
Carol A. Rae.................... 500 810 1,310
Jack E. Thompson................ 51,969 178,050 230,019
Jeffrey L. Zelms................ 50 131 181
Gene G. Elam.................... 11,908 122,750 134,658
Wayne Kirk(6)................... 8,680 105,500 114,180
Gil J. Leathley................. 3,551 62,425 65,976
William F. Lindqvist............ 382 86,300 86,682
All Directors, Nominees for Di-
rector and Executive Officers
as a Group (26 persons)........ 6,769,972 1,328,358 8,098,330
</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
principal shareholder of Case, Pomeroy & Company, Inc. The shares
beneficially owned by Mr. Clark represent approximately 3.05 percent of
the 211,149,500 shares of Homestake Common Stock outstanding as of June 1,
1998.
(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 9,530 shares owned by a corporation of which Mr. McClintock is
the sole shareholder.
(5) Includes 3,200 shares owned by a corporation of which Mr. Peeler is the
sole shareholder.
(6) Includes 416 shares held of record by two of Mr. Kirk's children. Mr. Kirk
disclaims beneficial ownership of these shares.
Security Ownership of Certain Beneficial Owners of Homestake
As of June 1, 1998, the only person known to Homestake to own beneficially
five percent or more of the Homestake Common Stock outstanding were:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------- --------------------- ----------------
<S> <C> <C>
Malaysia Mining Corporation Berhad...... 22,260,391(1) 10.54%
32nd Floor, Menara PNB
201A Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
August von Finck........................ 20,614,700(2) 9.76%
Pacellistrasse 4
D-80333, Munich, Germany
</TABLE>
- -------
(1) The amount and nature of Malaysia Mining's beneficial ownership is based
upon information provided to Homestake pursuant to a Schedule 13G filed on
behalf of Malaysia Mining on May 19, 1998.
(2) The amount and nature of Mr. von Finck's beneficial ownership is based
upon information provided to Homestake pursuant to a Schedule 13D,
Amendment No. 3, filed on behalf of Mr. von Finck on June 4, 1998.
3
<PAGE>
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 24, 1998,
Harry M. Conger and Henry G. Grundstedt will retire as directors. At that
time, the Board of Directors will amend the Bylaws to reduce the number of
directors to 12 members, divided into three Classes of four members each. Four
Class II Directors are to be elected at this annual meeting to serve until the
annual meeting in 2001 or until their successors are elected and qualified,
except that Stuart T. Peeler will be age 70 at the time of the 2000 annual
meeting and will retire at that time under the directors' mandatory retirement
policy (unless waived).
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 II 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
II 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 II DIRECTORS TO SERVE UNTIL 2001 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT
JULY 24, DIRECTOR
NOMINEE 1998 SINCE BIOGRAPHICAL INFORMATION
------- -------- -------- ------------------------
<S> <C> <C> <C>
Paul McClintock......... 49 -- Mr. McClintock has been a director of
McClintock Associates Pty. Limited
(investment banking) since 1985. He was the
chairman of Plutonic Resources Limited
(gold mining) from 1996 until April 1998,
when the Company acquired Plutonic
Resources Limited. He is a director of
Ashton Mining Limited (diamond mining) and
Tower Australia Limited (life insurance and
financial services).
John Neerhout, Jr....... 67 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.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AGE AT
JULY 24, DIRECTOR
NOMINEE 1998 SINCE BIOGRAPHICAL INFORMATION
------- -------- -------- ------------------------
<S> <C> <C> <C>
Stuart T. Peeler........ 68 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........ 48 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. (majority owned
subsidiary) and Homestake Canada Inc.
(wholly owned subsidiary) 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>
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 2000 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT
JULY 24, DIRECTOR
DIRECTOR 1998 SINCE BIOGRAPHICAL INFORMATION
-------- -------- -------- ------------------------
<S> <C> <C> <C>
M. Norman Anderson...... 67 1992 Mr. Anderson is President of Norman
Anderson & Associates Ltd. (mining
consultants). Mr. Anderson was a director
of Homestake Canada Inc. ("HCI") from 1987
to 1993, and was the Chairman of the Board
of Directors of HCI from February 1991 to
July 1992, when the Company acquired the
outstanding voting shares of HCI. He is a
director of Prime Resources Group Inc.,
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..... 57 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).
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AGE AT
JULY 24, DIRECTOR
DIRECTOR 1998 SINCE BIOGRAPHICAL INFORMATION
-------- -------- -------- ------------------------
<S> <C> <C> <C>
Douglas W. Fuerstenau... 69 1977 Mr. Fuerstenau has been a Professor of
Metallurgy, Department of Materials Science
and Mineral Engineering, University of
California, Berkeley from 1959 to 1992. He
was P. Malozemoff Professor of Mineral
Engineering from 1987 to 1993, and has been
a professor emeritus since 1993 and has
been a professor in the Graduate School
since July 1994.
Jeffrey L. Zelms........ 54 1997 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 the Phoenix
Textile Corporation (linen supplier for the
health industry).
</TABLE>
CONTINUING CLASS III DIRECTORS TO SERVE UNTIL 1999 ANNUAL MEETING:
<TABLE>
<CAPTION>
AGE AT
JULY 24, DIRECTOR
DIRECTOR 1998 SINCE BIOGRAPHICAL INFORMATION
-------- -------- -------- ------------------------
<S> <C> <C> <C>
Richard R. Burt......... 51 1997 Mr. Burt has been the Chairman of IEP
Advisors, Inc. (strategic and financial
advisory services) since June 1993. He is
also Chairman of Powerhouse Technologies,
Inc. (gaming software design) and Weirton
Steel Company (integrated steel producer).
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) and Hollinger International
Inc. (publishing).
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
AGE AT
JULY 24, DIRECTOR
DIRECTOR 1998 SINCE BIOGRAPHICAL INFORMATION
-------- --------- -------- ------------------------
<S> <C> <C> <C>
G. Robert Durham........ 69 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 and President of Phelps Dodge
Corporation (mining) from 1987 to 1989 and
President and Chief Operating Officer from
1985 to 1987, and he held other executive
positions with Phelps Dodge Corporation or
affiliated corporations beginning in 1977.
He is a director of FINOVA Group Inc.
(financial services) and Amphenol Corp.
(manufacturer of electronic connectors and
coaxial cables), and a trustee of Mutual
Life Insurance Company of New York.
Peter J. Neff........... 59 1998 Mr. Neff currently serves as a consultant
to Rhone-Poulenc Inc. (chemicals and
pharmaceuticals). He joined Rhone-Poulenc
in 1987 as President and Chief Operating
Officer and was elected Chief Executive
Officer in 1991 and served as President and
Chief Executive Officer until his
retirement in December 1997. Mr. Neff is a
director of UST Inc. (tobacco and wine
manufacturer and distributor) and
Envirogen, Inc. (environmental services),
and is Chairman of the Board of Trustees of
Rider University.
Carol A. Rae............ 52 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 1994
until 1995 and Senior Vice President of
Government Affairs of Chiron Vision from
1995 until 1997. She was President and
Chief Executive Officer of Magnum Diamond
Corporation (manufacturer of surgical
instruments) from 1989 to 1995.
</TABLE>
7
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD.
The Homestake Charter provides for the Homestake Board to be divided into
three classes. Each class of directors, elected at an annual meeting of
stockholders, is elected for a three year term. Homestake's directors can be
removed from office only for cause.
Homestake's Board of Directors held 15 meetings during the calendar year
1997.
The Board of Directors has six standing committees: Executive, Finance,
Audit, Compensation, Director Affairs, 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), Anderson, Clark, Conger,
Durham and Peeler. The Executive Committee held no meetings during 1997.
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), Clark, Conger, Grundstedt and Thompson, and Ms. Rae.
The Finance Committee held four meetings during 1997.
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. Clark (Chairman), Anderson,
Burt, Grundstedt and Neerhout, and Ms. Rae, all non-employee directors. The
Committee held six meetings during 1997.
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 and share rights plans and its Deferred Compensation Plan and Executive
Supplemental Retirement Plan. The members of the Committee are Messrs. Durham
(Chairman), Fuerstenau, Grundstedt, Neerhout and Zelms, all non-employee
directors. The Committee held four meetings during 1997.
The Director Affairs Committee reviews and evaluates candidates for director,
including nominees recommended by stockholders, makes recommendations on
candidates to the Board of Directors, evaluates director performance, and makes
recommendations regarding director compensation and stock ownership.
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, Burt,
Conger, Durham and Peeler, all non-employee directors. The Director Affairs
Committee held two meetings during 1997.
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, Neerhout and Zelms, and Ms.
Rae, all non-employee directors. The Environment, Health and Safety Committee
held three meetings during 1997.
In 1997, each incumbent director attended at least 75% of the total number of
meetings of the Board of Directors and the respective committees on which he or
she served, except that Mr. Burt attended fewer than 75% of the total number of
meetings of the Board of Directors and the committees on which he served.
COMPENSATION OF DIRECTORS.
A director of Homestake who is not an employee of Homestake 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
8
<PAGE>
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 a Retirement Plan for Outside Directors. Under the Plan,
directors who do not have a fully vested interest under any taxqualified
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 Stock Option and Share Rights Plan--1996 (the "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 canceled 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 1997, a total of 3,775 share rights were granted under the 1996
Plan. No director was credited with more than 493 share rights for 1997.
Prime Resources Group Inc. ("Prime"), 50.6% owned by the Company, pays
directors who are not employees of the Company or its subsidiaries an annual
retainer of C$10,000 per year, C$1,000 for each meeting of the Board or any
committee which they attend in person, and C$750 for telephone meetings. Prime
pays directors who are employees of the Company or its subsidiaries C$1,000
for meetings attended in person and C$750 for telephone meetings. M. Norman
Anderson, a nonemployee director of the Company and Prime, received C$21,500
in directors fees from Prime for 1997.
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 agreed to act as a consultant to the Board and the Chief
Executive Officer of Homestake for one year, subject to renewal for an
additional year. The consulting agreement was renewed at the request of the
Company for an additional year. Mr. Conger agreed to provide at least 500
hours of consulting services, including continuing to act as a director and
nonexecutive 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 to him for his services as a director. Homestake
also agreed to provide Mr. Conger office facilities. For the year 1997, Mr.
Conger received a total of $151,500 in compensation ($1,500 was 1996
compensation paid to Mr. Conger in 1997) and $20,945 in office facilities
expense reimbursement.
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 1997, the Company paid $11,844 to Mr. Peeler
under the agreement.
9
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS.
The following table discloses, for the years indicated, compensation
received by Homestake's executive officers named therein (the "Named Executive
Officers") for the fiscal years ended December 31, 1997, 1996 and 1995. Such
officers served as Chief Executive Officer or were among the four most highly
compensated executive officers (other than the Chief Executive Officer) for
the fiscal year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- ------------------------------------
AWARDS PAYOUTS
------------------------ -----------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK AWARD UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) ($)(2) OPTIONS (#) PAYOUTS ($) COMPENSATION
------------------ ---- -------- -------- --------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jack E. Thompson........ 1997 $475,000 $285,000 $ 18,778(4) $475,950(5) 133,400 $ 0 $15,874(6)
President and Chief Ex- 136,810(7)
ecutive Officer(3) 213,738(8)
1996 422,452 225,000 25,212(9) 56,100 0 12,044
1995 336,000 68,000 29,146(10) 31,100 0 9,174
Gene G. Elam............ 1997 283,000 98,900 5,213(11) 178,125(5) 57,100 0 13,906(12)
Vice President, Finance 44,250(7)
and Chief 22,501(8)
Financial Officer 1996 272,000 95,700 24,167(13) 17,900 0 11,546
1995 261,000 41,000 8,150(14) 16,100 0 9,010
Wayne Kirk.............. 1997 354,000 138,700 5,076(15) 223,725(5) 71,300 0 12,790(16)
Vice President, General 31,738(7)
Counsel and 15,000(8)
Corporate Secretary 1996 340,000 121,400 1,110(17) 22,300 0 10,908
1995 326,000 52,000 0 20,100 0 9,010
Gil J. Leathley......... 1997 223,606 76,800 19,556(19) 136,800(5) 43,600 0 14,975(20)
Senior Vice President, 14,371(7)
Operations(18) 45,000(8)
1996 208,000 71,700 18,995(21) 15,400 0 10,438
1995 198,088 30,000 49,571(22) 21,500 0 10,655
William F. Lindqvist.... 1997 233,000 93,800 13,615(24) 146,775(5) 47,000 0 13,926(25)
Vice President, 1996 224,000 77,300 19,731(26) 16,500 0 10,916
Exploration(23) 1995 91,667 12,000 125,525(27) 30,000 0 3,663
</TABLE>
10
<PAGE>
- --------
(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) In March 1997, the Compensation Committee adopted three restricted stock
programs (described in notes 5, 7 and 8 below) for the members of the
Company's senior management as a further means of aligning management's
long term interests with the interests of the Company's shareholders, as
a means of providing additional incentives and to encourage members of
senior management to increase their ownership in the Company and to
remain with the Company.
(3) Mr. Thompson served as President and Chief Operating Officer until May
1996, when he was appointed President and Chief Executive Officer.
(4) Consists of $1,178 (financial planning) and $17,600 (directors' fees).
(5) Value at date of grant of restricted stock granted under the Performance
Based Program. Under the Performance Based Program, the Compensation
Committee grants restricted stock to members of the senior management
which vest over time and which vest depending on achievement of
performance goals over the life of the Performance Based Stock Rights.
The employees must continue to be employed on the vesting date.
(6) Consists of $9,500 (matching contribution to savings plan), $2,223
(imputed income on split dollar life insurance), $2,254 (tax gross-up
related to split dollar life insurance), $838 (reimbursement for spousal
travel, expense and tax gross-up) and $1,059 (above market component of
interest paid on deferred compensation plan).
(7) Value at date of grant of restricted stock granted under the Matching
Stock Award Program. Under the Matching Stock Award Program, the
Compensation Committee grants restricted stock to senior managers on the
basis of one restricted share for each three shares owned by the senior
managers that are "enrolled" by the senior manager. The enrolled shares
must be held for five years and the employee must continue to be employed
on the vesting date for the matching shares to vest.
(8) Value at date of grant of restricted stock granted under the Bonus Stock
Program. Under the Bonus Stock Program, the Compensation Committee
provides senior managers with an opportunity to exchange a portion of
their annual cash bonuses for awards of restricted stock. The shares
awarded are equal to 150% of the cash foregone, and the shares vest over
time. The employee must continue to be employed on the vesting dates to
receive the shares. If not, the unvested shares and cash foregone are
forfeited.
(9) Consists of $6,012 (financial planning) and $19,200 (directors' fees).
(10) Consists of $17,500 (directors' fees), $11,030 (financial planning) and
$616 (tax grossup for payment made in connection with the sale of Mr.
Thompson's Canadian residence in 1994).
(11) Consists of $880 (financial planning) and $4,333 (directors' fees paid by
publicly held subsidiary).
(12) Consists of $9,500 (matching contribution to savings plan), $1,459
(imputed income on split dollar life insurance), $1,480 (tax gross-up
related to split dollar life insurance), $884 (reimbursement for spousal
travel, expense and tax gross-up) and $583 (above market component of
interest paid on deferred compensation plan).
(13) Consists of $1,620 (financial planning) and $22,547 (directors' fees paid
by publicly held subsidiary).
(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) Consists of $9,500 (matching contribution to savings plan), $1,204
(imputed income on split dollar life insurance), $1,221 (tax gross-up
related to split dollar life insurance), $768 (reimbursement for spousal
travel, expense and tax gross-up) and $97 (above market component of
interest paid on deferred compensation plan).
(17) Directors' fees paid by publicly held subsidiary.
(18) Mr. Leathley served as Vice President, Canadian Operations during a
portion of 1995 and was a Canadian resident. Accordingly, a portion of
Mr. Leathley's 1995 Annual Compensation and All Other Compensation was
paid in Canadian dollars. The conversion rate used to convert such
amounts was 0.7324. Mr. Leathley became Vice President, Operations, of
Homestake in May 1995.
(19) Consists of $5,021 (financial planning), $4,535 (directors' fees paid by
publicly held subsidiary) and $10,000 (forgiveness of relocation loan).
11
<PAGE>
(20) Consists of $9,500 (matching contribution to savings plan), $1,221
(imputed income on split dollar life insurance), $1,168 (tax gross-up
related to split dollar life insurance), $823 (reimbursement for spousal
travel, expense and tax gross-up), $1,790 (above market component of
interest paid on deferred compensation plan) and $473 (interest in
Canadian retirement account).
(21) 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).
(22) 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.
(23) Mr. Lindqvist became an employee of Homestake on June 30, 1995.
(24) Consists of $3,615 (financial planning) and $10,000 (forgiveness of
relocation loan).
(25) Consists of $9,500 (matching contribution to savings plan), $881 (imputed
income on split dollar life insurance), $973 (tax gross-up related to
split dollar life insurance) and $2,572 (above market component of
interest paid on deferred compensation plan).
(26) Consists of $6,497 (financial planning), $10,000 (forgiveness of
relocation loan) and $3,234 (tax gross-up related to relocation
expenses).
(27) 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 Company's Deferred Compensation Plan, participants may
elect to defer each year an amount not less than $2,000 nor more than 100
percent of compensation. Amounts deferred are credited with interest in an
amount equivalent to 120% of (i) the monthly Moody's Corporate Bond Yield
Average as published by Moody's Investors Service, Inc. and (ii) such
additional amount as the Compensation Committee determines to be appropriate.
STOCK OPTION PLANS.
Options Granted
The following table sets forth certain information with respect to options
to acquire common stock that were granted during 1997 to each Named Executive
Officer under Homestake's stock option plans.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
NO. OF POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED
UNDERLYING OPTIONS ANNUAL RATES OF STOCK
OPTIONS GRANTED TO EXERCISE PRICE APPRECIATION
GRANTED EMPLOYEES OR BASE FOR OPTION TERM
IN FISCAL PRICE EXPIRATION ---------------------
NAME (1) YEAR ($/SH) DATE 5%(2) 10%(2)
---- ---------- ---------- -------- ------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Jack E. Thompson........ 64,500 8.12% $15.225 Feb. 19, 2007 $ 672,740 $ 1,652,905
68,900 8.68 14.900 April 4, 2007 621,780 1,598,176
Gene G. Elam............ 20,500 2.58 15.225 Feb. 19, 2007 213,816 525,342
36,600 4.61 14.900 April 4, 2007 330,292 848,958
Wayne Kirk.............. 25,600 3.22 15.225 Feb. 19, 2007 267,010 656,037
45,700 5.75 14.900 April 4, 2007 412,414 1,060,039
Gil J. Leathley......... 17,600 2.22 15.225 Feb. 19, 2007 183,569 451,025
26,000 3.27 14.900 April 4, 2007 234,634 603,085
William F. Lindqvist.... 19,000 2.39 15.225 Feb. 19, 2007 198,172 486,902
28,000 3.53 14.900 April 4, 2007 252,683 649,477
</TABLE>
12
<PAGE>
- --------
(1) Granted at fair market value. Granted on February 19, 1997 and April 4,
1997 and vesting 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.
Option Exercises and Year-End Values:
The following table sets forth certain information with respect to options
exercised during 1997 by each Named Executive Officer and option values at
1997 year end.
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AT 1997 YEAR END
<TABLE>
<CAPTION>
VALUE OF
NO. OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FISCAL
NO. OF SHARES AT FISCAL YEAR-END YEAR-END
ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE UNEXERCISABLE UNEXERCISABLE
---- ------------- ------------------- -----------------
<S> <C> <C> <C>
Jack E. Thompson........ 0 119,225/198,450 $0/0
Gene G. Elam............ 0 96,675/81,875 0/0
Wayne Kirk.............. 0 72,950/102,200 0/0
Gil J. Leathley......... 0 39,875/68,325 0/0
William F. Lindqvist.... 0 70,425/69,375 0/0
</TABLE>
RETIREMENT PROGRAMS.
Homestake Retirement Plan
In general, all fulltime, nonunion U.S. employees of Homestake
(approximately 476 persons at December 31, 1997) participate in the Homestake
Retirement Plan, a noncontributory defined benefit plan (the "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. 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 (the "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, 1997, for Messrs. Elam, Kirk,
Leathley, Lindqvist and Thompson are 7 years, 5 years, 11 years, 5 years and
16 years, respectively. For purposes of these plans, earnings
13
<PAGE>
include salary and bonus but exclude directors' fees and other benefits that
are included in the Summary Compensation Table.
HOMESTAKE RETIREMENT PLAN
<TABLE>
<CAPTION>
AVERAGE ANNUAL
EARNINGS (60 YEARS OF SERVICE
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 (the "Code") imposes a maximum limit on
annual retirement benefits payable under qualified retirement plans. For 1997,
that annual limit was $125,000. In addition, the Code limits the amount of
annual compensation that may be considered under qualified retirement plans.
In 1997, that annual limit was $160,000. 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 ("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.
Homestake Executive Supplemental Retirement Plan
Homestake has established the Homestake Executive Supplemental Retirement
Plan (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 (except the Homestake Mining
Company Savings Plan) 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. For purposes of the Homestake ESRP, the
years of service as of December 31, 1997, for Messrs. Elam, Kirk, Leathley and
Thompson are 11 years, 5 years, 11 years and 15 years, respectively. Mr.
Lindqvist was previously employed by Homestake and following
14
<PAGE>
Homestake's 1992 acquisition of International Corona Corporation, 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.
HOMESTAKE EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
<TABLE>
<CAPTION>
AVERAGE ANNUAL
EARNINGS YEARS OF SERVICE
(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% 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 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.
15
<PAGE>
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, 1997,
based on the market price of the Homestake common stock and assuming
reinvestment of dividends, with the cumulative total return of companies
included in the Standard & Poor's 500 Index and the Standard & Poor's Gold &
Precious Metals Mining Index.
THE 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
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/92 12/93 12/94 12/95 12/96 12/97
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Homestake Mining Company $100 $201 $158 $145 $135 $ 85
- ------------------------------------------------------------------------------------------------------------------------------
S&P 500 $100 $110 $112 $153 $189 $252
- ------------------------------------------------------------------------------------------------------------------------------
S&P Gold & Precious Metals Mining $100 $183 $148 $167 $165 $109
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* $100 invested on 12/31/92 in stock or index - including reinvestment of
dividends. Fiscal year ending December 31.
16
<PAGE>
COMPENSATION COMMITTEE REPORT./1/
The Compensation Committee of the Board of Directors is comprised of five
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 Compensation Committee also 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 Deferred Compensation Plan, the Supplemental Retirement Plan
and the Executive Supplemental Retirement Plan.
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 that 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. In addition, the Company conducts a separate annual survey of
salary increases in the mining industry. For 1997, this survey included Amax
Gold, Barrick Gold, Battle Mountain Gold, BHP, Cyprus, Echo Bay Mines, Hecla
Mining, Kennecott, Kinross, Newmont Mining, Phelps Dodge, Placer Dome, Santa
Fe Pacific Gold, 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.
- --------
/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.
17
<PAGE>
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
Corporate Performance Objective, and the Department and Individual Performance
Objectives, 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 1997, the Corporate Performance Objectives included (i) improved stock
market capitalization per ounce of production relative to that of the S&P Gold
and Precious Metals Index (40%), (ii) significant growth in reserves,
resources and annual production (30%), (iii) achievement of specified
improvements in production, cost targets and environmental, health and safety
performance (20%), and (iv) achievement of other specified corporate
objectives (10%). Also for 1997, 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 1997, after review of the year's
performance by the Company, the Compensation Committee approved a 120%
performance factor in respect of the achievement of the Corporate Performance
Objectives. Also in November 1997, the Compensation Committee approved
performance factors for achievement of Department and Individual Performance
Objectives by Bonus Plan participants ranging from 98% to 150%.
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.
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 performance based and other types of restricted stock
awards.
For many years, including 1997, 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 1997, a total of 52 employees (approximately
3.3% 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
options to officers and key employees of the Company and its subsidiaries. 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. The
number of options awarded in February 1997 was based on a formula that had
been in effect for many years. In March 1997, based on the recommendation of
Compensation
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Resource Group, Inc., an executive compensation consulting firm, the
Compensation Committee adopted the Black-Scholes option valuation formula for
use in determining the appropriate number of stock options to be granted. The
Black-Scholes valuation formula is widely used by publicly held companies in
the United States in granting stock options. The Compensation Committee then
reexamined the stock option grants that had been made earlier in 1997 and
determined that the number of options granted was less than would have been
granted had the Black-Scholes valuation formula been used in determining the
number of options granted. The Compensation Committee then determined to grant
additional options so that the total number of options granted for 1997 would
be in accordance with the Black-Scholes option valuation formula.
The Compensation Committee does not consider the number of outstanding
options in determining annual option awards. The exercise price for options
generally is determined by averaging the closing prices of the Company's
Common Stock on the New York Stock Exchange for the five trading days
preceding 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 March 1997, the Compensation Committee established stock ownership
guidelines for the members of the Company's senior management as a further
means of aligning management's long term interests with the interests of the
Company's shareholders. The Compensation Committee also 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 providing additional
incentives and to encourage members of senior management to increase their
ownership in the Company and to remain with the Company. Accordingly, in March
1997 the Compensation Committee adopted three restricted stock programs.
. Under the first program, the Compensation Committee makes restricted
stock grants to members of senior management which vest over time and
which are 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 relative to other gold mining
companies, and return on shareholders' equity. In 1997, restricted stock
grants for a total of 125,400 shares were made to twelve senior
managers, under which annual achievement goals were established for each
of December 31, 1997, 1998, 1999 and 2000. The annual achievement goals
are to close the gap between the Company's average market capitalization
per ounce of production and that average for the companies comprising
the S&P Gold and Precious Metals Index by specific amounts each year.
The twelve senior managers can earn 25% of the shares subject to the
restricted stock grants on each measurement date on which the annual
achievement goals are met, plus any shares subject to the restricted
stock awards that were not earned at a prior measurement date because
the annual achievement goal for that measurement date was not met. The
annual achievement goal of December 31, 1997 was not met and none of the
performance based restricted stock vested.
. Under the second program, the Compensation Committee grants matching
restricted stock to senior managers on the basis of one restricted share
for each three shares owned by the senior managers that are "enrolled"
by the senior manager for matching grants. The matching grants vest
after a number of years, but only to the extent the senior manager
maintains ownership of the "enrolled" shares throughout the vesting
period. Matching stock grants were made in 1997 to seven senior mangers
for a total of 23,587 shares, and those managers are required to hold
the enrolled shares and continue in the employment of the Company for
five years in order to qualify and receive the matching stock.
. Under the third program, the Compensation Committee provides senior
managers with an opportunity to exchange a portion of their annual cash
bonuses for awards of restricted stock. The restricted stock awards are
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 awards vests over a number of years, and the grantees
must continue to be employed by the Company during the vesting period.
In
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1997, eight senior mangers elected to forego $253,700 in cash bonuses in
exchange for the award of 33,638 shares of restricted stock. A total of
50% of the shares will vest after one year, an additional 25% after two
years, and the remaining 25% after three years, provided that the senior
manager continues to be an employee on the vesting date. The senior
manager forfeits unvested shares if he or she does not continue to be
employed on the relevant vesting dates.
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 Officer's 1997 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 1996, after reviewing the proposed levels of 1997 compensation for
other mining company executives and also considering the Company's 1996
performance, the Compensation Committee determined that it would be
appropriate for the 1996 base salary for Jack E. Thompson, the Chief Executive
Officer, to be increased from an annual rate of $450,000 to $475,000, and that
recommendation was accepted by the Board of Directors.
In November 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 1997, the
Compensation Committee made its annual bonus recommendations. As noted above,
the Compensation Committee approved a 120% performance factor in respect of
the achievement of the 1997 Corporate Performance Objectives. After evaluating
the Individual Performance Objectives established for Mr. Thompson 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 120% performance factor in respect of Mr.
Thompson's achievement of his Individual Performance Objectives, resulting in
a recommended bonus of $285,000. That recommendation was accepted by the Board
of Directors.
Other Executive Officers' 1997 Compensation. In November 1996, after
reviewing the proposed levels of 1997 compensation for other mining company
executives and also considering the Company's 1996 performance, the
Compensation Committee determined that it would be appropriate for the 1997
base salary for all executive officers (other than the Chief Executive
Officer) to be increased in amounts ranging from 4% to 18.5% of 1996 base
salary (including increases attributable to promotions), and that
recommendation was accepted by the Board of Directors. In November 1996, the
Compensation Committee set target bonuses for executive officers (other than
Mr. Thompson) at 25% to 50% 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
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 1997, the Compensation Committee made its annual bonus
recommendations. As noted above, the Compensation Committee approved a 120%
performance factor in respect of the achievement of the 1997 Corporate
Performance Objectives. Evaluation of the Department and Individual
Performance Objectives established for each executive officer in November 1996
was made by the Company, and the Committee subsequently approved Department
and Individual Performance factors for executive officers ranging from 98% to
150%. The resulting bonus recommendations ranged from 109% to 135% 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
20
<PAGE>
excess of annual maximum deductible amount, the Compensation Committee would
expect to recommend such compensation.
May 12, 1998
COMPENSATION COMMITTEE
G. Robert Durham
Douglas W. Fuerstenau
Henry G. Grundstedt
John Neerhout, Jr.
Jeffrey L. Zelms
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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 1998. Effective July 1, 1998, Coopers & Lybrand LLP will be known as
PricewaterhouseCoopers. Representatives of Coopers & Lybrand LLP 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 1998.
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 1998. 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 and Case, Pomeroy & Company,
Inc. ("Case Pomeroy") 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.
SECTION 16(a) 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 1997 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 4 Statement of Changes in Beneficial Ownership for G. Robert Durham, a
Director of the Company, reporting a sale of Company shares in October 1997,
was filed late (in January 1998). No directors or executive officers reported
in 1997 a transaction that should have been reported in an earlier year,
except that Ronald D. Parker, a former Vice-President of the Company, filed in
1997 a Form 4 Statement of Changes in Beneficial Ownership, reporting an
exercise of Company stock options and the sale of the shares so acquired in
1996.
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SHAREHOLDER PROPOSALS
The 1999 annual meeting of shareholders will be held on May 11, 1999 unless
the date is subsequently changed by the Board of Directors. To be considered
for inclusion in the Proxy Statement for the 1999 annual meeting, proposals of
shareholders should be received by Homestake no later than November 24, 1998.
Such proposals should be directed to the Secretary of Homestake.
Under the Company's By-laws, any shareholder who intends to present any
matter of business to be considered and voted upon at the 1999 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 12, 1998 and on
or before February 26, 1999.
By Order of the Board of Directors
/s/ Wayne Kirk
Wayne Kirk
Secretary
San Francisco, California
June 24, 1998
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SKU No. 1600-PS-98
<PAGE>
PROXY
HOMESTAKE MINING COMPANY
650 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94108
ANNUAL MEETING OF SHAREHOLDERS - JULY 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jack E. Thompson, Gene G. Elam 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 24, 1998 at
the annual meeting of shareholders, or any postponement or adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[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 PROPOSAL NUMBER 1 AND PROPOSAL NUMBER 2.
1. Election of four Class II FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
Directors (term of three years). [ ] [ ]
Nominees:
Paul McClintock
John Neerhout, Jr. --------------------------------------
Stuart T. Peeler For all nominees except as noted above.
Jack E. Thompson
2. Appointment of Coopers & Lybrand LLP as independent auditors for 1998.
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 stockholder is a
corporation, sign in full corporate name by an authorized officer.
Signature:________ Date:______ Signature:__________ Date:_______
