<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NEWMONT GOLD COMPANY
(Name of Registrant as Specified in Its Charter)
NEWMONT GOLD COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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/ / 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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1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
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NEWMONT GOLD COMPANY
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NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of NEWMONT GOLD COMPANY will be held on
Thursday, May 12, 1994 at 9:00 a.m. in the John D. Hershner Room, 1700 Lincoln
Street, Denver, Colorado to:
1. Elect directors,
2. Transact such other business that may properly come before the
meeting.
Stockholders are cordially invited to attend the meeting.
TIMOTHY J. SCHMITT
Secretary
1700 Lincoln Street
Denver, Colorado 80203
March 29, 1994
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IF YOU ARE UNABLE TO ATTEND THE MEETING IN PERSON, PLEASE MARK,
SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE.
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<PAGE> 3
PROXY STATEMENT
GENERAL INFORMATION
STOCKHOLDERS ENTITLED TO VOTE. Holders of the common stock of the Company
of record at the close of business on March 24, 1994 are entitled to vote at the
Annual Meeting of Stockholders. As of March 21, 1994, there were 96,225,101
shares of common stock outstanding. Each share of common stock entitles its
owner to one vote. The holders of a majority of the shares entitled to vote at
the Annual Meeting of Stockholders must be present in person or represented by
proxy in order to constitute a quorum for all matters to come before the
meeting.
Votes at the Annual Meeting of Stockholders will be tabulated by two
inspectors of election, who shall be appointed by the Chairman of the meeting
and who shall not be candidates for election to the Board of Directors. The
inspectors of election will treat shares of common stock represented by a
properly signed and returned proxy as present at the Annual Meeting of
Stockholders for purposes of determining a quorum, without regard to whether the
proxy is marked as casting a vote or abstaining.
Directors will be elected by a favorable vote of a plurality of the shares
of common stock present and entitled to vote, in person or by proxy, at the
Annual Meeting of Shareholders. All other matters to come before the Annual
Meeting require the approval of a majority of the votes cast on such matters.
Under the Company's Certificate of Incorporation, By-Laws or Delaware law,
abstentions and broker "non-votes" as to particular matters will not count as
votes cast for or against any matters, and are counted only for purposes of
determining whether a quorum is present at the Annual Meeting. Abstentions and
"non-votes" have the same effect as votes against proposals presented to
stockholders except with respect to the election of directors. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions to do so from
the beneficial owner.
PROXY SOLICITATION. The accompanying proxy is solicited by the Board of
Directors of the Company. This Proxy Statement is being mailed to the
stockholders on or about March 29, 1994 concurrently with the mailing of the
Company's 1993 Annual Report. In addition to solicitation by mail, solicitation
of proxies may be made by certain officers and regular employees of the Company
by mail, telephone, telegraph or personal interview. All costs of the
solicitation of proxies will be borne by the Company. The Company will also
reimburse brokerage firms and others for their expenses in forwarding proxy
materials to beneficial owners of the Company's common stock. A stockholder who
executes a proxy may revoke it by (i) delivering to the Secretary of the Company
at any time before the proxies are voted, a written notice of the revocation
bearing a later date than the proxy or (ii) attending the Annual Meeting of
Stockholders and voting in person (although attendance at the Annual Meeting of
Stockholders will not in and of itself constitute a revocation of a proxy).
Written notice revoking a proxy should be sent to the attention of the Secretary
of the Company at 1700 Lincoln Street, Denver, Colorado 80203. A stockholder may
substitute another person in place of those persons presently named as proxies.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS. Arthur Andersen & Co. has
acted as auditors for the Company since 1967. The Board of Directors has
selected Arthur Andersen & Co. to continue in that capacity for the current
year. In addition to audit services, Arthur Andersen & Co. has regularly
provided tax consulting services to the Company. Representatives of Arthur
Andersen & Co. will be present at the Annual Meeting of Stockholders and will be
allowed to make a statement if they wish. Additionally, they will be available
to respond to appropriate questions from stockholders during the meeting.
STOCKHOLDER PROPOSALS. To be included in the Board of Directors' Proxy
Statement for the 1995 Annual Meeting of Stockholders, stockholder proposals
must be received by the Company on or before
<PAGE> 4
November 28, 1994. Proposals should be sent to the attention of the Secretary of
the Company at 1700 Lincoln Street, Denver, Colorado 80203.
PRINCIPAL STOCKHOLDER. As of March 21, 1994, the only beneficial owner of
more than 5% of the outstanding shares of the Company was Newmont Mining
Corporation ("NMC"), 1700 Lincoln Street, Denver, Colorado 80203, which owned
85,850,101 shares (89.22%) and as to which it had sole voting and investment
power. See "Principal Stockholders of NMC".
(1) ELECTION OF DIRECTORS
NOMINEES. Each of the eleven persons named below is a nominee for election
as a director at the Annual Meeting of Stockholders for the term of one year and
until his successor is elected and qualifies. Unless authority is withheld, the
proxies will be voted for the election of such nominees. Except for Messrs.
Bolduc and Cambre who were elected to the Board of Directors in March 1994 and
October 1993, respectively, all of the nominees were elected to the Board of
Directors at the last Annual Meeting of Stockholders and are all currently
serving as directors of the Company. If any such nominee cannot be a candidate
for election at the Annual Meeting of Stockholders, the proxies will be voted
either for a substitute nominee designated by the Board of Directors or for the
election only of the remaining nominees.
The following table contains a summary of the background and principal
occupations of the nominees.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE SINCE
<S> <C>
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RUDOLPH I. J. AGNEW (59)........................................................... 1989
Former Chairman and Chief Executive Officer of Consolidated Gold Fields PLC, a
natural resources company; Chairman, World Conservation Monitoring Centre, a
charitable organization for environmental data gathering
Director of NMC, Global Stone Corporation, New London PLC and Standard Chartered
PLC
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J. P. BOLDUC (54).................................................................. 1994
President since 1990 and Chief Executive Officer effective January 1, 1993 of W.
R. Grace & Co., a specialty chemical and health care company; previously, he
held various senior positions with W. R. Grace & Co. since 1983.
Director of NMC, Brothers Gourmet Coffee, Inc., Marshall & Ilsley Corporation,
Sunstrand Corporation and Unisys Corporation
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RONALD C. CAMBRE (55).............................................................. 1993
Vice Chairman and Chief Executive Officer of the Company since November 1, 1993;
previously Vice President and Senior Technical Advisor to the Office of the
Chairman of Freeport-McMoRan Inc., a natural resources company, since 1988.
Vice Chairman and Chief Executive Officer and Director of NMC
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JOSEPH P. FLANNERY (61)............................................................ 1989
Chairman, President and Chief Executive Officer of Uniroyal Holding, Inc., a
holding company; Partner in Clayton & Dubilier, Inc., an investment firm, from
September 1, 1988 through December 31, 1990
Director of NMC, APS Holding Corporation, Arvin Industries, Inc., Ingersoll-Rand
Company, K-Mart Corporation and The Scotts Company
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</TABLE>
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<TABLE>
<CAPTION>
DIRECTOR
NOMINEE SINCE
<S> <C>
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THOMAS A. HOLMES (70).............................................................. 1989
Retired Chairman and Chief Executive Officer of Ingersoll-Rand Company, a
manufacturer of machinery
Director of NMC, Arvin Industries, Inc., Becton Dickinson and Co. and W. R. Grace
& Co.
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GORDON R. PARKER (58).............................................................. 1981
Chairman of the Company; Retired Chief Executive Officer of the Company
Chairman and Director of NMC
Director of The Williams Companies, Inc.
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T. PETER PHILIP (61)............................................................... 1984
President of the Company and Chief Operating Officer of the Company since October
31, 1988
President and Chief Operating Officer and Director of NMC
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ROBIN A. PLUMBRIDGE (58)........................................................... 1989
Chairman and Chief Executive Officer of Gold Fields of South Africa Limited, a
natural resources company
Director of NMC, Driefontein Consolidated Limited and Kloof Gold Mining Company
Limited
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ROBERT H. QUENON (65).............................................................. 1988
Mining consultant since August 16, 1991; previously Chairman of Peabody Holding
Company, Inc., a coal producer, from August 16, 1990 through August 15, 1991;
previously President and Chief Executive Officer of Peabody Holding Company,
Inc.
Chairman of Federal Reserve Bank of St. Louis; Director of Laclede Steel Company
and Union Electric Company
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JAMES V. TARANIK (53).............................................................. 1986
President of Desert Research Institute, University and Community College System
of Nevada, an environmental research organization
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WILLIAM I. M. TURNER, JR. (65)..................................................... 1989
Chairman and Chief Executive officer of EXSULTATE INC., a holding company, since
July 1, 1990; previously Chairman and Chief Executive Officer of PCC
Industrial Corporation, a holding company, from February 1, 1989 through June
30, 1990; previously Chairman and Chief Executive Officer of Consolidated
Bathurst Inc., a forest products company
Director of NMC and Schroders PLC
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</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE FOREGOING
NOMINEES AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE
CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO VOTE.
RECENT DEVELOPMENTS. Effective as of January 1, 1994, NMC agreed to
transfer to the Company all of the assets of NMC, other than 85,850,101 shares
of the Company's common stock owned by NMC (approximately 89.22% of the
outstanding shares of the Company's common stock following completion of the
Transaction (as defined below)), in exchange for (i) the assumption by the
Company of all existing and future liabilities of NMC, but not NMC's obligations
with respect to NMC's $5.50
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<PAGE> 6
convertible preferred stock (other than accrued and unpaid dividends as of
December 31, 1993) and employee stock options of NMC exercisable for the common
stock of NMC, (ii) the issuance by the Company to NMC of preferred stock of the
Company having terms identical to the NMC's Preferred Stock (except that upon
conversion, NMC will be entitled to receive shares of Company common stock
(instead of NMC common stock)), and (iii) the issuance by the Company to NMC of
options exercisable for Company common stock on the same terms as NMC's options
(the preceding in its entirety, the "Transaction").
STOCK OWNERSHIP. As of March 17, 1994, all directors and executive officers
of the Company as a group beneficially owned 3,775 shares of the Company's
common stock, constituting in the aggregate less than 1% of the Company's
outstanding common stock. The nature of beneficial ownership of all such shares
is sole voting and investment power. Except as described under "Principal
Stockholders of NMC", as of March 17, 1994, all directors and executive officers
of the Company as a group beneficially owned 422,871 shares of NMC's common
stock, constituting in the aggregate less than 1% of NMC's outstanding common
stock. The nature of beneficial ownership of all such shares is sole voting and
investment power.
<TABLE>
<CAPTION>
NAME OF SHARES OF THE COMPANY SHARES OF NMC
BENEFICIAL OWNER COMMON STOCK OWNED COMMON STOCK OWNED
- ---------------------------------------------------- --------------------- ------------------
<S> <C> <C>
Rudolph I. J. Agnew................................. -- 2,000
John P. Bolduc...................................... -- --
Ronald C. Cambre.................................... -- 27,840(1)
Graham M. Clark, Jr. ............................... -- 20,050(1)
Joseph P. Flannery.................................. -- 2,200
Pierre Haas......................................... 2,000 2,000
Thomas A. Holmes.................................... -- 5,568
Walter R. Lawrence.................................. -- 63,555(1)
W. James Mullin..................................... -- 4,250(1)
Gordon R. Parker.................................... 1,200 127,886(1)
T. Peter Philip..................................... 100 33,763(1)
Robin A. Plumbridge................................. -- 2,000
Robert H. Quenon.................................... 300 300
James V. Taranik.................................... 100 100
William I. M. Turner, Jr. .......................... --
All directors and executive officers as a group,
including those named above (26 persons).......... 3,775 422,871(1)
</TABLE>
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(1) Includes 24,000, 55,500, 20,840, 15,750, 60,159, 4,250 and 294,517 shares of
NMC which Messrs. Cambre, Parker, Philip, Clark, Lawrence, Mullin and all
directors and executive officers as a group, respectively, have the right to
acquire on or within 60 days after March 17, 1994 by the exercise of options
granted by NMC.
PRINCIPAL STOCKHOLDERS OF NMC. The description of the beneficial ownership
of the outstanding NMC common stock and the other information which is set forth
below is based upon the Schedules 13D under the Securities Exchange Act of 1934
filed with the Securities and Exchange Commission by the persons reporting such
beneficial ownership and certain additional information provided by such persons
to NMC. The power of such persons to vote and dispose of the NMC common stock is
subject to the contractual arrangements described below.
Soros Restricted Group. According to a Schedule 13D dated April 23, 1993
(as amended by Amendment 1 thereto dated May 10, 1993, the "Soros Schedule 13D")
and Statements of Changes in Beneficial Ownership on Form 4, dated January 7,
1994, filed by Mr. George Soros ("Soros") with the Commission under the Exchange
Act, as of December 21, 1993, Quota Fund N.V. ("Quota"), Quantum Fund N.V.
("Quantum") and Quasar International Partners C.V. ("Quasar") beneficially owned
in the
4
<PAGE> 7
aggregate 8,461,450 shares of NMC common stock, or approximately 12.3% of the
outstanding NMC common stock. The shares of NMC common stock were acquired by
Quota, Quantum and Quasar at the direction of Soros Fund Management ("SFM"), an
investment advisory firm whose sole proprietor is Soros. SFM acts as the
principal investment manager or asset manager to Quota, Quantum and Quasar. The
sole power to direct the disposition of the shares of NMC common stock currently
owned by Quota, Quantum and Quasar is held by SFM. In addition, the authority to
vote such shares of NMC common stock is shared by SFM with Quota, Quantum and
Quasar, acting through their respective corporate officers, but, according to
the Soros Schedule 13D, SFM anticipates that, if exercised, such voting power
would be exercised in accordance with recommendations given by SFM. SFM shares
the power to direct the disposition of 8,200 shares of NMC's convertible
preferred stock, par value $5.50 per share, held by Quasar with D. Nolan
Management Company, Inc. ("Nolan"). The authority to vote these securities is
shared by SFM and Nolan with Quasar, acting through the corporate officers of
Quasar's managing general partner, but SFM anticipates that, if exercised, such
voting power would be exercised in accordance with recommendations given by
Nolan or SFM. According to the Soros Schedule 13D, Soros, as sole proprietor of
SFM, may be deemed to be the beneficial owner of the shares of NMC common stock
beneficially owned by Quota, Quantum and Quasar.
According to the Soros Schedule 13D and Statements of Changes in Beneficial
Ownership on Form 4 filed with the Securities and Exchange Commission on January
10, 1994 by Duquesne Capital Management Incorporated ("Duquesne") and Mr.
Stanley S. Druckenmiller ("Druckenmiller"), chief executive officer and
principal stockholder of Duquesne, as of December 9, 1993, certain clients of
Duquesne, for which Duquesne has investment discretion, beneficially owned
459,650 shares of NMC common stock, or approximately 0.7% of the outstanding NMC
common stock and Druckenmiller's spouse had an interest in 17,704 shares of NMC
common stock, or approximately 0.03% of the outstanding NMC common stock, for an
aggregate number of 477,354 shares of NMC common stock, or approximately 0.7% of
the outstanding NMC common stock, for which Druckenmiller may be deemed to have
a beneficial ownership interest. According to the Soros Schedule 13D,
Druckenmiller and Duquesne may be deemed to be beneficial owners of the shares
of NMC common stock beneficially owned by the clients of Duquesne.
Soros Standstill Agreement. In connection with the acquisitions of the
shares of NMC common stock described above, NMC entered into an agreement dated
as of May 10, 1993 (the "Soros Standstill Agreement") with Soros, SFM,
Druckenmiller, Duquesne, Quantum, Quasar and Quota (collectively, with certain
other entities, the "Soros Restricted Group") relating to permitted
stockholdings and certain other matters.
The following is a summary of provisions of the Soros Standstill Agreement.
This summary contains all material provisions of, but does not purport to be
complete and is qualified in its entirety by reference to, the Soros Standstill
Agreement, a copy of which was filed as an exhibit to NMC's Registration
Statement of NMC on Form S-3 (Registration Number 33-65271) (the "Registration
Statement"), filed with the Securities and Exchange Commission with respect to
the offering of certain shares of NMC common stock owned by DIA Holdings
(Overseas) B.V., RIT Capital Partners plc, each as more fully described below,
and Newgold Limited, an indirect, wholly owned subsidiary of RIT Capital
Partners plc.
Under the Soros Standstill Agreement, members of the Soros Restricted Group
are prohibited, with certain exceptions, from acquiring, prior to November 1,
1997, beneficial ownership of any Outstanding Voting Securities (as defined
therein) of NMC if, after such acquisition, the Soros Restricted Group would
beneficially own in the aggregate more than 13.5% of the Voting Power (as
defined therein) of all Outstanding Voting Securities, without obtaining the
prior consent of a majority of the Board of Directors of NMC, including a
majority of the directors who are not nominees of James M. Goldsmith. Goldsmith,
a former director of the Company and of NMC resigned from such positions as of
March 9, 1994. Since such date, he has had no affiliation with the Company or
with NMC other than through his direct and indirect ownership of NMC common
stock.
5
<PAGE> 8
Members of the Soros Restricted Group (other than any Fund, as defined
therein) may acquire beneficial ownership of any Outstanding Voting Securities
from the Goldsmith/Rothschild Restricted Group (as defined below) so long as the
aggregate percentage of the acquired Outstanding Voting Securities reduces the
percentage limitation set forth in the Goldsmith/Rothschild Standstill Agreement
(as defined below) (currently 36.4%) by an amount equal to the aggregate
percentage of Outstanding Voting Securities so transferred to the Soros
Restricted Group and members of the Goldsmith/Rothschild Group may acquire
beneficial ownership of any Outstanding Voting Securities from the Soros
Restricted Group so long as the aggregate percentage of the acquired Outstanding
Voting Securities reduces the percentage limitation set forth in the Soros
Standstill Agreement (currently 13.5%) by an amount equal to the aggregate
percentage of Outstanding Voting Securities so transferred to the
Goldsmith/Rothschild Group.
Subject to certain exceptions and, except as otherwise provided in the
Soros Standstill Agreement, no member of the Soros Restricted Group may assign,
sell or otherwise transfer any Voting Securities if such member or any of its
affiliates knows or, after reasonable inquiry, should have known, that the
transferee will beneficially own, after giving effect to such transfer, more
than an aggregate of 9.9% of the Voting Power of all Outstanding Voting
Securities, unless such transferee agrees to be bound by the provisions of the
Soros Standstill Agreement.
The Soros Restricted Group is obligated with respect to the election of
directors of NMC to vote, upon the request of NMC, the Voting Securities held by
the Soros Restricted Group for the nominees recommended by the Board of
Directors. On all other matters the Soros Restricted Group may vote such Voting
Securities as it determines in its sole discretion.
The Soros Standstill Agreement will terminate on the earlier of November 1,
1997, or the date of the occurrence of certain specified events, including (i)
the issuance by NMC of any new class of securities having the right to vote,
separately as a class, for directors, or to approve, separately as a class,
mergers or any other major transactions involving NMC unless the issuance and
specific terms of such new class of securities has been approved in advance by
the affirmative vote of a majority of the outstanding stock of NMC entitled to
vote thereon at an annual or special meeting called for the purpose of acting
thereon or (ii) upon notice by SFM that it has determined to terminate the Soros
Standstill Agreement effective on a date stated in such notice given within
ninety days after the execution or approval by NMC of (a) the disposition of its
interest in the Company which would result in NMC holding less than 51% of the
Company's outstanding common stock, (b) the sale, lease or exchange of all or
substantially all of the property or assets of the Company or (c) any plan of
reorganization or liquidation of NMC, in each case, without the prior approval
of a majority of the holders of the Outstanding Voting Securities.
The Goldsmith/Rothschild Restricted Group. As of July 15, 1993, DIA
Holdings (Overseas) B.V. ("DIA Overseas"), Jupiterstraat 158, 2130 AH Hoofddorp,
The Netherlands, was the direct beneficial owner with sole voting and investment
power of 3,400,000 shares, or 4.98%, of the outstanding NMC common stock.
Goldsmith is Chairman of the indirect parent corporation of DIA Overseas and has
certain authority with respect to the ultimate parent corporation of both DIA
Overseas and its direct and indirect parent corporations.
As of July 15, 1993, RIT Capital Partners plc ("RIT"), 27 St. James's
Place, London SW1A 1NR, England, was the direct beneficial owner with shared
voting and investment power of 1,000,000 Shares, or 1.46%, of the outstanding
NMC common stock.
J. Rothschild Capital Management Limited ("JRCML") is an indirect,
wholly-owned subsidiary of St. James's Place Capital plc ("SJPC"). Pursuant to
the terms of an investment management agreement between RIT and JRCML, JRCML
serves as the investment manager of RIT's portfolio investments and has
authority on behalf of RIT to vote and sell RIT's shares of NMC common stock
(subject to the terms of the Goldsmith/Rothschild Standstill Agreement (as
defined below)). As a result of JRCML's investment management agreement with
RIT, and the indirect ownership of JRCML by SJPC, SJPC
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<PAGE> 9
may be deemed to own beneficially the shares of NMC common stock beneficially
owned by RIT. The address of both SJPC and JRCML is 27 St. James's Place, London
SW1A 1NR, England.
Goldsmith/Rothschild Standstill Agreement. NMC is a party to an agreement
dated as of December 7, 1990, as amended by an Amendment thereto dated May 10,
1993 and certain other letter agreements with respect thereto (the
"Goldsmith/Rothschild Standstill Agreement") with certain entities including
Goldsmith (collectively, with those other entities, the "Goldsmith Group") and
with certain entities including Hornwood Investments N.V., SJPC, RIT and Jacob
Rothschild (collectively, with those other entities, the "Rothschild Group")
(the Goldsmith Group and the Rothschild Group, together the
"Goldsmith/Rothschild Restricted Group") relating to permitted stockholdings and
certain other matters.
The following is a summary of certain provisions of the
Goldsmith/Rothschild Standstill Agreement. This summary contains all material
provisions of, but does not purport to be complete and is qualified in its
entirety by reference to, the Goldsmith/Rothschild Standstill Agreement, a copy
of which was filed as an exhibit to the Registration Statement. Reference should
also be made to the entire Goldsmith/Rothschild Standstill Agreement for the
provisions not summarized below.
Under the Goldsmith/Rothschild Standstill Agreement, members of the
Goldsmith/Rothschild Restricted Group are prohibited, except as described above
under "Soros Standstill Agreement" and except as otherwise provided in the
Goldsmith/Rothschild Standstill Agreement, from acquiring, prior to November 1,
1997, beneficial ownership of any Outstanding Voting Securities (as defined
therein) of NMC if, after such acquisition, the Goldsmith/Rothschild Restricted
Group would beneficially own in the aggregate more than 36.4% of the Voting
Power (as defined therein) of all Outstanding Voting Securities. However, in
certain circumstances, Goldsmith has the right to make a tender offer, and any
member of the Rothschild Group shall have the right to participate as a bidder
in such tender offer, for any and all Outstanding Voting Securities.
If, at any time the Goldsmith/Rothschild Restricted Group beneficially
shall own 9.9% or more of the Voting Power of all Outstanding Voting Securities,
Goldsmith will have the right to recommend for nomination for election as
directors of NMC a number of persons relative to the number of persons
constituting the whole Board of Directors that is proportional to the percentage
of Voting Power of all Outstanding Voting Securities then beneficially held by
the Goldsmith/Rothschild Restricted Group, subject to certain limitations. The
Board of Directors is obligated to nominate for election as directors of NMC (i)
the number of qualified, acceptable persons recommended by Goldsmith as
described above, and (ii) so long as the Goldsmith/Rothschild Restricted Group
beneficially owns more than 25% of the Voting Securities (as defined therein), a
number of qualified persons who are independent of the management of NMC and of
the Goldsmith/Rothschild Restricted Group (the "Independent Directors") such
that, if all such persons were elected, the total number of Independent
Directors and persons whom Goldsmith is entitled to recommend as directors would
constitute at least a majority of all directors of NMC. The Goldsmith/Rothschild
Restricted Group is obligated with respect to the election of directors of NMC
to vote the Voting Securities held by the Goldsmith/Rothschild Restricted Group
for the nominees recommended by the Board of Directors. On all other matters the
Goldsmith/Rothschild Restricted Group may vote such Voting Securities as it
determines in its sole discretion.
The Goldsmith/Rothschild Standstill Agreement provides certain registration
rights to the Goldsmith/Rothschild Restricted Group in connection with a bona
fide public offering by the Goldsmith/ Rothschild Restricted Group.
Subject to certain exceptions and, except as otherwise provided in the
Goldsmith/Rothschild Standstill Agreement, no member of the Goldsmith/Rothschild
Restricted Group may assign, sell or otherwise transfer any Voting Securities if
such member or any of its affiliates knows or, after reasonable inquiry, should
have known, that the transferee will beneficially own, after giving effect to
such transfer, more than an aggregate of 9.9% of the Voting Power of all
Outstanding Voting Securities,
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<PAGE> 10
unless such transferee agrees to be bound by the provisions of the
Goldsmith/Rothschild Standstill Agreement.
The Goldsmith/Rothschild Standstill Agreement will terminate on November 1,
1997 unless terminated earlier in certain cases, including (i) the issuance by
NMC of any new class of securities having the right to vote, separately as a
class, for directors, or to approve, separately as a class, mergers or any other
major transactions involving NMC unless the issuance and specific terms of such
new class of securities has been approved in advance by the affirmative vote of
a majority of the outstanding stock of NMC entitled to vote thereon at an annual
meeting or special meeting called for the purpose of acting thereon, (ii) by
Goldsmith after the execution or approval by NMC of (a) the disposition of its
interest in the Company which would result in NMC holding less than 51% of the
outstanding common stock of the Company, (b) the sale, lease or exchange of all
or substantially all of the property or assets of the Company or (c) any plan of
reorganization or liquidation of NMC, in each case, without the prior approval
of a majority of the holders of the Outstanding Voting Securities, (iii) by
Goldsmith at any time during which the Goldsmith/Rothschild Restricted Group
holds more than 50% of the Voting Power of all Outstanding Voting Securities
acquired as a result of a tender offer or (iv) the earlier of the final
adjournment of the first annual meeting of the stockholders of NMC or the
creation of a Board of Directors of NMC of which a majority of the directors are
nominees of the Goldsmith/Rothschild Restricted Group, in either such case after
the Goldsmith/Rothschild Restricted Group beneficially owns more than 50% of the
Voting Power of all Outstanding Voting Securities acquired as a result of a
tender offer.
DIRECTORS' FEES, COMMITTEES AND MEETINGS. Directors who are neither
directors of NMC nor officers nor employees of the Company or of NMC or its
subsidiaries are entitled to receive $20,000 per annum for service on the
Company's Board of Directors. All directors are entitled to receive an
attendance fee of $1,000 per meeting of the Board of Directors. Each director
who is neither an officer nor an employee of the Company or of NMC or its
subsidiaries is entitled to receive an attendance fee of $750 per meeting of a
committee of which he is a member and $1,000 per meeting in the case of the
Chairman of the committee.
Mr. Parker has entered into a Consultation Agreement with the Company and
NMC effective as of October 31, 1993. Such agreement provides that Mr. Parker
will act as a consultant to each of NMC and the Company. Mr. Parker is entitled
to receive, in the aggregate, compensation under the agreement equal to $400,000
per annum from December 1, 1993 through December 31, and $300,000 per annum
through December 31, 1995. Mr. Parker is not entitled to any compensation as a
director of either of the Companies, other than compensation for meetings
actually attended. Mr. Parker is not entitled to participate in any directors'
stock award plan, although all stock options awarded to Mr. Parker under NMC's
1987 Key Employees Stock Option Plan and 1992 Key Employees Stock Plan prior to
his retirement on November 30, 1993 will continue to vest during 1994. As a
result of the Transaction (see "Recent Developments" above), the Company will be
responsible for payment of such compensation to Mr. Parker.
During 1993, the Board of Directors held eight meetings and each incumbent
director attended more than 75% in the aggregate of all meetings of the Board of
Directors and committees of the Board of Directors on which he served for the
period during which he was a member.
The Board of Directors has, in addition to other standing committees,
audit, compensation and nominating committees. Members of these three committees
are not, and have not been, officers or
8
<PAGE> 11
employees of the Company or of NMC or its subsidiaries. The members of these
committees during all of 1993 were:
<TABLE>
<CAPTION>
AUDIT COMPENSATION NOMINATING
- ---------------------- -------------------------- ----------------------
<S> <C> <C>
Joseph P. Flannery(1) Rudolph I. J. Agnew Rudolph I. J. Agnew
Pierre Haas Joseph P. Flannery Joseph P. Flannery(1)
Robin A. Plumbridge Thomas A. Holmes(1) Thomas A. Holmes
Robert H. Quenon William I. M. Turner, Jr.
James V. Taranik
</TABLE>
- ---------------
(1) Chairman
The Audit Committee recommends independent public accountants to act as
auditors for the Company for consideration by the Board of Directors, reviews
the Company's financial statements, confers with the independent public
accountants with respect to the scope and results of their audit of the
Company's financial statements and their reports thereon, reviews the Company's
accounting policies, tax matters and internal controls and oversees compliance
by the Company with requirements of the Financial Accounting Standards Board and
federal regulatory agencies. The Audit Committee also reviews non-audit services
furnished to the Company by the independent public accountants, primarily
consultation on tax matters. Access to the Audit Committee is given to the
Company's Controller. During 1993, the Audit Committee held three meetings.
The Compensation Committee's duties include recommending to the Board of
Directors the levels and forms of compensation to be paid to the officers and
key employees of the Company and to be paid to salaried employees generally.
During 1993, the Compensation Committee held six meetings.
The Nominating Committee's function is to propose to the Board of Directors
slates of directors to be elected at the Annual Meetings of Stockholders and
slates of officers to be elected by the Board of Directors. During 1993, the
Nominating Committee held four meetings. The Nominating Committee will consider
for nomination to become directors any persons recommended by stockholders.
Recommendations may be submitted to the Nominating Committee in care of the
Secretary of the Company.
CONTRACTUAL ARRANGEMENTS WITH NEWMONT MINING CORPORATION
MANAGEMENT SERVICES AGREEMENT. The Company and NMC were parties to a
Management Services Agreement pursuant to which the Company provided to NMC all
general executive, administrative and other services normally available from the
corporate personnel of the Company as NMC required from time to time in the
ordinary course of its business. NMC reimbursed the Company on an allocable
basis the costs incurred for providing such services, including salaries and
other compensation costs of executive officers of the Company who performed
services for NMC, office space rental and the costs of all other items
classified as general administrative overhead. In 1993, the amount charged under
the Management Services Agreement was $21.8 million. As a result of the
Transaction, this agreement was terminated effective as of January 1, 1994 (see
"Recent Developments" above).
EXPLORATION AGREEMENT. The Company and Newmont Exploration Limited
("NEL"), formerly a wholly-owned subsidiary of NMC and currently a wholly-owned
subsidiary of the Company, were parties to an Exploration Agreement pursuant to
which NEL undertook mine geology at the various mining operations on the
Company's properties. In 1993, the amount charged under the Exploration
Agreement was $19.4 million. As a result of the Transaction, this agreement was
terminated effective as of January 1, 1994 (see "Recent Developments" above).
TAX RELATIONSHIPS. The Company is included in the consolidated federal
income tax return of NMC and its 80% or greater owned subsidiaries, filed by NMC
as parent, and certain other state income tax returns filed by NMC on a combined
or consolidated basis. Effective January 1, 1994, NMC
9
<PAGE> 12
and the Company have entered into a new tax sharing agreement for the allocation
of federal and state income taxes.
Under the agreement, the Company has succeeded to all NMC federal and state
income tax attributes existing as of December 31, 1993, and has assumed all NMC
liabilities for federal and state income taxes, interest and penalties
attributable to tax periods ending on or before December 31, 1993.
For all tax periods beginning after December 31, 1993, the Company will
determine its federal and state tax income liability on a separate return basis,
which shall include the taxable income, loss, credits and other relevant tax
items attributable to all members of the Newmont consolidated or combined group
that are owned directly or indirectly by the Company.
Consistent therewith, the Company will pay to NMC the greater of regular
corporate income tax or the corporate alternative minimum tax, as applicable,
computed on a separate return basis, including interest and penalties. The
Company will tender payment to NMC no later than the time the Company would have
been required to pay income tax to the Internal Revenue Service ("IRS") or the
relevant state taxing authorities had the Company filed on a separate return
basis.
NMC, in turn, will pay to the Company amounts equal to the refunds the
Company would have been entitled to receive had the Company filed separate
company returns, including interest and rebate of penalties. NMC will tender
payment to the Company no later than the time the Company would have been
entitled to receive such tax refunds from the IRS or the relevant state taxing
authorities had the Company filed on a separate return basis.
The Company may deduct net operating losses from federal or state taxable
income as determined on a separate return basis. Such loss will be given effect
only to the extent that the losses reduced the actual tax liability of the
consolidated or combined group, or resulted in an actual refund of tax to the
group. NMC's obligation will not extend to any interest on such taxes.
In the event that the Company fails to satisfy its obligations regarding
payment of federal or state income taxes, interest and penalties under the
agreement, NMC can seek payment of such obligations from any member of the
Newmont consolidated or combined group that is owned directly or indirectly by
the Company.
EXECUTIVE COMPENSATION
As of November 1, 1993, Mr. Parker stepped down as Chief Executive Officer
of the Company and of NMC. On November 30, 1993 he retired as an employee, after
serving the Companies in various capacities for over 34 years. Mr. Parker will
continue to serve as Chairman of the Company and of NMC, however, and has been
retained by the Company and NMC as a consultant (see "Director's Fees,
Committees and Meetings" above). On November 1, 1993, Mr. Cambre was elected to
the offices of Chief Executive Officer and Vice Chairman of the Company and of
NMC.
During 1993, all executive officers of the Company participated in certain
NMC benefit plans and programs, including an incentive compensation plan,
pension plans, stock option plans, savings plans, a severance pay plan, an
officers death benefit plan and a group life insurance program. The cost of such
participation was allocated between the Company and NMC pursuant to the terms of
the Management Services Agreement. (See "Contractual Arrangements with Newmont
Mining Corporation" above.)
10
<PAGE> 13
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The following table shows
the net cash compensation paid by the Company (after recoveries from NMC), as
well as certain other compensation paid or accrued for 1993, 1992 and 1991, to
the Chief Executive Officer, to Mr. Parker, who served as Chief Executive
Officer through November 30, 1993 and to each of the Company's four most highly
compensated executive officers, other than the Chief Executive Officer, only for
services rendered to the Company. All of the named executive officers, except
Mr. Mullin, also served as executive officers of NMC in 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ----------------------
OTHER RESTRICTED SECURITIES
NAME/ ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) COMPENSATION AWARDS(2) OPTIONS(#) COMPENSATION(5)
- ------------------------------ ---- -------- -------- ------------ -------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre 1993 $ 23,000(3) $ 21,000 $ -- $ -- 242,000 $ --
Vice Chairman and 1992 N/A N/A N/A N/A N/A N/A
Chief Executive Officer 1991 N/A N/A N/A N/A N/A N/A
Gordon R. Parker 1993 105,194(3) 97,749 -- -- -- 2,070
Chairman 1992 69,150 47,220 -- 12,900 240,000(4) 4,850
1991 184,400 216,000 N/R -- 30,000 N/R
T. Peter Philip 1993 98,350(3) 52,917 -- 19,454 -- 2,610
President and 1992 75,000 45,101 -- 11,250 88,000(4) 5,750
Chief Operating Officer 1991 232,500 234,000 N/R -- 17,500 N/R
Graham M. Clark, Jr. 1993 96,750 46,266 -- 14,386 -- 4,050
Senior Vice President 1992 90,000 47,359 -- 10,800 120,000(4) 4,050
and General Counsel 1991 84,175 63,450 N/R -- 12,500 N/R
Walter R. Lawrence 1993 114,080 50,913 -- 13,332 -- 5,580
Senior Vice President, 1992 140,000 77,695 -- 19,200 120,000(4) 7,200
Operations 1991 132,413 90,000 N/R -- 10,000 N/R
W. James Mullin(6) 1993 120,625 29,468 -- -- 3,750(4) 7,238
Vice President and 1992 N/R N/R N/R N/R N/R N/R
General Manager 1991 N/R N/R N/R N/R N/R N/R
</TABLE>
- ---------------
N/R -- Not reportable
N/A -- Not applicable
(1) Represents the following percentages of total salary and bonus paid to the
named executive officers of the Company. Services rendered by these
individuals to NMC and its subsidiaries, other than the Company, have been
charged to and recovered from NMC.
<TABLE>
<CAPTION>
PERCENTAGE APPLICABLE
NAME YEAR TO THE COMPANY
--------------------------------------------------------------- ---- ---------------------
<S> <C> <C>
Ronald C. Cambre............................................... 1993 28%
1992 N/A
1991 N/A
Gordon R. Parker............................................... 1993 23%
1992 15%
1991 40%
T. Peter Philip................................................ 1993 29%
1992 25%
1991 90%
Graham M Clark, Jr............................................. 1993 45%
1992 45%
1991 47%
Walter R. Lawrence............................................. 1993 62%
1992 80%
1991 90%
W. James Mullin................................................ 1993 100%
1992 N/R
1991 N/R
</TABLE>
11
<PAGE> 14
(2) Value of restricted NMC common stock awards allocable to the Company
pursuant to the terms of the Management Services Agreement awarded under
NMC's Annual Incentive Compensation Plan for 1993 awarded at the election of
NMC's Compensation Committee in lieu of cash. See footnote 1, above. Such
shares, which are subject to a two-year vesting period, are entitled to
regular dividends payable by NMC.
(3) The amount shown for Mr. Cambre is based on annualized aggregate base salary
of $450,000 for the period from November 1, 1993 through December 31, 1993;
the amount shown for Mr. Parker is based on annualized aggregate base salary
of $461,000 for the period from January 1, 1993 through November 30, 1993.
The amount in this column also includes directors fees of $2,000, $8,000 and
$7,000 paid to Messrs. Cambre, Parker and Philip, respectively.
(4) These options vest over a period of five years except in the case of Mr.
Philip whose options vest over a period of approximately three years and in
the case of Mr. Mullin whose options vest over a period of two years. See
"Option Grants in 1993" table below.
(5) Represents the Company's net contributions and credits to NMC's Employee
Savings Plan and nonqualified supplemental Savings Equalization Plan for
Messrs. Parker, Philip, Clark, Lawrence and Mullin (See footnote 1, above.).
(6) Became an executive officer on December 15, 1993; previously he was Acting
General Manager of the Company.
STOCK OPTIONS GRANTED BY NMC. The following table contains information
concerning the grant of stock options by NMC in 1993 under its stock option
plans (at no cost to the Company) with respect to the named executive officers.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ------------------------------------------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO MARKET PRICE FOR OPTION TERM
OPTIONS PARTICIPANTS EXERCISE ON GRANT EXPIRATION -----------------------
NAME GRANTED (#) IN 1993 PRICE ($/SH) DATE ($/SH) DATE 5% 10%
- ----------------------- ----------- ------------- ------------ ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre....... 50,000(1) 9.9 51.07 51.07 10/31/03 $1,608,705 $4,060,065
96,000(2) 19.1 51.07 51.07 10/31/03 3,088,714 7,795,325
24,000(3) 4.8 55.00 51.07 10/31/03 677,858 1,854,511
24,000(3) 4.8 60.00 51.07 10/31/03 557,858 1,734,511
24,000(3) 4.8 65.00 51.07 10/31/03 437,858 1,614,511
24,000(3) 4.8 70.00 51.07 10/31/03 317,858 1,494,511
W. James Mullin........ 1,250(4) 0.3 46.88 46.88 4/26/03 36,918 93,174
2,500(4) 0.5 57.19 57.19 12/13/03 90,074 227,330
</TABLE>
- ---------------
(1) These options were granted by NMC on November 1, 1993 and become exercisable
for NMC common stock in four annual increments of 25% each commencing on
June 23, 1994.
(2) These options were granted by NMC on November 1, 1993 and become exercisable
for NMC common stock in four annual increments of 25% each commencing on
April 28, 1994. All of these options are exercisable at the indicated
exercise price but only if on the day prior to exercise the price of NMC's
common stock is at least 125% of the exercise price ($63.84).
12
<PAGE> 15
(3) These options were granted by NMC on November 1, 1993 and become exercisable
for NMC common stock in full, as follows:
<TABLE>
<CAPTION>
EXERCISE DATE ON
PRICE ($/SH) WHICH EXERCISABLE
- ------------ -----------------
<S> <C>
55.00........................................ June 23, 1994
60.00........................................ June 23, 1995
65.00........................................ June 23, 1996
70.00........................................ June 23, 1997
</TABLE>
(4) These options were granted by NMC on April 27, 1993 and December 14, 1993,
respectively, and become exercisable for NMC common stock for 50% of such
stock on the first anniversary date of each grant and for the remaining 50%
on the second anniversary date of each grant.
NMC OPTION EXERCISES AND HOLDINGS. The following table sets forth
information with respect to the named executive officers concerning the exercise
of NMC options in 1993 and unexercised NMC options held as of the end of 1993.
AGGREGATED OPTION EXERCISES IN 1993 AND
1993 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISABLE OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT 1993 YEAR-END (#) AT 1993 YEAR-END
ON VALUE ---------------------------- ----------------------------
EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre............... -- $ -- -- 242,000 $ -- $ 367,440(1)
Gordon R. Parker............... 162,167 2,913,296 31,500 48,000 309,015 545,760
T. Peter Philip................ 51,680 474,874 5,000 56,320 89,050 611,899
Graham M. Clark, Jr. .......... 69,250 1,130,214 3,750 96,000 66,788 1,008,360
Walter R. Lawrence............. -- -- 48,159 96,000 763,162 1,008,360
W. James Mullin................ 3,125 41,484 3,625 5,000 49,555 29,344
</TABLE>
- ---------------
(1) Does not include any value with respect to NMC options with an exercise
price of $51.07 which are exercisable only if on the day prior to exercise
the price of NMC's common stock is at least 125% of the exercise price
($63.84) since the fair market value of NMC's common stock on December 31,
1993 was $57.31.
PENSION PLANS AND OTHER RETIREMENT BENEFITS. The following table shows the
estimated pension benefits payable to a covered participant at normal retirement
age under NMC's qualified defined benefit pension plan (the "Pension Plan"), as
well as under NMC's nonqualified supplemental pension plan (the "Pension
Equalization Plan") that provides benefits that would otherwise be denied
participants by reason of certain Internal Revenue Code limitations on qualified
plan benefits, based on remuneration that is covered under the plans and years
of service with NMC, the Company and their subsidiaries.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 100,000............................ $ 26,250 $ 35,000 $ 43,750 $ 52,500 $ 61,250
150,000............................ 39,375 52,500 65,625 78,750 91,875
200,000............................ 52,500 70,000 87,500 105,000 122,500
250,000............................ 65,625 87,500 109,375 131,250 153,125
300,000............................ 78,750 105,000 131,250 157,500 183,750
350,000............................ 91,875 122,500 153,125 183,750 214,375
400,000............................ 105,000 140,000 175,000 210,000 245,000
450,000............................ 118,125 157,500 196,875 236,250 275,625
500,000............................ 131,250 175,000 218,750 262,500 306,250
550,000............................ 144,375 192,500 240,625 288,750 336,875
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
600,000............................ 157,500 210,000 262,500 315,000 367,500
650,000............................ 170,625 227,500 284,375 341,250 398,125
700,000............................ 183,750 245,000 306,250 367,500 428,750
750,000............................ 196,875 262,500 328,125 393,750 459,375
800,000............................ 210,000 280,000 350,000 420,000 490,000
850,000............................ 223,125 297,500 371,875 446,250 520,625
900,000............................ 236,250 315,000 393,750 472,500 551,250
950,000............................ 249,375 332,500 415,625 498,750 581,875
1,000,000............................ 262,500 350,000 437,500 525,000 612,500
1,050,000............................ 275,625 367,500 459,375 551,250 643,125
1,100,000............................ 288,750 385,000 481,250 577,500 673,750
</TABLE>
A participant's remuneration covered by the Pension Plan is his or her
average base salary and bonus, including amounts paid in the form of NMC
restricted stock (as reported in the Summary Compensation Table) for the five
consecutive years during the last ten years of the participant's career for
which such average is the highest or, in the case of a participant who has been
employed for less than five full years, the period of his or her employment with
NMC and its subsidiaries. The approximate term of service as of the end of 1993
for each named executive is: Mr. Cambre two months; Mr. Philip 35 years; Mr.
Clark 10 years; Mr. Lawrence 17 years; Mr. Mullin 24 years. Benefits shown are
computed on a straight single life annuity beginning at age 62. Such amounts
have not been reduced for Social Security benefits.
OFFICERS' DEATH BENEFIT PLAN AND GROUP LIFE INSURANCE PROGRAM. The Company
is a participating employer in NMC's Officers' Death Benefit Plan. The plan
provides a death benefit of three times annual base salary for an executive
officer who dies while an active employee and a death benefit of one times final
annual base salary for an executive officer who dies after retiring at or after
normal retirement age. Messrs. Parker, Philip and Clark were participants in a
prior plan and have a death benefit of the greater of $770,000 or three times
annual base salary while an active employee and a post-retirement death benefit
for these three executive officers based on retirement at or after normal
retirement age, of the greater of $385,000 or one times final annual base
salary. For retirement prior to normal retirement age, the post-retirement death
benefit for these three executive officers is 30% to 100% of the greater of
$385,000 or one times final annual base salary, depending on the number of years
to normal retirement age. Coverage under the Officers' Death Benefit Plan
includes group life insurance maintained for the benefit of all salaried
employees of the Company.
EXECUTIVE AGREEMENTS. Employment agreements are currently in effect between
NMC and Messrs. Cambre and Philip.
Mr. Cambre's employment agreement provides for an aggregate base salary of
$450,000 per annum through December 31, 1993 and $500,000 per annum through
December 31, 1994. Thereafter, the amount of Mr. Cambre's base salary will be
established by the Board of Directors. Pursuant to his employment agreement, Mr.
Cambre was awarded a bonus for 1993 in the amount of $75,000 ($21,000 net to the
Company after recoveries from NMC). Such amount was awarded in respect of Mr.
Cambre's 1993 services and was based on the level of performance-based bonus
that the Board of Directors determined was commensurate with the
responsibilities undertaken by Mr. Cambre on behalf of the Company. Mr. Cambre's
employment agreement is effective until his 62nd birthday, unless terminated
earlier as provided in the agreement. In the event Mr. Cambre's employment is
terminated without "cause" (as defined below) and without any breach by Mr.
Cambre of his agreement, Mr. Cambre will be entitled to receive a lump sum
payment equal to twice his base salary for each twelve-month period in the
remaining term of his employment, provided that such term will not exceed two
years.
Mr. Philip's employment agreement provides for an aggregate base salary, as
adjusted through 1993, of $315,000 per annum. In the event Mr. Philip's
employment is terminated without "cause" (as defined below) and without any
breach by Mr. Philip of his agreement, Mr. Philip will be entitled to
14
<PAGE> 17
receive an amount equal to the total base salary and incentive compensation that
would have been payable to him during the remaining term of his employment,
which term expires on April 1, 1995. The amount of "incentive compensation"
payable to Mr. Philip after such a termination will be based on prior annual
incentive compensation payments, but will, in no event, be less than 70% of Mr.
Philip's base salary in effect at the time of termination. In addition, Mr.
Philip will continue to participate in NMC's health and welfare plans throughout
the succeeding two-year period and to enjoy all rights under NMC's pension and
other benefit plans. Disputes as to any termination of Mr. Philip's employment
are subject to binding arbitration. The agreement states that it shall be
binding upon any successor to NMC.
Mr. Philip has announced his intention of retiring from his position as
President and Chief Operating Officer and as a director of the Company and NMC
as of December 31, 1994. From January 1, 1995 through April 1, 1995, he will
continue to be employed by the Company in an advisory capacity, at a salary (on
an annualized basis) of $200,000 per year. It is anticipated that, from April 2,
1995 through December 31, 1995, Mr. Philip will act as a consultant to the
Company pursuant to an agreement to be negotiated.
Supplemental severance agreements are currently in effect between NMC and
Messrs. Clark and Lawrence. These agreements expire on December 31, 1994. In the
event their employment is terminated other than for "cause" (as defined below)
then they will be entitled to twelve months pay and benefits. Included in such
amount is an incentive compensation payment, which is based on prior years'
incentive payments, but which will in no event be less than 25% of the
executive's base salary for the applicable measurement period. In the event of
termination of employment within two years following a defined change in control
of NMC, Messrs. Clark and Lawrence will be entitled to eighteen months pay and
benefits. Any benefits to which they are entitled from NMC's Severance Pay Plan
reduce the benefits due under these agreements.
"Cause" as a basis for termination in the executive employment agreements
described above is generally limited to (i) misappropriation of funds of the
Company, (ii) conviction of a felony, (iii) obtaining personal benefit from any
transaction between the Company and a third party without the prior approval of
such profit by the Board of Directors or (iv) obtaining a personal profit from
the sale of the Company's trade secrets.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of directors who are neither officers nor employees of the
Company. The Committee is responsible to the Board and by extension to the
stockholders for setting and administering the policies which govern both annual
compensation and stock incentive programs for the Company's executive officers
and other key employees. There are three elements to the Company's executive
compensation program: base salaries, annual incentives and stock options.
BASE SALARY. The base salaries of Mr. Cambre and other executive officers
fall within salary ranges that reflect competitive pay levels within the mining
industry as a whole for the positions they hold. The Company subscribes to and
participates in executive level surveys that address compensation in the mining
industry and in U.S. industry, generally. Such surveys include some, but not all
of, and are not limited to, the companies that are represented in the S&P Gold
Index shown on the Corporation's Performance Graph, below. Based on such
information, the Committee believes that salaries of the Company's executive
officers are generally at the median of executive salaries for comparable
positions in the mining industry.
Base salary increases are considered on the basis of changes in industry
levels, subject to evaluated individual contribution and the Company's
performance in the prior year. Mr. Parker's base salary was not increased in
1993, because the Committee believed that increases in Mr. Parker's total
compensation for this period would be better implemented through year-end
incentive performance awards rather than through base salary adjustments.
15
<PAGE> 18
ANNUAL INCENTIVES. Annual incentive awards are made pursuant to NMC's
Annual Incentive Compensation Plan. Executive officers (and other employees at
specified salary levels) are eligible to receive both a corporate performance
award and a personal performance award. Corporate performance awards are paid in
cash and are based upon the Company's attainment of production and cost-of-
production goals which are established annually in advance by NMC's Board of
Directors on the recommendation of its Compensation Committee after consultation
with the Company. At year-end, actual cash costs of production are adjusted to
consider the effect of actual production over or under targeted production. Such
adjusted costs are then compared with targeted costs to determine a "corporate
performance percentage". The Company must achieve a minimum performance
percentage (designated by the NMC Board of Directors, after consultation with
the Company's Board of Directors, to be 85%) before any awards based on
corporate performance can be made to participants in the Plan. Corporate
performance awards are incrementally increased in accordance with incrementally
higher performance percentages (with the maximum percentage being 120%). In
1993, the Company achieved a performance percentage of 104%. In addition, each
year NMC's Board of Directors designates a minimum average price of gold per
ounce when the corporate performance target is determined. No incentive awards
may by paid in respect of any year in which NMC does not realize such minimum
average price of gold per ounce.
Personal performance awards are based upon an evaluation of a participant's
personal contribution to the Company's and NMC's success and are also typically
paid in cash. However, for 1993 personal performance awards to Messrs. Philip,
Clark and Lawrence were paid 50% in cash and 50% in the form of restricted
shares of NMC's common stock, subject to two-year vesting provisions. The
restricted stock component of the annual incentive award program is intended to
align the interests and motivation of such recipients with NMC's stockholders
and by extension the Company's stockholders. It is the Committee's view that
such ownership will positively influence long-term decision making, since awards
for current performance will be impacted by future stock prices. In making
incentive awards based on the personal performance of the Company's executive
officers, the Committee considers a variety of factors, including the success of
each executive in accomplishing significant tasks on behalf of NMC and the
Company. Because most of the Company's officers and employees devote their time
to the mutual interests of the Company and NMC, substantial portions of the
personal performance awards reflect achievements that benefit both Companies. In
1993, for example, the Company's senior management devoted considerable effort
to planning and preparing for the Transaction. (See "Recent Developments"
above.) In addition, the viability of projects in various global locations, such
as Uzbekistan, Indonesia and Peru, depended on the ability of the Companies'
officers and employees to manage and resolve regulatory, financial,
technological, operational and other issues in new and challenging environments.
The 1993 personal performance awards made to senior executives were strongly
influenced by each executive's contributions to the ongoing success of such
projects and to the positioning of the Company and NMC for future worldwide
activity.
Corporate and personal performance awards are calculated as a percentage of
base salary. In general, performance awards represent a higher percentage of
salary for recipients holding positions of greater responsibility in the
Company.
The Chief Executive Officer's corporate performance award is based on the
corporate performance percentage described above, while his personal performance
award is based on his individual accomplishments as well as the overall results
of NMC and the Company. Mr. Parker's total all cash annual incentive award for
1993 of $424,995 was approximately equal to his prorated base salary for the
portion of the year prior to his retirement on November 30, 1993. Approximately
$170,000 of such incentive award (40% of the total award) was based on a
"corporate performance percentage" of 104% pursuant to NMC's Annual Incentive
Compensation Plan as described above. Approximately $255,000 (60% of the total
award) was based on Mr. Parker's personal performance evaluation, which reflects
Mr. Parker's continuing leadership in developing and executing NMC's projects in
Uzbekistan, Indonesia and Peru, in structuring and working toward completion of
the Transaction and in the positioning of the Companies for future growth. Such
award was also influenced by a 52% increase in NMC's net income per share (over
1992 net income per share) and a 43% increase in the Company's net income per
share (over 1992 net income per share). Mr. Parker's total 1993 incentive award
16
<PAGE> 19
exceeded his 1992 award (which consisted of cash and restricted stock) by 6%.
All incentive compensation amounts described above are before recoveries from
NMC.
Mr. Cambre was awarded a bonus for 1993 in the amount of $75,000 (before
recoveries from NMC) as a condition to his agreement to join the Company and NMC
as Chief Executive Officer and Vice Chairman. Such bonus reflects, on a prorated
basis, the bonus that the Committee believes is commensurate with the
responsibilities undertaken by Mr. Cambre as Chief Executive.
STOCK OPTIONS. The third element of executive compensation -- stock
options -- is long-term in nature. In 1992, NMC's Compensation Committee, which
is also responsible for administering NMC's stock option plans, suspended its
practice of making semi-annual stock option grants to Messrs. Parker, Philip,
Clark and Lawrence. Instead, NMC's Compensation Committee awarded special equity
option grants to these executives. In addition, Mr. Cambre was also awarded
special equity option grants in November 1993. The awards were based upon
recommendations contained in a study undertaken for NMC's Compensation Committee
by an independent compensation consultant who had been asked to design an option
program which would align the financial interests of its key executives more
closely with those of the stockholders of NMC. The Committee concurred with
these forms of awards.
The equity awards are essentially stock options with special pricing
features. With respect to half of the special grant the options have no value
unless NMC's common stock price rises to 125% of the exercise price on the day
prior to exercise. With respect to the other half of the special grants the
exercise prices are set at succeedingly higher levels above the value of NMC's
common stock on the grant date. Termination of employment before vesting for any
reason (other than a defined change-in-control) generally causes cancellation of
the unvested portion. Individuals must own and place on deposit with NMC a
number of shares equal to 2% of the option shares they were granted. The purpose
of the deposited shares is to evidence a commitment to ownership and risk on the
part of the executive in exchange for the leveraged opportunity to participate
in the growth in share value represented by the options, which are otherwise a
"riskless" grant. The shares come off deposit when an option is exercised or
expires. If the required number of shares are not placed on deposit, or if they
are taken off deposit early, the option is proportionately reduced. No new
grants to Messrs. Cambre, Philip, Clark and Lawrence are contemplated for
several years. Mr. Parker is no longer eligible to receive grants.
SUMMARY. The Committee believes that, with respect to Messrs. Cambre,
Philip, Clark, Lawrence and Mullin, the combination of competitive base
salaries, potentially significant performance-based annual incentives paid
partially in restricted stock, and a highly leveraged equity incentive
represented by premium-priced options combined with an ownership commitment,
represents a highly motivational and effective senior executive compensation
program that strongly aligns the interests of management with those of the
stockholders in achieving above average long-term returns on investment.
RECENT TAX LAW CHANGES. Under the Revenue Reconciliation Act of 1993,
section 162 of the Internal Revenue Code was amended to eliminate, with certain
exceptions, the deduction for certain compensation in excess of $1 million to
any named executive officer, including the Chief Executive Officer. The
Committee believes that the NMC stock option plans comply with the exceptions to
this new limitation. Because the exceptions to such limitation as applicable to
the Company's incentive compensation awards, however, could inhibit the
Committee's ability to adjust performance criteria as it deems appropriate, and
because the Committee does not currently anticipate any significant increase in
tax liability to the Company as a result of the section 162 amendments, the
Committee has not altered its approach to setting executive compensation in
response to such amendments. Should the compensation levels of the Chief
Executive Officer or any of the other named executive officers materially affect
the Company's tax position in the future, the Committee will consider
establishing performance criteria that will allow the Company to avail itself of
all appropriate tax deductions.
Submitted by the Compensation Committee of the Company's Board of
Directors:
<TABLE>
<S> <C>
Thomas A. Holmes, Chairman Joseph P. Flannery
Rudolph I. J. Agnew William I. M. Turner, Jr.
</TABLE>
17
<PAGE> 20
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The following graph assumes $100 invested on December 31, 1988 in the
Company's common stock, the S&P 500 Index and the S&P Gold Index.
CUMULATIVE VALUE OF $100 INVESTMENT
ASSUMING REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NEWMONT GOLD S&P 500 IN- S&P GOLD
(FISCAL YEAR COVERED) COMPANY DEX INDEX
<S> <C> <C> <C>
1988 100 100 100
1989 143 132 145
1990 123 128 128
1991 116 166 104
1992 94 179 97
1993 137 197 178
</TABLE>
SECTION 16(A) REPORTING
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission. All Section 16(a)
filing requirements applicable to the Company's directors and executive officers
were complied with except that one purchase of 2,000 shares of the Company's
common stock by Pierre Haas, a director, was reported on Form 5. Such Form 5 was
filed in lieu of a Form 4, which should have been filed approximately one month
earlier.
(2) OTHER MATTERS
The Board of Directors does not intend to bring other matters before the
Annual Meeting of Stockholders except items incident to the conduct of the
meeting. However, on all matters properly brought before the meeting by the
Board of Directors or by others, the persons named as proxies in the
accompanying proxy, or their substitutes, will vote in accordance with their
best judgment.
18
<PAGE> 21
P NEWMONT GOLD COMPANY
R PROXY SOLICITED BY BOARD OF DIRECTORS FOR
O ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 12, 1994
X
Y The undersigned hereby appoints GRAHAM M. CLARK, JR., WAYNE W. MURDY
and TIMOTHY J. SCHMITT, and each or any of them as proxies, with full
power of substitution and revocation, to represent the undersigned and
to vote all shares of the common stock of Newmont Gold Company which
the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on Thursday, May 12, 1994 at
9:00 a.m., local time, in the John D. Hershner Room, 1700 Lincoln
Street, Denver, Colorado, and any adjournments thereof, upon the
matter listed on the reverse side hereof. The proxies appointed hereby
may act by a majority of said proxies present at the meeting (or if
only one is present, by that one).
Election of Directors -- Nominees:
R.I.J. Agnew, J.P. Bolduc, R.C. Cambre,
J.P. Flannery, T.A. Holmes,
G.R. Parker, T.P. Philip, R.A. Plumbridge,
R.H. Quenon, J.V. Taranik, W.I.M. Turner, Jr.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOX, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
( SEE )
( REVERSE )
( SIDE )
<PAGE> 22
(X) Please mark your 0233
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF
DIRECTORS.
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES FOR
ELECTION OF DIRECTORS (SEE REVERSE):
- ------------------------------------------------------------------------------
FOR WITHHELD
Election of ( ) ( )
Directors (see
reverse)
For, except vote withheld from the following
nominee(s):
- --------------------------------------------
- ------------------------------------------------------------------------------
Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
Each signer hereby revokes all
previously signed proxies to vote
at the meeting or any adjournments
thereof.
-----------------------------------
-----------------------------------
SIGNATURE(S) DATE
