<PAGE>
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:
----------------------------------------------------------------------
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:
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
----------------------------------------------------------------------
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS - JUNE 8, 1999
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 Wyndham Hotel, 215 W. South
Temple, Salt Lake City, Utah, on Tuesday, June 8, 1999, at 11:30 a.m. for the
following purposes:
1. To elect two 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 20, 1999 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: May 3, 1999
BY ORDER OF THE BOARD OF DIRECTORS
John C. Farmer
Chief Financial Officer 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
June 8, 1999
____________________
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 Wyndham Hotel, 215 W. South Temple, Salt Lake
City, Utah, on Tuesday, June 8, 1999, at 11:30 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 May 3, 1999.
Voting Rights and Vote Required. Stockholders of record on April 20, 1999,
the record date, are entitled to vote at the meeting. As of April 20, 1999,
19,261,929 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 20, 1999 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 two directorships to be filled. On all other matters each
stockholder is entitled to cast one vote for each share of Common Stock held.
The two 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 two current Class III directors, whose terms
expire in 1999, are being proposed for election for new three-year terms
(expiring in 2002) at the Annual Meeting. The proxies solicited hereby cannot be
voted to elect more than two directors at the Annual Meeting.
It is the intention of the proxy holders named in the enclosed proxy to vote
such proxies for the two nominees first named below, both of whom currently are
directors, to hold office until the 2002 Annual Meeting or until their
successors are elected and qualified. Leucadia National Corporation ("Leucadia")
owns approximately 46.7% of the outstanding shares of the Company's Common
Stock. Leucadia has informed the Company that it intends to vote for the two
nominees first named below.
Certain information with respect to the nominees for director and directors
continuing in office is set forth below.
Class III - Nominees for election to serve until the 2002 Annual Meeting of
Stockholders:
Gordon J. Humphrey, 57, 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, 64, 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 American International
Group, Inc. (senior advisor), Motive Industries, Inc., 20th Century
Industries and US Foodservice, Inc. Mr. Miscoll serves as Chairman of the
Audit Committee and serves on the Compensation Committee of the Board of
Directors.
The Board of Directors Unanimously Recommends a Vote
"FOR" the Two Nominees Set Forth Above.
Class II - Directors whose terms continue until the 2000 Annual Meeting of
Stockholders:
Robert V. Hansberger, 78, was elected to the Board in 1993. Mr. Hansberger
served as Chairman of the Board from February 1995 to June 1998, and
currently serves on the Executive Committee of the Board of Directors. Mr.
Hansberger has served as the Chairman and Chief Executive Officer of Futura
Corporation and its subsidiaries and affiliates since 1972. He also serves as
Chairman of the Board for Primary Health, Inc., and as a director for a
number of other companies, including SCP Technologies and Building Materials
Holding Company.
Robert S. Shriver, 44, 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.
Class I - Directors whose terms continue until the 2001 Annual Meeting of
Stockholders:
Ian M. Cumming, 58, 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 Skywest,
Inc. Mr. Cumming serves on the Executive and Audit Committees of the Board of
Directors.
2
<PAGE>
Joseph S. Steinberg, 54, 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, Jordan Industries, Inc., and HomeFed Corporation.
G. Frank Joklik, 70, was appointed to the Board in June 1995, and became
Chairman of the Board of Directors of the Company on June 30, 1998. Mr.
Joklik served as President and Chief Executive Officer of the Company from
November 1, 1995 through June 30, 1998. Concurrent with his appointment as
Chairman of the Board, Mr. Joklik took a leave of absence from his position
as President and Chief Executive Officer of the Company in order to fulfill
his responsibilities to the Salt Lake Organizing Committee for the 2002
Olympic Winter Games. Prior to joining the Company, Mr. Joklik was the
President and Chief Executive officer of Kennecott Corporation from 1980 to
June 1993, when he retired from Kennecott. Mr. Joklik also serves as a
Director for First Security Corporation and Cleveland Cliffs Inc. He
currently serves on the Executive Committee 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, a 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 1998.
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 1998.
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 1998.
The Board of Directors held a total of six meetings during 1998. During 1998,
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 Mr. Steinberg
attended three of the six meetings of the Board of Directors.
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. Joklik receives an annual
fee of $20,000, payable quarterly. 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 1998.
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, all of which, as of
the date of this Proxy Statement, have vested in accordance with their terms.
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 20, 1999:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
G. Frank Joklik 70 Chairman of the Board
Donald L. Babinchak 63 President and Chief Executive Officer
James G. Baughman 42 Exploration Manager
John C. Farmer 49 Chief Financial Officer and Secretary
Larry L. Lackey 63 Chief Geologist
Thomas G. White 55 Manager of Operations
</TABLE>
G. Frank Joklik became Chairman of the Board of Directors of the Company on
June 30, 1998, and has been a director since June 6, 1995. Mr. Joklik served as
President and Chief Executive Officer of the Company from November 1, 1995
through June 30, 1998. Concurrent with his appointment as Chairman of the Board,
Mr. Joklik took a leave of absence from his position as President and Chief
Executive Officer of the Company in order to fulfill his responsibilities to the
Salt Lake Organizing Committee for the 2002 Olympic Winter Games. Prior to
joining the Company, Mr. Joklik was the President and Chief Executive Officer of
Kennecott Corporation.
Donald L. Babinchak has served as interim President and Chief Executive
Officer of the Company since June 30, 1998. Mr. Babinchak has also served as the
Director of Human Resources of the Company since March 25, 1996. Mr. Babinchak
was formerly Vice President of Human Resources and Administration of Kennecott
Corporation.
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 Chief Financial Officer of the Company on June
30, 1998. Mr. Farmer has also served as the Company's Controller, Treasurer and
Secretary since April 25, 1996. Mr. Farmer was formerly the Chief Financial
Officer of Dyno Nobel Inc.
Larry L. Lackey has been Chief Geologist for MK Gold since August 23, 1995.
He was formerly Regional Vice President-Central America and the Carribean for
Independence Mining Company, Inc.
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 Right to Acquire Percent
Name and Address Nature of Beneficial Within 60 Days of of
of Beneficial Owner Ownership(a) April 20, 1999 Class(b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Certain Beneficial Owners:
- -------------------------
Leucadia National Corporation
315 Park Avenue South
New York, NY 10010 9,000,000 - 46.7
Group consisting of:
Special Situations Fund III, L.P.,
MGP Advisors Limited Partnership, L.P.,
AWM Investment Company, Inc.
Austin W. Marxe and
David Greenhouse
153 East 53 Street
New York, New York 10022(c) 2,907,500 - 15.1
Group consisting of:
Royce & Associates, Inc.
Royce Management Company and
Charles M. Royce
1414 Avenue of the Americas
New York, New York 10019(d) 1,701,100 - 8.8
Directors:
- ---------
R.V. Hansberger(e) 16,000 15,000 *
G.J. Humphrey 30,000 30,000 *
J.P. Miscoll(f) 32,100 30,000 *
R.S. Shriver 15,000 15,000 *
I.M. Cumming(g) 30,000 30,000 *
J.S. Steinberg(h) 30,000 30,000 *
G.F. Joklik 775,000 675,000 3.9
Nondirector Named Executive Officers:
- ------------------------------------
D.L. Babinchak 135,000 125,000 *
T.G. White 121,575 115,000 *
All Directors and Executive Officers as a Group
(12) persons 1,403,340 1,280,000 6.8
</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 20, 1999. Unless otherwise
indicated in these footnotes, each stockholder has sole voting and
investment power with respect to the shares beneficially owned.
(b) The percentages shown are calculated based upon the shares indicated in
column (2).
6
<PAGE>
(c) According to a Statement on Schedule 13G dated February 12, 1999, 2,907,500
shares are beneficially owned by Austin W. Marxe and David Greenhouse,
which consist of 2,182,000 shares beneficially owned by Special Situations
Fund III, L.P. and 725,500 shares beneficially owned by Special Situations
Cayman Fund, L.P.
(d) According to a Statement on Schedule 13G dated February 10, 1999, 1,200,900
shares are beneficially owned by Royce & Associates, Inc. and 500,200
shares are beneficially owned by Royce Management Company.
(e) Mr. Hansberger shares voting and dispositive power as to 1,000 such shares
with his wife.
(f) Includes 2,100 shares beneficially owned by the J. P. Miscoll and I.
Miscoll Trust, dated November 11, 1991, Ingeburg Miscoll, Trustee.
(g) By virtue of Mr. Cumming's approximately 15.5% 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.
(h) By virtue of Mr. Steinberg's approximately 14.2% interest in the common
shares of Leucadia, Mr. Steinberg may be deemed to be the beneficial owner
of the shares of MK Gold Common Stock by Leucadia.
Section 16(a) Beneficial Ownership Reporting Compliance
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 for
the year ended December 31, 1998 all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis,
except that a Form 5 was filed late by Thomas G. White to report the withholding
of 1,036 shares by the Company to satisfy income tax withholding obligations in
connection with the vesting of shares of restricted stock during 1998 and 1997.
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 $100,000 during these periods. It should be noted that in
1996 the Company changed its fiscal year end from March 31 to December 31.
Accordingly, amounts shown for the fiscal year ended December 31, 1996 represent
amounts for the nine month period ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------------------
Other Securities
Fiscal Annual Restricted Underlying All
Name and Principal Year Compen- Stock Award(s) Options/ LTIP Other
Position Ended/1/ Salary Bonus ($) sation/2/ ($) SARs Payouts Comp.
($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Frank Joklik 12/31/98 80,769 - 2,612 - - - 11,842/3/
President and Chief 12/31/97 150,000 - 4,078 - - - 646
Executive Officer 12/31/96 115,746 - 1,733 - 900,000 - 677
(until June 30, 1998)
Donald L. Babinchak 12/31/98 126,692 - 4,851 - 75,000 - 3,958/4/
President and Chief 12/31/97 70,385 - 4,078 - - - 1,350
Executive Officer 12/31/96 43,846 - 1,733 - - - 1,086
(since June 30, 1998)
Thomas G. White 12/31/98 128,616 - - - - - 4,093/5/
Manager of 12/31/97 120,000 - - - 25,000 - 3,403
Operations and 12/31/96 87,692 - - - 100,000 - 63,879
Vice President
</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/ Amounts in this column consist of amounts paid to Mr. Joklik and Mr.
Babinchak in lieu of medical insurance coverage
/3/ Consists of $10,000 for services as Chairman of the Board, which is also
described in "Director Compensation," and life insurance premiums of $1,842.
/4/ Consists of 401(k) matching contributions of $2,767 and life insurance
premiums of $1,191.
/5/ Consists of 401(k) matching contributions of $3,215 and life insurance
premiums of $878.
Stock Options
The following table provides information related to options to purchase the
Company's Common Stock granted to the Named Executive Officers during 1998. The
Company has never granted any freestanding stock appreciation rights. None of
the Named Executive Officers exercised any options during 1998.
8
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Individual Grants Annual Rates of Stock
Price Appreciation for
Option Terms/4/
- ------------------------------------------------------------------------------------------------------------------------------
Number of % of Totals
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price/2/ Expiration
Name Granted (#) Fiscal Year ($/Sh) Date/3/ 5%($) 10%($)
- ---- ------------ ------------ ------------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Donald L. Babinchak/1/ 75,000 100% $0.8125 1/26/08 $38,323 $97,119
</TABLE>
______________________________
/1/ Options covering 75,000 shares were granted to Mr. Babinchak on June 26,
1998 at an exercise price of $0.8125 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 1998, and the value of options held by such
Executives at December 31, 1998 measured in terms of the last reported sale
price for the Company's Common Stock on December 31, 1998 ($0.5625, as reported
on the Nasdaq National Market System).
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options/SARs at
on Value Options/SARs at FY-End (#) FY End ($)
Name Exercise (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable)
- ---- ------------ -------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
G. Frank Joklik - - 450,000/450,000 0/0
Donald L. Babinchak - - 112,500/137,500 0/0
Thomas G. White - - 102,500/22,500 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
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capital and cash flow, or such other or similar objectives which are related to
performance. The amount of the 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, 1998.
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, 1999, awards
covering 2,066,266 shares of Common Stock were outstanding under the Stock
Incentive Plan and 427,534 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 1999) 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.
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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 June 26, 1998.
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.
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 June 26, 1998, 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 1998.
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 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
11
<PAGE>
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. 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 was below market due to
the financial condition of the Company. Stock option awards to Mr. Joklik were
based on his level of responsibility and experience.
Mr. Joklik became Chairman of the Board of the Company on June 30, 1998.
Concurrent with his appointment as Chairman of the Board, Mr. Joklik took a
leave of absence from his position as President and Chief Executive Officer of
the Company in order to fulfill his responsibilities to the Salt Lake Organizing
Committee for the 2002 Olympic Winter Games. The Company is not paying a salary
to Mr. Joklik during his leave of absence; however, Mr. Joklik does receive an
annual fee of $20,000, payable quarterly, for his services as Chairman of the
Board. Mr. Joklik also continues to participate in the Company's Stock Incentive
Plan.
During Mr. Joklik's leave of absence, the Board of Directors of the Company
has appointed Donald L. Babinchak to serve as the President and Chief Executive
Officer of the Company, on an interim basis until Mr. Joklik's return or until
his successor has been duly appointed and qualified. The Compensation Committee
has established an annual compensation rate of $150,000 for Mr. Babinchack. In
determining Mr. Babinchak's compensation, the Compensation Committee considered
the rate at which Mr. Joklik was compensated, prior to his leave of absence, as
well as Mr. Babinchak's responsibilities as President and Chief Executive
Officer of the Company. The Compensation Committee also authorized the grant of
additional options covering 75,000 shares of the Company's Common Stock to Mr.
Babinchak under the Company's Stock Incentive Plan.
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
The Company has maintained a $20.0 million credit facility with Leucadia
since June 1995. In March 1998, the Company renegotiated the terms of the credit
facility and entered into a new credit agreement (the "Credit Agreement") with
Leucadia. As of March 31, 1999, no borrowings were outstanding under the
Credit Agreement. The Company is required, however, to pay an on-going quarterly
commitment fee to Leucadia of $18,750. Total commitment fees paid by the Company
to Leucadia during 1998 pursuant to the Credit Agreement and the prior credit
agreement were $78,500. 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 Corporation. 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.
TOTAL SHAREHOLDER RETURNS
[PERFORMANCE GRAPH APPEARS HERE]
MK Gold Nasdaq Peer
Measurement Period Company Index Group
- ------------------ ------- ------ ------
Base Period - 12/31/93 100.00 100.00 100.00
Fiscal Year Ended 3/31/94 108.33 99.01 110.85
Fiscal Year Ended 3/31/95 68.75 110.14 102.84
Fiscal Year Ended 3/31/96 34.37 149.54 121.27
Nine Months Ended 12/31/96 25.00 175.77 120.10
Fiscal Year Ended 12/31/97 25.00 239.53 65.06
Fiscal Year Ended 12/31/98 9.37 293.21 40.91
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. Data for Amax Gold Inc., which was acquired by another company in
1998, is only included through December 31, 1997.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal submitted by a stockholder for action at the Company's 2000
Annual Meeting of Stockholders must be submitted in a letter to the Secretary of
the Company and received by the Company by January 4, 2000 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 2000 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
13
<PAGE>
Secretary of the Company not less than 60 days prior to the 2000 Annual Meeting;
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 2000 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: May 3, 1999 BY ORDER OF THE BOARD OF DIRECTORS
John C. Farmer
Chief Financial Officer and Secretary
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<PAGE>
[FORM OF PROXY]
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 8, 1999 AT 11:30 A.M.
MK GOLD COMPANY
The undersigned stockholder of MK Gold Company hereby appoints Donald L.
Babinchak and John C. Farmer 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 June
8, 1999 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
June 8, 1999
11:30 a.m.
The Wyndham Hotel
215 W. South Temple
Salt Lake City, Utah
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE Please mark
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). 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>
FOR all nominees listed to the WITHHOLD NOMINEES: Gordon J. Humphrey and James P. Miscoll
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
_________________________________________________________________________
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:_____________________________________________________________, 1999
_________________________________________________________________________
(Signature)
_________________________________________________________________________
(Signature if held jointly)
</TABLE>
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
June 8, 1999
11:30 a.m.
The Wyndham Hotel
215 W. South Temple
Salt Lake City, Utah
