<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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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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
Annual Meeting
May 6, 1999
10:00 a.m.
Executive Conference Center
at Inverness Business Park
IHS Group Building Complex
Building C
327 Inverness Drive South
Englewood, Colorado 80112
<PAGE>
Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
--------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------
<TABLE>
<C> <C> <S>
TIME.......................... 10:00 a.m. on Thursday, May 6, 1999
PLACE......................... Executive Conference Center
at Inverness Business Park
IHS Group Building Complex, Bldg. C
327 Inverness Drive South
Englewood, Colorado 80112
ITEMS OF BUSINESS............. (1) electing three directors;
(2) approving the appointment of
PricewaterhouseCoopers LLP as indepen-
dent accountants for 1999;
(3) considering and acting upon a shareholder
proposal regarding an independent nomi-
nating committee of the Board of Direc-
tors; and
(4) transacting such other business as prop-
erly may come before the meeting or any
adjournment thereof.
RECORD DATE................... Holders of Common Stock of record at the close
of business, March 8, 1999, are entitled to
vote at the meeting.
ANNUAL REPORT................. The Annual Report to Shareholders for the year
ended December 31, 1998, which is not a part
of the proxy soliciting material, is enclosed.
PROXY VOTING.................. It is important that your shares be repre-
sented 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.
Proxies may be revoked at any time before they
are voted at the meeting by written notice to
Cyprus Amax Minerals Company, by submitting a
properly executed later-dated proxy, or by
voting in person at the meeting.
</TABLE>
Philip C. Wolf
Senior Vice President, General Counsel,
and Secretary
March 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROXY STATEMENT............................................................ 1
PROPOSALS TO BE VOTED UPON................................................. 2
Election of Directors.................................................... 2
Approval of the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants.............................................................. 6
Shareholder Proposal Relating to the Creation of an Independent
Nominating Committee..................................................... 6
CERTAIN SECURITY OWNERSHIP AND REPORTING................................... 8
Security Ownership of Directors and Executive Officers................... 8
Security Ownership of Certain Beneficial Owners.......................... 9
Section 16(a) Beneficial Ownership Reporting Compliance.................. 9
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS................................ 10
Board and Committee Membership and Meetings.............................. 10
Board Committee Functions................................................ 11
Director Compensation.................................................... 11
Compensation and Benefits Committee Interlocks and Insider
Participation............................................................ 13
EXECUTIVE COMPENSATION..................................................... 13
Compensation and Benefits Committee Report............................... 13
Summary Compensation Table............................................... 18
Option Grants Table...................................................... 19
Option Exercises and Year-End Value Table................................ 19
Employment Contracts..................................................... 20
Comparison of Five-Year Cumulative Returns............................... 21
Pension Plan Table....................................................... 22
REQUIREMENTS FOR SUBMISSION OF SHAREHOLDER PROPOSALS, NOMINATION OF
DIRECTORS, AND OTHER MATTERS............................................... 23
</TABLE>
<PAGE>
Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
- -------------------------------------------------------------------------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
Cyprus Amax Minerals Company ("Cymax" or the "Company"), a Delaware
corporation, for the 1999 Annual Meeting of Shareholders to be held on May 6,
1999, and at any meeting following adjournment thereof. This proxy statement,
the enclosed form of proxy, and the enclosed Annual Report to Shareholders for
the year ended December 31, 1998, are being mailed on or about March 19, 1999,
to each shareholder entitled to vote at the meeting.
- -------------------------------------------------------------------------------
Proxies
It is important that your shares 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.
Proxies may be revoked at any time before they are voted at the meeting
by written notice to the Secretary of the Company, by submitting a properly
executed later-dated proxy, or by voting in person at the meeting.
Properly executed proxies returned at or prior to the meeting, and not
revoked, will be voted in accordance with the instructions indicated on those
proxies. If no instructions are indicated, the shares represented by the proxy
will be voted FOR proposals 1 and 2 and AGAINST proposal 3. If any other
matters are properly presented at the meeting, the persons named in the proxy
will have discretion to vote on those matters.
- -------------------------------------------------------------------------------
Shareholders Entitled to Vote
Holders of Cymax common stock ("Common Stock") of record at the close of
business on March 8, 1999, are entitled to notice of and to vote at the
meeting.
On March 12, 1999, there were 90,390,212 shares of Common Stock
outstanding. Each share is entitled to one vote on each matter properly
brought before the meeting.
A list of shareholders entitled to vote at the meeting will be available
at the Executive Conference Center at Inverness Business Park on May 6, 1999.
For ten days prior to the meeting, the list of shareholders will be available
during normal business hours at Cymax's offices at 9100 East Mineral Circle,
Englewood, Colorado 80112.
- -------------------------------------------------------------------------------
Required Vote
The presence, in person or by proxy, of the holders of not less than
one-third of the shares entitled to vote is necessary to constitute a quorum.
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. Under the rules of the New York Stock Exchange,
brokers holding shares in street name have the authority to vote on certain
routine matters when they have not received instructions from the beneficial
owners. For non-routine matters, brokers may not exercise their discretion.
Therefore, if a broker returns a signed proxy card, those shares are
considered present for quorum calculations for all matters, so that a non-vote
or abstention on non-routine matters has the effect of a negative vote.
- -------------------------------------------------------------------------------
1
<PAGE>
Cost of Proxy Solicitation
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited on behalf of the Company by directors, officers, or employees of
the Company in person or by telephone, facsimile transmission, or electronic
transmission. Additional solicitation of proxies of brokers, banks, nominees,
and institutional investors will be made by Georgeson & Company Inc. at a cost
to Cymax of approximately $8,000 plus expenses.
- -------------------------------------------------------------------------------
PROPOSALS TO BE VOTED UPON
- -------------------------------------------------------------------------------
1. Election of Directors
Cymax'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, three directors are nominated for election to hold office
until the Annual Meeting of Shareholders in 2002, or until their successors
are elected and duly qualified, or until their earlier death, resignation or
retirement.
The Board of Directors has nominated Linda G. Alvarado, George S. Ansell,
and Rockwell A. Schnabel for election to the Board. Each nominee currently is
a director of Cymax and was recommended to the Board by the Nominating
Committee. Shares represented by an executed proxy in the form enclosed will,
unless otherwise directed, be voted for the election of Ms. Alvarado, Dr.
Ansell, and Mr. Schnabel. 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 for a nominee will
have the same effect in the tabulation as shares for 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.
The Board unanimously recommends that the shareholders vote FOR the
election of Linda G. Alvarado, George S. Ansell, and Rockwell A. Schnabel as
directors of Cymax.
* * * * *
- -------------------------------------------------------------------------------
Set forth below is the principal occupation of, and other information
regarding, the nominees.
- -------------------------------------------------------------------------------
2
<PAGE>
[PHOTO OF Linda G. Alvarado Director since December 14, 1989
LINDA G. ALVARADO Term expires in 1999
APPEARS HERE]
President and Chief Executive Officer of Alvarado
Construction Inc. since 1981; age 47. Director of
Engelhard Corporation, Pitney Bowes, Inc., and U.S. West.
- -------------------------------------------------------------------------------
[PHOTO OF George S. Ansell Director since December 3, 1987
GEORGE S. ANSELL Term expires in 1999
APPEARS HERE]
President Emeritus of the Colorado School of Mines since
August 1998; age 64; President of the Colorado School of
Mines from 1984 to August 1998. Director of OEA, Inc.
- -------------------------------------------------------------------------------
[PHOTO OF Rockwell A. Schnabel Director since February 11, 1993
ROCKWELL A. SCHNABEL Term expires in 1999
APPEARS HERE]
Co-Chairman of Trident Inc. since 1993; age 62; Formerly
Acting Secretary of Commerce and United States Ambassador
to the Republic of Finland. Director of CSG Systems Inc.,
International Game Technology, and Rezsolutions Inc.
- -------------------------------------------------------------------------------
Other Directors
Set forth below is the principal occupation of, and other information
regarding, other members of the Board.
- -------------------------------------------------------------------------------
[PHOTO OF William C. Bousquette Director since December 5, 1991
WILLIAM C. BOUSQUETTE Term expires in 2001
APPEARS HERE]
Independent businessman since 1996; age 62; Senior Vice
President and Chief Financial Officer of Texaco Inc. from
1995 to 1996; Executive Vice President and Chief
Financial Officer of Tandy Corporation from 1994 to 1995;
Chief Executive Officer of TE Electronics, a subsidiary
of Tandy Corporation, from 1993 to 1994. Director of
O'Sullivan Industries Holdings, Inc. and Intertan, Inc.
- -------------------------------------------------------------------------------
3
<PAGE>
[PHOTO OF Thomas V. Falkie Director since July 1, 1988
THOMAS V. FALKIE Term expires in 2001
APPEARS HERE]
Chairman of Berwind Natural Resources Corporation since
September 1998; age 64; President and Chief Executive
Officer of Berwind Natural Resources Corporation from
1977 to September 1998. Director of the National Coal
Association and the National Mining Association, Chairman
of the American Coal Foundation, Chairman of the Board of
Governors of the National Mining Hall of Fame and Museum,
and a member of the Governing Council of the National
Academy of Engineering.
- -------------------------------------------------------------------------------
[PHOTO OF Ann Maynard Gray Director since November 15, 1993
ANN MAYNARD GRAY Term expires in 2001
APPEARS HERE]
Former President of Diversified Publishing Group, ABC,
Inc.; age 53; President of Diversified Publishing Group,
ABC, Inc., from 1991 to 1997. Director of Duke Energy
Corporation.
- -------------------------------------------------------------------------------
[PHOTO OF Theodore M. Solso Director since November 15, 1993
THEODORE M. SOLSO Term expires in 2001
APPEARS HERE]
President and Chief Operating Officer of Cummins Engine
Company, Inc. since 1995; age 52; Various positions with
Cummins Engine Company, Inc. since 1971. Director of
Cummins Engine Company, Inc., Cummins Engine Foundation,
Irwin Financial Corporation, and Otter Creek Golf Course.
Member of the Boards of Trustees of DePauw University and
Manufacturers Alliance.
- -------------------------------------------------------------------------------
[PHOTO OF John H. Stookey Director since November 15, 1993
JOHN H. STOOKEY Term expires in 2000
APPEARS HERE]
Chairman of Suburban Propane Partners since 1996; age 69;
Chairman of Quantum Chemical Company, a subsidiary of
Hanson PLC, from 1984 to 1995, and President from 1975 to
1993; executive officer of Petrolane Incorporated,
Petrolane Finance Corporation, and QJV Corp., affiliates
of Quantum Chemical Company, from 1989 to 1993. Director
of ACX Technologies, Inc. and the United States Trust
Company of New York.
- -------------------------------------------------------------------------------
4
<PAGE>
[PHOTO OF Billie B. Turner Director since October 22, 1992
BILLIE B. TURNER Term expires in 2000
APPEARS HERE]
Retired Chairman, President, and Chief Executive Officer
of IMC Fertilizer Group, Inc.; age 68; Chairman,
President, and Chief Executive Officer of IMC Fertilizer
Group, Inc. from 1987 until 1994. Director of IMC Global,
Inc. and International Minerals and Chemical Corporation
(Canada).
- --------------------------------------------------------------------------------
[PHOTO OF Milton H. Ward Director since May 14, 1992
MILTON H. WARD Term expires in 2000
APPEARS HERE]
Chairman, President, and Chief Executive Officer of Cymax
since 1992; age 66; Chairman of the Board and Chief
Executive Officer of Amax Gold Inc. from 1993 to June
1998; formerly Director, President, and Chief Operating
Officer of Freeport-McMoRan Inc. Director of the National
Mining Association and Kinross Gold Corporation.
- -------------------------------------------------------------------------------
Directors Serving Until the Annual Meeting
Set forth below is the principal occupation of, and other information
regarding, directors who will no longer serve on the Board subsequent to the
annual meeting.
- -------------------------------------------------------------------------------
[PHOTO OF Allen Born Director since November 15, 1993
ALLEN BORN Term expires in 1999
APPEARS HERE]
Chairman and Chief Executive Officer of Alumax Inc. from
1993 to August 1998; age 65; Vice Chairman of the Cymax
Board from 1995 to 1996 and Co-Chairman from 1993 to
1995; Chairman of AMAX Inc. from 1988 to 1993 and Chief
Executive Officer of AMAX Inc. from 1986 to 1993.
Director of AK Steel, INMET Mining Corporation, and the
International Primary Aluminum Institute.
Not seeking reelection at the annual meeting in May 1999.
- -------------------------------------------------------------------------------
[PHOTO OF James A. Todd, Jr. Director since October 22, 1992
JAMES A. TODD, JR. Term expires in 2001
APPEARS HERE]
Retired Chairman and Chief Executive Officer of
Birmingham Steel Corporation; age 70; Chairman of
Birmingham Steel Corporation from 1991 to 1996 and Chief
Executive Officer from 1984 to 1996. Director of the
National Mining Association, Kinross Gold Corporation,
and Emsource, Inc.
Retiring at the annual meeting in May 1999.
- -------------------------------------------------------------------------------
5
<PAGE>
2. Approval of the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants
The Audit Committee and the Board of Directors have recommended the
appointment of PricewaterhouseCoopers LLP to serve as independent accountants
for 1999. PricewaterhouseCoopers LLP has served as Cymax's independent
accountants since 1985. Representatives of PricewaterhouseCoopers LLP will
attend the annual meeting to answer appropriate questions, and to make a
statement if they desire.
The Board unanimously recommends a vote FOR the approval of
PricewaterhouseCoopers LLP's appointment as independent accountants for 1999.
* * * * *
- -------------------------------------------------------------------------------
3. Shareholder Proposal Relating to the Creation of an Independent Nominating
Committee
The New York City Employees' Retirement System, which owns 179,766
shares of Common Stock, has informed Cymax that it intends to propose the
following resolution at the 1999 annual meeting. The address of the New York
City Employees' Retirement System will be furnished upon request. The proposal
and supporting statement, for which the Board of Directors and Cymax accept no
responsibility, are set forth below.
- -------------------------------------------------------------------------------
Shareholder Proposal
WHEREAS, the board of directors is meant to be an independent body
elected by shareholders and charged by law and shareholders with the duty,
authority and responsibility to formulate and direct corporate policies, and
WHEREAS, this company has provided that the board may designate from
among its members one or more committees, each of which, to the extent
allowed, shall have certain designated authority, and
WHEREAS, we believe that directors independent of management are best
qualified to act in the interest of shareholders and can take steps necessary
to seek, nominate and present new directors to shareholders, and
WHEREAS, we believe the selection of new directors is an area in which
inside directors may have a conflict of interest with shareholders, and
WHEREAS, we believe that an increased role for the independent directors
would help our company improve its long-term financial condition, stock
performance and ability to compete,
6
<PAGE>
NOW THEREFORE, BE IT RESOLVED THAT: the shareholder request the company
establish a Nominating Committee to recommend candidates to stand for election
to the board of directors. The Committee shall be composed solely of
independent directors. For these purposes, an independent director is one who:
(1) has not been employed by the company or an affiliate in an executive
capacity within the last five years; (2) is not a member of a company that is
one of this company's paid advisors or consultants; (3) is not employed by a
significant customer or supplier; (4) is not remunerated by the company for
personal services consisting of legal, accounting, investment banking, and
management consulting services, whether or not as an employee for a
corporation, division, or similar organization that actually provides the
personal services, nor an entity from which the company derives more than 50
percent of its gross revenues; (5) is not employed by a tax-exempt
organization that receives significant contributions from the company; (6) is
not a relative of the management of the company; and (7) is not part of an
interlocking directorate in which the CEO or other executive officers of the
corporation serves on the board of another corporation that employs the
director.
- -------------------------------------------------------------------------------
Shareholder Statement of Support
As long-term shareholders we are concerned about our company's prospects
for profitable growth. This proposal is intended to strengthen the process by
which nominees are selected. We believe that this will strengthen the board of
directors in its role of advising, overseeing and evaluating management.
We urge you to vote FOR this proposal.
---
- -------------------------------------------------------------------------------
Board of Directors Comments
The Nominating Committee consists of six members, five of whom (including
the committee chairman) meet all seven tests for independence proposed by the
shareholder resolution. The sixth member is the Chairman and Chief Executive
Officer of Cymax. The Nominating Committee and the Board have discussed the
proposed shareholder resolution and have concluded not to recommend its
adoption. The absence of the Chairman and Chief Executive Officer as a member
would diminish the meaningful contribution he gives with respect to the
requisite experience and qualifications of candidates for filling vacancies or
additions to the Board of Directors. Moreover, the Nominating Committee is, in
every practical sense, an independent committee. The independence of the
Nominating Committee should be apparent in that the Board consists of 11 non-
employee directors, representing diverse backgrounds and strengths, and the
Chairman and Chief Executive Officer. This diversity has been achieved by the
independent actions of the current Nominating Committee. Nevertheless, in an
effort to accommodate the shareholder's concern while continuing to benefit
from the involvement of the Chairman and Chief Executive Officer, the
Nominating Committee has determined to retain his presence on the committee as
a non-voting member. The Nominating Committee also has adopted a policy that
requires the unanimous vote of the committee for approval of new directors.
The Board unanimously recommends a vote AGAINST the foregoing proposal.
* * * * *
- -------------------------------------------------------------------------------
7
<PAGE>
CERTAIN SECURITY OWNERSHIP AND REPORTING
- -------------------------------------------------------------------------------
Security Ownership of Directors and Executive Officers
The following table sets forth the beneficial ownership of Common Stock
as of March 12, 1999, by (a) each director, (b) the Chief Executive Officer,
(c) the next four highest compensated officers other than the Chief Executive
Officer (the "Named Executives"), and (d) all directors and executive officers
as a group. Unless otherwise specified, the directors and executive officers
have sole voting and investment power with respect to these securities. Cymax
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 Shares of Common Stock
---------------------------------------
Beneficially Deferral
Name Owned(1) Plan(2) Total
- -------------------------------------- -------------- ---------- -----------
<S> <C> <C> <C>
(a) and (b)
Milton H. Ward........................ 1,830,239 0 1,830,239
(a)
Linda G. Alvarado..................... 7,815 4,827 12,642
George S. Ansell...................... 6,875(3) 7,057 13,932
Allen Born............................ 26,148 23,917 50,065
William C. Bousquette................. 6,500 28,044 34,544
Thomas V. Falkie...................... 10,000 7,931 17,931
Ann Maynard Gray...................... 5,650 4,477 10,127
Rockwell A. Schnabel.................. 28,000 25,429 53,429
Theodore M. Solso..................... 6,000 22,165 28,165
John H. Stookey....................... 6,000 3,533 9,533
James A. Todd, Jr..................... 8,000 30,634 38,634
Billie B. Turner...................... 7,500 12,182 19,682
(c)
Gerald J. Malys....................... 377,202(3) 0 377,202
Jeffrey G. Clevenger.................. 289,847(3) 0 289,847
Garold R. Spindler.................... 198,531 0 198,531
Philip C. Wolf........................ 243,291 0 243,291
(d)
All directors and executive officers
as a group (20 persons).............. 3,538,150(3) 170,196 3,708,346
</TABLE>
- ------------------
(1) All directors and executive officers as a group (20 persons) beneficially
own 3.9%, and Mr. Ward beneficially owns 2%, of the outstanding Common
Stock. No other individual director or Named Executive beneficially owns
1% or more of the outstanding Common Stock.
(2) Units denominated as Common Stock equivalents held in the Deferred
Compensation Plan for Non-Employee Directors. See page 12 for a
description of the plan. All of the 11 non-employee directors have elected
to participate in the plan during 1999. The units are rounded to the
nearest whole share.
(3) Dr. Ansell shares voting power with respect to 375 shares; Mr. Clevenger
shares voting power with respect to 15,986 shares; and Mr. Malys shares
voting power with respect to 20,000 shares. The total for all directors
and executive officers as a group includes 600 shares for which an
executive officer disclaims beneficial ownership.
8
<PAGE>
The shares shown in the above table include:
Shares which certain persons have the rights to acquire within 60 days through
the exercise of stock options issued under the Stock Plan for Non-Employee
Directors. These shares include 3,000 shares for each of Mses. Alvarado and
Gray, Drs. Ansell and Falkie, and Messrs. Born, Bousquette, Schnabel, Solso,
Stookey, Todd, and Turner.
Shares which certain persons have the rights to acquire within 60 days through
the exercise of stock options issued under the Management Incentive Program.
These shares include 1,297,921 for Mr. Ward; 228,976 for Mr. Malys; 150,700
for Mr. Clevenger; 111,400 for Mr. Spindler; and 158,456 for Mr. Wolf. The
stock options exercisable under this program and the Stock Plan for Non-
Employee Directors total 2,250,849 for all directors and executive officers as
a group.
Shares of restricted stock acquired through the Management Incentive Program
and the Key Executive Long-Term Incentive Plan. These shares include 350,000
for Mr. Ward; 120,475 for Mr. Malys; 109,710 for Mr. Clevenger; 81,400 for Mr.
Spindler; 73,985 for Mr. Wolf; and 901,630 for all directors and executive
officers as a group. The holders of restricted shares have the power to vote
these shares and receive dividends but do not have investment power until the
shares vest.
Shares acquired through the employee savings plan for which the trustee has
shared voting and investment power. These shares include 2,598 for Mr. Ward;
5,917 for Mr. Malys; 3,980 for Mr. Clevenger; 731 for Mr. Spindler; 10,850 for
Mr. Wolf; and 33,727 for all executive officers as a group. The shares
reported are rounded to the nearest whole share.
- -------------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 12, 1999, Common Stock held
by the only person known to Cymax to have beneficial ownership of more than 5%
of its Common Stock:
<TABLE>
<CAPTION>
Number of Percent
Name and Address of Beneficial Owner Shares of Class
------------------------------------ --------- --------
<S> <C> <C>
Trimark Investment Management Inc., as Manager and
Trustee of certain mutual funds
One First Canadian Place, Suite 5600
P.O. Box 487
Toronto ON M5X 1E5, Canada............................. 9,355,200(1) 10.3%
</TABLE>
- ------------------
(1) Trimark Financial Corporation, owner of 100% of the voting equity
securities of Trimark Investment Management Inc., may be deemed to be a
beneficial owner of the shares.
- -------------------------------------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon copies of filings furnished to the Company and upon
statements furnished by known insiders that no filings were required pursuant
to Section 16(a) of the Securities Exchange Act of 1934, the Company believes
that during 1998, all filings of its officers, directors, and 10% beneficial
owners timely complied with Section 16(a) reporting requirements.
- -------------------------------------------------------------------------------
9
<PAGE>
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
Pursuant to the General Corporation Law of Delaware, as implemented by
the Company's Certificate of Incorporation and by-laws, the Company's
business, property and affairs are managed under the direction of the Board of
Directors. Members of the Board are kept informed of the Company's business
through discussions with the Chairman and other officers, by reviewing
materials provided to them, and by participating in Board and committee
meetings.
- -------------------------------------------------------------------------------
Board and Committee Membership and Meetings
During 1998, the Board of Directors held ten meetings and had five
ongoing committees: an Executive Committee, an Audit Committee, a Compensation
and Benefits Committee, an Employee Funds Investment Committee, and a
Nominating Committee. During the year, all of the directors except Mr. Born
attended 88% or more of the Board meetings and the meetings of the Board
committees on which they served. Mr. Born attended less than 75% of the
meetings.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Compensation Employee Funds
Name Board Executive Audit and Benefits Investment Nominating
---- ----- --------- ----- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Milton H. Ward.......... X* X* X
Linda G. Alvarado....... X X X
George S. Ansell........ X X X X*
Allen Born.............. X X X
William C. Bousquette... X X X* X
Thomas V. Falkie........ X X X X
Ann Maynard Gray........ X X X
Rockwell A. Schnabel.... X X X
Theodore M. Solso....... X X X
John H. Stookey......... X X X
James A. Todd, Jr....... X X X*
Billie B. Turner........ X X* X
1998 Meetings........... 10 2 3 7 2 3
</TABLE>
- ------------------
*Chair
- -------------------------------------------------------------------------------
10
<PAGE>
Board Committee Functions
- -------------------------------------------------------------------------------
Executive Committee
The Executive 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 committee also functions as a
Growth and Strategic Planning Subcommittee to review the strategic direction
of the Company.
- -------------------------------------------------------------------------------
Audit Committee
The Audit 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. None of its members are officers or employees of the
Company.
- -------------------------------------------------------------------------------
Compensation and Benefits Committee
The Compensation and Benefits Committee oversees benefit plans and
annual performance and merit increase budgets. The committee also administers
the Management Incentive Program, which includes stock option and restricted
stock provisions, and the Key Executive Long-Term Incentive Plan. It approves
bonus pools and officer bonuses granted under the Annual Incentive Plan. None
of its members are officers or employees of the Company.
- -------------------------------------------------------------------------------
Employee Funds Investment Committee
The Employee Funds Investment Committee reviews the investment and
performance of benefit plan trust funds and the selection and performance of
benefit plan trust fund managers. It also oversees the funding arrangements
and investment performances of salaried and hourly pension plans. None of its
members are officers or employees of the Company.
- -------------------------------------------------------------------------------
Nominating Committee
The Nominating 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 annually and determines whether to recommend for
re-nomination those whose terms are expiring. In addition, the committee
reviews and approves the acceptance of directorships and trusteeships offered
to senior officers of Cymax or its subsidiaries by other public corporations,
banks, or educational institutions. The committee does not consider
individuals nominated by shareholders for election to the Board.
- -------------------------------------------------------------------------------
Director Compensation
- -------------------------------------------------------------------------------
Annual Retainer Fees
Each January, non-employee directors receive an annual retainer of 2,000
shares of Common Stock.
- -------------------------------------------------------------------------------
Meeting Fees
Non-employee directors also receive a fee of $1,000 for attending each
Board meeting, each committee meeting, and each other meeting they are
requested by the Company to attend. In addition,
11
<PAGE>
for each committee meeting at which such person chairs, the chair of the
Nominating Committee receives an additional $250, the chair of the Employee
Funds Investment Committee receives an additional $500, and the chairs of the
Audit Committee and the Compensation and Benefits Committee 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.
- -------------------------------------------------------------------------------
Deferred Compensation Plan for Non-Employee Directors
The deferred compensation plan permits non-employee directors to defer
all or a portion of their annual retainers and meeting fees, whether paid in
cash or shares of Common Stock. Participants elect to have their deferred
compensation credited with hypothetical dividends based on a right to receive
shares of Common Stock at the closing market price on the New York Stock
Exchange on the date such participant would have received such compensation
had a deferral election not then been in effect ("phantom stock"), or with
hypothetical earnings based on a right to receive the cash value of an
investment of a participant's deferred compensation into a specific investment
fund. Compensation paid in shares of Common Stock is credited solely with
hypothetical dividends based on phantom stock. Distributions will be made to
participants upon termination of their directorship or thereafter.
The deferred compensation plan also contains the present value of the
benefits previously accrued under the Retirement Plan for Non-Employee
Directors before its merger with the deferred compensation plan on June 30,
1998.
- -------------------------------------------------------------------------------
Stock Plan for Non-Employee Directors
On the first business day of each January, each non-employee director is
granted an option to purchase 2,000 shares of Common Stock at not less than
100% of the fair market value on the date of the grant. Each stock option
granted expires no later than ten years after the date of grant. Before the
stock option becomes vested and exercisable, a director may be required to
complete a period of service as a member of the Board following the date of
the grant.
Each non-employee director also is awarded an annual retainer of 2,000
shares of Common Stock (see page 11). In addition, an individual who is
elected or appointed to be a director for the first time on or after April 1,
1998, will receive a one-time award of 12,500 shares of restricted stock. The
restrictions will lapse in 20% increments over a 5-year period from the award
date. The restrictions also lapse if the director terminates from the Board
because of death, disability, or retirement, or if there is a change of
control, as defined in the stock plan. The director will be entitled to
receive dividends attributed to the shares of restricted stock and to vote
such shares.
- -------------------------------------------------------------------------------
Stock Ownership Policy
In 1998, the Board of Directors revised its stock ownership policy.
Under the revised policy, directors are required to own, and to continue to
own while a member of the Board, at least 6,000 shares of Common Stock by the
later of January 1, 2004, or the 5th anniversary of the date such director
became a member of the Board. Phantom stock credited to directors' accounts
under the Deferred Compensation Plan for Non-Employee Directors will be
considered for purposes of determining whether the ownership goals have been
attained.
- -------------------------------------------------------------------------------
Retirement Policy
The Board of Directors has a retirement policy establishing a retirement
age of 70 for non-employee directors and 65 for employee directors. Case-by-
case exceptions may be made for
12
<PAGE>
employee directors pursuant to the terms of the Retirement Plan for Salaried
Employees. Such an exception was made for Mr. Ward in 1996 by approving an
employment contract that expires after he attains age 65. The policy further
provides that non-employee directors shall not be nominated, appointed, or
elected to serve for a term commencing after attaining retirement age, unless
the retirement of any such director would cause the total number of non-
employee directors to be eight or less. In that case, any such director who
reaches retirement age at the date of any annual meeting may continue to serve
beyond retirement age or may be nominated and elected to another three-year
term. Directors who reach retirement age while serving terms as directors may
continue to serve until the first annual meeting following their attaining
retirement age.
- -------------------------------------------------------------------------------
Retirement Plan for Non-Employee Directors
Effective June 30, 1998, the retirement plan was eliminated by merging
it with, and the present value of the liability of benefits accrued were
transferred to, the Deferred Compensation Plan for Non-Employee Directors.
- -------------------------------------------------------------------------------
Compensation and Benefits Committee Interlocks and Insider Participation
During 1998, Billie B. Turner, George S. Ansell, Thomas V. Falkie, Ann
Maynard Gray, Theodore M. Solso, and James A. Todd, Jr. served on the
Compensation and Benefits Committee for all or part of the year. None of these
committee members is or was an officer or employee of the Company or any of
its subsidiaries or engaged in any reportable related party transaction with
the Company.
- -------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
Compensation and Benefits Committee Report
The following report reflects the compensation philosophy and pay
determinations for the Chief Executive Officer and other executive officers
made by the Compensation and Benefits Committee for 1998.
- -------------------------------------------------------------------------------
Compensation Philosophy and Methodology
The Company's executive compensation program was adopted by the
Compensation and Benefits Committee in 1996. The program's 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 interest through equity-based plans, and to
provide a compensation package that rewards financial and individual
performance.
The Company retains a compensation consultant to review annually and
advise the Compensation and Benefits Committee on the Company's executive
compensation program. The consultant's review provides an ongoing evaluation
of the link between the Company's performance and its executive compensation
program as compared with the performance and executive compensation programs
of other companies that compete with the Company for executive talent. These
competitors include some of the same companies represented in the Cumulative
Shareholder Return graph on page 21, as well as other companies similar in
size to the Company.
13
<PAGE>
For 1998, the Company's compensation strategy for the key executive
group, other than the Chief Executive Officer, provided total compensation
(including salary, bonus, stock options, and performance-based restricted
stock with deferred cash incentive awards) that was targeted between the 50th
percentile and the 75th percentile of the compensation packages of comparable
companies. These targets were designed to provide meaningful rewards for
superior performance.
In assessing the performance of the Chief Executive Officer and
determining his 1998 compensation, as well as reviewing and approving the
Chief Executive Officer's recommendations for the 1998 performance of other
senior management, the Compensation and Benefits Committee considered:
1. the individual performance of the Chief Executive Officer and other
senior management;
2. the level of responsibility and contribution of those individuals to the
Company's performance;
3. the Company's performance based on both annual and long-term business
goals and strategies; and
4. the need to attract and retain key personnel by providing total
compensation opportunities that are competitive.
The Compensation and Benefits Committee determines the appropriate
compensation package for each senior executive in light of the foregoing
considerations, not based on a rigid formula or specific weightings.
- -------------------------------------------------------------------------------
Compensation Components
As discussed in greater detail below, the executive compensation program
consists of three components:
1. base salary;
2. annual bonus; and
3. long-term incentive compensation.
The total annual cash compensation paid to senior management, excluding
the Chief Executive Officer, is targeted in the upper quartile of the
Company's competitors and thus combines current above average bonus
opportunities with fully competitive base salaries.
- -------------------------------------------------------------------------------
Base Salary
The base salaries for senior management, excluding the Chief Executive
Officer, are generally targeted to range between the median and 75th
percentile of the Company's competitors.
- -------------------------------------------------------------------------------
Annual Bonuses
Under the Annual Incentive Plan, the bonus awards made to the Named
Executives and other senior management as a group are granted from an
annually-determined incentive pool. The incentive bonus pool equals 1.5% of
Income Before Income Taxes and Minority Interest (reflected in the Company's
Consolidated Statement of Operations in its Annual Report), as adjusted for
special items. The Compensation and Benefits Committee reviews the Company's
objectives and the executives' objectives, which are presented by the Chief
Executive Officer, at the beginning of the year. At the end of the year, the
Compensation and Benefits Committee grants awards to the executives based on
Company, business unit, and individual performance compared to established
objectives, as well as recommendations of the Chief Executive Officer. For the
Named Executives, the awards are limited to a fixed share of the pool and may
be reduced but not increased at the discretion of the Compensation and
Benefits Committee. For 1998 performance payout consideration, the
Compensation and Benefits Committee utilized a portion of the earned bonus
pool funds from previous years that had not been paid out.
- -------------------------------------------------------------------------------
14
<PAGE>
Long-Term Incentive Compensation
The Company's long-term incentive program provides incentives to the
Company's executive officers and key employees through a combination of stock
options, restricted stock, and performance-based restricted stock. The program
has the following components:
1. Management Incentive Program: Grants of stock options and restricted
stock under the management incentive program are designed to link the
interests of key employees (217 in 1998) 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 such
time as determined by the Compensation and Benefits Committee when the
grant is made. Grants of stock options promote the creation of
shareholder value since no benefit is realized unless stock price
appreciation occurs.
No shares of restricted stock may be sold, assigned, transferred,
pledged or otherwise encumbered until the restrictions lapse.
Restrictions lapse for 25% of the shares on each anniversary of the date
of award, subject to continued employment with the Company. Restrictions
automatically lapse in whole upon retirement, death or total disability,
or upon a change of control of the Company (as such terms are defined in
the management incentive program).
2. Key Executive Long-Term Incentive Plan: The long-term incentive plan
provides for awards of restricted stock to enhance the long-term
performance of the Company by rewarding executives for the sustained
creation of incremental value for shareholders and to attract and retain
high quality management talent. As with the Management Incentive
Program, shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered until the restrictions
lapse. The restrictions lapse in whole on the tenth anniversary of the
award date, subject to continued employment with the Company, or sooner,
in whole or in part, upon the achievement of certain Company
performance-based criteria which are specified in the long-term
incentive plan. Restrictions automatically lapse in whole upon
retirement, death, disability or involuntary termination of service
without cause, or upon a change of control of the Company (as such terms
are defined in the long-term incentive plan).
In 1998, the Compensation and Benefits Committee awarded stock options
and restricted stock to individuals based on an assessment of competitive
market data and the pay strategy adopted in 1996, and based upon
recommendations of the Chief Executive Officer, as well as the Compensation
and Benefits Committee's assessment of individual and, if applicable, business
unit performance.
- -------------------------------------------------------------------------------
Stock Ownership Requirements
Cymax policy, adopted in 1995, requires that the Company's Chief
Executive Officer own Common Stock with a value equal to five times his annual
base salary and that the Named Executives own Common Stock with a value equal
to three times their respective base salaries. The required stock ownership
levels must be achieved within five years.
- -------------------------------------------------------------------------------
Compensation of Chairman, President, and Chief Executive Officer
During 1998, under the direction of Milton H. Ward, the Company achieved
record low operating costs and continued to reduce debt. Efforts such as Quest
21, the continuous improvement process program implemented in 1997, and its
Coal Management Planning Process have been key
15
<PAGE>
factors in helping the Company achieve cost savings and productivity
improvements of approximately $150 million. Also, the Company reduced debt and
obligations by nearly $1 billion. Highlighted below are several significant
accomplishments achieved by the Company under Mr. Ward's leadership during
1998.
Metals. Despite significant business challenges presented by the
commodity markets, record low copper cash costs of 56c per pound were achieved
during the year. Over the last 2 years, the Company has been able to achieve
reductions in its copper cash costs of over 20%. Numerous records for
productivity and low costs were achieved at most operations in 1998.
Coal. The Company's coal division achieved its primary objective by
generating $195 million of cash flow during 1998. Improvements were made in
efficiencies, cost control, supplier alliances, and inventory management.
These efforts allowed the Company to increase productivity by approximately
14% during 1998 and lower costs at most of its operations.
Other. Corporate expenses were reduced $21 million, or 35%; and gross
interest expenses were reduced $40 million, or 19%.
Transactions. The Company engaged in three significant strategic
transactions during 1998 thereby allowing it to reduce debt, continue to
strengthen its financial position, and support growth opportunities in the
Company's core businesses.
1. In June, Amax Gold Inc. combined with Kinross Gold Corporation. The
Company held 59% of the stock of Amax Gold Inc. Following the
combination, the Company held 31% of Kinross Gold Corporation stock and
reduced its interest expense by approximately $28 million per year and
eliminated approximately $500 million in long-term obligations.
2. In late June, the Company successfully completed the sale of 11
Appalachian and Midwestern coal properties, for approximately $300
million in value.
3. In October, the Company successfully sold its lithium operations for
$305 million.
A substantial portion of Mr. Ward's compensation is determined pursuant
to the terms of his 1996 employment contract with the Company. The contract
primarily serves to reward Mr. Ward for his accomplishments and encourage him
to implement strategies that enable the ongoing success of the Company. It has
been designed to connect Mr. Ward's future financial rewards with the creation
of shareholder value. For a description of this contract and Mr. Ward's other
employment contracts, see page 20.
The Compensation and Benefits Committee has reviewed the Company's
performance for 1998 and Mr. Ward's leadership role in attaining the
achievements highlighted above, as well as the other criteria described in the
compensation philosophy and methodology section on page 13, and has determined
that the compensation awarded to Mr. Ward in 1998 was appropriate.
- -------------------------------------------------------------------------------
Employee Remuneration in Excess of $1 Million
Under Section 162(m) of the Internal Revenue Code, federal income tax
deductions taken by 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 year. 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 and must be based on
achieving objective 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. In order to qualify future payments under the Annual
16
<PAGE>
Incentive Plan as "performance based," the Company obtained shareholder
approval of the Annual Incentive Plan in May 1996.
The Compensation and Benefits Committee generally intends to administer
the Company's compensation programs so that the total compensation paid to any
employee will not exceed $1 million in any year, except for compensation
payments in excess of $1 million which qualify as "performance-based
compensation" or which are exempt for other reasons. In 1998, the Company paid
Mr. Ward total compensation in excess of $1 million in recognition of the
Company's outstanding performance under his leadership. If the objectives of
its executive compensation program so require, the Company may pay
compensation in excess of $1 million to its other executives. Any compensation
in excess of $1 million would not be deductible.
Billie B. Turner, Chairman
George S. Ansell
Thomas V. Falkie
Ann Maynard Gray
Theodore M. Solso
- -------------------------------------------------------------------------------
17
<PAGE>
Compensation Tables
The following tables set forth information for the years indicated
concerning the compensation of the Chairman, President, and Chief Executive
Officer and each of the Named Executives.
- -------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
---------------------------------------- ------------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Award ($)(1) Options (#) Compensation ($)(2)
------------------ ---- ---------- --------- ---------------- ------------ ----------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Milton H. Ward 1998 1,133,524(3) 975,000 10,001(4) 1,456,275 425,000 3,305
Chairman, President, and 1997 840,410(3) 1,300,000 21,232(4) 1,168,750 100,000 3,828
Chief Executive Officer 1996 708,000(3) 1,200,000 2,312(4) 1,321,875 1,150,000 3,879
Gerald J. Malys 1998 395,000 162,938 2,873(4) 482,543 126,250 3,316
Senior Vice President and 1997 370,000 230,000 1,355(4) 331,925 42,600 3,796
Chief Financial Officer 1996 340,000 200,000 29,957(4) 375,413 42,700 3,851
Jeffrey G. Clevenger 1998 390,000 160,875 -- 436,886 127,500 3,316
Executive 1997 330,000 215,000 16,006(4) 268,813 34,600 3,791
Vice President 1996 310,000 185,000 257(4) 317,250 40,000 3,848
Garold R. Spindler 1998 390,000 160,875 -- 405,761 122,500 3,368
Executive 1997 312,000 170,000 719(4) 259,463 33,500 3,952
Vice President 1996 300,000 120,000 1,055(4) 222,075 27,900 3,842
Philip C. Wolf 1998 300,000 123,750 -- 294,710 81,750 3,487
Senior Vice President, 1997 275,000 165,000 0 198,688 25,400 3,809
General Counsel, and Secretary 1996 260,000 150,000 1,854(4) 245,869 25,100 3,871
</TABLE>
- ------------------
(1) Restricted stock awards were made to Mr. Ward in January 1998 and October
1998 and to the Named Executive in January 1998 and August 1998. Amounts
shown in the table reflect the fair market value of the stock on the date
of the award. The actual value an executive may realize will depend upon
the amount of the stock on which restrictions lapse and the value
realized, which may be greater or less than this amount. The aggregate
restricted holdings of the Chief Executive Officer and the Named
Executives was 589,820 shares with a fair market value of $5,898,200 based
on the closing price of Common Stock of $10.00 per share on December 31,
1998. Such holdings include $3,000,000 (300,000 shares) for Mr. Ward;
$934,750 (93,475 shares) for Mr. Malys; $827,100 (82,710 shares) for Mr.
Clevenger; $556,500 (55,650 shares) for Mr. Spindler; and $579,850 (57,985
shares) for Mr. Wolf. The awards made in 1996, 1997, and January 1998 were
made under the Key Executive Long-Term Incentive Plan (see page 15). The
awards made in August and October 1998 were made under the Management
Incentive Program (see page 15). Regular dividends are paid on all
restricted stock awards.
(2) The amounts shown are the employer contributions to the employee savings
plan. For 1998, the maximum recognizable compensation for purposes of
calculating employer contributions was $160,000 per employee based on
Internal Revenue Service regulations.
(3) Does not include $166,476 reimbursed to Cymax by Amax Gold Inc. for Mr.
Ward's salary and benefits for services he provided to Amax Gold Inc.
during 1998, $309,590 reimbursed during 1997, or $292,000 reimbursed
during 1996.
(4) Gross up tax payment for certain benefits received by officers.
- -------------------------------------------------------------------------------
18
<PAGE>
Option Grants in 1998
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Exercise or Grant Date
Options Granted to Base Price Expiration Present
Name Granted (#)(1) Employees ($/Share) Date Value ($)(2)
---- -------------- ---------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Milton H. Ward 225,000 11.61 13.563 October 21, 2008 489,375
200,000 10.32 15.5625 January 2, 2008 580,560
Gerald J. Malys 71,250 3.68 11.469 August 20, 2008 125,557
55,000 2.84 15.5625 January 2, 2008 159,654
Jeffrey G. Clevenger 82,500 4.26 11.469 August 20, 2008 145,382
45,000 2.32 15.5625 January 2, 2008 130,626
Garold R. Spindler 82,500 4.26 11.469 August 20, 2008 145,382
40,000 2.06 15.5625 January 2, 2008 116,112
Philip C. Wolf 48,750 2.52 11.469 August 20, 2008 85,907
33,000 1.70 15.5625 January 2, 2008 95,792
</TABLE>
- ------------------
(1) The exercise price for each grant is equal to 100% of the fair market
value of Common Stock on the grant date. The stock options expire ten
years after the grant date.
(2) The Black-Scholes option pricing model was used to estimate the grant date
present value of the stock options set forth in this table. The Company's
use of this model should not be construed as an endorsement of its
accuracy at valuing stock options. All stock option models, including the
Black-Scholes model, require a prediction about the future movement of the
market price of Common Stock. The following assumptions were made for
purposes of calculating the Grant Date Present Value: For the stock
options granted January 2, 1998, a stock option term of 10 years,
volatility at 30%, dividend yield (for January 2, 1998, at 5.14%, for
August 20, 1998, at 6.98%, and for October 21, 1998, at 5.9%), and
interest rate for January 2, 1998, at 5.629%, for August 20, 1998, at
5.368%, and for October 21, 1998, at 4.349%. The real value of the stock
options in this table depends upon the actual performance of Common Stock
during the applicable period.
- -------------------------------------------------------------------------------
Aggregated Option Exercises in 1998
and Year-End Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Year-End (#) Year-End ($)
Shares Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable(1)
---- ------------------ ------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Milton H. Ward 0 0 1,147,921 / 1,141,667 0 / 0
Gerald J. Malys 0 0 180,176 / 147,550 0 / 0
Jeffrey G. Clevenger 0 0 110,900 / 144,800 0 / 0
Garold R. Spindler 0 0 74,650 / 139,250 0 / 0
Philip C. Wolf 0 0 129,256 / 94,450 0 / 0
</TABLE>
- ------------------
(1) Amounts shown in this column represent the fair market value (average of
the high and low) of the underlying Common Stock at year end minus the
exercise price. The actual value, if any, realized upon exercise may vary
depending upon the amount by which the market price of Common Stock
exceeds the exercise price when the stock options are exercised.
- -------------------------------------------------------------------------------
19
<PAGE>
Employment Contracts
Cymax entered into an employment contract with Milton H. Ward effective
January 1, 1996. The contract, which will expire on December 31, 2000,
establishes a base salary and provides for a target cash bonus with actual
payment determined by the Board. The bonus payment is subject to the
limitation of the Annual Incentive Plan. The contract also provides that Mr.
Ward is eligible to participate in employee benefit programs as well as
supplemental retirement benefits and stock plans. Mr. Ward agreed to fulfill
his assigned duties and to avoid activities adverse to Cymax's interests both
during and after the contract term. Cymax has the right to terminate the
employment contract upon 30 days' notice. If employment were 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 his
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 five-year period to exercise previously granted stock options.
In November 1993, Cymax entered into agreements with Gerald J. Malys,
Jeffrey G. Clevenger, and Philip C. Wolf. Stock options were granted pursuant
to the agreements, along with restricted stock which was fully vested in 1998.
In October 1998, Cymax entered into a similar agreement with Garold R.
Spindler. Pursuant to these agreements, in certain circumstances each Named
Executive would be entitled to a lump sum termination payment equal to the
accrued benefit under the retirement plans sponsored by the Company. Such
benefits would be calculated as if the executive had continued employment with
Cymax until the date he would first have been eligible to receive an
immediately payable retirement benefit (but for no less than an 18 month
period). The executive also could be eligible for retirement welfare benefits.
Cymax also has change of control employment agreements with Milton H.
Ward, Gerald J. Malys, Jeffrey G. Clevenger, Garold R. Spindler, and Philip C.
Wolf. These 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 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 3 times his yearly salary and bonus. The executives also will
receive an additional payment to make them whole for any excise tax imposed by
Section 4999 of the Internal Revenue Code.
Gerald J. Malys, Jeffrey G. Clevenger, Garold R. Spindler and Philip C.
Wolf are covered under the Company's Executive Officer Separation Policy. If
any Named Executive's employment is terminated under circumstances described
in the policy, he is entitled to separation benefits equal to one year of his
base salary plus target annual bonus. He also would be eligible for a pro rata
bonus for the year of termination at the discretion of the Compensation and
Benefits Committee, for outplacement services, and for medical and life
insurance benefits. The policy also provides for non-duplication of benefits.
Because of this, the Named Executives are not expected to receive medical and
life insurance benefits under this policy.
- -------------------------------------------------------------------------------
20
<PAGE>
Cumulative Shareholder Return
The graph below shows a five-year comparison of cumulative total
shareholder returns for Common Stock, the S&P 500 Index, and the Company's
peer index. The returns of the companies in the peer index are weighted based
on their stock market capitalization as of the beginning of the period.
Cumulative total shareholder return (on an assumed initial investment of $100
as of December 31, 1993), as determined at the end of each year, reflects the
change in stock price, assuming the reinvestment of dividends.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CYMAX, PEER INDEX AND S&P 500 INDEX
- ---------------------------------
Peer Index
------------------
Asarco Incorporated
Arch Coal, Inc.
Cleveland-Cliffs Inc.
Cominco Ltd.
Echo Bay Mines Ltd.
Freeport-McMoRan Copper &
Gold Inc.
Inco Limited
Noranda Inc.
Phelps Dodge Corporation
- ---------------------------------
<TABLE>
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) CYMAX PEER INDEX 500 INDEX
- ------------------- ----------- ---------- ---------
<S> <C> <C> <C>
Measurement Pt-
1993 100 100 100
FYE 1994 112.1 110 101.3
FYE 1995 111.9 123.1 139.3
FYE 1996 96.3 126.6 171.5
FYE 1997 91.6 116.5 228.6
FYE 1998 51.3 83.1 261.5
</TABLE>
- -------------------------------------------------------------------------------
Retirement Plans
The Retirement Plan for Salaried Employees covers executives and most
other salaried employees. The amount of annuity an employee will receive upon
retirement 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 (generally, the
later of age 65 or the 5th anniversary of the date participation commenced),
the annual benefit payable from the retirement plan will be the sum of: (1)
1.7% of average annual earnings (base salary plus bonus) received by the
employee for service during each year after 1998, plus (2) 1.7% of the
employee's average annual earnings from 1994 through 1998 multiplied by the
employee's number of pre-1999 years of service recognized by Cymax for
retirement plan benefit accrual purposes, less (3) 1.1% of the Social Security
offset multiplied by the total years of service as of December 31, 1998, and
certain other offsets, not to exceed 35 years recognized for Cymax plan
purposes.
21
<PAGE>
The estimated annual benefits payable upon retirement at normal
retirement age are $232,568 for Milton H. Ward; $223,913 for Gerald J. Malys;
$200,615 for Jeffrey G. Clevenger; $159,679 for Garold R. Spindler; and
$218,262 for Philip C. Wolf. These estimates are based on actual covered pay
for 1994 through 1998 and 1998 base salary and bonus for years after 1998. The
estimates do not reflect the impact of future salary increases.
The 5-year period 1994 through 1998 currently used in the benefit
formula described above may be rolled forward by the Board of Directors. The
table below provides information 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:
- -------------------------------------------------------------------------------
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Assumed
5-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>
$ 375,000 $ 31,875 $ 63,750 $ 95,625 $ 127,500 $ 159,375 $ 191,250 $ 223,125
475,000 40,375 80,750 121,125 161,500 201,875 242,250 282,625
575,000 48,875 97,750 146,625 195,500 244,375 293,250 342,125
775,000 65,875 131,750 197,625 263,500 329,375 395,250 461,125
975,000 82,875 165,750 248,625 331,500 414,375 497,250 580,125
1,175,000 99,875 199,750 299,625 399,500 499,375 599,250 699,125
1,675,000 142,375 284,750 427,125 569,500 711,875 854,250 996,625
2,175,000 184,875 369,750 554,625 739,500 924,375 1,109,250 1,294,125
2,675,000 227,375 454,750 682,125 909,500 1,136,875 1,364,250 1,591,625
</TABLE>
The amounts above are payable upon retirement between ages 62 and 65.
For retirement prior to age 62, the annual annuity amounts are reduced as
provided in the retirement plan. At year-end 1998, the Chief Executive Officer
and the Named Executives had accumulated the years of benefit service stated
(excluding additional years under the plan described in the following
paragraph): Milton H. Ward, 6 years; Gerald J. Malys, 13 years; Jeffrey G.
Clevenger, 6 years; Garold R. Spindler, 4 years; and Philip C. Wolf, 18 years.
The Internal Revenue Code limits the benefits payable from any funded
retirement plan that qualifies for federal income tax exemption. The estimated
annual benefits payable upon retirement, including amounts set forth in the
table above, which exceed such limits are payable from an unfunded non-
qualified retirement plan.
For certain executives designated by the Compensation and Benefits
Committee who continue to work until at least age 55, an additional retirement
benefit will be paid under another unfunded non-qualified retirement plan.
This benefit utilizes the benefit formula under the Retirement Plan for
Salaried Employees, but calculates benefit service as being equal to the
lesser of (1) the difference between 30 years and the years of benefit service
projected to age 62, or if older, the years of actual benefit service and (2)
the years of benefit service actually earned under the Retirement Plan for
Salaried Employees. Benefits under this non-qualified plan are determined
without regard to any Internal Revenue Code restrictions on benefits that can
be paid from a tax-qualified plan. Applying the benefit service calculation
above to Milton H. Ward as of the end of his employment contract at age 68, he
would be credited with an additional 8 years of service at retirement. At
normal retirement (age 65), 3 of the Named Executives would be credited with
the following additional years: Gerald J. Malys, 5 years; Jeffrey G.
Clevenger, 8 years; and Garold R. Spindler, 13 years. Philip C. Wolf would be
credited with no additional years at normal retirement. This plan provides for
immediate vesting and distribution of accrued benefits in the event of a
change of control, as defined in the plan.
- -------------------------------------------------------------------------------
22
<PAGE>
REQUIREMENTS FOR SUBMISSION OF SHAREHOLDER PROPOSALS, NOMINATION OF DIRECTORS,
AND OTHER MATTERS
- -------------------------------------------------------------------------------
Proposals to be Included in the Proxy Statement
All shareholder proposals to be considered for inclusion in the 2000
proxy statement and form of proxy must be submitted in writing to the
Secretary of the Company at its principal executive offices by November 22,
1999. The Annual Meeting of Shareholders in 2000 is scheduled to be held on
May 4.
- -------------------------------------------------------------------------------
Proposals to be Presented at the Meeting
The Company's advance notice by-law provisions require that notice of
any shareholder proposal intended to be presented from the floor of the 2000
Annual Meeting of Shareholders must be received in writing by the Secretary of
the Company not later than February 7, 2000. The notice must set forth:
1. A brief description of the business to be brought before the meeting;
2. The name and address of the shareholder proposing such business;
3. The class and number of shares of Common Stock beneficially owned by the
shareholder; and
4. Any material interest of the shareholder of such business.
- -------------------------------------------------------------------------------
Nomination of Directors
Under the Company's by-laws, shareholders entitled to vote generally may
nominate any person for election as a director by written notice to the
Secretary of the Company. Nominations must be received not later than February
7, 2000, for the 2000 Annual Meeting of Shareholders. The notice must set
forth:
1. The name and address of the nominating shareholder;
2. A representation that the nominating shareholder is a record holder of
Common Stock and the number of shares of record and beneficially owned;
3. A representation that the nominating shareholder intends to appear in
person or by proxy at the meeting to nominate each nominee;
4. A description of all arrangements or understandings between the
nominating shareholder and each nominee and any other person or persons
regarding each nomination to be made. If such arrangements are made with
any person or persons other than a nominee, such person or persons shall
be named;
5. The name and address of each nominee and the consent of each nominee to
serve as a director; and
6. Such other information regarding each nominee that would be required to
be included in a proxy statement filed in compliance with the proxy
rules of the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
23
<PAGE>
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 intend to vote on these
matters in accordance with their best judgment.
- -------------------------------------------------------------------------------
By order of the Board of Directors,
Philip C. Wolf
Senior Vice President, General Counsel,
and Secretary
March 12, 1999
Cymax'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: Cyprus Amax
Minerals Company, c/o Corporate Communications Center Inc., 2301 N. Akard,
Suite 300, Dallas, Texas 75201. Exhibits to the Form 10-K may be obtained at a
cost of 25c per page by writing to: Secretary, Cyprus Amax Minerals Company,
9100 East Mineral Circle, Englewood, Colorado 80112.
- -------------------------------------------------------------------------------
24
<PAGE>
[MAP OF THE EXECUTIVE CONFERENCE CENTER AT INVERNESS BUSINESS PARK APPEARS HERE]
<PAGE>
[LOGO OF CYPRUS AMAX MINERALS COMPANY APPEARS HERE]
[RECYCLED PAPER LOGO APPEARS HERE]
Printed on recycled paper.
<PAGE>
Please complete, sign, and return the attached card. Thank you for responding
promptly.
The proxies you have designated cannot vote your shares unless you sign and
return a proxy card. You are encouraged to specify your choices by marking the
appropriate boxes.
If you only sign and return the attached proxy card and provide no specific
voting direction, the proxies will vote your shares "FOR" Proposals 1 and 2 and
"AGAINST" Proposal 3.
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 Dale E.
Huffman, 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 given herein all the shares of the common stock of Cyprus Amax
Minerals Company (the "Company") held of record by the undersigned at the close
of business on March 8, 1999, at the Annual Meeting of Shareholders of the
Company to be held at the Executive Conference Center at Inverness Business
Park, IHS Group Building Complex, Building C, 327 Inverness Drive South,
Englewood, Colorado 80112, on May 6, 1999 at 10:00 a.m. or at any adjournment
thereof, and directs the Trustees of the Company Savings Plan and Trust, the
Company Thrift Plan For Bargaining Unit Employees, the Equatorial Mining North
America, Inc. ("Equatorial") 401(k) Profit Sharing Plan, and the Chemetall
Corporation ("Chemetall") Savings Plan (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. The Trustee of the Equatorial plan may or may not vote undirected
shares of the Company's stock in the plan, the Trustee of the Chemetall plan
will vote solely in accordance with written directions of the participants in
the plan, and the Trustees of the remaining plans will vote undirected shares of
the Company's 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 PROPOSALS 1 AND 2 AND
AGAINST PROPOSAL 3 EXCEPT AS NOTED ABOVE WITH RESPECT TO THE PLANS. UNLESS
AUTHORITY TO VOTE FOR NOMINEES IN PROPOSAL 1 IS WITHHELD, A VOTE FOR THE
ELECTION OF DIRECTORS WILL BE DEEMED TO CONFER AUTHORITY TO VOTE FOR ANY NOMINEE
WHOSE NAME IS NOT LINED THROUGH 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.
CYPRUS AMAX MINERALS COMPANY
P.O. BOX 11160
NEW YORK, N.Y. 10203-0160
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
AND AGAINST PROPOSAL 3.
(Continued, and to be dated and signed on reverse side.)
<PAGE>
<TABLE>
<CAPTION>
Please Detach Proxy Card Here
- -------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS 1 AND 2.
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote
listed below [ ] for all nominees listed below [ ]
</TABLE>
Nominees: Linda G. Alvarado, George S. Ansell, and Rockwell A. Schnabel.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
FOR ABOVE AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME.)
<TABLE>
<S> <C> <C> <C>
2. Appointment of PricewaterhouseCoopers LLP as independent accountants. FOR [ ] AGAINST [ ] ABSTAIN [ ]
- -------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL 3.
- -------------------------------------------------------------------------------------------------------------------------
3. Shareholder proposal relating to an Independent
Nominating Committee.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. OTHER MATTERS. In their discretion, the proxies are authorized to vote upon
other matters not known to the Board of Directors on March 12, 1999 that may
come before the meeting and upon matters incident to the conduct of the
meeting.
Change of Address and/or
Comments Mark Here [ ]
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 indicated and
an authorized corporate officer should sign.
Dated:___________________________________, 1999
______________________________________________
Signature
______________________________________________
Signature (if held jointly)
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. [X]
PLEASE SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
