SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. _ )
Filed by the Registrant x
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted
by
Rule 14a-6(e)(2))
x Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
(Name of Registrant as Specified In Its Charter)
TREMONT CORPORATION
(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:
TREMONT CORPORATION
1999 Broadway, Suite 4300Denver,
Colorado 80202<PAGE>
April 16, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Tremont Corporation ( Tremont ),
which will be held on Tuesday, May 6, 1997, at 1:00 p.m., Central
Daylight Time, at the offices of Contran
Corporation, Three Lincoln Center, 5430 LBJ Freeway, Suite 1700,
Dallas, Texas.
Whether or not you plan to attend the meeting, please complete,
date, sign and return the enclosed proxy card or
voting instruction form in the accompanying envelope so that your
shares are represented and voted in accordance
with your wishes. Your vote, whether given by proxy or in person
at the meeting, will be held in confidence by
the Inspector of Election for the meeting in accordance with
Tremont s Bylaws.
Sincerely,
J. Landis Martin
Chairman of the Board,President and
Chief Executive Officer
TREMONT CORPORATION
1999 Broadway, Suite 4300Denver, Colorado 80202
Notice of Annual Meeting of StockholdersTo Be Held May 6,1997
To the Stockholders of Tremont Corporation:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of
Stockholders (the Meeting ) of Tremont Corporation, a
Delaware corporation ( Tremont or the Company ), will be
held on Tuesday, May 6, 1997, at 1:00 p.m., Central
Daylight Time, at the offices of Contran Corporation, Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas,
Texas, for the following purposes:
(1) To elect seven directors to serve until the
1998 Annual Meeting of Stockholders and until their
successors are duly elected and qualified; and
(2) To transact such other business as may
properly come before the Meeting or any adjournment or
postponement thereof.
The Board of Directors of the Company set the close of
business on March 19, 1997, as the record date (the
Record Date ) for the Meeting. Only holders of Tremont s
common stock, $1.00 par value per share, at the close
of business on the Record Date, are entitled to notice of, and
to vote at, the Meeting. The stock transfer books
of the Company will not be closed following the Record Date. A
complete list of stockholders entitled to vote at
the Meeting will be available for examination during
normal business hours by any Tremont stockholder, for
purposes related to the Meeting, for a period of ten days
prior to the Meeting, at Tremont s corporate offices
located at 1999 Broadway, Suite 4300, Denver, Colorado.
You are cordially invited to attend the Meeting. Whether or not
you plan to attend the Meeting in person, please
complete, date and sign the accompanying proxy card or
voting instruction form and return it promptly in the
enclosed envelope to ensure that your shares are represented
and voted in accordance with your wishes. You may
revoke your proxy by following the procedures set forth in the
accompanying Proxy Statement. If you choose, you
may still vote in person at the Meeting even though you
previously submitted your proxy.
In accordance with the Company s Bylaws, your vote, whether
given by proxy or in person at the Meeting, will be
held in confidence by the Inspector of Election for the Meeting.
By
order of the Board of Directors,
Robert E. MusgravesVice President, General Counsel and
Secretary
Denver, ColoradoApril 16,
1997
TREMONT
CORPORATION
1999 Broadway, Suite 4300Denver,
Colorado 80202
P r o x y S t a t e m
e n t
General
Information
This Proxy Statement and the accompanying proxy card or voting
instruction form are being furnished in connection
with the solicitation of proxies by and on behalf of the Board of
Directors (the Board of Directors ) of Tremont
Corporation, a Delaware corporation ( Tremont or the
Company ), for use at the 1997 Annual Meeting of
Stockholders of the Company to be held on Tuesday, May 6,
1997, at 1:00 p.m., Central Daylight Time, at the
offices of Contran Corporation, Three Lincoln Centre, 5430
LBJ Freeway, Suite 1700, Dallas Texas, and at any
adjournment or postponement thereof (the Meeting ). This
Proxy Statement and the accompanying proxy card or
voting instruction form will be mailed to the holders of
Tremont s common stock, $1.00 par value per share<PAGE>
( Tremont Common Stock ),
on or about April 16, 1997.
Purpose of the
Meeting
Stockholders of the Company represented at the Meeting will
consider and vote upon (i) the election of seven
directors to serve until the 1998 Annual Meeting of
Stockholders of the Company and until their successors are
duly elected and qualified, and (ii) such other business as may
properly come before the Meeting. The Company is
not aware of any business to be presented for consideration at
the Meeting other than the election of directors.
Voting Rights and
Quorum
The presence, in person or by proxy, of the holders of a
majority of the shares of Tremont Common Stock entitled
to vote at the Meeting is necessary to constitute a quorum for
the conduct of business at the Meeting. Shares of
Tremont Common Stock that are voted to abstain from any
business coming before the Meeting and broker/nominee
non-votes will be counted as being in attendance at the Meeting
for purposes of determining whether a quorum is
present.
At the Meeting, directors of the Company will be elected
by a plurality of the affirmative vote of the
outstanding shares of Tremont Common Stock present (in person or
by proxy) and entitled to vote. The accompanying
proxy card or voting instruction form provides space for a
stockholder to withhold authority to vote for any or
all nominees for the Board of Directors. Neither shares
as to which authority to vote on the election of
directors has been withheld nor broker/nominee non-votes will
be counted as affirmative votes to elect nominees
for the Board of Directors. However, since director nominees
need only receive the vote of a plurality of the
shares represented (in person or by proxy) at the Meeting and
entitled to vote, a vote withheld from a particular
nominee will not affect the election of such nominee.
Except as otherwise required by the Company s Amended and
Restated Certificate of Incorporation, any other matter
that may be submitted to a stockholder vote will require
the affirmative vote of a majority of the shares
represented at the Meeting (in person or by proxy) and entitled
to vote. Shares of Tremont Common Stock that are
voted to abstain from any business coming before the Meeting and
broker/nominee non-votes will not be counted as
votes for or against the approval of any other matter coming
before the Meeting.
First Chicago Trust Company of New York ( First Chicago ), the
transfer agent and registrar for Tremont Common
Stock, has been appointed by the Board of Directors to
ascertain the number of shares represented, receive
proxies and ballots, tabulate the vote and serve as Inspector of
Election at the Meeting. All proxies and ballots
delivered to First Chicago shall be kept confidential by First
Chicago in accordance with the Company s Bylaws.
The record date set by the Board of Directors for the
determination of stockholders entitled to notice of, and to
vote at, the Meeting is the close of business on March 19,
1997 (the Record Date ). Only holders of shares of
Tremont Common Stock at the close of business on the Record
Date are entitled to vote at the Meeting. As of the
Record Date, there were 7,491,572 shares of Tremont Common
Stock issued and outstanding, each of which will be
entitled to one vote on each matter that comes before the
Meeting.
As of the Record Date, Contran Corporation, directly and
through certain of its subsidiaries ( Contran ) held
approximately 40% of the outstanding shares of Tremont Common
Stock. Contran has indicated its intention to have
such shares represented at the Meeting and to vote such
shares FOR the election of all of the nominees for
director set forth in this Proxy Statement. If such shares
are voted as indicated and all other outstanding
shares of Tremont Common Stock are represented and voted at the
Meeting, the additional affirmative vote of 10%
or more of the Tremont Common Stock entitled to vote will
assure the election of the director nominees. In
addition, all of such nominees for director will be elected if
no other person receives the vote of more shares
than the number of shares voted by Contran.
Proxy
Solicitation
This proxy solicitation is being made by and on behalf of the
Board of Directors of the Company. The Company will
pay all expenses of this proxy solicitation, including
charges for preparing, printing, assembling and
distributing all materials delivered to stockholders. In
addition to solicitation by mail, directors, officers
and regular employees of the Company may solicit proxies by
telephone or personal contact for which such persons
will receive no additional compensation. The Company has retained
D.F. King & Co., Inc. to aid in the solicitation of proxies, at a
cost that the Company estimates will not exceed
$2,000. Upon request, the Company will reimburse banking
institutions, brokerage firms, custodians, trustees,
nominees and fiduciaries for
their reasonable out-of-pocket expenses incurred in
distributing proxy materials and voting instructions to the
beneficial owners of Tremont Common Stock held of record by such
entities.
All shares of Tremont Common Stock represented by properly
executed proxies will, unless such proxies have been
previously revoked, be voted in accordance with the instruction
indicated in such proxies. If no instructions are
indicated, such shares will be voted (i) FOR the election
of the of the seven nominees set forth below as
directors, and (ii) in the discretion of the proxy holders on
any other matter that may properly come before the
Meeting. Each holder of record of Tremont Common Stock giving
the proxy enclosed with this Proxy Statement may
revoke it at any time, prior to the voting thereof at the
Meeting, by (i) delivering to First Chicago a written
revocation of the proxy, (ii) delivering to First Chicago a duly
executed proxy bearing a
later date, or (iii) by voting in person at the Meeting.
Attendance by a stockholder at the Meeting will not in
itself constitute the revocation of a proxy previously given.
Election of
Directors
The Bylaws of the Company currently provide that the Board of
Directors shall consist of not less than three and
not more than seventeen persons, as determined from time to time
by the Board of Directors in its discretion. The
Bylaws may be amended by the Board of Directors or by a
resolution adopted by the holders of a majority of the
shares of Tremont Common Stock entitled to vote for the
election of directors. The number of directors is
currently set at seven. The seven directors elected at the
Meeting will hold office until the 1998 Annual Meeting
of Stockholders of the Company and until their successors are
duly elected and qualified.
All of the nominees are currently directors of the Company
whose term will expire at the Meeting. All nominees
have agreed to serve if elected. If any nominee is not
available for election at the Meeting, the proxy will be
voted for an alternate nominee to be selected by the Board of
Directors, unless the stockholder executing such
proxy withholds authority to vote for the election of directors.
The Board of Directors believes that all of its
present nominees will be available for election at the Meeting
and will serve if elected.
Directors of the Company will be elected at the Meeting by a
plurality of the affirmative vote of the outstanding
shares of Tremont Common Stock represented and voting. Unless
otherwise specified, the agents designated in the
proxy will vote the shares covered thereby at the Meeting FOR
the election of the nominees named below. Contran
held approximately 40% of the outstanding shares of Tremont
Common Stock as of the Record Date and has indicated
its intention to vote such shares FOR the election of each of
the nominees named below.
Nominees for Director
The following information has been provided by the respective
nominees for election to the Board of Directors.
Susan E. Alderton, 45, has been a director of the Company since
1990. Ms. Alderton was Vice President-Finance of
the Company from
1990 until 1992, Treasurer of the Company from 1988 to 1992 and
Vice President of the Company from 1988 to 1990.
Since 1988, Ms. Alderton has been Vice President and Treasurer of
NL Industries, Inc. ( NL ), which is engaged in
the manufacture of titanium dioxide pigment and specialty
chemicals. The Company holds approximately 18% of the
outstanding common stock of NL ( NL Common Stock ). NL may be
deemed to be an affiliate of the Company.
Richard J. Boushka, 62, has been a director of the Company
since 1990. Since prior to 1986, Mr. Boushka has
served as the principal of Boushka Properties, a private
investment firm. Since 1986, Mr. Boushka has also served
as Chairman of the Board of Citation Oil and Gas Corporation,
an oil and gas production company, and has been
President of Sunflower Racing, Inc., an operator of
racetrack facilities. Mr. Boushka is also a director of
Perini Corporation and Perini Investment Properties, Inc. From
1955 to 1980, Mr. Boushka was employed by Vickers
Energy Company, where his last position was President. Mr.
Boushka serves as a member of the Company s Audit
Committee and Management Development and Compensation Committee
(the Compensation Committee ).
J. Landis Martin, 51, has been a director of the Company
since 1988. Mr. Martin has been the Chief Executive
Officer of the Company since 1988 and Chairman of the Board
since 1990. Except for a period in 1990, Mr. Martin
has served as President of the Company since 1987. Mr.
Martin has also served as Chairman of Titanium Metals
Corporation ( TIMET ), the Company s 30%-owned titanium metals
subsidiary, since 1987, as Chief Executive Officer
of TIMET since 1995 and President of TIMET from January 1995 to
February 1996. Since 1987, Mr. Martin has served
as President and Chief Executive Officer and, since 1986, as a
director of NL. From 1990 until 1994, Mr. Martin
served as Chairman of the Board, Chief Executive Officer and
a director of Baroid Corporation ( Baroid ), an
oilfield services company. Baroid may be deemed to have been an
affiliate for a potion of such period. In 1994,
Baroid became a wholly owned subsidiary of Dresser Industries,
Inc. ( Dresser ), a publicly held company engaged
in the petroleum drilling services, hydrocarbon processing and
engineering industries, and Mr. Martin became a
director of Dresser. Additionally, Mr. Martin is a director of
Apartment Investment and Management Corporation, a
real estate investment trust.
Glenn R. Simmons, 69, has been a director of the Company
since 1988. Since 1969, Mr. Simmons has been Vice
Chairman of the Board and a director of Contran. Mr. Simmons
is also a director of NL , Chairman of the Board,
Chief Executive Officer and a director of Keystone Consolidated
Industries, Inc. ( Keystone ), a manufacturer of
steel rod, wire and wire products and a majority-owned
subsidiary of Contran. Mr. Simmons is also Vice Chairman
of the Board and a director of Valhi, Inc. ( Valhi ), a company
engaged in component products and waste control
and, through NL, in the titanium dioxide and specialty
chemicals industries, and a majority-owned subsidiary of
Contran. Mr. Simmons is also Vice Chairman of Valcor, Inc. (
Valcor ), a wholly owned subsidiary of Valhi engaged
in the component products industries. Mr. Simmons has been an
executive officer and/or director of various other
companies related to Contran since 1969. Each of Contran, Valhi,
and Valcor may be deemed to be affiliates of the
Company. Mr. Simmons is a brother of Harold C. Simmons.
Harold C. Simmons, 65, has been a director of the Company since
1988 and served as Chairman of the Board of the
Company from 1988 to 1990. Since 1968, Mr. Simmons has been
Chairman of the Board, Chief Executive Officer and a
director of Contran and Valhi and has been President of
Contran and Valhi since 1994. Mr. Simmons is also
Chairman of the Board and a director of NL and a director of
Valcor. Mr. Simmons has been an executive officer
and/or director of various other companies related to Contran
since
1968. Mr. Simmons is a brother of Glenn R. Simmons.
Gen. Thomas P. Stafford (retired), 66, has been a director of the
Company since 1989. Gen. Stafford has served as
co-founder of Stafford, Burke and Hecker, Inc., a
Washington-based consulting firm, since
1982. Gen. Stafford graduated from the United States Naval
Academy in 1952. He was commissioned as an officer in
the United States Air Force ( USAF ) and attended the USAF
Experimental Flight Test School in 1958. He was
selected as an astronaut in 1962, piloted Gemini VI in
1965 and commanded Gemini IX in 1966. In 1969, Gen.
Stafford was named Chief of the Astronaut Office and was the
Apollo X commander for the first lunar module flight
to the moon. He commanded the Apollo-Soyuz joint mission with the
Soviet cosmonauts in 1975. After his retirement
from the USAF in 1979 as Lieutenant General, in which his last
assignment was Deputy Chief of Staff for research,
development and acquisitions, he became Chairman of Gibraltar
Exploration Limited, an oil and gas exploration and
production company, and served in that position until 1984,
when he joined General Technical Services, Inc., a
consulting firm. In addition to serving as a director of
TIMET since 1996, Gen. Stafford also serves as a
director of Allied-Signal Inc., CMI Corporation, Fischer
Scientific, Inc., Pacific Scientific Corporation,
Seagate Technologies, Inc., The Wackenhut Corporation and
Wheelabrator Technologies, Inc., and is Chairman of the
Board of the Omega Watch Corporation of America, the United
States affiliate of the Omega Watch Company. Gen.
Stafford serves as Chairman of the Company s Audit Committee and
Compensation Committee and serves as a member of
the Company s Nominations Committee.
Avy H. Stein, 42, has been a director of the Company since
1991. Mr. Stein has been a managing partner in the
private equity investment firm of Willis Stein & Partners
since 1995. Mr. Stein was a Managing Director of
Continental Equity Capital Corporation and Continental Illinois
Venture Corporation, investment funds affiliated
with Continental Bank of Illinois, from 1989 to 1995. Mr. Stein
serves as Chairman of the Company s Nominations
Committee and a member of the Compensation Committee.
For information concerning litigation and certain transactions
to which certain director nominees are parties,
see Certain Litigation and Certain Relationships and
Transactions below.
Board Meetings
The Board of Directors held five meetings in 1996 and took
action by written consent in lieu of a meeting three
times in 1996. Each of the directors participated in at least 75%
of the total number of such meetings and of the
committee meetings held dur
ing the period for committees on which they served.
Board Committees
The Board of Directors has established the following standing
committees:
Audit Committee. The principal responsibilities and authority of
the Audit Committee are to review and recommend
to the Board of Directors the selection of the Company s
independent auditors; to review with the independent
auditors the scope and results of the annual auditing engagement
and the system of internal accounting controls;
and, to direct and supervise special audit inquiries. The
current members of the Audit Committee are Gen. Thomas
P. Stafford (Chairman) and Richard J. Boushka. The Audit
Committee held two meetings in 1996.
Management Development and Compensation Committee. The
principal responsibilities and authority of the
Compensation Committee are to review and approve certain
matters involving executive compensation, including
making recommendations to the Board of Directors regarding
compensation matters involving the Chief Executive
Officer; to review and approve grants of stock options, stock
appreciation rights and awards of restricted stock
under the Company s incentive plans; except as otherwise
delegated by the Board of Directors, to review and
recommend adoption of or revisions to compensation plans and
employee benefit programs; to review and recommend
compensation policies and practices and to prepare such
compensation committee disclosures as may be required; to
review and recommend any executive employment contract;
and, to provide counsel on key personnel selection,
organization strategies and such other matters as the
Board of Directors may from time to time direct. The
current members of the Compensation Committee are Gen. Thomas P.
Stafford (Chairman), Richard J. Boushka and Avy
H. Stein. The Compensation Committee held one meeting in 1996
and took action by written consent in lieu of a
meeting once in 1996.
Nominations Committee. The principal responsibilities and
authority of the Nominations Committee are to review
and make recommendations to the Board of Directors regarding
such matters as the size and composition of the
Board of Directors, criteria for director nominations, director
candidates, the term of office for directors and
such other related matters as the Board of Directors may
request from time to time. The current members of the
Nominations Committee are Avy H. Stein (Chairman) and Gen. Thomas
P. Stafford. The Nominations Committee held one
meeting in 1996. The Nominations Committee reviewed and made
its recommendations to the Board of Directors with
respect to the election of directors at the Meeting. The
Nominations Committee will consider recommendations by
stockholders of the Company with respect to the election of
directors if such recommendations are submitted in
writing to the Secretary of the Company and received not
later than December 31 of the year prior to the next
annual meeting of stockholders.
Members of the standing committees will be appointed at
the meeting of the Board of Directors immediately
following the Meeting. The Board of Directors has previously
established, and from time to time may establish,
other committees to assist it in the discharge of its
responsibilities.
Compensation of Directors
During 1996, directors of the Company who were not also
employees of the Company or NL received an annual
retainer of $15,000, payable in quarterly installments, plus a
fee of $750 per day for attendance at meetings and
as a daily rate for other services rendered on behalf of the
Board of Directors and/or a committee of the Board
of Directors. In the event of the death while in active service
of any director who is eligible to receive fees,
such director s designated beneficiary or estate will be
entitled to receive a one-time life insurance benefit
equal to one year s annual retainer. Directors are also
reimbursed for reasonable expenses incurred in attending
Board of Directors and committee meetings. Directors receiving
fees for serving on the Board of Directors in 1996
were Richard J. Boushka, Glenn R. Simmons, Harold C.
Simmons, General Thomas P. Stafford and Avy H. Stein
(together, the Non-Employee Directors ).
During 1996, each of the Non-Employee Directors other than Glenn
R. Simmons and Harold C. Simmons were granted an
option, pursuant to the Tremont Corporation 1992 Non-Employee
Director Stock Option Plan (the Director Plan ),
to purchase 1,000 shares of Tremont Common Stock at an
exercise price of $22.75 per share, representing the
market value of Tremont Common Stock on the date of grant,
calculated as the last reported sales price of Tremont
Common Stock on the New York Stock Exchange Composite Tape on
such date. Options granted pursuant to the Director
Plan become exercisable one year after the date of grant and
expire on the fifth anniversary following the date
of grant.
Pursuant to an intercorporate services agreement between Contran
and the Company (see Certain Relationships and
Transactions below), certain services were provided by
Contran to Tremont during 1996, including services
rendered by Glenn R. Simmons and Harold C. Simmons, each of
whom is a director of the Company. Commencing in
1994, each of Messrs. G. Simmons and H. Simmons were paid
the directors fees described above, but were not
eligible to participate in the Director Plan. Commencing in
1994, the portion of the fees to be paid by Tremont
to Contran pursuant to the intercorporate services agreement
with Contran for the services of such individuals
has been reduced by the amount of directors fees paid
directly to such individuals. See also Certain
Relationships and Transactions below.
Executive
Officers
Set forth below is certain information relating to the current
executive officers of the Company. Biographical
information with respect to J. Landis Martin is set forth under
Election of Directors above. See also Certain
Relationships and Transactions below.
Name Age Position(s)
J. Landis Martin 51 Chairman of the
Board, President and Chief Executive Officer;
Chairman of the Board and Chief Executive
Officer of TIMET;
President and Chief Executive Officer of NL
Joseph S. Compofelice 47 Vice President
and Chief Financial Officer;
Vice President and Chief Financial Officer of
TIMET;
Vice President and Chief Financial Officer of
NL;
Executive Vice President of Valhi
Robert E. Musgraves 42 Vice President,
General Counsel and Secretary;
Vice President, General Counsel and Secretary of
TIMET
Mark A. Wallace 39 Vice President
and Controller;
Vice President Strategic Change of TIMET
Joseph S. Compofelice has been Vice President and Chief
Financial Officer of the Company since 1994. Mr.
Compofelice has been Vice President and Chief Financial Officer
of TIMET since 1996 and a director of TIMET since
1994 (except for the period from March 1996 to July 1996).
Mr. Compofelice has been Vice President and Chief
Financial Officer of NL and Executive Vice President of Valhi
since 1994 and a director of NL since 1995. Mr.
Compofelice was Vice President and Chief Financial Officer of
Baroid from 1990 to 1993.
Robert E. Musgraves has served as General Counsel and
Secretary of the Company since 1993 and has been a Vice
President of the Company since 1994. Mr. Musgraves has been
Vice President and General Counsel of TIMET since
1990 and Secretary since 1991. He also served as Vice
President-Administration of TIMET from 1993 to 1996. Prior
to joining TIMET in 1990, Mr. Musgraves was a partner in the law
firm of Kirkland & Ellis.
Mark A. Wallace has been Vice President and Controller of the
Company since 1992. Mr. Wallace has also been Vice
President Strategic Change of TIMET since December
1996. Prior to that he was Vice President-Finance and Treasurer
of TIMET since 1992. Mr. Wallace was an Assistant
Controller of Valhi from 1990 to 1992. Prior to joining Valhi
in 1990, Mr. Wallace was a Senior Manager for the
accounting firm of Arthur Andersen & Co.
Security
Ownership
Ownership in Tremont and Its Parents
The following table and notes set forth, as of the Record
Date, the beneficial ownership, as defined by the
regulations of the Securities and Exchange Commission (the
Commission ), of Tremont Common Stock held by (a)
each person or group of persons known to Tremont to
beneficially own more than 5% of the outstanding shares of
Tremont Common Stock, (b) each director or nominee for director
of Tremont, (c) each executive officer of Tremont
listed in the Summary Compensation Table below who is not a
director or nominee for director of Tremont, and (d)
all executive officers and directors of Tremont as a
group. Except as set forth in footnote (4) below, no
securities of Tremont s parent companies are beneficially
owned by any director, nominee for director or
executive officer of Tremont. All information is taken from or
based upon ownership filings made by such persons
with the Commission or upon information provided by such persons
to Tremont.
Tremont Common Stock
Name of
Amount
and Nature of
Beneficial Owner
Beneficial Ownership(1)
Percent of
Class(2)
Greater than 5% Stockholders
Contran Corporation and
subsidiaries(3)(4)
3,014,688(4)
40.2%
Tweedy, Browne Company L.P.
52 Vanderbilt Avenue
New York, New York 10017
960,474(5)
12.8%
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109
504,400(6)
6.7%
Directors
Susan E. Alderton
12,189(7)
Richard J. Boushka
4,100(8)
J. Landis Martin
190,918(9)
2.5%
Glenn R. Simmons
3,534(4)(10)
Harold C. Simmons
257,253(4)(11)
3.4%
Thomas P. Stafford
2,000(8)
Avy H. Stein
4,000(8)
Other Executive Officers
Joseph S. Compofelice
25,000(12)
Robert E. Musgraves
18,010(12)
Mark A. Wallace
3,325(12)
All current directors and executive
officers of the Company as a group
(10 persons)
520,329(4)(7)(8)(9)(10)(11)(12)
6.9%
(1) All beneficial ownership is sole and direct unless otherwise
noted.
(2) No percent of class is shown for holdings of less than 1%.
(3) The business address of each such holder is Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1700, Dallas, TX
75240-269
7.
(4) As of the Record Date, Contran was the holder of
approximately 3.2% of the outstanding Tremont Common Stock.
As of the Record Date, Valhi Group Inc. (VGI ) and National
City Lines, Inc. ( National ) were the holders of
approximately 31.5% and 4.7%, respectively, of the outstanding
Tremont Common Stock. In addition, NL and Valmont
Insurance Company ( Valmont ) were the holders of 36,167 and
30,490 shares, respectively, of Tremont Common
Stock, less than 1% of the outstanding Tremont common stock.
Valhi is the holder of 100% of the outstanding common stock
of Valmont. Valhi and Tremont are the holders of
approximately 55.6% and 17.7%, respectively, of the
outstanding common stock of NL and together may be deemed
to control NL. VGI, National and Contran are the holders of
approximately 74.9%, 10.0% and 6.8%, respectively,
of the outstanding common stock of Valhi, and The Combined
Master Retirement Trust (the Master Trust ) is the
holder of approximately 0.1% of the outstanding common stock
of Valhi. National, NOA, Inc. ( NOA ) and Dixie
Holding Company ( Dixie Holding ) are the holders of
approximately 73.3%, 11.4% and 15.3%, respectively, of the
outstanding common stock of VGI. Contran and NOA are
the holders of approximately 85.7% and 14.3%,
respectively, of the outstanding common stock of National.
Contran and Southwest Louisiana Land Company, Inc.
( Southwest ) are the holders of approximately 49.9% and
50.1%, respectively, of the outstanding common stock
of NOA. Dixie Rice Agricultural Corporation, Inc. ( Dixie
Rice ) is the holder of 100% of the outstanding
common stock of Dixie Holding. Contran is the holder of
approximately 88.7% and 54.3% of the outstanding common
stock of Southwest and Dixie Rice, respectively.
Substantially all of Contran s outstanding voting stock is
held by trusts established for the benefit of Harold C.
Simmons children and grandchildren (the Trusts ), of
which Harold C. Simmons is the sole trustee. As sole trustee
of the Trusts, Harold C. Simmons has the power to
vote and direct the disposition of the shares of Contran
common stock held by the Trusts. However, Mr. Simmons
disclaims beneficial ownership thereof. The Master Trust is
a trust formed by Valhi to permit the collective
investment by trusts that maintain the assets of certain
employee benefit plans adopted by Valhi and related
companies. Harold C. Simmons is the sole trustee of the
Master Trust and sole member of the trust investment
committee for the Master Trust. The trustee and members of the
trust investment committee for the Master Trust
are selected by Valhi s Board of Directors. Harold C. Simmons
and Glenn R. Simmons are each members of Valhi s
Board of Directors and are participants in one or more of the
employee benefit plans which invest through the
Master Trust. However, each such person disclaims beneficial
ownership of the Valhi common stock and Tremont
Common Stock (see footnote (11) below) held by the Master
Trust, except to the extent of his individual vested
beneficial interest in the assets held by the Master Trust.
Contran s ownership percentages of Valhi and Tremont reported
above include 0.2% of the outstanding shares of
Valhi common stock and 2.1% of the outstanding shares of
Tremont Common Stock, respectively, which shares are
directly held by the Contran Deferred Compensation Trust No. 2
(the CDCT No. 2 ). NationsBank of Texas, N.A.
serves as trustee (the Trustee ) of the CDCT No. 2.
Contran established the CDCT No. 2 as an irrevocable
rabbi trust to assist Contran in meeting certain deferred
compensation obligations that is owes to Harold C.
Simmons. If the CDCT No. 2 assets are insufficient to
satisfy such obligations, Contran must satisfy the
balance of such obligations. Pursuant to the terms of the CDCT
No. 2, Contran (i) retains the power to vote the
shares held by the CDCT No. 2, (ii) shares dispositive power
with the Trustee over such shares and (iii) may be
deemed the indirect beneficial owner of such shares.
Harold C. Simmons is Chairman of the Board of NL, Chairman of
the Board, President and Chief Executive Officer
of Contran, Dixie Holding, NOA, National, VGI and Valhi,
Chairman of the Board and Chief Executive Officer of
Dixie Rice and Southwest, and a director of Tremont. By
virtue of the holding of the offices, the stock
ownership and his service as trustee, all as described
above, Mr. Simmons may be deemed to control these
entities, and Mr. Simmons and certain of such entities, may be
deemed to possess indirect beneficial ownership
of the Tremont Common Stock directly held by certain of
such other entities. However, Mr. Simmons disclaims
beneficial ownership of the shares of Tremont Common Stock
beneficially owned, directly and indirectly, by any
of such entities.
(5) As reported in Amendment No. 7, dated September 9, 1993,
to a Statement on Schedule 13D as filed with the
Commission (the Tweedy Browne Schedule 13D ), Tweedy, Browne
Company L.P. ( TBC ) has beneficial ownership with
respect to 862,744 shares of Tremont Common Stock. In
addition, as reported in the Tweedy Browne Schedule 13D,
TBK Partners, L.P. and Vanderbilt Partners, L.P., entities which
are part of a group with TBC, beneficially owned
86,730 shares and 11,000 shares, respectively, of Tremont Common
Stock.
(6) As reported in a statement on Schedule 13G as filed with
the Commission on January 24, 1997, on behalf of
Wellington Management Company, LLP.
(7) The shares of Tremont Common Stock shown as beneficially
owned by Susan E. Alderton include 9,886 shares
which Ms. Alderton has the right to acquire by exercise of
options within 60 days of the Record Date under the
Tremont 1988 Long Term Performance Incentive Plan (the
Tremont Stock Incentive Plan ), and 11 shares held for
the benefit of Ms. Alderton under the NL Industries, Inc.
Retirement Savings Plan (the NL Savings Plan ).
(8) The shares of Tremont Common Stock shown as beneficially
owned by each of Messrs. Boushka, Stafford and Stein
include 4,000, 2,000, and 3,000 shares, respectively, which each
such person has the right to acquire by exercise
of options within 60 days of the Record Date under the Director
Plan, described above.
(9) The shares of Tremont Common Stock shown as beneficially
owned by J. Landis Martin include 60,000 shares
which Mr. Martin has the right to acquire by exercise of
options within 60 days of the Record Date under the
Tremont Stock Incentive Plan and 510 shares held for the
benefit of Mr. Martin under the NL Savings Plan. Such
shares also include 2,300 shares held by Mr. Martin s wife,
1,900 shares held by the Martin s Children Trust No.
II of which Mr. Martin is trustee and 100 shares held by one
of Mr. Martin s daughters, with respect to all of
which shares Mr. Martin disclaims beneficial ownership.
(10) The shares of Tremont Common Stock shown as beneficially
owned by Glenn R. Simmons include 3,515 shares held
by Mr. Simmons individual retirement account.
(11) The shares of Tremont Common Stock shown as beneficially
owned by Harold C. Simmons include 3,747 shares
held by Mr. Simmons wife, 3,506 shares held by the Master
Trust, and 250,000 shares held by The Harold Simmons
Foundation, Inc. (the Foundation ). The Foundation is a
tax-exempt foundation organized and existing exclusively
for charitable purposes, of which Mr. Simmons is Chairman of
the Board and Chief Executive Officer. Mr. Simmons
disclaims beneficial ownership of all such shares of Tremont
Common Stock (except to the extent of his individual
vested beneficial interest in the assets held by the Master
Trust).
(12) The shares of Tremont Common Stock shown as beneficially
owned by Joseph S. Compofelice, Robert E. Musgraves
and Mark A. Wallace include 15,000, 18,000 and 3,000 shares,
respectively, which Messrs. Compofelice, Musgraves
and Wallace have the right to acquire by exercise of options
within 60 days of the Record Date under the Tremont
Stock Incentive Plan, and, in the case of Mr. Musgraves,
10 shares held by his mother-in-law, beneficial
ownership of which is disclaimed by Mr. Musgraves.
Ownership in Tremont s Subsidiaries and Affiliates
The following table and notes set forth the beneficial ownership,
as of the Record Date, of (a) the common stock,
$.01 par value per share, of TIMET ( TIMET Common Stock ) and (b)
the common stock, $.125 par value per share, of
NL ( NL Common Stock ), held by (i) each director or nominee for
director of Tremont, (ii) each executive officer
of Tremont listed in the Summary Compensation Table below
who is not a director or nominee for director of
Tremont, and (iii) all current executive officers and directors
of Tremont as a group. Except as set forth below
and under the heading Ownership of TIMET Trust Securities
below, no securities of Tremont s subsidiaries or
less than majority owned affiliates are beneficially owned by
any director, nominee for director or executive
officer of Tremont. All information has been taken from or based
upon ownership filings made by such persons with
the Commission or upon information provided by such persons to
Tremont.
TIMET Common Stock
NL Common Stock
Name of
Amount and Nature of
Percent
Amount and
Nature of
Percent
Beneficial Owner
Beneficial Ownership(1) of Class(2) Beneficial
Ownership(1) of Class(2)
Susan E. Alderton
-0-
147,491(6)
Richard J. Boushka
-0-
-0-
J. Landis Martin
41,267(4)(5)
917,626(7)
1.8%
Glenn R. Simmons
-0-(3)
6,800(8)
Harold C. Simmons
-0-(3)
69,475(8)(9)
Thomas P. Stafford
1,100
-0-
Avy H. Stein
-0-
-0-
Joseph S. Compofelice
22,353(4)
123,240(10)
Robert E. Musgraves
8,500(5)
-0-
Mark A. Wallace
7,500
-0-
All current directors and executive
officers of the Company as a
group (10 persons)
81,020(3)(4)(5)
1,264,932(6)(7)(8)
2.5%
(9)(10)
(1) All beneficial ownership is sole and direct unless otherwise
noted.
(2) No percent of class is shown for holdings of less than 1%.
(3) Tremont directly beneficially owns 11,033,075 shares of
TIMET Common Stock, or 35.1% of the TIMET Common
Stock outstanding. Such shares include 2,011,305 shares
obtainable within 60 days of the Record Date upon
exercise of an option (the IMI Option ) expiring February 15,
1999 granted by IMI Americas Inc. to Tremont, 25%
of which (504,230 shares) was concurrently assigned to Union
Titanium Sponge Corporation ( UTSC ) in connection
with the February
1996 acquisition by TIMET (the IMI Titanium Acquisition ) of
the IMI titanium business from IMI plc ( IMI ) at
an exercise price of $7.95 per share. In connection with the
June 1996 initial public offering of TIMET Common
Stock (the TIMET IPO ), Tremont relinquished its right to
acquire 1,615 shares, which were sold by IMI in the
TIMET IPO. UTSC s portion of the IMI Option reverts to Tremont
if not exercised by UTSC on or prior to February
11, 1999.
See footnotes (4) and (11) to the table appearing under
the heading Ownership in Tremont and Its Parents
above for information concerning individuals and entities
which may be deemed to indirectly beneficially own
the shares of TIMET Common Stock dir
ectly beneficially owned by Tremont. Glenn R. Simmons and
Harold C. Simmons disclaim beneficial ownership of
all of the shares of TIMET Common Stock owned by Tremont.
(4) Mr. Martin and Mr. Compofelice are the holders of 3,000
and 2,000, respectively, of the 65 8% Convertible
Preferred Securities, Beneficial Unsecured Convertible
Securities (the TIMET Trust Securities ) of the TIMET
Capital Trust I. See Ownership of TIMET Trust Securities
below. Such TIMET Trust Securities are convertible
into 4,017 and 2,678 shares of TIMET Common Stock,
respectively, which amounts are included in the TIMET Common
Stock ownership numbers shown for Mr. Martin and Mr.
Compofelice. No other director, nominee for director or
executive officer of the Company holds any TIMET Trust
Securities.
(5) The shares of TIMET Common Stock shown as beneficially
owned by Mr. Martin include 400 shares held by Mr.
Martin s daughters, beneficial ownership of which is disclaimed
by Mr. Martin. The shares of TIMET Common Stock
shown as beneficially owned by Mr.
Musgraves include (i) 1,000 shares held by Mr. Musgraves and
his wife as joint tenants, and (ii) 1,000 shares
held by Mr. Musgraves mother-in-law, beneficial ownership of
which is disclaimed by Mr. Musgraves.
(6) The shares of NL Common Stock shown as beneficially owned
by Susan E. Alderton include 107,382 shares which
Ms. Alderton has the right to acquire by the exercise of stock
options within 60 days of the Record Date under
stock option plans adopted by NL, and 11,858 shares held for
the benefit of Ms. Alderton under the NL Savings
Plan.
(7) The shares of NL Common Stock shown as beneficially owned
by J. Landis Martin include 835,288 shares which
Mr. Martin has the right to acquire by the exercise of stock
options within 60 days of the Record Date under
stock option plans adopted by NL, and 11,673 shares held for the
benefit of Mr. Martin under the NL Savings Plan.
(8) Valhi directly beneficially owns 28,416,910 shares of NL
Common Stock. Tremont directly beneficially owns
9,064,780 shares of NL Common Stock. See footnote (4) to the
table appearing under the heading Ownership in
Tremont and Its Parents above for information concerning
individuals and entities which may be deemed to
indirectly beneficially own the shares of NL Common Stock
directly beneficially owned by Valhi and Tremont. Glenn
R. Simmons and Harold C. Simmons disclaim beneficial ownership
of all of the shares of NL Common Stock owned by
such entities.
(9) The shares of NL Common Stock shown as beneficially owned by
Harold C. Simmons include 69,475 shares held by
Mr. Simmons wife, beneficial ownership of which is disclaimed by
Mr. Simmons.
(10) The shares of NL Common Stock shown as beneficially owned
by Joseph S. Compofelice include (i) 5,240 shares
held for the benefit of Mr. Compofelice under the NL Savings
Plan, (ii) 87,000 shares which Mr. Compofelice has
the right to acquire by the exercise of stock options within 60
days of the Record Date under stock option plans
adopted by NL, and (iii) 30,000 shares held by Mr. Compofelice
and his wife as joint tenants.
Ownership of TIMET Trust Securities
The TIMET Capital Trust I (the TIMET Trust ) is a statutory
business trust formed under the laws of the State of
Delaware, all of whose common securities are owned by
TIMET. The TIMET Trust Securities represent undivided
beneficial interest in the TIMET Trust. The TIMET Trust exists
for the sole purpose of issuing the TIMET Trust
Securities and investing in an equivalent amount of 65 8%
Convertible Junior subordinated Debentures due 2026
(the Debentures ) of TIMET. The TIMET Trust Securities are
convertible, at the option of the holder thereof,
into an aggregate of approximately 5.4 million shares of TIMET
Common Stock at a conversi
on rate of 1.339 shares of TIMET Common Stock for each TIMET
Trust Security. TIMET has effectively fully and
unconditionally guaranteed repayment of all amounts due on the
TIMET Trust Securities.
The TIMET Trust Securities were issued pursuant to an offering
exempt from registration under the Securities Act
of 1933, as amended, (the Securities Act ). Pursuant to an
agreement with the original purchasers of the TIMET
Trust Securities, TIMET has filed a registration statement
(the BUCS Registration Statement ) under the
Securities Act to register, among other things, the TIMET
Trust Securities, the Debentures, the TIMET Common
Stock issuable upon the conversion of the TIMET Trust
Securities, and certain other shares of TIMET Common Stock
which is held by, or may be acquired by, Tremont and UTSC.
The Company understands that Contran and related entities
may consider acquiring or disposing of shares of
T r emont Common Stock through open-market or privately
negotiated transactions, depending upon future
developments, including, but not limited to, the availability
and alternative uses of funds, the performance of
Tremont Common Stock in the market, an assessment of the business
of and prospects for the Company, financial and
stock market conditions and other factors. The Company may
similarly consider such acquisitions of shares of
Tremont Common Stock and acquisition or disposition of securities
issued by related parties. In 1997, the Company
announced that it may repurchase up to 2,000,000 shares of
Tremont Common Stock. Neither Contran nor the Company
presently intends to engage in any transaction or series of
transactions which would result in the Tremont Common
Stock becoming eligible for termination of registration under
the Securities Exchange Act of 1934 or ceasing to
be traded on a national securities exchange.
Executive
Compensation
Summary of Cash and Certain Other Compensation of Executive
Officers
The following table sets forth certain information regarding
the compensation paid (or accrued) the Company and
TIMET for services rendered by Tremont s Chief Executive
Officer and each of the other executive officers of
Tremont for services rendered during the years 1994-1996.
Summary Compensation
Table(1)
Long Term
Compensation
Awards
Securities
Annual Compensation(2)
Underlying
All Other
Salary
Bonus(3)(4)
Options(5) Compensation(6)
Name and Position
Year
($)
($)
(#)
($)
J. Landis Martin
1996
225,000
2,650,331
-0-
21,028
Chairman of the Board,
1995
120,000
-0-
-0-
2,650
President and Chief Executive Officer(7)
1994
120,000
-0-
60,000
2,400
Joseph S. Compofelice
1996
120,000
410,969
-0-
14,263
Vice President and
1995
90,000
100,000
-0-
4,476
Chief Financial Officer(8)
1994
79,626
-0-
25,000
2,169
Robert E. Musgraves
1996
160,000
277,092
-0-
15,338
Vice President, General
1995
120,000
31,200
-0-
5,018
Counsel and Secretary
1994
120,000
31,200
10,000
4,691
Mark A. Wallace
1996
135,000
246,992
-0-
8,676
Vice President and
1995
100,000
26,000
-0-
3,972
Controller
1994
100,000
26,000
10,000
3,773
(1) Columns required by the regulations of the Commission which
would contain no entries have been omitted.
(2) J. Landis Martin, the Company s Chairman, President and
Chief Executive Officer, Joseph S. Compofelice, the
Company s Vice President and Chief Financial Officer,
Robert E. Musgraves, the Company s Vice President and
General Counsel, and Mark A. Wallace, the Company s Vice
President and Controller, also serve as officers of
TIMET.
The amounts shown as salary and bonus for Messrs. Martin,
Compofelice, Musgraves and Wallace represent the full
amount paid by TIMET for services rendered by such persons
during 1994, 1995 and 1996 on behalf of both TIMET
and Tremont. Pursuant to an intercorporate services
arrangement, Tremont reimbursed TIMET for approximately 50%
of such amounts in
1994 and 1995. In 1996, pursuant to an intercorporate
services agreement, Tremont reimbursed (or will
reimburse) TIMET for approximately $120,000, $64,000, $72,000
and $60,000 of the compensation paid to Messrs.
Martin, Compofelice, Musgraves and Wallace, respectively,
representing approximately 20% of such individuals
TIMET salary and regular bonus plus a proportionate share of
applicable estimated fringe and overhead expense
for each.
The Company expects that each of Messrs. Martin, Compofelice
and Musgraves will devote approximately 10% of his
total TIMET/Tremont time during
1997 to Tremont matters. Accordingly, Tremont will
reimburse TIMET for such proportionate percentage of the
1997 salary and bonus paid by TIMET to such individuals
(plus a share of applicable estimated fringe and
overhead expense for each) pursuant to an intercorporate
services agreement. See Certain Relationships and
Related Transactions Contractual Relation
ships.
Messrs. Martin and Compofelice also serve as officers
of NL and are compensated directly by NL for such
services. Mr. Compofelice also serves as an executive officer
of Valhi, which reimburses NL for a proportionate
part of Mr. Compofelice s NL compensation. See Appendix A.
(3) Under TIMET s variable incentive compensation plan
applicable to Messrs. Musgraves and Wallace (the TIMET
Employee Cash Incentive Plan ), a portion of the compensation
payable to the Company s officers who participate
in the TIMET Employee Cash Incentive Plan is based upon
TIMET s financial performance. The balance of the
compensation payable to the Company s officers under the
TIMET Employee Cash Incentive Plan is based on the
assessed performance of the individual officer.
Based on TIMET s 1994 and 1995 financial results, all
compensation paid under the TIMET Employee Cash Incentive
Plan to Messrs. Musgraves and Wallace for such years
related solely to individual performance and no
compensation was payable with respect to TIMET s performance.
For 1996, the payments under the TIMET Employee
Cash Incentive Plan to Messrs. Musgraves and Wallace
($140,800 and $110,700, respectively) were based upon a
combination of TIMET performance and assessed individual
performance.
None of Messrs. Martin, or Compofelice have participated in the
TIMET Employee Cash Incentive Plan. In February
1996, TIMET s Board adopted a separate incentive
compensation program applicable to certain senior executive
officers of TIMET, including Messrs. Martin and
Compofelice, that provides for payments based solely upon
Company performance. For 1996, awards of $272,500 and
$145,200 were made to Messrs. Martin and Compofelice
under this plan.
(4) In February 1996, in connection with the IMI Titanium
Acquisition, TIMET made special cash and stock bonus
(the Management Shares ) awards to certain of its executive
officers. Applying the fair value of TIMET Common
Stock at the effective date of grant of the Management Shares,
awards totaling $667,831, $265,769, $136,292, and
$136,292 were made to Messrs. Martin, Compofelice, Musgraves and
Wallace, respectively. Such amounts are included
in the Bonus column. Tremont s reimbursement to TIMET did not
include any portion of such amounts.
(5) Represents only grants of stock options under the Tremont
Stock Incentive Plan. See Stock Option/SAR Grants
in Last Fiscal Year below with respect to grants of stock
options made in 1996 to the named individuals under a
stock option plan adopted by TIMET in 1996.
(6) Such amounts represent (i) matching contributions made or
accrued by TIMET pursuant to the savings feature of
TIMET s Thrift/Retirement Plan, (ii) retirement
contributions made or accrued by TIMET pursuant to the
Thrift/Retirement Plan and (iii) life insurance premiums paid by
TIMET, as follows:
Savings
Match
Retirement Contribution
Life Insurance
1994
1995
1996
1994
1995
1996
1994
1995
1996
Martin -0-
$0,150
$13,378
$2,400
$2,400
$7,650
-0-
-0-
-0-
Compofelice -0-
$0,900
$07,237
$1,593
$3,000
$6,450
$576
$576
$576
Musgraves $1,115
$1,230
$09,000
$3,000
$3,000
$5,550
$576
$576
$788
Wallace $0,906
$1,200
$08,060
$2,415
$2,520
$4,500
$452
$452
$616
(7) The amount shown as Bonus for Mr. Martin for 1996
includes a special bonus of $2 million awarded by
Tremont. Of this amount, $955,000 was paid by Tremont to Mr.
Martin in 1996 and the balance was deferred for
future payment (with interest on the unpaid balance at 8.75% per
annum).
(8) Based upon the recommendation of the Chief Executive Officer
and TIMET s and Tremont s Management Development
and Compensation Committees, the TIMET and Tremont Boards
approved a bonus of $100,000 for Mr. Compofelice with
respect to his services on behalf of TIMET and Tremont during
1995.
Tremont beneficially owns approximately 18% of the outstanding NL
Common Stock. For financial reporting purposes,
Tremont reports its interest in NL by the equity method. For all
or a portion of each of the years 1994-1996, J.
Landis Martin and Joseph S. Compofelice also served as
executive officers of NL and were separately compensated
by NL for such services. Mr. Compofelice also served as an
executive officer of Valhi for a portion of such
period, for which services Valhi reimbursed NL. Annexed to this
Proxy Statement as Appendix A is information with
respect to compensation paid by NL to J. Landis Martin and
Joseph S. Compofelice for services rendered to NL and
Valhi for the years 1994-1996.
Stock Option/SAR Grants in Last Fiscal Year
No stock options or stock appreciation rights ( SARs ) were
granted under the Tremont Stock Incentive Plan during
fiscal year 1996. As such, the table showing option grants
with respect to Tremont Common Stock for the last
fiscal year has been omitted.
Effective with the closing of the TIMET IPO, TIMET adopted a
stock option/stock appreciation/restricted stock
plan (the TIMET Stock Incentive Plan ). Set forth below
is information regarding grants made to executive
officers of Tremont under the TIMET Stock Incentive Plan in 1996.
Potential Realizable
Number of Percent of
Value at
Assumed Annual
Securities Total Options
Rate of Stock Price
Underlying Granted to
Exercise or
Appreciation for Option
Options Employees in
Base Price
Expiration
Term(5) ($)
Name Granted(1)
Fiscal Year
($/share)
Date
5%
10%
J. Landis Martin 18,000
10.1%
23.00(2)
6/4/2006
260,362
659,809
18,000
26.00(3)
6/4/2006
206,362
605,809
18,000
29.00(4)
6/4/2006
152,362
551,809
Joseph S. Compofelice 8,500
4.8%
23.00(2)
6/4/2006
122,949
311,577
8,500
26.00(3)
6/4/2006
97,449
286,077
8,500
29.00(4)
6/4/2006
71,949
260,577
Robert E. Musgraves 6,000
3.4%
23.00(2)
6/4/2006
86,787
219,936
6,000
26.00(3)
6/4/2006
68,787
201,936
6,000
29.00(4)
6/4/2006
50,787
183,936
Mark A. Wallace 6,000
3.4%
23.00(2)
6/4/2006
86,787
219,936
6,000
26.00(3)
6/4/2006
68,787
201,936
6,000
29.00(4)
6/4/2006
50,787
183,936
(1) Options become exercisable 40% on the second anniversary of
the date of grant and 20% on each of the third,
fourth, and fifth anniversaries.
(2) Exercise price is the market value of TIMET Common Stock
on the grant date, calculated as the price to the
public in the TIMET IPO (the IPO Price ) on such date.
(3) Exercise price is equal to the IPO Price plus $3.00.
(4) Exercise price is equal to the IPO Price plus $6.00.
(5) Pursuant to the rules of the Commission, these
amounts reflect the calculations at assumed 5% and 10%
appreciation rates from the IPO Price on the date of grant. Such
calculations are not intended to forecast future
appreciation, if any, and do not necessarily reflect the actual
value, if any, that may be realized. The actual
value of such options, if any, would be realized only upon the
exercise of such options and will depend upon the
actual future performance of TIMET Common Stock. No assurance
can be made that the amounts reflected in these
columns will be achieved. The potential realizable value was
computed as the difference between the appreciated
value (at the end of the ten-year term of the options) of
TIMET Common Stock into which the listed options are
exercisable and the aggregate exercise price of such options.
The appreciated value per share at the end of the
ten-year term would be $37.46 and $59.66 at the assumed 5% and
10% rates, respectively.
Stock Option Exercises and Holdings
The following table provides information, with respect to the
executive officers of Tremont listed in the Summary
Compensation Table above, concerning the exercise of Tremont
options during the last fiscal year and the value of
unexercised options held as of December 31, 1996. No SARs have
been granted under the Tremont Incentive Plan.
Aggregated Option Exercises in 1996 and
12/31/96 Option Values
Number of
Securities
Value of
Underlying
Unexercised,
Unexercised
In-the-Money
Options
at
Options at
Shares
12/31/96
12/31/96
Acquired
(#)
($)
on Exercise Value
Realized
(Exercisable/
(Exercisable/
Name
(#)
($)
Unexercisable)
Unexercisable)
J. Landis Martin
42,500/45,000
1,061,781/1,179,938
Joseph S. Compofelice
10,000/15,000
280,000/420,000
Robert E. Musgraves
14,200/8,800
342,538/236,525
Mark A. Wallace
10,200
246,863
-0-/8,800
- -0-/238,725
No stock options granted to executive officers of the Company
under the TIMET Stock Incentive Plan were exercised
(or exercisable) during 1996.
Agreements with Executives
In connection with Joseph S. Compofelice s employment
with the Company in February 1994, the Compensation
Committee approved the terms of an executive severance
agreement with Mr. Compofelice which provides that Mr.
Compofelice may be terminated at any time by the Company
and that the following payments be made to Mr.
Compofelice in the event that Mr. Compofelice s employment is
terminated by the Company without cause (as defined
in the agreement) or Mr. Compofelice terminates his employment
with the Company for good reason (as defined in
the agreement): (i) the greater of two times Mr. Compofelice s
annual base salary plus target bonus (which shall
not be less than the amount of his annual salary) or two times
Mr. Compofelice s actual salary plus bonus for the
two years prior to termination; (ii) accrued salary and bonus
through the date of termination; (iii) an amount in
cash or Tremont Common Stock equal to the fair market
value of outstanding stock options granted to Mr.
Compofelice in excess of exercise price, unvested stock
appreciation rights and unvested restricted stock grants;
(iv) an amount equal to unvested company contributions
together with an amount equal to the company s matching
contributions to Mr. Compofelice s account under the TIMET Thrift
Plan for a period of two years; and (v) certain
other benefits.
Compensation Committee Report on
Executive Compensation
The Compensation Committee of the Company s Board of
Directors presents the following report on executive
compensation.
The Compensation Committee is composed of directors who are
neither officers nor employees of the Company, its
subsidiaries or affiliates and who are not eligible to
participate in any of the employee benefit plans
administered by it. The Compensation Committee reviews and
recommends compensation policies and is responsible
for approving all compensation paid directly by the Company to
the Company s executive officers other than base
salary of the Chief Executive Officer (the CEO ). Any action
regarding the base salary of the CEO is reviewed
and approved by the Board after recommendation by the
Compensation Committee.
Compensation Program Objectives
The Compensation Committee believes that the Company s primary
goal should be to increase stockholder value, as
measured by dividends paid on and appreciation in the
value of the Company s equity securities. It is the
Compensation Committee s policy that compensation programs be
designed to attract, retain, motivate and reward
employees, including executive officers, who can lead the
Company in accomplishing this goal. It is also the
Compensation Committee s policy that compensation programs
maintain a strong risk/reward ratio, with a large
component of cash compensation being tied to the Company s
financial results, creating a performance-oriented
environment that rewards employees for achieving pre-set
financial performance levels and increasing stockholder
value, thereby contributing to the long-term success of the
Company.
During 1996, the Company s compensation program with
respect to its executive officers, including the CEO,
consisted of three primary components: base salary,
variable compensation based upon company and individual
performance, and non-cash incentive compensation in the form of
stock options granted under the Tremont Incentive
Plan.
Base Salaries
The Compensation Committee, in consultation with the CEO,
reviews base salaries for the executive officers other
than the CEO generally no more frequently than annually.
The CEO s recommendation and the Compensation
Committee s actions regarding base salaries were based
primarily upon a subjective evaluation of past and
potential future individual performance and contributions and
alternative opportunities that might be available
to the executives in question. Also reviewed was
compensation data from companies employing executives in
positions similar to those whose salaries were being
reviewed, as well as market conditions for executives in
general with similar skills, background and performance, both
inside and outside of the metals industry (such
companies included companies contained in the peer group index
plotted on the Performance Graph following this
report), and other companies with similar financial and
business characteristics as the Company, or where the
executive in question has similar responsibilities.
Based upon the foregoing considerations, in 1996, the
Compensation Committee approved increases in total
TIMET/Tremont base salaries for Mr. Compofelice from $90,000
to $120,000, for Mr. Musgraves from $120,000 to
$160,000, and for Mr. Wallace from $100,000 to $135,000.
Cash Incentive Plans
Awards under TIMET Employee Cash Incentive Plan represent a
significant portion of the potential annual cash
compensation to employees of TIMET (from 0% to 88% of base
salary for 1996 depending upon the position held by
such employee) and consist of a combination of awards
based on the financial performance of TIMET and on
individual performance. Messrs. Musgraves and Wallace were
eligible to receive benefits under the TIMET Employee
Cash Incentive Plan for 1996. Tremont reimbursed TIMET for an
allocated portion of these amounts for each year
1994 - 1996.
Potential awards under the TIMET Employee Cash Incentive Plan
attributable solely to the performance of TIMET in
1996 were based on TIMET s achieving certain pre-set return on
equity goals, which the Company believes should
increase stockholder value over time if they are met.
Performance Levels A, B, C or D are tied to TIMET s
achieving a corporate-wide return on equity rate of 3%, 6%, 12%
or 24%, respectively. In 1996, TIMET achieved a
24.2% return on equity, as calculated under the TIMET
Employee Cash Incentive Plan, resulting in a
TIMET-performance based payout at the D or highest level.
Payments made to Messrs. Musgraves and Wallace under
this portion of the TIMET Employee Cash Incentive Plan for
services rendered in 1996 are included under the
Bonus column set forth in the Summary Compensation Table above.
An individual performance award may be made to an executive of
TIMET under the TIMET Employee Cash Incentive Plan
if such executive s performance objectives were met during
the prior fiscal year. Payments made to Messrs.
Musgraves and Wallace under this portion of the TIMET Employee
Cash Incentive Plan for services rendered in each
year 1994-1996 are included under the Bonus column set forth in
the Summary Compensation Table above.
In 1996, the TIMET s Board established the TIMET Senior Executive
Cash Incentive Plan (the Senior Executive Cash
Incentive Plan ), which is currently applicable to Mr. Martin
and Mr. Compofelice (and another executive officer
of TIMET). The Senior Executive Cash Incentive Plan provides
for payments based solely upon TIMET performance
ranging between 0% for corporate returns on equity of less
than 10% up to 150% of base salary for corporate
returns on equity at 30% or greater. A payment of $145,200 to Mr.
Compofelice based upon TIMET s return on equity
of 24.2% for 1996 is included under the Bonus column set
forth in the Summary Compensation Table above. An
allocated portion of this amount was paid by Tremont.
Apart from the foregoing plans, the Compensation Committee or the
Board may from time to time award other Tremont
bonuses as the Compensation Committee or Board deems appropriate
from time to time under its general authority or
under a separate discretionary plan.
Stock Option Grants
Part of the Company s total compensation program is non-cash
incentive awards in the form of stock options, stock
appreciation rights and awards of restricted stock under
the Tremont Stock Incentive Plan. The Compensation
Committee believes that compensation linked to stock price
performance helps focus the executives attention on
managing the Company from the perspective of an owner with
an equity stake in the business. To help assure a
focus on long-term creation of stockholder value, the
Compensation Committee periodically grants ten-year options
which are vested at 40%, 60%, 80% and 100% on the second,
third, fourth and fifth anniversary dates of the date
of grant, respectively, and are exercisable at the fair
market value of Tremont Common Stock on the date of
grant. In addition, to further provide incentives for
increasing shareholder value, in 1994 the Compensation
Committee determined that options to certain company executive
officers would be granted in three exercise price
tranches. One-third of the options granted to such individuals
in 1994 are exercisable at the fair market value
of the Tremont Common Stock of the date of grant. The
remaining two-thirds of the options are exercisable at
levels that are above the market price on the date of grant. The
value of stock option grants is directly related
to the future performance of the Tremont Common Stock and will
provide value to the recipient only when, and to
the extent, the price of the Tremont Common Stock increases
above the option exercise price. The Compensation
Committee did not make or recommend any grants of
restricted stock, stock appreciation rights, equity-based
awards or non-qualified options for the 1995 or 1996 fiscal
year. Beginning in 1996, executive officers of the
Company were included in grants made pursuant to a
stock-based incentive plan adopted by TIMET in conjunction
with the TIMET IPO.
Chief Executive Officer Compensation
Effective as of January 1, 1992, Mr. Martin, the CEO,
commenced receiving a base salary directly from the
Company. The Board of Directors set the CEO s base salary at
$120,000 per year in 1992, which was the result of a
subjective determination taking into account the importance of
the CEO to the strategic leadership of the Company
and the fact that the CEO devotes only a portion of
his working time to Company business. In 1996, the
Compensation Committee recommended, and the Board of
Directors approved, an increase in the CEO s base salary
from $120,000 to $225,000 per year based on the additional amount
of time spent by the CEO on the Company and its
subsidiaries and other considerations.
Prior to 1996, the CEO was eligible for bonuses only as
recommended by the Compensation Committee and approved by
the Board. No amounts were recommended or approved for 1994 or
1995. In 1996, TIMET adopted the Senior Executive
Cash Incentive Plan which was applicable to the CEO,
among others, as described above. Based upon TIMET s
financial results for 1996, Mr. Martin received an award of
$272,500 under that program (an allocated portion of
which was paid by the Company). In addition, in 1996, the
Compensation Committee recommended, and the Board of
Directors approved, a special bonus of $2 million to the CEO,
based upon the Company s improved performance and
other factors. Of this amount, $955,000 was paid by the Company
to the CEO in
1996 and the balance was deferred for future payment (with
interest on the unpaid balance at 8.75% per annum).
Future Activities
Given the decreased ownership by the Company in TIMET during
1996 and based upon the relative percentage of time
now being devoted by the executive officers to the affairs of the
Company versus those of TIMET, the Compensation
Committee anticipates that commencing in 1997, the regular
compensation of the executive officers of the Company,
each of whom is also an executive officer of TIMET,
will be addressed directly by the TIMET Management
Development and Compensation Committee and, in the case of the
CEO s base salary, the TIMET Board of Directors.
The Tremont Compensation Committee expects that its role with
respect to regular compensation matters for such
individuals will be limited to approving, or recommending
approval by the full Board, of the portion of such
individual s compensation to be reimbursed by Tremont under
any intercorporate services arrangement between
Tremont and TIMET. This role will be reassessed periodically
based upon any changes in facts or circumstances
that might occur.
Management
Development and Compensation Committee
Gen. Thomas P.
Stafford (Chairman)Richard J. BoushkaAvy H.
Stein
Performance Graph
Set forth below is a line graph comparing the cumulative total
stockholder return on Tremont Common Stock against
the cumulative total return of (a) the S & P Composite 500 Stock
Index and (b) a self-selected peer group for the
period commencing December 31, 1991 and ending December 31, 1996.
The self-selected peer group is comprised of RMI
Titanium Company and Oregon Metallurgical Corporation, TIMET
s principal domestic competitors in the titanium
metals industry for whom meaningful stock performance data is
available. The graph shows the value at December 31
of each year assuming an original investment of $100 and
reinvestment of cash dividends to stockholders.
Comparison of Five Year Cumulative Return Among Tremont
Corporation, S&P Composite 500 Stock Index and the
Self-Selected Peer
Group
Fiscal Year Ended
Self-Selected
December 31,
Tremont
S & P 500
Peer Group
1991
$100
$100
$100
1992
$060
$108
$066
1993
$049
$118
$070
1994
$084
$120
$101
1995
$119
$165
$152
1996
$259
$203
$487
Certain Relationships and
Transactions
Relationships with Related Parties
As set forth under the caption Security Ownership, Harold C.
Simmons, through Contran, may be deemed to control
the Company. In addition, Valhi, a 92%-owned subsidiary
of Contran, and the Company beneficially own
approximately 56% and 18%, respectively, of the
outstanding NL Common Stock, and together may be deemed to
control NL. The Company and other entities that may be
deemed to be controlled by or related to Mr. Simmons
sometimes engage in (a) intercorporate transactions with
related companies such as guarantees, management and
expense sharing arrangements, shared fee arrangements, joint
ventures, partnerships, loans, options, advances of
funds on open account, and sales, leases and exchanges of assets,
including securities issued by both related and
unrelated parties, and (b) common investment and acquisition
strategies, business combinations, reorganizations,
recapitalizations, securities repurchases, and purchases and
sales (and other acquisitions and dispositions) of
subsidiaries, divisions or other business units, which
transactions have involved both related and unrelated
parties and have included transactions which resulted in the
acquisition by one related party of a publicly held
minority equity interest in another related party. The Company
continuously considers, reviews and evaluates, and
understands that Contran, Valhi and related entities also
consider, review and evaluate such transactions.
Depending upon the business, tax and other objectives then
relevant, it is possible that the Company might be a
party to one or more of such transactions in the future. In
connection with these activities, the Company may
consider issuing additional equity securities or incurring
additional indebtedness. The Company s acquisition
activities have in the past and may in the future include
participation in the acquisition or restructuring
activities conducted by Contran, NL and other companies that may
be deemed to be controlled by Harold C. Simmons.
It is the policy of the Company to engage in transactions with
related parties on terms, in the opinion of the
Company, no less favorable to the Company than could be obtained
from unrelated parties.
Harold C. Simmons, a director of the Company, is also
currently Chairman of the Board, President and Chief
Executive Officer of Contran, Valhi, and Chairman of the Board
of NL. J. Landis Martin, Chairman of the Board,
President and Chief Executive Officer of the Company, is also
currently a director, President and Chief Executive
Officer of NL and Chairman and Chief Executive Officer of TIMET.
Joseph S. Compofelice, Vice President and Chief
Financial Officer of the Company, is also an executive officer
of Valhi and an executive officer and director of
NL and TIMET. Robert E. Musgraves, Vice President, General
Counsel and Secretary of the Company, holds similar
p o s itions at TIMET. Mark A. Wallace, Vice President
and Controller of the Company, is also Vice
President Strategic Change of TIMET. Glenn R. Simmons, a director
of the Company, is also currently Vice Chairman
of the Board of Contran and Valhi, and a director of NL and
Valhi. Susan E. Alderton, a director of the Company,
and David B. Garten, Assistant Secretary of the Company, are
also currently executive officers of NL. Steven L.
Watson, Assistant Secretary of the Company, is also
currently an executive officer of Contran and Valhi. The
Company understands that all such persons are expected to
continue to serve in such capacities in 1997. Such
management interrelationships and intercorporate relationships
may lead to possible conflicts of interest. These
possible conflicts may arise from the duties of loyalty owed by
persons acting as corporate fiduciaries to two or
more companies under circumstances in which such companies may
have adverse interests. Such individuals divide
their time among the companies for which they serve as executive
officers.
Although no specific procedures are in place which govern the
treatment of transactions among the Company, TIMET,
Contran, NL, and Valhi, with the exception of Contran, the board
of directors of each of these companies includes
one or more members who are not officers or directors of
any entity that may be deemed to be related to the
Company. Additionally, under applicable principles of law, in the
absence of stockholder ratification or approval
by directors who may be deemed disinterested, transactions
involving contracts among companies under common
control must be fair to all companies involved. Furthermore,
directors and officers owe fiduciary duties of good
faith and fair dealing to all stockholders of the companies for
which they serve.
Contractual Relationships
NL Registration Rights Agreement
In connection with the December 1991 purchase by the Company of
7.8 million shares of NL Common Stock from Valhi,
NL entered into a Registration Rights Agreement pursuant to
which the Company received certain registration
rights with respect to the purchased shares. Unless all
registration rights are exercised earlier, such agreement
expires in December 2001.
Baroid Letters of Credit
Approximately $9 million in letters of credit were issued under
Baroid s bank credit agreement to collateralize
certain obligations arising out of the insurance and
bentonite mining operations of the Company and its
subsidiaries. Pursuant to an indemnif
ication agreement, the Company agreed to indemnify Baroid
for all fees and expenses arising out of Baroid s
issuance of any letters of credit on the Company s behalf.
Following the January 1994 sale of Baroid to an
unrelated third party, these letters of credit were and
continue to be issued under the unrelated third party s
credit facility.
Insurance Sharing Agreements
NL Insurance Ltd. of Vermont, an indirect wholly owned
subsidiary of the Company ( TRE Insurance ), has assumed
the obligations of the issuer of certain reinsurance contracts
that relate to primary insurance policies issued
by a third-party insurance company in favor of NL and the
Company. NL and TRE Insurance are parties to an
insurance sharing agreement with respect to such reinsurance
contracts (the NL Insurance Sharing Agreement ).
Under the terms of the NL Insurance Sharing Agreement, NL is
required to reimburse TRE Insurance with respect to
certain loss payments and reserves established by TRE Insurance
that (a) arise out of claims against NL and its
subsidiaries (the NL Liabilities ), and (b) are subject
to payment by TRE Insurance under its reinsurance
contracts with the third-party insurance company. Also
pursuant to the NL Insurance Sharing Agreement, TRE
Insurance is to credit NL with respect to certain underwriting
profits or recoveries that TRE Insurance receives
from independent reinsurers that relate to the NL Liabilities.
Baroid and TRE Insurance are also parties to an
insurance sharing agreement having substantially the same
terms and conditions as the NL Insurance Sharing
Agreement with respect to certain loss payments and
reserves established by TRE Insurance that arise out of
claims against Baroid and its subsidiaries. As of December
29, 1996, Tremont had receivables of approximately
$3.6 million and $.5 million from NL and Baroid,
respectively, pursuant to their respective insurance sharing
agreements.
Contran Intercorporate Services Agreement
During 1996, Contran and the Company were parties to an
intercorporate services agreement (the Contran ISA )
which provides that Contran will render certain management
functions to the Company and its subsidiaries,
including services rendered by Harold C. Simmons and Glenn
R. Simmons. The Company paid Contran $160,000 for
services rendered under the Contran ISA in 1996 and expects to
pay approximately the same amount for services in
1997. The Contran ISA may be terminated by either party
pursuant to written notice to the other party not less
than 30 days prior to the end of each quarter. The Company
will continue to pay directors fees and expenses
separately to Harold C. Simmons and Glenn R. Simmons. See
Compensation of Directors above.
NL Intercorporate Services Agreements
NL and the Company are parties to an intercorporate services
agreement (the NL ISA ) whereby NL makes available
to Tremont certain services with respect to Tremont s
insurance, risk management, real property, and internal
audit needs. The Company paid fees of approximately $60,000 to NL
for services pursuant to the NL ISA during 1996
and expects to pay approximately $100,000 for services in
1997. The NL ISA is subject to renewal by mutual
agreement for succeeding one-year terms commencing January 1,
1997 and may be terminated at any time by either
party pursuant to 90-day prior written notice to the other party.
NL expects to enter into a separate intercorporate services
agreement with TIMET in 1997, whereby NL will provide
certain financial, risk management, tax and administrative
services to TIMET. NL anticipates receiving
approximately $350,000 for such services provided by NL to TIMET.
TIMET Intercorporate Services Agreement
Effective January 1, 1996, the Company and TIMET entered into
an intercorporate services agreement (the TIMET
ISA ) which provides that the parties will render certain
management, financial, tax and administrative services
to each other, including provision for the reimbursement by
Tremont to TIMET for salary, bonus and stock-based
compensation for executive officers of Tremont. The term of
the agreement is one year, subject to renewal on a
quarterly basis. TIMET charged Tremont a net amount of
approximately $.4 million under the TIMET ISA in 1996.
Tremont expects to pay TIMET a net amount of approximately $.4
million for services in 1997.
Utility Agreement
In connection with the operations of TIMET s Henderson, Nevada
facility, TIMET purchases utility services from
Basic Investments, Inc. and its subsidiaries (collectively,
BII ) pursuant to various agreements. During 1995,
the aggregate amount paid by TIMET to BII was less than $1
million. A 75%-owned subsidiary of Tremont owns
approximately 32% of BII.
Option Reimbursement Agreement
In 1996 in connection with the TIMET IPO, IMI and UTSC
entered into separate agreements with the Company and
Tremont whereby IMI and UTSC each agreed to reimburse Tremont for
a potion of the cost to Tremont associated with
the exercise of certain Tremont stock options issued to
employees of TIMET pursuant to the Tremont Stock
Incentive Plan. The payments are calculated by multiplying (x)
the number of Tremont Common Stock covered by such
exercised option by (y) the difference between (i) the
closing sale price of Tremont Common Stock on the NYSE
Composite Tape on the date of exercise not to exceed $34 minus
(ii) $16.625 and multiplying the resulting product
by (z) 0.16 in the case of UTSC and 0.34 in the case of IMI. The
maximum aggregate payments to be made by IMI and
UTSC to Tremont under such agreements are limited to $1.1 million
and $520,000, respectively.
Subsidiary and Affiliate Relationships
NL is a party to certain additional agreements with related
entities as set forth in Appendix A to this Proxy
Statement.
Certain
Litigation
Certain directors of Tremont are parties to the litigation
described below.
In November 1991, a purported derivative complaint was filed in
the Court of Chancery of the State of Delaware,
New Castle County (Kahn v. Tremont Corp., et al., No.
12339), in connection with Tremont s purchase of 7.8
million shares of NL s outstanding Common Stock from Valhi in
1991. The complaint named as defendants Valhi and
all the members of the Board of Directors of Tremont and
alleged that Tremont s purchase of the NL shares
constituted a waste of Tremont s assets and a breach of
fiduciary duties by Tremont s Board. A trial in this
matter was held in June 1995. In March 1996, the Court
issued its opinion ruling in favor of the defendants,
concluding that the purchase of the interest in NL was
entirely fair to Tremont. Plaintiff has appealed the
decision to the Delaware Supreme Court which has not yet ruled on
the matter.
In September 1996, a purported stockholder derivative suit was
filed int he Chancery Division of the New Jersey
Superior Court, Bergen County (Seinfeld v. Simmons et al.,
Civ. Action No. C-336-96) challenging the NL s 1991
purchase of approximately 10.9 million shares of NL Common
Stock from Valhi in connection with a dutch auction
tender offer to all stockholders. The complaint names as
defendants NL, Valhi, and seven persons who served on
NL s Board of Directors in 1991, including Messrs. J.
Landis Martin, Glenn Simmons and Harold Simmons. The
complaint alleges, among other things, that the NL purchase of
the shares in the dutch auction was an unfair and
wasteful expenditure of the NL funds that constituted a
breach of the defendants fiduciary duties to NL's
stockholders. The complaint seeks, among other things,
rescission of the purchase from Valhi pursuant to the
dutch auction and plaintiff has stated that damages sought
are $149 million. NL and the other defendants have
answered the complaint and have denied all allegations of
wrongdoing. The Company understands that each of the
defendants intend to defend the action vigorously. Trial is
scheduled to begin in November 1997. The Company is
not a party to this action.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company s executive officers,
directors, and persons who own beneficially more than 10%
of a registered class of the Company s equity
securities to file reports of ownership and changes in
ownership with the Commission and the Company. Based
solely on a review of copies of the Section 16(a) reports
furnished to the Company and written representations by
certain reporting persons, the Company believes that all of
the Company s executive officers, directors and
greater than 10% beneficial owners filed on a timely basis all
reports required during and with respect to the
fiscal year ended December 31, 1996.
Independent Public
Accountants
The firm of Coopers & Lybrand, L.L.P. served as the Company s
independent public accountants for the year ended
December 31, 1996 and is currently expected to be considered
for appointment by the Board of Directors as such
for the year ended December
31, 1997. Representatives of Coopers & Lybrand, L.L.P. are
expected to attend the Meeting. They will have an
opportunity to make a statement, if they desire to do so,
and will be available to respond to appropriate
questions.
Stockholder Proposals for 1997
Annual Meeting
Stockholders may submit proposals on matters appropriate
for stockholder action at the Company s annual
stockholder meetings, consistent with rules adopted by the
Commission. Such proposals must be received by the
Company no later than December 20, 1997, to be considered for
inclusion in the proxy statement and form of proxy
relating to the 1998 Annual Meeting of Stockholders. Any
such proposals should be addressed to: Corporate
Secretary, Tremont Corporation, 1999 Broadway, Suite 4300,
Denver, Colorado 80202.
Other Matters
The Board of Directors knows of no other business which will
be presented for consideration at the Meeting. If
any other matters properly come before the Meeting, the persons
designated as agents in the enclosed proxy card
or voting instruction form will vote on such matters in
accordance with their best judgment.
1996 Annual Report on
Form 10-K
A copy of Tremont s 1996 Annual Report on Form 10-K, as filed
with the Commission, is included as part of the
Company s 1996 Annual Report which accompanied this Proxy
Statement, additional copies of which are available to
stockholders without charge on request by writing: Investor
Relations Department, Tremont Corporation,
1999 Broadway, Suite 4300, Denver, Colorado 80202.
Appendix
Annexed to this Proxy Statement as Appendix A is information
with respect to compensation paid by NL to certain
individuals who are executive officers of Tremont and
information with respect to certain related party
transactions involving NL.
TREMONT CORPORATION
Denver, ColoradoApril 16,
1997
A p p e n d i x A
NL Industries, Inc. Compensation and
Related Party Transactions
Summary of Cash and Certain Other Compensation of Executive
Officers Paid by NL
The Summary Compensation Table set forth below provides
certain summary information concerning annual and
long-term compensation paid or accrued by NL to, or on behalf
of, each executive officer of Tremont listed under
Executive Compensation in the Proxy Statement who is also
an executive officer of NL, for services rendered
during the fiscal years ended December 31, 1994, 1995 and 1996.
Summary Compensation Table
Long Term
Compensation(1)
Awards
Securities
Annual Compensation(1)
Underlying
All Other
Salary
Bonus(2)
Options
Compensation(5)
Name and Principal Position with NL
Year
($)
($)
(#)
($)
J. Landis Martin
1996
400,000
-0-
45,000
85,000
President and
1995
400,000
600,000
-0-
94,000
Chief Executive Officer(3)
1994
400,000
600,000
195,000
9,000
Joseph S. Compofelice
1996
185,000
-0-
24,000
32,762
Vice President and
1995
185,000
277,500
30,000
39,042
Chief Financial Officer(4)
1994
166,856
250,300
125,000
9,950
(1) For the named executives listed, no awards of restricted
stock or payouts under long-term incentive plans
were made during 1996, 1995 or 1994. Therefore, columns for such
compensation have been omitted.
(2) Represents amounts paid pursuant to the NL Variable
Compensation Plan, formerly known as the Share in
Performance Incentive Plan (the NL Variable Compensation Plan ).
(3) During 1996, 1995 and 1994, Mr. Martin also served as
an executive officer of Tremont. In addition, Mr.
Martin has served as an executive officer of TIMET since 1987.
He also served as an executive officer of Baroid
until Baroid was acquired by Dresser in January 1994. Mr. Martin
is expected to continue to serve as an executive
officer of NL, Tremont and TIMET in 1997 and to be compensated
directly by NL for services to NL and by TIMET for
services to TIMET and Tremont. Mr. Martin is expected to continue
to devote approximately one-half of his working
time to his duties as President and Chief Executive Officer of
NL. See Certain Relationships and Transactions.
(4) Mr. Compofelice commenced employment as an executive
officer of NL and Tremont in February 1994, as an
executive officer of Valhi in July 1994 and as an executive
officer of TIMET in February 1996. He was compensated
directly by NL and Tremont and/or TIMET for services to such
companies in 1996, 1995 and 1994. NL was credited by
Valhi for the portion of Mr. Compofelice s salary earned for
services attributable to Valhi in 1996, 1995 and
1994 against the amount otherwise payable by NL to Valhi
pursuant to the intercorporate services agreement
between NL and Valhi. See Certain Relationships and
Transactions. Amounts paid in 1996, 1995 and 1994 by NL to
Mr. Compofelice that were credited by Valhi are included in
the table above. Mr. Compofelice is expected to
continue to serve as an executive officer of NL, Valhi, Tremont
and TIMET in
1997, and to be compensated directly by NL for NL-related
services and by TIMET for services to TIMET and
Tremont. NL expects that Valhi will continue to credit NL
under the above- referenced intercorporate services
agreement for the portion of Mr. Compofelice s salary for
services attributable to Valhi in 1997. Mr. Compofelice
is expected to continue to devote approximately forty percent of
his working time to his duties as Vice President
and Chief Financial Officer of NL.
(5) For 1996 represents (i) $1,512 of term life insurance
premiums paid by the Company for the benefit of Mr.
Compofelice, and (ii) $85,000 and $31,250 accrued by the
Company in an unfunded account for the benefit of Mr.
Martin and Mr. Compofelice, respectively, under the
Supplemental Executive Retirement Plan for Executives and
Officers of NL Industries, Inc. (the SERP ). For 1995
represents: (i) a contribution by the Company of $9,000 to
the account of each of the named executive officers under the NL
Savings Plan, (ii) $1,512 of term life insurance
premiums paid by the Company for the benefit of Mr.
Compofelice and (iii) $85,000 and $28,530 accrued by the
Company in unfunded accounts for the benefit of Messrs. Martin
and Compofelice respectively, under the SERP. For
1994 represents: (i) a contribution by the Company of
$9,000 to the account of each of the named executive
officers under the NL Savings Plan, and (ii) $950 of term
life insurance premiums paid by the Company for the
benefit of Mr. Compofelice.
Stock Option Grants by NL
The following table provides information, with respect to
the individual grants to the executive officers of
Tremont listed under Executive Compensation in the Proxy
Statement, concerning the grant of options under the
Long Term Performance Incentive Plan of NL (the NL
Incentive Plan ) during fiscal year 1996. No stock
appreciation rights ( NL SARs ) were granted under the NL
Incentive Plan in 1996.
Option Grants in Last
Fiscal Year
Potential
Realizable
Number of Percent of
Value at
Assumed Annual
Securities Total Options
Rate of Stock Price
Underlying Granted to
Exercise
or
Appreciation for
Option
Options Employees in
Base Price
Expiration
Term(3) ($)
Name
Granted(1) (#) Fiscal Year ($/share)(2)
Date
5%
10%
J. Landis Martin
15,000 20.7%
14.25
2/14/06
134,425
340,661
15,000
15.75
111,925
318,161
15,000
17.25
86,425
295,661
Joseph S. Compofelice
8,000 11.04%
14.25
2/14/06
71,693
181,686
8,000
15.75
59,693
169,686
8,000
17.25
47,693
157,686
(1) Grants of options to purchase shares of NL Common Stock ( NL
Options ) under the NL Incentive Plan vest over
five years from February 14, 1996, the date of grant, at a rate
of 40% on the second anniversary of the date of
grant, and 20% on each of the next three succeeding
anniversary dates. The NL Options expire on the tenth
anniversary date of the date of grant.
(2) Exercise price of $14.25 is equal to the mean of the high
and low prices of the NL Common Stock on the New
York Stock Exchange Composite Tape on the date of grant;
exercise prices of $15.75 and $17.25 are equal to the
foregoing mean price on the date of grant plus $1.50 and $3.00,
respectively.
(3) Pursuant to the rules of the Commission, these
amounts reflect the calculations at assumed 5% and 10%
appreciation rates. Such calculations are not intended to
forecast future appreciation, if any, and do not
necessarily reflect the actual value, if any, that may be
realized. The actual value of such options, if any,
would be realized only upon the exercise of such options and
depends upon the future performance of the Common
Stock. No assurance can be made that the amounts reflected
in these columns will be achieved. The potential
realizable value was computed as the difference between the
appreciated value (at the end of the ten-year term of
the options) of the Common Stock into which the listed options
are exercisable and the aggregate exercise price
of such options. The appreciated value per share at the end of
the ten-year term would be $23.21 and $36.96 at
the assumed 5% and 10% rates, respectively.
Stock Option Exercises and Holdings for NL
The following table provides information with respect to
the executive officers of Tremont listed under
Executive Compensation in the Proxy Statement concerning the
exercise of NL Options during the last fiscal year
and the value of unexercised NL Options held as of December 31,
1996. No NL SARs have been granted under the NL
Incentive Plan.
Aggregated Option Exercises in 1996 and 12/31/96 Option Values
Number of Securities Value of
Underlying Unexercised
Unexercisable In-the-Money
Options at Options at
Shares
12/31/96 12/31/96
Acquired
(#) ($)
on Exercise Value Realized
(Exercisable/ (Exercisable/
Name (#) ($)
Unexercisable) Unexercisable)
J. Landis Martin -0- -0-
758,288/224,000 516,000/383,625
Joseph S. Compofelice -0- -0-
50,000/129,000 106,250/159,375
Pension Plan
The Retirement Plan of NL Industries, Inc. for its U.S.
employees (the Pension Plan ) provides lifetime
retirement benefits to eligible employees. In February 1996,
the Company approved the suspension of all future
accruals under the Pension Plan effective as of March 31, 1996
(the Suspension Date ). Salaried employees, who
were at least 21 years of age became eligible to participate in
the Pension Plan if they completed at least five
months of service (as defined in the Pension Plan) in a
specified twelve-month period prior to the Suspension
Date. Annually, prior to the Suspension Date, the Board
established, in its discretion, the amount of an
employee s annual pension benefit for the year based primarily on
the employee s total eligible earnings for that
year and the Company s financial performance in relationship to
its annual operating plan for the previous year.
To the extent that the minimum, target, or maximum level of
operating income performance were achieved, the
employee earned an annual benefit equal to 1%, 2% or 3%,
respectively, of such employee s total base salary and
bonus, up to the limits set forth in the Internal Revenue Code.
Such pension benefits are payable upon retirement
and attainment of ages specified in the Pension Plan. The
Pension Plan covers Messrs. Martin and Compofelice. No
amounts were paid or distributed to Messrs. Martin and
Compofelice in 1996. The estimated accrued annual benefits
payable upon retirement at normal retirement age for
Messrs. Martin and Compofelice are $50,239 and $9,293,
respectively.
NL Employment Agreements
Mr. Martin has entered into an executive severance agreement
with NL which, as amended, provides that he may be
terminated at any time by action of the Board of
Directors. NL and Mr. Martin have amended the executive
severance agreement originally entered into in December 1991 to
provide that the following payments shall be made
to Mr. Martin in the event Mr. Martin is terminated by NL
without cause (as defined in the agreement) or Mr.
Martin terminates his employment with NL for good reason
(as defined in the agreement): (i) two times Mr.
Martin s annual base salary plus target bonus (which shall
not be less than the amount of his annual salary);
(ii) accrued salary and bonus through the date of
termination; and (iii) certain other benefits. The amended
agreement provides that it shall be in effect through December
31, 2000.
In connection with the commencement of Mr. Compofelice s
employment with NL in February 1994, the NL Management
Development and Compensation Committee approved the terms
of an executive severance agreement with Mr.
Compofelice which have since been incorporated into an
executive severance agreement which provides that Mr.
Compofelice may be terminated at any time by action of the Board
of Directors. The executive severance agreement
also provides that the following payments shall be made to
Mr. Compofelice in the event Mr. Compofelice is
terminated by NL without cause (as defined in the agreement) or
Mr. Compofelice terminates his employment with NL
for good reason (as defined in the agreement): (i) the greater
of two times Mr. Compofelice s annual base salary
plus target bonus (which shall not be less than the amount
of his annual salary) or Mr. Compofelice s actual
salary and bonus for the two years prior to termination;
(ii) accrued salary and bonus through the date of
termination; (iii) an amount in cash or Common Stock equal to
the fair market value of outstanding stock options
granted to Mr. Compofelice in excess of the exercise price and
unvested restricted stock grants; (iv) an amount
equal to unvested Company contributions together with an
amount equal to NL s matching contributions to Mr.
Compofelice s account under the Savings Plan for a period of
two years; (v) an amount equal to the vested and
unvested portions of Mr. Compofelice s account under the
SERP; and certain other benefits. This agreement is
automatically extended for a one-year term commencing each
January 1, unless NL and Mr. Compofelice agree
otherwise in writing.
Certain Relationships and Transactions
Intercorporate Services Agreements
NL and Contran are parties to an intercorporate services
agreement (the NL Contran ISA ) whereby Contran makes
available to NL the services of Harold C. Simmons to
consult with NL and assist in the development and
implementation of NL s strategic plans and objectives.
The services do not include major corporation
acquisitions, divestitures and other special projects outside the
scope of NL s business as it has been conducted
in the past. NL paid Contran approximately $400,000 in 1996
for services pursuant to the NL Contran ISA and
expects to pay approximately the same amount in 1997 for
such services. The NL Contran ISA is subject to
termination or renewal by mutual agreement and may be
terminated by either party pursuant to a written notice
delivered 30 days prior to a quarter-end. NL will continue
to pay directors fees and expenses separately to
Harold C. Simmons.
NL and Valhi are parties to an intercorporate services agreement
(the Valhi ISA ) whereby Valhi renders certain
management, financial and administrative services to NL and NL
makes the services of Joseph S. Compofelice and
NL s internal audit personnel available to Valhi. In addition in
1996, NL provided to Valhi certain insurance and
risk management services. Mr. Compofelice serves as an executive
officer of Valhi. NL expects to receive net fees
of approximately $30,000 from Valhi pursuant to the Valhi ISA
during
1996 after receiving credit for the amount owed by Valhi to NL
for the portion of Mr. Compofelice s salary earned
in 1995 and 1996 for services attributable to Valhi and for
certain internal audit services provided to Valhi in
1995. NL expects to receive a higher net amount for services in
1997. The Valhi ISA is subject to termination or
renewal by mutual agreement and may be terminated by either
party pursuant to a written notice delivered 30 days
prior to a quarter-end.
Tremont Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 6, 1997
The undersigned hereby appoints Robert E. Musgraves and
Joseph S. Compofelice, and each of them, proxy and
attorney-in-fact for the undersigned, with full poser of
substitution, to vote on behalf of the undersigned at
the 1997 Annual Meeting of Stockholders (the "Meeting") of
Tremont Corporation, a Delaware corporation
("Tremont"), to be held at the offices of Contran Corporation,
5430 LBJ Freeway, Suite 1700, Dallas, Texas on
Tuesday May 6, 1997, at 1:00 p.m. (local time), and at any
adjournment or postponement of said Meeting, all of
the shares of Common Stock ($1.00 par value) of Tremont
standing in the name of the undersigned or which the
undersigned may be entitled to vote on the matters described on
the reverse side of this card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TREMONT CORPORATION. PLEASE COMPLETE, SIGN, DATE
AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be
signed on the reverse side) SEE REVERSE SIDE
/X/ Please mark your votes as in this example.
This proxy, if properly executed, will be voted in the manner
directed herein. If no direction is made, this
proxy will be voted FOR all nominees named in Item 1 below.
The Board of Directors recommends a vote FOR the proposal
below.
1. Election of Seven Directors FOR ALL
WITHHELD AS TO
ALL
(except as marked
below)
/
/
/ /
Vote withheld as to the following nominee(s):
Nominees
S u s an E.
Susan E. Alderton, Richard J.Boushka, J. Landis Martin, Glenn R.
Simmons,
Harold C. Simmons, General Thomas P. Stafford, and Avy H.
Stein.
_____________________________________
2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before
the Meeting and any adjournment of postponement thereof; hereby
revoking any proxy or proxies heretofore given by
the undersigned.
Please sign exactly as your name appears on this card. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign full
corporate name and sign authorized officer s name and title.
If a partnership, please sign in partnership name
and sign authorized person s name and title.
The undersigned hereby revokes all proxies heretofore given by
the undersigned to vote at such meeting and any
adjournment or postponements thereof.
________________________________
________________________________
SIGNATURE(S) DATE
