<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
ASARCO Incorporated
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which 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:
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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>
ASARCO
RICHARD DE J. OSBORNE
CHAIRMAN OF THE BOARD
March 6, 1995
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders which
will be held in the Ground Floor Auditorium, 1 Chase Manhattan Plaza, New
York, New York on Wednesday, April 26, 1995, at 2 P.M. We hope you can be with
us.
At the meeting, you will be asked to elect directors, approve the selection
of auditors and consider a shareholder proposal.
The meeting also provides an opportunity to give you a current report on the
activities of the Company and its plans and prospects for the future.
It is important that your shares be represented at the meeting whether or
not you are able to attend in person. Therefore, you are asked to vote, sign,
date and mail the enclosed proxy. Please do so today.
Sincerely,
/s/ Richard de J. Osborne
ASARCO Incorporated, 180 Maiden Lane, New York, N.Y. 10038 (212) 510-2000
<PAGE>
ASARCO
ASARCO Incorporated
180 MAIDEN LANE
NEW YORK, N.Y. 10038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1995
To the Stockholders:
The annual meeting of stockholders of ASARCO Incorporated will be held in the
Ground Floor Auditorium, 1 Chase Manhattan Plaza, New York, New York on
Wednesday, April 26, 1995, at 2 P.M. for the following purposes:
(1) To elect four directors to serve until the 1998 annual meeting of
stockholders, one director to serve until the 1996 annual meeting of
stockholders and one director to serve until the 1997 annual meeting of
stockholders.
(2) To act upon a proposal to approve the selection by the Board of
Directors, upon recommendation of the Audit Committee, of Coopers &
Lybrand as independent auditors for the calendar year 1995.
(3) To act upon the shareholder proposal set forth in the accompanying proxy
statement.
(4) To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 8, 1995 will be
entitled to vote at the annual meeting. Stockholders of record who attend the
annual meeting in person may withdraw proxies and vote in person if they wish.
By order of the Board of Directors,
A.B. Kinsolving
Secretary
New York, N.Y., March 6, 1995
YOUR VOTE IS IMPORTANT
Please mark, sign, date and return your
proxy.
<PAGE>
PROXY STATEMENT
This proxy statement is furnished as part of the solicitation by the Board of
Directors of ASARCO Incorporated, 180 Maiden Lane, New York, N.Y. 10038
("Asarco" or the "Company") of the proxies of all stockholders entitled to vote
at the annual meeting to be held on April 26, 1995 and at any adjournment
thereof. This proxy statement and the enclosed form of proxy are being mailed,
commencing on or about March 10, 1995, to stockholders of record on March 8,
1995. Any proxy in the enclosed form given pursuant to this solicitation and
received in time for the annual meeting will be voted with respect to all
shares represented by it and in accordance with the instructions, if any, given
in such proxy. If the Company receives a signed proxy with no voting
instructions given, such shares will be voted for the election of directors and
approval of auditors proposals and against the shareholder proposal opposed by
the Board of Directors. Any proxy may be revoked at any time prior to the
exercise thereof by notice from the stockholder, received in writing by the
Secretary, or by written ballot voted at the meeting.
At the close of business on February 28, 1995, the Company had outstanding
42,170,882 shares of Common Stock, without par value. Each share of Common
Stock outstanding at the March 8, 1995 record date will be entitled to one vote
at the annual meeting. The presence in person or by proxy of the holders of
record of a majority of the shares entitled to vote at the meeting shall
constitute a quorum. Abstentions or votes withheld are counted for quorum
purposes but are not counted either as votes cast "For" or "Against". A
plurality of the votes cast is required for the election of directors. The
affirmative vote of a majority of the votes cast at the meeting by the holders
of shares entitled to vote thereon is required to approve the other matters
described in this proxy statement.
When a stockholder participates in the Dividend Reinvestment Plan applicable
to the Company's Common Stock, his proxy to vote shares of Common Stock will
include the number of shares held for him by The Bank of New York, the agent
under the plan. If the stockholder does not send any proxy, the shares held for
his account in the Dividend Reinvestment Plan will not be voted. Shares of
Common Stock owned under the Company's Savings Plans will be voted by the
trustee under the plans in accordance with the instructions contained in the
proxy submitted by the beneficial stockholder. Any shares held by the trustee
as to which it receives no voting instructions will be voted by the trustee in
the same proportion as the shares for which it has received voting
instructions.
ELECTION OF DIRECTORS
At the recommendation of the Company's Organization and Compensation
Committee and pursuant to a resolution of the Board of Directors adopted on
January 25, 1995, six nominees are proposed for election at the annual meeting.
The remaining six directors will continue to serve in accordance with their
previous election. All of the nominees are currently directors. All current
directors except for Martha T. Muse were elected to their present term of
office at a previous annual meeting of stockholders. Ms. Muse was elected by
the Board of Directors at its meeting held on September 28, 1994.
The Company's Restated Certificate of Incorporation, as amended, provides
that there shall be three classes of directors, as nearly equal in number as
possible, each class to be elected for a three-
2
<PAGE>
year term. On November 23, 1994 M.I.M. Holdings Limited ("MIM") completed the
public sale of all Asarco shares owned by MIM, and Norman C. Fussell and Peter
R. Rowland, who had been nominated by MIM as Asarco directors, resigned from
Asarco's Board. The Board of Directors has currently fixed the number of
directors at twelve. At its meeting held on January 25, 1995, the Board of
Directors of the Company nominated James W. Kinnear, Francis R. McAllister,
Michael T. Nelligan and John D. Ong for election as Class I directors to serve
until the 1998 annual meeting of stockholders, Martha T. Muse for election as a
Class II director to serve until the 1996 annual meeting of stockholders and
David C. Garfield as a Class III director to serve until the 1997 annual
meeting of stockholders. Messrs. Garfield, Kinnear, McAllister, Nelligan and
Ong are currently serving as Class I directors with a term of office expiring
in 1995.
Proxies in the enclosed form will be voted, unless authority is withheld, for
the election of the six nominees named below. If any person should be
unavailable for election, proxies will be voted for another individual chosen
by the Board of Directors as a substitute for the unavailable nominee, unless
the Board of Directors adopts a resolution pursuant to the By-Laws reducing the
number of directors.
NOMINEES FOR ELECTION AS DIRECTORS
Class I
(to serve until the 1998 annual meeting of stockholders)
<TABLE>
<CAPTION>
DIRECTOR
FOR DIRECTOR AGE SINCE
------------ --- --------
<S> <C> <C> <C>
James W. Kinnear........ Director of Corning Incorporated and 66 1990
PaineWebber Group Inc. and an advisory di-
rector of Unilever N.V. and Unilever PLC;
President and Chief Executive Officer of
Texaco Inc. (crude oil, natural gas and
petroleum products) from 1987 to April
1993; previously its Vice Chairman of the
Board from 1983 to 1987, Executive Vice
President from 1978 to 1983, and a direc-
tor from July 1977 to May 1994; alternate
director of M.I.M. Holdings Limited.
Francis R. McAllister... Executive Vice President of the Company in 52 1988
charge of copper operations since April
1993; previously its Chief Financial Offi-
cer from April 1982 until April 1993; di-
rector of Grupo Mexico, S.A. de C.V.
Michael T. Nelligan..... President and Chief Executive Officer of 55 1984
Don Ward & Co. (specialty trucking) since
January 1987; Mr. Nelligan was Chairman of
the Board of Ideal Basic Industries, Inc.
(cement products) from October 1985 until
January 1986, its Chief Executive Officer
from July 1983 until January 1986 and its
President from 1982 until January 1986.
John D. Ong............. Chairman and Chief Executive Officer of The 61 1991
BF Goodrich Company (diversified chemicals
and aerospace) since 1979 and its President
from 1975 to 1984; director of Cooper In-
dustries, Inc., Ameritech Corporation, The
Kroger Co. and The Geon Company.
</TABLE>
3
<PAGE>
Class II
(to serve until the 1996 annual meeting of stockholders)
<TABLE>
<CAPTION>
DIRECTOR
FOR DIRECTOR AGE SINCE
------------ --- --------
<S> <C> <C> <C>
Martha T. Muse.......... Chairman, President and Chief Executive Of- 68 1994
ficer of The Tinker Foundation (not-for-
profit corporation) since 1975; previously
its President from 1968 and its Executive
Director from 1965 to 1968; director
emerita of Columbia University; director
of The Bank of New York and The Bank of
New York Company, Inc.
</TABLE>
Class III
(to serve until the 1997 annual meeting of stockholders)
<TABLE>
<CAPTION>
DIRECTOR
FOR DIRECTOR AGE SINCE
------------ --- --------
<S> <C> <C> <C>
David C. Garfield....... Director of Schering-Plough Corporation. 67 1984
Mr. Garfield was consultant to Ingersoll-
Rand Company (machinery manufacturer) from
June 1986 until June 1992. Mr. Garfield
was President of Ingersoll-Rand Company
from 1981 through May 1986 and previously
its Vice Chairman.
</TABLE>
DIRECTORS WHOSE TERM OF OFFICE CONTINUES
Class II
(serving until the 1996 annual meeting of stockholders)
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR AGE SINCE
-------- --- --------
<S> <C> <C> <C>
Willard C. Butcher...... Director of Texaco Inc., International Pa- 68 1974
per Company and M.I.M. Holdings Limited.
Mr. Butcher was Chairman of the Executive
Committee of The Chase Manhattan Bank,
N.A. from November 1, 1990 until October
31, 1991 and was Chairman of the Board and
Chief Executive Officer of the bank from
1981 through October 1990. Mr. Butcher was
also Chairman of the Board and Chief Exec-
utive Officer of The Chase Manhattan Cor-
poration from 1981 through October 1990.
Harry Holiday, Jr....... Director of NBD Bancorp, Inc. and Birming- 71 1981
ham Steel Corporation. From April 1982 un-
til January 1986, Mr. Holiday was Chairman
of the Board of Armco Inc. (steel products
and manufacturing) and its Chief Executive
Officer from 1979 until February 1985.
Richard de J. Osborne... Chairman of the Board, Chief Executive Of- 60 1976
ficer and President of the Company since
December 1, 1985 and President of the Com-
pany from 1982; director of The Continen-
tal Corporation, Schering-Plough Corpora-
tion, M.I.M. Holdings Limited and Grupo
Mexico, S.A. de C.V.
</TABLE>
4
<PAGE>
Class III
(serving until the 1997 annual meeting of stockholders)
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR AGE SINCE
-------- --- --------
<S> <C> <C> <C>
James C. Cotting........ Chairman and Chief Executive Officer of 61 1987
Navistar International Corporation (truck
and engine manufacturer) since April 1987;
its Vice Chairman and Chief Financial Of-
ficer from September 1983 until March
1987, and previously its Executive Vice
President, Finance and Planning; director
of USG Corporation and The Interlake Cor-
poration; alternate director of M.I.M.
Holdings Limited.
E. Gordon Gee........... President of The Ohio State University 51 1989
since September 1990; from 1985 until Au-
gust 1990, President of the University of
Colorado; from 1981 to 1985, President of
West Virginia University; director of Banc
One Corporation, The Limited, Inc.,
Glimcher Realty Trust and Columbia Gas of
Ohio, Inc.
James Wood.............. Chairman of the Board and Chief Executive 65 1989
Officer of The Great Atlantic & Pacific
Tea Company, Inc. (supermarket chain)
since 1980; previously its President from
1988 to 1993 and at other times since
1980; prior to 1980, Chairman of the Board
and Chief Executive Officer of The Grand
Union Company; director of Schering-Plough
Corporation.
</TABLE>
5
<PAGE>
BENEFICIAL OWNERSHIP OF MANAGEMENT
The information set forth below as to the shares of Common Stock of the
Company beneficially owned by the nominees, directors, executive officers named
in the Summary Compensation Table below and by all nominees, directors and
officers as a group is stated as of December 31, 1994.
<TABLE>
<CAPTION>
SHARES OF THE
COMPANY'S ADDITIONAL
COMMON STOCK SHARES DEEMED PERCENT
BENEFICIALLY BENEFICIALLY OF
OWNED(A) OWNED(B) TOTALS CLASS
------------- ------------- ------- -------
<S> <C> <C> <C> <C>
Willard C. Butcher................. 1,000 -- 1,000 (c)
James C. Cotting................... 1,200 -- 1,200 (c)
David C. Garfield(d)............... 14,900 -- 14,900 (c)
E. Gordon Gee...................... 800 -- 800 (c)
Harry Holiday, Jr.................. 1,100 -- 1,100 (c)
James W. Kinnear(e)................ 1,000 -- 1,000 (c)
Francis R. McAllister(f)........... 24,674 85,002 109,676 (c)
Martha T. Muse..................... 400 -- 400 (c)
Michael T. Nelligan................ 1,215 -- 1,215 (c)
John D. Ong........................ 600 -- 600 (c)
Richard de J. Osborne(f)(g)........ 79,399 229,980 309,379 (c)
James Wood(e)...................... 2,800 -- 2,800 (c)
Kevin R. Morano(f)................. 9,469 29,550 39,019 (c)
Robert M. Novotny(f)............... 9,055 27,000 36,055 (c)
Robert J. Muth(f).................. 11,109 25,930 37,039 (c)
All nominees, directors and
officers as a group (23
individuals)(f)................... 190,754 504,162 694,916 1.7
</TABLE>
- --------
(a) Information with respect to beneficial ownership is based upon information
furnished by each nominee, director or officer. Except as noted below, all
nominees, directors and officers have sole voting and investment power over
the shares beneficially owned by them.
(b) Consists of shares deemed beneficially owned under regulations of the
Securities and Exchange Commission since such shares may be acquired within
60 days after December 31, 1994 through the exercise of options granted
under the Company's Stock Incentive Plan or the previous Stock Option Plan.
(c) Less than 1%.
(d) Does not include 1,000 shares owned by Mr. Garfield's wife and 1,000 shares
owned by his daughters. Mr. Garfield disclaims beneficial ownership of
these shares.
(e) In addition, Messrs. Kinnear and Wood have credited to their account the
equivalent of 6,533 shares and 3,191 shares of Common Stock, respectively,
in book entry form under the Company's Deferred Fee Plan for Directors.
Deferred fees are paid in cash at or following retirement depending on the
market value of the shares at that time.
(f) Includes restricted Common Stock awarded under the Company's Stock
Incentive Plan to certain of the Company's executive officers, and still
subject to restrictions, as follows: 34,700 such shares to Mr. Osborne;
10,260 to Mr. McAllister; 6,120 to Mr. Morano; 5,740 to Mr. Novotny; 5,040
to Mr. Muth and 16,930 to other executive officers. Restrictions on such
shares lapse in equal installments over five years beginning on their
respective grant dates.
(g) Includes 4,614 shares of Common Stock over which Mr. Osborne and his wife
share voting and investment power.
6
<PAGE>
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors has
furnished the following report on executive compensation.
The compensation of Asarco's executive officers other than those who are also
directors is reviewed and established annually by the Organization and
Compensation Committee of the Board of Directors. For the two officers who are
also directors (Mr. Osborne and Mr. McAllister) the Committee makes
compensation recommendations to the Board absent those officers, which
establishes their compensation. The Board did not modify or reject in any
material way the Committee's recommendations for 1994 compensation. The
Committee met a total of three times during 1994. Long-term incentive
compensation awards for 1994 to officers and other salaried employees were
approved by the Committee (and recommended to the Board with respect to Messrs.
Osborne and McAllister) at the Committee's January 1994 meeting.
The Company retains an independent compensation consulting organization to
advise and assist the Company and the Committee in connection with compensation
matters. During 1994 the consulting organization made recommendations to the
Committee on base salary, cash incentive and long-term incentive compensation
for the Chief Executive Officer and each other Asarco executive position on
subjects including target levels for base salary and cash incentive
compensation; long-term income targets and recommended weighting of stock
option and restricted stock values; and appropriate stock option and restricted
stock valuation methods. The Committee carefully considered the recommendations
and acted within the scope of the recommendations in these areas. In 1993, the
consultant had recommended a methodology to implement comparisons of pay versus
performance and to examine pay competitiveness. The Committee continued to use
such methodology in 1994.
Asarco's executive officer compensation is composed of base salary and
incentive compensation.
The Company's policy for base salary for executive officers is to establish
par compensation levels for each position based on competitive data and the
responsibilities and value of each executive position to the Company. The
Committee considers compensation information from other companies in the mining
and metals industry and comparably sized and both larger and smaller companies
in other industries. The Committee then considers individual and corporate
performance in establishing salary levels within a competitive range.
Because the Committee believes that the S&P Metals Group and the S&P 500
Index, used for comparing shareholder returns, do not necessarily represent the
Company's most direct competitors for executive talent, the Committee reviews
four different comparator groups proposed by its independent consultants in
making decisions that affect executive compensation: one group comprises 12
metals companies worldwide; another group includes 14 process-oriented
companies; a third group comprises 59 companies engaged in heavy industry; and
a fourth group consists of approximately 200 companies having annual revenues
of $1 billion to $5 billion (the "Comparator Groups"). These groups represent
companies whose operational and performance characteristics are capable of
comparison with those of the Company, allowing for meaningful comparisons of
executive compensation. The Comparator Groups include three of the four
companies in the S&P Metals Group and approximately 155 companies in the S&P
500 Index.
7
<PAGE>
Base salaries for the Company's executive officers in 1994 were slightly
above the median of the Comparator Groups studied by the Committee and
represented a slightly greater percentage of total compensation, relative to
the median for the Comparator Groups. Because the cyclical nature of the
Company's business can result in significant changes in incentive compensation
from year to year the Committee believes that compensation levels are more
stable and, accordingly, more competitive when base salaries comprise a larger
portion of total compensation. In general, the Committee structures total cash
compensation for each salaried position to be approximately at the median of
total compensation for comparable positions among the Comparator Groups.
Although the Company's base salaries are set at levels intended to be
competitive with the Company's industry peers, the Committee also takes into
consideration the Company's performance relative to companies in the Comparator
Groups as part of its compensation review. In this regard, the Company's
success in meeting transactional, operational and financial objectives are all
taken into consideration. Because the relative importance of each objective may
change over time, the Committee does not set fixed Company performance targets
for purposes of setting base salaries. The Company's success or failure in
achieving certain objectives or financial results, however, will generally
affect executive salaries. Thus, in a downward part of the business cycle,
salary increases may be delayed or salaries even reduced; in strong financial
years, the Company may award larger increases.
Base salaries for Mr. Osborne, Mr. McAllister and the other executive
officers were not increased during 1994.
Incentive compensation consists of cash incentive compensation awarded
annually if justified, and long-term incentive compensation. Long-term
incentive compensation combines restricted stock and stock options and is
designed to link the interests of executive officers with those of stockholders
by providing each executive an incentive to manage the business as an owner
with an equity stake. During 1994 the Committee made a decision not to grant
stock appreciation rights in the future and most of the Company's officers,
including Messrs. Osborne and McAllister, voluntarily surrendered their
previously awarded stock appreciation rights.
Annual cash incentive payments are determined under the Asarco Incentive
Compensation Plan, which is administered by the Organization and Compensation
Committee. Approximately 73% of all active salaried employees of the Company
are eligible for annual cash incentive compensation payments. A target level of
annual incentive compensation is established for each eligible employee based
on the level of responsibility attached to such employee's position with the
Company. For executive officers these targets are set slightly below
competitive median levels. The officers' levels of responsibility are
determined by the Committee after review of substantially equivalent positions
among the Comparator Groups.
Under the Asarco Incentive Compensation Plan, awards to employees are
increased or decreased from a predetermined target level, based upon
performance measured at three levels: individual, operating unit or staff group
and Company-wide. Incentive compensation for the Company's executive officers,
and particularly for the Chief Executive Officer, is determined by individual
and Company
8
<PAGE>
performance levels. Company performance in 1994 was evaluated against certain
objectives previously established by the Board of Directors. Among such
objectives were: the completion of certain transactions, including the
disposition or restructuring of certain Company investments; the achievement of
certain production, expense and profit goals; and the completion of certain
financial transactions. The degree to which the Company is able to meet its
annual objectives is expressed as a corporate performance rating determined by
the Board of Directors with the recommendation of the Committee. In 1994, the
Committee used considerations of business judgment to weight the Company's
stated objectives for purposes of determining the corporate performance rating.
Incentive compensation for the Company's officers other than Messrs. Osborne
and McAllister was established by the Committee after two meetings at which it
considered the Company's performance in 1994. Incentive compensation for
Messrs. Osborne and McAllister was determined by the Board of Directors upon
the recommendation of the Committee, after review by the Board and the
Committee at meetings held in November 1994 and January 1995. The Committee and
the Board of Directors determined that the Company had achieved a 1994
corporate performance rating of 75% and concluded that annual cash incentive
payments should be made to each of the Company's officers including Messrs.
Osborne and McAllister. The Committee and the Board considered that
Mr. Osborne's performance continued to exceed expectations and merited an
increased individual award adjustment of 50%.
In January 1994 the Committee approved awards of stock options with stock
appreciation rights and restricted stock to the Company's officers other than
Mr. Osborne and Mr. McAllister, and recommended to the Board awards to Mr.
Osborne and Mr. McAllister. These awards were made within long-term incentive
income targets based upon analyses by the Company's compensation consultant.
The consultant supplements data from the Comparator Groups with broad based
survey data to develop target levels of "long-term gain opportunity" for
various levels of total compensation, with greater percentages of long term
gain opportunity attaching to higher responsibility levels. The Company's
consultant surveys a broader group of companies than those in the Comparator
Groups so as to provide a more complete analysis of competitive long-term
incentive compensation award levels.
The Company makes long-term incentive awards on an annual basis and has not
established specific stock ownership objectives for its officers. In 1994,
long-term incentive compensation awards to the Company's executive officers
were at the median of awards made by the companies included in the Comparator
Groups and the consultant's surveys. In making 1994 long-term incentive awards
the Committee also considered each officer's performance. The Committee also
considered outstanding options and shares of restricted stock previously
awarded to the executive officers. In the case of the Chief Executive Officer
the Committee also considered his performance and responsibility in
establishing the Company's strategic goals and directing all elements of its
performance.
Under the Revenue Reconciliation Act of 1993, section 162 of the Internal
Revenue Code was amended to eliminate, with certain exceptions, the deduction
for certain compensation in excess of $1 million to the Chief Executive Officer
and the four other highest paid executive officers as required to be reported
in the Company's proxy statement. This change became effective with the tax
year starting January 1, 1994. The Committee has been advised that issues under
section 162 are expected to be clarified in the future by Internal Revenue
Service regulations under the provision. The Committee has
9
<PAGE>
also noted that the nature of the Company's business, in which earnings are
affected substantially by changes in commodity market prices for the Company's
principal products, makes establishing fixed targets unresponsive to the
rapidly changing nature of the Company's business. Accordingly, the Committee
does not now plan to make changes in Asarco executive compensation programs as
a result of the provision. The Committee will continue to monitor the
development of Internal Revenue Code regulations under section 162.
Willard C. Butcher, Chairman
Harry Holiday, Jr.
James W. Kinnear
John D. Ong
----------------
10
<PAGE>
EXECUTIVE COMPENSATION
Set forth below is certain information concerning the annual and long-term
compensation for services in all capacities to the Company for fiscal years
1994, 1993 and 1992 of the Company's Chief Executive Officer and the other four
most highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------- --------------------------
SECURITIES
UNDERLYING
OPTIONS/
NAME AND RESTRICTED SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARDS(1) (SHARES) COMPENSATION(2)
------------------ ---- -------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard de J. Osborne... 1994 $725,000 $368,800 $420,750 48,000 $4,500
Chairman of the Board, 1993 725,000 -- 260,000 27,000 7,075
President and Chief 1992 687,500 125,000 180,625 21,000 6,866
Executive Officer
Francis R. McAllister... 1994 380,000 131,600 116,875 18,500 4,500
Executive Vice President 1993 389,507 -- 78,000 12,000 7,075
1992 370,713 41,100 55,250 9,000 6,866
Kevin R. Morano......... 1994 265,000 113,600 93,500 14,500 4,500
Vice President 1993 241,333 -- 35,175 5,600 7,075
1992 185,000 16,700 18,062 3,500 5,550
Robert M. Novotny....... 1994 258,000 92,600 67,787 11,000 4,500
Vice President 1993 258,000 -- 41,600 6,500 7,075
1992 244,500 26,100 31,875 5,000 6,866
Robert J. Muth.......... 1994 264,000 70,100 58,437 9,800 4,500
Vice President 1993 264,000 -- 39,000 5,800 7,075
1992 253,500 21,800 29,750 4,500 6,866
</TABLE>
- --------
(1) Dollar values of restricted stock awards are shown as of the date of grant.
The number and dollar value of shares of restricted stock holdings owned at
December 31, 1994 and still subject to restrictions are as follows: Mr.
Osborne, 34,700 shares/$988,950; Mr. McAllister, 10,260 shares/$292,410;
Mr. Morano, 6,120 shares/$174,420; Mr. Novotny, 5,740 shares/$163,590; and
Mr. Muth, 5,040 shares/$143,640. Restrictions on such shares lapse in equal
installments over five years beginning with the grant dates which occurred
during the period from April 1990 through January 1994. Dividends paid on
the shares of restricted stock are not subject to restrictions.
(2) Amounts shown reflect matching contributions made by the Company for the
named individuals under the Company's Savings Plan. The Plan is a qualified
defined contribution profit sharing plan available generally to all United
States salaried employees with six months of service with the Company.
These amounts are immediately vested and may be withdrawn subject to
certain restrictions, penalties and suspension periods.
11
<PAGE>
OPTION GRANTS
Set forth below is further information on grants of stock options and related
stock appreciation rights ("SARs") under the Company's Stock Incentive Plan for
the period January 1, 1994 to December 31, 1994. On or shortly after November
30, 1994 all the Company's officers other than Mr. Muth voluntarily surrendered
all SARs owned by them to the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS VALUE
---------------------------------------------- ----------
NUMBER OF % OF TOTAL
SHARES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTION/SARS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR PRICE $/SH DATE VALUE(2)
- ---- ----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Richard de J. Osborne 48,000 20.5% $23.75 1/26/04 $274,171
Francis R. McAllister 18,500 7.9% $23.75 1/26/04 105,670
Kevin R. Morano 14,500 6.2% $23.75 1/26/04 82,822
Robert M. Novotny 11,000 4.7% $23.75 1/26/04 62,831
Robert J. Muth 9,800 4.2% $23.75 1/26/04 55,977
</TABLE>
- --------
(1) The options and SARs were awarded under the Company's 1990 stockholder-
approved Stock Incentive Plan. The option price per share equals the fair
market value of the Company's Common Stock on the date of grant. SARs were
granted in tandem with options; therefore the exercise of one canceled the
other. The options provide for limited rights exercisable upon the occurrence
of specified events that may materially affect the value of the Company's
Common Stock and are designated as such by the Committee that administers the
Plan, including a tender or exchange offer for shares of the Company's Common
Stock, the replacement of a majority of the Board as a result of a proxy
contest, a merger or reorganization of the Company, or a liquidation or
dissolution of the Company. If an exercise event occurs, the holder is
entitled to receive the cash value of the options at the highest market value
that the shares traded over a period of sixty days preceding the event or, in
the event of the consummation of a tender offer, the tender offer price.
(2) Based on the Black-Scholes option pricing model, a widely recognized method
of valuing options. The following assumptions were used in determining the
value of the options using the model: expected volatility of 28.99% based on
actual monthly volatility for the preceding five years, risk-free rate of
return of 5.06% based on the yield of the five year U.S. treasury notes as of
the grant date, annual dividend rate of $0.72 per share based on average
dividends paid per share over the preceding ten years, and exercise of the
option five years after the grant date. The actual value, if any, an
executive may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised, so that there is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model. The model is used for valuing market
traded options and is not directly applicable to valuing stock options
granted under the Company's Stock Incentive Plan which cannot be sold.
12
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Set forth below is information concerning stock option and SAR exercises by
named executive officers during 1994, including the aggregate value of gains
on the date of exercise, the number of shares covered by exercisable options
and the value of "in-the-money" options as of December 31, 1994. All
outstanding options were exercisable at December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND DECEMBER 31, 1994 OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT YEAR OPTIONS/SARS
SHARES ACQUIRED VALUE END EXERCISABLE/ AT YEAR
NAME ON EXERCISE REALIZED UNEXERCISABLE (1) END(2)
---- --------------- -------- --------------------- ------------
<S> <C> <C> <C> <C>
Richard de J. Osborne... 1,328(3) $39,675 229,980 $837,066
Francis R. McAllister... -- -- 85,002 294,501
Kevin R. Morano......... 1,576(4) 49,053 29,550 99,733
Robert M. Novotny....... 721(4) 21,615 27,000 71,408
Robert J. Muth.......... 2,045(4)(5) 35,818 25,930 62,916
</TABLE>
- --------
(1) The above officers held no unexercisable options or SARs at December 31,
1994.
(2) Based on the New York Stock Exchange--Composite Transactions price for the
Company's Common Stock of $28 1/2 on December 30, 1994.
(3) SARs were exercised 50% for stock and 50% for cash; net share acquisition
was 664 shares.
(4) SARs were exercised 100% for cash and no shares were acquired.
(5) 1,370 shares were acquired through a stock option exercise.
13
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total return on the Company's Common Stock against the cumulative
total return of the S&P Composite-500 Stock Index and the S&P Metals
Miscellaneous Group Index for the five year period 1989 to 1994.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ASARCO INCORPORATED, S&P 500 INDEX & S&P METALS MISC. GROUP INDEX**
[GRAPH APPEARS HERE]
<CAPTION>
Measurement period S&P METALS
(Fiscal year Covered) ASARCO S&P 500 GROUP
- --------------------- --------- --------- ----------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/90 $ 96.40 $ 96.90 $ 94.99
FYE 12/31/91 $ 80.90 $ 126.42 $ 107.18
FYE 12/31/92 $ 97.56 $ 136.05 $ 114.99
FYE 12/31/93 $ 91.36 $ 149.76 $ 128.10
FYE 12/31/94 $ 115.52 $ 151.74 $ 149.57
</TABLE>
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
**ASSUMES $100 INVESTED ON 12/31/89 IN ASARCO COMMON STOCK, S&P 500 INDEX & S&P
METALS GROUP INDEX.
The preceding chart analyzes the total return on Asarco's common stock
compared to the S&P 500 and the S&P Metals Group over the five year period
commencing December 31, 1989. In the first year of this period, through
December 31, 1990, Asarco stock's return declined 3.6%, compared to declines of
3.1% and 5.0% for the S&P 500 and the S&P Metals Group, respectively. Over the
next three years returns on Asarco stock were a negative 16.1% for 1991, a
positive 20.6% for 1992 and a negative 6.4% for 1993, compared to positive
returns of 30.5%, 7.6% and 10.1% for the S&P 500 and 12.8%, 7.3% and 11.4% for
the S&P Metals Group. In 1994, Asarco's stock provided a return of 26.4%
compared to 1.3% for the S&P 500 and 16.8% for the S&P Metals Group.
RETIREMENT PLANS
The following table shows the estimated amount of annual retirement income
(calculated as a single life annuity benefit) payable to employees for life,
commencing at normal retirement at age 65 in
14
<PAGE>
1995, under the Company's qualified Retirement Benefit Plan for Salaried
Employees ("Plan"), covering substantially all salaried employees, a prior plan
of the Company and a supplemental retirement benefit plan (the "Supplemental
Plan"). Benefits are calculated using a final average earnings formula
(i.e. average of the highest consecutive 60 months of the last 120 months of
compensation received "Average Final Compensation"), minus a Social Security
offset. The Supplemental Plan is a non-qualified supplemental retirement
benefit plan under which any benefits not payable from Plan assets by reason of
the limitations imposed by the Internal Revenue Code of 1986, as amended (the
"Code") and the loss due to the deferrals of salaries made under the Company's
Deferred Income Benefit System are paid from the Company's general corporate
funds. The table assumes Social Security benefit levels as in effect on
January 1, 1995.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL RETIREMENT BENEFITS
------------------------------------------------------
AVERAGE 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
FINAL COMPENSATION OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 400,000 $ 87,667 $116,890 $146,112 $175,334 $204,557
500,000 110,167 146,890 183,612 220,334 257,057
600,000 132,667 176,890 221,112 265,334 309,557
700,000 155,167 206,890 258,612 310,334 362,057
800,000 177,667 236,890 296,112 355,334 414,557
900,000 200,167 266,890 333,612 400,334 467,057
1,000,000 222,667 296,890 371,112 445,334 519,557
1,100,000 245,167 326,890 408,612 490,334 572,057
1,200,000 267,667 356,890 446,112 535,334 624,557
1,300,000 290,167 386,890 483,612 580,334 677,057
</TABLE>
As of January 31, 1995, the following officers had completed the number of
years of service indicated opposite their names: Richard de J. Osborne, 20
years; Francis R. McAllister, 28 years; Kevin R. Morano, 16 years; Robert M.
Novotny, 6 years and Robert J. Muth, 26 years. Under the Plan and Supplemental
Plan, the amounts of covered compensation of such persons for calendar year
1994 were Richard de J. Osborne, $725,000, Francis R. McAllister, $380,000,
Kevin R. Morano, $265,000, Robert M. Novotny, $258,000 and Robert J. Muth,
$264,000 and consisted of basic salary and bonuses in the year received as
shown in the Summary Compensation Table and in prior proxy statements. Bonuses
are generally received in the year following that in which they are earned.
Messrs. Osborne, Novotny and Muth are eligible to receive additional
benefits, not included in the amounts shown in the table, under the Company's
supplemental plan for designated officers hired in mid-career (the "Mid-Career
Plan"). The Mid-Career Plan provides supplemental retirement benefits out of
the general funds of the Company for officers holding the rank of Vice
President or higher who are determined by the Organization and Compensation
Committee to have had prior business or professional experience valuable to the
Company and relevant to the positions for which they were employed by the
Company, and who at retirement or termination of employment with the consent of
the Company will have been with the Company as a Vice President or higher for
10 years or more. The Mid-Career Plan provides for annual benefits equal to 55%
of the Average Final Compensation, which amount is reduced by any benefits
payable by the Company or any other employer under any other pension plan not
attributable to the employee's contributions, and by all Social Security
benefits payable
15
<PAGE>
at the time of retirement or early termination. All benefits under the Mid-
Career Plan are forfeited by a participant who prior to attaining age 65
terminates employment with the Company without its consent. Participants in the
Supplemental Plan and the Mid-Career Plan may elect, in accordance with the
terms of the plan, to receive their benefits in a lump-sum payment at
retirement.
EMPLOYMENT AGREEMENTS
The Company has employment agreements which provide for severance payments in
certain events to Messrs. Osborne, McAllister, Morano, Novotny, Muth and six
other key executive officers. The employment agreements are for a term of one
year, renewable automatically on a year-to-year basis unless terminated by the
Company at least 60 days prior to the anniversary date, except that they
continue in effect for not less than three years following occurrence of a
change in control of the Company. If, as a result of a change in control, the
executive's employment is terminated, his responsibilities are materially
reduced, or his salary, bonus or benefits are adversely affected, the executive
is entitled to receive from the Company as severance pay one lump-sum payment
equal to the total of three times such executive's average annual base salary
and incentive compensation payments received for the higher of the three or
five years immediately preceding the date of termination or the change in
control, and the annual cost to the Company of all the benefits such executive
is entitled to receive immediately preceding the date of termination. Upon
termination by the Company after a change in control, under the agreements each
executive is also entitled to payment from the Company of the value of such
executive's stock options. The amount of the severance payment from the Company
will also include an amount necessary to reimburse each executive for any
excise taxes imposed by the Code in respect of such payments. The employment
agreements also provide that following the occurrence of a potential change in
control of the Company each executive officer will remain in the employ of the
Company for 180 days. Under the agreements, change in control as to an
executive shall not be deemed to have occurred if the event first giving rise
to the change in control involves a publicly-announced transaction or publicly-
announced proposed transaction which at the time of the announcement has not
been previously approved by the Company's Board of Directors and the executive
is part of a purchasing group proposing the transaction. Also, there is deemed
to be no change of control as to an executive if the executive is part of a
purchasing group which consummates a change in control transaction.
CERTAIN TRANSACTIONS
During 1994, the Company sold metal products to a subsidiary of MIM for an
aggregate price of approximately $2.0 million, and Southern Peru Copper
Corporation, an associated company, purchased products, services and technology
used in the refining of copper from subsidiaries of MIM for an aggregate price
of approximately $2.4 million. Norman C. Fussell, who resigned as a director of
the Company effective November 30, 1994, was Managing Director and Chief
Executive Officer of MIM during 1994.
ADDITIONAL INFORMATION
The functions of the Organization and Compensation Committee of the Board of
Directors (composed of Messrs. Willard C. Butcher, Chairman, Harry Holiday,
Jr., James W. Kinnear and John D. Ong) include making recommendations to the
Board with respect to nomination and tenure policy for directors and election
of and title changes for all corporate executive officers. The Committee
considers
16
<PAGE>
recommendations for nominees to the Board of Directors from all sources. Such
recommendations should be sent in writing to the Secretary of the Company. The
Company's By-Laws define notice procedures to be followed by stockholders
seeking to nominate directors for election. Under the By-laws, a stockholder
seeking to nominate a director for election by shareholders must give written
notice to the Secretary of the Company at least 90 days in advance of the
anniversary date of the immediately preceding annual meeting, or within 10 days
of the giving of notice of a special meeting. The notice must provide specific
biographical data with respect to each nominee, including such information as
is required to be included in the Company's proxy statement, and a
representation by the stockholder that he or she is a holder of record entitled
to vote at the meeting and that he or she intends to appear in person or by
proxy to make the nomination. Nominations for the Company's 1996 annual meeting
of stockholders must be received by January 27, 1996.
The Pension Advisory Committee of the Board of Directors (composed of Messrs.
David C. Garfield, Chairman, E. Gordon Gee, Harry Holiday, Jr., Martha T. Muse,
Michael T. Nelligan and James Wood) reviews pension fund and savings plan
matters affecting directors, officers and employees of the Company and makes
recommendations on such matters to the Board of Directors. The Committee met
two times during 1994.
The Board of Directors met nine times during 1994. All incumbent directors
attended at least 81% of the aggregate number of meetings of the Board of
Directors and of the Committees of the Board on which they served.
Directors who are not officers or employees of the Company were paid in 1994
a basic fee of $22,000 ($23,000 for 1995) plus $1,100 ($1,200 for 1995) for
attendance at each meeting of the Board or of any Committee of the Board on
which they served. The Company has a stock award plan for non-employee
directors providing for the award of 200 shares of Asarco Common Stock per
annum payable following each annual meeting to non-employee directors who
continue to serve or who are elected or reelected at such meeting, or payable
to non-employee directors who are first elected between annual meetings or at a
special meeting. The plan also allows incumbent directors to forego their award
for any year by giving irrevocable notice prior to the start of such year or,
in the case of new directors, by notice before their election.
On January 18, 1995 Messrs. Willard C. Butcher and Richard de J. Osborne were
elected directors of MIM, and Messrs. James C. Cotting and James W. Kinnear
were elected as alternate directors of MIM, as nominees of Asarco pursuant to
existing contractual provisions between MIM and Asarco. MIM pays an annual fee
of Australian $45,000 to its directors including Messrs. Butcher and Osborne.
Messrs. Cotting and Kinnear will receive $35,000 per annum from Asarco, which
at current exchange rates is comparable to the MIM directors fee, for serving
as alternate directors of MIM, since MIM does not pay fees to alternates.
Directors may defer payment of fees payable for serving on the Board or a
Committee under the Deferred Fee Plan for Directors. Deferred compensation will
be credited with interest compounded quarterly at a floating rate equal to the
prime rate charged by The Chase Manhattan Bank, N.A. from the date on which it
would normally have been paid until payment or credited with a bookkeeping
entry in shares of Asarco Common Stock. In the case of cash or stock deferrals,
the value of a participant's deferred compensation is payable, at the
participant's election, in cash in a lump sum, or in annual
17
<PAGE>
installments commencing on January 15 of any year subsequent to the fourth year
following the year in which such fees were earned. In any case, payment of the
deferred compensation will commence on January 15 of the year following
termination of services as a director. In the event of a participant's death,
the value of the participant's account is paid in a lump sum on the first
January or July 15 following the participant's death unless the participant had
elected to continue the schedule for payment of benefits previously elected.
The Retirement Plan for Non-Employee Directors is a pension plan for
directors who do not participate in other retirement plans of the Company and
its subsidiaries and have at least five years of service as a director of the
Company. Benefits are payable out of the general funds of the Company and are
calculated at the time of retirement from the Board as a percentage of the
annual retainer paid to the director. Annual benefits equal 50% of the annual
retainer for directors with at least five years of service as Asarco directors
and are thereafter increased by 10% of such annual retainer for each additional
year of service preceding retirement, until they reach a maximum of 100%. Under
Asarco's current By-Laws a director is not eligible to serve on the Board
beyond the annual meeting of stockholders next following the director's 72nd
birthday. Benefits are not payable after the death of a director. Participants
in the Retirement Plan for Non-Employee Directors may elect, in accordance with
the terms of the plan, to receive their benefits in a lump-sum payment at
retirement.
PROPOSAL TO APPROVE THE SELECTION OF AUDITORS
Upon recommendation of its Audit Committee, the Board of Directors has
selected Coopers & Lybrand to serve as independent auditors for the Company for
the calendar year 1995, subject to approval of the stockholders. The Board of
Directors recommends that the stockholders approve the selection of Coopers &
Lybrand at the annual meeting. Coopers & Lybrand and its predecessors have
served as the Company's auditors continuously since 1935. Coopers & Lybrand
have advised the Company that neither the firm nor any of its members has any
direct or material indirect financial interest in the Company or its
subsidiaries.
The Audit Committee consists of Messrs. Michael T. Nelligan, Chairman, James
C. Cotting, David C. Garfield, E. Gordon Gee and James W. Kinnear. Three
meetings were held in 1994. The functions of the Committee include recommending
the engagement of independent auditors, reviewing the fees, scope and timing of
their audit and their other services, and reviewing the audit plan and results
of the audit. The Committee also reviews the Company's policies and procedures
on internal auditing, accounting and financial controls. The implementation and
maintenance of internal controls are understood to be primarily the
responsibility of management.
A representative of Coopers & Lybrand will be present at the stockholders'
meeting. The representative will have an opportunity to make a statement and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL.
18
<PAGE>
SHAREHOLDER PROPOSAL
SHAREHOLDER PROPOSAL CONCERNING NON-EMPLOYEE DIRECTORS RETIREMENT PLAN
Mr. William Steiner of 4 Radcliff Drive, Great Neck, NY 11024, who owns
Asarco Common Stock with a market value of at least $1,000, has notified the
Company that he intends to present the following proposal at the stockholders'
meeting:
"RESOLVED, that the shareholders assembled in person and by proxy, recommend
(i) that all future non-employee directors not be granted pension benefits and
(ii) current non-employee directors voluntarily relinquish their pension
benefits."
SUPPORTING STATEMENT
Aside from the usual reasons, presented in the past, regarding "double
dipping", that is outside (non-employee) directors who are in almost all cases
amply rewarded with their pension at their primary place of employment, and in
many instances serving as outside pensioned directors with other companies,
there are other more cogent reasons that render this policy as unacceptable.
Traditionally, pensions have been granted in both the private and public
sectors for long term service. The service component usually represents a
significant number of hours per week. The practice of offering pensions for
consultants is a rarity. Outside directors' service could logically fit the
definition of consultants and pensions for this type of service is an abuse of
the term.
But more importantly, outside directors, although retained by corporate
management, namely the C.E.O., are in reality representatives of shareholders.
Their purpose is to serve as an impartial group to which management is
accountable. Although outside directors are certainly entitled to compensation
for their time and expertise, pensions have the pernicious effect of
compromising their impartiality. In essence, pensions are management's grants
to outside directors to insure their unquestioning loyalty and acquiescence to
whatever policy management initiates, and at times, serving their own self
interests. Thus, pensions become another device to enhance and entrench
management's controls over corporate policies while being accountable only to
themselves. As a founding member of the Investors Rights Association of America
I feel this practice perpetuates a culture of corporate management "cronyism"
that can easily be at odds with shareholder and company interest.
A final note in rebuttal to management's contention that many companies offer
their outside directors pensions, so they can attract and retain persons of the
highest quality. Since there are also companies that do not offer their outside
directors pensions, can management demonstrate that those companies that offer
pensions have a better performance record then their non-pensioned peers? In
addition, do we have any evidence of a significant improvement in corporate
profitability with the advent of pensions for outside directors?
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION.
STATEMENT OF THE BOARD OF DIRECTORS IN OPPOSITION TO THE PROPOSAL
The directors retirement plan is discussed above under "Additional
Information".
The Company's goal has always been to attract and retain the highest quality
individuals to serve on its Board of Directors. The significance of this goal
is based on the central position of the Board of
19
<PAGE>
Directors within the Company's management, decision-making and policy
structure. In light of the importance of Board judgments and decisions, the
Company has sought and will continue to seek and retain the best available
candidates for its Board. In order to meet that goal, it is necessary to
provide director benefits which are competitive with those provided by other
large corporations.
In January 1988 the Company engaged Sibson & Co., independent compensation
consultants, to review competitive directors' benefits practice and recommend
whether Asarco's approach at the time should be changed. Sibson & Co.
recommended that Asarco adopt its directors' retirement plan. Sibson & Co. has
recently advised the Company that today directors' retirement plans are used
extensively in large companies and that Asarco's plan provisions are consistent
with typical practice.
The Company believes that directors with long-term service add great value
due to their accumulated in-depth knowledge of the Company. The Board members
are entitled to appropriate benefits for fulfilling their obligations on a
regular basis, including receiving a pension for their long-time service to the
Company.
The affirmative vote of a majority of the votes cast at the meeting by the
holders of shares entitled to vote thereon is required to approve this
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS SHAREHOLDER
PROPOSAL AND YOUR PROXY WILL BE SO VOTED UNLESS OTHERWISE SPECIFIED.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the Company's 1996
annual meeting of stockholders must be received by the Company at its principal
executive offices (180 Maiden Lane, New York, N.Y. 10038) by November 17, 1995
in order to be considered for inclusion in the Company's proxy statement and
form of proxy.
OTHER INFORMATION
The Company is not aware of any other matters to be considered at the
meeting. If any other matters properly come before the meeting, the persons
named in the enclosed form of proxy will vote said proxy in accordance with
their judgment on such matters.
A transcript of the proceedings of the 1995 annual meeting of stockholders
will be available after June 1, 1995 to any stockholder upon request to the
Secretary, specifying a proper purpose for the request, and upon payment of
$10.00 to cover the cost of postage and reproduction.
Asarco has adopted a confidential voting policy regarding shareholder votes
at Company shareholder meetings. Under the policy, shareholders' votes are kept
confidential by an independent inspector of election, who may be the transfer
agent, except as may be necessary to meet applicable legal requirements or to
respond to written comments on proxy cards. Each proxy solicited by the Board
which identifies the vote of a specific shareholder will be treated in
accordance with this policy unless the shareholder elects not to have such vote
kept confidential. In the event of a contested solicitation, if the Company and
the opposing party can agree in writing on mutually acceptable confidentiality
20
<PAGE>
procedures which would apply to each party's solicitation, the Company agrees
to be bound by the confidentiality procedures set forth in such agreement. If
the parties do not agree on mutually acceptable confidentiality procedures, the
Company's policy on confidential voting shall not apply to the solicitation.
The Asarco confidential voting policy shall not operate to impair free and
voluntary communication between Asarco and its shareholders, including
voluntary disclosure by shareholders of the nature of their votes.
The cost of soliciting proxies in the accompanying form will be borne by the
Company. Morrow & Co., Inc. and Georgeson & Company Inc. have been employed to
solicit proxies by mail, telephone or personal solicitation for fees to be paid
by the Company of $10,000 each, plus reasonable out-of-pocket expenses. A
number of regular employees of the Company, without additional compensation,
may solicit proxies personally or by mail or telephone.
ASARCO Incorporated
A.B. Kinsolving, Secretary
New York, N.Y., March 6, 1995
21
<PAGE>
ASARCO Incorporated
P R O X Y
Proxy Solicited by Board of Directors for Annual Meeting
of Stockholders to be held April 26, 1995
The undersigned hereby appoints RICHARD DE J. OSBORNE, FRANCIS R.
McALLISTER and AUGUSTUS B. KINSOLVING, and each of them, with power of
substitution, the proxies of the undersigned to vote all the shares the
undersigned may be entitled to vote at the annual meeting of stockholders of
ASARCO Incorporated, to be held in the Ground Floor Auditorium, 1 Chase
Manhattan Plaza, New York, New York at 2 P.M., on Wednesday, April 26, 1995, and
at any adjournments thereof upon all matters specified in the notice of said
meeting as set forth on the reverse hereof, and upon such other business as may
lawfully come before the meeting.
Classified Board Election: For the nominees listed on the reverse
hereof, or such other person or persons, if any, as may be chosen to replace
unavailable nominees.
PLEASE VOTE ON ALL PROPOSALS, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued on the other side.)
ASARCO INCORPORATED
P.O. BOX 11467
NEW YORK, N.Y. 10203-0467
<PAGE>
The shares represented by this proxy will be voted as directed by the
stockholder. If a signed proxy is returned to the Company with no voting
instruction given, such shares will be voted FOR all nominees for election as
directors, FOR Proposal No. 2 and AGAINST Proposal No. 3. If you do not wish
your shares voted FOR a particular nominee, mark the Exception box and enter
the name(s) of the exception(s) in the space provided.
Class I Director Nominees: James W. Kinnear, Francis R. McAllister, Michael T.
Nelligan and John D. Ong.
Class II Director Nominee: Martha T. Muse.
Class III Director Nominee: David C. Garfield
Mark here to elect NOT to have your vote kept confidential.
Directors recommend a vote "For"
1. Classified board election:
*Exception(s):
----------------------------
For Withhold Exception*
Directors recommend a vote "For"
2. Selection of Coopers & Lybrand as independent auditors for 1995.
For Against Abstain
Directors recommend a vote "Against"
3. Shareholder proposal concerning Non-Employee Directors Retirement Plan.
For Against Abstain
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name or names appear on this proxy. If stock is held
jointly, each holder should sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate officer, please give full title.
DATED ,1995
-------------------
SIGNED
------------------------
------------------------
Votes must be indicated (X) in Black
or Blue as in this example. X
<PAGE>
ASARCO INCORPORATED
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
BECAUSE OF DELAYS IN MAIL
PLEASE SIGN AND RETURN THE
ENCLOSED PROXY EVEN IF YOU
RETURNED THE ORIGINAL
April 7, 1995
To the Stockholders of ASARCO Incorporated
A REMINDER
We have previously sent to you proxy soliciting material relating to the
annual meeting of stockholders to be held on April 26, 1995.
According to our latest records, we have not as yet received your Proxy. The
time before the meeting is short and many of our shares are held in small
amounts. Your signed Proxy will be helpful, whether your holding is large or
small, and will aid us in avoiding further expense and delay.
A Proxy and return envelope are enclosed for your use.
Thank you for your cooperation.
Very truly yours,
A.B. Kinsolving
Secretary
PLEASE ACT PROMPTLY
