<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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
PUERTO RICAN CEMENT COMPANY, INC.
- --------------------------------------------------------------------------------
(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)(1) 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:
(4) Date Filed:
<PAGE> 2
PUERTO RICAN CEMENT COMPANY, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1997
---------------------
The annual meeting of stockholders of Puerto Rican Cement Company, Inc.
(the "Company") will be held at the office of the Company, Amelia Industrial
Park, Guaynabo, Puerto Rico, on Wednesday, May 7, 1997 at 10:00 a.m. Atlantic
Standard Time for the following purposes:
1. The election of five Class I directors for a term of three years
and until election and qualification of their successors.
2. The transaction of such other business as may lawfully come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 19, 1997 will
be entitled to vote at the meeting.
It is important that your stock be represented at the meeting. If you do
not expect to be present, you are urged to date, sign and mail promptly the
enclosed proxy. For your convenience, we enclose a self-addressed envelope to
which no postage need be affixed if mailed in the United States or Puerto Rico.
The Company's executive office is located in Guaynabo, Puerto Rico. Its
mailing address is P.O. Box 364487, San Juan, Puerto Rico 00936-4487. It is
anticipated that the proxy material will be mailed to stockholders on or about
March 31, 1997.
By Order of the Board of Directors
Etienne Totti del Valle
Secretary
Guaynabo, Puerto Rico
March 31, 1997
<PAGE> 3
PUERTO RICAN CEMENT COMPANY, INC.
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS, MAY 7, 1997
The enclosed proxy is being solicited by the Board of Directors of the
Company for the annual meeting of stockholders to be held on May 7, 1997. This
proxy statement and the accompanying Notice of Annual Meeting of Stockholders
and proxy card are being mailed to stockholders beginning on or about March 31,
1997. In addition to solicitation by mail, solicitation of proxies may be made
personally or by telephone or other means by the Company's regular employees. If
the proxy is executed and returned in time for voting, the shares represented
thereby will be voted. Stockholders have the right to revoke their proxies at
any time prior to the time their shares are actually voted. If revocation is
made by mail, it should be sent to Jose O. Torres, Assistant Secretary, Puerto
Rican Cement Company, Inc., P.O. Box 364487, San Juan, Puerto Rico 00936-4487.
The cost of solicitation will be paid by the Company. The Company has
retained the services of Georgeson & Co., Inc., New York, New York, to assist in
the solicitation of proxies at a cost of $6,500.00. Brokers, nominees and other
similar record holders will be requested to forward proxies and proxy materials
to the beneficial owners of the shares and will be reimbursed by the Company for
their expenses.
VOTING SECURITIES
As of March 19, 1997, the Company had outstanding 5,527,074 shares
(exclusive of 472,926 treasury shares) of Common Stock, par value $1 per share.
Each outstanding share of Common Stock is entitled to one vote. Only
stockholders of record at the close of business on March 19, 1997 will be
entitled to vote at the meeting. For information regarding principal holders of
the Company's Common Stock, see "Information about Nominees, Directors, and
Principal Stockholders" below.
ELECTION OF DIRECTORS
The current Class I directors are Carlos J. Suarez, Oscar A. Blasini, Luis
Alberto Ferre Rangel, Miguel A. Nazario and Hector del Valle. The current Class
II directors are Rosario J. Ferre, Esteban D. Bird, Federico F. Sanchez, Jorge
L. Fuentes, Juan A. Albors and Federico M. Stubbe. The Class III directors are
Antonio Luis Ferre, Alberto M. Paracchini, Jose J. Suarez, Carlos del Rio,
Emilio J. Venegas and Antonio Luis Ferre Rangel. Each class serves a three-year
term, which terms are currently to expire on the date of the respective annual
meetings as follows: Class I, 1997; Class II, 1998; and Class III, 1999. At the
Board meeting held in July 1996, Mr. Jose A. Fernandez Paoli resigned as a Class
III director and at its meeting of September 1996, the Board named Carlos del
Rio to the Class III position left vacant by Mr. Paoli.
It is anticipated that the proxy will be voted for the individual nominees
for Class I directors named below, unless authority is withheld to vote for all
or any of such individuals as indicated on the proxy card. Director Carlos J.
Suarez reached mandatory retirement age in accordance with policies established
by the
<PAGE> 4
Board of Directors and will not run for election as a Class I director. At its
meeting of February 28, 1997, the Board submitted Waldemar Del Valle Armstrong
as nominee for this vacancy based on the recommendations of the Nominating
Committee. Director Hector Puig Ramirez passed away on March 3, 1997 and the
Board did not submit a nominee to run for election in his place. At its regular
meeting on March 26, 1997, the Board of Directors voted to amend Article III
Section 1 of the Company's By-Laws to reduce the number of directors from the
present 18 to 17. The names of the nominees for Class I directors are: Waldemar
Del Valle Armstrong, Luis Alberto Ferre Rangel, Oscar A. Blasini, Miguel A.
Nazario, and Hector del Valle. All nominees, except for Waldemar Del Valle
Armstrong, currently are directors of the Company and were elected at the annual
meeting in 1994 as Class I directors. Pursuant to the Company's By-laws, the
election of any director requires an affirmative vote of a majority of the votes
of the Company's Common Stock represented at the Annual Meeting in person or by
proxy and entitled to vote on that proposal. Votes cast by proxy or in person at
the Annual Meeting will be counted by the persons appointed by the Company to
act as election inspectors for the meeting. The election inspectors will treat
shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions, however, will constitute a vote "against" any proposal. The
election inspectors will treat "broker non-votes" (i.e. shares held by brokers
or nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote and with respect to which the broker or
nominee does not have discretionary power to vote on a particular matter) as if
the broker never voted. If no directive is given, with respect to each proposal,
the proxy will be tallied as a vote "for" management.
Each Class I director elected at this meeting shall serve from the time of
election and qualification until the third annual meeting following election and
until a successor shall have been elected and shall have qualified. If any
nominee is unable to serve as a director, an event which the Company does not
now anticipate, the proxy will be voted for a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE CLASS I DIRECTOR NOMINEES NAMED ABOVE.
INFORMATION ABOUT NOMINEES, DIRECTORS AND PRINCIPAL STOCKHOLDERS
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1997
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
CLASS I DIRECTORS AND NOMINEES
Waldemar del Valle Armstrong 44 Since 1982 Partner at law firm of Parra, Nominee 800(b)
Del Valle, Frau & Limeres; since 1996
director Damas Inc., non profit
hospital; Director of Ranfe, Inc.,
since 1995.
Oscar A. Blasini 60 President of G.B. Investments, Inc. 1975 300(b)
(real estate development and
investment company) since 1981.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1997
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
Miguel A. Nazario 49 President and Chief Executive Officer of 1994 1,000(b)
the Company since January 1995 and
Vice President from August 1994
through December 1994; Process Manager
for Worldwide Manufacturing of Digital
Equipment Corp. (computer company)
from 1993 to 1994; Manager for U.S.
and Latin American Operations of
Digital Equipment Corp. from 1992 to
1993; President and General Manager of
Puerto Rican Operations of Digital
Equipment Corp. from 1987 to 1992.
Hector del Valle 59 Vice Chairman of the Board of the 1987 None
Company since January 1, 1995,
President from 1988 to December 1994,
Director since 1987 and Senior Vice
President -- Finance and Secretary
from 1983 to 1987.
Luis Alberto Ferre Rangel 30 Business Editor, since February 1995, 1996 28,939(d)
Assistant Editor from August 1992 to (0.52%)
January 1995, Reporter from February
1990 to July 1992 of El Dia Inc.
(newspaper) (an adult son of Antonio
Luis Ferre).
CLASS II DIRECTORS
Rosario J. Ferre 58 Second Vice President since 1983 and 1992 32,688(c)
Director since 1960 of Luis A. Ferre (0.59%)
Foundation, Inc. and Ponce Museum of
Art (non profit foundation) (an adult
daughter of Luis A. Ferre and sister
of Antonio Luis Ferre).
Esteban D. Bird 65 President of Bird Construction Company 1973 None
(general contractors) since 1964;
Director of BanPonce Corporation (bank
holding company) and of Banco de Ponce
(commercial bank) from 1989 to 1990;
Director of Banco Popular de Puerto
Rico (commercial bank) since 1991.
Federico F. Sanchez 55 President of Federico F. Sanchez & 1982 366(b)
Company, Inc. since 1977; President of
Interlink Group, Inc. (real estate
consultants, brokers and developers)
since 1986.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1997
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
Jorge L. Fuentes 48 Chairman of the Board and Chief 1984 None
Executive Officer of Gabriel Fuentes,
Jr. Construction Company, Inc.
(general contractors) since 1986;
Chairman of the Board, Chief Executive
Officer and Director of Fuentes
Concrete Pile Inc. (manufacturers of
concrete pile foundations) since 1986;
Director of the Bank and Trust of
Puerto Rico (commercial bank and
trust) since 1988.
Juan A. Albors 60 President and General Partner Albors 1986 2,100(b)
Development Corporation (real estate
developers and investors) since 1977;
Director of BanPonce Corporation (bank
holding company) and Banco de Ponce
(commercial bank) from 1984 to 1990;
Director of Banco Popular de Puerto
Rico (commercial bank) since 1990;
member from 1985 to 1993 and Chairman,
from 1989 to 1993, of the Board of
Governors of the Puerto Rico Maritime
Shipping Authority.
Federico M. Stubbe 48 President of Comunidades Fermaral Inc. 1993 None
(residential real estate developers)
since 1987.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1997
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
CLASS III DIRECTORS
Antonio Luis Ferre 63 Chairman of the Board of the Company 1959 617,125(d)
since January 1, 1995, Vice Chairman (11.17%)
from 1985 through December 1994 and
Chairman from 1980 through 1985;
President of El Dia, Inc. (newspaper
publishing company) since 1969;
Director of Metropolitan Life
Insurance Company of New York
(insurance company) from 1987 to 1995
and Member of the Directors Advisory
Committee since 1995; Director and
Vice Chairman of BanPonce Corporation
(bank holding company) since 1984 and
Banco de Ponce (commercial bank) from
1959 to 1990; Director and Vice
Chairman of Banco Popular de Puerto
Rico (commercial bank) since 1991;
Director of Pueblo ExtraSupermarkets
(food retailer) from 1993 to 1995
(father of Antonio Luis Ferre Rangel
and Luis Alberto Ferre Rangel, adult
son of Luis A. Ferre and brother of
Rosario J. Ferre).
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1997
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
Alberto M. Paracchini 64 Vice Chairman of the Board of the 1968 None
Company and Director since 1968;
Chairman of the Board and Chief
Executive Officer from 1983 to 1990
and President from 1980 to 1990 of
Banco de Ponce (commercial bank);
President from 1984 to 1990, Chairman
of the Board from 1985 to 1993 and
Director from 1985 to present of
BanPonce Corporation (bank holding
company); Chairman of the Board from
1986 to 1993 of Vehicle Equipment
Leasing Corporation (automobile
leasing company); Director since 1991
and Chairman of the Board from 1991 to
1993 of Banco Popular de Puerto Rico
(commercial bank), Popular Leasing &
Rental, Inc. and Popular Consumer
Services, Inc; Director of HDA
Management Corporation since December
1993, Equus Management Company, Inc.
since August 1994 and Venture Capital
Fund since March 1994.
Carlos Del Rio 47 Senior Vice President & COO MOVA 1996 None
Pharmaceutical Corp. since 1996; from
1983 to 1995 Senior Vice President and
Director of Worlwide Operations,
SmithKline Beecham (pharmaceutical
company)
Emilio J. Venegas 69 President and Director of Sanson 1977 33,000
Corporation (rock and concrete (0.6%)
products) since 1983; Secretary and
Director of Venegas Construction
Corporation (general contractors)
since 1989; Director of BanPonce
Corporation (bank holding company)
since 1984 and Banco de Ponce
(commercial bank) from 1973 to 1990.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1997
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
Jose J. Suarez 61 Consultant to the Company since January 1989 None
1996, Executive Vice President in
Charge of Operations of the Company
from 1988 until 1995, Senior Vice
President -- Operations from 1983 to
1987; Director of ScotiaBank of Puerto
Rico (commercial bank) since February
1992.
Antonio Luis Ferre Rangel 30 Vice President Operations and Strategic 1993 28,939(d)
Planning of the Company since January (0.52%)
1996, Vice President -- Strategic
Planning of the Company from 1994 to
1995 and Assistant Plant Manager of
the Company from 1992 to 1994 (an
adult son of Antonio Luis Ferre).
All Directors Nominees and Executive 785,812(e)
Officers as a Group (19 persons in
total including those listed above)
</TABLE>
- ---------------
(a) Dates refer to periods served as a director of either the Company or Ponce
Cement Corporation, which was merged into the Company on March 14, 1963.
(b) Number of shares set forth represents in each case less than 0.10% of the
outstanding shares of Common Stock.
(c) 32,688 shares (0.59%) of the Company's Common Stock are held as follows: (1)
direct ownership by Rosario J. Ferre, director of the Company, of 2,688
shares (.04%) of the Company's Common Stock; and (2) through her 100%
ownership of R.F.T. Investment Corp., a Puerto Rico corporation, which owns
of record 30,000 shares (0.55%) of the Company's Common Stock. In addition,
Rosario J. Ferre has shared voting and investment power regarding 537,174
shares (9.72%) of the Company's Common Stock held of record by South
Management Corporation. Mrs. Ferre has a 25% ownership interest in South
Management Corporation and shared voting and investment power with Mr. Luis
A Ferre and Mr. Antonio Luis Ferre who hold 50% and 25% ownership interests,
respectively, in South Management Corporation.
(d) Includes 281,504 shares (5.09%) of the Company's outstanding Common Stock
held by Ferre Investment Fund, Inc., a Puerto Rico corporation wholly owned
by Antonio Luis Ferre, a director of the Company since 1959, his spouse and
five adult children. Of this amount, Antonio Luis Ferre Rangel and Luis
Alberto Ferre Rangel, adult sons of Antonio Luis Ferre, each claim
beneficial ownership of 8,378 shares (.15%), Antonio Luis Ferre retains sole
voting power with respect to the total shares owned by Ferre Investment
Fund, Inc. and claims beneficial ownership of the remaining 264,748 shares
(4.79%). 3,300 shares (.06%) are held by Alfra Investment Corp., a Puerto
Rico corporation wholly owned by the five adult children of Antonio Luis
Ferre. Out of this total, Antonio Luis Ferre Rangel and Luis Alberto Ferre
Rangel, adult sons of Antonio Luis Ferre, each claim beneficial ownership of
660 shares (.012%), Antonio Luis Ferre retains sole voting power with
respect to the total shares owned by Alfra Investment
7
<PAGE> 10
Corp. and his five adult children claim beneficial ownership of the shares.
Also includes 332,321 shares (6.01%) of the Company's outstanding Common
Stock held by El Dia, Inc., a Puerto Rico corporation, 87.18% of which are
owned by Antonio Luis Ferre, his spouse and five adult children. Of this
amount, Antonio Luis Ferre Rangel and Luis Alberto Ferre Rangel, adult sons
of Antonio Luis Ferre, each claim beneficial ownership of 19,901 shares
(.36%), Antonio Luis Ferre retains shared voting power with respect to
87.18% of the total shares owned by El Dia, Inc. and claims beneficial
ownership of 292,519 shares (5.29%). In addition, Antonio Luis Ferre has
shared voting and investment power regarding 537,174 shares (9.72%) (not
included in the total on page 5) of the Company's outstanding Common Stock
held of record by South Management Corporation. Mr. Antonio Luis Ferre has a
25% ownership interest in South Management Corporation and shared voting and
investment power with Mr. Luis A Ferre and Mrs. Rosario J. Ferre who hold
50% and 25% ownership interests, respectively, in South Management
Corporation.
(e) All of the directors and executive officers of the Company as a group,
including officers not listed, own 785,812 shares (14.21%) of the Company's
Common Stock and, as described above, Antonio Luis Ferre and Rosario J.
Ferre share voting power and investment power regarding 537,174 shares
(9.72%) of the Company's Common Stock held of record by South Management
Corporation.
8
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
In addition to the directors listed above who beneficially own more than 5%
of the outstanding shares of the Company's Common Stock, the following persons
beneficially own 5% or more of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES AND PERCENT OF
BENEFICIAL OWNERSHIP OUTSTANDING
NAME AND ADDRESS AS OF MARCH 19, 1997 SHARES
---------------- -------------------- -----------
<S> <C> <C>
Luis A. Ferre
G.P.O. Box 6108
San Juan, Puerto Rico 00936 485,247(a)* 8.78%(a)*
Herman Ferre Roig
Hato Rey Tower
Floor 18 Suite 1804
Ave. Munoz Rivera 268
Hato Rey, Puerto Rico 00919 632,540(b)* 11.44%(b)*
Charles M. Royce
Quest Management Company
Quest Advisory Corp.
1414 Avenue of the Americas
New York, New York 10019 394,700(c) 7.14%(c)
Franklin Resources, Inc.
Charles B. Johnson
Rubert H. Johnson, Jr.
Franklin Mutual Advisers, Inc.
51 John F. Kennedy Parkway
Short Hills, N.J. 07078 526,700(d) 9.53%(d)
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071 371,000(e) 6.71%(e)
T. Rowe Price Associates, Inc.
T. Rowe Price Small Cap
Value Fund Inc.
100 East Pratt Street
Baltimore, Maryland 21202 437,100(f) 7.91%(f)
</TABLE>
- ---------------
(a) As of March 19, 1997, Luis A. Ferre (father of Antonio Luis Ferre and
Rosario J. Ferre), while not directly owning of record any shares of the
Company's outstanding Common Stock, had a beneficial interest in 485,247
shares (8.78%) of the Company's outstanding Common Stock through the Luis
A. Ferre Foundation, Inc., a charitable foundation, respecting which Mr.
Ferre, as its President, votes the Company's Common Stock owned of record
by the Foundation. In addition, Luis A. Ferre has shared voting and
investment power regarding 537,174 shares (9.72%) of the Company's
outstanding Common Stock held of record by South Management Corporation.
Luis A. Ferre has a 50% ownership interest in South Management Corporation
and has shared voting and investment power with Antonio Luis Ferre
9
<PAGE> 12
and Rosario J. Ferre who each hold an additional 25% ownership interest in
South Management Corporation.
(b) As of March 19, 1997, Herman Ferre Roig (a first cousin of Antonio Luis
Ferre and Rosario J. Ferre) owned directly 95,366 shares (1.72%) of the
outstanding Common Stock of the Company. In addition, Herman Ferre Roig and
his wife and children have a beneficial interest in and investment power
regarding 537,174 shares (9.72%) of the Company's outstanding Common Stock
held of record by Brim Incorporado as a result of their 100% ownership
interest in Brim Incorporado. Herman Ferre Roig has sole voting and
dispositive power regarding the shares held by Brim Incorporado.
(c) Charles M. Royce, a U.S. citizen, Quest Advisory Corp. ("Quest"), a New York
corporation, and Quest Management Company ("QMC"), a Connecticut general
partnership, as a group, are the beneficial owners of 394,700 shares (7.14%)
of the Company's outstanding Common Stock. Mr. Charles M. Royce is deemed to
be a controlling person of QMC and Quest. QMC has 17,000 shares (.31%) of
the Company's outstanding Common Stock registered in its name and Quest has
377,700 shares (6.83%) of the Company's outstanding Common Stock registered
in its name. Both are registered investment advisers. Quest and QMC have
sole dispositive and voting power regarding their respective portions of the
Company's outstanding Common Stock.
(d) Frankling Resources, Inc. and its subsidiary, Frankling Mutual Advisers,
Inc., both Delaware corporations, and controlling persons Charles B. Johnson
and Rubert H. Johnson Jr., both U.S. citizens, are the beneficial owners of
526,700 shares (9.53%) of the Company's outstanding Common Stock. Frankling
Mutual Advisers, Inc. holds sole voting control and dispositive power over
the shares held by this group.
(e) Capital Research and Management Company ("CRMC"), a registered investment
adviser and an operating subsidiary of The Capital Group Companies Inc.,
exercises investment discretion with respect to 371,000 shares (6.71%) of
the outstanding Common Stock of the Company, which are owned by various
institutional investors. CRMC has no power to direct the voting of the
shares but holds sole dispositive power over all shares registered in its
name.
(f) T. Rowe Price Associates, Inc. ("TRPA") is the beneficial owner of 437,100
shares (7.91%) of the Company's outstanding Common Stock. T. Rowe Price
Associates, Inc. is a registered investment adviser and one or more of its
clients is the legal owner of the Company's outstanding Common Stock
registered in the name of TRPA. The largest among these holdings is that of
T. Rowe Price Small Cap Value Fund, Inc., a Maryland Corporation. TRPA holds
sole voting control over 17,000 shares (.3%) of the outstanding Common Stock
of the Company and dispositive power over all shares registered in its name.
T. Rowe Price Small Cap Value Fund, Inc. holds sole voting control over
383,900 shares (6.94%) of the outstanding Common Stock of the Company.
* The shared voting and investment power regarding shares of the Company's
Common Stock attributable to Antonio Luis Ferre (described in footnote (d) on
page 7), Rosario J. Ferre (described in footnote (c) on page 7), and Luis A.
Ferre (described in footnote (a) on page 9), arises by reason of their
holdings in South Management Corporation, a Puerto Rico corporation, which
holds of record 537,174 shares (9.72%) of the Company's outstanding Common
Stock. Each of said persons disclaims that he or she is acting as a group with
regard to such shared voting and investment power.
10
<PAGE> 13
EXECUTIVE COMPENSATION
Set forth below is the compensation paid by the Company (none is paid by
any subsidiary) during each of the last three fiscal years ended December 31,
1996 to its President, Chief Executive Officer and the Company's four other most
highly paid executive officers whose aggregate remuneration exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------- OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Miguel A. Nazario 1996 $288,000 $75,000 $13,589
President, Director 1995 $256,000 $86,000 $12,431
and Chief Executive Officer(2) 1994 $ 96,615 16,664 617
Hector del Valle 1996 $236,640 $60,300 $ 9,073
Vice Chairman 1995 $257,297 $56,880 $10,169
Director 1994 $199,080 $52,140 $ 9,935
Jose O. Torres 1996 $130,592 $41,188 $11,887
Vice President of Finance, 1995 $122,650 $34,688 $11,048
Assistant Secretary and Treasurer 1994 $111,950 $16,522 $12,856
Francisco Rexach 1996 $150,000 $ 4,929 $12,852
President, Ready 1995 $ 16,667 NA NA
Mix Concrete, Inc. (wholly 1994 $ NA NA NA
owned subsidiary)(3)
Rene Di Cristina 1996 $115,462 $38,000 $ 5,185
Vice President -- 1995 $108,571 $30,375 $ 8,998
Sales 1994 $101,472 $20,375 $13,408
</TABLE>
- ---------------
(1) The Company furnished automobiles to its executive officers, including the
five individuals named above. Other Annual Compensation reflects cost to
the Company of furnishing such automobiles to the listed officers and
paying related expenses.
(2) Mr. Nazario joined the Company in 1994 and was named President and Chief
Executive Officer of the Company as of January 1995.
(3) Mr. Rexach joined the Company in November 1995.
Named officers received no compensation other than that presented in the
Summary Compensation Table included herein. The column of the table marked as
"salary" includes cash payments for vacation time not used by the executive.
11
<PAGE> 14
PENSION PLAN TABLE
The following table illustrates estimated annual benefits payable under the
Company's pension plan upon normal retirement to persons with the specified
combination of remuneration and years of credited service. Amounts are based on
straight life annuities including estimated social security benefits deducted in
calculating benefits paid under the plan.
YEARS OF CREDITED SERVICE (A)
<TABLE>
<CAPTION>
HIGHEST FIVE
YEAR AVERAGE
COMPENSATION (B) 10 15 20 25 30 35 40
- ---------------- ------- ------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 65,000 $ 8,647 $12,970 $ 17,294 $ 21,942 $ 26,590 $ 31,240 $ 35,888
90,000 12,397 18,595 24,794 31,442 38,090 44,740 51,388
115,000 16,147 24,220 32,294 40,942 49,590 58,240 66,888
140,000 19,897 29,845 39,794 50,442 61,090 71,740 82,388
165,000 23,647 35,470 47,294 59,942 72,590 85,240 97,888
190,000 27,397 41,095 54,794 69,442 84,090 98,740 113,388
215,000 31,147 46,720 62,294 78,942 95,590 112,240 128,888
240,000 34,897 52,345 69,794 88,442 107,090 125,740 144,388
265,000 38,647 57,970 77,294 97,942 118,590 139,240 159,888
290,000 42,397 63,595 84,794 107,442 130,090 152,740 175,388
315,000 46,147 69,220 92,294 116,942 141,590 166,240 190,888
340,000 49,897 74,845 99,794 126,442 153,090 179,740 206,388
365,000 53,647 80,470 107,294 135,942 164,590 193,240 221,888
390,000 57,397 86,095 114,794 145,442 176,090 206,740 237,388
</TABLE>
- ---------------
(a) As of December 31, 1996, Miguel A. Nazario had 2 years of credited
service and would have $549,000 average final remuneration covered by the plan
and be entitled to a yearly pension benefit of $140,000 at normal retirement
age; Hector Del Valle had 39 years of credited service and would have $283,000
average final remuneration covered by the plan and be entitled to a yearly
pension benefit of $191,000 at normal retirement age; Jose O. Torres had 19
years of credited service and would have $237,000 average final remuneration
covered by the plan and be entitled to a yearly pension benefit of $115,000 at
normal retirement age; Rene Di Cristina had 13 years of credited service and
would have $258,000 average final remuneration and be entitled to a yearly
pension benefit of $115,000 at normal retirement age.
As subsequently described, Ready Mix Concrete, Inc, a wholly owned
subsidiary, carries a separate pension program. Under this program, Mr.
Francisco Rexach has 34 years of credited service and would have $182,900
average annual remuneration covered by the plan and be entitled to a yearly
pension benefit of $58,639 at normal retirement age.
All estimated pension benefit information assumes average salary increases
of 5% up until normal retirement at age 65.
(b) A participant's pension under the Company's program, is based upon such
participant's "pensionable earnings." Pensionable earnings are computed by
annualizing the average monthly eligible compensation received by the
participant from the Company during the 60-month period in which the participant
received his highest eligible compensation. Eligible compensation is equal to
"Salary" as reported in the "Summary
12
<PAGE> 15
Compensation Table" not including bonuses (reported separately in such table as
"Bonus") or overtime payments, if any.
The Company's pension plan covers all salaried employees of the Company who
are not subject to the terms of a union contract and who complete at least 1,000
hours of service with the Company during the 12-month period beginning with the
date of employment or during any subsequent calendar year.
Effective January 1, 1994, the Company amended the pension plan to modify
the benefit formula for determining an active participant's basic benefit. The
new formula produces a benefit at normal retirement age equal to 1.1% of the
participant's average monthly compensation up to "Covered Compensation" and 1.5%
of average monthly earnings in excess of "Covered Compensation" multiplied by
the first 20 years of "Credited Service," plus 1.2% of average monthly
compensation up to Covered Compensation and 1.6% of average monthly earnings in
excess of "Covered Compensation," multiplied by "Credited Service" in excess of
20 years. "Covered Compensation" is as defined in Section 401 (1) (5) (E) of the
United States Internal Revenue Code of 1986, as amended. For unmarried retired
participants the normal retirement benefit is paid in the form of a monthly
straight life annuity commencing at retirement. For married retired participants
the normal retirement benefit generally is an actuarially adjusted monthly joint
and surviving spouse annuity commencing at retirement and continuing for the
participant's life with 50% of such benefit continuing for the life of the
participant's surviving spouse, if any. "Average monthly compensation" under the
plan is the highest average monthly base salary (including commissions, but
excluding bonuses, overtime and other payments that are not predetermined)
during any five consecutive years in the ten-year period immediately preceding
the participant's actual retirement date. The minimum monthly retirement benefit
for participants who were participants in the plan on December 31, 1975 is not
less than the sum of (a) 1.2% of average monthly compensation for each of the
first 10 years of credited service plus (b) 1.5% of such compensation for each
year of credited service prior to age 65 in excess of 10, with the maximum
benefit equal to 72% of average monthly compensation after 40 years of credited
service. In computing the minimum retirement benefit, compensation is assumed to
remain unchanged since December 31, 1975. Effective August 1, 1986, any
participant retiring under the plan shall receive monthly benefits of not less
than $5.00 for each year of credited service. In addition to annual retirement
benefits, the plan provides benefits for disability, death and other
terminations of employment after 10 years of credited service. Early retirement
is provided, with unreduced benefits, for participants who are at least 55 years
of age and whose age plus years of service equal to at least 85, and with
reduced benefits for participants who are at least 60 years of age with at least
10 years of service.
SUBSIDIARY PENSION PROGRAM
During 1995, the Company acquired a wholly owned subsidiary, Ready Mix
Concrete, Inc., which had its own pension program (the subsidiary's pension
program). The subsidiary's pension plan covers all salaried employees of the
subsidiary, who are not subject to the terms of a union contract and who
complete at least 1,000 hours of service with the subsidiary during the 12-month
period beginning with the date of employment or during any subsequent plan year.
A participant's pension is based upon such participant's plan compensation. Plan
compensation is equal to regular salary or wages, plus overtime, commissions,
and bonuses.
Effective June 28, 1994, the subsidiary amended the pension plan to modify
the benefit formula for determining an active participant's basic benefit. The
new program produces a career-average benefit at normal retirement age equal to
0.75% of annual plan compensation up to the Social Security Taxable Wage
13
<PAGE> 16
Base, and 1.25% of annual plan compensation in excess of the Taxable Wage Base,
for each year of service after June 28, 1994.
For service until June 27, 1994, the plan provides a frozen benefit at
normal retirement age equal to 20% of "average annual compensation" plus 20% of
average annual compensation in excess of $4,800 (the total reduced by 1/15th for
each year of service less than 15), and 0.5% of such average annual compensation
for each year of service exceeding 15. "Average annual compensation" is the
highest average plan compensation during any five consecutive plan years in the
ten-year period ending June 27, 1994.
For unmarried retired participants, the normal retirement benefit is paid
in the form of a monthly life annuity with 120 payments guaranteed commencing at
retirement. For married retired participants, the normal retirement benefit
generally is an actuarially adjusted monthly joint and surviving spouse annuity
commencing at retirement and continuing for the participant's life with 50% of
such benefit continuing for the life of the participant's surviving spouse, if
any.
Normal retirement benefits are payable upon attainment of age 65. In
addition to annual retirement benefits, the plan provides benefits for
disability, death, and other terminations of employment after 5 years of
credited service. Early retirement is provided, with reduced benefits, for
participants who are at least 55 years of age with at least 10 years of service.
In addition to the Pension Plan, the subsidiary offers a Savings Plan for
all salaried employees who are not subject to the terms of a union contract and
who complete at least 1,000 hours of service with the subsidiary during the
12-month period beginning with the date of employment or during any subsequent
plan year.
Contributions to the Savings Plan are based upon each participant's plan
compensation. Plan compensation is equal to regular salary or wages, plus
overtime, commissions, and bonuses.
The Savings Plan was effective July 1, 1994. Participants may elect to make
basic contributions of from 1% to 4% of plan compensation on a before-tax basis,
and supplemental contributions of an additional 1% to 4% of plan compensation
also on a before-tax basis. The subsidiary makes annual matching contributions
of 50% of participant basic contributions, up to $2,000 per participant. In
addition, the subsidiary may make discretionary profit-sharing contributions at
the end of each year. Such profit-sharing contributions are allocated to all
eligible employees, whether or not they elect to contribute to the plan.
Participants become fully vested in the subsidiary Savings Plan's matching
contributions and profit-sharing contributions after 3 years of service.
Withdrawals from the plan prior to retirement or other termination of
employment are not permitted except in the case of financial hardship. Upon
retirement, a participant's account balance is distributed in a lump sum payment
or in installments.
EXECUTIVE SEPARATION POLICY
The Company has entered into separate agreements with 27 members of
management including Messrs. Antonio Luis Ferre, Miguel A. Nazario, Antonio Luis
Ferre Rangel, Jose O. Torres and Rene Di Cristina. Nineteen contracts were
ratified by the Company's Board of Directors at its meeting of August 24, 1988
and eight of these ten year contracts were ratified by the Board of Directors at
its meeting of October 26, 1994. All contracts, among other things, grant an
amount equal to two and a half times compensation based on average salary plus
bonus during the three years prior to the date of a takeover or change in
control of the
14
<PAGE> 17
ownership of the Company. Benefits payable under the contracts are triggered if,
as a result of a change in control, these executives are (1) laid off or forced
to resign or (2) unable to function in the position held prior to the change in
control. A change in control is generally defined as a third party acquisition
of the Company's shares representing 20% or more of the total number which may
be cast for the election of directors.
COMPENSATION COMMITTEE REPORT
The purpose of the following Compensation Committee Report is to inform
shareholders of the Compensation Committee's compensation policies for executive
officers and the rationale for compensation paid to the Chief Executive Officer
("CEO"). This report is submitted by the Compensation Committee for 1996. During
1996, the Compensation Committee consisted of four outside directors of the
Company. The Compensation Committee's overall goal is to develop executive
compensation policies that are consistent with, and linked to, strategic
business objectives and Company values. The Compensation Committee approves the
design of, assesses the effectiveness of, and administers executive compensation
programs in support of, compensation policies. The Compensation Committee
presents its decisions to the Board of Directors for approval and from time to
time seeks and receives information from management.
Compensation Philosophy
The compensation program followed by the Company is based on the
achievement of business objectives. The Company's primary business objective is
to maximize shareholder value over both the near-term and the long-term. To
achieve this objective, the compensation program is designed to relate pay to
performance. Expected corporate and individual performance goals are established
by the Board of Directors at the beginning of each fiscal year. The program also
strives to attract, retain, and reward executives who contribute to the overall
success of the Company. Each program element, therefore, is intended to target
compensation levels that are at the median of a comparative market. Offering
market-comparable pay opportunities allows the Company to maintain a stable,
successful management team.
Competitive Pay
Competitive market data is provided by an independent compensation
consultant, Hewitt Associates Caribe Inc. The data provided compares Company
compensation practices to a group of comparable companies. The Company's market
for compensation comparison purposes is comprised of a group of companies who
tend to have similar philosophies, sales volumes, and operations in Puerto Rico
or multinationally. The Compensation Committee reviews and approves the
selection of companies used for compensation comparison purposes. The companies
chosen for comparison are not in all cases the same companies which comprise the
Peer Group in the Performance Graph included on page 18. The Compensation
Committee believes that the Company's most direct competitors for executive
talent are not the same companies that would be included in a peer group
established for comparing shareholder returns.
The key elements of the Company's executive compensation are base salary
and annual incentives. In determining compensation, all elements of an
executive's total compensation package, including pension plans, insurance, and
other benefits are considered.
15
<PAGE> 18
COMPENSATION VEHICLES
Salary
The Compensation Committee regularly reviews each executive's base salary.
Base salaries for executives are initially determined by evaluating executives'
levels of responsibility, prior experience and breadth of knowledge, as well as
external pay practices. Increases to base salaries are driven primarily by
corporate and individual performances.
Base salaries are targeted at the median of the comparative market. The
comparative market is determined by an objective evaluation of compensation
provided in similar positions in a selected group of peer companies competing in
the local job market. This comparison, which includes local companies in the
same and other industries, is performed on a regular basis by outside personnel
consultants hired for this purpose by the Company. Salaries paid can be adjusted
above or below the median based on individual and corporate performances plus
other factors such as experience in the position. Corporate and individual
performance factors are equally weighted in determining base salaries. Corporate
performance measures include Company's return on shareholders' equity,
individual performance in securing specific strategic objectives, Company
performance against budget, Company cash flow per share and Company performance
in comparison with peer group cement companies. In 1996, the Company's target
for return on shareholders' equity was not met but several strategic objectives
were reached which will affect future performance and the Company's objectives
regarding cash flow per share were attained.
Annual Cash Bonus
All employees are eligible for an annual cash bonus. For executives, this
bonus is based on the achievement of pre-established annual corporate and
individual performance goals. This bonus opportunity promotes the Company's
pay-for-performance philosophy. Bonus opportunities are based on a percentage of
base salary. Target bonus opportunities are set at the median of the comparative
market according to position.
Corporate goals are based on the Company's total return on shareholders'
equity, Company performance against budget, cash flow per share and in
performance comparison with peer group cement companies for the year. Individual
performance is also taken into account. Corporate and individual performance
factors are equally weighted in determining bonuses. Local laws provide for a
minimum bonus to be paid to all employees; this bonus is enhanced when
predetermined thresholds for corporate performance are met.
The total appropriation for the bonus is approved by the Board of Directors
each year, based on the level of achievement of these goals. In 1996, most
corporate goals were achieved or exceeded, and all of the named executive
officers received bonuses.
On an occasional basis, the Compensation Committee recommends to the Board
special bonuses for extraordinary achievement of specific objectives. These
special bonuses are of a non-recurrent nature. Special bonuses were awarded in
the last fiscal year to three officers of the Company.
CHIEF EXECUTIVE OFFICER
With respect to the base salary granted to Mr. Miguel A. Nazario (President
and CEO) in 1996, the Compensation Committee took into account a comparison of
base salaries of chief executive officers of local peer companies, the Company's
success in completing several of the Company's major projects with respect to
the Company's operations. These include obtaining all necessary permits and
procuring all necessary
16
<PAGE> 19
equipment for a major real estate development, startup of the Company's
polypropylene bag manufacturing operation, securing the final drafts of permits
necessary to increase the Company's cement production by 30% and the merging of
the ready mix subsidiaries, Ready Mix Concrete, Inc. and Concreto Mixto, Inc.
Also considered as goals are return on investment and cash flow per share.
During 1996 in its assessment of Mr. Nazario's individual performance, the
Compensation Committee placed increased emphasis in operational goals as a means
of improving future return on equity and the improvement in cash flow from
operations (which reached $3.73 per share as compared to $3.70 per share in
1995). The Company delivered an indexed return over the 1991-1996 period which
matches the benchmark of our peer group for the industry over the same period.
Mr. Nazario was granted a base salary of $288,000 for 1996, an increase of 9%
over his $264,000 base salary for 1995.
In 1996, Mr. Nazario's annual bonus payment stressed the level of
achievement of predetermined operational goals. Achievement was measured in
terms of total return on stockholders' equity, performance against budget, cash
flow per share and other specific performance goals. Major predetermined goals
exceeded among others were: completing of all major requirements for the startup
of a real estate development, startup of the Company's polypropylene bag
manufacturing operation, securing the final drafts of permits necessary to
increase by 30% cement production, increase in cash flow per share and
successful merging of the two ready mix subsidiaries acquired in 1995. Based on
these factors Mr. Nazario's annual bonus payment was $75,000 during 1996.
Compensation Committee:
Jorge L. Fuentes, President
Alberto M. Paracchini
Hector Puig Ramirez
Federico Sanchez
February 26, 1997
17
<PAGE> 20
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PUERTO RICAN CEMENT COMPANY, INC.,
STANDARD AND POOR'S INDUSTRIALS INDEX AND PEER GROUP
Set forth below is a performance graph which was prepared with the aid of
independent consultant Standard & Poor's Compustat Services Inc. It assumes a
$100 investment in January 1, 1991 and includes total return to shareholders
assuming reinvestment of dividends on a monthly basis over a five-year period
using 1991 as base year. Returns were based on a published industrial index and
on the weighting of results at the beginning of each year between industry peer
group members excluding the Company. Industry Peer Group members consist of
seven major companies in the cement or related industries publicly listed on a
national stock exchange in the U.S. with the same or similar business products
as the Company. The companies included are: Calmat Co., Florida Rock Industries,
Giant Group LTD, Lafarge Corp., Southdown Inc., Texas Industries Inc., and
Vulcan Materials Co. Results were weighted according to market capitalization.
The stock price performance on the graph below is not necessarily indicative of
future price performance.
TOTAL SHAREHOLDER RETURNS
------------------------
(Dividends Reinvested)
<TABLE>
<CAPTION>
INDEXED RETURNS
Years Ending
Base
Period
Company Name/Index Dec91 Dec92 Dec93 Dec94 Dec95 Dec96
- -----------------------------------------------------------------------------------------
<S> <C> <C> <S> <C> <C> <C>
PUERTO RICAN CEMENT CO INC 100 130.09 130.74 153.19 184.48 177.87
S&P INDUSTRIAL INDEX 100 105.70 115.24 119.64 161.03 198.01
PEER GROUP 100 112.41 147.68 135.75 159.42 177.11
</TABLE>
18
<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Compensation Committee consisted of the following
non-employee directors of the Company: Jorge L. Fuentes, Alberto M. Paracchini,
Hector Puig Ramirez and Federico Sanchez. Mr. Paracchini is Vice Chairman of the
Board of the Company.
The Company has entered into five separate term loan agreements with Banco
Popular de Puerto Rico, a commercial bank, of which Messrs. Antonio Luis Ferre,
Alberto M. Paracchini, Esteban D. Bird and Juan A. Albors are directors,
pursuant to which such bank agreed to provide the Company long-term financing up
until December 2002. The proceeds of these loans were used to finance certain of
the Company's equipment purchases and refinance debt of the ready mix
subsidiaries. The aggregate principal balance of $36,398,214, as of December 31,
1996, under these loans was totally prepaid as of January 27, 1997 with the
proceeds of a private placement of $50 million in 20-year notes effected by the
Company on January 27, 1997.
As of December 31, 1996, the Company had available from Banco Popular de
Puerto Rico lines of credit of $4,000,000 for unsecured short-term borrowings
and/or discounting customers' trade paper. A wholly owned subsidiary of the
Company, Florida Lime Corporation, had available a line of credit of $600,000
from such bank as of December 31, 1996 for unsecured short-term borrowings. At
such date, the Company and such subsidiary had no outstanding borrowings under
these lines of credit.
During 1996, the Company sold its products, in the normal course of
business, for the aggregate amount of $809,898 to Fuentes Concrete Pile, Inc., a
Puerto Rico corporation of which Mr. Jorge L. Fuentes is Chairman of the Board
of Directors, Chief Executive Officer and a Director.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The following briefly summarizes certain transactions with the Company and
certain transactions relating to the officers or directors of the Company.
Transactions relating to Compensation Committee members are included under
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION."
Mr. Carlos J. Suarez, a Director of the Company as of December 31, 1996,
received during 1996 the aggregate amount of $186,977 in deferred consulting
fees and interest paid and $13,286 in expenses related to a Company automobile,
for work performed for the Company under a consulting contract. The consulting
fees originated from services performed as a consultant in the management of the
daily operations of the Company and were paid in addition to directors' fees
received by Mr. Suarez as a retainer and for his attendance at Board meetings.
The terms of such contract and consulting fees paid pursuant thereto are
competitive with the terms of and fees paid pursuant to contracts for similar
services entered into by the Company with outside parties. Mr. Suarez occupied
the position of Chairman of the Board of the Company until December 1994.
Mr. Jose J. Suarez, a Director of the Company as of December 31, 1996,
received during 1996 the aggregate amount of $126,414 in consulting fees and
expenses related to a Company automobile, for work performed for the Company
under a consulting contract. The consulting fees originated from services
performed as a consultant in the management of the daily operations of the
Company and were paid in addition to directors' fees received by Mr. Suarez as a
retainer and for his attendance at Board meetings. The terms of such contract
and consulting fees paid pursuant thereto are competitive with the terms of and
fees paid pursuant to contracts for similar services entered into by the Company
with outside parties. Mr. Suarez occupied the position of Executive Vice
President in charge of Operations of the Company until December 1995.
19
<PAGE> 22
As of December 31, 1996, the Company had available from ScotiaBank de
Puerto Rico, a commercial bank of which Mr. Jose J. Suarez was a Director, a
line of credit of $4,000,000 for unsecured short-term borrowings which had a
balance of $2,750,000 as of December 31, 1996. In 1993, the bank approved a
construction long term facility of $8,000,000, later increased to $12,000,000
which had a balance of $3,693,805 as of December 31, 1996. This loan, together
with the outstandings under the line of credit, were prepaid as of January 27,
1997 with a portion of the proceeds of a private placement of $50,000,000 in
20-year notes effected by the Company on January 27, 1997. In 1995, the Company
obtained from the Bank of Nova Scotia, parent company of ScotiaBank de Puerto
Rico, an $8,000,000 term loan for working capital purposes payable over a
seven-year period at a fixed interest rate of 6.32% per annum which had a
$7,200,000 outstanding balance as of December 31, 1996. Mr. Jose J. Suarez, as
of January 14, 1997, resigned as director of ScotiaBank de Puerto Rico.
During 1996, Diesel del Sur, Inc., a Puerto Rico corporation and
dealership, sold motor parts and provided services in the normal course of
business to the Company in the aggregate amount of $966,672. The children of Mr.
Carlos J. Suarez are majority stockholders of, and one son Carlos J. Suarez, Jr.
is President of, Diesel del Sur, Inc.
Mr. Antonio Luis Ferre, a Director and Chairman of the Board of the Company
as of December 31, 1996, received during 1996 the aggregate amount of $216,166
in consulting fees including automobile expenses for work performed for the
Company under a consulting contract. The consulting fees originated from
services performed as a consultant in the management of the daily operations of
the Company and were paid in addition to directors' fees received by Mr. Ferre
as a retainer and for his attendance at Board meetings. The terms of such
contract and consulting fees paid pursuant thereto are competitive with the
terms of and fees paid pursuant to contracts for similar services entered into
by the Company with outside parties. Mr. Ferre was elected Chairman of the Board
of the Company effective January 1, 1995.
DATE OF RECEIPT OF STOCKHOLDERS' PROPOSALS
Stockholders who intend to present proposals at the 1998 annual meeting of
stockholders must submit their proposals to the Company on or before November
30, 1997.
DIRECTORS' FEES
Standard remuneration for directors not employed by the Company is a $2,500
quarterly retainer fee and $1,000 for each Board or committee meeting attended.
In addition, the Company pays yearly premiums of approximately $708 on behalf of
each outside director in connection with group life and accident insurance
coverage. The Company paid approximately $5,200 during the fiscal year as
interest for accumulated deferred compensation for one director and compensates
two directors an additional $50 per meeting for costs associated with traveling
from outside the San Juan metropolitan area.
OTHER MATTERS
The Board of Directors of the Company has, among others, the following
committees: an Audit Committee composed during 1996 of outside directors Messrs.
Emilio J. Venegas, Esteban Bird and Juan A. Albors; a Compensation Committee
composed during 1996 of outside directors Messrs. Hector Puig Ramirez, Alberto
M. Paracchini, Federico Sanchez and Jorge L. Fuentes and a Nominating Committee
composed
20
<PAGE> 23
during 1996 of directors Messrs. Carlos J. Suarez, Jorge L. Fuentes, Luis
Alberto Ferre and Alberto Paracchini.
The Audit Committee makes recommendations for the appointment of
independent auditors and, in conjunction with such auditors, makes
recommendations to the Board of Directors concerning the Company's internal
accounting controls and operating procedures, including the review and approval
of internal audit programs.
The Compensation Committee evaluates and makes recommendations to the Board
of Directors regarding the remuneration of directors, officers and salaried
employees. The policies and mission of the Compensation Committee are set forth
in the "Compensation Committee Report" found on page 15.
The Nominating Committee evaluates and makes recommendations to the Board
of Directors on nominees for directors as vacancies arise. These nominations are
submitted to the Board which votes on the candidates for acceptance as nominees.
During 1996, the Board of Directors met 12 times, the Nominating Committee
met 2 times, the Audit Committee met 3 times and the Compensation Committee met
2 times. Each director attended at least 75% of the aggregate meetings of the
Board and each committee thereof of which he was a member.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended December 31, 1996, all
Section 16 (a) filing requirements applicable to the Company were complied with.
The Board of Directors again selected Price Waterhouse, certified public
accountants, to audit the accounts of the Company for the year 1996. A
representative of Price Waterhouse is expected to be present at the meeting of
stockholders and available to answer stockholders' questions and, if he so
desires, to make a statement. The audit services performed for the Company
included the examination of the annual financial statements and financial
information contained in the Company's report on Form 10-K filed with the
Securities and Exchange Commission, in addition to consultation from time to
time with officers of the Company in connection with various accounting methods
and procedures.
The Board of Directors does not intend to bring any other business before
the meeting, nor is it aware that anyone else intends to do so. However, should
any other business come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote as proxies in accordance with their best
judgment.
By Order of the Board of Directors
Etienne Totti Del Valle
Secretary
PUERTO RICAN CEMENT COMPANY, INC.
21
<PAGE> 24
APPENDIX
PROXY
PUERTO RICAN CEMENT COMPANY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 7, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned stockholder of PUERTO RICAN CEMENT COMPANY, INC. (the
"Company") hereby appoints RENE DI CRISTINA, ANGEL AMARAL, and JOSE A. COSTA,
and each of them, proxies of the undersigned, each with power of substitution,
to vote as designated below all shares of common stock of the Company held of
record by the undersigned on March 19, 1997 at the annual meeting of
stockholders to be held at the offices of the Company, Amelia Industrial Park,
Guaynabo, Puerto Rico, on May 7, 1997 at 10:00 o'clock A.M., Atlantic Standard
Time, and at any adjournment thereof, with all powers the undersigned would
possess if personally present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 25
Please mark
your votes as
indicated in
this example [X]
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD
all nominees all votes for the election
listed below (except as marked of all nominees
1. ELECTION OF CLASS I DIRECTORS to the contrary below) listed below 2. In their discretion, the proxies
Nominees: Oscar A. Blasini [ ] [ ] are authorized to vote upon such
Luis Alberto Ferre Rangel, Miguel A. Nazario, other business as may lawfully
Waldemar del Valle Armstrong and Hector del Valle. come before the meeting or any
adjournment thereof.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominees's name on the space provided below.)
- ----------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION TO VOTE IS MADE
DIRECTLY BY A BENEFICIAL HOLDER,
THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS.
PLEASE SIGN AND DATE WHERE
INDICATED BELOW AND RETURN PROMPTLY
IN ENCLOSED ENVELOPE.
NO POSTAGE REQUIRED.
The undersigned hereby acknowledges
receipt of the Annual Report for
1996, the Notice of Annual Meeting
of Stockholders and the Proxy
Statement relating to said Annual
Meeting, and hereby revokes any
proxy or proxies heretofore given
in respect of the same shares of
stock.
Signature(s) Dated , 1997
------------------------------------------------------------------------------------- ---------------------
Signature should agree with name on stock certificate. When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
</TABLE>
