<PAGE> 1
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))
[ ] Definitive Proxy Statement
[ X ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
[TREMONT LOGO]
TREMONT CORPORATION
1999 BROADWAY, SUITE 4300
DENVER, COLORADO 80202
April 9, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders of
Tremont Corporation ("Tremont"), which will be held on Tuesday, May 5, 1998, 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,
/s/ LANNY MARTIN
J. Landis Martin
Chairman of the Board,
President and Chief Executive Officer
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<PAGE> 3
TREMONT CORPORATION
1999 BROADWAY, SUITE 4300
DENVER, COLORADO 80202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1998
To the Stockholders of Tremont Corporation:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Meeting") of Tremont Corporation, a Delaware corporation ("Tremont" or the
"Company"), will be held on Tuesday, May 5, 1998, 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 1999 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 18,
1998, 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,
/s/ ROBERT E. MUSGRAVES
Robert E. Musgraves
Vice President, General Counsel and
Secretary
Denver, Colorado
April 9, 1998
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TREMONT CORPORATION
1999 BROADWAY, SUITE 4300
DENVER, COLORADO 80202
PROXY STATEMENT
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 1998 Annual Meeting of Stockholders of the Company to be held on Tuesday,
May 5, 1998, 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 first
be mailed to the holders of Tremont's common stock, $1.00 par value per share
("Tremont Common Stock"), on or about April 17, 1998.
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 1999 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 any other matter coming before the Meeting.
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<PAGE> 5
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 18, 1998 (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 6,769,163 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, through certain of its subsidiaries
("Contran"), together with certain other persons or entities related to Harold
C. Simmons, held approximately 49.9% of the outstanding shares of Tremont
Common Stock. Contran and such persons or entities have indicated their
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 0.2% 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 and
such entities.
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 $4,000. 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 (a) "FOR" the election of all of the seven
nominees set forth below as directors, and (b) 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) 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 either 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 1999 Annual Meeting of Stockholders of the Company and until
their successors are duly elected and qualified.
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<PAGE> 6
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 and certain other persons or entities related to
Harold C. Simmons held, in the aggregate, approximately 46.1% of the
outstanding shares of Tremont Common Stock as of the Record Date and have
indicated their intention to vote such shares "FOR" the election of each of the
nominees named below.
The Board of Directors recommends a vote "FOR" each of the nominees identified
below.
NOMINEES FOR DIRECTOR
The following information has been provided by the respective nominees for
election to the Board of Directors.
SUSAN E. ALDERTON, 46, 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. From 1988 to 1998, Ms. Alderton was Vice President and
Treasurer of NL Industries, Inc. ("NL"), which is engaged in the manufacture of
titanium dioxide pigment. In February 1998, Ms. Alderton was also named Chief
Financial Officer of NL. The Company holds approximately 17.7% of the
outstanding common stock of NL ("NL Common Stock"). NL may be deemed to be an
affiliate of the Company.
RICHARD J. BOUSHKA, 63, has been a director of the Company since 1990. Since
before 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.
From 1955 to 1980, Mr. Boushka was employed by Vickers Energy Company, where
his last position was President. Mr. Boushka serves as Chairman of the
Company's Audit Committee and is a member of the Management Development and
Compensation Committee (the "Compensation Committee").
J. LANDIS MARTIN, 52, has been the Chief Executive Officer and a director of
the Company since 1988. Mr. Martin has been Chairman of the Board of the
Company since 1990, and has served as President of the Company since 1987
(except for a period in 1990). Mr. Martin has also served as Chairman and a
director of Titanium Metals Corporation ("TIMET"), the Company's 30%-owned
titanium metals affiliate since 1987, as Chief Executive Officer of TIMET since
1995 and as President of TIMET from 1995 to 1996. Timet may be deemed to be an
affiliate of the Company. 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. 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, 70, has been a director of the Company since 1988. Mr.
Simmons is Chairman of the Board of Keystone Consolidated Industries, Inc.
("Keystone"), a steel fabricated wire products, industrial wire and carbon
steel rod company. Since prior to 1993, Mr. Simmons has been Vice Chairman of
the Board of Valhi, Inc. ("Valhi") and Contran, a diversified holding company
which directly and through related entities holds approximately 93% of the
outstanding common stock of Valhi and 48% of the out-
5
<PAGE> 7
standing common stock of Keystone. Mr. Simmons is also a director of NL and
CompX International Inc. ("CompX"), a majority-owned, indirect subsidiary of
Valhi engaged in the manufacture of ergonomic computer support systems,
precision ball bearing drawer slides and medium-security mechanical locks for
office furniture and other applications. Mr. Simmons has been an executive
officer and/or director of various companies related to Valhi and Contran since
1969. Valhi and CompX may be deemed to be affiliates of the Company. Mr.
Simmons is a brother of Harold C. Simmons.
HAROLD C. SIMMONS, 66, has been a director of the Company since 1988 and served
as Chairman of the Board of the Company from 1988 to 1990. Since prior to 1993,
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. Mr.
Simmons has been an executive officer and/or director of various other
companies related to Valhi and Contran since 1961. Mr. Simmons is a brother of
Glenn R. Simmons.
GEN. THOMAS P. STAFFORD (retired), 67, 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 and Seagate Technologies, Inc. Gen.
Stafford serves as Chairman of the Compensation Committee and is also a member
of the Company's Audit Committee and Nominations Committee.
AVY H. STEIN, 43, 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 is a member
of the Compensation Committee.
For information concerning legal proceedings and certain transactions to which
certain director nominees are parties and other matters, see "Certain
Litigation" and "Certain Relationships and Transactions" below.
BOARD MEETINGS
The Board of Directors held four meetings in 1997. Each of the directors
participated in at least 75% of the total number of such meetings and of the
committee meetings held during 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 Richard J. Boushka
(Chairman) and Gen. Thomas P. Stafford. The Audit Committee held one meeting
in 1997.
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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 the review
of certain intercorporate services agreements through which reimbursement is
made for compensation paid by related parties to the Company's executive
officers, together with 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.
During 1997, the Compensation Committee held one meeting and took action by
written consent in lieu of a meeting one time.
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 1997. In February 1998, 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 1997, 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 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 1997 were Richard J. Boushka, Glenn R. Simmons, Harold C. Simmons,
Gen. Thomas P. Stafford and Avy H. Stein (together, the "Non-Employee
Directors").
During 1997, each of the Non-Employee Directors other than Glenn R. Simmons and
Harold C. Simmons was 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 $56.50 per share,
representing the market value of Tremont Common Stock on the date of grant,
calculated as the last reported sale 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.
In addition, pursuant to an intercorporate services agreement between Contran
and the Company, certain services were provided by Contran to Tremont during
1997, including services rendered by Glenn R. Simmons and Harold C. Simmons,
each of whom is a director of the Company. See "Certain Relationships and
Transactions--Contractual Relationships" below.
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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.
<TABLE>
<CAPTION>
Name Age Position(s)
<S> <C> <C>
J. Landis Martin 52 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
J. Thomas Montgomery, Jr. 51 Vice President-Controller and Treasurer; Vice President-Finance and
Treasurer of TIMET
Robert E. Musgraves 43 Vice President, General Counsel and Secretary; Vice President, General
Counsel and Secretary of TIMET
</TABLE>
J. THOMAS MONTGOMERY, Jr. has served as Vice President-Controller and Treasurer
of the Company since May 1997. He has also been Vice President-Finance and
Treasurer of TIMET since 1996. Prior to joining TIMET in 1996, he was Vice
President and Controller of Valhi and Contran since 1987.
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.
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SECURITY OWNERSHIP
OWNERSHIP OF TREMONT COMMON STOCK
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 current and former 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 (3) 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.
<TABLE>
<CAPTION>
Tremont Common Stock
-------------------------------------------
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class(2)
- ---------------- ----------------------- -----------
<S> <C> <C>
GREATER THAN 5% STOCKHOLDERS
Contran Corporation and subsidiaries 3,118,588(3) 46.1%
Tweedy, Browne Company L.P. and related entities 960,474(4) 14.2%
JMG Capital Partners, L.P. and related entities 355,800(5) 5.3%
DIRECTORS
Susan E. Alderton 7,876(6) --
Richard J. Boushka 6,100(7) --
J. Landis Martin 210,418(8) 3.1%
Glenn R. Simmons 534(3)(9) --
Harold C. Simmons 257,253(3)(10) 3.8%
Thomas P. Stafford 2,000(7) --
Avy H. Stein 10,300(7) --
OTHER EXECUTIVE OFFICERS
J. Thomas Montgomery, Jr. 2,000(11) --
Robert E. Musgraves 21,010(12) --
FORMER EXECUTIVE OFFICERS
Joseph S. Compofelice 12,200(13) --
Mark A. Wallace 327(11) --
ALL DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANY AS A GROUP
(11 persons) 530,018(3)(6)(7)(8)(9) 7.7%
(10)(11)(12)(13)
</TABLE>
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%. For
purposes of calculating individual and group percentages, the number
of shares treated as outstanding for each individual includes stock
options exercisable by such individual (or individuals included in the
group) within 60 days of the Record Date.
(3) As reported in Amendment No. 8, dated March 12, 1998, to a Statement
on Schedule 13D, as filed with the Commission, as of the Record Date,
Contran was the holder of approximately 3.5% (236,371 shares) of the
outstanding shares of Tremont Common Stock. As of the Record Date,
Valhi, Valhi Group Inc. ("VGI"), National City Lines, Inc.
("National"), NL and Valmont Insurance Company ("Valmont") were the
holders of approximately 1.5% (103,900 shares), 34.9% (2,361,300
shares), 5.2% (350,360 shares), 0.5% (36,167 shares) and 0.5% (30,490
shares), respectively, of the outstanding shares of Tremont Common
Stock.
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<PAGE> 11
Valhi is the holder of 100% of the outstanding common stock of
Valmont. Valhi and Tremont are the holders of approximately 58.2% 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 74.8%, 9.5% and 7.8%, respectively, of
the outstanding common stock of Valhi. 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 88.8% 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 certain of Harold C. Simmons' children and grandchildren (the
"Simmons Trusts"), of which Harold C. Simmons is the sole trustee. As
sole trustee of the Simmons Trusts, Harold C. Simmons has the power to
vote and direct the disposition of the shares of Contran common stock
held by the Simmons Trusts. However, Mr. Simmons disclaims beneficial
ownership of such shares.
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 (10) below) held by the Master Trust, except to
the extent of his individual vested beneficial interest in the assets
held by the Master Trust.
Of Contran's ownership percentages reported above, 0.2% of the
outstanding shares of Valhi common stock and 3.5% of the outstanding
shares of Tremont Common Stock are directly held by the Contran
Deferred Compensation Trust No. 2 (the "CDCT No. 2" ). Boston Safe
Deposit and Trust Company 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 it owes to Harold C. Simmons. If the
assets of the CDCT No. 2 are insufficient to satisfy such obligations,
Contran must satisfy the balance of such obligations as they come due.
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) retains dispositive
power over such shares and (iii) may be deemed to be 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 holding such 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
all of such entities, except to the extent of his vested, beneficial
interest in the shares held by the Master Trust and except to the
extent of his interest as a beneficiary of the CDCT No. 2.
The business address of each such holder is Three Lincoln Centre, 5430
LBJ Freeway, Suite 1700, Dallas, TX 75240.
10
<PAGE> 12
(4) As reported in Amendment No. 7, dated September 9, 1993, to a
Statement on Schedule 13D, as filed with the Commission, Tweedy,
Browne Company L.P. ("TBC") beneficially owns 862,744 shares of
Tremont Common Stock and TBK Partners, L.P. and Vanderbilt Partners,
L.P., entities which are part of a group with TBC, beneficially own
86,730 shares and 11,000 shares, respectively, of Tremont Common
Stock. The business address of each such holder is 52 Vanderbilt
Avenue, New York, NY 10017.
(5) As reported in Statement on Schedule 13D, dated November 12, 1997, as
filed with the Commission on behalf of JMG Capital Partners, L.P., JMG
Convertible Investments, L.P., JMG Capital Management, Inc., Jonathan
M. Glaser, Triton Capital Investments, L.P., Triton Capital Holdings,
Ltd. and Pacific Capital Management. The business address of each such
holder is 1999 Avenue of the Stars, Suite 1950, Los Angeles, CA 90067,
except in the case of Triton Capital Investments, Ltd. and Triton
Capital Holdings Ltd., for which the business address is Kaya Flamoyan
9, Curacao, Netherland Antilles.
(6) The shares of Tremont Common Stock shown as beneficially owned by
Susan E. Alderton include (i) 7,365 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 (ii) 11 shares held for the
benefit of Ms. Alderton under the NL Industries, Inc. Retirement
Savings Plan (the "NL Savings Plan"). The business address for Ms.
Alderton is NL Industries, Inc., 70 East 55th Street, 8th Floor, New
York, NY 10022.
(7) The shares of Tremont Common Stock shown as beneficially owned by each
of Messrs. Boushka, Stafford and Stein include 4,000, 2,000, and 5,000
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. The business address for Mr. Boushka
is Boushka Properties, 701 E. Kellogg, Suite 650, Wichita, KS 67207.
The address for Gen. Stafford is Coral Harbor Club, 88181 Old Highway,
MM88, Unit C-44, Islamarada, FL 33036. The business address for Mr.
Stein is Willis Stein & Partners, 27 West Monroe St., Suite 4300,
Chicago, IL 60606.
(8) The shares of Tremont Common Stock shown as beneficially owned by J.
Landis Martin include (i) 75,500 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 (ii) 510 shares held for
the benefit of Mr. Martin under the NL Savings Plan. Such shares also
include (iii) 1,800 shares held by Mr. Martin's wife, (iv) 2,400
shares held by the Martin's Children Trust No. II of which Mr. Martin
is trustee and (v) 100 shares held by one of Mr. Martin's daughters,
with respect to all of which shares Mr. Martin disclaims beneficial
ownership. The business address for Mr. Martin is 1999 Broadway,
Suite 4300, Denver, CO 80202.
(9) The shares of Tremont Common Stock shown as beneficially owned by
Glenn R. Simmons represent shares held by Mr. Simmons' individual
retirement account. The business address for Mr. Simmons is Contran
Corporation, 5430 LBJ Freeway, Suite 1700, Dallas, TX 75240.
(10) The shares of Tremont Common Stock shown as beneficially owned by
Harold C. Simmons represent (i) 3,747 shares held by Mr. Simmons'
wife, (ii) 3,506 shares held by the Master Trust, and (iii) 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). The business address for Mr.
Simmons is Contran Corporation, 5430 LBJ Freeway, Suite 1700, Dallas,
TX 75240.
(11) The business address for Messrs. Montgomery and Wallace is 1999
Broadway, Suite 4300, Denver, CO 80202.
11
<PAGE> 13
(12) The shares of Tremont Common Stock shown as beneficially owned by
Robert E. Musgraves include (i) 21,000 shares which Mr. Musgraves has
the right to acquire by exercise of options within 60 days of the
Record Date under the Tremont Stock Incentive Plan, and (ii) 10 shares
held by a member of his household, beneficial ownership of which is
disclaimed by Mr. Musgraves. The business address for Mr. Musgraves is
1999 Broadway, Suite 4300, Denver, CO 80202.
(13) All shares are held by Mr. Compofelice and his wife as joint tenants.
The business address for Mr. Compofelice is CompX International, Inc.,
16825 Northchase Drive, Suite 1200, Houston, TX 77060.
The Company understands that Contran and related entities may consider
acquiring or disposing of shares of Tremont 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. During 1997, the
Company repurchased 787,100 shares of Tremont Common Stock pursuant to such
program. 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, as amended (the "Exchange Act"), or ceasing to be traded
on a national securities exchange.
OWNERSHIP OF TIMET AND NL COMMON STOCK
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 current and former 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 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.
<TABLE>
<CAPTION>
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)
- ---------------- ----------------------- ----------- ----------------------- -----------
<S> <C> <C> <C> <C>
DIRECTORS
Susan E. Alderton -0- -- 188,814(9) --
Richard J. Boushka -0- -- -0- --
J. Landis Martin 41,267(3)(4) -- 993,751(10) 1.9%
Glenn R. Simmons -0-(5) -- 6,800(11) --
Harold C. Simmons -0-(5) -- 69,475(11)(12) --
Thomas P. Stafford 2,350(6) -- -0- --
Avy H. Stein -0- -- -0- --
OTHER EXECUTIVE OFFICERS
J. Thomas Montgomery, Jr. 2,500 -- 8,500 --
Robert E. Musgraves 8,400(7) -- -0- --
FORMER EXECUTIVE OFFICERS
Joseph S. Compofelice 22,353(4)(8) -- 165,783(13) --
Mark A. Wallace 7,500 -- -0- --
ALL DIRECTORS AND EXECUTIVE OFFICERS OF
THE COMPANY AS A GROUP (11 persons) 84,370(3)(4)(5)(6)(7)(8) -- 1,433,123(9)(10)(11) 2.7%
(12)(13)
</TABLE>
12
<PAGE> 14
(1) All beneficial ownership is sole and direct unless otherwise noted.
Addresses for all beneficial owners are included in the notes
accompanying the Tremont Common Stock Ownership Table.
(2) No percent of class is shown for holdings of less than 1%. For
purposes of calculating individual and group percentages, the number
of shares treated as outstanding for each individual includes stock
options exercisable by such individual (or all individuals included in
the group) within 60 days of the Record Date.
(3) 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.
(4) Mr. Martin and Mr. Compofelice are the holders of 3,000 and 2,000,
respectively, of the 6 5/8% 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) Tremont directly beneficially owns 11,033,075 shares of TIMET Common
Stock, or 35.1% of the TIMET Common Stock outstanding. Such shares
include 1,508,075 shares obtainable within 60 days of the Record Date
upon exercise of an option (the "IMI Option") having an exercise price
of $7.95 per share and expiring February 15, 1999, granted by IMI
Americas Inc. to Tremont, 25% of which (503,230 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"). 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 under the original IMI Option, 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 (3) and (10) to the table appearing under the heading
"Ownership of Tremont Common Stock" above for information concerning
individuals and entities which may be deemed to indirectly
beneficially own the shares of TIMET Common Stock directly
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.
(6) The shares of TIMET Common Stock shown as beneficially owned by Thomas
P. Stafford include 1,250 shares which Gen. Stafford has the right to
acquire by the exercise of stock options within 60 days of the Record
Date under a stock option plan adopted by TIMET for its non-employee
directors.
(7) 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) 900 shares held by a member of Mr.
Musgraves' household, beneficial ownership of which is disclaimed by
Mr. Musgraves.
(8) The shares of TIMET Common Stock shown as beneficially owned by Joseph
S. Compofelice are held by Mr. Compofelice and his wife as joint
tenants.
(9) The shares of NL Common Stock shown as beneficially owned by Susan E.
Alderton include (i) 128,982 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 (ii) 11,858
shares held for the benefit of Ms. Alderton under the NL Savings Plan.
13
<PAGE> 15
(10) The shares of NL Common Stock shown as beneficially owned by J. Landis
Martin include (i) 833,277 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 (ii) 13,809 shares
held for the benefit of Mr. Martin under the NL Savings Plan.
(11) Valhi directly beneficially owns 58.2% (29,844,210 shares) of the
outstanding shares of NL Common Stock. Tremont directly beneficially
owns 17.7% (9,064,780 shares) of the outstanding shares of NL Common
Stock. VGI, National, the Foundation, the CDCT No.2, Valhi, NL,
Valmont and the Master Trust are the holders of approximately 34.9%
(2,361,300 shares), 5.2% (350,360 shares), 3.7% (250,000 shares), 3.5%
(236,371 shares), 1.5% (103,900 shares), 0.5% (36,167 shares), 0.5%
(30,490 shares) and less than 0.1% (3,506 shares), respectively, of
the outstanding Tremont Common Stock. See footnotes (3) and (10) to
the table appearing under the heading "Ownership of Tremont Common
Stock" 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 individuals and entities.
(12) The 69,475 shares of NL Common Stock shown as beneficially owned by
Harold C. Simmons represent shares held by Mr. Simmons' wife,
beneficial ownership of which is disclaimed by Mr. Simmons.
(13) The shares of NL Common Stock shown as beneficially owned by Joseph S.
Compofelice include (i) 7,183 shares held for the benefit of Mr.
Compofelice under the NL Savings Plan, (ii) 115,600 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) 42,000 shares held by Mr. Compofelice and his wife as
joint tenants.
14
<PAGE> 16
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
interests 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
6 5/8% 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 conversion 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 are held by, or may be acquired by, Tremont and UTSC. Except
as set forth in footnote (4) to the table under the heading "Ownership of TIMET
and NL Common Stock," no director, nominee for director or executive officer of
Tremont is known to own any TIMET Trust Securities.
15
<PAGE> 17
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding the compensation
paid by the Company and TIMET for services rendered by Tremont's Chief
Executive Officer and each of Tremont's current and certain former executive
officers, in each case for services rendered during the years 1995-1997.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Annual Compensation(2)
----------------------------------------- All Other
Salary Bonus(3)(4) Compensation(5)
Name and Position Year ($) ($) ($)
- ----------------- ---- ------- ----------- ---------------
<S> <C> <C> <C> <C>
J. Landis Martin
Chairman of the Board,
President and Chief Executive Officer(6) 1997 500,000 565,000 20,273
1996 225,000 2,650,331 21,028
1995 120,000 -0- 2,650
J. Thomas Montgomery, Jr.
Vice President, Controller and Treasurer(7) 1997 150,000 87,000 14,542
1996 -- -- --
1995 -- -- --
Robert E. Musgraves
Vice President, General Counsel and Secretary 1997 160,000 107,600 15,361
1996 160,000 277,092 15,338
1995 120,000 31,200 5,018
Joseph S. Compofelice
Vice President and Chief Financial Officer(8)(9) 1997 170,000 192,100 17,576
1996 120,000 410,969 14,263
1995 90,000 100,000 4,476
Mark A. Wallace
Vice President and Controller(10) 1997 150,000 98,750 14,253
1996 135,000 246,992 8,676
1995 100,000 26,000 3,972
</TABLE>
(1) Columns required by the regulations of the Commission that would
contain no entries have been omitted.
(2) J. Landis Martin, the Company's Chairman, President and Chief
Executive Officer, J. Thomas Montgomery, Jr., the Company's Vice
President-Controller and Treasurer, Robert E. Musgraves, the Company's
Vice President, General Counsel and Secretary, and Mark A. Wallace,
the Company's former Vice President-Controller (serving Tremont for a
portion of 1997), also serve as executive officers of TIMET. Joseph S.
Compofelice, the Company's Vice President and Chief Financial Officer
until February 1998, also formerly served as an executive officer 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 1995, 1996 and 1997 on behalf
of both TIMET and Tremont. Pursuant to an intercorporate services
arrangement, Tremont reimbursed TIMET for approximately 50% of such
amounts in 1995. Pursuant to an intercorporate services agreement, in
1996 Tremont reimbursed 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 and Tremont salary and
regular bonus plus a proportionate share of applicable estimated
fringe benefits and overhead expense for each. In 1997, pursuant to an
intercorporate services agreement, Tremont reimbursed TIMET for
approximately $128,000, $44,000, $19,000, $32,000 and $10,000 of the
compensation paid to Messrs. Martin, Compofelice, Montgomery,
Musgraves and Wallace, respectively, representing approximately
16
<PAGE> 18
10% of such individuals' TIMET salary and regular bonus (prorated, in
the cases of Messrs. Montgomery and Wallace, for the portion of 1997
during which each served as an executive officer of Tremont), plus a
proportionate share of applicable estimated fringe benefits and
overhead expense for each.
The Company expects that each of Messrs. Martin, Montgomery and
Musgraves will devote approximately 10% of his total TIMET/Tremont
time during 1998 to Tremont matters. Accordingly, it is anticipated
that Tremont will reimburse TIMET for such proportionate percentage of
the 1998 salary and bonus paid by TIMET to such individuals (plus a
share of applicable estimated fringe benefits and overhead expense for
each) pursuant to an intercorporate services agreement. See "Certain
Relationships and Related Transactions--Contractual Relationships"
below.
Tremont beneficially owns approximately 17.7% of the outstanding
shares of 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 1995-1997, 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. Appended to this Proxy
Statement as Appendix A is information with respect to compensation
paid by NL to Mr. Martin and Mr. Compofelice for services rendered to
NL and Valhi for the years 1995-1997.
(3) Under TIMET's variable incentive compensation plan applicable to
Messrs. Montgomery, 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 1995 financial results, all compensation paid under
the TIMET Employee Cash Incentive Plan to Messrs. Musgraves and
Wallace for such year 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 $110,200, respectively)
were based upon a combination of TIMET performance and assessed
individual performance. For 1997, the payments under the TIMET
Employee Cash Incentive Plan to Messrs. Montgomery, Musgraves and
Wallace ($87,000, $107,600 and $98,750, respectively) were based upon
a combination of TIMET performance and assessed individual
performance.
Neither Mr. Martin nor Mr. Compofelice has participated in the TIMET
Employee Cash Incentive Plan. In 1996, TIMET's Board adopted the
Senior Executive Cash Incentive Plan, 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. Awards were made under
this plan to Mr. Martin and Mr. Compofelice of $272,250 and $145,200,
respectively, for 1996 and $565,000 and $192,100, respectively, for
1997. All such amounts are included in the "Bonus" column for the year
in question.
(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, aggregate cash and stock 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 for each such individual for 1996. Tremont's
reimbursement to TIMET did not include any portion of such amounts.
17
<PAGE> 19
(5) 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:
<TABLE>
<CAPTION>
Name Year Martin Compofelice Montgomery Musgraves Wallace
- ---- ---- ------ ----------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Savings Match 1997 $ 8,606 $10,200 $7,658 $8,096 7,478
1996 $13,378 $ 7,237 -- $9,000 8,060
1995 $ 150 $ 900 -- $1,230 1,200
Retirement Contribution 1997 $11,667 $ 6,800 $6,127 $6,477 5,983
1996 $ 7,650 $ 6,450 -- $5,550 4,500
1995 $ 2,400 $ 3,000 -- $3,000 2,520
Life Insurance 1997 $ -0- $ 576 $ 444 $ 788 $ 792
1996 $ -0- $ 576 -- $ 788 $ 616
1995 $ -0- $ 576 -- $ 576 $ 452
</TABLE>
(6) The amount shown as "Bonus" for Mr. Martin for 1996 includes a special
bonus of $2 million awarded by Tremont in 1996. Of this amount,
$955,000 was paid by Tremont to Mr. Martin in 1996, $900,000 was paid
in 1997, and the balance was paid in 1998 (with interest on the unpaid
balances in 1997 and 1998 at 8.75% per annum).
(7) Mr. Montgomery's employment with TIMET commenced in December 1996 and
his services as an executive officer of Tremont commenced in May 1997.
Consequently, no information is shown for Mr. Montgomery for 1995 and
1996. The amount shown for Mr. Montgomery as "All Other Compensation"
for 1997 also includes $313 for travel-related compensation.
(8) Based upon the recommendation of TIMET's Chief Executive Officer and
TIMET's and Tremont's Management Development and Compensation
Committees, the TIMET and Tremont Boards approved a bonus of $100,000
for Mr. Compofelice with respect to his services on behalf of TIMET
and Tremont during 1995.
(9) Mr. Compofelice's service as an executive officer of the Company ended
in February 1998.
(10) Mr. Wallace's service as an executive officer of the Company ended in
May 1997.
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options or stock appreciation rights ("SARs") have been granted under
the Tremont Stock Incentive Plan since 1994. Consequently, the table showing
option grants with respect to Tremont Common Stock for the last fiscal year has
been omitted.
18
<PAGE> 20
Since 1996, executive officers of Tremont have instead been granted stock
options pursuant to a stock option/stock appreciation/restricted stock plan
adopted by TIMET (the "TIMET Stock Incentive Plan"). Set forth below is
information regarding grants made to executive officers of Tremont under the
TIMET Stock Incentive Plan in 1997.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of Percent of Rate of Stock Price
Securities Total Options Appreciation for Option
Underlying Granted to Exercise or Term(3) ($)
Options Employees in Base Price Expiration ------------------------
Name Granted(1) Fiscal Year ($/share)(2) Date 5% 10%
- ----------------------- ---------- ------------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
J. Landis Martin 20,000 16.5% 28.00 2/13/2007 352,181 892,496
20,000 31.00 2/13/2007 292,181 832,496
20,000 34.00 2/13/2007 232,181 772,496
J. Thomas Montgomery, Jr. 3,000 2.5% 28.00 2/13/2007 52,827 133,874
3,000 31.00 2/13/2007 43,827 124,874
3,000 34.00 2/13/2007 34,827 115,874
Robert E. Musgraves 5,000 4.2% 28.00 2/13/2007 88,045 223,124
5,000 31.00 2/13/2007 73,045 208,124
5,000 34.00 2/13/2007 58,045 193,124
Joseph S. Compofelice 8,000 6.6% 28.00 2/13/2007 140,872 356,998
8,000 31.00 2/13/2007 116,872 332,998
8,000 34.00 2/13/2007 92,872 308,998
Mark A. Wallace 4,000 3.3% 28.00 2/13/2007 70,436 178,499
4,000 31.00 2/13/2007 58,436 166,499
4,000 34.00 2/13/2007 46,436 154,499
</TABLE>
(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
of such date.
(2) The exercise price of $28.00 per share represents the "fair market
value" of TIMET Common Stock on the grant date, calculated as the mean
of the highest and lowest sales prices on such date (the "Grant Date
FMV"). The exercise prices of $31.00 and $34.00 per share represent
the Grant Date FMV plus $3.00 and $6.00 per share, respectively.
(3) Pursuant to the rules of the Commission, these amounts reflect the
calculations at assumed 5% and 10% appreciation rates from the Grant
Date FMV. 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 $45.61 and $72.62 at the assumed 5% and 10% appreciation
rates, respectively.
19
<PAGE> 21
STOCK OPTION EXERCISES AND HOLDINGS
The following table provides information, with respect to the executive
officers of Tremont listed in the Summary Compensation Table above, concerning
the exercise of Tremont options during the last fiscal year and the value of
unexercised options held as of December 31, 1997. No SARs have been granted
under the Tremont Incentive Plan.
AGGREGATED OPTION EXERCISES IN 1997 AND 12/31/97 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised,
Unexercised In-the-Money
Options at Options at
Shares 12/31/97 12/31/97
Acquired (#) ($)
on Exercise Value Realized (Exercisable/ (Exercisable/
Name (#) ($) Unexercisable) Unexercisable)
- ------------------------- ----------- -------------- -------------------- -------------------
<S> <C> <C> <C> <C>
J. Landis Martin -- -- 60,000/27,500 2,477,625/1,175,031
J. Thomas Montgomery, Jr. -- -- -0-/-0- -0-/-0-
Robert E. Musgraves -- -- 18,000/5,000 730,000/219,938
Joseph S. Compofelice -- -- 15,000/10,000 661,875/441,250
Mark A. Wallace 3,800 95,137 -0-/5,000 -0-/219,938
</TABLE>
No stock options granted to executive officers of the Company under the TIMET
Stock Incentive Plan were exercised (or exercisable) during 1997.
20
<PAGE> 22
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.
As previously indicated, none of the Company's executive officers is directly
compensated by the Company. Mr. Martin, the Company's Chairman and Chief
Executive Officer, is compensated directly by TIMET and NL. Mr. Compofelice,
the Company's former Vice President and Chief Financial Officer, was
compensated directly by TIMET, NL, and Valhi. Mr. Montgomery, Mr. Musgraves,
and Mr. Wallace (the Company's former Vice President and Controller) are each
compensated directly by TIMET. The Company, through an intercorporate services
agreement, reimburses TIMET for a portion of the compensation paid to each of
the Company's executives by TIMET (see "Certain Relationships and
Transactions--Contractual Relationships" below). TIMET (as well as NL and
Valhi) currently maintains a compensation committee of that company's Board of
Directors that addresses the compensation directly paid to these affected
individuals and separately reports on these matters to its stockholders in its
proxy statement.
Consequently, beginning in 1997, the role of the Company's Compensation
Committee relating to compensation for its executive officers has been limited
to evaluating and recommending to the full Board the portion of such
individuals' compensation that would be subject to reimbursement under the
intercorporate services agreement with TIMET. This evaluation takes into
account the Compensation Committee's view of the reasonableness of the
allocation and amount in relation to the amount of time being devoted by such
individuals to the affairs of the Company and the cost that might be expected
to be incurred by the Company were it to hire separate individuals to perform
these functions on a full-time basis.
For 1997, the Compensation Committee recommended to the full Board of Directors
approval of the intercorporate services agreement with TIMET that provided for
payment to TIMET of approximately $400,000, including approximately $250,000
related to reimbursement for compensation paid by TIMET to the Company's
executives. This was based upon an allocation of approximately 10% of each such
executive's TIMET compensation (including base salary, incentive compensation,
and an allocated portion of benefit costs), which the Compensation Committee
felt to be reasonable and less than the Company would incur were it to fill
such positions with separate, full-time employees.
In 1993, Congress amended the Internal Revenue Code to impose a $1 million
deduction limit on compensation paid to the chief executive officer and the
four other most highly compensated executive officers of public companies,
subject to certain transition rules and exceptions for compensation received
pursuant to non-discretionary, performance-based plans approved by such
companies' stockholders. The Compensation Committee does not believe that any
existing compensation program of the Company could give rise to a deductibility
limitation at current executive compensation levels.
The role of the Compensation Committee 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. Boushka
Avy H. Stein
21
<PAGE> 23
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return for the period commencing December 31, 1992 and ending December 31, 1997
on Tremont Common Stock against the cumulative total return of (a) the S & P
Composite 500 Stock Index, (b) a self-selected TIMET peer group (comprised of
RMI Titanium Company (NYSE: RTI) and Oregon Metallurgical Corporation (NASDAQ:
OREM), TIMET's principal domestic competitors in the titanium metals industry
for whom meaningful stock performance data is available), and (c) the S&P
Chemicals Index, which is utilized as a comparison of performance by NL. The
graph shows the value at December 31 of each year assuming an original
investment of $100 in each and reinvestment of cash dividends and other
distributions to stockholders.
Comparison of Five Year Cumulative Return Among Tremont Corporation,
S&P Composite 500 Stock Index, the Self-Selected TIMET Peer Group,
and the S&P Chemicals Index
[GRAPH]
<TABLE>
<CAPTION>
Fiscal Year Ended 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
(values in $) -------- -------- -------- -------- -------- --------
- -----------------
<S> <C> <C> <C> <C> <C> <C>
TRE 100 85 146 206 448 648
S&P 500 100 110 112 153 189 252
RTI 100 86 31 46 161 115
OREM 100 119 181 284 820 849
S&P Chem 100 112 129 169 223 275
</TABLE>
22
<PAGE> 24
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATIONSHIPS WITH RELATED PARTIES
As set forth under the caption "Security Ownership," Harold C. Simmons, through
Contran and other related entities or persons, may be deemed to control the
Company. In addition, Valhi, a 93%-owned subsidiary of Contran and related
entities, and the Company beneficially own approximately 58.2% and 17.7%,
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
which are, 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 and 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. J. Thomas Montgomery, Jr., Vice President-Controller and Treasurer of
the Company, is also Vice President-Finance and Treasurer of TIMET. Robert E.
Musgraves, Vice President, General Counsel and Secretary of the Company, holds
similar positions at 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. Susan E. Alderton, a director of the Company, is currently Vice
President, Chief Financial Officer and Treasurer of NL. David B. Garten,
Assistant Secretary of the Company, is currently Vice President, General
Counsel and Secretary of NL. Steven L. Watson, Assistant Secretary of the
Company, is also currently an executive officer of Contran and Valhi. Robert D.
Hardy, Assistant Treasurer of the Company, is also currently Vice President-Tax
of NL. Joan H. Prusse, Assistant General Counsel and Assistant Secretary of the
Company, holds similar positions at TIMET. The Company understands that all
such persons are expected to continue to serve in such capacities in 1998. Such
management interrelationships and intercorporate relationships may lead to
possible conflicts of interest. These possible conflicts of interest 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
conflicts of interest. 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, the board of
directors of each of these companies (with the exception of Contran) 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
stockholders of all the companies for which they serve.
23
<PAGE> 25
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 indemnification 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 31, 1997, Tremont had receivables of approximately $3.4 million and
$.4 million from NL and Baroid, respectively, pursuant to their respective
insurance sharing agreements.
Contran Intercorporate Services Agreement
During 1997, 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
$540,000 for services rendered under the Contran ISA in 1997 and expects to pay
approximately the same amount for services in 1998. 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, internal audit and
executive secretarial needs. The Company paid fees of approximately $94,000 to
NL for services pursuant to the NL ISA during 1997. In addition, in 1996, NL
provided Tremont certain tax services totaling approximately $100,000 for which
NL was reimbursed in 1997. The NL ISA is subject to renewal by mutual agreement
for succeeding one-year terms commencing January 1, 1998 and may be terminated
at any time by either party pursuant to 90-day prior written notice to the
other party. The Company expects to enter into a similar agreement for 1998
providing for payment by the Company of approximately $105,000 to NL.
24
<PAGE> 26
NL is also party to an intercorporate services agreement with TIMET (the
"NL/TIMET ISA"), whereby NL provides certain insurance, risk management, real
property, internal audit, tax and executive secretarial services to TIMET.
During 1997, TIMET paid NL approximately $519,000 for such services. The
NL/TIMET 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. The Company
understands that TIMET and NL intend to enter into a similar agreement for 1998
pursuant to which TIMET anticipates it will pay NL approximately $430,000 in
1998.
TIMET Intercorporate Services Agreement
Effective January 1, 1997, 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
payments 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. Tremont paid TIMET approximately $360,000 under the TIMET ISA
in 1997. Tremont intends to enter into a similar agreement for 1998 providing
for comparable services and payments.
Utility Services
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 1997, the
aggregate amount paid by TIMET to BII was less than $1 million. A 75%-owned
subsidiary of Tremont owns approximately 32% of the outstanding equity
securities of BII (representing 26% of the voting securities).
Option Reimbursement Agreement
In 1996 in connection with the TIMET IPO, IMI and UTSC entered into separate
agreements with the Company and TIMET whereby IMI and UTSC each agreed to
reimburse Tremont for a portion 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 shares 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 (z) multiplying the resulting product by (i) 0.16
in the case of UTSC and (ii) 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. Pursuant to this agreement,
IMI and UTSC made payments to Tremont of $653,588 and $307,571, respectively,
during 1997.
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 shareholder derivative suit 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,
including Ms. Alderton and Messrs. Boushka, Martin, Glenn Simmons, Harold
Simmons and Stein, and Gen. Stafford, 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 appealed this decision and, upon appeal, the Delaware
Supreme
25
<PAGE> 27
Court reversed and remanded the case to the Chancery Court for further
consideration of the fairness of the transaction. In March 1998, Tremont and
Valhi executed and filed with the court a proposed stipulation of settlement to
the case. Under the proposed settlement, which is subject to court approval,
Valhi agreed to transfer to Tremont 1.2 million shares of NL Common Stock,
subject to adjustment depending upon the average sales price of the shares
during a fifteen trading day period ending five trading days prior to the
transfer, up to a maximum of 1.4 million shares and down to a minimum of 1
million shares. Valhi has the option, in lieu of transferring the shares, of
transferring cash or cash equivalents equal to the product of the number of
shares that would otherwise have been transferred to Tremont and the average
price. If approved by the court, the transfer of shares or cash is expected to
occur in the second or third quarter of 1998. Pursuant to the proposed
settlement and subject to court approval, Tremont will reimburse plaintiffs for
attorneys' fees of up to $5 million and related costs.
In September 1996, a purported shareholder derivative suit was filed in the
Chancery Division of the New Jersey Superior Court, Bergen County (Seinfeld v.
Simmons et al., Civ. Action No. C-336-96) challenging 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 shareholders. The complaint names as
defendants NL, Valhi, and seven persons who served on NL's Board of Directors
in 1991, including Messrs. 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 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 answered the complaint and denied all
allegations of wrongdoing. In February 1998, NL and Valhi executed and filed
with the court a proposed stipulation of settlement of the case. Under the
proposed settlement, which is subject to court approval, Valhi agreed to
transfer to NL 750,000 shares of NL Common Stock, subject to adjustment
depending on the average sales price of the shares during a fifteen trading day
period ending five trading days prior to the transfer, up to a maximum of
825,000 shares and down to a minimum of 675,000 shares. Valhi has the option,
in lieu of transferring the shares, of transferring cash or cash equivalents
equal to the product of the number of shares that would otherwise have been
transferred to NL and the average price. If approved by the court, the transfer
of shares or cash is expected to occur in the second or third quarter of 1998.
Pursuant to the proposed settlement and subject to court approval, NL will
reimburse plaintiffs for attorneys' fees of up to $3 million and related costs.
The Company is not a party to this action.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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, 1997.
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, 1997 and is currently
expected to be considered for appointment by the Board of Directors as such for
the year ended December 31, 1998. 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.
26
<PAGE> 28
STOCKHOLDER PROPOSALS FOR 1999 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 10, 1998, to be considered for inclusion in the proxy statement and
form of proxy relating to the 1999 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.
1997 ANNUAL REPORT ON FORM 10-K
A copy of Tremont's 1997 Annual Report on Form 10-K, as filed with the
Commission, is included as part of the Company's 1997 Annual Report which
accompanies 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 A
Appended 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, Colorado
April 9, 1998
27
<PAGE> 29
APPENDIX 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 was, during 1997, also an executive
officer of NL, for services rendered during the fiscal years ended December 31,
1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation(1)
Awards
Annual Compensation(1) Securities
---------------------------- Underlying All Other
Salary Bonus(2) Options Compensation(3)
Name and Principal Position with NL Year ($) ($) (#) ($)
- ----------------------------------- ---- ------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
J. Landis Martin 1997 500,000 750,000 120,000 9,600
President and 1996 400,000 -0- 45,000 85,000
Chief Executive Officer(4) 1995 400,000 600,000 -0- 94,000
Joseph S. Compofelice 1997 260,000 390,000 45,000 12,254
Vice President and 1996 185,000 -0- 24,000 32,762
Chief Financial Officer(5) 1995 185,000 277,500 30,000 39,042
</TABLE>
(1) For the named executives listed, no awards of restricted stock or
payouts under long-term incentive plans were made during 1997, 1996 or
1995. Therefore, columns for such compensation have been omitted. In
addition, no SARs were granted during 1997, 1996 or 1995.
(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) For 1997 represents (i) $2,654 of life insurance premiums paid by the
Company for the benefit of Mr. Compofelice, and (ii) a contribution
of $9,600 to the accounts of each of Messrs. Martin and Compofelice
under the NL Savings Plan. For 1996 represents (i) $1,512 of 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
unfunded accounts for the benefit of Messrs. Martin and 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 each of Messrs. Martin and Compofelice under the NL Savings
Plan, (ii) $1,512 of 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.
(4) During 1997, 1996 and 1995, Mr. Martin also served as an executive
officer of Tremont and TIMET. 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 1998 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" below.
A-1
<PAGE> 30
(5) During 1997, 1996 and 1995, Mr. Compofelice also served as an
executive officer of Tremont and Valhi. He commenced employment as an
executive officer of TIMET in 1996. Mr. Compofelice resigned his
position as an executive officer of NL, Tremont and TIMET in February
1998. He was compensated directly by NL and Tremont and/or TIMET for
services to such companies in 1997, 1996 and 1995. NL was credited by
Valhi for the portion of Mr. Compofelice's salary earned for services
attributable to Valhi in 1997, 1996 and 1995 against the amount
otherwise payable by NL to Valhi pursuant to the intercorporate
services agreement between NL and Valhi. See "Certain Relationships
and Transactions" below. Amounts paid in 1997, 1996 and 1995 by NL to
Mr. Compofelice that were credited by Valhi are included in the table
above. The amounts in the table above exclude certain payments made
through NL's payroll system which were funded entirely by an
affiliate. NL expects that Valhi will credit NL under the
above-referenced intercorporate services agreement for the portion of
Mr. Compofelice's salary for services attributable to Valhi in 1998.
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 who were, during 1997, also executive officers of NL,
concerning the grant of options under the Long Term Performance Incentive Plan
of NL (the "NL Incentive Plan") during fiscal year 1997. No stock appreciation
rights ("NL SARs") were granted under the NL Incentive Plan in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of Percent of Rate of Stock Price
Securities Total Options Appreciation for Option
Underlying Granted to Exercise or Term(3) ($)
Options Employees in Base Price Expiration ------------------------
Name Granted(1) (#) Fiscal Year ($/share)(2) Date 5% 10%
- --------------------- -------------- ------------ ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
J. Landis Martin 30,000 20.39% 11.875 2/12/07 224,042 567,769
30,000 13.375 2/12/07 179,042 522,769
30,000 14.875 2/12/07 134,042 477,769
Joseph S. Compofelice 12,000 8.2% 11.875 2/12/07 89,616 227,107
12,000 13.375 2/12/07 71,616 209,107
12,000 14.875 2/12/07 53,616 191,107
</TABLE>
(1) Grants of options to purchase shares of NL Common Stock ("NL Options")
under the NL Incentive Plan vest over five years from February 12,
1997, 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 $11.875 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 $13.375 and $14.875 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 NL 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 NL 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 $19.34 and $30.80
at the assumed 5% and 10% rates, respectively.
A-2
<PAGE> 31
STOCK OPTION EXERCISES AND HOLDINGS FOR NL
The following table provides information with respect to the executive officers
of Tremont listed under "Executive Compensation" in the Proxy Statement who
were, during 1997, also executive officers of NL, concerning the exercise of NL
Options during the last fiscal year and the value of unexercised NL Options
held as of December 31, 1997. No NL SARs have been granted under the NL
Incentive Plan.
AGGREGATED OPTION EXERCISES IN 1997 AND 12/31/97 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercisable In-the-Money
Options at Options at
Shares 12/31/97 12/31/97
Acquired (#) ($)
on Exercise Value Realized (Exercisable/ (Exercisable/
Name (#) ($) Unexercisable) Unexercisable)
- --------------------- ----------- -------------- -------------------- -----------------
<S> <C> <C> <C> <C>
J. Landis Martin 76,000 722,629 752,277/237,000 2,005,500/560,250
Joseph S. Compofelice 12,000 84,376 75,000/128,000 324,000/289,000
</TABLE>
PENSION PLAN
The Retirement Plan of NL Industries, Inc. for its U.S. employees (the "NL
Pension Plan") provides lifetime retirement benefits to eligible employees. In
February 1996, the Company approved the suspension of all future accruals under
the NL 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 NL Pension Plan if they completed at least five months of
service (as defined in the NL 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 NL Pension Plan. The NL Pension Plan covers
Messrs. Martin and Compofelice. No amounts were paid or distributed to Messrs.
Martin and Compofelice in 1997. 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 his employment may be terminated at any time by action
of the NL 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's
employment 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's employment may be terminated at any time by
action of the NL Board of Directors. The executive severance agreement also
provides that the following payments shall be made to Mr. Compofelice in the
event Mr. Compofelice's employment 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
A-3
<PAGE> 32
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 NL 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 NL contributions
together with an amount equal to NL's matching contributions to Mr.
Compofelice's account under the NL 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. Mr. Compofelice left the
employment of NL in February 1998; no amounts were paid or are due under the
agreement.
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 $500,000 in 1997 for services pursuant to the NL Contran ISA and
expects to pay approximately the same amount in 1998 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 1997, NL provided
to Valhi certain insurance and risk management services. Mr. Compofelice serves
as an executive officer of Valhi. NL received net fees of approximately
$138,000 from Valhi pursuant to the Valhi ISA during 1997 after receiving
credit for certain insurance and risk management services provided to Valhi in
1996. NL expects to receive a lower net amount for services in 1998. 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.
A-4
<PAGE> 33
[TREMONT LOGO]
TREMONT CORPORATION
1999 BROADWAY, SUITE 4300
DENVER, COLORADO 80202
<PAGE> 34
PROXY
TREMONT CORPORATION
1999 BROADWAY, SUITE 4300
DENVER, COLORADO 80202
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 5, 1998
The undersigned hereby appoints Robert E. Musgraves, J. Thomas Montgomery,
Jr., and Joan H. Prusse, and each of them, proxy and attorney-in-fact for the
undersigned, with full power of substitution, to vote on behalf of the
undersigned at the 1998 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 5, 1998, 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" each of the director nominees
named in Item 1 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:
Susan E. Alderton
Richard J. Boushka
J. Landis Martin
Glenn R. Simmons
Harold C. Simmons
Gen. Thomas P. Stafford
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.
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 show full corporate
name and sign authorized officer's name and title. If a partnership, please show
full 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.
- -----------------------------------------------------
1998
- -------------------------------------------------
SIGNATURE(S) DATE
