STILLWATER MINING COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999
To Our Stockholders:
On Thursday, May 27, 1999, Stillwater Mining Company (the "Company") will
hold its 1998 Annual Meeting of Stockholders at the Westin Tabor Center Hotel,
1672 Lawrence Street, Denver, Colorado 80202, at 10:00 a.m., Mountain Daylight
Time.
Only Stockholders who owned stock at the close of business on March 29,
1999 may vote at this meeting or any adjournments that may take place. At the
meeting, the Stockholders will:
1. Amend the Company's Restated Certificate of Incorporation to
alter the required number of directors;
2. Elect the Board of Directors;
3. Approve the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 1999.
4. Attend to other business properly presented at the meeting or any
postponements or adjournments thereof.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE THREE
PROPOSALS OUTLINED IN THIS PROXY STATEMENT.
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 15, 1999.
By Order of the Board of Directors
LOGO
Michael A. Shea, Secretary
Denver, Colorado
April 15, 1999
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>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION..........................................................1
Solicitation..............................................................1
Voting Rights.............................................................1
Voting....................................................................2
Revocability of Proxy.....................................................2
PROPOSAL ONE: APPROVAL OF AMENDMENT TO THE RESTATED CERTIFICATE
OF INCORPORATION TO ALTER THE REQUIRED NUMBER OF DIRECTORS................3
Approval by Stockholders..................................................3
PROPOSAL TWO: ELECTION OF DIRECTORS.........................................4
Nominees for Election.....................................................4
Meetings and Committees of the Board......................................5
Director Compensation.....................................................6
EXECUTIVE COMPENSATION AND OTHER INFORMATION.................................7
Executive Compensation....................................................7
Employment Agreements.....................................................8
Section 16(a) Beneficial Ownership Reporting Compliance...................9
Stock Option Grants.......................................................9
Option Values............................................................10
Report of the Compensation Committee of the Board of Directors...........10
Performance Graph........................................................13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............14
PROPOSAL THREE: APPOINTMENT OF INDEPENDENT ACCOUNTANTS.....................15
STOCKHOLDER PROPOSALS.......................................................16
GENERAL.....................................................................16
<PAGE>
STILLWATER MINING COMPANY
1200 17TH STREET, SUITE 900
DENVER, COLORADO 80202
---------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999
---------------
This Proxy Statement is furnished to the stockholders of Stillwater Mining
Company (the "Company") in connection with the solicitation by the Board of
Directors of proxies to be voted at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on May 27, 1999, or any postponements or
adjournments thereof. The Meeting is being held to: (i) amend the Company's
Restated Certificate of Incorporation to alter the required number of directors;
(ii) elect eight directors to hold office until the next Annual Meeting of
Stockholders or until their respective successors are elected; (iii) ratify the
appointment of PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending December 31, 1999; and (iv) 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
1200 17th Street, Suite 900, Denver, Colorado 80202, and its telephone number is
(303) 352-2060.
GENERAL INFORMATION
SOLICITATION
The enclosed proxy is being solicited by the Board of Directors of the
Company on behalf of the Company. The cost of this solicitation will be borne by
the Company. In addition to solicitation by mail, the 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. The Company will
reimburse such banks and brokers for their reasonable out-of-pocket expenses.
VOTING RIGHTS
Holders of shares of Common Stock at the close of business on March 29,
1999 (the "Record Date") are entitled to notice of and to vote at the Meeting.
On the Record Date, _____ 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, 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
<PAGE>
stockholder is entitled to vote 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.
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 to the Restated Certificate of Incorporation and the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants. If a
stockholder abstains from voting on any matter, the Company intends to count
such stockholder 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 amendment to the Restated Certificate of
Incorporation, FOR the election as directors of the nominees named in this proxy
statement and FOR ratification of the selection of PricewaterhouseCoopers LLP as
the Company's 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. Abstentions and broker nonvotes,
therefore, have the same effect as votes against a proposal.
Both 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 or postponements or
adjournments thereof, then the proxy holders named in the proxy intend 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 (i) written
notice to the Secretary, (ii) receipt of a proxy properly signed and dated
subsequent to an earlier proxy or (iii) by revocation of a written proxy by
request in person at the Meeting. If not revoked, the shares of Common Stock
represented by a proxy will be voted according to the proxy.
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<PAGE>
PROPOSAL ONE
APPROVAL OF AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION TO ALTER THE REQUIRED NUMBER OF DIRECTORS
The Company's stockholders are being asked to approve a proposal to amend the
Restated Certificate of Incorporation to alter the required number of directors,
to provide the Board of Directors with the flexibility to increase and decrease
the size of the Board from seven to ten members.
The Company's Board of Directors has adopted, and is recommending that the
shareholders amend Article 5, Section 1 of the Company's Restated Certificate of
Incorporation to read as follows:
Article 5
SECTION 1 NUMBER. Except as otherwise provided for or fixed pursuant
to the provisions of Article 4 of this Certificate relating to the
rights of holders of any series of Preferred Stock, the number of
directors constituting the entire Board of Directors shall be set in
accordance with the bylaws of the Corporation; provided, however,
that the number of directors shall be no less than seven and no more
than ten.
The amendment would set the minimum number of directors at seven and the maximum
number of directors at ten rather than the current fixed number of seven
directors. The amendment is intended to conform the size of the Board to prior
practice and to provide the Company with flexibility in structuring its board.
The Board of Directors believes that the desirable size of the Board may change
from time to time, based on the availability of qualified persons and the needs
of the Company. As a result, the Company believes it is advantageous for the
Board of Directors to have the flexibility to make changes in the number of
directors within the limitations of the proposed amendment. In addition, the
Company is proposing to elect eight directors at the Meeting. Passage of this
proposal is necessary in order for the stockholders to validly elect all of the
nominees set forth in this Proxy Statement.
APPROVAL BY STOCKHOLDERS
Approval of this proposal requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company entitled to vote at the
Meeting. If approved by the stockholders, the amendment to Article 5, Section 1
will become effective upon the filing of a Certificate of Amendment to the
Company's Restated Certificate of Incorporation with the Secretary of State of
Delaware, which filing is expected to take place shortly after the Meeting. If
this proposal is not approved by the stockholders, the Certificate of Amendment
will not be filed.
The Board of Directors has concluded that the amendment to the Company's
Restated Certificate of Incorporation to alter the required number of directors
is in the best interests of the stockholders and unanimously recommends that you
vote FOR the approval of Proposal Number 1.
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<PAGE>
PROPOSAL TWO
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 respective successors are elected, and each person 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 to vote 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 that 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 additional relevant information is set forth below. Such
information is based upon information furnished to the Company by such nominee.
NOMINEES FOR ELECTION
JOHN E. ANDREWS (AGE 52). Mr. Andrews has been a director of the Company
since January 1999. He has served as the Company's President and Chief Operating
Officer since 1994. From 1989 to 1993 he served as Director of International
Mining Operations of Phelps Dodge Corporation, an international mining company.
From 1979 to 1989 he served in a variety of engineering and management positions
with Exxon Corporation, an international energy and resource corporation.
DOUGLAS D. DONALD (AGE 76). 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, a financial consulting firm. Mr. Donald is also a
director of Piedmont Mining Company, a mining company; Repadre Capital Corp., a
venture capital firm; and the Gold Growth Fund, a mutual fund.
RICHARD E. GILBERT (AGE 58). Mr. Gilbert has been a director of the
Company since January 1999. Mr. Gilbert most recently served as a Vice President
of Robert Fleming, Inc., an investment banking firm, from 1997 until his
retirement in 1998. From 1991 to 1997, Mr. Gilbert served as Managing Director
of Everen Securities, an investment banking firm.
-4-
<PAGE>
LAWRENCE M. GLASER, PH.D. (AGE 43). Dr. Glaser is currently an independent
corporate advisor to the mining industry and has been a director of the Company
since May 1997. From 1997 to 1998, Dr. Glaser served as Senior Global Mining
Analyst of Caspian Securities ("Caspian"), an investment advisory firm. From
1992 until joining Caspian, Dr. Glaser was a mining analyst at Muzinich & Co.
Inc., a registered broker/ dealer.
APOLINAR GUZMAN (AGE 64). Mr. Guzman has been a director of the Company
since July 1998. Mr. Guzman is currently an independent mining and mine
construction consultant. For the past 22 years, he served in various engineering
and management positions with RTZ Corporation, an international mining company.
WILLIAM E. NETTLES (AGE 55). Mr. Nettles has been Chairman of the Board of
the Company since he joined the Company as Chief Executive Officer in August
1997. Prior to this time, Mr. Nettles served with Engelhard Corporation, a
precious metals and chemical company, as the Vice President and Chief Financial
Officer from 1995 to 1997 and as a Vice President and General Manager from 1988
to 1994.
TED SCHWINDEN (AGE 73). Mr. Schwinden has been a director of the Company
since October 1994. From 1981 until 1989, when Mr. Schwinden retired, he 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 68). 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 mining company, a position he assumed in 1996 until
1997. He served as Chairman of Eldorado Corporation Ltd., a mining company, from
1993 until September 1994, and he was the President, Chief Executive Officer and
a Director of Lac Minerals Ltd., a mining company, from August 1994 until
September 1994. From 1992 to 1994, he served as the President and Chief
Operating Officer of Homestake Mining Company, a mining company. Previously, he
served as the President and Chief Executive Officer of International Corona
Corporation, a mining company, in Vancouver, Canada. Mr. Steen is also a
director of Dynatic Corporation, a mining company, and Tiomin Resources, Inc., a
mining company.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met eight times during fiscal 1998. Each director
attended 75% or more of the total number of meetings of the Board and committees
on which he served that were held during 1998. The Board of Directors has
established the following standing committees:
AUDIT COMMITTEE. The Audit Committee held three meetings during 1998 and
currently is comprised of Messrs. Schwinden (Chairman), Gilbert 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 four meetings
during 1998 and is currently comprised of Messrs. Glaser (Chairman), Donald and
Guzman. The principal responsibilities of the Compensation Committee are to
establish policies and determine matters involving executive compensation,
recommend changes in employee benefit programs, approve the grant of stock
options and
-5-
<PAGE>
stock awards under the Company's stock plans and provide assistance to
management regarding key personnel selection.
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 must be addressed to
the secretary of the Company and 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, the proposed nominee's principal
occupation or employment, the class and number of shares of capital stock of the
Company that are beneficially owned by the proposed nominee and other
information required to be disclosed by the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). 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 that are beneficially owned by
such stockholder.
DIRECTOR COMPENSATION
The Company pays each nonemployee director $800 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 $800 for each committee meeting attended; however, the chairman
of each standing committee of the Board of Directors receives a fee of $1,000
for each committee meeting attended. All directors are reimbursed for reasonable
travel expenses.
The 1998 Equity Incentive Plan (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 next three reappointments or reelections, vesting six months after each such
grant. 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.
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<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 officers, other than
the Chief Executive Officer, whose individual salary and bonus exceeded $100,000
during 1998 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING ALL OTHER
SALARY BONUS SATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)/1/ ($)/2/ (#) ($)/3/ /4/
- --------------------------- ---- -------- ------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William E. Nettles /5/..... 1998 326,152 212,518 29,650 -- 120,000 8,828
Chairman and Chief 1997 177,632 80,000 66,810 -- 150,000 633
Executive Officer
John E. Andrews............ 1998 237,691 125,544 -- -- 10,428
President and Chief 1997 151,731 12,720 30,187 12,750 9,828
Operating Officer 1996 151,154 -- -- -- 12,750 9,882
James A. Sabala /6/........ 1998 127,500 80,000 84,739 -- 45,000 828
Vice President and Chief
Financial Officer
Gilmore Clausen............ 1998 121,288 47,064 -- -- 18,000 7,862
Vice President Nye 1997 113,583 6,441 -- 600 10,500 7,076
Operations 1996 109,015 3,577 (3,578) -- 1,929 3,951
</TABLE>
- ------------------
/1/ Amount includes reimbursement for relocation expenses of: $29,650 and
$51,810 for Mr. Nettles in 1998 and 1997, respectively; $84,739 for
Mr. Sabala in 1998; and $3,578 for Mr. Clausen in 1996.
/2/ Shares of restricted stock were awarded in January 1997 to executives in
lieu of bonuses for 1996 and salary increases for 1997 as follows: 1,725
shares to Mr. Andrews and 600 shares to Mr. Clausen. Restrictions on such
shares lapse 50% after one year and the remainder after two years. As of
December 31, 1997, restricted stock holdings were as follows:
Mr. Andrews - 1,150 shares valued at $19,263 and Mr. Clausen - 600 shares
valued at $10,050.
/3/ Amounts include life insurance premium payments during 1998 of: $828 for
Messrs. Nettles, Andrews and Sabala; and $751 for Mr. Clausen.
/4/ Amounts include 401(k) contributions made by the Company of: $8,000, for
Mr. Nettles; $9,600 for Mr. Andrews; and $720 for Mr. Clausen.
/5/ Mr. Nettles was elected as an executive officer and a director of the
Company in August 1997. 1997 compensation amounts represent compensation
paid for August through December 1997.
/6/ Mr. Sabala was elected as an executive officer on April 1, 1998. 1998
compensation amounts represent compensation for April through December
1998.
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<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Nettles,
Andrews, Sabala and Clausen.
WILLIAM E. NETTLES. Mr. Nettles' initial employment agreement became
effective on August 13, 1997 and was amended on August 10, 1998, and amended and
restated on December 15, 1998. The agreement ends on December 31, 1999 and may
be continued for additional two year terms. It is terminable by the Company or
Mr. Nettles upon 90 days' notice. Under the agreement, Mr. Nettles is entitled
to receive: (i) an initial base salary of $325,000, subject to adjustment; (ii)
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); (iii) options to purchase 120,000 shares of Common Stock;
and (iv) employee benefits. If Mr. Nettles is terminated without cause or
resigns voluntarily for Good Reason (as defined in his 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, Mr. 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 pursuant to the agreement. It is
terminable by the Company or Mr. Andrews upon 90 days' notice. The agreement
entitles Mr. Andrews to receive: (i) an initial base salary of $150,000, subject
to adjustment; (ii) 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); (iii) options to purchase 100,000 shares of
Common Stock; and (iv) standard employee benefits. If Mr. Andrews is terminated
without cause or resigns voluntarily for Good Reason (as defined in his
employment agreement) 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.
JAMES A. SABALA. Mr. Sabala's employment agreement became effective on
April 1, 1998 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. Sabala upon 90 days' notice. The agreement entitles Mr. Sabala to receive:
(i) an initial base salary of $170,000, subject to adjustment; (ii) a
performance bonus in an amount to be determined by the Board (the target of
which is 35% of his base salary and the maximum of which cannot exceed 70% of
base salary), (iii) options to purchase 45,000 shares of Common Stock; and
(iv) standard employee benefits. If Mr. Sabala is terminated without cause or
resigns voluntarily for Good Reason (as defined in this employment agreement)
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.
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<PAGE>
GIL CLAUSEN. Mr. Clausen's employment agreement became effective on
November 30, 1995 and had an original term of one year, which is continued from
year to year unless altered or terminated pursuant to the agreement. It is
terminable by the Company or Mr. Clausen upon 90 days' notice. The agreement
entitles Mr. Clausen to receive: (i) an initial base salary of $108,000, subject
to adjustment; (ii) a performance bonus in an amount to be determined by the
Board (the target of which is 25% of his base salary and the maximum of which
cannot exceed 50% of base salary); (iii) options to purchase 37,500 shares of
Common Stock; and (iv) standard employee benefits. If Mr. Clausen is terminated
without cause or resigns voluntarily for Good Reason (as defined in his
employment agreement) the Company is required to pay him an amount equal to his
annual base salary plus his target bonus. The employment agreement also contains
a customary nondisclosure covenant and a one-year covenant not to compete.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission and the American Stock Exchange, Inc. initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Based solely on its review of copies of the Section 16(a)
reports and written representations the Company has received, the Company
believes that during fiscal 1998, all of its directors, executive officers and
greater than 10% beneficial owners had timely filed all required reports except
that
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Stock Plan to the Named Executive Officers in 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZED VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM/3/
GRANTED IN FISCAL PRICE EXPIRATION -------------------------------
NAME (#)/1/ /2/ YEAR ($/SH)(1) DATE 5% 10%
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William E. Nettles.. 120,000/4/ 12.92% $15.50 6/1/08 $1,169,737 $2,964,356
John E. Andrews..... 67,500 7.27% 12.75 1/22/08 541,239 1,371,612
James A. Sabala..... 45,000 4.84% 16.71 4/1/08 472,846 1,198,290
Gil Clausen......... 18,000 1.94% 12.75 1/22/08 144,330 365,763
</TABLE>
- -------------------
/1/ The exercise price for each grant is equal to 100% of the fair market
value of a share of Common Stock on the date of grant.
/2/ The Options vest and become exercisable in three equal annual installments
on the anniversary date of the date of grant.
/3/ Assumed values result from the indicated prescribed rates of stock price
appreciation through the expiration date. The actual value of these
option grants is dependent on the future performance of the Common Stock.
/4/ Mr. Nettles' options automatically vest and become exercisable immediately
upon a change in control of the Company or in the event Mr. Nettles is
terminated without cause or resigns for Good Reason.
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<PAGE>
OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning options exercised during 1998, the value realized
upon exercise and the number and value of unexercised options held as of
December 31, 1998.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE REALIZED OPTIONS AT 12/31/98 AT 12/31/97
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE/1/
- -------------------------- ------------------- ----------------- ---------------------------- ------------------------------
<S> <C> <C> <C> <C>
William E. Nettles........ -- -- 50,000/ 220,001 $633,334 / $2,606,686
John A. Andrews........... 37,500 $528,517 112,500 / 67,500 $2,233,920 / $939,377
James A. Sabala........... -- -- 0 / 45,000 $0 / $448,128
Gilmore Clausen........... -- -- 57,750 / 18,000 $859,375 / $250,500
- ----------------------
</TABLE>
/1/Amounts shown in this column represent the market value of the underlying
Common Stock at December 31, 1998 of $26.67 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
POLICY. The Compensation Committee of the Board of Directors is
responsible for establishing and administering the Company's compensation
policies and plans for the executive officers of the Company, and for making
recommendations to the full Board with respect to executive compensation
matters. The objective of the compensation plan is to ensure the Company is able
to attract and retain the highest caliber executives, ensure that management's
interests are aligned with those of the stockholders, while also ensuring that
corporate and individual performance parameters represent a significant
component of the total compensation package. Performance is gauged by the
Compensation Committee in terms of both corporate and individual contributions
to the Company. These include net earnings to common stockholders, metal
production volumes and costs, successful implementation of risk mitigation and
management programs, workforce safety, environmental stewardship, progress in
the expansion program and other factors.
The Compensation Committee's policy is to construct a compensation package
that works to the benefit of stockholders and management through balancing both
short and long term components of the compensation plan. The Compensation
Committee believes that through a properly balanced plan, management can be
motivated to continually outperform their peer group, without sacrificing long
term performance and growth. The Compensation plan adopted by the Board of
Directors integrates a combination of base salary, annual quantitative
performance bonuses with additional discretionary awards, plus annual option
grants.
The option grants expire after ten years, vest over a three-year period
and are issued with an exercise price equal to the market price of the stock on
the date of issue.
BASIS OF COMPENSATION. The Compensation Committee is responsible for
retaining and using outside independent compensation consultants and uses
various mining industry compensation surveys in its
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<PAGE>
establishment of and amendments to executive compensation plans. The
Compensation Committee's policy is to align executive officers base salaries at
or below the industry midpoint for North American precious metals mining
companies of a similar size in terms of employees, revenue and market
capitalization. A midpoint basis is used by the Compensation Committee rather
than an industry average, due to highly anomalous compensation for companies at
the top end of the peer group. Independent compensation consultants are retained
for a full and comprehensive evaluation of the Company's compensation structure
and levels every other year.
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 which
takes into account peer group salary midpoints. Base salaries for new executive
officers are determined by individual experience and planned responsibilities
within the Company, and are set in relation to a peer group midpoint. Additional
base salary adjustments are made annually where substantive changes occur in the
responsibilities of an executive officer. Base salaries are generally reviewed
in January of each year; however, depending upon when a new executive officer
joins the Company, a salary review may take place in June.
INCENTIVE SHORT TERM COMPENSATION. Each executive officer's employment
agreement provides for a bonus payable at the discretion of the Compensation
Committee. Annual calendar year incentive bonuses are based upon a purely
quantitative formula, although the Compensation Committee maintains the right to
increase or decrease these amounts. Executive officer's annual bonuses have
targets and maximum caps as a percentage of the annual base salary. Maximum caps
are twice the target values. Bonuses consist of two distinct components: half of
the targeted bonus is linked to net income of the Company and half is linked to
metal production rates and production costs. Annual target bonuses are set each
year relative to the annual budget and a peer group midpoint and vary with each
executive officer's position within the Company.
OPTION GRANTS - LONG TERM INCENTIVE COMPENSATION. The Compensation
Committee provides additional incentive through the annual discretionary grant
of stock options in the Company under the Company's stock option plans. The
purpose of the stock options plans is to reward and provide incentives for
executive officers, employees, nonemployee directors and consultants of the
Company. Such stock options are the dominant component of long term remuneration
within the total compensation package. Stock options granted to executive
officers have a life of ten years, and vest in equal installments over three
years. Stock option grants as a form of long term compensation were used by over
80% of the peer group companies during 1997. Stock options are granted at an
exercise price equal to the market price of the stock on the date of issue. The
Compensation Committee views such option grants as a core component of the
policy of management incentive and performance motivation, which also further
align the interests of management with those of the owners of the Company. The
Compensation Committee has and will continue to examine alternative option grant
strategies, and plans and other mechanisms for providing equity linked
compensation for management. The Compensation Committee believes that the
current plan offers a responsible basis for management's short and long term
balance of risk to return for stockholders. Due to certain changes to management
with the addition of a new Chairman and CEO, CFO and two new Vice Presidents
during the past two years, the basis for the size of option grants to
individuals has fluctuated due to the need for initial grants on inception of
employment. Option grant amounts take into account the projected future value of
grants, which is based upon the price of the underlying shares, so future grant
amounts may also fluctuate appreciably from year to year.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S 1998 COMPENSATION. Mr. Nettles'
base salary of $326,152 and bonus of $212,518 were based upon research reports
by an independent consulting firm, with the goal of positioning his compensation
at the median level of his peers in the industry. In 1998, Mr. Nettles
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<PAGE>
was granted options to purchase 120,000 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, bonus and option grant, the
Compensation Committee considered the compensation 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.
Lawrence M. Glaser
Douglas D. Donald
Apolinar Guzman
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on Common Stock as of the Company's initial
public offering on December 16, 1994 through December 31, 1998 with the
cumulative total return on the following indices, assuming the reinvestment of
all dividends: (i) the Standard & Poor's 500, (ii) the Russell 2000, (iii) the
S&P Gold and Precious Metals Mining Index and (iv) the S&P Small Cap Gold and
Precious Metals Mining Index. The Company has decided to change to the Russell
2000 and S&P Gold and Precious Metals Mining Index from the S&P Small Cap Gold
and Precious Metals Mining Index because the Company believes that the
corporations included in the Russell 2000 and S&P Gold and Precious Metals
Mining Index are more comparable to the Company than those in the S&P Small Cap
Gold and Precious Metals Mining Index. For the same reason, the Company no
longer compares itself with the Johannesburg Stock Exchange ("JSE") Actuaries'
Platinum Index, a subsection of the JSE Actuaries' All Share Index, or the North
American regional index of the Financial Times Gold Mining Index.
CUMULATIVE TOTAL STOCKHOLDER RETURN
[GRAPHIC APPEARS HERE]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
------------------------------------------------------------
12/16/94 12/94 12/95 12/96 12/97 12/98
----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Stillwater Mining Company 100 105 148 139 130 308
S&P Small Cap Gold & Precious Metals Mining 100 103 114 134 94 113
S&P 500 100 101 140 172 229 294
Russell 2000 100 103 132 154 188 187
S&P Gold & Precious Metals Mining 100 106 120 119 78 68
</TABLE>
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes information as of March 1, 1999, 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.
NAME AND ADDRESS Percent
OF BENEFICIAL OWNER Amount Of Class
- ----------------------------------------- --------------- --------------
Fidelity Management Research Corporation. 3,504,000 10.1%
82 Devonshire Street
Boston, MA 02109/1/
American Express Company and affiliates.. 2,575,000 7.4%
American Express Tower
World Financial Center
New York, NY 10285/2/
Scudder Kemper Investments, Inc.......... 2,605,400 7.5%
Two International Place
Boston, MA 02110/3/
The Prudential Insurance Company of America 2,717,000 7.9%
751 Broad Street
Newark, NJ 07102-3777/4/
John E. Andrews/5/....................... 138,334 *
Douglas D. Donald/6/..................... 36,900 *
Richard E. Gilbert....................... 1,000 *
Lawrence M. Glaser/7/.................... 34,650 *
Apolinar Guzman/8/....................... 15,000 *
William E. Nettles/9/.................... 65,277 *
Ted Schwinden/10/........................ 33,300 *
Peter Steen/11/.......................... 61,875 *
James A. Sabala/12/...................... 15,500 *
Gil Clausen/13/.......................... 57,750 *
All directors and executive officers as a group 459,586 1.3%
(10 persons)/4//5//6//7//8//9//10//11//12//13/
- ---------------
* Indicates ownership of less than 1%.
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<PAGE>
/1/
/2/ The number of shares reported in this table is based upon the Schedule 13G,
dated December 31, 1998, 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 ____ shares, and shared voting power over _____
shares as of December 31, 1998. The business address disclosed in Schedule
13G for American Express Financial Corporation is IDS Tower 10, Minneapolis,
Minnesota 55440.
/3/ The number of shares reported 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 ____ shares, shared voting
power over _____ shares, and sole dispositive power over 1,143,018 shares as
of December 31, 1998.
/4/ 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
_____ shares, shared voting power over ______ shares, sole dispositive power
over 1,700 shares and shared dispositive power over _____ shares as of
December 31, 1998.
/5/ Includes 101,428 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
/6/ Includes: (i) 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) _____ shares issuable upon exercise of stock
options exercisable currently or within 60 days.
/7/ Includes 33,750 shares issuable upon exercise of stock options exercisable
currently or within 60 days. (
/8/ Includes 15,000 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
/9/ Includes 50,000 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
/10/Includes 33,150 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
/11/Includes 33,750 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
/12/Includes 15,000 shares issuable upon exercise of stock options exercisable
currently or within 60 days.
/13/Includes 57,750 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
PricewaterhouseCoopers LLP as the Company's independent accountants for the year
ending December 31, 1999. A representative of PricewaterhouseCoopers 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.
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<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 1999 is expected to be held on or
about May 25, 2000, and proxy materials in connection with that meeting are
expected to be mailed on or about April 1, 2000. Stockholder proposals prepared
in accordance with the proxy rules must be received by the Company on or before
December 17, 1999. 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, 1998 is being mailed to stockholders with this Proxy Statement.
By Order of the Board of Directors,
Michael A. Shea
Secretary
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<PAGE>
STILLWATER MINING COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[X]
1. To amend the Company's Restated Certificate of Incorporation to alter the
required number of directors.
For Against Abstain
[ ] [ ] [ ]
2. 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:
John E. Andrews, Douglas D. Donald, Richard E. Gilbert, Lawrence M. Glaser,
Apolinar Guzman, William E. Nettles, Ted Schwinden, Peter Steen
For For All Cumulate
All Except For
[ ] [ ] [ ]
3. Ratification of appointment of PricewaterhouseCoopers 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: __________________________________________________________________ , 1999
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.
- ------------------------------------------------------------------------------
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<PAGE>
FOLD AND DETACH HERE
STILLWATER MINING COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 1999
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 29, 1999 at the Annual Meeting of Stockholders to
be held in Denver, Colorado on May 27, 1999 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)
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