<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
Cyprus Amax Minerals Company
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(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:
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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):
-------------------------------------------------------------------------
(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>
[LOGO OF CYPRUS AMAX MINERALS COMPANY APPEARS HERE]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT FOR
CYPRUS AMAX MINERALS COMPANY
To be held on Wednesday,
May 3, 1995 at 10 a.m.
in the South Mountain Ballroom
of The Pointe Hilton on South Mountain
7777 South Pointe Parkway
Phoenix, Arizona 85044
<PAGE>
NOTICE OF MEETING
The Annual Meeting of Shareholders of Cyprus Amax Minerals Company, a
Delaware corporation ("Cyprus Amax"), will be held in the South Mountain
Ballroom of The Pointe Hilton on South Mountain, 7777 South Pointe Parkway,
Phoenix, Arizona 85044 on May 3, 1995 at 10:00 in the morning (Phoenix time)
for the following purposes:
(1) electing five directors;
(2) approving the Non-Employee Directors' Deferred Compensation Plan;
(3) approving Price Waterhouse LLP to serve as independent accountants
for Cyprus Amax for the 1995 fiscal year;
(4) considering and acting upon a shareholder proposal regarding
elimination of the classified board of Cyprus Amax; and
(5) transacting such other business as properly may come before the
meeting or any adjournment thereof.
The close of business on March 6, 1995 has been fixed as the record date for
the annual meeting. All holders of common stock of record at that time are
entitled to vote at the meeting.
It is important that your stock be represented at the meeting. Whether or not
you plan to attend, please sign, date, and return the enclosed proxy promptly
in order to be sure that your shares will be voted. You may revoke your proxy
at any time before it is voted at the meeting by submitting a written
revocation or a new proxy or by attending the meeting and voting in person.
Philip C. Wolf
Senior Vice President, General Counsel
and Secretary
March 20, 1995
<PAGE>
PROXY STATEMENT
Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cyprus Amax Minerals Company ("Cyprus
Amax" or the "Company") for the Annual Meeting of Shareholders to be held on
May 3, 1995. Only holders of Cyprus Amax common stock of record at the close of
business on March 6, 1995 will be entitled to vote at the meeting, each share
of such stock being entitled to one vote. On March 20, 1995 there were
outstanding 92,651,219 shares of Cyprus Amax common stock. Assuming a quorum is
present, the affirmative vote of at least a majority of the shares of common
stock represented at the meeting, either in person or by proxy, and entitled to
vote is required to approve each of the matters presented to the shareholders.
Abstentions are counted in tabulations of votes cast at the meeting and thus
have the same effect as a negative vote, whereas shares not voted due to the
failure of a broker to exercise his discretionary authority are not tabulated
for purposes of determining whether a proposal has been approved. The proxy
statement and enclosed form of proxy are being mailed on or about March 24,
1995 to each shareholder entitled to vote at the meeting. The Annual Report to
Shareholders for the year ended December 31, 1994, which is not a part of this
proxy statement, was mailed to shareholders commencing March 13, 1995.
Properly executed proxies returned at or prior to the meeting, unless
subsequently revoked, will be voted in accordance with the directions thereon.
If no directions are specified, the shares represented by the proxy will be
voted FOR proposals 1, 2, 3, and 5 and AGAINST proposal 4. You may revoke your
proxy at any time before it is voted at the meeting by submitting a written
revocation or a new proxy to the Secretary of the Company or by attending the
meeting and voting in person. The persons named in the proxy will have
discretionary authority to vote with respect to additional matters that may
properly come before the meeting.
The entire cost of the solicitation of proxies will be borne by Cyprus Amax.
In addition to solicitation by mail, officers and regular employees of Cyprus
Amax may solicit proxies by telephone, telegraph, or personal contact.
Additional solicitation of proxies of brokers, banks, nominees, and
institutional investors will be made by Georgeson & Company Inc. at a cost to
Cyprus Amax of approximately $8,000 plus out-of-pocket expenses.
ELECTION OF DIRECTORS
Cyprus Amax's Certificate of Incorporation establishes a classified Board of
Directors with three classes of directors. At each Annual Meeting of
Shareholders, the successors to the class of directors whose terms expire at
that meeting are elected to serve as directors for a three-year term. At this
annual meeting, five directors are nominated for election to hold office until
the Annual Meeting of Shareholders in 1998 or until their successors are
elected and duly qualified.
<PAGE>
The Board of Directors has nominated William C. Bousquette, Thomas V. Falkie,
Ann Maynard Gray, Theodore M. Solso, and James A. Todd, Jr. for election to the
Board. Each nominee is currently a director of Cyprus Amax and was recommended
to the Board by the Nominating Committee.
Brief statements setting forth the principal occupations of and other
information concerning the nominees appear below.
William C. Bousquette: Senior Vice President and Chief
Financial Officer of Texaco Inc. since January 1995;
age 58. Mr. Bousquette has been a director of Cyprus
Amax since December 5, 1991 and his term will expire
at the annual meeting in 1995. Mr. Bousquette was
Executive Vice President and Chief Financial Officer
of Tandy Corporation from January 1994 until January
1995 and from November 1990 until January 1993. Mr.
Bousquette was Chief Executive Officer of TE
Electronics, a subsidiary of Tandy Corporation, from
January 1993 until January 1994. Mr. Bousquette was
Executive Vice President and Chief Financial Officer
of Emerson Electric Company from 1984 until 1990. Mr.
Bousquette is a director of O'Sullivan Industries
Holdings, Inc.
(Photo)
Thomas V. Falkie: President of Berwind Natural
Resources Corporation since 1977; age 60. Dr. Falkie
has been a director of Cyprus Amax since July 1, 1988
and his term will expire at the annual meeting in
1995. He was Director of the United States Bureau of
Mines from 1974 to 1977 and head of the Mineral
Engineering Department of Pennsylvania State
University from 1969 to 1974. Dr. Falkie is a director
of the National Coal Association and the National
Mining Association, and a member of the Governing
Council of the National Academy of Engineering.
(Photo)
Ann Maynard Gray: President of Diversified Publishing
Group, Capital Cities/ABC, Inc. since April 1991; age
49. Ms. Gray has been a director of Cyprus Amax since
November 15, 1993 and her term will expire at the
annual meeting in 1995. For more than five years prior
to 1991, Ms. Gray held various senior financial and
managerial positions within the Capital Cities/ABC,
Inc. organization. Ms. Gray is a director of Panhandle
Eastern Corporation.
(Photo)
2
<PAGE>
Theodore M. Solso: President and Chief Operating
Officer of Cummins Engine Company, Inc. since February
1995; age 48. Mr. Solso has been a director of Cyprus
Amax since November 15, 1993 and his term will expire
at the annual meeting in 1995. Mr. Solso has held
various positions with Cummins Engine Company, Inc.
since 1971. Mr. Solso is a director of Cummins Engine
Company, Inc., Cummins Engine Foundation, Irwin
Financial Corporation, and The Heritage Fund.
(Photo)
James A. Todd, Jr.: Chairman and Chief Executive
Officer of Birmingham Steel Corporation; age 66. Mr.
Todd has been a director of Cyprus Amax since October
22, 1992 and his term will expire at the annual
meeting in 1995. Mr. Todd has been Chairman of
Birmingham Steel Corporation since 1991 and Chief
Executive Officer since 1984, and was President from
1984 to 1991. Mr. Todd is a director of the National
Mining Association.
(Photo)
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION
OF WILLIAM C. BOUSQUETTE, THOMAS V. FALKIE, ANN MAYNARD GRAY, THEODORE M.
SOLSO, AND JAMES A. TODD, JR. AS DIRECTORS OF CYPRUS AMAX. Shares represented
by an executed proxy in the form enclosed will, unless otherwise directed, be
voted for the election of Ms. Gray and Messrs. Bousquette, Falkie, Solso, and
Todd. Should any of these nominees become unavailable for election for any
reason now unknown, the shares so represented will be voted for the election of
such other person or persons as the Board of Directors may recommend. The
affirmative vote of a majority of the shares represented at the meeting, either
in person or by proxy, is required to elect each director. Shares represented
at the meeting that abstain from voting as to a nominee will have the same
effect in the tabulation of votes as shares as to which authority to vote has
been withheld. Shares represented by a proxy that is executed in such a manner
as not to withhold authority are deemed to grant authority to vote for the
nominees.
3
<PAGE>
OTHER DIRECTORS
Brief descriptions of the remaining members of the Board appear below.
Milton H. Ward: Chairman, President and Chief
Executive Officer of Cyprus Amax since May 14, 1992;
Co-Chairman sinceNovember 15, 1993; age 62. His term
as a director will expire at the annual meeting in
1997. Mr. Ward served as Director, President, and
Chief Operating Officer of Freeport-McMoRan Inc. from
1983 until 1992 and Chairman and Chief Executive
Officer of Freeport McMoRan Copper & Gold Inc. from
1984 until 1992. Mr. Ward is Chairman of the Board of
Amax Gold Inc. He is a director of the National Mining
Association.
(Photo)
Allen Born: Chairman and Chief Executive Officer of
Alumax Inc. since November 15, 1993; age 61. Mr. Born
has been a director and Co-Chairman of Cyprus Amax
since November 15, 1993 and his term will expire at
the annual meeting in 1996. Mr. Born was Chairman of
AMAX Inc. from June 1988 until November 15, 1993 and
Chief Executive Officer of AMAX Inc. from January 1986
until November 15, 1993. He served as President and
Chief Operating Officer of AMAX Inc. from June 1985
through July 1991. Mr. Born is a director of AK Steel,
Alumax Inc., and Amax Gold Inc. Mr. Born also is a
director of the Aluminum Association and the
International Primary Aluminium Institute.
(Photo)
Linda G. Alvarado: President and Chief Executive
Officer of Alvarado Construction Inc. since 1981; age
43. Ms. Alvarado has been a director of Cyprus Amax
since December 14, 1989 and her term will expire at
the annual meeting in 1996. Ms. Alvarado is a director
of Engelhard Corporation, Lennox International Inc.,
Norwest Banks of Colorado, Inc., Pena Investment
Advisors, Inc., and Pitney Bowes, Inc.
(Photo)
4
<PAGE>
George S. Ansell: President of the Colorado School of
Mines since 1984; age 60. Dr. Ansell has been a
director of Cyprus Amax since December 3, 1987 and his
term will expire at the annual meeting in 1996. From
1974 to 1984 Dr. Ansell served as Dean of the School
of Engineering of Rensselaer Polytechnic Institute.
Dr. Ansell is a director of Norwest Banks of Colorado,
Inc. and OEA, Inc.
(Photo)
James C. Huntington, Jr.: Independent Businessman
since 1988; age 66. Mr. Huntington has been a director
of Cyprus Amax since November 15, 1993 and his term
will expire at the annual meeting in 1997. Mr.
Huntington was Senior Vice President, Finance and
Administration of American Standard Inc. from 1987
through August 1988. He is a director of Alumax Inc.
and Dravo Corporation.
(Photo)
Michael A. Morphy: President of MorMarketing since
1985; age 62. Mr. Morphy has been a director of Cyprus
Amax since July 1, 1985 and his term will expire at
the annual meeting in 1996. Mr. Morphy was President
and Chief Executive Officer of California Portland
Cement Company in 1981, and served as its Chairman
from 1981 through 1985. Mr. Morphy was Vice Chairman
of CalMat Co. in 1984 and 1985. Mr. Morphy is a
director of Santa Fe Energy Resources, Inc. and Santa
Fe Pacific Corporation.
(Photo)
5
<PAGE>
Ambassador Rockwell A. Schnabel: Co-Chairman Trident
Capital, L.P. and former Deputy Secretary of the
United States Department of Commerce; age 58. Mr.
Schnabel has been a director of Cyprus Amax since
February 11, 1993 and his term will expire at the
annual meeting in 1996. Mr. Schnabel served as Deputy
Commerce Secretary in 1991 and 1992; Acting Secretary
of Commerce from December 1991 to March 1992; and
Under Secretary of Commerce in 1989 and 1990. Prior to
that he served as the United States Ambassador to the
Republic of Finland from 1986 to 1989. Mr. Schnabel
was with Bateman Eichler Hill Richards, Inc.
(investment bankers--member NYSE) from 1965 to 1983,
serving as its President from 1980 to 1982. Mr.
Schnabel is a director of Amax Gold Inc. and
International Game Technology, and is President of the
Los Angeles Fire and Police Pension Board.
(Photo)
John Hoyt Stookey: Chairman of Quantum Chemical
Company, a subsidiary of Hanson P.L.C., since 1984;
age 65. Mr. Stookey has been a director of Cyprus Amax
since November 15, 1993 and his term will expire at
the annual meeting in 1997. Mr. Stookey was President
of Quantum Chemical Company from 1975 through 1993. As
Chairman of Quantum Chemical Company, Mr. Stookey
served from 1989 to 1993 as an executive officer of
Petrolane Incorporated, Petrolane Finance Corp. and
QJV Corp., affiliates of Quantum Chemical Company,
which companies were reorganized on July 15, 1993
under the U.S. Bankruptcy Code. Mr. Stookey is a
director of ACX Technologies, Inc., Chesapeake
Corporation, and the United States Trust Company of
New York.
(Photo)
Billie B. Turner: Retired Chairman, President and
Chief Executive Officer of IMC Fertilizer Group, Inc.;
age 64. He has been a director of Cyprus Amax since
October 22, 1992 and his term will expire at the
annual meeting in 1997. He served as Chairman,
President and Chief Executive Officer of IMC
Fertilizer Group, Inc. from July 1987 until 1994. Mr.
Turner held a variety of executive offices within the
IMC organization since 1954. Mr. Turner is a director
of IMC Global, Inc., International Minerals and
Chemical Corporation (Canada), and the National Mining
Association.
(Photo)
6
<PAGE>
APPROVAL OF THE NON-EMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
The Board of Directors has unanimously adopted the Non-Employee Directors'
Deferred Compensation Plan which is included in this Proxy Statement as
Appendix A (the "Deferred Compensation Plan"). The purpose of the Deferred
Compensation Plan is to enable directors to defer compensation by accruing
Cyprus Amax common stock or cash investment account balances under the Deferred
Compensation Plan. Pursuant to Section 16 of the Securities Exchange Act of
1934, the Deferred Compensation Plan may not be amended without the approval of
stockholders if the amendment would materially increase benefits accruing to
participants, materially increase the number of securities which may issue
under the Deferred Compensation Plan, or materially modify the eligibility
requirements for participants. For a review of benefits available to directors
under the Deferred Compensation Plan, please see the discussion of "Director
Compensation and Business Relationships."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
DEFERRED COMPENSATION PLAN.
APPROVAL OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of the Audit
Committee, unanimously recommends the appointment of Price Waterhouse LLP to
serve as independent accountants for Cyprus Amax for the 1995 fiscal year.
Price Waterhouse LLP has served as Cyprus Amax's independent accountants since
1985. Representatives of Price Waterhouse LLP will attend the annual meeting,
will have an opportunity to make a statement if they desire, and will be
available to respond to appropriate comments.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPOINTMENT OF
PRICE WATERHOUSE LLP TO SERVE AS INDEPENDENT ACCOUNTANTS FOR CYPRUS AMAX FOR
THE 1995 FISCAL YEAR.
SHAREHOLDER PROPOSAL RELATING TO ELIMINATION OF CLASSIFIED BOARD
Mr. John J. Gilbert, owner of 253 shares, and Margaret R. Gilbert, owner of
200 shares, and both co-trustees under the wills of Lewis D. Gilbert for 7
shares, Caston J. Gilbert for 180 shares, Minnie D. Gilbert for 364 shares, and
both representing an additional family interest of 500 shares, have informed
Cyprus Amax that they intend to propose the following resolution at the 1995
Annual Meeting. The address of Mr. and Mrs. John Gilbert will be furnished upon
request. The proposal and supporting statement, for which the Board of
Directors and Cyprus Amax accept no responsibility, are set forth below.
7
<PAGE>
The Shareholder Proposal
"RESOLVED: That the stockholders of Cyprus Amax Minerals Company, assembled
in annual meeting in person and by proxy, hereby request that the Board of
Directors take the needed steps to provide that at future elections of
directors new directors be elected annually and not by classes as is now
provided and that on expiration of present terms of directors their subsequent
election shall also be on an annual basis."
The Shareholder Reasons
"Last year ARCO, to its credit, voluntarily ended theirs stating that when a
very high percentage, 34.6%, desired it to be changed to an annual election it
was reason enough for them to change it. Several other companies have also
followed suit such as: Pacific Enterprises, Katy Industry, Hanover Direct,
Campbell Soup and others.
Because of normal need to find new directors and because of environmental
problems and the recent avalanche of derivative losses and many groups desiring
to have directors who are qualified on the subjects, we think that ending the
stagger system of electing directors is the answer. In addition, some
recommendations have been made to carry out the Valdez 10 points. The 11th, in
our opinion, should be to end the stagger system of electing directors and to
have cumulative voting.
Also, the need for having new directors to see that the post-meeting report
on the stockholders meeting is improved to include the voting results, as well
as questions and answers raised at the meeting, is another reason, in our
opinion, to end the stagger system.
Recently Equitable Life Insurance Company, which is now called Equitable
Companies, converted from a policy owned company to a public stockholder
meeting. Thanks to AXA, the comptrolling French insurance company not wanting
it they now do not have a staggered board.
The Orange and Rockland Utility Company had a terrible time with the stagger
system and its 80% clause to recall a director. The chairman was involved in a
scandal effecting the company. Not having enough votes the meeting to get rid
of the chairman had to be adjourned. Finally, at the adjourned meeting enough
votes were counted to recall him.
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain."
Board of Directors Comments
Under Cyprus Amax's current system of electing directors, approximately one-
third of the directors stand for election each year. This system provides
continuity and stability of Cyprus Amax's management and policies because a
majority of the directors at any one time will have
8
<PAGE>
prior experience as directors of Cyprus Amax and in-depth knowledge of the
Company. The Board of Directors believes that the election of new directors
every year would be disruptive to management of the Company to the detriment of
the shareholders.
This proposal seeks to disrupt a system that has proven to be very
successful. Historically, Cyprus Amax's Board members are reelected without
controversy. The Board of Directors continues to believe that this system is in
the best interests of the Company and its shareholders and that it is not
necessary or desirable to change the manner in which directors are elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE FOREGOING
PROPOSAL.
9
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of March 20, 1995, the beneficial ownership of
Cyprus Amax common stock held by each director, certain executive officers, and
all directors and officers as a group. Cyprus Amax currently has $4.00 Series A
Convertible Preferred Stock issued and outstanding, none of which is
beneficially owned by directors or executive officers.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME OF BENEFICIAL OWNER SHARES OF CLASS
------------------------ --------- --------
<S> <C> <C>
Milton H. Ward 822, 435 *
Allen Born 96,148 *
Linda G. Alvarado 2,500 *
George S. Ansell 1,875(1) *
William C. Bousquette 1,500 *
Thomas V. Falkie 5,000 *
Ann Maynard Gray 650 *
James C. Huntington, Jr. 2,500 *
Michael A. Morphy 21,513 *
Rockwell A. Schnabel 6,000 *
Theodore M. Solso 1,000 *
John Hoyt Stookey 1,000 *
James A. Todd, Jr. 3,000 *
Billie B. Turner 2,000 *
Gerald J. Malys 182,206 *
Jeffrey G. Clevenger 109,504 *
Donald P. Brown 129,959 *
Philip C. Wolf 138,257 *
All directors and officers as a group (26 persons) 1,527,047 2%
</TABLE>
--------
* Amount of class is less than one percent
(1) Dr. Ansell shares voting power with respect to 375 of these shares.
The shares shown include shares which certain persons have the rights to
acquire within 60 days through the exercise of stock options issued under the
Cyprus Amax Management Incentive Program. These shares include 541,147 for Mr.
Ward, 87,544 for Mr. Malys, 75,000 for Mr. Born, 35,900 for Mr. Clevenger,
68,044 for Mr. Brown, 82,114 for Mr. Wolf, and 1,057,571 for all directors and
officers as a group. Also included are shares held in the employee savings
plan, the Deferred Compensation Plan, and the dividend reinvestment program.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows, as of March 20, 1995, Cyprus Amax common stock
held by the only person known to Cyprus Amax to have beneficial ownership of
more than five percent of its common stock:
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------ --------- --------
<S> <C> <C>
T. Rowe Price Trust Company as Trustee of the
Company employee savings plan
10090 Red Run Boulevard
Owings Mills, MD 21117................................ 6,282,637* 7%
T. Rowe Price Trust Company and T. Rowe Price
Associates, Inc., for other funds and individual
accounts
10090 Red Run Boulevard Less
Owings Mills, MD 21117................................ 418,229 than 1%
</TABLE>
--------
* As to all of these shares, the Trustee has shared voting power and shared
investment power. In light of rights given to the participants under the
employee savings plan, the participants may be beneficial owners of some or
all of the 3,245,371 shares (3.5 percent of the class) held by the Trustee
that have been allocated to the participants' accounts.
DIRECTOR COMPENSATION AND BUSINESS RELATIONSHIPS
Director compensation. Directors who are not employees of Cyprus Amax receive
an annual retainer of $25,000, a $1,000 fee for attendance at Board meetings,
and a $750 fee for attendance at committee meetings and at other meetings at
which their attendance is requested by Cyprus Amax. In addition, for meetings
at which such person chairs, the chairman of the Nominating Committee receives
an additional $250, the chairman of the Employee Funds Investment Committee
receives an additional $500, and the chairmen of the Audit and Compensation and
Benefits Committees each receive an additional $5,000 per year or $500 per
meeting, whichever is greater. All directors are reimbursed for expenses
incurred in attending Board and committee meetings.
The Company sponsors the Deferred Compensation Plan under which any director
who is not an employee of the Company may elect to defer all or a portion of
his or her director fees and related compensation. The following discussion is
qualified in its entirety by the terms of the Deferred Compensation Plan, and
shareholders are encouraged to review the full text of the Deferred
Compensation Plan found in Appendix A. Amounts deferred under the Deferred
Compensation Plan are credited to a participant's account, at the election of
the participant, in the form of a right to receive shares of the Company's
common stock at the closing market price on the Composite Tape of the New York
Stock Exchange on the date such participant would have received such
compensation had a deferral election not then been in effect, or the right to
receive the cash value of an investment of a participant's deferred
compensation into a specific investment fund.
11
<PAGE>
Under the Deferred Compensation Plan, each non-employee director may elect,
prior to the beginning of a calendar year, to defer all or a portion of his or
her director fees and related amounts to be paid for such year. Amounts
deferred are credited to the participating director's account as a future right
to receive either shares of the Company's common stock or cash. A participating
director may revoke or change his or her deferral election for a future
calendar year if such revocation or change is made at least six months prior to
the effective date of the change, if the deferral is credited as Company common
stock, or by the preceding December 31, if the deferral is credited as cash.
If the deferral is credited as Company common stock, the participating
director's account is credited with the right to additional shares as and to
the extent dividends are paid on the Company's common stock, or if the deferral
is credited as cash, the account is adjusted as and to the extent there is a
change in the value (including earnings) of the investments selected by the
director. Accounts credited with the right to receive Company common stock may
be adjusted to compensate for changes in the capital structure of the Company,
and all accounts are payable on an accelerated basis in the event of a Change
in Control.
A distribution will be made to a participant upon termination of his or her
directorship or, if he or she so elects, on any January 1 occurring thereafter.
Such distribution will consist of (1) the number of whole shares credited to
his or her account on the date of such distribution and a cash payment for any
fractional shares or (2) cash. Of the 13 non-employee directors, Allen Born,
Ann Maynard Gray, Michael A. Morphy, Rockwell A. Schnabel, Theodore M. Solso,
John Hoyt Stookey and James A. Todd, Jr. have elected to participate in the
Deferred Compensation Plan. From June 1994 through March 1995, the total Cyprus
Amax shares credited to each participant's account was as follows: 0 for Mr.
Born, 668 for Ms. Gray, 0 for Mr. Morphy, 865 for Ambassador Schnabel, 865 for
Mr. Solso, 236 for Mr. Stookey, and 882 for Mr. Todd.
In May 1992 the shareholders approved the Stock Plan for Non-Employee
Directors. Under this plan as subsequently amended by the Board of Directors,
on July 1 of each year each director who is not on that date an employee of
Cyprus Amax is granted 500 shares of Cyprus Amax common stock, until a maximum
of 35,000 shares in the aggregate have been granted to all non-employee
directors. As of March 20, 1995, a total of 15,500 shares had been granted to
13 directors.
In February 1991 the Board of Directors adopted a retirement policy for the
directors, establishing a retirement age of 70 for non-employee directors and
65 for employee directors. The policy provides that no individual shall be
nominated, appointed, or elected to serve as a director for any period which
would commence after such individual attains retirement age. Any director who
reaches retirement age while serving a term as director may continue to serve
until the first annual meeting following his or her attainment of retirement
age.
12
<PAGE>
Effective 1990 Cyprus Amax adopted a non-qualified retirement plan for non-
employee directors. The annual benefit payable upon retirement is an amount
equal to the annual retainer which the eligible director received or would have
received during the calendar year in which that director ceased to serve as a
director. The benefits are payable for the life of the eligible director after
the later of retirement from the Board or attainment of age 65.
Certain business relationships. Under a consulting agreement in effect from
November 1993 through November 1996, Mr. Born will receive payment at the rate
of $300,000 per year from Cyprus Amax. Under that agreement Mr. Born agrees to
serve as Co-Chairman of the Cyprus Amax Board and Chairman of its Executive
Committee for two years from November 15, 1993 and thereafter to serve for the
balance of his current term as Vice Chairman of the Cyprus Amax Board. Mr. Born
also agrees to serve as a consultant to Cyprus Amax by rendering services as
requested. Such services may include review, advice, and counsel on
organizational and operational matters, investment proposals, investor and
shareholder relations matters and other specific matters as requested. Mr. Born
is expected to spend such time as reasonably is required to perform the
services requested of him.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings in 1994.
The Executive Committee, which met two times in 1994, has as its members
Allen Born (Chairman), Linda G. Alvarado, George S. Ansell, Theodore M. Solso,
Billie B. Turner, and Milton H. Ward. The committee has and may exercise all of
the powers of the Board when the Board is not in session but may not take any
action that legally may be taken only by the Board.
The Audit Committee, which met two times in 1994, has as its members William
C. Bousquette (Chairman), Linda G. Alvarado, Rockwell A. Schnabel, Theodore M.
Solso, John Hoyt Stookey, and James A. Todd, Jr., none of whom is an officer or
employee of Cyprus Amax. The committee reviews audit examinations and annual
financial reports and statements, as well as internal controls and results of
internal auditing activities. It reviews in advance the engagement or discharge
of independent accountants, the scope of their work, and the fees for all
services provided.
The Compensation and Benefits Committee, which met four times in 1994, has as
its members Thomas V. Falkie (Chairman), George S. Ansell, Ann Maynard Gray,
James C. Huntington, Jr., Michael A. Morphy, and Billie B. Turner. The
committee oversees benefit plans and annual performance and merit increase
budgets. The committee also administers the Amended and Restated Management
Incentive Program, which includes stock option and restricted stock provisions,
and the Key Executive Long-Term Incentive Program, and approves bonus pools and
officer bonuses granted pursuant to the Bonus Incentive Program.
13
<PAGE>
The Employee Funds Investment Committee, which met two times in 1994, has as
its members Michael A. Morphy (Chairman), Linda G. Alvarado, George S. Ansell,
William C. Bousquette, Ann Maynard Gray, and James C. Huntington, Jr. The
committee reviews the investment and performance of benefit plan trust funds
and the selection and performance of benefit plan trust fund managers and
oversees the funding arrangements and investment performances of salaried and
hourly pension plans.
The Nominating Committee, which met one time in 1994, has as its members
Milton H. Ward (Chairman), Allen Born, Thomas V. Falkie, Michael A. Morphy,
Rockwell A. Schnabel, John Hoyt Stookey, and James A. Todd, Jr. The committee
reviews and makes recommendations concerning the qualifications of individuals
for election to the Board and recommends appointments to all Board committees.
The committee also reviews the performance of Board members and reviews and
approves the acceptance of directorships and trusteeships offered to senior
officers of Cyprus Amax or its subsidiaries by other corporations, banks, or
educational institutions.
The Nominating Committee does not consider individuals nominated by
shareholders for election to the Board. However, under the By-Laws, nominations
for the election of directors may be made by any shareholder entitled to vote
in the election of directors generally, but only if written notice of such
shareholder's intent to make such nominations has been received by the
Secretary of Cyprus Amax at 9100 East Mineral Circle, Englewood, Colorado 80112
not later than (i) with respect to an election to be held at an annual meeting
of shareholders, 90 days prior to the anniversary date of the immediately
preceding annual meeting, and (ii) with respect to an election to be held at a
special meeting of shareholders for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first given to shareholders. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the shareholder is a
holder of record of stock of Cyprus Amax entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person
or persons specified in the notice; (c) the number of shares of Cyprus Amax
owned of record and beneficially by the shareholder; (d) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (e) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (f) the consent of each nominee
to serve as a director of Cyprus Amax. The presiding officer of the meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
14
<PAGE>
CUMULATIVE SHAREHOLDER RETURN
The following graph shows a five-year comparison of cumulative total
shareholder returns for Cyprus Amax common stock, the S&P 500 Index, and the
stocks for peer companies (weighting the returns of these peer companies based
on stock market capitalization as of the beginning of the period). The peer
companies selected by Cyprus Amax for this Proxy Statement were Asarco, Inc.;
Ashland Coal Company; Cleveland Cliffs Inc.; Cominco Ltd. ("Cominco");
Freeport-McMoRan, Inc.; Magma Copper Company; Noranda Inc. ("Noranda"); and
Phelps Dodge Corporation. Noranda is traded on the Toronto Stock Exchange in
Canadian currency which was translated into U.S. dollars on a quarterly basis.
Cumulative total shareholder return (on an assumed initial investment of $100
at December 31, 1989), as determined at the end of each year, reflects the
change in stock price, assuming reinvestment of dividends.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG CYPRUS AMAX, PEER INDEX AND S&P 500 INDEX
<TABLE>
<CAPTION>
Measurement period CYPRUS PEER S&P 500
(Fiscal Year Covered) AMAX INDEX INDEX
<S> <C> <C> <C>
Measurement PT -
12/31/89 $ 100.0 $ 100.0 $ 100.0
FYE 12/31/90 $ 72.0 $ 94.0 $ 97.0
FYE 12/31/91 $ 93.0 $ 113.0 $ 126.0
FYE 12/31/92 $ 131.0 $ 133.0 $ 136.0
FYE 12/31/93 $ 111.0 $ 146.0 $ 149.0
FYE 12/31/94 $ 115.0 $ 169.0 $ 151.0
</TABLE>
15
<PAGE>
In early 1992 the Company made significant management and strategic changes.
In May 1992 Milton Ward was elected Chairman, President and Chief Executive
Officer and the Company launched a major effort to invest capital to increase
production, improve productivity, and reduce costs at its existing operations
and to grow the Company through mergers and acquisitions. The following three-
year graph is consistent with the above five-year graph except that it assumes
an initial investment at December 31, 1991. The Company believes this graph is
"a better representation" of company performance under the current management
group.
In each of the three years shown, the Company has outperformed the S&P 500
Index and, through the effort described above, significantly outperformed its
peer group in 1992. The stock price performance in 1993 reflects the effect of
the merger with AMAX Inc. which closed on November 15, 1993 and resulted in the
issuance of 44.4 million shares of common stock and 4.7 million shares of
preferred stock, almost doubling total outstanding shares.
The merger and the remaking of the Company is proceeding very well and,
although 1994 performance lagged that of the peer group, current development
and growth projects have positioned the Company for improved performance in
future years.
[GRAPH APPEARS HERE]
COMPARISON OF THREE-YEAR CUMULATIVE RETURN
AMONG CYPRUS AMAX, PEER INDEX AND S&P 500 INDEX
<TABLE>
<CAPTION>
Measurement period CYPRUS PEER S&P 500
(Fiscal year Covered) AMAX INDEX INDEX
<S> <C> <C> <C>
Measurement PT -
12/31/91 $ 100.0 $ 100.0 $ 100.0
FYE 12/31/92 $ 142.0 $ 117.0 $ 108.0
FYE 12/31/93 $ 120.0 $ 131.0 $ 118.0
FYE 12/31/94 $ 125.0 $ 152.0 $ 120.0
</TABLE>
16
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors
("Committee") reviews the Company's executive compensation programs each year,
determines the compensation of the Chief Executive Officer ("CEO") and reviews
and approves the CEO's recommendations for the compensation of the other senior
executives of the Company. In 1994 the number of Committee members increased
from four directors to six directors, none of whom is an employee or an officer
of Cyprus Amax.
The executive compensation programs consist of annual compensation and long-
term incentive plans. The overall objectives are to attract and retain the best
executive talent, to focus executive behavior on achieving the Company's annual
and long-term business objectives, to link executive and shareholder interests
through equity-based plans, and to provide a compensation package that rewards
financial and individual performance.
For the past three years, the Company has retained a compensation consultant
to review its executive compensation programs. This annual review permits an
ongoing evaluation of the link between the Company's performance and its
executive compensation as compared to the compensation programs of other
companies that compete with the Company for executive talent. These competitors
include some of the same companies represented in the Total Shareholder Return
graphs on pages 15 and 16 as well as other companies similar in size to the
Company.
The pay strategy for the key executive group has been in place for three
years. This strategy provides for total cash compensation (salary and bonus)
targeted at competitive market medians, with total compensation (including
stock options, restricted stock, and performance-vested restricted stock with
deferred cash incentive awards) designed to provide above average rewards for
superior performance. The target pay strategy(1) has been:
. Base salaries are targeted at 90 percent of the competitive market
median, or approximately the 40th percentile, with variations occurring
due to individual performance.
. Annual cash compensation (salary plus bonus) is targeted at the
competitive market median, or approximately the 50th percentile.
. Total compensation (salary plus annual bonus and long-term incentives)
is targeted at 130 percent of the competitive market median, or
approximately the 75th percentile.
--------
(1) During 1995 the Company is reviewing its pay strategy and executive
compensation programs.
17
<PAGE>
In assessing the performance and determining the 1994 compensation of the CEO
as well as reviewing and approving the CEO's recommendations for the 1994
compensation of other senior executives, the Committee considered management's
strategic, operational, and financial accomplishments. These include 1994
results with earnings of $175 million compared with 1993 earnings of $100
million. The 1994 results were the highest since 1989, with all of the
Company's major businesses of copper, molybdenum, coal, and lithium showing
significant improved productivity and cost reductions.
Integration of the merged Cyprus Minerals Company ("Cyprus") and AMAX Inc.
("Amax") operations was completed during the year and the results were
excellent. As a result of the merger and other actions taken, Cyprus Amax's
workforce was reduced by approximately 2,000 personnel and the Company realized
about $200 million in annual savings. In addition, the merger and restructuring
have created efficient, low-cost operations with significant cash flow
generating capabilities. As a result of these improvements and the Company's
ability to raise approximately $1.3 billion from the sale of non-core assets,
the Company's financial strength has significantly improved and has made it
possible to acquire two world-class copper operations, El Abra in Chile and
Cerro Verde in Peru.
As a result of the above, Cyprus Amax has become one of the world's leading
mining companies, the second largest producer of copper and coal in the United
States, and the world's leading largest producer of molybdenum and lithium. The
Company also holds a substantial position in gold.
The significant achievements made in combining and reengineering Cyprus and
Amax along with the continued cost and productivity improvement programs has
well positioned Cyprus Amax in the strong markets it currently is enjoying and
for profitable growth which should lead to improved shareholder return. As an
indication to its shareholders of the progress which has been made, the Company
paid a special 10 cent per share dividend in December 1994.
The Committee also takes into account the requirements of employment
agreements between the Company and certain executives. See "Executive
Compensation--Employment Contracts".
Base Salary. As in previous years, the Committee reviewed the competitive
market data provided by outside compensation consultants. Base pay levels for
the executive officers are competitive within a range (discussed above in the
target pay strategy) that the Committee considers to be reasonable and
necessary to attract and retain the best available talent. The executives named
in the Summary Compensation Table ("Named Executives"), excluding the CEO,
received average base salary increases of 8.2 percent, ranging from a low of
4.7 percent to a high of 10.9 percent.
Bonus Incentive Program. The Bonus Incentive Program for 1994 was a
discretionary program. The Committee adopted this approach because the merger
of Cyprus and Amax had
18
<PAGE>
taken place in late 1993 and the Company was still in a transition phase. As a
result, the Committee used its discretion based on recommendations from the CEO
as well as the Company's performance as described above.
For the Named Executives, excluding the CEO, the awarded bonuses ranged from 56
percent to 91 percent of base salary.
Long-Term Incentive Programs. The Long-Term Incentive Programs have two
components: (1) stock options and restricted stock which are awarded under the
Amended and Restated Management Incentive Program and (2) restricted stock and
deferred cash incentive awards which are awarded under the Key Executive Long-
Term Incentive Plan.
1. Amended and Restated Management Incentive Program: Granting of stock
options and restricted stock under the Amended and Restated Management
Incentive Program is designed to link the interests of key employees
(204 participants in 1994) with those of the shareholders. Stock options
are granted with an exercise price equal to the fair market value of the
common stock on the date of grant and vest at the end of two years.
Granting of stock options promotes the creation of shareholder value
since the benefit cannot be realized unless stock price appreciation
occurs. Grants of restricted stock have been awarded to a limited number
of employees upon employment as an important long-term retention device.
The shares cannot be transferred until they vest, with vesting occurring
in four equal annual installments.
2. Key Executive Long-Term Incentive Plan: The Key Executive Long-Term
Incentive Plan provides for awards of restricted stock. The restriction
period is ten years from the date following the grant but restrictions
may lapse on an accelerated basis at the end of the third, fourth,
fifth, or sixth calendar years if total shareholder return exceeds the
median performance of certain peer mining companies (which are the
companies defined on pages 15 and 16 as the Peer Group). In this event,
executives will also receive a deferred cash incentive award equal to
the value of the shares for which restrictions have lapsed valued at the
stock price on the day the stock was awarded multiplied by the
applicable tax rate in effect when the shares vested. The awards made in
1994 were primarily based on an assessment of the competitive market
data and the pay strategy adopted in 1992, recommendations of the CEO,
and the Committee's assessment of individual as well as business unit
performance. The Named Executives, excluding the CEO, received awards
ranging from 7,835 shares to 11,075 shares.
Compensation of Co-Chairman, President and Chief Executive Officer. In
determining the compensation to be awarded to Mr. Ward for his services to the
Company as Co-Chairman of the Board, President and Chief Executive Officer, the
Committee considered a number of factors. The Committee first took into account
the employment agreement between the Company and Mr.
19
<PAGE>
Ward under which Mr. Ward is to receive a minimum base salary and bonus
targeted at 100 percent of base salary. The Committee also recognized the
significant progress made during 1994, the first full year following the merger
with AMAX Inc., toward the attainment of the Company's strategic long-term
goals under the leadership of Mr. Ward. Further, the Committee noted that Mr.
Ward is an excellent representative of the Company to the public by virtue of
his stature in the community and industry. In light of these extraordinary
achievements, the Committee believed that an award to Mr. Ward of compensation
in excess of the targeted amount was warranted.
The Committee awarded to Mr. Ward a bonus of 121 percent ($1 million) of his
base salary and 40,000 shares of restricted stock under the Key Executive Long-
Term Incentive Plan. Also, Mr. Ward's base salary was increased by 10 percent,
from $750,000 to $825,000, a portion of which is reimbursed to Cyprus Amax from
Amax Gold Inc. for Mr. Ward's salary and benefits for services he provided to
Amax Gold Inc. during 1994.
Committee Policy Regarding Compliance with Section 162(m) of the Internal
Revenue Code. The 1993 Omnibus Budget Reconciliation Act ("OBRA") became law
in August 1993 for compensation earned in 1994 and later. Under the new law,
income tax deductions of publicly-traded companies may be limited to the extent
total compensation (including base salary, annual bonus, restricted stock
awards, stock option exercises, and non-qualified benefits) for certain
Executive Officers exceeds $1 million in any one year. Under OBRA the deduction
limit does not apply to payments which qualify as "performance based". To
qualify as "performance based", compensation payments must be made from a plan
that is administered by a Committee of outside directors based on achieving
performance goals. In addition, the material terms of the plan must be
disclosed to and approved by shareholders, and the Committee must certify that
the performance goals were achieved before payments can be awarded.
When final regulations are issued, the Committee will review those
regulations and determine the feasibility of designing compensation programs to
conform with the OBRA legislation and related regulations so that total
compensation paid to any employee generally will not exceed $1 million in any
one year, except for compensation payments in excess of $1 million which
qualify as "performance based". In 1994 the Company paid Mr. Ward compensation
in excess of $1 million in recognition of the substantial achievements made by
the Company under his leadership.
Thomas V. Falkie, Chairman
George S. Ansell
Ann Maynard Gray
James C. Huntington, Jr.
Michael A. Morphy
Billie B. Turner
20
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth information for the years indicated concerning
the compensation of the Co-Chairman, President and Chief Executive Officer and
each of the four other executives as of year-end 1994 who were the most highly
compensated during 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------- --------------------
RESTRICTED
NAME AND OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARD($)(1) SARS(#) COMPENSATION($)(2)
------------------ ---- ---------- ---------- ---------------- ----------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Milton H. Ward 1994 $601,919(3) $1,000,000 $ 0 $1,230,000 0 $ 5,050
Co-Chairman, 1993 747,413 1,500,000 531,079 4,032,806 514,588 15,280
President and Chief 1992 480,069 522,000 628,888 495,000 300,000 12,945
Executive Officer
Gerald J. Malys 1994 255,366 250,000 0 340,556 0 4,798
Senior Vice President 1993 247,604 200,000 199,155 1,657,740 78,176 7,190
and Chief Financial 1992 248,371 75,000 0 0 13,000 7,949
Officer
Jeffrey G. Clevenger 1994 237,946 165,000 163,783(4) 289,358 0 4,770
Senior Vice 1993 226,907 150,000 450,280(4) 1,046,708 53,600 6,921
President, Copper 1992 76,658 35,000 253,905(4) 0 0 0
Donald P. Brown(5) 1994 222,211 130,000 0 241,787 0 924,797(5)
Former Senior Vice 1993 212,725 100,000 139,408 1,172,146 57,044 2,855
President, Coal 1992 212,150 53,000 0 0 11,000 6,790
Philip C. Wolf 1994 217,440 125,000 0 240,926 0 4,460
Senior Vice 1993 208,509 105,000 139,408 1,114,189 51,456 6,361
President, General 1992 212,150 48,000 0 0 11,000 6,790
Counsel and Secretary
</TABLE>
--------
(1) Awards were made under the Key Executive Long-Term Incentive Plan in
February 1994. Amounts shown in the table reflect the fair market value (as
defined) of the stock on the date of the award. The actual value an
executive may realize will depend upon the amount of the stock in respect
of which restrictions lapse and the value realized, which may be greater or
less than this amount. As of the end of fiscal 1994, the aggregate
restricted stock holdings of the Named Executives was 405,947 shares with a
fair market value of $10,605,365 based on the closing price of Cyprus Amax
common stock of $26.125 per share on December 30, 1994. Such holdings
include $4,867,610 (186,320 shares) for Mr. Ward; $1,890,379 (72,359
shares) for Mr. Malys; $1,235,556 (47,294 shares) for Mr. Clevenger;
$1,339,664 (51,279 shares) for Mr. Brown; and $1,272,157 (48,695 shares)
for Mr. Wolf. Restrictions on 43,416 shares of restricted stock lapsed as a
result of Mr. Brown's termination of employment, although
21
<PAGE>
Mr. Brown will continue as a participant in the Key Executive Long-Term
Incentive Plan to the extent of the 7,863 shares of restricted stock he
holds.
(2) The amounts shown are the employer contributions to the employee savings
plan. For 1994, the maximum recognizable compensation for purposes of
calculating employer contributions was reduced from $235,840 to $150,000
based on IRS regulations.
(3) Does not include $211,611 reimbursed to Cyprus Amax by Amax Gold Inc. for
Mr. Ward's salary and benefits for services he provided to Amax Gold Inc.
during 1994.
(4) Mr. Clevenger joined Cyprus Amax in August 1992. The amounts shown reflect
compensation intended to replace benefits forfeited by Mr. Clevenger when
he left his previous employment and includes $163,783 as the value of stock
options that would have vested in 1994, $310,872 as the value of stock
options that would have vested in 1993, and $253,905 as the value of stock
options that would have vested in 1992. It was agreed that Mr. Clevenger
would receive such benefits for the years 1992, 1993, and 1994.
(5) Mr. Brown resigned at year-end 1994. The amount shown reflects $920,063 of
accrued severance payments in connection with Mr. Brown's termination of
employment and $4,734 of employer contributions to the employee savings
plan.
22
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/STOCK APPRECIATION RIGHT ("SAR") VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
---------------------- --------------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
---- ------------ ------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Milton H. Ward 0 $ 0 541,147 / 273,441 $399,447 / 17,090
Co-Chairman, President
and Chief Executive Of-
ficer
Gerald J. Malys 0 0 87,544 / 28,632 61,160 / 1,790
Senior Vice President
and Chief Financial
Officer
Jeffrey G. Clevenger 0 0 35,900 / 17,700 369 / 1,106
Senior Vice President,
Copper
Donald P. Brown(2) 20,000(2) 119,250 47,761 / 20,283 423 / 1,268
Former Senior Vice
President, Coal
Philip C. Wolf 0 0 82,114 / 19,092 129,101 / 1,193
Senior Vice President,
General Counsel and
Secretary
</TABLE>
--------
(1) Amounts shown in this column represent the market value of the underlying
Cyprus Amax common stock at year end minus the exercise price. The actual
value, if any, an executive may realize will depend upon the amount by
which the market price of Cyprus Amax common stock exceeds the exercise
price when the options are exercised. The actual value, therefore, may be
greater or less than the value shown in the table.
(2) Mr. Brown resigned at year-end 1994. Mr. Brown exercised SARs in respect of
20,000 options and received 2,011 shares of Cyprus Amax common stock,
valued at the fair market value of the common stock on the exercise date
minus the exercise price, and $59,674 in cash.
Employment Contracts. In 1994 Cyprus Amax entered into an employment contract
with Mr. Ward. The contract, which will expire on August 1, 1997, establishes a
base salary and target cash bonus and provides that Mr. Ward is eligible to
participate in employee benefit programs. Mr. Ward covenants to fulfill his
assigned duties and to avoid activities adverse to Cyprus Amax's interests both
during and after the contract term. Cyprus Amax retains the right to terminate
the
23
<PAGE>
employment upon 30 days' notice. If employment is terminated other than due to
breach of covenant (or retirement or resignation in certain circumstances), Mr.
Ward would be entitled to a lump sum payment equal to salary and bonus for the
remainder of the contract period plus the actuarial equivalent of supplemental
retirement benefits and welfare benefits for retirees. If permitted by
applicable laws and plan provisions, Mr. Ward could be entitled to receive the
value of any previously awarded restricted shares and a three-year period to
exercise previously granted stock options.
In November 1993 Cyprus Amax entered into agreements (the "Agreements") with
Gerald J. Malys, Jeffrey G. Clevenger, Donald P. Brown, Philip C. Wolf and two
other executive officers. Pursuant to the Agreements, each executive was
granted options and restricted stock with a fair market value equal to the
severance and other benefits they would have received under their prior
employment arrangements in the event of a termination of employment. The
restricted stock and stock options vest ratably over a four-year period with
accelerated vesting in the event of an involuntary termination without Cause, a
termination by the executive for Good Reason or by reason of death, Retirement
or Disability, or in the event of a Change of Control (as such terms are
defined in the Agreements). Upon an involuntary termination without Cause, or a
termination by the executive for Good Reason or by reason of death, or
Disability, the executive will be entitled to a cash payment equal to the
actuarial equivalent of the excess of a full retirement benefit and the
retirement benefit to which he is actually entitled and will be eligible for
retiree welfare benefits. The executives will also receive an additional
payment to make them whole for any excise tax imposed by Section 4999 of the
Internal Revenue Code imposed upon the foregoing payments.
Cyprus Amax also entered into Change of Control employment agreements with
Milton H. Ward, Gerald J. Malys, Jeffrey G. Clevenger, Donald P. Brown, Philip
C. Wolf and two other executive officers (the "Employment Agreements"). The
Employment Agreements become effective upon a Change of Control (as defined
therein). If the executive is terminated other than for Cause or if the
executive terminates employment under enumerated circumstances which constitute
Good Reason (as such terms are defined in the Employment Agreements) or for any
reason during the 30-day period following the first anniversary of the Change
of Control, the executive will become entitled to a specific severance payment
equal to three times the executive's yearly salary and bonus. The Employment
Agreements provide that if any payment made pursuant to the Employment
Agreements or otherwise would subject the executive to an excise tax under
Section 4999 of the Internal Revenue Code, the executive would receive an
additional payment so that after receipt of the payment the executive would be
in the same after-tax position as that in which he would have been had such
payments not been subject to such excise tax.
In February of 1994, Cyprus Amax adopted the Executive Officer Separation
Policy ("the Policy"). Gerald J. Malys, Jeffrey G. Clevenger, Donald P. Brown,
Philip C. Wolf, and five other executives ("Participants") were covered under
this Policy. Separation benefits are payable to the Participants if employment
is terminated in circumstances as described in the Policy. The
24
<PAGE>
separation benefits payable to Participants shall be equal to one year of the
Participant's base salary plus the Participant's target annual bonus. The
Participant shall also be eligible for a pro rata bonus for the year of
termination at the discretion of the Committee. The Participant shall be
entitled to outplacement services provided by a firm of the Participant's
choice at a cost to Cyprus Amax of up to 15 percent of the Participant's then
current base salary plus annual bonus. Commencing upon termination, the
Participant also shall be entitled to receive medical benefits (excluding
dental) and life insurance for one (1) year following date of termination. The
Policy provides that anyone who is a participant in another agreement or
arrangement which, upon termination, will provide benefits similar to those
under the Policy, shall not be entitled to those benefits under the Policy.
The amounts paid to Cyprus Amax's executives under employment contracts and
the Separation Policy are included in the Summary Compensation table above.
RETIREMENT PLANS
The Retirement Plan for Salaried Employees of Cyprus Amax (the "Retirement
Plan") covers executives and most other salaried employees. The amount of
annuity a retiring employee will receive on a single-life basis is determined
under the formula set forth below. Upon retirement, a married employee receives
a reduced annuity payment that continues after death to cover the surviving
spouse, unless the employee and the spouse elect one of the alternate options
of equivalent actuarial value.
If an employee retires on the normal retirement date (the later of age 65 or
the fifth anniversary of the date participation commenced) the annual benefit
payable from the Retirement Plan will be the sum of: (i) 1.7 percent of average
annual earnings (base salary plus bonus) received by the employee for service
during each year after 1994, plus (ii) 1.7 percent of the employee's average
annual earnings from 1990 through 1994 multiplied by the employee's pre-1995
years of service recognized by Cyprus Amax for retirement plan benefit accrual
purposes, less (iii) 1.1 percent of the Social Security offset multiplied by
the total years of service as of December 31, 1994, not to exceed 35 years
recognized for Cyprus Amax plan purposes.
The estimated annual benefits payable upon retirement at normal retirement
age are $146,026 for Milton H. Ward; $188,169 for Gerald J. Malys; $150,838 for
Jeffrey G. Clevenger; $184,957 for Donald P. Brown; and $171,645 for Philip C.
Wolf. The foregoing estimates are based on actual covered pay for 1990-1994 and
1994 base salary and bonus for years after 1994 and do not reflect the impact
of future salary increases.
The five-year period 1990 through 1994 currently used in the benefit formula
described above may be rolled forward by Cyprus Amax's Board of Directors. The
table below provides information
25
<PAGE>
on retirement benefits (subject to reduction by a percentage of Social Security
benefits), assuming that the formula is applied to average annual remuneration
during the five years prior to retirement:
<TABLE>
<CAPTION>
ASSUMED
FIVE-YEAR
AVERAGE YEARS OF BENEFIT SERVICE
ANNUAL --------------------------------------------------------------
EARNINGS 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------- ------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 275,000 23,375 46,750 70,125 93,500 116,875 140,250 163,625
375,000 31,875 63,750 95,625 127,500 159,375 191,250 255,000
475,000 40,375 80,750 121,125 161,500 201,875 242,250 282,625
575,000 48,875 97,750 146,625 195,300 244,375 293,250 342,125
975,000 82,875 165,750 248,625 331,500 414,375 497,250 580,125
1,275,000 108,375 216,750 325,125 433,500 541,875 650,250 758,625
1,575,000 133,875 267,750 401,625 535,500 669,375 803,250 937,125
1,875,000 159,375 318,750 478,125 637,500 796,875 956,250 1,115,625
</TABLE>
The amounts above are payable upon retirement between ages 62 and 65. The
later of age 65 or the fifth anniversary of the date participation commenced is
normal retirement age. For retirement below age 62, the annual annuity amounts
are reduced as provided in the Retirement Plan. At year-end 1994, the following
executives had accumulated the years of benefit service stated (excluding
additional years under the unfunded non-qualified plan described below): Milton
H. Ward, 2 years; Gerald J. Malys, 9 years; Jeffrey G. Clevenger, 2 years;
Donald P. Brown, 0 years; Philip C. Wolf, 14 years. The Employee Retirement
Income Security Act of 1974, as amended by the Tax Equity and Fiscal
Responsibility Act of 1982 and the Tax Reform Act of 1986, limits the benefits
payable from any funded retirement plan that qualifies for federal tax
exemption. The estimated annual benefits payable upon retirement, including
amounts set forth in the table above, which exceed such limits are payable from
Cyprus Amax's unfunded nonqualified retirement plans which were adopted in
1986.
In 1988 Cyprus Amax adopted an unfunded non-qualified retirement plan to
provide additional retirement benefits for certain executives designated by the
Committee. If an eligible executive continues to work until normal retirement
age, he or she will receive additional retirement benefits that will, when
combined with the retirement benefits actually available under the Retirement
Plan, equal the benefits he or she would receive under the Retirement Plan for
the lesser of 30 years of service credit or twice the service actually credited
under the Retirement Plan. Under the terms of this plan, Milton H. Ward and
Gerald J. Malys would be credited with an additional five years of service at
normal retirement and Jeffrey G. Clevenger would be credited with an additional
eight years of service at normal retirement. Donald P. Brown and Philip C. Wolf
are not eligible for additional years credited at normal retirement. This plan
provides for immediate vesting and distribution of accrued benefits in the
event of Change of Control, as defined in the plan.
26
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gerald J. Malys, Cyprus Amax's Senior Vice President and Chief Financial
Officer has been a director of Amax Gold Inc. since November 15, 1993 and has
served on the Compensation Committee of the Board of Directors of Amax Gold
Inc. since December 8, 1993. Milton H. Ward is the Co-Chairman of the Board,
President and Chief Executive Officer of Cyprus Amax and Chairman of the Board
of Directors of Amax Gold Inc.
SHAREHOLDER PROPOSAL DATE
Shareholders may submit proposals on matters appropriate for shareholder
action consistent with applicable law and the Company's By-Laws. Proposals
which shareholders intend to present at the 1996 Annual Meeting of Shareholders
must be received by the Secretary of Cyprus Amax by November 20, 1995 to be
considered for inclusion in Cyprus Amax's proxy statement and form of proxy
relating to the 1996 Annual Meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. However, if any other matters properly do come before the meeting, the
persons named in the accompanying proxy will vote thereon in accordance with
their best judgment.
By order of the Board of Directors,
Philip C. Wolf
Senior Vice President, General Counsel
and Secretary
March 20, 1995
CYPRUS AMAX'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (WITHOUT EXHIBITS) MAY BE OBTAINED AT NO CHARGE BY ANY
SHAREHOLDER ENTITLED TO VOTE AT THE MEETING WHO WRITES TO: SECRETARY, CYPRUS
AMAX MINERALS COMPANY, 9100 EAST MINERAL CIRCLE, ENGLEWOOD, COLORADO 80112.
EXHIBITS TO THE FORM 10-K ARE ALSO AVAILABLE AT A COST OF TWENTY-FIVE CENTS PER
PAGE.
27
<PAGE>
APPENDIX A
NON-EMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
1. PURPOSE
The purpose of this Non-Employee Directors' Deferred Compensation Plan (the
"Plan") is to assist Cyprus Amax Minerals Company (the "Company") in recruiting
qualified individuals to serve as non-employee members of the Board of
Directors of the Company and to provide an incentive to such persons to
continue to serve the Company in that capacity.
2. DEFINITIONS
Whenever the following terms are used herein, with the first letter
capitalized, they shall have the meanings specified below:
(a) "Account" means the account maintained by the Administrator for each
Participant which is to be credited, as hereinafter set forth, with Stock or
other Investments equal in value to the amount of the Participant's
Compensation which is deferred pursuant to this Plan, together with the
earnings thereon as provided for herein.
(b) "Administrator" means the Vice President, Human Resources appointed by
the Board of Directors to administer the Plan.
(c) "Beneficiary" or "Beneficiaries" means the person or persons (including
without limitation, any trustee) last designated by a Participant to receive
the benefits specified hereunder, in the event of the Participant's death, or
if there is no designated Beneficiary or surviving Beneficiary, the
Participant's estate.
(d) "Board" means the Company's Board of Directors.
(e) "Board Member" shall mean a member of the Board who is not an employee of
the Company or its subsidiaries or affiliates.
(f) "Change of Control" shall mean the occurrence of any of the following
events:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
35% or more of either (A) the then outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not
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constitute a Change of Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (D) any acquisition
by any corporation pursuant to a transaction which complies with clauses
(A) and (B) of subsection (iii) of this section (f).
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(iii) Consummation of a reorganization, merger or consolidation involving
the Company or any subsidiary of the Company or sale or other disposition
of all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business Combination,
either (A)(1) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be or (2) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination and (B) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 35% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business
Combination; or
(iv) A complete liquidation or dissolution of the Company.
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<PAGE>
(g) "Change of Control Stock Value" shall mean the value of a share of Stock
determined as follows:
(i) if the Change of Control results from an event described in clause
(iii) of the Change of Control definition, the highest per share price paid
for shares of Stock of the Company in the transaction resulting in the
Change of Control;
(ii) if the Change of Control results from an event described in clauses
(i) or (ii) of the Change of Control definition and no event described in
clauses (iii) or (iv) of the Change of Control definition has occurred in
connection with such Change of Control, the highest sale price of a share
of Stock on any trading day during the sixty consecutive trading days
immediately preceding the date of such Change of Control as reported on the
New York Stock Exchange Composite Tape and published in the Wall Street
Journal; or
(iii) if the Change of Control results from an event described in clause
(iv) of the Change of Control definition, the price per share received by
holders of Stock in the transaction described in such clause (iv).
(h) "Company" means Cyprus Amax Minerals Company, a Delaware corporation, or
any successor corporation.
(i) "Compensation" means for any Plan Year all retainer, meeting, committee
and chair fees payable in cash to a Board Member for service on the Board, or
any other amounts payable for any services rendered to the Company as an
independent contractor while serving as a Board Member, before any reduction
pursuant to this Plan.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time. References to any provision of the Exchange Act shall be deemed
to include successor provisions thereto and regulations thereunder.
(k) "Investments" means an investment option, other than Stock, made
available under the Plan, specifically T. Rowe Price Funds. A Participant may
modify his or her Investment elections quarterly.
(l) "Participant" means any Board Member who actually participates in this
Plan in any Plan Year and who is entitled to a benefit hereunder.
(m) "Plan Year" shall mean each year beginning on the first day of January
and ending on the 31st day of December, commencing with an initial short Plan
Year beginning on May 5, 1994.
(n) "Stock" means the Company's Common Stock, without par value.
3. PARTICIPATION
(a) Plan is Voluntary
Participation in the Plan is voluntary.
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<PAGE>
(b) Filing of Application
To participate in the Plan for any Plan Year a Board Member must file a
written application with the Administrator. The application for participation
shall signify the Board Member's acceptance of the benefits and terms of the
Plan and state the portion of his or her Compensation that he or she elects to
defer, whether such deferrals shall be credited to his or her Account as Stock
or other Investments and the time when the Board Member desires distribution of
his or her benefits under the Plan. A Board Member electing to participate in
the Plan for any Plan Year must file the application according to the following
schedule:
(i) with respect to any or all Compensation to be credited to his or her
Account as Stock, the Board Member must notify the Administrator at least
six months prior to the date on which such election is to be effective, but
in no event later than December 31 immediately preceding such Plan Year;
and
(ii) with respect to any or all Compensation to be credited to his or her
Account as other Investments, the Board Member must notify the
Administrator no later than December 31 immediately preceding such Plan
Year.
The Administrator shall notify each Board Member of his or her prospective
eligibility to participate in the Plan at least thirty days prior to December
31.
Notwithstanding Section 3(b)(ii) above, for purposes of the 1995 Plan Year
only, a Board Member electing to defer that part of his or her Compensation,
which constitutes other amounts payable for any services rendered to the
Company as an independent contractor while serving as a Board Member, to be
credited to his or her Account as other Investments shall have the right to
notify the Administrator at any time prior to the date the Board Member earns
said amounts.
Notwithstanding any other provision of this Section, during the Plan Year in
which a person first becomes a Board Member, the new Board Member may elect
within thirty days after the date he or she becomes a Board Member to (i) defer
any or all Compensation earned for the remainder of that Plan Year for services
to be performed subsequent to his or her election to be credited to his or her
Account as other Investments or (ii) defer any or all Compensation earned more
than six months after the date of such election to be credited to his or her
Account as Stock.
(c) Revoking or Modifying an Application
A Board Member may revoke or change his or her election to defer Compensation
for future Plan Years according to the following schedule:
(i) with respect to a revocation or change which affects a Board Member's
election to have any or all Compensation credited to his or her Account as
Stock, the Board Member must notify the Administrator of such revocation or
change at least six months prior to the date on which such revocation or
change is to be effective, but in no event later than
A-4
<PAGE>
December 31 prior to the Plan Year in which the revocation or change shall
become effective; and
(ii) with respect to a revocation or change which affects a Board
Member's election to have any or all Compensation credited to his or her
Account as other Investments, the Board Member must notify the
Administrator of such revocation or change no later than December 31 prior
to the Plan Year to which the revocation or change relates.
(d) Designation of Beneficiary
Upon forms provided by the Administrator, each Participant shall designate
the Beneficiary or Beneficiaries to receive the amounts distributable in the
event of such Participant's death. A Participant may from time to time change
the designated Beneficiary or Beneficiaries, without the consent of such
Beneficiary or Beneficiaries, by filing a new designation in writing with the
Administrator. The Company and the Administrator may rely upon the Beneficiary
designation last filed in accordance with the terms of the Plan.
4. ACCRUAL OF BENEFITS
(a) Deferred Compensation
Each Board Member who elects to participate in this Plan for any Plan Year
must irrevocably elect to defer the receipt of all or a specified percentage of
his or her Compensation in accordance with the terms of Section 3(b). Said
amount shall be credited to such Board Member's Account in accordance with
Section 4(b) and shall be paid in accordance with Section 5.
(b) Earnings
The amount of Compensation that each Participant elects to defer under this
Plan shall increase or decrease in value during the period of deferral based on
the market value of Stock or on the value of Investments, including earnings
thereon. On the date the Plan is credited with the deferred Compensation of a
Participant, the Participant's Account shall be credited with cash or a number
of shares of Stock (including fractions) having a value equal to the amount of
the Participant's Compensation deferred on that date. The date the Plan is
credited with the deferred Compensation of a Participant shall be the date of
the Board meeting for regularly scheduled meetings and shall be the date of the
meeting(s) for other than regular Board meetings and otherwise shall be the
last business day of the month. The value of Stock shall be determined using
the closing market price of the Stock on the Composite Tape of the New York
Stock Exchange for that date. If the Composite Tape is not operating on such
date, or Stock is not traded there on such date, the value shall be computed
using the closing price on the next business day on which such Stock was traded
thereon.
Whenever dividends are paid with respect to shares of Stock, each
Participant's Account shall be credited with additional shares of Stock
(including fractions) equal in value to the amount of
A-5
<PAGE>
the dividend paid on a single share of Stock multiplied by the number of shares
of Stock (including fractions) credited to a Participant's Account as of the
record date for dividend purposes. For purposes of crediting dividends, the
value of Stock shall be determined as of the day dividends are actually paid on
Stock and in the same manner as is used for crediting deferred Compensation to
Accounts.
To the extent that a Participant's Account is credited with other
Investments, the Account shall be adjusted from time to time to reflect changes
in value, including earnings.
The number of shares of Stock in each Participant's Account shall be
appropriately adjusted and modified upon the occurrence of any stock split,
reverse stock split, stock dividend, or stock consolidation. Notwithstanding
any provision of the Plan to the contrary, in the event of a Change of Control,
all shares of Stock credited to a Participant's Account shall be converted into
cash in an amount equal to the product of (i) the Change of Control Stock
Value, multiplied by (ii) the number of shares of Stock that have been credited
to each Participant's Account as of the date of the Change of Control. The
amount of cash resulting from the foregoing conversion of shares of Stock in a
Participant's Account shall, at the election of the Participant made on a form
approved by the Administrator, be credited to such Participant's Account or
paid out in a lump sum no later than fifteen days after the date of the Change
of Control. In the event of a Change of Control, the value of any other
Investments in a Participant's Account shall be converted to cash, and at the
election of the Participant made on a form approved by the Administrator, be
credited to such Participant's Account or paid out in a lump sum, no later than
fifteen days after the date of the Change of Control, and income shall be
credited to a Participant's Account from the date of the Change of Control to
the date of distribution at the prime rate of Chemical Bank, N.A. as in effect
from time to time during such period. If cash is credited to a Participant's
Account under this paragraph, income shall be credited thereto from the date of
the Change of Control to the date of distribution at the prime rate of Chemical
Bank, N.A. as in effect from time to time during such period.
(c) Vesting
The interest of each Participant in any benefit accrued hereunder shall be
fully vested and nonforfeitable at all times.
5. DISTRIBUTION OF BENEFITS
(a) Time of Distribution
A Participant may elect to have the balance of his or her Account distributed
to him or her on or commencing (i) as soon as reasonably possible after the
Participant ceases to be a Board Member, or (ii) on the January 1 occurring a
stated number of years after the Participant ceases to be a Board Member, in
either case, in a lump sum or in up to ten annual installments, as elected
A-6
<PAGE>
by the Participant. Such an election shall be made on the application filed
pursuant to Section 3(b) and shall be irrevocable once made. However, a
Participant may elect a different distribution date(s) for Compensation
deferred in subsequent years by filing a change of deferral election as
provided in Section 3(b).
(b) Payment Upon Death
Notwithstanding any election under Section 5(a), if a Participant dies prior
to distribution of his or her Account, the balance of the credit of the
Participant's Account as of the date of death shall be paid, as soon as
reasonably possible thereafter, to the Participant's Beneficiary or
Beneficiaries.
(c) Methods of Payment
Lump sum distributions under the Plan shall consist of shares of Stock equal
to the number of whole shares of Stock credited to the Participant's Account on
the date as of which the distribution occurs and a cash payment for any
fraction of a share. Installment distributions under the Plan with respect to
Stock shall consist of shares of Stock equal to the number of whole shares of
Stock obtained by multiplying (i) a fraction, the numerator of which is 1 and
the denominator of which is the number of years remaining in the deferral
period by (ii) the number of shares of Stock credited to the Participant's
Account on the date as of which the distribution occurs, and a cash payment for
any fraction of a share. The portion of the Account of any Participant credited
with other Investments shall be paid in cash, either in a lump sum or
installment distributions, which shall be calculated in the same manner as
stated above. Each Participant, or Beneficiary, agrees that prior to
distribution of any benefit under the Plan he or she will make such
representations and execute such documents as are deemed by the Administrator
necessary to comply with applicable securities laws.
6. THE ADMINISTRATOR
(a) Appointment
An Administrator shall be appointed by the Board of Directors to administer
the Plan as provided herein.
(b) Rights and Duties
The Administrator, on behalf of the Participants and their Beneficiaries,
shall enforce the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers necessary to
accomplish those purposes, including, but not by way of limitation, the
following:
(i) to compute and certify the amount and kind of benefits payable to
Participants and their Beneficiaries;
A-7
<PAGE>
(ii) to maintain or to designate any person or entity to maintain all the
necessary records for the administration of the Plan;
(iii) to make and publish such rules for the regulation of the Plan as
are not inconsistent with the terms hereof; and
(iv) to provide for disclosure of such information and filing or
provision of such reports and statements to participants or Beneficiaries
under this Plan as the Administrator deems appropriate.
All actions of the Administrator shall be conclusive on all persons interested
in the Plan except to the extent otherwise specifically indicated herein. The
Administrator may appoint a plan administrator and agents, and delegate thereto
such powers and duties in connection with the administration of the Plan as the
Administrator may from time to time prescribe.
(c) Quarterly Reports
The Administrator shall furnish each Participant with a quarterly report
indicating the number of shares of Stock and/or other Investments credited to
his or her Account as of the end of the preceding calendar quarter.
(d) Information
To enable the Administrator to perform his or her functions, the Company
shall supply full and timely information to the Administrator on all matters
relating to the Compensation of all Participants, their status as Board
Members, their contributions, and such other pertinent facts as the
Administrator may require.
(e) Compensation, Indemnity and Liability
The Administrator shall serve without bond, except as otherwise required by
law, and without compensation for his or her services hereunder. All expenses
of the Administrator shall be paid by the Company and the Company shall furnish
the Administrator with such clerical and other assistance as is necessary in
the performance of his or her duties.
The Administrator shall not be liable for any act or omission on his or her
part. The Company shall indemnify and hold harmless the Administrator against
any and all expenses and liabilities arising out of his or her administration
of the Plan.
7. AMENDMENT AND DISCONTINUANCE
(a) Amendments
The Board shall have the right to amend the Plan from time to time, and to
amend or cancel any amendments; provided, however, that no amendment shall
reduce any amount already credited to a Participant's Account as of the
effective date of such amendment.
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(b) Discontinuance of Plan
It is the expectation of the Company that the Plan will be continued
indefinitely, but continuance of the Plan is not assumed as a contractual
obligation of the Company, and the right is reserved by the Company at any time
to reduce, suspend, or discontinue the Plan; provided, however, the Company
shall in no event have the power to reduce the amount already credited to a
Participant's Account as of the effective date of any such reduction,
suspension or discontinuance nor to discontinue the crediting of earnings on
such amounts subsequent to said date. In the event of a reduction, suspension
or discontinuance of the Plan, the payment of benefits accrued hereunder shall
continue to be made in accordance with the provisions of the Plan.
8. GENERAL PROVISIONS
(a) No Interest in Assets
No Participant or any other person shall have any interest in any shares of
Stock or other Investments credited to his or her Account or in any specific
asset of the Company by reason of any amount credited to him or her hereunder,
nor any rights to receive any distribution under the Plan except as and to the
extent expressly provided in the Plan. There shall be no funding of any
benefits which may become payable hereunder. No trust shall be created in
connection with or by the execution or adoption of this Plan. Any benefits
which become payable hereunder shall be paid from the general assets of the
Company. Nothing in the Plan shall be deemed to give any Board Member any right
to participate in the Plan, except in accordance with the provisions of the
Plan.
(b) Restriction Against Assignment
The Company shall pay all amounts payable hereunder only to the person or
persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Account shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiaries, or successors in
interest, nor shall it be subject to execution by levy, attachment or
garnishment or by any other legal or equitable proceeding, nor shall any such
person have any right to alienate, anticipate, commute, pledge, encumber, or
assign any benefits or payments hereunder in any manner whatsoever.
(c) Receipt or Release
Any payment to any Participant or his or her Beneficiaries in accordance with
the provisions of the Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Administrator and the Company and the
Administrator may require such Participant or Beneficiaries, as a condition
precedent to such payment, to execute a receipt and release to such effect.
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<PAGE>
(d) Payment on Behalf of Minor
In the event any amount becomes payable under the Plan to a minor or a person
who, in the sole judgment of the Administrator, is considered by reason of
physical or mental condition to be unable to give a valid receipt therefor, the
Administrator may direct that such payment be made to any person found by the
Administrator, in his or her sole judgment, to have assumed the care of such
minor or other person. Any payment made pursuant to such determination shall
constitute a full release and discharge of the Administrator and the Company.
(e) Forfeiture
Any payment or distribution to a Participant under the Plan which is not
claimed by the Participant, Beneficiaries, or other person entitled thereto
within three years after becoming payable shall be forfeited and canceled and
shall remain with the Company and no other person shall have any right thereto
or interest therein. The Company shall not have any duty to give notice that
amounts are payable under the Plan to any person other than the Participant and
the designated Beneficiary or Beneficiaries.
(f) Withholding
The Company may deduct from the amount of all distributions or deferrals
under the Plan any taxes required to be withheld by the Federal or any State or
local government.
(g) Governing Law
This Plan shall be construed, administered and enforced according to the laws
of the State of Colorado.
(h) Captions
Captions in this Plan are not part of the provisions hereof and shall have no
force or effect.
(i) Successors and Assigns
This Plan shall inure to the benefit of, and be binding upon, the parties
hereto and their successors and assigns.
(j) Effective Date
This Plan shall become effective as of May 5, 1994.
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LOGO
[RECYCLED PAPER LOGO APPEARS HERE]
<PAGE>
--------------------------------------------------------------------------------
CYPRUS AMAX MINERALS COMPANY
THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
OR THE TRUSTEES NAMED BELOW
The undersigned hereby appoints Milton H. Ward, Philip C. Wolf, and Kathleen J.
Gormley, and each or any of them, the proxies and agents of the undersigned,
with full power of substitution, to represent and vote in accordance with the
instructions on the reverse side all the shares of the common stock of Cyprus
Amax Minerals Company held of record by the undersigned at the close of
business on March 6, 1995 at the Annual Meeting of the Shareholders of Cyprus
Amax Minerals Company to be held in the South Mountain Ballroom of the Pointe
Hilton on South Mountain, 7777 South Pointe Parkway, Phoenix, Arizona 85044, on
May 3, 1995 at 10:00 a.m. (Phoenix time) or at any adjournment thereof, or
directs the Trustees of the Cyprus Amax Minerals Company Savings Plan and
Trust, AMAX Inc. Thrift Plan For Bargaining Unit Employees, Amoco Corporation
Employee Savings Plan, Luzenac America Employee Savings Plan, and the
Northshore Mining Company Retirement Savings Plan (the "Plans") (as applicable,
with respect to shares of common stock held for the benefit of the undersigned)
to vote in person or by proxy at such annual meeting, all shares held by or for
the benefit of the undersigned in accordance with such instructions. The
Trustee of the Amoco Corporation Employee Savings Plan will vote undirected
shares of the Company's common stock held by it in its discretion, and the
Trustees of the remaining Plans will vote unallocated and/or undirected shares
of the Company's common stock held by them in direct proportion to the voting
of shares for which instructions have been received.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3, AND 5 AND
AGAINST ITEM 4, EXCEPT AS NOTED ABOVE WITH RESPECT TO THE PLANS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, AND 5 AND AGAINST
ITEM 4.
ELECTION OF DIRECTORS. Nominees:
William C. Bousquette, Thomas V. Falkie, Ann Maynard Gray, Theodore M. Solso,
and James A. Todd, Jr.
INSTRUCTIONS: To withhold authority to vote for one or more nominees, write the
name of each nominee for whom authority is withheld in the space provided on
the reverse side. UNLESS AUTHORITY TO VOTE FOR ALL NOMINEES IS WITHHELD, A VOTE
FOR THE ELECTION OF DIRECTORS WILL BE DEEMED TO CONFER AUTHORITY TO VOTE FOR
ANY NOMINEE WHOSE NAME IS NOT WRITTEN IN THE SPACE PROVIDED ON THE REVERSE SIDE
AND FOR ANOTHER NOMINEE IF ANY OF THE NAMED NOMINEES IS UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE.
-------------
SEE REVERSE
SIDE
-------------
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
--------------------------------------------------------------------------------
CYPRUS AMAX'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3,
AND 5.
--------------------------------------------------------------------------------
1. Election of Directors. (see reverse) FOR WITHHELD
[_] [_]
2. Approval of the Non-Employee Directors' FOR AGAINST ABSTAIN
Deferred Compensation Plan. [_] [_] [_]
3. Appointment of Price Waterhouse LLP FOR AGAINST ABSTAIN
as independent accountants. [_] [_] [_]
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
5. OTHER MATTERS. In their discretion, the proxies are authorized to vote
upon other matters not known to the Board of Directors on March 20, 1995
that may come before the meeting and upon matters incident to the conduct
of the meeting.
--------------------------------------------------------------------------------
--------------------------------------------------------------------
CYPRUS AMAX'S BOARD OF DIRECTORS RECOMMENDS A
VOTE "AGAINST" PROPOSAL 4.
--------------------------------------------------------------------
4. Shareholder proposal relating to FOR AGAINST ABSTAIN
elimination of classified Board. [_] [_] [_]
--------------------------------------------------------------------
SIGNATURE(S) _____________________________________________ DATE______________
SIGNATURE(S) _____________________________________________ DATE______________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS. JOINT OWNERS SHOULD EACH SIGN. IF
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, AGENT, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF SIGNING ON BEHALF OF A CORPORATION, THE
FULL CORPORATE NAME SHOULD BE INCLUDED AND AN AUTHORIZED CORPORATE OFFICER
SHOULD SIGN.
--------------------------------------------------------------------------------
<PAGE>
GRAPHICS APPENDIX LIST
----------------------
EDGAR Version Typeset Version
------------- ---------------
Page 2 Photographs of Director Nominees:
William C. Bousquette, Thomas V. Falkie,
Ann Maynard Gray.
Page 3 Photograph of Director Nominees:
Theodore M. Solso, James A. Todd, Jr.
Page 4 Photographs of Directors: Milton H. Ward,
Allen Born, Linda G. Alvarado.
Page 5 Photographs of Directors: George S. Ansell,
James C. Huntington, Jr., Michael A. Morphy.
Page 6 Photographs of Directors:
Ambassador Rockwell A. Schnabel,
John Hoyt Stookey, Billie B. Turner.
