<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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
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(Name of Registrant as Specified In Its Charter)
TREMONT CORPORATION
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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<PAGE> 2
[TREMONT CORPORATION LETTERHEAD]
March 30, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders of
Tremont Corporation ("Tremont" or the "Company"), which will be held on Tuesday,
May 9, 2000, at 1:00 p.m. (Central Time), at the offices of Valhi, Inc., Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas. In addition to
matters to be acted on at the meeting, which are described in detail in the
attached Notice of Annual Meeting of Stockholders and Proxy Statement, we will
update you on the Company. I hope that you will be able to attend.
Whether or not you plan to attend the meeting, please complete, date, sign and
return the enclosed proxy card or voting instruction form in the accompanying
envelope so that your shares are represented and voted in accordance with your
wishes. Your vote, whether given by proxy or in person at the meeting, will be
held in confidence by the Inspector of Election for the meeting in accordance
with Tremont's Bylaws.
Sincerely,
J. Landis Martin
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3
[TREMONT CORPORATION LETTERHEAD]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
To the Stockholders of Tremont Corporation:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Meeting") of Tremont Corporation, a Delaware corporation ("Tremont" or the
"Company"), will be held on Tuesday, May 9, 2000, at 1:00 p.m. (Central Time),
at the offices of Valhi, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite
1700, Dallas, Texas, for the following purposes:
(1) To elect seven directors to serve until the 2001 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 22,
2000, as the record date (the "Record Date") for the Meeting. Only holders of
Tremont's common stock, $1.00 par value per share, at the close of business on
the Record Date, are entitled to notice of, and to vote at, the Meeting. The
stock transfer books of the Company will not be closed following the Record
Date. A complete list of stockholders entitled to vote at the Meeting will be
available for examination during normal business hours by any Tremont
stockholder, for purposes related to the Meeting, for a period of ten days prior
to the Meeting, at Tremont's corporate offices located at 1999 Broadway, Suite
4300, Denver, Colorado.
You are cordially invited to attend the Meeting. Whether or not you plan to
attend the Meeting in person, please complete, date and sign the accompanying
proxy card or voting instruction form and return it promptly in the enclosed
envelope to ensure that your shares are represented and voted in accordance with
your wishes. You may revoke your proxy by following the procedures set forth in
the accompanying Proxy Statement. If you choose, you may still vote in person at
the Meeting even though you previously submitted your proxy.
In accordance with the Company's Bylaws, your vote, whether given by proxy or in
person at the Meeting, will be held in confidence by the Inspector of Election
for the Meeting.
By order of the Board of Directors,
Robert E. Musgraves
Vice President, General Counsel and Secretary
Denver, Colorado
March 30, 2000
<PAGE> 4
[TREMONT CORPORATION LETTERHEAD]
---------------
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
2000 Annual Meeting of Stockholders of the Company to be held on Tuesday, May 9,
2000, at 1:00 p.m. (Central Time), at the offices of Valhi, Inc., 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 4, 2000.
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 2001 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
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<PAGE> 5
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 such other matter.
First Chicago Trust Division of EquiServe ("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 will 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 22, 2000 (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 6,415,820 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, VALHI, INC. ("VALHI"), TOGETHER WITH CERTAIN OTHER
PERSONS OR ENTITIES RELATED TO HAROLD C. SIMMONS, HELD APPROXIMATELY 71.2%
(4,570,941 SHARES) OF THE OUTSTANDING SHARES OF TREMONT COMMON STOCK. VALHI 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 ALL OF SUCH
SHARES ARE VOTED AS INDICATED, THE ELECTION OF SUCH DIRECTOR NOMINEES WILL BE
ASSURED.
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
distribution of this Proxy Statement, at a cost that the Company estimates will
be approximately $4,500. In addition, 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 previously been 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 each of the seven
nominees set forth below as directors, and (b) to the extent allowed by federal
securities laws, 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.
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ELECTION OF DIRECTORS
The Bylaws of the Company currently provide that the Board of Directors shall
consist of a minimum of three and a maximum of seventeen persons, as determined
from time to time by the Board of Directors in its discretion. The number of
directors is currently set at seven. The seven directors elected at the Meeting
will hold office until the 2001 Annual Meeting of Stockholders of the Company
and until their successors are duly elected and qualified.
All of the nominees set forth below 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.
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, 48, has been a director of Tremont since 1990. Ms. Alderton
was Vice President, Finance of Tremont from 1990 until 1992, Treasurer of
Tremont from 1988 to 1992 and Vice President of Tremont from 1988 to 1990. Since
1988, Ms. Alderton has been Vice President and Treasurer of NL Industries, Inc.
("NL"), which is engaged in the manufacture of titanium dioxide pigment. In
1998, Ms. Alderton was also named Chief Financial Officer of NL. Valhi and
Tremont hold approximately 60% and 20%, respectively, of the outstanding common
stock of NL ("NL Common Stock"). NL may be deemed to be an affiliate of Tremont.
Richard J. Boushka, 65, has been a director of Tremont 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. From 1955 to 1980, Mr. Boushka was employed by Vickers Energy
Company, an oil and gas concern, where his last position was President. Mr.
Boushka is also a director of Perini Corporation. Mr. Boushka serves as Chairman
of Tremont's Audit Committee and is a member of the Management Development and
Compensation Committee (the "Compensation Committee").
J. Landis Martin, 54, has been the Chief Executive Officer and a director of
Tremont since 1988. Mr. Martin has been Chairman of the Board of Tremont since
1990, and has served as President of Tremont since 1987 (except for a period in
1990). Mr. Martin has also served since 1987 as Chairman and a director of
Titanium Metals Corporation ("TIMET"), a producer of titanium metal products, as
Chief Executive Officer of TIMET since 1995 and as President of TIMET from 1995
to 1996 and since January 2000. The Company owns approximately 39% of the
outstanding shares of common stock of TIMET ("TIMET Common Stock"). TIMET may be
deemed to be an affiliate of Tremont. Since 1987, Mr. Martin has served as
President and Chief Executive Officer and, since 1986, as a director of NL. Mr.
Martin is also a director of Halliburton Company, Apartment Investment and
Management Company, and Crown Castle International Corporation.
3
<PAGE> 7
Glenn R. Simmons, 72, has been a director of Tremont 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 1995, Mr. Simmons has been Vice Chairman of the Board of Valhi
and Contran Corporation ("Contran"), a diversified holding company that directly
and through related entities holds approximately 93% of the outstanding common
stock of Valhi ("Valhi Common Stock") and 47% of the outstanding common stock of
Keystone. Mr. Simmons has been an executive officer and/or director of various
companies related to Valhi and Contran since 1969. Mr. Simmons is also a
director of TIMET, 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 slides and security products. Valhi and
CompX may be deemed to be affiliates of Tremont. Mr. Simmons is a brother of
Harold C. Simmons.
Harold C. Simmons, 68, has been a director of Tremont since 1988 and served as
Chairman of the Board of Tremont from 1988 to 1990. Mr. Simmons has been
Chairman of the Board, Chief Executive Officer and a director of Valhi and
Contran since prior to 1995 and was President of Valhi and Contran from 1994 to
1998. Mr. Simmons has been an executive officer and/or director of various other
companies related to Valhi and Contran since 1961. Mr. Simmons is also Chairman
of the Board and a director of NL. Mr. Simmons is a brother of Glenn R. Simmons.
General Thomas P. Stafford (retired), 69, has been a director of Tremont since
1989. Gen. Stafford was a co-founder of and has been affiliated with 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 and NL, Gen. Stafford is a director of CMI Corporation,
Seagate Technologies, Inc., and The Wackenhut Corp. Gen. Stafford serves as
Chairman of the Compensation Committee and is a member of Tremont's Audit
Committee and Nominations Committee.
Avy H. Stein, 45, has been a director of Tremont 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 Tremont's Nominations Committee and is a member of the
Compensation Committee.
For information concerning certain transactions to which certain director
nominees are parties and other matters, see "Certain Relationships and
Transactions" below.
4
<PAGE> 8
BOARD MEETINGS
The Board of Directors held four meetings in 1999. 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 1999.
Management Development and Compensation Committee. The principal
responsibilities and authority of the Compensation Committee are to review and
approve certain matters involving executive compensation, principally 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. The
Compensation Committee held one meeting in 1999.
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 1999. In February 2000, 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 1999, directors of the Company who were not 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
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in 1999 were Richard J. Boushka, Glenn R. Simmons, Harold C. Simmons, Gen.
Thomas P. Stafford and Avy H. Stein (together, the "Non-Employee Directors").
During 1999, 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 $31.00 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. Stock 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
1999, including services rendered by Harold C. Simmons, a director of the
Company. See "Certain Relationships and Transactions--Contractual Relationships"
below.
EXECUTIVE OFFICERS
Set forth below is certain information relating to the current executive
officers of the Company. Biographical information with respect to J. Landis
Martin is set forth under "Election of Directors" above. See also "Certain
Relationships and Transactions" below.
<TABLE>
<CAPTION>
Name Age Position(s)
- ---- --- -----------
<S> <C> <C>
J. Landis Martin 54 Chairman of the Board, President and Chief Executive Officer of Tremont; Chairman of
the Board, President and Chief Executive Officer of TIMET; President and Chief
Executive Officer of NL
Robert E. Musgraves 45 Vice President, General Counsel and Secretary of Tremont; Executive Vice President,
General Counsel & Secretary of TIMET
Mark A. Wallace 42 Vice President, Chief Financial Officer and Treasurer of Tremont; Executive Vice
President, Chief Financial Officer & Treasurer of TIMET
</TABLE>
Robert E. Musgraves has served as General Counsel and Secretary of Tremont since
1993 and has been a Vice President of Tremont since 1994. Mr. Musgraves has been
Vice President and General Counsel of TIMET since 1990 and Secretary since 1991
and was named Executive Vice President, General Counsel & Secretary of TIMET in
January 2000.
Mark A. Wallace has served as Vice President, Chief Financial Officer and
Treasurer of Tremont since February 2000 and was Vice President--Controller &
Treasurer of Tremont from 1992 to 1997. Mr. Wallace served as Vice
President--Finance & Treasurer of TIMET from 1992 to 1997, Vice
President--Strategic Change & Information Technology of TIMET from 1997 to
January 2000, and Executive Vice President, Chief Financial Officer & Treasurer
of TIMET since January 2000.
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SECURITY OWNERSHIP
OWNERSHIP OF TREMONT COMMON STOCK
The following table and accompanying 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 or 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 current executive officers and directors of
Tremont as a group. See footnote (3) for information concerning individuals and
entities that may be deemed to indirectly beneficially own those shares of
Tremont Common Stock directly beneficially owned by Valhi and related entities.
All information has been taken from or is based upon ownership filings made by
such persons with the Commission or upon information provided by such persons to
Tremont.
OWNERSHIP OF TREMONT COMMON STOCK
<TABLE>
<CAPTION>
Tremont Common Stock
--------------------------------
Amount and
Nature of
Beneficial Percent of
Name of Beneficial Owner Ownership (#) (1) Class (2)
- -------------------------- ----------------- ----------
<S> <C> <C>
GREATER THAN 5% STOCKHOLDERS
Valhi, Inc.(3) 3,827,521 59.7%
NL Industries, Inc.(3) 536,167 8.4%
JMG Capital Partners, L.P. and related entities (4) 355,800 5.6%
Dimensional Fund Advisors, Inc. (5) 339,833 5.3%
DIRECTORS
Susan E. Alderton (6) 7,011 --
Richard J. Boushka (7) 8,100 --
J. Landis Martin (8) 210,428 3.2%
Glenn R. Simmons (3)(9) 534 --
Harold C. Simmons (3)(10) 3,747 --
Thomas P. Stafford (7) 4,000 --
Avy H. Stein (7) 12,300 --
OTHER CURRENT AND FORMER EXECUTIVE OFFICERS
J. Thomas Montgomery, Jr. (11) 2,000 --
Robert E. Musgraves (12) 11,500 --
ALL CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
AS A GROUP (9 persons) (3)(6)(7)(8)(9)(10)(12)(13) 257,686 4.0%
</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 all individuals included in the group) within 60 days
of the Record Date.
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<PAGE> 11
(3) Based upon information supplied to the Company by Valhi, Valhi and NL are
the direct holders of approximately 59.7% (3,827,521 shares) and 8.4%
(536,167 shares), respectively, of the outstanding shares of Tremont Common
Stock.
Valhi and Tremont are the direct holders of approximately 59.5% and 20.2%,
respectively, of the outstanding shares of NL Common Stock. Tremont is the
direct holder of approximately 39.1% of the outstanding shares of TIMET
Common Stock. Valhi Group, Inc. ("VGI"), National City Lines, Inc.
("National"), and Contran are the holders of approximately 81.8%, 9.5%, and
1.6%, respectively, of the outstanding shares of Valhi Common Stock.
National, NOA, Inc. ("NOA") and Dixie Holding Company ("Dixie Holding") are
the direct holders of approximately 73.3%, 11.4% and 15.3%, respectively,
of the outstanding common stock of VGI. Contran and NOA are the direct
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 direct 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 direct holder of 100%
of the outstanding common stock of Dixie Holding. Contran is the holder of
100% of the outstanding common stock of Dixie Rice and approximately 88.9%
of the outstanding common stock Southwest. Substantially all of Contran's
outstanding voting stock is held either by trusts established for the
benefit of certain children and grandchildren of Harold C. Simmons (the
"Trusts"), of which Mr. Simmons is the sole trustee, or by Mr. Simmons
directly. As sole trustee of the Trusts, Mr. Simmons has the power to vote
and direct the disposition of the shares of Contran stock held by the
Trusts. Mr. Simmons, however, disclaims beneficial ownership of any Contran
shares held by the Trusts.
Valmont Insurance Company ("Valmont") and a subsidiary of NL directly own
1,000,000 shares and 1,186,200 shares, respectively, of the outstanding
shares of Valhi Common Stock. Valhi directly holds 100% of the outstanding
common stock of Valmont. Pursuant to Delaware law, Valhi treats the shares
of Valhi Common Stock owned by Valmont and the subsidiary of NL as treasury
stock for voting purposes. For the purposes of this footnote, such shares
are not deemed outstanding.
The Harold Simmons Foundation, Inc. (the "Foundation") directly holds
approximately 3.1% (200,000 shares) of the outstanding shares of Tremont
Common Stock and 0.5% of the outstanding shares of Valhi Common Stock. The
Foundation is a tax-exempt foundation organized for charitable purposes.
Harold C. Simmons is Chairman of the Board and Chief Executive Officer of
the Foundation and may be deemed to control the Foundation. Mr. Simmons,
however, disclaims beneficial ownership of any shares of Tremont Common
Stock or Valhi Common Stock held by the Foundation.
The Combined Master Retirement Trust (the "CMRT") directly holds
approximately 0.1% (3,506 shares) of the outstanding shares of Tremont
Common Stock, approximately 0.1% of the outstanding shares of Valhi Common
Stock, and approximately 8.4% of the outstanding shares of TIMET Common
Stock. Valhi established the CMRT as a trust to permit the collective
investment by master 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 CMRT and a member of the trust investment committee
for the CMRT. Valhi's board of directors selects the trustee and members of
the trust investment committee for the CMRT. 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 that invest through the CMRT.
However, each such person disclaims beneficial ownership of the shares of
Tremont, Valhi, and TIMET Common Stock held by the CMRT, except to the
extent of his individual, vested beneficial interest in the assets held by
the CMRT.
8
<PAGE> 12
The shares of Tremont Common Stock held by the Foundation and the CMRT are
not included in the ownership number shown for Valhi and related entities
in the stock ownership table.
The shares of Valhi Common Stock reflected above as being owned by Contran
include approximately 0.4% of the outstanding shares of Valhi Common Stock
directly held by the Contran Deferred Compensation Trust No. 2 (the "CDCT
No. 2"). Boston Safe Deposit and Trust Company serves as 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 CDCT No. 2 assets are
insufficient to satisfy such obligations, Contran must satisfy the balance
of such obligations. Pursuant to the terms of the CDCT No. 2, Contran (a)
retains the power to vote the shares of Valhi Common Stock held directly by
the CDCT No. 2, (b) retains dispositive power over such shares and (c) may
be deemed the indirect beneficial owner of such shares. Mr. Simmons,
however, disclaims beneficial ownership of the shares owned, directly or
indirectly, by the CDCT No. 2, except to the extent of his interest as a
beneficiary of the CDCT No. 2.
Harold C. Simmons is Chairman of the Board and Chief Executive Officer of
Valhi, VGI, National, NOA, Dixie Holding, Dixie Rice, Southwest and
Contran. Mr. Simmons is also Chairman of the Board and Chief Executive
Officer of NL and a director of Tremont.
By virtue of the holding of the offices, the stock ownership and his
service as trustee, all as described above, (a) Harold C. Simmons may be
deemed to control the entities described above and (b) Mr. Simmons and
certain of such entities may be deemed to possess indirect beneficial
ownership of the shares of Tremont, Valhi, NL and TIMET Common Stock held
directly by certain of such entities. However, Mr. Simmons disclaims
beneficial ownership of such shares beneficially owned, directly or
indirectly, by any of such entities, except to the extent otherwise
expressly indicated in this footnote.
Harold C. Simmons' spouse is the direct owner of 3,747 shares of Tremont
Common Stock, 77,000 shares of Valhi Common Stock and 69,475 shares of NL
Common Stock. Mr. Simmons may be deemed to share indirect beneficial
ownership of such shares. Mr. Simmons disclaims all such beneficial
ownership.
The business address of Valhi, VGI, National, NOA, Dixie Holding, Contran,
the CMRT, the Foundation, and Harold C. Simmons is Three Lincoln Centre,
5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697. The business
address of Dixie Rice is 600 Pasquiere Street, Gueydan, Louisiana 70542.
The business address of Southwest is 402 Canal Street, Houma, Louisiana
70360.
(4) As reported in a 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, California 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.
(5) As reported in a Statement on Schedule 13G, dated February 4, 2000, as
filed with the Commission on behalf of Dimensional Fund Advisors Inc. The
business address of each such holder is 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401.
(6) The shares of Tremont Common Stock shown as beneficially owned by Susan E.
Alderton include (i) 6,500 shares that Ms. Alderton has the right to
acquire by exercise of stock 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").
9
<PAGE> 13
(7) The shares of Tremont Common Stock shown as beneficially owned by each of
Richard J. Boushka, Gen. Thomas P. Stafford and Avy H. Stein include 4,000
shares that each such person has the right to acquire by exercise of stock
options within 60 days of the Record Date under the Director Plan, as
described above.
(8) The shares of Tremont Common Stock shown as beneficially owned by J. Landis
Martin include (i) 60,000 shares that Mr. Martin has the right to acquire
by exercise of stock options within 60 days of the Record Date under the
Tremont Stock Incentive Plan and (ii) 520 shares held for the benefit of
Mr. Martin under the NL Savings Plan. Such shares also include (i) 1,800
shares held by Mr. Martin's wife, (ii) 2,400 shares held by the Martin's
Children Trust No. II of which Mr. Martin is trustee, and (iii) 100 shares
held by one of Mr. Martin's daughters, with respect to all of which shares
beneficial ownership is disclaimed by Mr. Martin.
(9) The shares of Tremont Common Stock shown as beneficially owned by Glenn R.
Simmons include 515 shares held by Mr. Simmons' individual retirement
account.
(10) The shares of Tremont 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.
(11) Mr. Montgomery's service as an executive officer of Tremont ended in
February 2000.
(12) The shares of Tremont Common Stock shown as beneficially owned by Robert E.
Musgraves represent shares that Mr. Musgraves has the right to acquire by
the exercise of stock options within 60 days of the Record Date under the
Tremont Stock Incentive Plan.
(13) The shares of Tremont Common Stock shown as beneficially owned by "All
Current Directors and Executive Officers of the Company as a group" include
90,000 shares that members of this group have the right to acquire by the
exercise of stock options within 60 days of the Record Date under the
Tremont Stock Incentive Plan or the Director Plan.
Tremont understands that Valhi 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 Tremont, financial and stock market conditions and other factors.
Tremont may similarly consider such acquisitions of shares of Tremont Common
Stock and acquisition or disposition of securities issued by related parties. In
1997, Tremont announced that it may repurchase up to 2,000,000 shares of Tremont
Common Stock. During 1997 and 1998, Tremont repurchased an aggregate of
1,219,300 shares of Tremont Common Stock pursuant to such program. Neither Valhi
nor Tremont presently intends to engage in any transaction or series of
transactions that would result in the Tremont Common Stock's 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 VALHI, TIMET, AND NL COMMON STOCK
By virtue of the share ownership described above, for purposes of the
Commission's regulations, Valhi may be deemed to be the parent of Tremont, and
TIMET and NL may be deemed to be subsidiaries of Tremont. The following table
and notes set forth the beneficial ownership, as of the Record Date, of (a)
Valhi Common Stock, $.01 par value per share, (b) TIMET Common Stock, $.01 par
value per share, and (c) NL Common Stock, $.125 par value per share, held by (i)
each director or nominee for director of Tremont, (ii) each executive officer of
Tremont listed in the Summary Compensation Table below who is not a director or
nominee for director of Tremont, and (iii) all current executive officers and
directors of Tremont as a group. Except as set forth below
10
<PAGE> 14
and under the heading "Ownership of TIMET Trust Securities" below, no securities
of Tremont's parent, 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 is based upon ownership filings
made by such persons with the Commission or upon information provided by such
persons to Tremont.
OWNERSHIP OF VALHI COMMON STOCK, TIMET COMMON STOCK, AND NL COMMON STOCK (1)(2)
<TABLE>
<CAPTION>
Valhi Common Stock (3) TIMET Common Stock NL Common Stock
---------------------- -------------------- --------------------
Number of Percent Number of Percent Number of Percent
Shares of Class Shares of Class Shares of Class
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS
Susan E. Alderton (4) -0- --- -0- --- 135,422 ---
Richard J. Boushka (5) -0- --- 6,800 --- -0- ---
J. Landis Martin (6)(7)(8) 25,000 --- 156,667 --- 720,772 1.4%
Glenn R. Simmons (9)(10)(11)(12)(13)(14) 423,183 --- 7,500 --- 7,800 ---
Harold C. Simmons (9)(10)(11)(15)(16) 630,383 --- -0- --- 75,475 ---
Thomas P. Stafford (17) -0- --- 9,900 --- -0- ---
Avy H. Stein -0- --- -0- --- -0- ---
OTHER CURRENT AND FORMER EXECUTIVE
OFFICERS
J. Thomas Montgomery, Jr. (18)(19) 3,400 --- 46,200 --- 9,500 ---
Robert E. Musgraves (19)(20) -0- --- 27,750 --- -0- ---
ALL CURRENT DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY AS A GROUP (9
persons) (4)(5)(6)(7)(8)(9)(10)(11)
(12)(13)(14)(15)(16)(17)(18)(19)(20)(21) 1,078,566 --- 242,117 --- 939,469 1.8%
</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%. In addition, for
purposes of calculating individual and group ownership 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) As previously noted, the 1,186,200 shares of Valhi Common Stock held by a
subsidiary of NL and the 1,000,000 shares of Valhi Common Stock held by
Valmont are excluded from the number of shares of Valhi Common Stock
outstanding. Tremont understands that Valhi treats these excluded shares as
treasury stock for voting purposes pursuant to Delaware law.
(4) The shares of NL Common Stock shown as beneficially owned by Susan E.
Alderton include (i) 82,200 shares that 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) 12,065 shares held for the
benefit of Ms. Alderton under the NL Savings Plan.
(5) The shares of TIMET Common Stock shown as beneficially owned by Richard J.
Boushka represent shares held in Mr. Boushka's individual retirement
account.
(6) The shares of TIMET Common Stock shown as beneficially owned by J. Landis
Martin include (i) 400 shares held by Mr. Martin's daughters, beneficial
ownership of which is disclaimed by Mr. Martin, and (ii) 98,400 shares that
Mr. Martin has the right to acquire by the exercise of stock options within
60 days of the Record Date under TIMET's 1996 Long Term Performance
Incentive Plan (the "TIMET Stock Incentive Plan").
(7) J. Landis Martin is the holder of 3,000 of the 6-5/8% Convertible Preferred
Securities, Beneficial Unsecured Convertible Securities (the "TIMET Trust
Securities") of the TIMET Capital Trust I.
11
<PAGE> 15
See "Ownership of TIMET Trust Securities" below. Such TIMET Trust
Securities are convertible into 4,017 shares of TIMET Common Stock, which
amount is included in the TIMET Common Stock ownership number shown for
Mr. Martin. No other director, nominee for director or executive officer
of the Company is known to hold any TIMET Trust Securities.
(8) The shares of NL Common Stock shown as beneficially owned by J. Landis
Martin include (i) 493,000 shares that 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) 17,631 shares held for the
benefit of Mr. Martin under the NL Savings Plan.
(9) VGI, National, Contran, and the CMRT directly beneficially own
approximately 81.8%, 9.5%, 1.2%, and 0.1%, respectively, of the outstanding
shares of Valhi Common Stock. See footnote (3) above regarding certain
shares of Valhi Common Stock held by NL and Valmont. See footnote (3) to
the table appearing under the heading "Ownership of Tremont Common Stock"
above for information concerning individuals and entities that may be
deemed to indirectly beneficially own the shares of Valhi Common Stock
directly beneficially owned by such entities. Glenn R. Simmons and Harold
C. Simmons disclaim beneficial ownership of all of the shares of Valhi
Common Stock owned by such entities, except as otherwise noted in such
footnote (3).
(10) Tremont and the CMRT directly beneficially own approximately 39.1% and
8.4%, respectively, of the outstanding shares of TIMET Common Stock. See
footnote (3) to the table appearing under the heading "Ownership of Tremont
Common Stock" above for information concerning individuals and entities
that may be deemed to indirectly beneficially own the shares of TIMET
Common Stock directly beneficially owned by Tremont and the CMRT. Glenn R.
Simmons and Harold C. Simmons disclaim beneficial ownership of all of the
shares of TIMET Common Stock owned by Tremont.
(11) Valhi and Tremont directly beneficially own approximately 59.5% and 20.2%,
respectively, of the outstanding shares of NL Common Stock. See footnote
(3) to the table appearing under the heading "Ownership of Tremont Common
Stock" above for information concerning individuals and entities that 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 Valhi and Tremont.
(12) The shares of Valhi Common Stock shown as beneficially owned by Glenn R.
Simmons include (i) 420,000 shares that Mr. Simmons has the right to
acquire by the exercise of stock options within 60 days of the Record Date
under stock option plans adopted by Valhi and (ii) 2,383 shares held in Mr.
Simmons' individual retirement account. In addition, such shares include
800 shares held in a retirement account for Mr. Simmons' wife, with respect
to which shares beneficial ownership is disclaimed by Mr. Simmons.
(13) The shares of TIMET Common Stock shown as beneficially owned by Glenn R.
Simmons include 5,000 shares that Mr. Simmons 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.
(14) The shares of NL Common Stock shown as beneficially owned by Glenn R.
Simmons include 4,000 shares that Mr. Simmons 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.
(15) The shares of Valhi Common Stock shown as beneficially owned by Harold C.
Simmons include (i) 77,000 shares held by Mr. Simmons' wife, beneficial
ownership of which is disclaimed by Mr. Simmons, and (ii) 550,000 shares
that Mr. Simmons has the right to acquire by the exercise of stock options
within 60 days of the Record Date under stock option plans adopted by
Valhi.
12
<PAGE> 16
(16) The shares of NL Common Stock shown as beneficially owned by Harold C.
Simmons include (i) 69,475 shares held by Mr. Simmons' wife, beneficial
ownership of which is disclaimed by Mr. Simmons, and (ii) 4,000 shares that
Mr. Simmons 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.
(17) The shares of TIMET Common Stock shown as beneficially owned by Gen.
Thomas P. Stafford include 7,750 shares that 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.
(18) Mr. Montgomery's service as an executive officer of Tremont ended in
February 2000. The shares of TIMET Common Stock shown as beneficially owned
by J. Thomas Montgomery, Jr. include 19,800 shares that Mr. Montgomery has
the right to acquire by the exercise of stock options within 60 days of the
Record Date under the TIMET Stock Incentive Plan.
(19) Of the shares of TIMET Common Stock shown as beneficially owned by J.
Thomas Montgomery, Jr. and Robert E. Musgraves, 5,400 and 6,400 shares,
respectively, are pledged to TIMET to secure repayment of loans from TIMET
to such individual used to purchase such shares. See "Certain Relationships
and Transactions--Contractual Relationships--TIMET Executive Stock
Ownership Loan Plan."
(20) The shares of TIMET Common Stock shown as beneficially owned by Robert E.
Musgraves include (i) 200 shares held by members of Mr. Musgraves'
household, beneficial ownership of which is disclaimed by Mr. Musgraves,
and (ii) 17,400 shares that Mr. Musgraves has the right to acquire by the
exercise of stock options within 60 days of the Record Date under the TIMET
Stock Incentive Plan.
(21) The shares of Valhi, TIMET, and NL Common Stock shown as beneficially
owned by "All Current Directors and Executive Officers of the Company as a
group" include 970,000, 152,550, and 583,200 shares, respectively, that
members of this group have the right to acquire by the exercise of stock
options within 60 days of the Record Date under stock option plans adopted
by each such company with respect to its employees and/or directors.
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, in effect, 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 that are held by, or may be acquired by, Tremont. See "Certain
Relationships and Transactions--Contractual Relationships--Registration Rights"
below. Except as set forth in footnote (7) to the table under the heading
"Ownership of Valhi, TIMET, and NL Common Stock," no director, nominee for
director or executive officer of Tremont is known to hold any TIMET Trust
Securities.
13
<PAGE> 17
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF EXECUTIVE OFFICERS The
following table and accompanying notes set forth certain information regarding
the compensation paid by Tremont and TIMET for services rendered by (i)
Tremont's Chief Executive Officer and (ii) each of Tremont's two other executive
officers serving as such during 1999, in each case for services rendered during
each of the fiscal years 1997, 1998 and 1999 (regardless of the year in which
actually paid).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)(2)
Long Term
Compensation
Awards
Securities
Annual Compensation Underlying All Other
Names and Position Year Salary($) Bonus($)(3) Options(#) Compensation($)(4)
- ------------------ ---- ---------- ----------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
J. Landis Martin(5)
Chairman of the Board, 1999 500,000 -0- 111,000 9,760
President and Chief Executive 1998 500,000 265,000 75,000 14,573
Officer 1997 500,000 565,000 60,000 20,827
J. Thomas Montgomery, Jr 1999 150,000 30,000 18,000 8,160
Vice President, Controller and 1998 150,000 60,000 9,000 124,902
Treasurer 1997 150,000 87,000 9,000 44,443
Robert E. Musgraves 1999 225,000 45,000 27,000 8,773
Vice President, General Counsel 1998 175,000 84,000 15,000 13,108
and Secretary 1997 160,000 107,600 15,000 13,185
</TABLE>
- ---------------
(1) Columns required by the regulations of the Commission that would
contain no entries have been omitted.
(2) J. Landis Martin, Tremont's Chairman, President and Chief Executive
Officer, and Robert E. Musgraves, Tremont's Vice President, General
Counsel and Secretary, also currently serve as executive officers of
TIMET. Mr. Montgomery's service as an executive officer of Tremont and
TIMET commenced in May 1997 and ended in February 2000. The amounts
shown as salary and bonus for Mr. Martin, Mr. Montgomery and Mr.
Musgraves represent the full amount paid by TIMET for services rendered
by such persons on behalf of both TIMET and Tremont during 1997, 1998
and 1999. Pursuant to an intercorporate services agreement, in each of
1997, 1998, and 1999, Tremont reimbursed TIMET for approximately 10% of
the TIMET salary and regular bonus of each of Mr. Martin, Mr.
Montgomery and Mr. Musgraves (prorated, in the case of Mr. Montgomery
for the portion of 1997 during which he served as an executive officer
of Tremont), plus a proportionate share of applicable estimated fringe
benefits and overhead expense for each as follows:
<TABLE>
<CAPTION>
Year Martin Montgomery Musgraves
---- ------ ---------- ---------
<S> <C> <C> <C> <C>
1999 $ 60,000 $21,600 $32,760
1998 $ 91,800 $25,200 $31,080
1997 $128,000 $19,000 $31,872
</TABLE>
Tremont expects that Mr. Martin, Mr. Musgraves, and Mark A. Wallace,
Tremont's current Vice President, Chief Financial Officer and
Treasurer, will devote approximately 10% of his total TIMET/Tremont
time during 2000 to Tremont matters. Accordingly, it is anticipated
that Tremont will reimburse TIMET for such proportionate percentage of
the 2000 salary and regular bonus paid by TIMET to such individuals
(plus a proportionate share of applicable estimated fringe benefits and
overhead expense for each) pursuant to an intercorporate services
agreement. See "Certain
14
<PAGE> 18
Relationships and Related Transactions--Contractual
Relationships--TIMET Intercorporate Services Agreement" below.
Tremont beneficially owns approximately 20.1% of the outstanding shares
of NL Common Stock. For financial reporting purposes, Tremont reports
its interest in NL by the equity method. For each of the years
1997-1999, J. Landis Martin also served as an executive officer of NL
and was separately compensated by NL for such services. Appended to
this Proxy Statement as Appendix A is information with respect to
compensation paid by NL to Mr. Martin for services rendered to NL for
each such year.
(3) Under TIMET's variable incentive compensation plan applicable during
1997-1999 to Mr. Montgomery and Mr. Musgraves (the "TIMET Employee Cash
Incentive Plan"), a portion of the compensation payable to such
individuals under this plan is based upon TIMET's financial
performance, while the balance is based on the assessed performance of
the individual officer. Mr. Martin participates in TIMET's Senior
Executive Cash Incentive Plan (the "TIMET Senior Executive Cash
Incentive Plan"). Such plan provides for payments based solely upon
TIMET's financial performance. Participation in this plan is in lieu of
participation in the TIMET Employee Cash Incentive Plan. Except as
noted in footnote (5) below, the amounts shown in the "Bonus" column
represent amounts paid under the TIMET Employee Cash Incentive Plan or
the TIMET Senior Executive Cash Incentive Plan, as applicable to such
individual.
(4) Except as otherwise indicated in this footnote and in footnote (5)
below, "All Other Compensation" amounts represent (i) matching
contributions made or accrued by TIMET pursuant to the savings feature
of TIMET's Retirement Savings Plan, (ii) retirement contributions made
or accrued by TIMET pursuant to the TIMET Retirement Savings Plan, and
(iii) life insurance premiums paid by TIMET, as follows:
<TABLE>
<CAPTION>
Year Martin Montgomery Musgraves
---- ------ ---------- ---------
<S> <C> <C> <C> <C>
Savings Match ($) 1999 1,600 1,500 1,600
1998 6,400 4,501 6,400
1997 11,667 6,127 6,477
Retirement Contribution ($) 1998 8,160 4,800 5,920
1998 8,160 7,840 5,920
1997 8,160 7,840 5,920
Life Insurance ($) 1999 -0- 1,860 1,253
1998 -0- 1,860 788
1997 -0- 444 788
</TABLE>
In addition, the amounts shown as "All Other Compensation" for Mr.
Montgomery include $30,032 of TIMET travel-related compensation for
1997 and $110,701 of TIMET relocation-related compensation for 1998.
(5) The amounts shown as "Bonus" for Mr. Martin do not reflect any portion
of the previously reported special bonus of $2 million awarded by
Tremont in 1996, of which $900,000 was paid by Tremont to Mr. Martin in
1997 and the remaining balance of $145,000 was paid in 1998. Interest
on the unpaid balances was paid in 1997 and 1998 at 8.75% per annum,
which amounts are reflected in the "All Other Compensation" column for
Mr. Martin to the extent such interest was in excess of 120% of the
applicable federal long-term interest rate ($1,000 in 1997 and $13 in
1998).
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options or stock appreciation rights ("SARs") have been granted under
the Tremont Stock Incentive Plan since 1994. Consequently, the table showing
stock option grants with respect to Tremont Common Stock for the last fiscal
year has been omitted. Since 1996, executive officers of
15
<PAGE> 19
Tremont have instead been granted stock options pursuant to the TIMET Stock
Incentive Plan, a stock option/stock appreciation/restricted stock plan adopted
by TIMET in 1996. Set forth below is information regarding grants made to
executive officers of Tremont under the TIMET Stock Incentive Plan in 1999.
<TABLE>
<CAPTION>
TIMET OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value at
Percent of Assumed Annual Rate
Total of Stock Price
Options Appreciation
Securities Granted to for
Underlying Employees Exercise or Option Term($)(3)
Date of Options in Fiscal Base Price Expiration -------------------
Name Grant Granted(#)(1) Year ($/share)(2) Date 5% 10%
- ---- ------- --------------- ---------- ------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Landis Martin 2/23/99 37,000 7.97 2/23/2009 185,455 469,979
37,000 8.97 2/23/2009 148,455 432,979
37,000 17.9% 9.97 2/23/2009 111,455 395,979
J. Thomas Montgomery, Jr. 2/23/99 6,000 7.97 2/23/2009 30,074 76,213
6,000 8.97 2/23/2009 24,074 70,213
6,000 2.9% 9.97 2/23/2009 18,074 64,213
Robert E. Musgraves 2/23/99 9,000 7.97 2/23/2009 45,111 114,319
9,000 8.97 2/23/2009 36,111 105,319
9,000 4.4% 9.97 2/23/2009 27,111 96,319
</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 $7.97 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 $8.97 and $9.97 per share represent the
Grant Date FMV plus $1.00 and $2.00 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 identified
stock 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 $12.98 and $20.67 at the assumed 5% and 10% appreciation
rates, respectively.
STOCK OPTION EXERCISES AND HOLDINGS
The following table and accompanying notes provide information, with respect to
the executive officers of Tremont listed in the Summary Compensation Table
above, concerning the exercise of Tremont and TIMET stock options during the
last fiscal year and the value of unexercised Tremont and TIMET stock options
held as of December 31, 1999. Mr. Montgomery holds no Tremont stock options. No
SARs have been granted under the Tremont Stock Incentive Plan or the TIMET Stock
Incentive Plan. TIMET has previously agreed to reimburse Tremont for the
difference between the market price of Tremont Common Stock on the date of
exercise of a Tremont stock option held by a TIMET employee (up to $16.625 per
share) and the exercise price of such option.
16
<PAGE> 20
See also "Certain Relationships and Transactions--Contractual
Relationships--Option Reimbursement Agreement" below.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1999 AND 12/31/99 OPTION VALUES
Number of Securities Value of
Underlying Unexercised,
Unexercised Options In-the-Money
Shares at 12/31/99 Options at 12/31/99
Acquired on Value (Exercisable/ (Exercisable/
Name Exercise (#) Realized ($) Unexercisable) (#) Unexercisable) ($)
- ---- ------------ ------------ -------------------- -------------------
TREMONT
<S> <C> <C> <C> <C>
J. Landis Martin -0- -0- 60,000/0 322,500/0
Robert E. Musgraves -0- -0- 11,500/0 54,094/0
TIMET
J. Landis Martin -0- -0- 98,400/201,600 -0-/-0-
J. Thomas Montgomery, Jr. -0- -0- 19,800/34,200 -0-/-0-
Robert E. Musgraves -0- -0- 17,400/49,200 -0-/-0-
</TABLE>
SEVERANCE ARRANGEMENTS
In 1999, TIMET adopted a policy applicable to certain executive officers of
TIMET, including Mr. Martin, Mr. Musgraves and Mr. Wallace, providing that the
following payments will be made to such individual by TIMET in the event his or
her employment is terminated by TIMET without cause (as defined in the policy)
or such individual terminates his or her employment with TIMET for good reason
(as defined in the policy): (i) one times such individual's annual TIMET base
salary; (ii) prorated bonus for the year of termination; and (iii) certain other
benefits.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of Tremont'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 Tremont, 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 Tremont's executive officers is directly
compensated by Tremont. Mr. Martin, Tremont's Chairman, President and Chief
Executive Officer, is compensated directly by TIMET and NL. Mr. Montgomery and
Mr. Musgraves were each compensated directly by TIMET during 1999, and Mr.
Musgraves and Mr. Wallace will each be compensated by TIMET during 2000.
Tremont, through an intercorporate services agreement, reimburses TIMET for a
portion of the compensation paid to each of Tremont's executives by TIMET (see
"Certain Relationships and Transactions--Contractual Relationships" below).
TIMET (as well as NL) 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 Tremont's Compensation Committee
relating to compensation for its executive officers has been limited to
evaluating and recommending to the full Tremont Board the portion of such
individuals' compensation that would be subject to reimbursement under Tremont's
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
17
<PAGE> 21
Tremont and the cost that might be expected to be incurred by Tremont were it to
hire separate individuals to perform these functions on a full-time basis.
For 1999, the Compensation Committee recommended that the full Board of
Directors approve an intercorporate services agreement with TIMET providing for
payment to TIMET of approximately $200,000 in 1999, including approximately
$115,000 related to reimbursement for compensation paid by TIMET to Tremont'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 Tremont 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 Tremont 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
18
<PAGE> 22
PERFORMANCE GRAPH
Set forth below is a line graph comparing, for the period commencing December
31, 1994 and ending December 31, 1999, the cumulative total stockholder return
on Tremont Common Stock against the cumulative total return of (a) the S & P
Composite 500 Stock Index, (b) TIMET's self-selected peer group, comprised
solely of RTI International Metals, Inc. (NYSE: RTI) (formerly RMI Titanium
Company), the principal U.S. competitor of TIMET in the titanium metals industry
for which meaningful, same-period stockholder return information 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
[CHART]
<TABLE>
<CAPTION>
12/31/1994 12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
TRE 100 141 307 445 284 130
S&P 500 100 138 169 226 290 351
RTI 100 145 511 366 255 136
S&P CHEMICALS 100 131 173 212 193 253
</TABLE>
19
<PAGE> 23
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATIONSHIPS WITH RELATED PARTIES
As set forth under the caption "Security Ownership" above, Tremont may be deemed
to be controlled by Harold C. Simmons. Tremont 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 that resulted in the acquisition by one related party of a publicly
held, minority equity interest in another related party. Tremont 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 Tremont might be a party to one or more of such transactions in
the future. In connection with these activities, Tremont may consider issuing
additional equity securities or incurring additional indebtedness. Tremont'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 Tremont to engage in transactions with related
parties on terms that are, in the opinion of Tremont, no less favorable to
Tremont than could be obtained from unrelated parties.
Susan E. Alderton, a director of Tremont, is Vice President, Chief Financial
Officer and Treasurer of NL. J. Landis Martin, Chairman of the Board, President
and Chief Executive Officer of Tremont, is also a director, President and Chief
Executive Officer of NL and Chairman, President and Chief Executive Officer of
TIMET. Glenn R. Simmons, a director of Tremont, is also Vice Chairman of the
Board of Contran and Valhi and a director of TIMET and NL. Harold C. Simmons, a
director of Tremont, is also Chairman of the Board and Chief Executive Officer
of Contran and Valhi, and Chairman of the Board of NL. Gen. Thomas P. Stafford,
a director of Tremont, is also a director of TIMET and NL. Robert E. Musgraves,
Vice President, General Counsel and Secretary of Tremont, is also Executive Vice
President, General Counsel and Secretary at TIMET. Mark A. Wallace, Vice
President, Chief Financial Officer and Treasurer of the Company, is also
Executive Vice President, Chief Financial Officer and Treasurer of TIMET. Joan
H. Prusse, Assistant General Counsel and Assistant Secretary of Tremont, holds
similar positions at TIMET. David B. Garten, Assistant Secretary of Tremont, is
Vice President, General Counsel and Secretary of NL. Steven L. Watson, Assistant
Secretary of Tremont, is also an executive officer of Contran and Valhi and a
director of Valhi and TIMET. David P. Burlage, Assistant Treasurer of Tremont,
holds a similar position at TIMET. Robert D. Hardy, Assistant Treasurer of
Tremont, holds a similar position at TIMET and is also Vice President-Controller
of NL. Tremont understands that all such persons are expected to continue to
serve in such capacities in 2000. Such individuals divide their time among the
companies for which they serve as officers. 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.
Although no specific procedures are in place that govern the treatment of
transactions among Tremont, Contran, Valhi, TIMET and NL, the board of directors
of each of these companies (with
20
<PAGE> 24
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 Tremont.
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.
CONTRACTUAL RELATIONSHIPS
NL Registration Rights Agreement
In connection with the 1991 purchase by Tremont of 7.8 million shares of NL
Common Stock from Valhi, NL entered into a Registration Rights Agreement
pursuant to which Tremont received certain registration rights with respect to
the purchased shares. Unless all registration rights are exercised earlier, such
agreement expires in December 2001.
Insurance Sharing Agreements
NL Insurance Ltd. of Vermont, a wholly owned subsidiary of Tremont ("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 Tremont. 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 will 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. As of December 31, 1999, NL had current accounts payable
to TRE Insurance of approximately $2.9 million with respect to the agreement. At
December 31, 1999, NL had $9.7 million of restricted cash equivalents that
collateralized letters of credit relating to the NL Liabilities issued and
outstanding on behalf of TRE Insurance pursuant to the NL Insurance Sharing
Agreement.
Contran Intercorporate Services Agreement
During 1999, Contran and Tremont were parties to an intercorporate services
agreement (the "Contran ISA") that provides that Contran will render certain
management functions to Tremont and its subsidiaries, including services
rendered by Harold C. Simmons and Glenn R. Simmons. During 1999, fees for
services provided by Contran to Tremont were approximately $1.1 million. The
Contran ISA is subject to automatic renewal and may be terminated by either
party pursuant to written notice delivered at least 30 day prior to a
quarter-end. Tremont expects to enter into a similar agreement for 2000
providing for payments by Tremont to Contran of approximately the same amount.
Tremont 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 Tremont 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, tax and
executive secretarial needs. During 1999, fees for services provided by NL to
Tremont were approximately $0.1 million. The NL ISA is subject to automatic
renewal and may be terminated by either party pursuant to written notice
delivered at least 30 days prior to a quarter-end. Tremont expects to enter into
a similar agreement for 2000 providing for comparable services and payments.
21
<PAGE> 25
NL and TIMET are parties to an intercorporate services agreement (the "NL/TIMET
ISA") whereby NL makes available to TIMET certain services with respect to
TIMET's insurance, risk management, real property, internal audit, tax and
executive secretarial needs. During 1999, fees for services provided by NL to
TIMET were approximately $0.3 million. The NL/TIMET ISA is subject to automatic
renewal and may be terminated by either party pursuant to written notice
delivered at least 30 days prior to a quarter-end. Tremont understands that
TIMET and NL expect to enter into a similar agreement for 2000 providing for
comparable services and payments.
TIMET Intercorporate Services Agreement
Tremont and TIMET are parties to an intercorporate services agreement (the
"TIMET ISA") that provides that TIMET will render certain management, financial,
tax and administrative services to Tremont, including provision for the
reimbursement by Tremont to TIMET of a portion of the salary, bonus and overhead
expense for the executive officers of Tremont. The TIMET ISA is subject to
automatic renewal and may be terminated by either party pursuant to a written
notice delivered at least 30 days prior to a quarter-end. During 1999, fees for
services provided by TIMET to Tremont were approximately $0.2 million. Tremont
expects to enter into a similar agreement for 2000 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. A 75%-owned subsidiary of
Tremont owns approximately 32% of the outstanding equity securities of BII
(representing 26% of the voting securities of BII). During 1999, fees for such
utility services provided by BII to TIMET were approximately $1.8 million.
Contran Advances
During 1998 and 1999, Tremont borrowed a total of $13.7 million from Contran to
finance the purchase of shares of NL and TIMET Common Stock and for other
general corporate purposes. These advances, which are payable upon demand, bear
interest at the prime rate from time to time, less 0.5% (an effective rate of
8.0% at December 31, 1999).
Aircraft
In 1999, NL purchased for $2.85 million a 25% undivided interest in an aircraft.
The seller of the aircraft interest to NL reacquired the interest from TIMET in
1999 for $2.85 million. Tremont understands that the purchase of the aircraft
interest was unanimously approved by the outside directors of each of TIMET's
and NL's Boards of Directors. During 1999, NL charged $58,824 to TIMET for use
of the aircraft, and NL paid TIMET $86,418 for the use of a TIMET-owned
aircraft. In 1998, TIMET paid NL $271,405 and NL paid TIMET $10,892 for aircraft
usage.
Insurance Brokerage Commissions
A wholly owned subsidiary of Tremont ("TRE Insurance"), Valmont, and EWI RE,
Inc. ("EWI") arrange for or broker certain of Tremont's and TIMET's insurance
policies. Valmont is a wholly owned subsidiary of Valhi. Parties related to
Contran hold 90% of the outstanding common stock of EWI, and a son-in-law of
Harold C. Simmons manages the operations of EWI. Consistent with insurance
industry practices, TRE Insurance, Valmont and EWI receive commissions from the
insurance and reinsurance underwriters for the policies that they arrange or
broker. During 1999, Tremont and TIMET paid approximately $.02 million and $2.0
million, respectively, for policies arranged or brokered by EWI and, in certain
cases, also by either TRE Insurance or Valmont. These amounts principally
included payments for reinsurance and insurance premiums paid to unrelated third
parties, but also included commissions paid to TRE Insurance, Valmont and EWI.
22
<PAGE> 26
In Tremont's opinion, the amounts that Tremont paid for these insurance policies
are reasonable and similar to those it could have obtained through an unrelated
insurance broker and/or insurance company. Tremont understands that TIMET takes
the same view with respect to the amounts paid by TIMET. Tremont expects that
these relationships with TRE Insurance, Valmont, and EWI will continue in 2000.
TIMET Executive Stock Ownership Loan Plan
In 1998, the TIMET Board of Directors approved a loan plan designed to assist
TIMET's executive officers in meeting certain goals established with respect to
their ownership of TIMET Common Stock. Each executive may borrow up to 50% of
his or her base salary per calendar year and 200% of such base salary in the
aggregate. Interest accrues at a rate equal to .0625% per annum above TIMET's
effective borrowing rate at the time of the loan, subject to annual adjustment,
and is payable quarterly. The effective interest rate in 1999 was 5.625%
(approximately 7.7% for 2000). Principal is repayable in equal annual
installments commencing on the sixth anniversary of the loan. Repayment of the
loans is secured by the stock purchased with the loan proceeds. The loans are
"full recourse" to the executive personally, except that in the case of a sale
of all of the collateral by TIMET upon an event of default or upon the
termination of the executive's employment, whether for cause or otherwise, the
borrower's personal liability for repayment of the loan is limited to 70% of the
principal amount remaining after sale and application of the proceeds from the
sale of the stock. The following table identifies the executive officers of
Tremont who were indebted to TIMET under this program during 1999:
<TABLE>
<CAPTION>
Maximum Principal
Principal Amount Outstanding as
Outstanding of March 30,
Name during 1999 ($) 2000 ($)
---- ---------------- --------------
<S> <C> <C>
J. Landis Martin 238,685 -0-
J. Thomas Montgomery, Jr. 75,000 75,000
Robert E. Musgraves 87,461 87,461
</TABLE>
In March 2000, the TIMET Board approved an extension of the repayment term for
Mr. Montgomery (along with certain other former TIMET executives) until the
earlier of five years after termination of employment or the date on which the
stock collateral could be sold and the loan fully liquidated at no loss. Any
accrued interest during such period may be deferred, in which case it will be
added to the principal amount outstanding.
Shareholders' Agreement
In connection with the acquisition by TIMET in 1996 of IMI Titanium, TIMET,
Tremont, IMI, plc ("IMI") and two of its affiliates, IMI Kynoch Ltd. and IMI
Americas Inc., entered into an agreement dated February 15, 1996, as amended
March 29, 1996 (the "Shareholders' Agreement"). Among other things, pursuant to
the Shareholders' Agreement, IMI Americas, Inc. granted to Tremont an option
(the "IMI Option") to acquire 2,012,920 shares of TIMET Common Stock, 504,230
shares of which Tremont assigned to Union Titanium Sponge Corporation ("UTSC"),
TIMET's other shareholder at that time, and 1,615 shares of which Tremont
relinquished in 1996. In February 1999, the portion of the IMI Option held by
UTSC reverted to Tremont, and Tremont exercised the option to acquire 2,011,305
shares of TIMET Common Stock.
The Shareholders' Agreement also contains provisions that regulate certain
matters relating to the governance of TIMET originally as among TIMET, Tremont
and its affiliates, and IMI and its affiliates. TIMET agreed in the
Shareholders' Agreement that, among other things, so long as Tremont (as the
only remaining shareholder party) continues to hold at least 10% of the
23
<PAGE> 27
outstanding shares of TIMET Common Stock, TIMET will not cause or permit the
dissolution or liquidation of itself or any of its subsidiaries or the filing by
itself of a petition in bankruptcy, or the commencement by TIMET of any other
proceeding seeking relief from its creditors, without the approval of Tremont.
TIMET has also agreed to provide Tremont certain periodic information about
TIMET and its subsidiaries, which right is subject to confidentiality
restrictions.
Registration Rights
Under the Shareholders' Agreement, Tremont is entitled to certain rights with
respect to the registration under the Securities Act of the shares of TIMET
Common Stock that Tremont holds. The Shareholders' Agreement generally provides,
subject to certain limitations, that (i) Tremont has two rights, only one of
which can be on Form S-1, to require TIMET to register under the Securities Act
an amount of not less than $25 million of registrable securities; and (ii) if
TIMET proposes to register any securities under the Securities Act (other than a
registration on Form S-4 or Form S-8, or any successor or similar form), whether
or not pursuant to registration rights granted to other holders of its
securities and whether or not for sale for its own account, Tremont has the
right to require TIMET to include in such registration the registrable
securities held by Tremont or its permitted transferees so long as Tremont holds
in excess of 5% of the outstanding shares of TIMET Common Stock (or to sell the
entire balance of any such registrable securities even though less than 5%).
TIMET is obligated to pay all registration expenses in connection with a
registration under the Shareholders' Agreement. Under certain circumstances, the
number of shares included in such registrations may be limited. TIMET has agreed
to indemnify the holders of any registrable securities to be covered by a
registration statement pursuant to the Shareholders' Agreement, as well as the
holders' directors and officers and any underwriters and selling agents, against
certain liabilities, including liabilities under the Securities Act.
Option Reimbursement Agreement
In 1996, IMI and UTSC, which were, along with Tremont, the sole shareholders of
TIMET at that time, entered into separate agreements with Tremont 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, reimbursements due from IMI and UTSC were less than $1,000
each during 1999.
Tremont believes that the terms of the foregoing contractual relationships,
agreements and other transactions with related parties were no less favorable to
Tremont than it might have obtained from unaffiliated third parties.
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Tremont's executive officers,
directors, and persons who own beneficially more than 10% of a registered class
of Tremont's equity securities to file
24
<PAGE> 28
reports of ownership and changes in ownership with the Commission and Tremont.
Based solely on a review of copies of the Section 16(a) reports furnished to
Tremont and written representations by certain reporting persons, Tremont
believes that all of Tremont'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, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as Tremont's independent public
accountants for the year ended December 31, 1999 and is currently expected to be
considered for appointment by the Board of Directors as such for the year ended
December 31, 2000. Representatives of PricewaterhouseCoopers LLP are not
expected to attend the Meeting.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder action
at Tremont's annual stockholder meetings, consistent with rules adopted by the
Commission. Such proposals must be received by Tremont no later than December 1,
2000, to be considered for inclusion in the proxy statement and form of proxy
relating to the 2001 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 to 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.
1999 ANNUAL REPORT ON FORM 10-K
Tremont's 1999 Annual Report on Form 10-K, as filed with the Commission, is
included as a part of Tremont's 1999 Annual Report which accompanies this Proxy
Statement. Additional copies are available to stockholders without charge upon
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
March 30, 2000
25
<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 and related notes set forth below provide certain
summary information concerning annual and long-term compensation paid or accrued
by NL to, or on behalf of, J. Landis Martin, the only executive officer of
Tremont listed under "Executive Compensation" in the Proxy Statement who was,
during 1999, also an executive officer of NL, for services rendered during the
fiscal years ended December 31, 1997, 1998 and 1999.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------- ------------
Other Securities All
Annual Underlying Other
Salary Bonus Compensation Options Compensation
Names and Position Year ($) ($) (2) ($) (3) (#) ($) (4)
- ------------------ ---- ------ ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
J. Landis Martin (5) 1999 500,000 500,000 17,435 99,000 125,320
President and Chief 1998 500,000 2,750,000 19,742 120,000 328,520
Executive Officer
1997 500,000 750,000 -0- 90,000 19,520
</TABLE>
- ---------------
(1) No grants of SARs, awards of restricted stock or payouts under
long-term incentive plans (as defined by applicable federal securities
regulations) were made during 1999, 1998 or 1997. Therefore, columns
for such compensation otherwise required by applicable federal
securities regulations have been omitted.
(2) Amounts paid pursuant to the NL Variable Compensation Plan (the "NL
Variable Compensation Plan"). In addition, for 1998, Mr. Martin was
granted a special discretionary bonus by NL of $2,000,000 in view of
his contributions to the sale of NL's rheological additives business.
(3) Amount that exceeds 120% of the applicable Federal long-term interest
rate on deferred compensation.
(4) Represents (i) contributions to the account of Mr. Martin under the NL
Savings Plan, including pension contributions, and (ii) amounts accrued
by NL in unfunded accounts for the benefit of Mr. Martin under the
Supplemental Executive Retirement Plan for Executives and Officers of
NL Industries, Inc. (the "NL SERP"), as follows:
<TABLE>
<CAPTION>
Year Martin
---- ------
<S> <C> <C>
NL Savings Plan ($) 1999 16,320
1998 19,520
1997 19,520
NL SERP ($) 1999 109,000
1998 309,000
1997 -0-
</TABLE>
(5) During 1999, 1998 and 1997, Mr. Martin also served as an executive
officer of Tremont and TIMET. Mr. Martin is expected to continue to
serve as an executive officer of NL, Tremont and TIMET in 2000 and to
be compensated directly by NL for services to NL and by TIMET for
A-1
<PAGE> 30
services to TIMET and Tremont. Mr. Martin is expected to continue to
devote approximately one-half of his working time to his duties as
President and Chief Executive Officer of NL. See "Certain Relationships
and Transactions" below.
STOCK OPTION GRANTS BY NL
The following table and related notes provide information, with respect to the
grant to Mr. Martin of options ("NL Options") under the Long Term Performance
Incentive Plan of NL (the "NL Incentive Plan") during fiscal year 1999. No stock
appreciation rights ("NL SARs") were granted under the NL Incentive Plan in
1999.
NL OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rate of Stock
Securities Total Options Price Appreciation for
Underlying Granted to Exercise or Option Term ($) (3)
Date of Options Employees in Base Price Expiration ----------------------
Name Grant Granted Fiscal Year ($/share) (2) Date 5% 10%
- ---- ------- --------- ------------- ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Landis Martin 5/4/99 33,000 12.1875 5/4/09 252,934 640,983
33,000 13.6875 5/4/09 203,434 591,483
33,000 24.1% 15.1875 5/4/09 153,934 541,983
</TABLE>
- ----------------
(1) Grants of NL Options to purchase shares of NL Common Stock under the NL
Incentive Plan vest over five years from 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 $12.1875 is equal to the mean of the high and low
prices of NL Common Stock on the New York Stock Exchange Composite Tape
on the date of grant; exercise prices of $13.6875 and $15.1875 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 $19.85 and $31.61 at the assumed 5%
and 10% rates, respectively.
A-2
<PAGE> 31
STOCK OPTION EXERCISES AND HOLDINGS FOR NL
The following table and related notes provide information with respect to Mr.
Martin regarding the exercise of NL Options during the last fiscal year and the
value of unexercised NL Options held as of December 31, 1999. No NL SARs have
been granted to Mr. Martin under the NL Incentive Plan.
AGGREGATED NL OPTION EXERCISES IN 1999 AND 12/31/99 OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Unexercised Value of Unexercised, In-the-
Shares Options at 12/31/99 Money Options at 12/31/99
Acquired on (Exercisable/ (Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable) (#) Unexercisable) ($)
---- ------------ ------------------ ------------------- -----------------------------
<S> <C> <C> <C> <C>
J. Landis Martin -0- -0- 418,000/291,000 1,904,438/232,155
</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
1996, NL 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 NL'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 Mr. Martin. No amounts were paid
or distributed to Mr. Martin in 1998. The estimated accrued annual benefits
payable upon retirement at normal retirement age for Mr. Martin is $50,277.
NL EMPLOYMENT AGREEMENT
Mr. Martin has entered into an executive severance agreement with NL which
provides that he 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. 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 NL base salary plus NL target bonus (which
target bonus shall not be less than the amount of his annual NL salary); (ii)
accrued NL salary and NL bonus through the date of termination; and (iii)
certain other benefits. The agreement provides that it shall be in effect
through December 31, 2000.
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
A-3
<PAGE> 32
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 $950,000 in 1999 for services pursuant to
the NL/Contran ISA and expects to pay approximately the same amount in 2000 for
such services. The NL/Contran ISA is subject to automatic renewal and may be
terminated by either party pursuant to a written notice delivered at least 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 "NL/Valhi
ISA") whereby Valhi renders certain management, financial and administrative
services to NL and NL makes available to Valhi the services of NL's internal
audit personnel and certain insurance and risk management services. NL paid
total net fees of approximately $114,000 to Valhi for services provided in 1999.
NL expects to pay approximately the same amount or lower for services in 2000.
The NL/Valhi ISA is subject to automatic renewal and may be terminated by either
party pursuant to a written notice delivered at least 30 days prior to a
quarter-end.
NL and CompX are parties to an intercorporate services agreement (the "NL/CompX
ISA") whereby NL makes available to CompX certain services with respect to
CompX's occupancy, accounting, computer support and internal audit needs. CompX
paid fees of approximately $173,000 for services pursuant to the NL/CompX ISA
during 1999. The NL/CompX ISA is subject to automatic renewal and may be
terminated by either party pursuant to a written notice delivered at least 30
days prior to a quarter-end. NL expects to receive approximately the same amount
for services to be provided to CompX in 2000.
Insurance Brokerage Commissions
EWI RE, Inc. ("EWI") arranges for and brokers certain of NL's insurance policies
and those of NL's 50%-owned joint venture. Parties related to Contran own 90% of
the outstanding common stock of EWI, and a son-in-law of Harold C. Simmons
manages the operations of EWI. Consistent with insurance industry practices, EWI
receives a commission from the insurance underwriters for the policies that it
arranges or brokers. NL and its joint venture paid an aggregate of approximately
$3.7 million for such policies in 1999, which amount principally included
payments for reinsurance premiums paid to third parties, but also included
commissions paid to EWI. In NL's opinion, the premiums that NL paid for these
insurance policies are reasonable and similar to those it could have obtained
through an unrelated insurance broker. NL expects that these relationships with
EWI will continue in 2000.
A-4
<PAGE> 33
[TREMONT CORPORATION 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 9, 2000
The undersigned hereby appoints Mark A. Wallace, Robert E. Musgraves, 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
2000 Annual Meeting of Stockholders (the "Meeting") of Tremont Corporation, a
Delaware corporation ("Tremont"), to be held at the offices of Valhi, Inc., 5430
LBJ Freeway, Suite 1700, Dallas, Texas on Tuesday, May 9, 2000, at 1:00 p.m.
(Central 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
<PAGE> 35
[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.
<TABLE>
<S> <C> <C>
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
</TABLE>
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.
-----------------------------
-----------------------------
SIGNATURE(S) DATE
