<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
Stillwater Mining 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):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(1) (2)
or Item 22(a) (2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
STILLWATER MINING COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 25, 1997
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
Stillwater Mining Company (the "Company") will be held at the Denver Petroleum
Club, 555 17th Street, 37th floor, Denver, Colorado, on Friday, April 25, 1997,
at 8:30 a.m., Denver time, for the following purposes:
1. To elect seven directors to hold office until the next Annual Meeting of
Stockholders or until their successors are elected.
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the meeting or
any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on March 14, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors
/S/Michael A. Shea
Michael A. Shea, Secretary
Denver, Colorado
March 25, 1997
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF STOCKHOLDERS, PLEASE
SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU
EXPECT TO ATTEND IN PERSON. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.
<PAGE>
STILLWATER MINING COMPANY
536 E. Pike Ave.
Columbus, MT 59019
----------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 25, 1997
----------------------------------
To Our Stockholders:
This Proxy Statement is furnished to the stockholders of Stillwater Mining
Company (the "Company") in connection with the solicitation of proxies by the
Board of Directors of the Company to be voted at the Annual Meeting of
Stockholders of the Company (the "Meeting") to be held on April 25, 1997, or
any postponements or adjournments thereof. The Meeting is being held for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
The Company's principal offices are located at 536 E. Pike Ave., Columbus,
Montana, and its telephone number is (303) 978-2525. This Proxy Statement, the
accompanying proxy card and the Notice of Annual Meeting are first being sent to
stockholders of the Company on or about March 31, 1997.
GENERAL INFORMATION
SOLICITATION
The enclosed proxy is being solicited by the Board of Directors of the
Company. The cost of this solicitation will be borne by the Company. In addition
to solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. Although no compensation
will be paid for such solicitation of proxies, the Company may also request
banks and brokers to solicit their customers who have a beneficial interest in
the Company's Common Stock registered in the names of nominees and will
reimburse such banks and brokers for their reasonable out-of-pocket expenses.
VOTING RIGHTS
Holders of shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), at the close of business on March 14, 1997 (the "Record
Date") are entitled to notice of and to vote at the Meeting. On the Record
Date, 20,190,367 shares of Common Stock were issued, outstanding and entitled to
vote. The holders of at least 50% of the capital stock of the Company issued and
outstanding and entitled to vote at the meeting, present in person or by proxy,
constitutes a quorum.
Each share of Common Stock outstanding on the Record Date is entitled to
one vote and holders of shares of Common Stock have cumulative voting rights in
connection with the election of directors. A stockholder may cumulate votes for
the election of directors by multiplying the number of votes to which the
stockholder may be entitled by seven (the number of directors to be elected) and
casting all such votes for one nominee or distributing them among any two or
more nominees. Only stockholders of record at the close of business on March 14,
1997 will be entitled to vote at the meeting.
VOTING PROXIES
If a stockholder abstains from voting on any matter, the Company intends to
count the abstention as present for purposes of determining whether a quorum is
present at the Meeting for the transaction of business. Unless contrary
instructions are indicated on a proxy, the shares of Common Stock represented by
such proxy will be voted FOR the election as directors of the nominees named in
this proxy statement; and FOR ratification of the selection of
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<PAGE>
Price Waterhouse LLP as independent accountants. Additionally, the Company
intends to count broker "non-votes" as present for purposes of determining the
presence or absence of a quorum for the transaction of business. A non-vote
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner. Abstentions and non-votes will not be counted as votes cast
for or against items submitted for a vote of stockholders. Therefore,
abstentions and broker non-votes have the same effect as votes against a
proposal.
Management and the Board of Directors of the Company know of no other
matters to be brought before the Meeting. If other matters are presented
properly to the stockholders for action at the Meeting and any postponements
and adjournments thereof, it is the intention of the proxy holders named in the
proxy to vote in their discretion on all matters on which the shares of Common
Stock represented by such proxy are entitled to vote.
REVOCABILITY OF PROXY
Any proxy may be revoked at any time before it is voted by written notice
to the Secretary, by receipt of a proxy properly signed and dated subsequent to
an earlier proxy, or by revocation of a written proxy by request in person at
the Meeting; but if not revoked, the shares of Common Stock represented by such
proxy will be voted.
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table includes information as of March 1, 1997, except as
otherwise indicated, concerning the beneficial ownership of Common Stock of the
Company by (i) stockholders known to the Company to hold more than 5% of the
Common Stock of the Company, (ii) each director, director nominee and executive
officer of the Company, and (iii) all directors, director nominees and executive
officers of the Company as a group. Unless otherwise indicated, all beneficial
owners have sole voting and investment power over the shares held.
<TABLE>
PERCENT
NAME AND ADDRESS OF
OF BENEFICIAL OWNER AMOUNT CLASS
- ------------------- ------- ------
<S> <C> <C>
FMR Corp.............................................. 2,515,526 12.19%
82 Devonshire Street
Boston, MA 02109(1)
American Express Company and affiliates............... 2,226,750 11.10%
American Express Tower
World Financial Center
New York, New York 10285(2)
The Prudential Insurance Company of America........... 1,090,800 5.42%
751 Broad Street
Newark, NJ 07102-3777(3)
Scudder, Stevens & Clark, Inc......................... 1,200,696 6.00%
345 Park Avenue
New York, NY 10154(4)
John E. Andrews(5)..................................... 100,050 *
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
R. Daniel Williams(6)................................ 29,000 *
Ray W. Ballmer(7).................................... 33,750 *
John W. Eschenlohr(8)................................ 15,000 *
Sharon M. Meadows(7)................................. 22,500 *
Ted Schwinden(9)..................................... 22,100 *
Peter Steen(7)....................................... 41,250 *
W. Thomas Stephens................................... 500 *
Richard B. Von Wald.................................. 0 --
All directors and executive officers as a group
(9 persons)(5)(6)(7)(8)(9).......................... 264,150 1.31%
</TABLE>
*Indicates ownership of less than 1%.
(1) The number of shares reported in this table is based upon information as of
December 31, 1996 and is based upon information provided to the Company by FMR
Corp. on behalf of itself and certain related persons and/or entities. The
Schedule 13G/A dated March 10, 1997, discloses that, as of December 31, 1996 FMR
Corp. had sole voting power over 502,052 shares and sole dispositive power over
2,515,526 shares.
(2) The number of shares reported in this table is based upon information as of
December 31, 1996 and is based upon information provided to the Company by an
affiliate of American Express Company. The Schedule 13G, dated December 31,
1996, filed jointly by American Express Company ("AMEX") and American Express
Financial Corporation discloses that AMEX and American Express Financial
Corporation have shared dispositive power over 2,226,750 shares of Common Stock,
and shared voting power over 167,250 shares. The business address disclosed in
Schedule 13G for American Express Financial Corporation is IDS Tower 10,
Minneapolis, Minnesota 55440.
(3) The number of shares reported in this table is based upon information as of
December 31, 1996 and is based upon information provided to the Company by The
Prudential Insurance Company on behalf of itself and certain related persons
and/or entities. The Schedule 13G, dated February 3, 1997, discloses that, as of
December 31, 1996 The Prudential Insurance Company and such related persons
and/or entities have shared voting power over 1,081,800 shares of Common Stock
and shared dispositive power over 1,090,800 shares.
(4) The number of shares reported in this table is based upon information as of
December 31, 1996 and is based upon information provided to the Company by
Scudder, Stevens & Clark, Inc. ("Scudder"). The Schedule 13G dated February 10,
1997 discloses that, as of December 31, 1996 Scudder had sole voting power over
214,150 shares, shared voting power over 672,846 shares, and sole dispositive
power over 1,200,696 shares.
(5) Includes 91,500 shares of Common Stock issuable upon exercise of currently
exercisable stock options.
(6) Includes 21,500 shares of Common Stock issuable upon exercise of currently
exercisable stock options and 7,500 shares of Common Stock issuable upon
exercise of stock options which become exercisable within 60 days.
(7) Includes 22,500 shares of Common Stock issuable upon exercise of stock
options held by each of Messrs. Ballmer and Steen and Ms. Meadows which are
currently exercisable.
(8) Includes 15,000 shares of Common Stock issuable upon exercise of stock
options held by Mr. Eschenlohr which are currently exercisable.
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<PAGE>
(9) Includes 22,100 shares of Common Stock issuable upon exercise of stock
options held by Mr. Schwinden which are currently exercisable.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated for election at the Meeting the seven
persons named below, to serve until the next Annual Meeting of Stockholders or
until their successors are elected, and each has consented to being named as a
nominee. All of the nominees are currently directors of the Company.
It is anticipated that proxies will be voted for the nominees listed below,
and the Board of Directors has no reason to believe any nominee will not
continue to be a candidate or will not be able to serve as a director if
elected. In the event that any nominee named below is unable to serve as a
director, the proxy holders named in the proxies have advised that they will
vote for the election of such substitute or additional nominees as the Board of
Directors may propose.
In the election of directors, each stockholder voting in person or by proxy
shall have the number of votes to which such stockholder would otherwise be
entitled multiplied by seven (the number of directors to be elected). If there
are no nominees other than those set forth in this proxy statement, the named
proxies will then allocate the cumulated votes equally among the nominees for
which authority to vote has been granted. If there are additional nominees, the
named proxies will allocate the cumulated votes among the nominees for which
authority to vote has been granted in the manner which appears to the named
proxies most likely to result in the greatest number of nominees set forth
herein being elected.
The name and age of each nominee, his or her principal occupation for at
least the past five years and other information is set forth below, based upon
information furnished to the Company by such nominee.
NOMINEES FOR ELECTION
Ray W. Ballmer, age 70, director since September 1994.
On February 20, 1997, Mr. Ballmer was appointed non-executive Chairman of the
Company on an interim basis. From 1982 until 1991, Mr. Ballmer served first as
President and Chief Operating Officer and then as Chief Executive Officer of Rio
Algom Limited. From 1975 until 1983, he served first as Executive Vice President
and then as President of Amoco Minerals. Until 1975, he served as Managing
Director of Bougainville Copper, and before that held a number of senior
operating positions with Kennecott Corporation.
John W. Eschenlohr, age 60, director since April 1996.
Mr. Eschenlohr is Executive Vice President of Degussa Corporation, one of the
world's largest users of palladium. Mr. Eschenlohr is responsible for the Metal
Group and the refining and manufacturing of precious metals. Prior to joining
Degussa in 1980, he served as Vice President of Engelhard Corporation with
responsibility for precious metals refining operations. Mr. Eschenlohr is a
director of Degussa Corporation.
5
<PAGE>
Sharon M. Meadows, age 46, director since April 1995.
From 1989 until 1994 Ms. Meadows served as Managing Director of CS First
Boston Corporation and from 1983 until 1989 as Vice President. From 1990 until
1993, she headed CS First Boston's Restructuring Group and from 1993 to 1994 co-
headed its Structured Finance Group. From 1976 until 1983 she held a number of
positions with Citibank, N.A., eventually serving as Vice President,
Institutional Recovery Management.
Ted Schwinden, age 71, director since October 1994.
From 1981 until 1989, Mr. Schwinden served as the Governor of the State of
Montana, and from 1977 until 1981 as the Lieutenant Governor of the State of
Montana. From 1969 until 1976, he served as the Director of the Montana
Department of State Lands.
Peter Steen, age 66, director since October 1994.
Mr. Steen is Chairman of the Executive and Policy Committee of Santa Fe
Pacific Gold Corporation, a position he assumed in February 1996. Previously, he
served as Chairman of Eldorado Corporation Ltd. and until September 1994, he was
the President, Chief Executive Officer and a Director of Lac Minerals Ltd. From
1992 to 1994, he served as the President and Chief Operating Officer of
Homestake Mining Company. Previously, he served as the President and Chief
Executive Officer of International Corona Corporation in Vancouver, Canada. Mr.
Steen is a director of Santa Fe Pacific Gold Corporation.
W. Thomas Stephens, age 54, director since September 1994.
Until August 1996 Mr. Stephens served as Chairman of the Board, President and
Chief Executive Officer of Schuller Corporation. Prior to being named Chairman
in 1990, Mr. Stephens was President and Chief Executive Officer of Schuller
Corporation beginning in 1986 and Executive Vice President and Chief Financial
Officer from 1984 to 1986. Mr. Stephens began his career with Riverwood
International Corporation, a former subsidiary of Schuller Corporation, in 1963.
He is a director of Ball Corporation, Public Service Company of Colorado and
Mail-Well Incorporated.
Richard B. Von Wald, age 54, director since October 1994.
Mr. Von Wald is Executive Vice President and General Counsel for Schuller
Corporation in Denver, Colorado. He has also served as the Secretary of Schuller
Corporation since 1990. Mr. Von Wald began his legal career with Schuller
Corporation in 1973.
MEETINGS OF THE BOARD
The Board of Directors met eight times during fiscal 1996. Each director
attended 75% or more of the total number of such meetings and committee meetings
on which he or she served that were held during 1996.
DIRECTOR COMPENSATION
The Company pays each non-employee director $1,000 per meeting of the Board
of Directors attended. Non-employee members of all committees of the Board of
Directors of the Company (with the exception of the chairman of each standing
committee), receive fees of $1,000 for each committee meeting attended; however,
the
6
<PAGE>
chairman of each standing committee of the Board of Directors receives a fee of
$1,500 for each committee meeting attended. The Company's 1994 Stock Plan (the
"Stock Plan") provides that (i) each non-employee director serving on the
Board of Directors on the date of stockholder approval of the Stock Plan, and
(ii) each non-employee director who is initially elected to the Board of
Directors of the Company on or after the date of stockholder approval of the
Stock Plan, will be granted non-qualified stock options ("NQSOs") to purchase
15,000 shares of the Company's Common Stock; provided, however, that a non-
employee director may elect not to accept such options. Upon becoming a
director, each non-employee director will be granted a NQSO to purchase 15,000
shares of the Company's Common Stock vesting six months thereafter. An
additional NQSO to purchase 7,500 shares of the Company's Common Stock will be
granted to each non-employee director on his or her first reappointment or
reelection, vesting six months after such reappointment or reelection. The
exercise price of options granted to non-employee directors under the Stock Plan
will be the fair market value of the Company's Common Stock at the closing price
on the date of grant.
BOARD COMMITTEES
The Board of Directors has established the following standing committees:
Audit Committee. The Audit Committee held two meetings during 1996 and is
currently comprised of Messrs. Von Wald (Chairman), Ballmer and Schwinden. The
Audit Committee reviews the accounting principles and procedures of the Company
and its annual financial reports and statements; recommends to the Board of
Directors the engagement of the Company's independent accountants; reviews with
the independent accountants the plans and results of the auditing engagement;
and considers the independence of the Company's auditors.
Compensation Committee. The Compensation Committee held one meeting during
1996 and is currently comprised of Messrs. Ballmer (Chairman), Eschenlohr,
Schwinden, Steen, Stephens and VonWald, and Ms. Meadows. The principal
responsibilities of the Compensation Committee are to establish policies and
periodically determine matters involving executive compensation, recommend
changes in employee benefit programs, recommend the grant of stock options and
stock awards under the Stock Plan and provide counsel regarding key personnel
selection. The Board of Directors will approve the grant of stock options and
restricted stock awards under the Stock Plan based upon the recommendations of
the Compensation Committee.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 1994, 1995
and 1996, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to Charles R. Engles, the
Company's former Chief Executive Officer; John E. Andrews, the Company's
President and Chief Operating Officer; and R. Daniel Williams, the Company's
Chief Financial Officer, who are the most highly compensated officers of the
Company in office at the end of fiscal 1996 whose total cash compensation
exceeded $100,000 during fiscal 1996 (collectively, the "Named Executive
Officers"), in all capacities in which they served:
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<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name and Principal Annual
Position Compensation Long Term Compensation Awards
Name and Principal Salary Bonus Restricted Stock Options/SAR's All Other
Position Year ($) ($) Awards($) Granted Compensation($)
- ------------------ ---- ------ ----- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Engles, 1996 195,000 27,528/(9)/ N/A 20,000 12,883/(1)/
CEO 1995 195,000 36,758 N/A 18,500 12,883/(1)/
1994 45,000 50,000 176,100/(2)/ 150,000 242/(3)/
John E. Andrews, 1996 150,000 10,658/(8)/ N/A 8,500 10,108/(4)/
President 1995 150,000 15,000 N/A 8,000 9,870/(5)/
1994 113,468 75,000 N/A 75,000 16,020/(6)/
R. Daniel Williams 1996 120,000 7,613/(8)/ N/A 6,500 6,624/(7)/
Chief Financial 1995 50,000 15,000 N/A 30,000 44,511/(9)/
Officer 1994 N/A N/A N/A N/A N/A
</TABLE>
(1) Includes an $11,700 employer contribution to the Company's 401(k) Plan and
Trust and $1,183 in life insurance premiums paid by the Company.
(2) In October 1994, Mr. Engles was granted 30,000 shares of Common Stock as a
restricted stock award, of which 15,000 shares vested on October 4, 1995 and
15,000 shares vested on October 4, 1996. The value of the restricted stock award
shown in the Summary Compensation Table is based on the fair market value of
$5.87 on the date of grant. On October 4, 1995, 15,000 shares vested and
pursuant to the Restricted Stock Agreement, Mr. Engles returned 5,168 of the
vested shares to the Company in satisfaction of tax withholding obligations. On
October 4, 1996 the remaining 15,000 shares vested and Mr. Engles returned 6,907
of the vested shares to the Company in satisfaction of tax withholding
obligations. As of December 31, 1996, Mr. Engles held 17,925 shares of
restricted stock which had a fair market value of $324,891, based on the closing
price of the Company's Common Stock of $18 1/8 per share.
(3) Represents life insurance premiums paid by the Company.
(4) Includes a $9,000 employer contribution to the Company's 401(k) Plan and
Trust and $1,108 in life insurance premiums paid by the company.
(5) Includes a $9,000 employer contribution to the Company's 401(k) Plan and
Trust and $870 in life insurance premiums paid by the Company.
(6) Includes $8,333 reimbursed by the Company for moving expenses, a $6,808
employer contribution to the Company's 401(k) Plan and Trust and $879 in life
insurance premiums paid by the Company.
(7) Includes $5,963 employer contribution to the Company's 401(k) Plan and
Trust and $661 in life insurance premiums paid by the Company.
(8) Paid in the form of restricted stock grants on January 23, 1997 at $17.50
per share, vesting over two years.
(9) Includes $276 in life insurance premiums paid by the company and $44,235
reimbursed by the Company for moving expenses.
8
<PAGE>
On February 20, 1997, Mr. Engles resigned as Chairman and Chief Executive
Officer of the Company. Ray Ballmer, a Director of the Company, was appointed
as Chairman on an interim basis.
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Company's Stock Plan to the Named Executive Officers in 1996:
<TABLE>
<CAPTION>
Potential Realizable Value
% of Total at Assumed Annual Rates of
Options Stock Price Appreciation
Options Granted to Exercise for Option Term (3)
Granted Employees in Price per Expiration ---------------------------
Name (1) Fiscal Year Share(2) Date 5% 10%
- ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Engles 20,000 8% $20.00 1/26/06 $251,558 $637,497
John E. Andrews 8,500 3.2% $20.00 1/26/06 $106,912 $270,936
R. Daniel Williams 6,500 2.6% $20.00 1/26/06 $ 81,756 $207,187
</TABLE>
(1) The stock options vest and become exercisable twelve months after the date
of grant; however, upon the occurrence of a change-in-control of the
Company, the stock options vest and become exercisable automatically.
(2) The exercise price for each grant is equal to 100% of the fair market value
of the Common Stock on the date of grant.
(3) These assumed values result from the indicated prescribed rates of stock
price appreciation. The actual value of these option grants is dependent on
future performance of the Common Stock.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers, concerning unexercised options held as of December 31, 1996.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-
Options at 12/31/96 Money Options at 12/31/96
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
- -------- ------------------------- -------------------------------
<S> <C> <C>
Charles R. Engles(2) 168,500 / 20,000 $1,812,812 / $0
John E. Andrews(3) 83,000 / 8,500 $ 908,125 / $0
R. Daniel Williams(4) 7,500 / 29,000 $ 0 / $0
</TABLE>
(1) Amounts shown in this column represent the market value of the underlying
Common Stock at December 31, 1996 minus the exercise price. The actual value, if
any, an executive may realize will depend upon the amount by which the market
price of the Common Stock exceeds the exercise price when the options are
exercised. The actual value, therefore, may be greater or less than the value
shown in the table.
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<PAGE>
(2) Mr. Engles' unexerciseable stock options become immediately exercisable
upon a change in control or termination of employment without cause or for good
reason.
(3) Mr. Andrews' unexerciseable stock options become immediately exercisable
upon a change in control or termination of employment without cause or for
good reason.
(4) Mr. Williams' unexerciseable stock options become immediately exercisable
upon a change in control.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing and administering the compensation philosophy,
policies, and plans for the top executive officers of the Company. The
Committee's executive compensation philosophy is that compensation should
largely be tied to the performance of the Company and the sustained creation of
shareholder value. As a result, the Company's compensation program reflects a
strong performance and long-term orientation. The compensation programs also are
designed to encourage employee stock ownership. The Committee believes that such
ownership effectively motivates executives to increase shareholder value and
aligns the interests of executives with those of shareholders of the Company. In
its administration of the various compensation plans, the Committee focuses on
the goals of tying compensation to performance and encouraging executive stock
ownership.
The Company's executive compensation program consists of three principal
components: (1) base salary, (2) an annual incentive bonus plan, and (3) stock
options. These components are described below:
Base Salary. Pursuant to the compensation philosophy of emphasizing
performance-oriented pay, the Committee established executive salaries during
1996 at levels below the median of United States mining companies of similar
size and growth prospects.
In establishing executive salaries in the future, the Committee intends to
consider quantitative measures related to the Company's financial performance,
as well as a number of qualitative measures related to the executive's duties
and responsibilities. The Committee will continue to compare the salary of its
executive officers with salaries of executive officers in comparable positions
in other United States mining companies of similar size.
Incentive Bonus Plan. The Company has an annual incentive bonus plan covering
all its executive officers. The 1996 plan was designed to pay up to 130% of an
executive officer's salary if the Company achieved certain levels of net income
and met other strategic and operating objectives. For 1996, the plan weighted
the performance components by assigning a 70% weighting to the achievement of
the net income objective and a 30% weighting to other strategic and operating
objectives on an individual basis.
Under the plan, actual award levels vary depending upon the degree of
achievement relative to the objectives described above. Participants receive no
award for each component unless certain minimum performance levels are
achieved. The Committee reserves the right to increase or decrease the amount of
each bonus as compared to the amount established under the formula.
In 1996, the Company performed below the minimum level for the net income
component of the formula and generally between the minimum and maximum levels
for the other components. In 1996, executive bonuses were paid in accordance
with the formula amounts in the form of restricted stock grants on January 23,
1997 at $17.50 per share vesting over two years.
Stock Options. In September 1994, the Company's stockholders approved the
Stock Plan and authorized 1,500,000 shares of Common Stock for issuance upon
exercise of options, stock appreciation rights, restricted stock grants and
other stock based awards. The purpose of the Stock Plan is to reward and provide
incentives for executive officers, employees, and non-employee directors of the
Company by providing them with an opportunity to acquire
10
<PAGE>
an equity interest in the Company, thereby increasing their personal interest in
its continued success and progress. In addition, the Stock Plan is intended to
retain the services of key employees and non-employee directors as well as to
assist in attracting new key employees and non-employee directors.
In 1996, stock option grants to executive officers were consistent with the
Company's compensation philosophy of emphasizing performance-oriented pay and
were determined by comparison with the compensation practices of other similar
companies. The grants were designed to provide total compensation at the
seventy-fifth percentile level provided the Company's stock performs at the
seventy-fifth percentile level. In addition to the grants to executives, all new
employees of the Company were granted stock options in 1996.
Chairman and Chief Executive Officer's 1996 Compensation. Mr. Engles' base
salary of $195,000 was established upon his employment with the Company in
October 1994 and was not adjusted during his term of employment. Mr. Engles'
1996 bonus of $27,528 was determined in accordance with the formula for all
executive officers. The strategic and operating objectives upon which 30% of Mr.
Engles' bonus opportunity was based included progress on the Company's expansion
plan, obtaining financing for future growth opportunities, and development of
its following in the investment community. In 1996, Mr. Engles was granted
options to purchase 20,000 shares of Common Stock as the long term component of
his annual compensation. This grant was determined according to the criteria
described above.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
limits to $1 million the tax deductibility of compensation paid by a public
company to its chief executive and four other most highly compensated executive
officers. The Company is relying upon certain transition rules set forth in
recently promulgated regulations. Therefore, the Committee believes it need not
take any specific action or adopt a formal policy at the present time with
respect to the deductibility of compensation under Section 162(m).
SUBMITTED BY THE MEMBERS OF THE COMPENSATION COMMITTEE:
Ray W. Ballmer Sharon M. Meadows
W. Thomas Stephens Peter Steen
Ted Schwinden Richard B. Von Wald
John W. Eschenlohr
The preceding report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended (the "1933 Act") or the
Securities Exchange Act of 1934 (the "Exchange Act"), except to the extent the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the 1933 Act or the Exchange Act.
PERFORMANCE GRAPH
The Securities and Exchange Commission (the "SEC") requires that the
Company include in this Proxy Statement a line graph presentation comparing
cumulative stockholder returns on an indexed basis with a broad market index and
either a published industry or line-of-business index or a group of peer
companies selected by the Company. The Company has chosen to use the Standard &
Poor's 500 as its broad market index. The Company has chosen two published peer
group indices: the Johannesburg Stock Exchange (JSE) Actuaries' Platinum Index,
a subsection of the JSE Actuaries' All Share Index (converted into U.S.
dollars), and the North American regional index of the Financial Times Gold
Mines Index. The Company selected these indices to reflect the respective
markets for platinum group metals related stocks and for United States precious
metals stocks. The graph below compares the cumulative total return as of
December 31, 1996 on $100 invested as of the opening of trading on
December 16, 1994 (the first day of trading in the Company's Common Stock) in
the Common Stock of the Company, and in the stocks comprising the JSE Actuaries'
Platinum Index (converted into U.S. dollars), the North American regional index
of the Financial Times Gold Mines Index, and the Standard & Poor's 500, assuming
the reinvestment of all dividends.
11
<PAGE>
[GRAPH APPEARS HERE]
COMPARISON AMONG STILLWATER MINING COMPANY,
S&P 500, FT GOLD AND JSE PLATINUM
<TABLE>
<CAPTION>
Opening 12/16/94 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C>
Company $100 $103 $145 $137
S&P 500 $100 $101 $139 $171
FT Gold $100 $103 $114 $115
JSE Platinum $100 $106 $ 69 $ 52
</TABLE>
12
<PAGE>
The information under the heading "Performance Graph" shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the 1933 Act or the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under the 1933 Act or the
Exchange Act.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Company are Messrs.
Ballmer (Chairman), Eschenlohr, Schwinden, Steen, Stephens and Von Wald, and Ms.
Meadows. None of such persons is an officer or employee of the Company, other
than Mr. Ballmer who, since Febrary 20, 1997, has served as non-executive
Chairman on an interim basis. Mr. Von Wald is an executive officer of Schuller
Corporation, which has 100% ownership of Manville Mining Company. For a
discussion of certain transactions and relationships between the Company,
Schuller Corporation and Manville Mining Company, see "Certain Transactions"
below.
CERTAIN TRANSACTIONS
The Company pays a 5% net smelter royalty to Schuller based on metals
produced from 816 of the Company's controlled mining claims. In 1996, the
Company incurred royalties of approximately $1.3 million payable to Schuller.
Pursuant to a Stock Redemption Agreement, entered into by Chevron U.S.A. Inc.
("Chevron"), Manville Mining Company ("MMC"), a subsidiary of Schuller, and
the Company as of July 28, 1994 (the "Redemption Agreement"), the Company
redeemed Chevron's 50% ownership of the Company for $44.0 million in cash, and
agreed to relieve Chevron of all responsibility and liability under certain
reclamation bonds and relieved Chevron from responsibility for the Company's
obligations under workers' compensation laws for injuries sustained or diseases
suffered subsequent to July 31, 1994. In addition, Chevron agreed to leave in
full force and effect through January 1, 1997 its guarantee of certain school
bond funding. On or before December 31, 1996, the Company must provide
substitute security for the school bond funding and use reasonable efforts to
remove Chevron's guarantee on terms and conditions reasonably acceptable to the
Company. The Company and MMC will fully indemnify Chevron from any loss
sustained on the school bonds after January 1, 1997. Finally, the Company is
required by the terms of the Redemption Agreement to indemnify Chevron and MMC
for environmental damage or hazards caused by or arising out of any acts or
omissions of any entity other than Chevron or MMC, or any acts or omissions of
Chevron or MMC while acting on behalf of or for the benefit of the Company,
subsequent to September 30, 1993.
In 1994, the Company agreed to indemnify Chevron and MMC for liabilities
incurred by them on behalf of or in connection with the Company, including any
liabilities under certain surety obligations of the Company that are guaranteed
by them and certain environmental liabilities of the Company arising out of
actions taken on or after October 1, 1993. The Company's indemnification
obligations to Chevron and MMC are supported by mortgages in favor of Chevron
and MMC against certain parcels of land owned by the Company.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Andrews and
Williams, effective as of September 19, 1994 and August 1, 1995, respectively.
The agreements have terms of one year and thereafter continue from year to year.
The agreements are terminable by the Company or the employee upon 90 days'
notice. Under these agreements, if either Mr. Andrews or Mr. Williams is
terminated without cause or resigns voluntarily for good reason, the Company is
required to pay such employee an amount equal to his annual base salary plus his
target bonus under the Company's incentive bonus program. In addition, any
previously unvested options or restricted stock held by Mr. Andrews would
immediately vest in such event.
13
<PAGE>
COMPLIANCE WITH SECTION 16(A) - BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's directors and executive
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. These insiders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file, including Forms 3, 4
and 5.
The Company is not aware of any delinquent filings, based solely on its
review of the copies of such reports furnished to the Company and written
representations that no other reports were required.
PROPOSAL NUMBER TWO
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Unless otherwise directed by the stockholders, shares represented by proxy at
the meeting will be voted in favor of ratification of the appointment of the
firm of Price Waterhouse LLP as independent accountants for the Company for the
year ending December 31, 1997. Management believes that neither Price Waterhouse
LLP nor any of its partners or employees presently has or has held within the
past three years any direct or indirect interest in the Company. A
representative of Price Waterhouse LLP is expected to be present at the 1997
Annual Meeting and will be given an opportunity to make a statement if so
desired and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit stockholders of a
company to present proposals for stockholder action in the company's proxy
statement where such proposals are consistent with applicable law, pertain to
matters appropriate for stockholder action and are not properly omitted by
company action in accordance with the proxy rules. The Company's Annual Meeting
of Stockholders following the end of fiscal 1997 is expected to be held on or
about April 25, 1998, and proxy materials in connection with that meeting are
expected to be mailed on or about March 16, 1998. Stockholder proposals prepared
in accordance with the proxy rules must be received by the Company on or before
November 14, 1997. The Company's Amended and Restated Bylaws also contain
procedures to be followed for stockholder proposals for stockholder action,
including the nomination of directors.
GENERAL
The Board of Directors of the Company knows of no matters other than the
foregoing to be brought before the meeting. The enclosed proxy, however, gives
discretionary authority in the event that any additional matters should be
presented.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1996 is being mailed to stockholders with this Proxy Statement.
By Order of the Board of Directors,
/S/ Michael A. Shea
Michael A. Shea, Secretary
14
<PAGE>
STILLWATER MINING COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 25, 1997
The undersigned hereby appoints Ray W. Ballmer and John E. Andrews, or
either of them, as proxies with full power of substitution to vote all shares
of stock of Stillwater Mining Company of record in the name of the undersigned
at the close of business on March 14, 1997 at the Annual Meeting of
Stockholders to be held in Denver, Colorado on April 25, 1997, or at any
postponements or adjournments, hereby revoking all former proxies.
1. ELECTION OF DIRECTORS: [_] WITH AUTHORITY to vote [_] WITHHOLD AUTHORITY
for all nominees listed to vote for all
below (except as marked nominees
to the contrary)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, AND
CUMULATE VOTES AMONG REMAINING NOMINEES, STRIKE A LINE THROUGH THE WITHHELD
NOMINEE'S NAME IN THE LIST BELOW.)
Ray W. Ballmer, John W. Eschenlohr, Sharon M. Meadows, Ted Schwinden,
Peter Steen, W. Thomas Stephens, Richard B. Von Wald
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
[_] FOR [_] AGAINST [_] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS COMING BEFORE THE MEETING.
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1) AND (2)
IN ACCORDANCE WITH THE SPECIFICATION MADE AND "FOR" SUCH PROPOSALS IF THERE IS
NO SPECIFICATION.
Dated:_____________________________________
___________________________________________
(Signature)
___________________________________________
(Signature)
Please sign name(s) exactly as shown at
left. When signing as executor,
administrator, trustee or guardian, give
full title as such; when shares have been
issued in the names of two or more persons,
all should sign.
