<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Section 240.14a-11(c) or Section 240.14a-12
MK GOLD COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS - MAY 22, 1998
To the Stockholders of MK Gold Company:
You are cordially invited to attend the Annual Meeting of Stockholders of MK
Gold Company (the "Company") to be held at the DoubleTree Hotel, 255 S. West
Temple, Salt Lake City, Utah, on Friday, May 22, 1998, at 11:00 a.m. for the
following purposes:
1. To elect three directors of the Company.
2. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on April 17, 1998 are
entitled to notice of and to vote at the meeting and at any and all adjournments
or postponements thereof. If you are unable to attend the meeting in person,
you are urged to sign, date and return the enclosed proxy as it is necessary
that holders of a majority of the outstanding shares be present, in person or by
proxy, in order to obtain a quorum for the meeting. The proxy may be returned
in the accompanying, self-addressed envelope which requires no postage if
mailed in the United States.
Dated: April 24, 1998
BY ORDER OF THE BOARD OF DIRECTORS
John C. Farmer
Controller, Treasurer and Secretary
____________________
The Company's Annual Report is being mailed to stockholders and accompanies
these proxy materials. The Annual Report contains financial and other
information about the Company, but is not incorporated in the Proxy Statement
and is not to be deemed a part of the proxy soliciting material.
<PAGE>
MK GOLD COMPANY
60 E. South Temple, Suite 2100
Salt Lake City, Utah 84111
____________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998
____________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of MK Gold Company, a Delaware
corporation ("MK Gold" or the "Company"), to the holders of the Company's common
stock, par value $.01 per share ("Common Stock"), for use at its Annual Meeting
of Stockholders to be held at the DoubleTree Hotel, 255 S. West Temple, Salt
Lake City, Utah, on Friday, May 22, 1998, at 11:00 a.m., and at any and all
adjournments or postponements thereof. Any proxy delivered pursuant to this
solicitation may be revoked by the person giving it at any time prior to the
exercise thereof (i) by filing a revocation instrument with the Secretary of the
Company, (ii) by delivering a duly executed proxy bearing a later date, or (iii)
by appearing at the meeting and voting in person.
This Proxy Statement and the related proxy are first being mailed to
stockholders commencing on or about April 24, 1998.
VOTING RIGHTS AND VOTE REQUIRED. Stockholders of record on April 17, 1998,
the record date, are entitled to vote at the meeting. As of April 17, 1998,
19,464,466 shares of Common Stock were outstanding and entitled to vote.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the shares of Common Stock outstanding at the close of business on
April 17, 1998 will constitute a quorum. Under the Delaware General Corporation
Law and the Company's Certificate of Incorporation, for each share of Common
Stock held, each stockholder is entitled to cast one vote for each nominee for
each of the three directorships to be filled. On all other matters each
stockholder is entitled to cast one vote for each share of Common Stock held.
The three nominees for director receiving the highest number of votes cast will
be elected whether or not any one of them receives the vote of a majority of the
shares represented and entitled to vote at the meeting. Approval of each of the
other business items will require the affirmative vote of a majority of the
shares of Common Stock represented and entitled to vote at the meeting.
Abstentions are counted for purposes of determining the number of shares
represented and entitled to vote at the meeting. However, abstentions are not
counted in determining the number of shares voting "FOR" an item of business
and, therefore, have the same effect as a vote "AGAINST" a business item.
Broker non-votes are counted for purposes of determining the number of shares
represented and entitled to vote at the meeting; however, the shares represented
thereby are not voted and do not represent a vote either "FOR" or "AGAINST" an
item of business.
VOTING OF PROXIES. The shares of Common Stock represented by all properly
executed proxies received in time for the meeting will be voted in accordance
with the directions given by the stockholders. If no instructions are given,
the shares will be voted FOR each of the nominees named herein, or their
respective substitutes, as directors.
Management knows of no business to be brought before the meeting other than
the matters described in this Proxy Statement. However, if any other matters
are properly presented for action, it is the intention of the proxy holders
named in the enclosed proxy to vote on such matters in accordance with their
discretion pursuant to such proxy.
TABULATION. Pursuant to the by-laws and policies of the Company,
representatives of ChaseMellon Shareholder Services, L.L.C. have been appointed
to serve as independent Inspectors of Election to supervise the voting of the
shares for the Annual Meeting of Stockholders. The Inspectors of Election will
decide all questions respecting the qualification of voters, the validity of the
proxies and the acceptance or rejection of votes. None of the Inspectors of
Election is an officer, employee or stockholder of the Company.
<PAGE>
BUSINESS TO BE TRANSACTED
1. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes: Class
I, Class II and Class III, each class as nearly equal in number as possible.
Each class serves three years, with terms of office of the respective classes
expiring in successive years. The three current Class I directors, whose terms
expire in 1998, are being proposed for election for new three-year terms
(expiring in 2001) at the Annual Meeting. The proxies solicited hereby cannot
be voted to elect more than three directors at the Annual Meeting.
It is the intention of the proxy holders named in the enclosed proxy to vote
such proxies for the three nominees first named below, all of whom currently are
directors, to hold office until the 2001 Annual Meeting or until their
successors are elected and qualified. Leucadia National Corporation
("Leucadia") owns approximately 46.2% of the outstanding shares of the Company's
Common Stock. Leucadia has informed the Company that it intends to vote for the
three nominees first named below.
Certain information with respect to the nominees for director and directors
continuing in office is set forth below.
CLASS I NOMINEES FOR ELECTION TO SERVE UNTIL THE 2001 ANNUAL MEETING OF
STOCKHOLDERS:
IAN M. CUMMING, 56, was appointed to the Board in June 1995. Mr. Cumming has
served as a Director and Chairman of the Board of Directors of Leucadia
National Corporation since 1978. He also serves as a Director for Allcity
Insurance Company, Skywest, Inc. and Barbados Light and Power Company. Mr.
Cumming serves on the Executive and Audit Committees of the Board of
Directors.
JOSEPH S. STEINBERG, 53, was appointed to the Board in June 1995. Mr.
Steinberg has served as a Director of Leucadia National Corporation since
1978 and as President since 1979. He also serves as a Director for Allcity
Insurance Company and for Jordan Industries, Inc.
G. FRANK JOKLIK, 69, was appointed to the Board in June 1995. Mr. Joklik has
served as President and Chief Executive Officer of the Company since November
1, 1995. Mr. Joklik served as President and Chief Executive officer of
Kennecott Corporation from 1980 to June 1993, when he retired from Kennecott.
He also serves as President and Chief Executive Officer of the Salt Lake
Organizing Committee for the 2002 Winter Olympics and as a Director for First
Security Corporation and Cleveland Cliffs Inc. Mr. Joklik serves on the
Executive Committee of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE THREE NOMINEES SET FORTH ABOVE.
CLASS III DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 1999 ANNUAL MEETING OF
STOCKHOLDERS:
GORDON J. HUMPHREY, 56, was elected to the Board in 1993. Mr. Humphrey has
served as President and a Director of the Humphrey Group, Inc. since 1991.
He is a former U.S. Senator from New Hampshire (1972-1991). Mr. Humphrey
serves as Chairman of the Compensation Committee and serves on the Audit
Committee of the Board of Directors.
JAMES P. MISCOLL, 62, was elected to the Board in 1993. Mr. Miscoll served
as Vice Chairman, Bank of America from 1985 to 1992, when he retired from
that position. Mr. Miscoll also serves as a Director for Coast Federal
Financial, Inc., Rykoff-Sexton, Inc. and MK Rail Corporation. Mr. Miscoll
serves as Chairman of the Audit Committee and serves on the Compensation
Committee of the Board of Directors.
2
<PAGE>
CLASS II DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS:
ROBERT V. HANSBERGER, 77, was elected to the Board in 1993. Mr. Hansberger
has served as the Chairman and Chief Executive Officer of Futura Corporation
since 1972. He also serves as a Director for Primary Health, Inc., Ram Golf
Corp., BMC West Corporation and Thrifty Foods, Inc. Mr. Hansberger was
elected Chairman of the Board in February 1995, and serves on the Executive
Committee of the Board of Directors.
ROBERT S. SHRIVER, 43, was elected to the Board in 1993. Mr. Shriver has
served as the Executive Director of Special Olympics Productions, Los
Angeles, California, and as a financial advisor/investor since 1990. He also
serves as a Director for MacAndrews & Forbes, Inc., and MAFCO Holdings, Inc.
Mr. Shriver serves on the Compensation and Audit Committees of the Board of
Directors.
If it is determined prior to the meeting that any nominee will be unable to
serve as a Director, the proxy holders reserve the right to substitute a nominee
and vote for another person of their choice in the place and stead of any
nominee unable so to serve, unless the Board of Directors reduces the size of
the membership of the Board of Directors prior to the Annual Meeting to
eliminate the position of any such nominee.
INFORMATION CONCERNING THE BOARD OF DIRECTORS,
BOARD COMMITTEES AND DIRECTOR COMPENSATION
BOARD COMMITTEES AND MEETINGS
The current committees of the Company's Board of Directors include an
Executive Committee, the Compensation Committee and an Audit Committee. These
committees are further described below.
Executive Committee. The Executive Committee is responsible for overseeing
the management of the business and affairs of the Company and has such
additional authority as may be granted to it from time to time by the Board of
Directors. The Executive Committee meets at such times as may be deemed
necessary by the Board of Directors or the Executive Committee. The current
members of the Executive Committee are Robert V. Hansberger, Ian M. Cumming and
G. Frank Joklik. No meetings of the Executive Committee were held during 1997.
Compensation Committee. The Compensation Committee reviews and adjusts the
salaries of the principal officers and key executives of the Company. The
Compensation Committee also administers the Company's executive compensation and
benefit plans. The Compensation Committee meets at such times as may be deemed
necessary by the Board of Directors or the Compensation Committee. The current
members of the Compensation Committee are Gordon J. Humphrey (Chairman), James
P. Miscoll and Robert S. Shriver. The Compensation Committee held one meeting
during 1997.
Audit Committee. The primary function of the Audit Committee is to facilitate
communications among outside auditors and the Board of Directors. The Audit
Committee also reviews financial statements, internal controls, and procedures
and the scope and results of audits. The Audit Committee meets at such times as
may be deemed necessary by the Board of Directors or the Audit Committee. The
current members of the Audit Committee are James P. Miscoll (Chairman), Ian M.
Cumming, Gordon J. Humphrey, and Robert S. Shriver. The Audit Committee held two
meetings during 1997.
The Board of Directors held a total of two regular meetings during 1997.
During 1997, each incumbent director attended 75% or more of the total number of
meetings of the Board and the committees of the Board on which he served that
were held during the periods he served, except that during such period (i) Mr.
Hansberger attended one of the two meetings of the Board of Directors; and (ii)
Mr. Shriver attended one of the two meetings of the Board of Directors and none
of the meetings of the Audit Committee or the Compensation Committee.
3
<PAGE>
DIRECTOR COMPENSATION
Cash Compensation. Directors receive a fee of $7,500 per year, plus $500 for
each Board meeting attended, and $250 for each standing committee meeting
attended. As Chairman of the Board of Directors, Mr. Hansberger receives an
annual fee of $20,000, payable quarterly. Directors who are employees of the
Company receive no additional compensation for serving as Directors, but may
receive compensation for consulting services. Directors are also reimbursed by
the Company for reasonable and necessary expenses incurred in connection with
their services as Directors of the Company. The Company does not have any
consulting agreements with its Directors and no Director received compensation
for consulting services during 1997.
Stock Option Plan for Non-Employee Directors. The Company has a Stock Option
Plan for Non-Employee Directors, the purpose of which is to encourage the
highest level of performance from those members of the Board of Directors who
are not employees of the Company by providing such non-employee Directors with a
proprietary interest in the financial success of the Company. Under the plan,
non-employee Directors are granted discounted options to purchase shares of MK
Gold Common Stock. The plan was amended at the 1994 Annual Meeting to increase
the number of options granted to each Non-Employee Director from 15,000 to
30,000. Following such amendment, the Company's nonemployee Directors held
options as follows: (i) James P. Miscoll -- 30,000 shares; (ii) Gordon J.
Humphrey -- 30,000 shares; (iii) Robert V. Hansberger -- 15,000 shares; and (iv)
Robert S. Shriver -- 15,000 shares. Messrs. Shriver and Hansberger declined to
accept the additional option grant of 15,000 shares authorized at the 1994
Annual Meeting. Upon their election to the Board of Directors in June 1995, each
of Messrs. Cumming and Steinberg were granted an option under the Stock Option
Plan for Non-Employee Directors to purchase 30,000 shares of MK Gold Common
Stock.
With respect to the foregoing options, options for 15,000 shares were granted
to each of Messrs. Hansberger, Shriver, Humphrey and Miscoll on December 17,
1993 at an exercise price of $3.09375 per share all of which, as of the date of
this Proxy Statement, have vested in accordance with their terms. In addition,
options for 15,000 shares were granted to each of Messrs. Humphrey and Miscoll
on July 14, 1994, at an exercise price of $2.71880 per share all of which, as of
the date of this Proxy Statement, have vested in accordance with their terms.
Options for 30,000 shares were granted to each of Messrs. Cumming and Steinberg
on June 6, 1995, at an exercise price of $1.81 per share, and 20,000 have vested
with respect to each of these directors as of the date of this Proxy Statement.
The purchase price per share for shares covered by each option award under
the Stock Option Plan for Non-Employee Directors is equal to 50% of the fair
market value of MK Gold Common Stock on the date of grant. Options granted
under the plan are non-transferable and non-assignable by the participant other
than by will or by the laws of descent and distribution. The options granted
under the plan vest over a three-year period in annual increments of one-third
on each anniversary of the date of grant for participants who continue to serve
on the Board of Directors. If a participant ceases to be a member of the Board
of Directors for any reason except termination for cause, all vested options
then held are exercisable for a period of three years and all unvested options
terminate 30 days after the participant ceases to be a member of the Board of
Directors. If a participant is terminated for cause, all vested options are
exercisable for a period of 30 days and all unvested options automatically
terminate.
4
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
Following is a schedule of names and certain information regarding all of the
executive officers of the Company, as of April 17, 1998:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- -------------------------------------
<S> <C> <C>
Robert V. Hansberger 77 Chairman of the Board
G. Frank Joklik 69 President and Chief Executive Officer
Don L. Babinchak 62 Director of Human Resources
James G. Baughman 41 Exploration Manager
John C. Farmer 48 Controller, Treasurer and Secretary
Larry L. Lackey 62 Chief Geologist
Thomas G. White 53 Manager of Operations
</TABLE>
Robert V. Hansberger became Chairman of the Board of the Company on February 20,
1995, and has been a director since December 17, 1993 when the Company became a
publicly traded entity. Mr. Hansberger has also served as the Chairman and
Chief Executive Officer of Futura Corporation located in Boise, Idaho, since
1972.
G. Frank Joklik has been the President and Chief Executive Officer of the
Company since November 1, 1995. Mr. Joklik has been a director since June 6,
1995. Mr. Joklik was formerly the President and CEO of Kennecott Corporation.
Don L. Babinchak has been Director of Human Resources of the Company since March
25, 1996. Mr. Babinchak was formerly Vice President of Human Resources of
Kennecott Corporation. Mr. Babinchak is employed on a part-time basis by the
Company.
James G. Baughman has been the Company's Exploration Manager since September 15,
1996 and an officer of the Company since March 21, 1997. Prior to joining MK
Gold, Mr. Baughman was a field and staff geologist for a number of companies at
locations in the lower United States, Alaska, Mongolia and South America.
John C. Farmer was appointed Controller, Treasurer and Secretary April 25, 1996.
He was formerly the Chief Financial Officer of Dyno Noble Inc.
Larry L. Lackey has been Chief Geologist for MK Gold since August 23, 1995. He
was formerly Regional Vice President for Independence Mining Company, Inc.,
responsible for the Central America and the Caribbean region.
Thomas G. White has been the Manager of Operations and Vice President for MK
Gold since October 8, 1993. Prior to joining MK Gold, Mr. White served as a
Mining Executive for the gold operations of Homestake Mining Co., located in San
Francisco, California (1975 to 1992).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding persons known by the
Company to beneficially own, as defined by the Securities and Exchange
Commission ("SEC") Rule 13d-3, more than 5% of the Company's Common Stock as of
the Record Date, based solely on information regarding such ownership available
to the Company in filings by such beneficial owners with the SEC on Schedules
13D and 13G. It also shows the same information as of the Record Date for all
Directors and Executive Officers named in the Summary Compensation Table on page
8 (the "Named Executive Officers"), and all Directors and Executive Officers as
a group. Except as set forth in the footnotes below, all such persons possess
sole voting and investment power with respect to the shares listed.
5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
Number of Shares
and Nature of Right to Acquire Percent
Name and Address Beneficial Within 60 Days of of
of Beneficial Owner Ownership(a) April 17, 1998 Class(b)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Certain Beneficial Owners:
- -------------------------
Leucadia National Corporation
315 Park Avenue South
New York, NY 10010 9,000,000 - 46.2
Group consisting of:
Advisory Research, Inc.
and David B. Heller.
Two Prudential Plaza
180 N. Stetson, Suite 5780
Chicago, Illinois 60601(c) 1,340,400 - 6.9
Group consisting of:
Special Situations Fund III, L.P.,
MGP Advisors Limited Partnership, L.P.,
AWM Investment Company, Inc. and
Austin W. Marxe
153 East 53 Street
New York, New York 10022(d) 1,457,500 - 7.5
Group consisting of:
Quest Advisory Corp. and
Quest Management Company
1414 Avenue of the Americas
New York, New York 10019(e) 1,657,200 - 8.5
Directors:
- ---------
R.V. Hansberger(f) 16,000 15,000 *
G.J. Humphrey 30,000 30,000 *
J.P. Miscoll(g) 32,100 30,000 *
R.S. Shriver 15,000 15,000 *
I.M. Cumming(h) 30,000 30,000 *
J.S. Steinberg(i) 30,000 30,000 *
G.F. Joklik 550,000 450,000 2.8
Nondirector Named Executive Officers:
- ------------------------------------
T.G. White(j) 96,400 86,160 *
All Directors and Executive Officers as a Group
(12) persons 1,077,000 963,660 5.3
</TABLE>
- --------------------
* Less than 1%
(a) Amounts in Column 2 include shares listed in Column 3. For purposes of this
table, shares are considered to be "beneficially" owned if the person
directly or indirectly has the sole or shared power to vote or direct the
voting of the securities or the sole or shared power to dispose of or
direct the disposition of the securities. Shares are also considered
"beneficially owned" if a person has the right to acquire the beneficial
ownership of the shares within 60 days of April 17, 1998. Unless otherwise
indicated in these footnotes, each stockholder has sole voting and
investment power with respect to the shares beneficially owned.
6
<PAGE>
(b) The percentages shown are calculated based upon the shares indicated in
column (2).
(c) According to a Statement on Schedule 13G dated February 13, 1998, Advisory
Research Inc. is the direct beneficial owner of 1,340,400 shares. David B.
Heller is President and the controlling shareholder of Advisory Research,
Inc.
(d) According to a Statement on Schedule 13G dated February 3, 1998, 1,457,500
shares are beneficially owned by Austin W. Marxe and AWM Investment
Company, which consist of 1,094,000 shares beneficially owned by Special
Situations Fund III, L.P. and 363,500 shares beneficially owned by Special
Situations Cayman Fund, L.P.
(e) According to Amendment No. 1 to a Statement on Schedule 13G dated February
10, 1998, 1,460,700 shares are beneficially owned by Quest Advisory Corp.
and 196,500 shares are beneficially owned by Quest Management Company.
(f) Mr. Hansberger shares voting and dispositive power as to 1,000 such shares
with his wife.
(g) Includes 2,100 shares beneficially owned by the J. P. Miscoll and I.
Miscoll Trust, dated November 11, 1991, Ingeburg Miscoll, Trustee.
(h) By virtue of Mr. Cumming's approximately 18.4% interest in the common
shares of Leucadia, Mr. Cumming may be deemed to be the beneficial owner of
the shares of MK Gold Common Stock owned by Leucadia.
(i) By virtue of Mr. Steinberg's approximately 16.5% interest in the common
shares of Leucadia (excluding an approximately 2% interest in Leucadia
securities held by two trusts for the benefit of Mr. Steinberg's minor
children as to which Mr. Steinberg disclaims beneficial ownership), Mr.
Steinberg may be deemed to be the beneficial owner of the shares of MK Gold
Common Stock owned by Leucadia.
(j) Mr. White has sole voting power as to 10,240 shares, sole dispositive power
as to 6,370 shares and shared dispositive power as to 0 shares.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's Executive Officers and Directors, and
persons who beneficially own more than 10% of the Company's Common Stock, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and furnish the Company with copies. Based solely upon a
review of the copies of such forms furnished to the Company and written
representations from certain reporting persons, the Company believes that during
1997 all persons subject to the reporting requirements of Section 16(a) filed
the required reports on a timely basis.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to the Chief
Executive Officer of the Company and the Manager of Operations and Vice
President of the Company (collectively, the "Named Executive Officers"). No
other officer or employee of the Company received a total annual salary and
bonus in excess of $100,000 during these periods. It should be noted that in
1996 the Company changed its fiscal year end from March 31 to December 31.
Accordingly, amounts shown for the fiscal year ended December 31, 1996 represent
amounts for the nine month period ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- -----------------------------------------
OTHER SECURITIES
FISCAL ANNUAL RESTRICTED UNDERLYING ALL
NAME AND PRINCIPAL YEAR COMPEN- STOCK OPTIONS/ LTIP OTHER
POSITION ENDED/1/ SALARY BONUS SATION AWARD(S) SARS2 PAYOUTS COMP./3/
($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Frank Joklik 12/31/97 150,000 - - - - - 4,724
President and Chief 12/31/96 115,746 - - - 900,000 - 2,410
Executive Officer (since 3/31/96 59,423 - - - - - 1,558
November 1, 1995)
Thomas G. White 12/31/97 120,000 - - - 25,000 - 3,403
Manager of Operations and 12/31/96 87,692 - - - 100,000 - 63,879
Vice President 3/31/96 130,395 - - - - - 6,520
</TABLE>
- ----------------
/1/ In 1996 the Company changed its fiscal year end from March 31 to December
31. Accordingly, amounts shown for the fiscal year ended December 31, 1996
represent amounts for the nine month period ended December 31, 1996.
/2/ Options covering 900,000 and 70,000 shares of the Company's Common Stock
were granted to Mr. Joklik and Mr. White, respectively, on August 5, 1996.
These options were granted as replacement options in exchange for options
previously granted to Mr. Joklik and Mr. White on February 8, 1996 and
April 13, 1995, respectively. Except for the exercise price, the
replacement options contain identical terms to the options surrendered, and
vest in accordance with the vesting schedule of the surrendered options. On
August 5, 1996, Mr. White was also granted an additional option covering
30,000 shares which vests in equal increments over a three year period. On
January 30, 1997, Mr. White was granted an option covering 25,000 shares
which vests in equal increments over a two year period.
/3/ The amounts shown in this column consist of matching contributions to the
Named Executive Officers' 401(k) accounts and payments of life insurance
premiums. The amount in this column for the nine month period ended
December 31, 1996, also includes relocation expenses of $59,867 paid on
behalf of Mr. White.
STOCK OPTIONS
The following table provides information related to options to purchase the
Company's Common Stock granted to the Named Executive Officers during 1997. The
Company has never granted any freestanding stock appreciation rights. None of
the Named Executive Officers exercised any options during 1997.
8
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Individual Grants Annual Rates of Stock
Price Appreciation for
Option Terms/4/
- --------------------------------------------------------------------------------------------------- ----------------------
(a) (b) (c) (d) (e)
Number of % of Totals
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price/2/ Expiration
Name Granted (#) Fiscal Year ($/Sh) Date/3/ 5%($) 10%($)
- ---- ------------ ------------- ------------ ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Thomas G. White/1/ 25,000 10% 1.50 1/30/07 23,584 59,765
</TABLE>
______________________________
/1/ Options covering 25,000 shares were granted to Mr. White on January 30,
1997 at an exercise price of $1.50 per share. These options vest in equal
increments over a two year period.
/2/ Fair market value on date of grant.
/3/ Subject to earlier termination under certain circumstances.
/4/ Potential realizable value is calculated based on an assumption that the
price of the Company's Common Stock appreciates at the annual rates shown
(5% and 10%), compounded annually, from the date of grant of the option
until the end of the option term. The value is net of the exercise price
but is not adjusted for the taxes that would be due upon exercise. The 5%
and 10% assumed rates of appreciation are mandated by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of future stock prices. Actual gains, if any, upon
future exercise of any of these options will depend upon the actual
performance of the Company's Common Stock.
The following table provides information as to options exercised by each of
the Named Executive Officers during 1997, and the value of options held by such
Executives at December 31,1997 measured in terms of the last reported sale price
for the Company's Common Stock on December 31, 1997 ($1.50, as reported on the
Nasdaq National Market System).
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options/SARs at
on Value Options/SARs at FY-End (#) FY End ($)
Name Exercise (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ -------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
G. Frank Joklik - - 225,000/675,000 0/0
Thomas G. White - - 80,000/45,000 0/0
</TABLE>
EMPLOYEE INCENTIVE COMPENSATION AND SAVINGS PLANS
Executive Incentive Plan. The Company has an Executive Incentive Plan
whereby key officers and employees of the Company may earn bonuses.
Participants in the Executive Incentive Plan are selected by the Compensation
Committee based on their level of responsibility, salary, and past and
prospective contributions to the business and growth of the Company. Bonus
payments are determined by MK Gold's Compensation Committee.
Under the Executive Incentive Plan, cash awards may be made to individuals
from an award fund established annually by the Company. The amount of the award
fund will be based on criteria established by the Compensation Committee. The
criteria may be described in terms of Company-wide objectives, such as net
income, return on capital and cash flow, or such other or similar objectives
which are related to performance. The amount of the
9
<PAGE>
award fund for any year may not in any event exceed 9.55% of the Company's net
profit after taxes for such year. Each participant potentially may receive an
award from the award fund up to a specified percentage of the participant's base
salary, which percentage generally ranges from 20% to 50% depending on the
participant's base salary and the participant's organizational duties. The
Compensation Committee may modify individual awards but in no event may the
Compensation Committee increase by more than 50% the award otherwise payable.
Awards are subject to forfeiture if a participant's employment terminates prior
to receipt of the award unless termination is due to retirement, death,
permanent disability or, after a change in control of the Company, termination
is by the Company for Cause (as defined in the plan) or is by the participant
without Good Reason (as defined in the plan). No awards were made under the
Executive Incentive Plan for the year ended December 31, 1997.
Long-Term Incentive Plan. The Company has a Long-Term Incentive Plan whereby
officers and employees of the Company may earn bonuses. Under the Long-Term
Incentive Plan, cash awards may be made dependent on a comparison of the Company
at the end of an initial 3-year period (ended December 31, 1996) and each
rolling 3-year period thereafter against total shareholder return for other
companies in the same industry. In the event of a change in control of the
Company (as defined in the plan), each active participant would be entitled to
receive a pro rata portion of the benefit payable under the plan for any pending
performance period (based on 30-day average closing prices as of the month
immediately preceding the month in which the change in control occurs) as soon
as practicable following such change in control. No awards have been made under
this Plan.
Stock Incentive Plan. The Company has a Stock Incentive Plan, pursuant to
which awards of stock options, stock appreciation rights and restricted stock
may be made to officers and key employees. The Stock Incentive Plan is
administered by the Compensation Committee, no voting member of which may be an
employee of the Company or be eligible to receive awards under the Stock
Incentive Plan. A maximum of 2,500,000 shares of Common Stock are authorized to
be issued pursuant to the Stock Incentive Plan. As of April 1, 1998, awards
covering 1,991,266 shares of Common Stock were outstanding under the Stock
Incentive Plan and 502,534 shares were available for awards under the Stock
Incentive Plan. Under the Stock Incentive Plan, awards are not considered to
have been made with respect to options or stock appreciation rights that
terminate without being exercised.
Awards of restricted stock are subject to vesting requirements, and shares of
restricted stock generally are not permitted to be sold, pledged, or otherwise
disposed of during the period in which the restrictions exist. Shares of
restricted stock otherwise carry full voting and dividend rights from the date
of the award. Options awarded pursuant to the Stock Incentive Plan are subject
to vesting requirements. Generally, the exercise price of all options granted
under the Stock Incentive plan are not less than the market price at the date of
grant or the average market price over a period preceding or following the date
of grant as specified in the option.
Generally, options awarded under the Stock Incentive Plan have a term of 10
years. The foregoing periods are subject to acceleration in the event of a
change in the control of the Company and in certain other events, including
retirement after age 65, death, and disability. Pursuant to the Stock Incentive
Plan, the Compensation Committee will review from time to time and may revise
any of the foregoing vesting or other requirements as they apply to eligible
participants.
Savings Plan. The Company has adopted a tax-qualified retirement plan
("Savings Plan") with a salary deferral feature within the meaning of Section
401(k) of the Code. Employees of the Company and of certain affiliates are
eligible to participate in the Savings Plan, provided, among other things, that
they are at least 21 years of age and U.S. citizens or lawfully admitted
residents.
Pursuant to the salary deferral feature of the Savings Plan, each participant
may elect to reduce his or her compensation by between 1% and 15%, but not more
than $10,000 (for 1998) per year, adjusted for changes in the cost of living and
subject to non-discrimination limits under the Code. The Company will
contribute these compensation deferrals to the Savings Plan. The Company has
also agreed to match 50% of the first 5% of eligible employee compensation
deferrals to the Plan ("Company Matching Contributions"). The Company retains
the right to make additional non-elective Company contributions to help satisfy
federal non-discrimination requirements.
Savings Plan deferrals (including Company Matching Contributions) are
allocated to accounts in the name of the participants and invested at their
direction in investment funds which have been chosen by the savings plan
committee under the Savings Plan.
10
<PAGE>
A participant's retirement benefit under the Savings Plan is dependent upon
the participant's vested account balance at the time of distribution. The value
of such account is dependent upon how well the participant invests his or her
deferrals (including Company Matching Contributions) over the period of time he
or she participates in the Savings Plan. Compensation deferrals are always
fully vested. Company Matching Contributions are fully vested upon completion of
one year of service, or attainment of age 65, death or total disability.
Distribution of the vested balance of a participant's account is to be made
in a single cash payment within one year after termination of employment,
reaching age 65 or death, unless the account balance exceeds $5,000, in which
case distribution is made at age 65 or earlier if the participant consents.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised entirely of non-employee Directors
who make independent decisions with respect to executive compensation.
Compensation of the top executive officers (including the Named Executive
Officers) is reviewed at least annually by the Compensation Committee. The most
recent review was conducted on January 30, 1997.
Compensation Policy Applicable to Officers and Key Executives. The goal of
the Compensation Committee is to create compensation packages for officers and
key executives which will attract, retain and motivate executive personnel who
are capable of achieving the Company's short-term and long-term financial and
strategic goals. Compensation packages are designed to combine a mixture of
short-term and long-term incentives tied to Company performance as described
more particularly below. In exercising its responsibilities, the Compensation
Committee seeks to encourage management to achieve the Company's short-term and
long-term financial and strategic objectives, including maximizing long-term
value for stockholders. Through the implementation of its compensation
policies, the Compensation Committee believes it can motivate management to
consider the Company's short-term and long-term objectives, such as the
Company's financial performance and stock price appreciation, by rewarding the
Company's key officers and executives upon achieving such objectives. The
Compensation Committee has not adopted a policy in response to federal tax law
changes that, beginning in 1994, limit the deductibility by the Company of
compensation in excess of $1 million per employee per year for each of the
Company's five most highly compensated executives, since the total compensation
paid to any individual executive officer does not now, and is not in the
foreseeable future anticipated to, exceed the deductibility levels.
Executive Compensation Policies. Executive compensation at the Company is
made up of three elements: (i) base salary, (ii) bonuses (short-term and long-
term incentives) and (iii) grants of equity-based compensation (e.g., stock
options and restricted stock).
Base Salary. Effective January 1, 1994, the Compensation Committee
-----------
established base salaries for all of the executive officers of the Company. At
such time, the base salary level for each executive officer of the Company was
based on each employee's job responsibilities with consideration given to
comparable salaries disclosed in a 1992 Canadian Mining Industry Salary Survey
containing data on 27 public mining company corporate offices and approximately
75 associated mine sites. On January 30, 1997, the Compensation Committee
reviewed the salaries for officers and executives of the Company and determined
that no changes in base salary levels were appropriate.
Bonuses. In addition to base salary, key officers and employees are eligible
--------
to receive bonuses under the Company's Executive Incentive Plan and Long-Term
Incentive Plan. Bonuses under the Company's Executive Incentive Plan are
determined by the Compensation Committee within the parameters of the Executive
Incentive Plan. The Plan requires the establishment of an award fund which
shall not exceed 9.55% of the Company's net profits after taxes for the year.
This fund is allocated to Company officers and executives in accordance with an
allocation schedule which is tied to salary grade and/or organizational level of
a participant. No bonuses were granted under the Company's Executive Incentive
Plan during 1997.
The Company's Long-Term Incentive Plan provides long-term incentives to
officers and employees based upon the overall performance of the Company over
periods of three years as compared to other companies in the same industry. To
date, no cash awards have been granted under the Long-Term Incentive Plan.
Stock Options and Restricted Stock. In addition to salary and bonus, the
-----------------------------------
Company has adopted the Stock Incentive Plan, which provides that the long-term
compensation of officers and key employees be dependent upon
11
<PAGE>
the financial performance of the Company. Under the Stock Incentive Plan,
officers and key employees are eligible to receive awards of stock options,
stock appreciation rights and restricted stock. The number of stock options and
shares of restricted stock granted to each executive officer is determined by a
competitive compensation analysis and each individual's salary and
responsibility. The Compensation Committee also considers the number and
exercise price of options and shares of restricted stock granted to individuals
in the past. All option grants have been made with an exercise price equal to
the fair market value of the MK Gold Common Stock on the date of grant as
required pursuant to the terms of the Company's stock incentive plan.
CEO'S COMPENSATION.
Mr. Joklik was appointed President and Chief Executive Officer of the Company
on November 1, 1995. The Company does not currently have an employment
agreement with Mr. Joklik. Mr. Joklik's minimum annual base salary of $150,000
was established by the Compensation Committee, and approved by the Board of
Directors. Mr. Joklik agreed to an initial salary which is below market due to
the current financial condition of the Company. Stock option awards to Mr.
Joklik were based on his level of responsibility and experience.
Gordon J. Humphrey (Chairman)
James P. Miscoll
Robert S. Shriver
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Compensation Committee consists of three non-employee Directors.
Currently, the members of the Compensation Committee are Messrs. Humphrey
(Chairman), Miscoll and Shriver. None of the executive officers of the Company
serve as a director of another corporation in a case where an executive officer
of such other corporation serves as a Director of the Company.
RELATED PARTY TRANSACTIONS
On June 6, 1995, Leucadia purchased approximately 46% of the outstanding
shares of Common Stock from Morrison Knudsen Corporation ("Morrison Knudsen").
As part of its acquisition of Morrison Knudsen's interest in the Company,
Leucadia agreed to acquire the interest of Canadian Imperial Bank of Commerce
("CIBC"), the Company's primary lender, in the Company's $20 million loan
facility with CIBC (the "Credit Facility") and all of Morrison Knudsen's
obligations under, or with respect to, the Credit Facility, including its
guarantee of MK Gold's obligations under the Credit Facility, were extinguished.
On August 18, 1995, the Company repaid $15 million in principal to Leucadia
which was outstanding under the Credit Facility. In addition, the Company has
paid an aggregate of $892,000 in interest and commitment fees to Leucadia in
accordance with the terms of the Credit Facility through March 31, 1998. In
March 1998, the Company renegotiated the Credit Facility and entered into a new
credit agreement with Leucadia. Under the terms of the new credit agreement,
the Company is required to pay to Leucadia an on-going quarterly commitment fee
of $18,750. As of the Record Date, no borrowings were outstanding under the
Credit Facility. Two directors of the Company, Messrs. Cumming and Steinberg,
are officers, directors and principal shareholders of Leucadia.
12
<PAGE>
COMPANY PERFORMANCE GRAPH
Rules adopted by the Securities and Exchange Commission require that the
Company include in this proxy statement a line-graph presentation comparing
cumulative, five-year shareholder returns on an indexed basis with the Nasdaq
Stock Index and either a nationally recognized industry standard or an index of
peer companies selected by the Company. The Common Stock of the Company
commenced trading on December 15, 1993, and prior to this date the Company was
wholly owned by Morrison Knudsen. The Company chose a group of 7 mining and
development companies as a peer group for purposes of this performance
comparison. A list of these companies follows the graph set forth below. In
1994, the Company changed its fiscal year end to March 31. In 1996, the Company
changed its fiscal year end to December 31. Accordingly, the period from
December 31, 1993 to March 31, 1994 and the period from March 31, 1996 to
December 31, 1996 reflect three and nine month periods, respectively.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CRSP
Measurement period MK Gold NASDAQ Peer
(Fiscal Year Covered) Company Index Group
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/14/93 $100.00 $100.00 $100.00
FYE 12/93 $ 92.31 $103.36 $ 94.76
FYE 03/94 $100.00 $ 99.01 $105.04
FYE 03/95 $ 63.46 $110.14 $ 97.45
FYE 03/96 $ 31.72 $149.54 $114.92
FYE 12/96 $ 23.08 $175.77 $113.80
FYE 12/97 $ 23.08 $239.53 $ 61.65
</TABLE>
Peer group includes: Agnico Eagle Mines Ltd.; Amax Gold Inc., Battle Mountain
Gold Company; Camboir Inc., Bema Gold Corp., Glamis Gold Ltd.; and Greenstone
Resources Ltd.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any proposal submitted by a stockholder for action at the Company's 1999
Annual Meeting of Stockholders must be submitted in a letter to the Secretary of
the Company and received by the Company by December 24, 1998 in order for such
proposal to be included in the Company's proxy statement and form of proxy
relating to such meeting. The proposal must be in the form required by and
subject to the other requirements of applicable rules of the Securities and
Exchange Commission.
The Executive Committee will consider nominees for the Board of Directors
recommended by stockholders for the 1999 Annual Meeting if the following
information concerning each nominee is disclosed in writing: name, age,
business address, residence address, principal occupation or employment, class
and number of shares of Common Stock of the Company which are beneficially owned
by each nominee and other information relating to the nominee that is required
to be disclosed in solicitations for proxies for election of directors pursuant
to Regulation 14A under the Exchange Act. The stockholder making the nomination
must also disclose his name, address and the number of shares beneficially
owned. All such recommendations must be submitted to the Company in a letter to
the Secretary of the Company not less than 60 days prior to the 1999 Annual
Meeting;
13
<PAGE>
provided, however, that in the event public announcement of the date of the
annual meeting is not made at least 75 days prior to the date of the annual
meeting, such recommendation by the stockholder must be received not later than
10 days following the day on which public announcement is first made of the date
of the 1999 Annual Meeting.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from its stockholders
on behalf of the Board of Directors. In addition to the use of the mails,
proxies may be solicited by the directors, officers, and employees of the
Company by personal interview, telephone or telegram. Such directors, officers
and employees will not be additionally compensated for such solicitation, but
may be reimbursed for out-of-pocket expenses incurred in connection therewith.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of the Company's Common Stock held of record by such persons,
and the Company will reimburse such brokerage houses, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred in connection
therewith.
Dated: April 24, 1998 BY ORDER OF THE BOARD OF DIRECTORS
John C. Farmer
Controller, Treasurer and Secretary
14
<PAGE>
[FORM OF PROXY]
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998 AT 11:00 A.M.
MK GOLD COMPANY
The undersigned stockholder of MK Gold Company hereby appoints John C.
Farmer and Donald L. Babinchak and each of them, as attorneys and proxies, each
with the power to act without the other and with power of substitution and
revocation, and hereby authorizes them to represent the undersigned and vote, as
designated on the other side, all shares of stock of MK Gold Company standing in
the name of the undersigned with all powers which the undersigned would possess
if present at the Annual Meeting of Stockholders of the Company to be held May
22, 1998 or any adjournments or postponements thereof.
RECEIPT OF THE NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND THE PROXY
STATEMENT FURNISHED HEREWITH, IS HEREBY ACKNOWLEDGED.
(Continued and to be marked, dated and signed on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING OF
STOCKHOLDERS
MK GOLD COMPANY
MAY 22, 1998
11:00 A.M.
THE DOUBLETREE HOTEL
255 S. WEST TEMPLE
SALT LAKE CITY, UTAH
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE Please mark
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. your votes as
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR indicated in
PROPOSAL 1. this example X
-
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS (THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW)
<S> <C> <C>
FOR all nominees listed to the WITHHOLD NOMINEES: Ian M. Cumming, Joseph S. Steinberg and G. Frank Joklik
right (except as marked to the AUTHORITY
contrary herein) to vote for all INSTRUCTION: To withhold authority to vote for any individual nominee,
nominees listed to write that nominee's name in the space provided below.)
the right
___ ___
</TABLE>
___________________________________
2. In their discretion the Proxies are
authorized to vote upon such other business
as may properly come before the meeting or
any adjournment thereof.
The signature should agree with the
name on your stock certificate.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee, or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by president
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated:_______________________, 1998
___________________________________
(Signature)
___________________________________
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
________________________________________________________________________________
FOLD AND DETACH HERE
ADMISSION TICKET
ANNUAL MEETING OF
STOCKHOLDERS
MK GOLD COMPANY
MAY 22, 1998
11:00 A.M.
THE DOUBLETREE HOTEL
255 S. West Temple
Salt Lake City, Utah
