<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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):
[_] No fee required
[_] 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:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF STILLWATER MINING COMPANY]
STILLWATER MINING COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1998
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Stillwater
Mining Company (the "Company") will be held at the Marriott Hotel, 1701
California Street, Denver, Colorado, on Friday, May 15, 1998, at 8:30 a.m.,
Mountain Daylight Time, for the following purposes:
1. To elect eight directors to hold office until the next Annual Meeting of
Stockholders or until their successors are elected.
2. To amend and restate the Company's 1994 Stock Plan to authorize an
additional one million shares of stock to be made available for issuance
under the plan.
3. To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending December 31, 1998.
4. 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 20, 1998, 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
[SIGNATURE OF MICHAEL A. SHEA]
Michael A. Shea, Secretary
Denver, Colorado
April 6, 1998
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.
<PAGE>
STILLWATER MINING COMPANY
717 17TH STREET, SUITE 1480
DENVER, COLORADO 80202
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1998
----------------
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 May 15, 1998, or any
postponements or adjournments thereof. The Meeting is being held (i) to elect
eight directors to hold office until the next Annual Meeting of Stockholders
or until their successors are elected, (ii) to amend and restate the Company's
1994 Stock Plan (the "Stock Plan") to authorize an additional one million
shares of stock to be made available for issuance under the Stock Plan, (iii)
to ratify the appointment of Price Waterhouse LLP as the Company's independent
accountants for the fiscal year ending December 31, 1998 and (iv) to transact
such other business as may properly come before the meeting or any
postponements or adjournments thereof. The Company's principal executive
offices are located at 717 17th Street, Suite 1480, Denver, Colorado, 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 April 8, 1998.
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, par value $.01 per share
("Common Stock"), registered in the names of nominees and will reimburse such
banks and brokers for their reasonable out-of-pocket expenses. The Company
will pay compensation of approximately $9,000 to the firm of Morrow & Company
in New York to assist in the solicitation of proxies.
VOTING RIGHTS
Holders of shares of Common Stock at the close of business on March 20, 1998
(the "Record Date") are entitled to notice of and to vote at the Meeting. On
the Record Date, 20,388,872 shares of Common Stock were issued, outstanding
and entitled to vote. The holders of at least 50% of the Common 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 is entitled by eight (the number of directors to be elected) and
casting all such votes for one nominee or distributing them among any two or
more nominees.
<PAGE>
VOTING
The vote of the holders of (i) a plurality of votes cast at the Meeting is
required for the election of directors and (ii) a majority of the stock having
voting power present in person or represented by proxy is required to approve
the amendment and restatement of the Stock Plan and to ratify the selection of
Price Waterhouse LLP as independent accountants. 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,
FOR the amendment and restatement of the Stock Plan and FOR ratification of
the selection of Price Waterhouse LLP as independent accountants.
Additionally, the Company intends to count broker "nonvotes" as present for
purposes of determining the presence or absence of a quorum for the
transaction of business. A nonvote 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 nonvotes will
not be counted as votes cast for or against items submitted for a vote of
stockholders. Therefore, abstentions and broker nonvotes 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.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated for election at the Meeting the eight
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 eight (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, unless a different allocation of votes is
specified on the proxy card.
The name and age of each nominee, his principal occupation for at least the
past five years and other information is set forth below and is based upon
information furnished to the Company by such nominee.
NOMINEES FOR ELECTION
RAY W. BALLMER (AGE 71). Mr. Ballmer has been a director of the Company
since 1994 and served as the Company's Chairman of the Board, on an interim
basis, from February to August 1997. From 1982 to 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. Prior to
1975, Mr. Ballmer served as Managing Director of Bougainville Copper and held
a number of senior operating positions with Kennecott Corporation.
DOUGLAS D. DONALD (AGE 75). Mr. Donald has been a director of the Company
since May 1997. Mr. Donald is an independent financial advisor with the
financial consulting firm of Amster Yard, a position he has held since 1996.
From 1988 to 1996, he was a manager of the Scudder Gold Fund, a mutual fund,
at Scudder, Stevens & Clark. Mr. Donald is also a director of Piedmont Mining
Company, Repadre Capital Corp. and the Gold Growth Fund.
JOHN W. ESCHENLOHR (AGE 61). Mr. Eschenlohr has been a director of the
Company since April 1996. Mr. Eschenlohr served as Executive Vice President of
Degussa Corporation, one of the world's largest users of palladium, from 1980
until his retirement in September 1997. Mr. Eschenlohr also served as a
director of Degussa Corporation until September 1997. Prior to joining Degussa
in 1980, he served as Vice President of Engelhard Corporation with
responsibility for precious metals refining operations.
LAWRENCE M. GLASER (AGE 42). Mr. Glaser has been a director of the Company
since May 1997. Mr. Glaser presently serves as Senior Global Mining Analyst of
Caspian Securities ("Caspian") in New York, a position he has held since May
1997. From 1992 until joining Caspian, Mr. Glaser was a mining analyst at
Muzinich & Co. Inc., a registered broker/dealer.
3
<PAGE>
PETE INGERSOLL (AGE 67). Mr. Ingersoll has been a director of the Company
since May 1997. Since 1993, Mr. Ingersoll has been a managing partner of
Ingersoll, Parker & Longabaugh, a mining company consulting firm. From 1987 to
1992, Mr. Ingersoll was a Senior Vice President of the metals and mining
equity research group of Lehman Brothers, Inc. He is also a director of
Getchell Gold Corporation.
WILLIAM E. NETTLES (AGE 54). Mr. Nettles has been Chairman of the Board of
the Company since he joined the Company as Chief Executive Officer in August
1997. Mr. Nettles served as the Vice President and Chief Financial Officer of
Engelhard Corporation from 1995 to 1997 and served as a Vice President and
General Manager from 1988 to 1994. Pursuant to Mr. Nettles employment
agreement with the Company, Mr. Nettles was appointed Chairman of the Board,
and the Company agreed to nominate and to use its reasonable efforts to cause
him to be elected to serve as a member of the Board of Directors. See
"Employment Agreements."
TED SCHWINDEN (AGE 72). Mr. Schwinden has been a director of the Company
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 67). Mr. Steen has been a director of the Company since
October 1994. Mr. Steen previously served on the Board of Directors of Santa
Fe Pacific Gold Corporation, a position he assumed in February 1996 until
1997. He served as Chairman of Eldorado Corporation Ltd. from 1993 until
September 1994 and he was the President, Chief Executive Officer and a
Director of Lac Minerals Ltd. from August 1994 until September 1994. 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
also a director of Dynatic Corporation and Tiomin Resources, Inc.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met 15 times during fiscal 1997. Each director
attended 75% or more of the total number of such meetings and committee
meetings on which he served that were held during 1997. The Board of Directors
has established the following standing committees:
AUDIT COMMITTEE. The Audit Committee held four meetings during 1997 and
currently is comprised of Messrs. Schwinden (Chairman), Ingersoll and Steen.
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
1997 and is currently comprised of Messrs. Ballmer (Chairman), Donald and
Glaser. The principal responsibilities of the Compensation Committee are to
establish policies and periodically determine matters involving executive
compensation, recommend changes in employee benefit programs, approve the
grant of stock options and stock awards under the Stock Plan and provide
counsel regarding key personnel selection.
MARKETING COMMITTEE. The Marketing Committee held one meeting during 1997
and is currently comprised of Messrs. Eschenlohr (Chairman) and Glaser. The
principal responsibilities of the Marketing Committee are to provide
consultation and guidance with respect to forward sales and hedging policies.
4
<PAGE>
NOMINATION OF DIRECTORS. Nominations of persons for election as directors
may be made at a meeting of stockholders (i) by or at the direction of the
Board of Directors, (ii) by any nominating committee or persons appointed by
the Board of Directors or (iii) by any stockholder of the Company entitled to
vote for the election of directors if the stockholder gives timely notice (the
"Stockholder Notice"). The Stockholder Notice will be timely if delivered to
or mailed and received at the principal executive office of the Company not
less than 50 days nor more than 75 days prior to the meeting; provided,
however, that in the event less than 60 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder will be timely if received not later than the close of
business on the tenth day following the day on which such notice of the
meeting date was mailed or such public disclosure was made, whichever occurs
first. The Stockholder Notice to the secretary of the Company must set forth
the name, age, business address and residence address of each person whom the
stockholder proposes to nominate for election or reelection as a director, his
or her principal occupation or employment, the class and number of shares of
capital stock of the Company which are beneficially owned by the person and
other information required by the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to be disclosed. The Stockholder Notice must also set
forth the name and record address of the stockholder giving the notice and the
class and number of shares of capital stock of the Company which are
beneficially owned by such stockholder.
DIRECTOR COMPENSATION
The Company pays each nonemployee director $1,000 per meeting of the Board
of Directors attended. Nonemployee members of all committees of the Board of
Directors (with the exception of the chairman of each standing committee),
receive fees of $1,000 for each committee meeting attended; however, the
chairman of each standing committee of the Board of Directors receives a fee
of $1,500 for each committee meeting attended. Directors are also reimbursed
for reasonable travel expenses.
The Stock Plan provides that each nonemployee director will be granted
nonqualified stock options ("NSOs") to purchase 15,000 shares of Common Stock,
vesting in six months, upon his or her initial election to the Board of
Directors. An additional NSO to purchase 7,500 shares of Common Stock will be
granted to each nonemployee director on his or her first reappointment or
reelection, vesting six months after such reappointment or reelection. The
exercise price of options granted to nonemployee directors under the Stock
Plan will be the fair market value of a share of Common Stock on the date of
grant. A nonemployee director may elect not to accept such options.
In May 1997, Mr. Ballmer was appointed as Chairman on an interim basis until
Mr. Nettles joined the Company as Chairman and Chief Executive Officer in
August 1997. Mr. Ballmer received $136,500 ($2,500 per day) for serving as
Chairman during such time.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to the
Company's chief executive officer and the other executive officer whose
individual salary and bonus exceeded $100,000 during 1997 and two individuals
who served as executive officers during 1997 but were not serving as executive
officers at the end of the fiscal year (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------- ----------------------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS OPTIONS SATION
POSITION YEAR ($) ($) ($) ($) (#) ($)(1)
- ------------------ ---- ------- ------ ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
William E. Nettles(2)... 1997 177,632 80,000 $66,810(3) -- 100,000 633
Chairman and Chief
Executive Officer
John E. Andrews......... 1997 151,731 12,720 -- 20,125(4) 8,500 9,828(5)
President and Chief 1996 151,154 -- -- -- 8,500 9,882
Operating Officer 1995 150,000 15,000 -- -- 8,000 10,044
Charles R. Engles(6).... 1997 28,125 -- -- 42,000(4) -- 442,736(5)(7)
Former Chief 1996 195,000 -- -- -- 20,000 12,847
Executive Officer 1995 195,000 36,758 -- -- 18,500 13,057
R. Daniel Williams(8)... 1997 135,000 36,000 -- 11,375(4) 6,500 143,862(5)(9)
Former Vice President
and 1996 123,231 -- -- -- 6,500 6,669
Chief Financial Officer 1995 50,000 15,000 -- -- 30,000 44,583
</TABLE>
- --------
(1) Amounts include life insurance premium payments during 1997 of: $633 for
Mr. Nettles; $828 for Mr. Andrews; $449 for Mr. Engles; and $662 for Mr.
Williams.
(2) Mr. Nettles was elected an executive officer and a director of the Company
in August 1997. The 1997 compensation amounts represent compensation paid
for August through December 1997.
(3) Amount includes $51,810 for moving expenses reimbursed in 1997.
(4) Shares of restricted stock were awarded in January 1997 to executives in
lieu of bonuses for 1996 and salary increases for 1997 as follows: 1,150
shares to Mr. Andrews; 2,400 shares to Mr. Engles and 650 shares to Mr.
Williams. Restrictions on such shares lapse 50% after one year and the
remainder after two years. As of December 31, 1997, restricted stock
holdings were valued at $19,263, $542,700 and $10,888 for Messrs. Andrews,
Engles and Williams, respectively.
(5) Amounts include 401(k) contributions made by the Company of: $9,000 for
Mr. Andrews; $11,408 for Mr. Engles; and $7,200 for Mr. Williams.
(6) Mr. Engles resigned as an executive officer and a director in February
1997.
(7) Amount includes $430,879 in severance payments.
(8) Mr. Williams resigned as an executive officer in October 1997.
(9) Amount includes $136,000 in severance payments.
6
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Nettles,
Andrews, Williams and Engles.
WILLIAM E. NETTLES. Mr. Nettles' employment agreement became effective on
August 13, 1997 and has a term of three years. It is terminable by the Company
or Mr. Nettles upon 90 days' notice. Under the agreement, Mr. Nettles is
entitled to receive an initial base salary of $275,000, subject to adjustment,
a performance based cash bonus in an amount to be determined by the Board (the
target of which is 65% of base salary and the maximum of which cannot exceed
130% of base salary), options to purchase 100,000 shares of Common Stock and
employee benefits. If Mr. Nettles is terminated without cause or resigns
voluntarily for Good Reason (as defined in the employment agreement), the
Company is required to pay him an amount equal to his annual base salary plus
his target bonus. The severance benefits shall continue for a three year
period following the date of termination if such termination occurs within the
initial employment term, and for a two year period following the date of
termination if such termination occurs after the initial employment term. In
addition, any previously unvested options or restricted stock held by Mr.
Nettles would immediately vest. In the event of a change of control of the
Company, if the Company terminates Mr. Nettles without cause, or Mr. Nettles
resigns for good reason, within two years of the change of control, Nettles
will be entitled to receive 300% of his base salary and target bonus in a lump
sum, a continuation of employee benefits for three years and any accrued
compensation or unreimbursed expenses. The employment agreement also contains
a customary nondisclosure covenant, a one-year covenant not to compete and an
agreement by the Company to use commercially reasonable efforts to obtain and
maintain customary directors' and officers' liability insurance covering Mr.
Nettles. Under the employment agreement, the Board agreed to use its
reasonable best efforts to cause Mr. Nettles to be elected to serve as a
director.
JOHN E. ANDREWS. Mr. Andrews' employment agreement became effective on
September 19, 1994 and had an original term of one year, which is continued
from year to year unless altered or terminated. It is terminable by the
Company or Mr. Andrews upon 90 days' notice. The agreement entitles Mr.
Andrews to receive an initial base salary of $150,000, subject to adjustment,
a performance bonus in an amount to be determined by the Board (the target of
which is 50% of his base salary and the maximum of which cannot exceed 100% of
base salary), options to purchase 100,000 shares of Common Stock and standard
employee benefits. If Mr. Andrews is terminated without cause or resigns
voluntarily for good reason, the Company is required to pay him an amount
equal to his annual base salary plus his target bonus. The employment
agreement also contains a customary nondisclosure covenant and a one-year
covenant not to compete.
CHARLES R. ENGLES. Mr. Engles' employment agreement became effective on
October 4, 1994 and had an original term of one year, which was continued from
year to year until it was terminated in February 1997. The agreement entitled
Mr. Engles to receive an initial base salary of $195,000, subject to
adjustment, a performance bonus in an amount to be determined by the Board
(the target of which was 65% of his base salary and the maximum of which could
not exceed 130% of base salary), options to purchase 40,000 shares of Common
Stock and standard employee benefits. Pursuant to the terms of the employment
agreement, the Company was required to pay Mr. Engles his annual base salary
plus his target bonus when the employment agreement was terminated. The
employment agreement contained a customary nondisclosure covenant, a one-year
covenant not to compete and an agreement by the Company to use commercially
reasonable efforts to obtain and maintain customary directors' and officers'
liability insurance covering Mr. Engles.
R. DANIEL WILLIAMS. Mr. Williams' employment agreement became effective on
August 1, 1995 and had an original term of one year, which was continued from
year to year until notice of termination in October 1997. The employment
agreement entitled Mr. Williams to receive an initial base salary of $120,000,
subject to adjustment, a performance bonus in an amount to be determined by
the Board (the target of which was 30% of his base salary and the maximum of
which could not exceed 60% of base salary), options to purchase 30,000 shares
of Common Stock and standard employee benefits. Pursuant to the terms of the
agreement, the Company was required to pay Mr. Williams his annual base salary
plus his target bonus when the agreement was terminated. The employment
agreement contained a customary nondisclosure covenant and a one-year covenant
not to compete.
7
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission and the American Stock Exchange, Inc. initial reports of ownership
and reports of changes in ownership of Common Stock and other equity
securities of the Company. Based solely on its review of copies of the Section
16(a) reports and written representations the Company has received, the
Company believes that during fiscal 1997, all of its directors, executive
officers and greater than 10% beneficial owners had timely filed all required
reports except that Mr. Donald inadvertently failed to report one transaction
in 1997.
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Stock Plan to the Named Executive Officers in 1997:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#)(1) YEAR ($/SH)(1) DATE 5% 10%
- ---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William E. Nettles...... 100,000(3) 45% $21.00 8/13/07 $1,320,679 $3,346,859
John E. Andrews......... 8,500(4) 3% $17.50 1/23/07 $ 93,548 $ 237,069
Charles R. Engles....... 22,000(4) 10% $17.50 1/23/07 $ 242,124 $ 613,591
R. Daniel Williams...... 6,500(4) 2% $17.50 1/23/07 $ 71,537 $ 181,288
</TABLE>
- --------
(1) The exercise price for each grant is equal to 100% of the fair market
value of a share of Common Stock on the date of grant.
(2) Assumed values result from the indicated prescribed rates of stock price
appreciation through the expiration date. The actual value of these option
grants is dependent on the future performance of the Common Stock.
(3) Option vests and becomes exercisable in three equal annual installments on
the anniversary date of the date of grant. Option automatically vests and
becomes exercisable immediately upon a change in control of the Company or
in the event Mr. Nettles is terminated without cause or resigns for Good
Reason (defined to include failure by the Company to cause Mr. Nettles to
continue as Chairman of the Board).
(4) Option vests and becomes exercisable twelve months after the date of
grant. Option automatically vests and becomes exercisable immediately upon
a change in control of the Company.
8
<PAGE>
OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning option exercises during 1997, the value realized
upon exercise and the number and value of unexercised options held as of
December 31, 1997.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE REALIZED OPTIONS AT 12/31/97 AT 12/31/97
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE($)
- ---- -------- --------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
William E. Nettles...... -- -- 0/100,000 0
John E. Andrews......... -- -- 100,000/0 $ 15,750
Charles R. Engles....... 65,000 1,208,681 145,500/0 $767,325
R. Daniel Williams...... -- -- 36,500/0 0
</TABLE>
- --------
(1) Amounts shown in this column represent the market value of the underlying
Common Stock at December 31, 1997 of $16.75 per share less the exercise
price. The actual value, if any, an executive officer 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.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is responsible for
establishing and administering the compensation philosophy, policies and plans
for the executive officers of the Company. The Compensation Committee's
executive compensation philosophy is to provide a program that will be able to
attract and retain high caliber managerial and technical talent and that ties
compensation with the performance of the Company and the sustained creation of
stockholder value. As a result, the Company's compensation program reflects a
strong performance and long term orientation. The compensation program also is
designed to encourage stock ownership. The Compensation Committee believes
that such ownership effectively motivates executives to increase stockholder
value and aligns the interests of executives with those of stockholders of the
Company.
The Company's executive compensation program consists of three principal
components: (1) base salary, (2) an annual incentive bonus and (3) stock
options.
BASE SALARY. The initial base salary payable to an executive officer is
determined pursuant to the terms of the executive officer's employment
agreement and is adjusted annually at the discretion of the Compensation
Committee. In establishing the executive's initial base salary, the
Compensation Committee considered the salaries of executive officers in
comparable positions in other United States mining companies of similar size
and established executive salaries at levels below the median. In establishing
annual adjustments to executive salaries, the Compensation Committee considers
quantitative measures related to the Company's financial performance and a
number of qualitative measures related to the executive's duties and
responsibilities. In an effort to conserve cash, in January 1997 awards of
restrictive stock were granted to executive officers in lieu of a salary
increase for 1997.
ANNUAL INCENTIVE BONUS. Each executive officer's employment agreement
provides for a bonus payable at the discretion of the Compensation Committee
and at an amount targeted and limited to a percentage of the executive's
salary. The Compensation Committee awards bonuses based on the achievement of
certain Company objectives and on a review of the executive officer's
performance. Actual bonus awards vary depending upon the degree of achievement
relative to the Company's and the individual's objectives. For each component,
no award is made unless certain minimum performance levels are achieved. The
Compensation Committee reserves the right to increase or decrease the amount
of each bonus as compared to the amount established under the formula. As the
Company's objectives for 1997 were not achieved, bonuses were awarded based on
the achievement of individual objectives only, and, consequently, bonuses for
1997 were below targeted amounts.
9
<PAGE>
STOCK OPTIONS. The purpose of the Stock Plan is to reward and provide
incentives for executive officers, employees, nonemployee directors and
consultants of the Company by providing them with an opportunity to acquire an
equity interest in the Company, thereby increasing their personal interest in
its continued success and progress. In 1997, 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.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S 1997 COMPENSATION. Mr. Nettles' base
salary of $275,000 and bonus of $80,000 were established pursuant to an
employment agreement executed upon his employment with the Company in August
1997. Also in accordance with his employment agreement, in 1997 Mr. Nettles
was granted options to purchase 100,000 shares of Common Stock, vesting over a
period of three years, as the long term component of his annual compensation.
In establishing Mr. Nettles initial base salary and bonus, the Compensation
Committee considered the salaries paid to chief executive officers at other
precious metals companies.
SECTION 162(M). Under Section 162(m) of the Internal Revenue Code, as
amended, federal income tax deductions of publicly traded companies may be
limited to the extent total compensation (including base salary, annual bonus,
restricted stock awards, stock options exercises and non-qualified benefits)
for certain executive officers exceeds $1 million in any one year. The
Compensation Committee intends to design the Company's compensation programs
so that the total compensation paid to any employee will not exceed $1 million
in any one year.
Ray W. Ballmer
Douglas D. Donald
Lawrence M. Glaser
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on the Common Stock over the period from
the Company's initial public offering on December 16, 1994 to December 31,
1997 with the cumulative total return on the Standard & Poor's 500, 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 Small Cap Gold and Precious Metals Index, assuming the reinvestment of
all dividends. The Company has decided to change to the Standard and Poor's
Small Cap Gold and Precious Metals Index from 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 because the Company believes that the
corporations included in the Standard & Poor's Small Cap Gold and Precious
Metals Index are more comparable to the Company.
CUMULATIVE TOTAL STOCKHOLDER RETURN
LOGO
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/16/94 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Stillwater Mining Company......... $100 $103 $145 $137 $128
S&P 500........................... 100 101 139 171 228
Financial Times Gold Mines Index.. 100 103 114 115 71
JSE Actuaries' Platinum Index..... 100 106 69 52 55
S&P Small Cap Gold & Precious Met-
als.............................. 100 103 83 87 60
</TABLE>
11
<PAGE>
PROPOSAL TWO
AMENDMENT AND RESTATEMENT OF 1994 STOCK PLAN
GENERAL
The 1994 Stock Plan, as amended by the First Amendment to 1994 Stock Plan
dated April 24, 1997 (the "Stock Plan"), is intended to promote the interests
of the Company and its stockholders by attracting and retaining personnel,
including executive and other key employees, consultants and directors of the
Company and its affiliates, motivating such individuals by means of
performance-related incentives to achieve long term performance goals, and
enabling employees, nonemployee directors and consultants to participate in
the long term growth and financial success of the Company. The Stock Plan
became effective upon its approval by the stockholders of the Company in
September 1994 and expires on September 16, 2004.
DESCRIPTION OF AMENDMENTS
In May of 1997, the Board of Directors of the Company, upon the
recommendation of the Compensation Committee, amended the Stock Plan (the
"1997 Amendments") to reflect the amendments adopted by the Securities and
Exchange Commission to Rule 16b-3 under the Exchange Act and to allow the
Board of Directors or the Compensation Committee of the Board of Directors to
grant awards to consultants. In January 1998, the Board, also upon the
recommendation of the Compensation Committee, approved the amendment and
restatement of the Stock Plan in the form of the 1998 Equity Incentive Plan
(the "Amended Plan"), subject to stockholder approval. The Amended Plan
reflects the 1997 Amendments and increases the number of shares of Common
Stock authorized for issuance by 1,000,000 shares, from a total of 1,500,000
shares to 2,500,000 shares. The Amended Plan is set forth in its entirety as
Appendix A to this Proxy Statement. At March 31, 1998, no shares remained
available for future grant under the Stock Plan. The Board approved the
increase in the number of shares authorized for issuance to ensure the
continued availability of the Stock Plan to attract, retain and motivate
employees, consultants and directors of the Company and its affiliates and to
enable such individuals to participate in the long term growth and financial
success of the Company.
BOARD RECOMMENDATION FOR STOCKHOLDER APPROVAL
The Board of Directors recommends that the stockholders approve the Amended
Plan. The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy at the Meeting and entitled to vote will be
required to approve the Amended Plan.
PLAN ADMINISTRATION
The Amended Plan will be administered by the Board or a committee of the
Board designated by the Board and composed of not less than the minimum number
of nonemployee directors required by Rule 16b-3 (the "Committee"). Subject to
the terms of the Amended Plan and applicable law, the Board or the Committee
determines the persons to whom awards are granted, the types of awards
granted, the number of shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
awards granted, and the terms and conditions of any award under the Amended
Plan and interprets and administers the Amended Plan.
AWARDS AVAILABLE UNDER THE AMENDED PLAN; ELIGIBILITY
Under the Amended Plan, the Board or the Committee may grant awards to
employees, non-employee directors or consultants. As of March 31, 1998, the
Company had approximately 675 employees, seven non-employee directors and two
consultants. Awards granted under the Amended Plan may consist of options,
stock appreciation rights ("SARs") (rights to receive an amount equal to the
excess of the fair market value of shares on the date of exercise of the SAR
over the grant price), restricted stock (stock subject to forfeiture based on
12
<PAGE>
certain conditions) or other stock-based awards except that nonemployee
directors may not be granted SARs. Stock options granted under the Amended
Plan may be incentive stock options ("ISOs") intended to meet the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended from time to
time (the "Code"), or options that are not intended to be ISOs ("NSO"). ISOs
only may be granted to persons who are employees of the Company. NSOs may be
granted to employees, nonemployee directors or consultants to the Company.
Restricted stock awards will provide for the payment of dividends unless
otherwise determined by the Board or Committee. Such dividends may be paid
directly to the holder of the stock or may be reinvested in additional shares
of restricted stock and may be subject to risk of forfeiture and/or transfer
restrictions for such period of time as is established by the Board or
Committee.
TERMS OF AWARDS
The following is a description of the permissible terms of awards under the
Amended Plan. Individual awards may be more restrictive as to any or all of
the permissible terms described below.
EXERCISE, GRANT OR PURCHASE PRICE. The Board or the Committee establishes
the exercise price of the options, the grant price of SARs or the exercise or
purchase price of other stock based awards at the time such award is granted.
Except in the case of awards the exercise of which would result in the
cancellation of another award, the exercise, grant or purchase price must not
be less than the fair market value of the shares on the date of grant. If an
employee owns or is deemed to own more than 10% of the combined voting power
of all classes of stock of the Company, any ISOs granted to such employee must
have an exercise price of at least 110% of the fair market value of the shares
on the date of grant. At March 31, 1998, the closing price of a share of
Common Stock on the American Stock Exchange was $25.25 per share.
CONSIDERATION FOR AWARDS; PAYMENT. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law. Payment for shares or other securities to be delivered
pursuant to the Amended Plan may be made by such method or methods and in such
form or forms as the Board or the Committee determines, including cash,
shares, other securities, other awards or other property, or any combination
thereof.
VESTING; TERM; CANCELLATION. The Board or the Committee determines any
vesting period for options, SARs or other stock based awards, except that for
automatic grants of options to nonemployee directors (as described below under
"Automatic Grants to Nonemployee Directors), the vesting period is six months
after the date of grant and for SARs, the vesting period cannot be less than
six months after the date of grant unless the Board or Committee otherwise
decides. The Board or the Committee also determines the terms of the awards,
except that the term of options automatically granted to nonemployee directors
must be the lesser of ten years after the date of grant or one year after the
termination of services as a director and the term of any ISO may not be more
than ten years from the date of grant. The Board or the Committee may cause
any award to be canceled in consideration of a cash payment or alternative
award (equal to the fair market value of the award to be canceled) made to the
holder of such canceled award.
RESTRICTIONS ON TRANSFERABILITY. Awards other than ISOs are transferable to
the extent provided in any award agreement. ISOs may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution, except that a beneficiary of
the ISO upon the grantee's death may be designated. In addition, the ISOs may
be exercised during the lifetime of the grantee only by the grantee.
AUTOMATIC GRANTS TO NONEMPLOYEE DIRECTORS. Each nonemployee director of the
Company is automatically granted, upon his or her election to the Board, an
NSO to purchase 15,000 shares of Common Stock and, upon his or her first
reelection to the Board, an NSO to purchase an additional 7,500 shares of
Common Stock. The maximum aggregate number of shares as to which options can
be granted under the Amended Plan to any nonemployee director is limited to
22,500 shares. A nonemployee director can elect not to receive options.
13
<PAGE>
ADJUSTMENT PROVISIONS
If the Board or the Committee determines that any dividend or other
distribution, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of shares or other securities of the Company, issuance
of warrants or other rights to purchase shares or other securities of the
Company or other similar corporate transaction or event affects the shares
such that an adjustment is determined by the Board or Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Amended Plan, then
the Board or Committee will, in such manner as it deems equitable, adjust any
or all of the number of shares or the kind of equity securities of the Company
(or number and kind of other securities or property) with respect to which
awards may be granted or which are subject to outstanding awards and the grant
or exercise price with respect to any award or provide for a cash payment to
holders of outstanding awards, subject to the terms of the Amended Plan. In
addition, if the Company or any affiliate of the Company assumes outstanding
employee awards or the right or obligation to make future employee awards in
connection with the acquisition of another business or another corporation or
business entity, the Board or the Committee may make such adjustments, not
inconsistent with the terms of the Amended Plan, in the terms of awards as it
deems appropriate in order to achieve reasonable comparability or an equitable
relationship between the assumed awards and the awards as so adjusted.
Furthermore, the Board or the Committee may make adjustments in the terms and
conditions of, and the criteria included in, awards in recognition of unusual
or nonrecurring events affecting the Company, any affiliate of the Company or
the financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Board or
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Amended Plan.
PLAN AMENDMENTS
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an award agreement or in the Amended Plan, the Board may
amend, alter, suspend, discontinue or terminate the Amended Plan at any time
without the consent of any stockholder, participant, other holder or
beneficiary of an award or other person unless stockholder approval is
necessary to comply with, or to obtain exemptive relief under, any tax or
regulatory requirement that the Board deems desirable to comply with, or
obtain exemptive relief under, including for these purposes any approval
requirement which is a prerequisite for exemptive relief from Section 16(b) of
the Exchange Act. The Board or the Committee may amend the Amended Plan in
such a manner as may be necessary so as to have it conform with local rules
and regulations in any jurisdiction outside the United States.
AWARD AMENDMENTS
The Board or the Committee may waive any conditions or rights under, amend
any terms of, or accelerate or alter any award previously granted,
prospectively or retroactively, without the consent of any relevant
participant or holder or beneficiary of an award, provided that such action
does not materially impair the rights of any participant or holder or
beneficiary of an award without such person's consent or result in a decrease
in the fair market value of an award without such participant's, holder's or
beneficiary's consent.
14
<PAGE>
NEW PLAN BENEFITS
The following table presents certain information with respect to option
grants under the Amended Plan expected during 1998 to the Named Executive
Officers (as defined in "Executive Compensation" above), all executive
officers as a group, all directors who are not executive officers as a group,
and all employees who are not executive officers as a group.
NEW PLAN BENEFITS
1998 EQUITY INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF SHARES(1)
- ----------------- -------------------
<S> <C>
William E. Nettles.......................................... --
Chief Executive Officer
John E. Andrews............................................. 45,000(2)
President and Chief Operating Officer
Charles R. Engles........................................... N/A
Former Chief Executive Officer
R. Daniel Williams.......................................... N/A
Former Chief Financial Officer
Executive Group............................................. 45,000(2)
Nonexecutive Director Group................................. 30,000(3)
Nonexecutive Officer Employee Group(4)...................... --
</TABLE>
- --------
(1) The closing price per share of Common Stock as of March 31, 1998 was
$25.25.
(2) Stock option was granted at an exercise price of $19.125 per share.
(3) Pursuant to the terms of the Amended Plan, a stock option to purchase
7,500 shares of Common Stock will be issued to each of Messrs. Donald,
Glaser and Ingersoll on May 15, 1998 if they are re-elected as directors
of the Company. The exercise price will be equal to the fair market value
per share of Common Stock on such date.
(4) In January 1998, the Board of Directors adopted the Stillwater Mining
Company General Employee Stock Plan (the "General Employee Plan") for
nonexecutive officers and authorized 200,000 shares of Common Stock for
issuance under that plan. During 1998 grants will be made to nonexecutive
officer employees under the General Employee Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE AMENDED PLAN
The following is a general summary of the federal income tax consequences
that may apply to recipients of options, SARs, restricted stock or other stock
awards under the Amended Plan. Because the application of tax laws may vary
according to individual circumstances, a participant should seek professional
tax advice concerning the tax consequences to him or her of participating in
the Amended Plan, including the potential application and effect of state,
local and foreign tax laws and estate and gift tax considerations.
INCENTIVE STOCK OPTIONS. A participant who is granted an ISO recognizes no
taxable income when the ISO is granted. Generally, no taxable income is
recognized upon exercise of an ISO unless the alternative minimum tax applies
as described below. However, a participant who exercises an ISO recognizes
taxable gain or loss when the participant sells his or her shares. Any gain or
loss recognized on the sale of shares acquired upon exercise of an ISO is
taxed as long term capital gain or loss if the shares have been held for more
than one year after the option was exercised and for more than two years after
the option was granted. Any long term capital gain will be taxed at a rate of
20% if, at the time the shares are sold, the participant held the shares for
more than 18 months from the date the option was exercised; otherwise, the
long term capital gain will be taxed at a rate of 28%. If a participant is
entitled to long term capital gain treatment upon a sale of the stock, the
Company will not be entitled to any compensation expense deduction with
respect to the ISO shares.
15
<PAGE>
If the participant disposes of the shares before the required holding
periods have elapsed (a "disqualifying disposition"), the participant is taxed
as though he or she had exercised an NSO, except that the compensation income
on exercise of the option is recognized in the year of the disqualifying
disposition and generally may not exceed the excess of the amount realized in
the sale of the stock over the option price.
EFFECT OF ALTERNATIVE MINIMUM TAX. The difference between the option price
and the fair market value of the shares on the date of exercise of an ISO will
be a tax preference item for alternative minimum tax ("AMT") purposes and may
give rise to an AMT liability for certain taxpayers. AMT is payable if and to
the extent that it exceeds the taxpayer's regular tax liability. Subject to
certain limitations, any AMT paid may be credited against a taxpayer's regular
tax liability in subsequent tax years. In addition, special rules may apply
with respect to (I) certain subsequent sales of the shares in a disqualifying
disposition and (ii) certain basis adjustments in computing the alternative
minimum taxable income on a subsequent sale of the shares.
NON-STATUTORY STOCK OPTIONS. The tax treatment of NSOs differs significantly
from the tax treatment of ISOs. A participant generally recognizes no taxable
income as the result of the grant of an NSO. Upon exercise of an NSO, the
participant normally recognizes ordinary income in the amount of the
difference between the option price and the fair market value of the stock on
that date. If the participant is an employee of the Company, such ordinary
income generally is subject to withholding of income and employment taxes.
Upon the sale of stock acquired by the exercise of an NSO, any gain or loss,
based on the difference between the sale price and the fair market value on
the date of recognition of income, will be taxed as a capital gain or loss. A
capital gain or loss will be long term if the optionee has held the shares
more than twelve months from the date of recognition of income. Any long term
capital gain will be taxed at a rate of 20% if, at the time the shares are
sold, the participant held the shares for more than 18 months from the date
the option was exercised; otherwise, the long term capital gain will be taxed
at a rate of 28%. The Company should be entitled to a deduction equal to the
amount of ordinary income recognized by the optionee as a result of the
exercise of the NSO.
If the participant is subject to Section 16(b) of the Exchange Act, the date
for measuring taxable income potentially may be deferred for up to six months
after the date of exercise unless the optionee makes an election under Section
83(b) of the Code within 30 days after exercise. If a Section 83(b) election
is made, the participant will be taxed currently upon exercise of the NSO in
an amount equal to the excess, if any, of the fair market value of the shares
at that time over the option price. Any future appreciation in the shares will
be treated as capital gain upon the sale or exchange of the shares.
STOCK APPRECIATION RIGHTS. A participant recognizes ordinary income upon the
exercise of an SAR. The Company generally receives a deduction for amounts it
pays in connection with SARs.
RESTRICTED STOCK. In general, a participant will not recognize taxable
income upon the receipt of restricted stock, because such stock will be
subject to restrictions which constitute a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code (including, for this purpose, any
restriction under Section 16(b) of the Exchange Act). Rather, the participant
will recognize ordinary income at such time as the restrictions no longer
apply, in an amount equal to the fair market value of the stock at that time
over the amount, if any, paid for the stock. However, a participant may elect
to be taxed currently upon receipt of the stock (without regard to such
restrictions) by making an election under Section 83(b) of the Code within 30
days of receipt. In this event, the participant will recognize ordinary income
at the time of the receipt of the stock in an amount equal to the excess, if
any, of the fair market value of the stock at that time over the amount, if
any, paid for the stock. However, if the shares are later forfeited, the
participant will not be entitled to any loss (except for any amount actually
paid for the stock). Any future appreciation in the stock will be treated as
capital gain upon the sale or exchange of the stock. The amount of
compensation income to the participant generally is deductible by the Company.
Any dividends paid to the participant on restricted stock before the stock is
taken into income are ordinary compensation income to the participant and
generally are deductible by the Company.
16
<PAGE>
WITHHOLDING. The Company's obligation to deliver shares of Common Stock on
the exercise of stock options under the Amended Plan is subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements. The Company may withhold any taxes required by
any federal, state, or local law or regulation in connection with any stock
option or other award under the Amended Plan, including withholding of any
portion of any payment or withholding from other compensation payable to the
participant, unless such person reimburses the Company for such amount.
The Board may provide holders of NSOs or restricted stock with the right to
use shares of Common Stock in satisfaction of all or part of the taxes
incurred by such holders in connection with the exercise of stock options or
the lapsing of restrictions on restricted stock, as applicable. Such right may
be provided to any such holder by (i) the election to have the Company
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such NSOs, a number of shares with an aggregate fair market value equal to
the amount of taxes due as designated by such holder; or (ii) the election to
deliver to the Company, at the time the NSO is exercised or the restrictions
lapse on shares of restricted stock, shares of Common Stock previously
acquired by such holder with an aggregate fair market value equal to the
amount of taxes due as designated by such holder.
17
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes information as of March 1, 1998, except as
otherwise indicated, concerning the beneficial ownership of Common Stock by
(i) stockholders known to the Company to beneficially own more than 5% of the
Common Stock, (ii) each director, director nominee and Named 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>
<CAPTION>
PERCENT
NAME AND ADDRESS OF
OF BENEFICIAL OWNER AMOUNT CLASS
- ------------------- --------- -------
<S> <C> <C>
American Express Company and affiliates...................... 2,250,852 11.1%
American Express Tower
World Financial Center
New York, New York 10285(1)
Scudder Kemper Investments, Inc.............................. 1,143,018 5.7%
Two International Place
Boston, MA 02110(2)
The Prudential Insurance Company of America.................. 1,087,400 5.34%
751 Broad Street
Newark, NJ 07102-3777(3)
Ray W. Ballmer(4)............................................ 33,750 *
Douglas D. Donald(5)......................................... 17,100 *
John W. Eschenlohr(4)........................................ 24,500 *
Lawrence M. Glaser(6)........................................ 15,600 *
Pete Ingersoll(7)............................................ 16,000 *
William E. Nettles........................................... 7,700 *
Ted Schwinden(8)............................................. 22,100 *
Peter Steen(4)............................................... 41,250 *
John E. Andrews(9)........................................... 109,700 *
Charles R. Engles(10)........................................ 200,325 *
R. Daniel Williams(11)....................................... 43,650 *
All directors and executive officers as a group (11 per-
sons)(4)(5)(6)(7)(8)(9)(10)(11) ............................ 614,425 2.9%
</TABLE>
- --------
* Indicates ownership of less than 1%.
(1) The number of shares reported in this table is based upon the Schedule
13G, dated December 31, 1997, filed jointly by American Express Company
and American Express Financial Corporation, which discloses that American
Express Company and American Express Financial Corporation have shared
dispositive power over 2,250,852 shares, and shared voting power over
102,552 shares as of December 31, 1997. The business address disclosed in
Schedule 13G for American Express Financial Corporation is IDS Tower 10,
Minneapolis, Minnesota 55440.
(2) The number of shares reported is based upon the Schedule 13G, dated
February 12, 1998, filed by Scudder Kemper Investments, Inc. ("Scudder"),
which discloses that Scudder had sole voting power over 272,350 shares,
shared voting power over 539,868 shares, and sole dispositive power over
1,143,018 shares as of December 31, 1997.
(3) The number of shares reported is based upon the Schedule 13G, dated
February 10, 1998, filed by The Prudential Insurance Company and certain
related persons and/or entities, which discloses that The Prudential
Insurance Company and such related persons and/or entities had sole voting
power over 1,700
18
<PAGE>
shares, shared voting power over 1,085,700 shares, sole dispositive power
over 1,700 shares and shared dispositive power over 1,085,700 shares as of
December 31, 1997.
(4) Includes 22,500 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
(5) Includes 1,200 shares held by EMD Partners, of which Mr. Donald is a
general partner, (ii) 900 shares held by VY Trust, for which Mr. Donald is
a joint trustee, and (iii) 15,000 shares issuable upon exercise of stock
options exercisable currently or within 60 days.
(6) Includes 15,000 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
(7) Includes 15,000 shares issuable upon exercise of stock options exercisable
currently or within 60 days. Mr. Ingersoll shares voting and investment
power over 1,000 shares with his wife.
(8) Includes 22,100 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
(9) Includes 100,000 shares issuable upon exercise of stock options
exercisable currently or within 60 days.
(10) Includes 145,500 shares issuable upon exercise of stock options
exercisable currently or within 60 days.
(11) Includes 43,000 shares issuable upon exercise of stock options
exercisable currently or within 60 days.
PROPOSAL THREE
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, 1998. A representative of Price Waterhouse
LLP is expected to be present at the Meeting and will be given an opportunity
to make a statement if so desired and to respond to appropriate questions.
NOTICE OF CHANGE IN RIGHTS AGENT
The Company entered into a Rights Agreement, dated October 26, 1995 (the
"Rights Agreement"), under which each stockholder of record as of November 15,
1995, received a dividend in the form of Preferred Stock Purchase Rights,
which rights permit the holder to purchase 1/1000th of a share of the
Company's Series A Preferred Stock under certain circumstances involving a
potential change of control of the Company. Pursuant to Section 21 of the
Rights Agreement, the Company has elected to change the Rights Agent from
American Securities Transfer & Trust, Incorporated to Harris Trust and Savings
Bank.
19
<PAGE>
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 1998 is expected to be
held on or about April 25, 1999, and proxy materials in connection with that
meeting are expected to be mailed on or about March 15, 1999. Stockholder
proposals prepared in accordance with the proxy rules must be received by the
Company on or before December 7, 1998. The Company's Amended and Restated
Bylaws also contain procedures to be followed for stockholder proposals for
stockholder action, including the nomination of directors. See "Election 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, 1997 is being mailed to stockholders with this Proxy Statement.
By Order of the Board of Directors,
[SIGNATURE OF MICHAEL A. SHEA]
Michael A. Shea
Secretary
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APPENDIX A
STILLWATER MINING COMPANY
1998 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSES. The purposes of this Stillwater Mining Company 1998
Equity Incentive Plan, as may be amended from time to time (the "Plan"), are
to promote the interests of Stillwater Mining Company and its stockholders by
(i) attracting and retaining personnel, including executive and other key
employees, consultants, and directors of the Company and its Affiliates, as
defined below; (ii) motivating such employees by means of performance-related
incentives to achieve longer-range performance goals, and (iii) enabling such
employees, consultants and directors to participate in the long-term growth
and financial success of the Company.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have
the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company and (ii) any entity in which the Company has a
significant equity interest, in either case as determined by the Committee.
"Alternative Award" shall mean an Award granted in tandem with, either at
the same or a later time as, another Award having substantially similar
economic characteristics, the exercise of which would result in the
cancellation of such other Award.
"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock,
or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean (i) the Board, or (ii) a committee of the Board
designated by the Board to administer the Plan and composed of not less than
the minimum number of Persons from time to time required by Rule 16b-3, each
of whom, to the extent necessary to comply with 16b-3 only, is a "Non-Employee
Director" within the meaning of Rule 16b-3(b)(3)(i).
"Company" shall mean Stillwater Mining Company, together with any successor
thereto.
"Consultant" shall mean any Person who is engaged by the Company or any
Affiliate to render consulting or advisory services as an independent
contractor and is compensated for such services.
"Employee" shall mean any employee of the Company or of any Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value of the property or
other item being valued, as determined by the Committee acting in good faith.
"Incentive Stock Option" shall mean an option granted under Section 6(a) of
the Plan that is intended to meet the requirements of Section 422 of the Code
or any successor provision thereto.
"Non-Employee Director" (i) shall have the meaning set forth in Rule 16b-
3(b)(3)(i) for purposes of the definition of "Committee" set forth in the
Plan, and (ii) shall mean a director who is not an Employee of the Company for
all other purposes, including, but not limited to, Section 6(a)(iv).
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"Non-Qualified Stock Option" shall mean an option granted under Section 6(a)
of the Plan that is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Other Stock-Based Award" shall mean any right granted under Section 6(f) of
the Plan.
"Participant" shall mean any Employee, Non-Employee Director or Consultant
selected by the Committee to receive an Award under the Plan.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
"Restricted Period" shall mean the period of time selected by the Committee
(as may be amended by the Committee from time to time) during which a grant of
Restricted Stock may be forfeited to the Company.
"Restricted Stock" shall mean any Share granted under Section 6(c) of the
Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.
"SEC" shall mean the Securities and Exchange Commission, or any successor
thereto and shall include the staff thereof.
"Shares" shall mean the common shares of the Company, $.01 par value, or,
following an adjustment under Section 4(b) of the Plan, such other securities
or property as may become subject to Awards in substitution for such common
shares pursuant to such adjustment.
"Stock Appreciation Right" shall mean any right granted under Section 6(b)
of the Plan.
SECTION 3. ADMINISTRATION.
(a) Authority of Committee. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to eligible
Participants; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or
other property, or cancelled, forfeited, or suspended and the method or
methods by which Awards may be settled, exercised, cancelled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what
circumstances cash, shares, other securities, other Awards, other property,
and other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (viii) establish, amend, suspend,
or waive such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (ix) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan.
(b) Determinations Under the Plan. Unless otherwise expressly provided in
the Plan all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
shareholder and any Employee.
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SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available. Subject to adjustment as provided in Section 4(b), the
number of Shares with respect to which Awards may be granted under the Plan
shall be 2,500,000. If, after the effective date of the Plan, any Shares
covered by an Award granted under the Plan, or to which such an Award relates,
are forfeited, or if an Award otherwise terminates or is cancelled without the
delivery of Shares or of other consideration, then the Shares covered by such
Award, or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of Shares with respect to which Awards
may be granted, to the extent of any such forfeiture, termination or
cancellation, shall again be, or shall become, to the extent permissible under
Rule 16b-3, Shares with respect to which Awards may be granted.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in
such manner as it may deem equitable, adjust any or all of (i) the number of
Shares or the kind of equity securities of the Company (or number and kind of
other securities or property) with respect to which Awards may be granted,
(ii) the number of Shares or the kind of equity securities of the Company (or
number and kind of other securities or property) subject to outstanding
Awards, and (iii) the grant or exercise price with respect to any Award or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, in each case, that with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to the extent
that such authority would cause the Plan to fail to comply with Section 422 of
the Code, as from time to time amended and provided further, that the number
of Shares subject to any Award denominated in Shares shall always be a whole
number.
(c) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
SECTION 5. ELIGIBILITY. Employees, Non-Employee Directors and Consultants of
the Company or any Affiliate shall be eligible to be designated as
Participants.
SECTION 6 AWARDS.
(a) Options.
(i)Grant. Subject to the provisions of the Plan, the Committee shall have
authority to determine the Employees to whom options shall be granted, the
number of Shares to be covered by each Option, the option price therefor
and the conditions and limitations applicable to the exercise of the
Option. The Committee shall have the authority to grant Incentive Stock
Options, or to grant Non-Qualified Stock Options, or to grant both types of
options. In the case of Incentive Stock Options, the terms and conditions
of such grants shall be subject to, and comply with, the requirements of
Section 422 of the Code, as from time to time amended.
(ii)Exercise Price. The Committee shall establish the exercise price at
the time each Option is granted, which price, except in the case of Options
that are Alternative Awards, shall not be less than 100% of the per share
Fair Market Value of the Shares on the date of grant. If an employee owns
or is deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company and an Incentive Stock Option is
granted to such employee, the option price shall be no less than 110% of
the Fair Market Value of the Shares on the date of grant.
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(iii)Exercise. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may specify in the applicable
Award Agreement or thereafter. The Committee may impose such conditions
with respect to the exercise of Options, including without limitation, any
relating to the application of Federal or state securities laws, as it may
deem necessary or advisable.
(iv)Non-Employee Directors. Each Non-Employee Director who (i) is serving
on the Board of Directors on the date this Plan is approved by an action in
writing by the shareholders of the Company or at an annual or special
meeting of the shareholders, or (ii) on or after the date the Plan shall be
effective in accordance with Section 9, is initially elected to the Board
of Directors of the Company by the Board to fill any vacancy in accordance
with the Company's Bylaws or at any annual or special meeting of the
shareholders of the Company, shall as of the date of such meeting or
written action automatically be granted an Option to purchase 15,000 Shares
at an option price per share equal to 100% of the Fair Market Value of the
Shares on the date of grant. Each Non-Employee Director who is re-elected
to the Board of Directors at any annual or special meeting of the
shareholders of the Company and who has previously received an Option to
purchase 15,000 Shares as described above, shall as of the date of such
meeting automatically be granted an Option to purchase 7,500 Shares at an
option price per share equal to 100% of the Fair Market Value of the Shares
on the date of grant. Notwithstanding the above, a Non-Employee Director
may elect to not accept such Options. All such Options shall be designated
as Non-Qualified Options and shall be subject to same terms and provisions
as are then in effect with respect to the granting of Non-Qualified Options
to officers and key employees of the Company, except that (i) the term of
each such Option shall be the lesser of ten (10) years after the date of
grant or, if a Non-Employee Director is removed for cause, one (1) year
after the termination of services as a director, (ii) the Option shall
become exercisable in full after a period of six (6) months after the date
of grant, and (iii) no Stock Appreciation Rights may be granted to any Non-
Employee Director under this paragraph or in any other manner under this
Plan. Subject to the foregoing, all provisions of this Plan not
inconsistent with the foregoing shall apply to Options granted to Non-
Employee Directors. The maximum aggregate number of Shares as to which
Options may be granted to any Non-Employee Director under this Plan shall
be 22,500 Shares.
(v)Consultants. Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Consultants to whom options shall
be granted, the number of Shares to be covered by each Option, the option
price therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to only
grant Non-Qualified Stock Options to Consultants. The exercise price of the
Option granted shall not be less than 100% of the per share Fair Market
Value of the Shares on the date of grant. Each Option shall be exercisable
at such times and subject to such conditions as the Committee shall specify
in the applicable Award Agreement or thereafter. The Committee may impose
such conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities
laws, as it may deem necessary or advisable.
(b)Stock Appreciation Rights.
(i)Grant. Subject to the provisions of the Plan, the Committee shall have
authority to determine the Employees to whom Stock Appreciation Rights
shall be granted, the number of Shares to be covered by each Stock
Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. A Stock Appreciation Right
may be granted in tandem with another Award, in addition to another Award,
or freestanding and unrelated to another Award. A Stock Appreciation Right
granted in tandem with or in addition to another Award may be granted
either at the same time as such other Award or at a later time. A Stock
Appreciation Right shall not be exercisable earlier than six months after
grant, unless otherwise determined by the Committee, and, except for a
Stock Appreciation Right which is an Alternative Award, shall have a per
share grant price of not less than 100% of the per share Fair Market Value
of the Shares on the date of grant.
(ii)Exercise and Payment. A Stock Appreciation Right shall entitle the
Participant to receive with respect to each Share covered by such Stock
Appreciation Right an amount equal to the excess of the Fair
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Market Value of a Share on the date of exercise of the Stock Appreciation
Right over the per share grant price thereof, provided that the Committee
may, for administrative convenience, determine that the exercise of any
Stock Appreciation Right, which is not related to an Incentive Stock Option
and which can only be exercised for cash during limited periods of time in
order to satisfy the conditions of certain rules of the SEC, shall be
deemed to occur for all purposes hereunder on the day during such limited
period on which the Fair Market Value of the Shares is the highest. Any
such determination by the Committee may be changed by the Committee from
time to time and may govern the exercise of Stock Appreciation Rights
granted prior to such determination as well as Stock Appreciation Rights
thereafter granted.
(iii)Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods
and form of settlement, and any other terms and conditions of any Stock
Appreciation Right. Any such determination by the Committee may be changed
by the Committee from time to time and may govern the exercise of Stock
Appreciation Rights granted or exercised prior to such determination as
well as Stock Appreciation Rights granted or exercised thereafter. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
(c)Restricted Stock.
(i)Grant. Subject to the provisions of the Plan, the Committee shall have
authority to determine the Employees to whom Restricted Stock shall be
granted and the number of Shares of Restricted Stock to be granted to each
such Participant, the duration of the Restricted Period during which, and
the conditions under which, the Restricted Stock may be forfeited to the
Company, and the other terms and conditions of such Awards. Unless
otherwise determined by the Committee, Restricted Stock Awards shall
provide for the payment of dividends. Dividends paid on Restricted Stock
may be paid directly to the Participant and may be subject to risk of
forfeiture and/or transfer restrictions during any period established by
the Committee, or may be reinvested in additional Shares of Restricted
Stock all as determined by the Committee in its discretion.
(ii)Transfer Restrictions. During the Restricted Period, Restricted Stock
will be subject to the limitations on transfer as provided in Section
8(g)(iii).
(d)Other Stock-Based Awards. The Committee shall have authority to determine
the Employees who shall receive an "Other Stock-Based Award", which shall
consist of a right (i) which is other than an Award or right described in
Section 6(a), (b), or (c) above and (ii) which is denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related
to, Shares (including, without limitation, securities convertible into
Shares), deemed by the Committee to be consistent with the purposes of the
Plan; provided, that any such right must comply, to the extent deemed
desirable by the Committee, with Rule 16b-3. Subject to the terms of the Plan
and any applicable Award Agreement, the Committee shall determine the terms
and conditions of any such other Stock-Based Award. Except in the case of an
Other Stock-Based Award that is a Substitute Award or an Alternative Award,
the price at which securities may be purchased pursuant to any Other Stock-
Based Award granted under this Plan, or the provision, if any, of any such
Award that is analogous to the purchase or exercise price, shall not be less
than 100% of the Fair Market Value of the security to which such Award relates
on the date of the grant.
(e)General.
(i)Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for, any other Award granted under the
Plan. Awards granted in addition to, or in tandem with, other Awards may be
granted either at the same time as, or at a different time from, the grant
of such other Awards.
(ii)Forms of Payment by Company Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the
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grant, exercise or payment of an Award may be made in such form or forms as
the Committee shall determine, including, without limitation, cash, Shares,
other securities, other Awards or other property, or any combination
thereof, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee.
(iii)Limits on Transfer of Awards. Awards (other than Incentive Stock
Options) shall be transferable to the extent provided in any Award
Agreement. Incentive Stock Options may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will
or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant; provided, however,
that the Participant may designate a beneficiary of the Participant's
Incentive Stock Option in the event of the Participant's death on a
beneficiary designation form provided by the Company.
(iv)Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, that in no event shall the
term of any Incentive Stock Option exceed a period of ten years from the
date of its grant.
(v)Share Certificates. All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any
Award, or the exercise thereof, shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
Plan or the rules, regulations, and other requirements of the SEC, any
stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require that, during the
Restricted Period, a certificate for Shares of Restricted Stock registered
in the name of a Participant shall be deposited by such Participant,
together with a stock power endorsed in blank, with the Company.
(vi)Consideration for Grants. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.
(vii)Delivery of Shares or Other Securities and Payment by Participant of
Consideration. No Shares or other securities shall be delivered pursuant to
any Award until payment in full of any amount required to be paid pursuant
to the Plan or the applicable Award Agreement is, or is arranged to be,
received by the Company. Such payment may be made by such method or methods
and in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards or other
property, or any combination thereof; provided that the combined value, as
determined by the Committee, of all cash and cash equivalents and the Fair
Market Value of any such Shares or other property so tendered, or arranged
to be tendered, to the Company, as of the date of such tender, is at least
equal to the full amount required to be paid pursuant to the Plan or the
applicable Award Agreement to the Company.
SECTION 7. AMENDMENT AND TERMINATION. Except to the extent prohibited by
applicable law and unless otherwise expressly provided in an Award Agreement
or in the Plan:
(a)Amendments to the Plan. The Board may amend, alter, suspend, discontinue,
or terminate the Plan at any time without the consent of any shareholder,
Participant, other holder or beneficiary of an Award, or other Person;
provided that notwithstanding any other provision of the Plan or any Award
Agreement, no such amendment, alteration, suspension, discontinuation, or
termination shall be made without shareholder approval if such approval is
necessary to comply with, or to obtain exemptive relief under, any tax or
regulatory requirement that the Board deems desirable to comply with, or
obtain exemptive relief under, including for these purposes any approval
requirement which is a prerequisite for exemptive relief from Section 16(b) of
the Exchange Act. Notwithstanding anything to the contrary herein, the
Committee may amend the Plan in such a manner as may be necessary so as to
have the Plan conform with local rules and regulations in any jurisdiction
outside the United States.
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(b)Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or accelerate or alter, any Award theretofore
granted, prospectively or retroactively, without the consent of any relevant
Participant or holder or beneficiary of an Award, provided that such action
does not (i) materially impair the rights of any Participant or holder or
beneficiary of an Award without such person's consent, or (ii) result in a
decrease in the Fair Market Value of an Award without such Participant's or
holder's or beneficiary's consent.
(c)Adjustments of Awards Upon Certain Acquisitions. In the event the Company
or any Affiliate shall assume outstanding employee awards or the right or
obligation to make future employee awards in connection with the acquisition
of another business or another corporation or business entity, the Committee
may make such adjustments, not inconsistent with the terms of the Plan, in the
terms of Awards as it shall deem appropriate in order to achieve reasonable
comparability or an equitable relationship between the assumed awards and the
Awards as so adjusted.
(d)Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
(e)Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan or any Award or Award Agreement in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
(f)Cancellation. Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, the Committee may cause any Award granted hereunder
to be cancelled in consideration of a cash payment or alternative Award (equal
to the Fair Market Value of the Award to be cancelled) made to the holder of
such cancelled Award.
SECTION 8. GENERAL PROVISIONS.
(a)No Rights to Awards. No Employee, Participant or other Person shall have
any claim to be granted any Award, and there is no obligation for uniformity
of treatment of Employees, Participants, or holders or beneficiaries of
Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(b)Delegation. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or
any Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to
grant Awards to, or to cancel, modify or waive rights with respect to, or to
alter, discontinue, suspend, or terminate Awards held by, Employees who are
not officers or directors of the Company for purposes of Section 16 of the
Exchange Act, or any successor section thereto, or who are otherwise not
subject to such Section.
(c)Withholding. A participant may be required to pay to the Company or any
Affiliate, and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan or from any compensation or other amount
owing to a Participant, the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes. In the case
of payments of Awards in the form of Shares, at the Committee's discretion the
Participant may be required to pay to the Employer the amount of any taxes
required to be withheld with respect to such Shares or, in lieu thereof, the
Employer shall have the right to retain (or the Participant may
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be offered the opportunity to elect to tender) the number of Shares whose Fair
Market Value equals the amount required to be withheld. The Committee may
provide for additional cash payments to holders of Awards to defray or offset
any tax arising from the grant, vesting, exercise or payments of any Award. In
the discretion of the Committee, the Company may offer loans to Participants
to satisfy withholding requirements on such terms as the Committee may
determine, which terms may in the discretion of the Committee be non-interest
bearing.
(d)Award Agreements. Each Award hereunder shall be evidenced by an Award
Agreement, which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto, including
but not limited to the effect on such Award of the death, retirement or other
termination of employment of a Participant and the effect, if any, of a change
in control of the Company.
(e)No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may (but need not) provide for
the grant of options, restricted stock and other types of security-based
awards provided for hereunder (subject to shareholder approval if such
approval is required), and such arrangements may be either generally
applicable or applicable only in specific cases.
(f)No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, except to the extent expressly provided otherwise in the Plan or in any
Award Agreement.
(g)No Rights as Stockholder. Subject to the provisions of the applicable
Award Agreement, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be distributed
under the Plan until he or she has become the holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted
Stock hereunder, the applicable Award shall specify if, and to what extent,
the Participant shall not be entitled to the rights of a stockholder in
respect of such Restricted Stock.
(h)Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Colorado and applicable
Federal law.
(i)Severability. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.
(j)Other Laws. The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if it determines that the issuance or
transfer of such Shares or such other consideration might violate any
applicable law or regulation or entitle the Company to recover the same under
Section 16(b) of the Exchange Act, and any payment tendered to the Company by
a Participant, other holder or beneficiary in connection with the exercise of
such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award
granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the
Committee has determined that any such offer, if made, would be in compliance
with all applicable requirements of Federal securities laws.
(k)No Trust or Fund Created. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the
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Company or any Affiliate pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company or any
Affiliate.
(l)No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights
thereto shall be cancelled, terminated, or otherwise eliminated.
(m)Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of the
date of its approval by the shareholders of the Company.
SECTION 10. TERM OF THE PLAN. No Award shall be granted under the Plan after
September 16, 2004. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award theretofore granted may, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under any such Award shall, extend beyond such date.
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<PAGE>
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STILLWATER MINING COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1.ELECTION OF DIRECTORS (TO WITHHOLD AUTHORITY TO VOTE FOR ANY OR ALL
NOMINEE(S), MARK OVAL UNDER "FOR ALL EXCEPT" AND STRIKE A LINE THROUGH THE
NAME OF THE NOMINEE(S).) INSTRUCTION: If no choice for directors is indicated
in the space provided below, this proxy shall authorize the proxies named
herein to cumulate all votes which the undersigned is entitled to cast at the
meeting for, and to allocate such votes among, one or more of the nominees
listed for election as director, as such proxies shall determine, in their
sole and absolute discretion, in order to maximize the number of such nominees
elected to the Company's Board of Directors. To specify a different allocation
of votes for directors, mark the oval "Cumulate For" and write the number of
shares and the name(s) of the nominee(s) in the space provided below.
NOMINEES:
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Ray W. Ballmer, Douglas D. Donald, John W. Eschenlohr,Lawrence M. Glaser, Pete
Ingersoll, William E. Nettles,Ted Schwinden, Peter Steen
For For All Cumulate
All Except For
[ ] [ ] [ ]
2. To amend and restate the Company's 1994 Stock Plan to authorize an additional
one million shares of Common Stock to be made available for issuance under
the Plan.
For Against Abstain
[ ] [ ] [ ]
3. Ratification of appointment of Price Waterhouse LLP as the Company's
Independent Accountants.
For Against Abstain
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon any other
matters coming before the meeting.
Dated: __________________________________________________________________ , 1998
Signature(s)____________________________________________________________________
Signature(s)____________________________________________________________________
PLEASE SIGN NAME(S), EXACTLY AS SHOWN ABOVE. WHEN SIGNING AS EXECUTOR,
ADMINISTRATOR OR GUARDIAN, GIVE FULL TITLE AS SUCH. WHEN SHARES HAVE BEEN ISSUED
IN THE NAMES OF TWO OR MORE PERSONS, ALL SHOULD SIGN.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
STILLWATER MINING COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 1998
The undersigned hereby appoints William E. Nettles 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 20, 1998 at the Annual Meeting of
Stockholders to be held in Denver, Colorado on May 15, 1998 or at any
postponements or adjournments, hereby revoking all former proxies.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1), (2) AND
(3) IN ACCORDANCE WITH THE SPECIFICATION MADE AND "FOR" SUCH PROPOSALS IF
THERE IS NO SPECIFICATION.
(continued on reverse side)
