<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
Texas Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<S> <C>
TEXAS INDUSTRIES, INC.
[TXI LOGO] 1341 W. MOCKINGBIRD LANE - DALLAS, TEXAS 75247 - (214)
647-6700
</TABLE>
August 29, 1996
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Texas Industries, Inc., to be held at 9:30 A.M. Central Daylight Time, on
Tuesday, October 15, 1996, at the Dallas Public Schools Environmental Education
Center, 1600 Bowers Road, Seagoville, Texas.
The following Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting we will also
report on the operations of the Company. Our 1996 Annual Report accompanies this
Proxy Statement.
It is important that your shares be represented at the Meeting regardless
of the size of your holdings. If you are unable to attend in person, we urge you
to participate by voting your shares by proxy. You may do so by filling out and
returning the enclosed proxy card.
If you arrive early, you are invited to have coffee and meet informally
with the Directors.
Sincerely,
/s/ ROBERT D. ROGERS
----------------------------------
ROBERT D. ROGERS
President
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 15, 1996
The Annual Meeting of Shareholders of Texas Industries, Inc. (the
"Company") will be held at the Dallas Public Schools Environmental Education
Center, 1600 Bowers Road, Seagoville, Texas, on Tuesday, October 15, 1996, at
9:30 A.M. (C.D.T.) for the following purposes:
1. To elect three (3) Directors to terms expiring in 1999.
2. To approve the performance-based incentive compensation provision
of the employment contract of the Company's Chief Executive Officer.
3. To transact such other business that may properly come before the
Meeting or any adjournment thereof.
Only Shareholders of record at the close of business on August 19, 1996,
will be entitled to vote at the Meeting. A list of such Shareholders will be
open to the examination of any Shareholder during ordinary business hours for a
period of ten days prior to the Meeting, at the Executive Offices of the Company
at 1341 W. Mockingbird Lane, Dallas, Texas.
While you are encouraged to attend the Meeting, you are requested to date,
sign and return promptly the accompanying proxy in the enclosed envelope
provided for that purpose.
By Order of the Board of Directors,
/s/ ROBERT C. MOORE
----------------------------------
ROBERT C. MOORE
Secretary
Dallas, Texas
August 29, 1996
<PAGE> 3
<TABLE>
<S> <C>
TEXAS INDUSTRIES, INC.
[TXI LOGO] 1341 W. MOCKINGBIRD LANE - DALLAS, TEXAS 75247 - (214)
647-6700
</TABLE>
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 15, 1996
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of Texas Industries, Inc., a Delaware
corporation (the "Company"), of proxies in the accompanying form for exercise at
the Annual Meeting of Shareholders of the Company to be held on October 15,
1996, and at any adjournment thereof. The approximate date on which this Proxy
Statement and accompanying proxy were first sent to Shareholders is August 29,
1996.
The cost of soliciting proxies in the accompanying form has been, or will
be, borne by the Company. In addition to solicitation by mail, the Company will
request banks, brokers and other custodians, nominees, and fiduciaries to send
proxy material to the beneficial owners and to secure their voting instructions,
if necessary. The Company will reimburse them for their expenses in so doing.
Officers and regular employees of the Company may solicit proxies personally, by
telephone or telegrams from some Shareholders, if proxies are not promptly
received. In addition, the Company has retained ChaseMellon Shareholder Services
to assist in the solicitation of proxies at a cost of $5,000 plus reasonable
out-of-pocket expenses.
OUTSTANDING VOTING STOCK AND QUORUM
The outstanding voting securities of the Company as of August 19, 1996,
were 11,150,880 shares of the Common Stock of the Company. Each share is
entitled to one vote. The presence at the Meeting, in person or by proxy, of the
holders of a majority of the issued and outstanding voting securities of the
Company is necessary to constitute a quorum to transact business.
VOTING OF PROXY
The proxy enclosed is designed to permit each Shareholder of record at the
close of business on August 19, 1996, to vote at the Annual Meeting and at any
adjournment thereof. Shares cannot be voted at the Meeting unless the owner is
present or represented by proxy. Any proxy may be revoked prior to the voting by
notice in writing to the Secretary of the Company at the address stated above.
The shares represented by any unrevoked proxy in the accompanying form, if such
proxy is properly executed and returned, will be voted in accordance with the
specifications made thereon, or in the absence of such specifications, in
accordance with the Board of Directors' recommendations.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table furnishes information concerning all persons known to
the Company to beneficially own 5% or more of any class of voting stock of the
Company as of June 30, 1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER SECURITY OF BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------------ ---------------- ----------------------- --------
<S> <C> <C> <C>
FMR Corp. Common Stock 1,371,100(1) 12.41%
82 Devonshire Street
Boston, Massachusetts 02109
Neuberger & Berman L.P. Common Stock 637,500(2) 5.77%
605 Third Ave.
New York, New York 10158-3698
</TABLE>
- ---------------
(1) Based on Schedule 13G dated February 14, 1996 which indicates that FMR Corp.
has sole power to vote or to direct the vote over 43,300 shares and sole
power to dispose or to direct the disposition over 1,371,100 shares.
(2) Based on Schedule 13G dated February 12, 1996 which indicates that Neuberger
& Berman L.P. has sole voting power over 369,750 shares, shared voting
power over 110,000 shares and shared dispositive power over 637,500 shares.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The bylaws of the Company provide for a board of not fewer than three nor
more than twenty-one directors with the actual number to serve at any time to be
determined by resolution of the board. The bylaws further provide that the board
shall be divided into three classes, each class being as nearly equal in number
as possible. The three classes have staggered terms of three years. The terms of
office of three of the Directors expire at this Annual Meeting and the proxies
solicited hereby cannot be voted for a greater number of persons than the three
nominees named below. Unless otherwise indicated, all proxies that authorize the
persons named therein to vote for the election of directors will be voted for
the election of the nominees named below, each of which is presently a Director
of the Company. Directors are elected by plurality vote. If any of the nominees
named should not be available for election as a result of unforeseen
circumstances, it is the intention of the persons named in the proxy to vote for
the election of such substitute nominee, if any, as the Board of Directors may
propose.
NOMINEES FOR DIRECTORS
The following are nominees for election as directors of the Company for a
term of office expiring at the Annual Meeting of Shareholders in 1999 or until
their respective successors shall have been elected and qualified.
<TABLE>
<CAPTION>
SERVED AS PROPOSED
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE DURING PAST FIVE YEARS* SINCE EXPIRE
- ---------------------- --- --------------------------------------------------------- --------- --------
<S> <C> <C> <C> <C>
Robert Alpert........... 64 Chairman of the Board of Alpert Companies (investments) 1975 1999
Dallas, Texas(b)(c)
Richard I. Galland...... 80 Attorney at Law since January 1991(d) 1974 1999
Elizabeth C. Williams... 53 Vice President for Business & Finance/Treasurer, Southern 1995 1999
Methodist University, Dallas, Texas
</TABLE>
2
<PAGE> 5
CONTINUING DIRECTORS
The term of office for each of the continuing directors expires at the
Annual Meeting of Shareholders to be held in the year indicated below, or until
his or her successor shall have been elected and qualified.
<TABLE>
<CAPTION>
SERVED AS
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE DURING PAST FIVE YEARS* SINCE EXPIRE
- ----------------------- --- --------------------------------------------------------- --------- --------
<S> <C> <C> <C> <C>
Gordon E. Forward...... 60 President and Chief Executive Officer of Chaparral Steel 1991 1997
Company(c)(f)
James M. Hoak, Jr...... 52 Chairman of Heritage Media Corporation (broadcasting and 1995 1997
advertising), Dallas, Texas; Chairman of Hoak Capital
Corporation (private investment company), Dallas,
Texas, since 1991; Chairman of James M. Hoak & Co.
(investment banking) and Hoak Securities Corp.
(securities broker-dealer), Dallas, Texas since 1995;
Chairman and Chief Executive Officer of Crown Media,
Inc. (cable television), Dallas, Texas, from
1991-1995(e)
Ralph B. Rogers........ 86 Chairman of the Board of Directors of the Company(a) 1951 1997
Robert D. Rogers....... 60 President and Chief Executive Officer of the 1970 1998
Company(a)(b)(c)
Ian Wachtmeister....... 63 President and Chief Executive Officer of The Empire, AB, 1977 1998
Stockholm, Sweden
Gerald R. Heffernan.... 76 President, G.R. Heffernan & Associates, Ltd., Toronto, 1986 1998
Ontario, Canada(c)
</TABLE>
- ------------------------------
* Based upon information provided by the Directors to the Company as of June
30, 1996.
(a) Mr. Robert D. Rogers is the son of Mr. Ralph B. Rogers.
(b) Messrs. Alpert and Rogers are members of the Board of Directors of
Consolidated Freightways, Inc.
(c) Messrs. Rogers, Heffernan, Alpert and Forward are members of the Board of
Directors of Chaparral Steel Company.
(d) Mr. Galland is a member of the Board of Directors of D.R. Horton, Inc. and
Associated Materials Inc.
(e) Mr. Hoak is a member of the Board of Directors of Airgas, Inc., Pier I
Imports, Inc. and MidAmerica Energy Company.
(f) Mr. Forward is a member of the Board of Directors of Noranda Forest Inc.
BOARD COMMITTEES, MEETINGS, ATTENDANCE AND FEES
The Board of Directors has an Audit Committee and a Compensation Committee
and the full Board of Directors acts in lieu of a Nominating Committee. The
Company's Compensation Committee, composed during the last fiscal year of
Directors Galland, Alpert and Hoak, met three times during the year. The
Compensation Committee recommends and approves the salaries of top management of
the Company and all stock option awards to key employees of the Company and its
subsidiaries. Its actions are subject to the review and approval of the Board of
Directors.
The Company's Audit Committee, composed during the last fiscal year of
Directors Alpert, Heffernan, Wachtmeister and Williams, met twice with the
independent public accountants during the year. The Audit Committee reviews the
scope, plan and results of the annual audit with the independent auditors;
approves and ratifies each professional service provided by the independent
auditors; considers the independence of the auditors; and reviews and approves
all non-audit fees paid to the independent auditors.
The Board, acting in lieu of a Nominating Committee, will consider nominees
for directors recommended by shareholders. Communications to the Board may be
addressed in care of the Company's Secretary at the Company's Executive Offices.
The Board of Directors met four times during the last fiscal year. Except
for Mr. Alpert and Mr. Hoak, who each missed one meeting of the Compensation
Committee, each Director attended more than 75% of the meetings of the Board of
Directors and the meetings of the committees on which he or she served.
3
<PAGE> 6
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its affiliates currently
receive $15,000 per year plus $1,000 for each day that a Board or Committee
meeting is attended. Under a deferred compensation arrangement, such amount may
be deferred in whole or in part at the election of the director. Compensation so
deferred is denominated in shares of the Company's Common Stock determined by
reference to the average market price during the thirty (30) trading days prior
to the date of the arrangement. Dividends are credited to the account in the
form of common stock at a value equal to the fair market value of the stock on
the date of payment of such dividend. Each non-employee director is
automatically granted an option to purchase 10,000 shares of Common Stock when
first elected either by the Board, or by the Shareholders at an annual meeting,
and each time thereafter that such director is reelected at an annual meeting.
The Company also reimburses directors for travel, lodging and related expenses
they may incur in attending Board and/or Committee meetings.
OTHER TRANSACTIONS
No reportable transactions occurred between the Company and any director,
nominee for director, officer or any affiliate of, or person related to, any of
the foregoing since the beginning of the Company's last fiscal year (June 1,
1995).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised exclusively of Directors who are
not officers or employees of the Company. No executive officer of the Company
serves or has served during the year on the Compensation Committee or as a
director of another company, one of whose executive officers serves as a member
of the Compensation Committee or as a Director of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of June 30, 1996, the approximate number
of shares of Common Stock of the Company and common stock of the Company's 84%
owned subsidiary Chaparral Steel Company ("Chaparral") beneficially owned by
each Director, by each executive officer named in the Summary Compensation Table
and by all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMPANY CHAPARRAL
COMMON SHARES COMMON SHARES(1)
-------------------- --------------------
BENEFICIALLY BENEFICIALLY
OWNED** %(2) OWNED** %(3)
------------ ---- ------------ ----
<S> <C> <C> <C> <C>
Robert Alpert............................................. 7,555(4) * 1,000 *
Melvin G. Brekhus......................................... 14,812(4) * None *
Gordon E. Forward......................................... 20,570 * 113,100(5) *
Richard M. Fowler......................................... 55,132(4) * 46,100(5) *
Richard I. Galland........................................ 9,764(4) * None *
Gerald R. Heffernan(6).................................... 123,000(4) 1.1% None *
James M. Hoak, Jr. ....................................... 3,000(4) * None *
Robert C. Moore........................................... 20,742(4) * 22,600(5) *
Ralph B. Rogers(7)........................................ 31,910(4) * 5,000 *
Robert D. Rogers(8)....................................... 199,320(4) 1.8% 122,800(5) *
Tommy A. Valenta.......................................... 13,800(4) * None *
Ian Wachtmeister(9)....................................... 2,371 * None *
Elizabeth C. Williams..................................... 1,100(4) * None *
All Directors and Executive Officers as a
Group (18 Persons)...................................... 543,579(4) 4.8% 314,650(5) 1.1%
</TABLE>
- ---------------
* Represents less than one percent (1%) of the total number of shares
outstanding.
** Except as indicated in the notes below, each person has the sole voting and
investment authority with respect to the shares set forth in the above
table.
4
<PAGE> 7
(1) Chaparral common stock is listed for trading on the New York Stock Exchange.
(2) Based on the sum of (i) 11,120,531 shares of Common Stock, which on June 30,
1996, was the approximate number of shares outstanding, and (ii) the number
of shares subject to options exercisable by such person(s) within 60 days
of such date.
(3) Based on the sum of (i) 28,707,400 shares of common stock, which on June 30,
1996, was the approximate number of shares outstanding, and (ii) the number
of shares subject to options exercisable by such person(s) within 60 days
of such date.
(4) Includes, with respect to such person(s) shares of Common Stock subject to
options exercisable within 60 days of June 30, 1996, as follows: Ralph B.
Rogers, 3,000 shares; Robert D. Rogers, 70,000 shares; Robert Alpert, 5,000
shares; Melvin G. Brekhus, 9,300 shares; Richard M. Fowler, 15,100 shares;
Richard I. Galland, 3,000 shares; Gerald R. Heffernan, 3,000 shares; James
M. Hoak, Jr., 1,000 shares; Robert C. Moore, 10,300 shares; Tommy A.
Valenta, 12,237 shares; Elizabeth C. Williams, 1,000 shares; and all
Directors and Executive Officers as a Group, 165,137 shares.
(5) Includes, with respect to such person(s) shares of common stock subject to
options exercisable within 60 days of June 30, 1996, as follows: Gordon E.
Forward, 98,000 shares; Richard M. Fowler, 45,000 shares; Robert C. Moore,
22,000 shares; Robert D. Rogers, 82,000 shares; and all Directors and
Executive Officers as a Group, 251,000 shares.
(6) The wife of Mr. Heffernan owns 971 shares of Common Stock as to which he
disclaims beneficial ownership.
(7) The wife of Mr. Rogers owns 5,214 shares of Common Stock as to which he
disclaims beneficial ownership.
(8) The wife of Mr. Rogers owns 4,000 shares of Chaparral common stock as to
which he disclaims beneficial ownership.
(9) Includes 100 shares of Common Stock owned by the wife of Mr. Wachtmeister.
5
<PAGE> 8
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended May 31, 1996, 1995 and 1994, of those persons who were, at May 31, 1996,
(i) the Chief Executive Officer and (ii) the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
---------- PAYOUTS
ANNUAL COMPENSATION SECURITIES ---------- ALL OTHER
NAME AND --------------------- UNDERLYING LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ISSUER OPTIONS PAYOUTS($) ($)(5)
- -------------------------------- ----- --------- --------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Rogers(1)............. 1996 862,432 2,000,666 Company -- -0- 21,829
President and Chief Chaparral -- -0- -0-
Executive Officer 1995 637,324 727,050(4) Company 50,000 -0- 22,787
Chaparral 40,000 -0- -0-
1994 631,916 -0- Company -- -0- 22,635
Chaparral -- -0- -0-
Richard M. Fowler(2)............ 1996 220,625 69,497 Company 21,000 148,750 3,000
Vice President -- Chaparral -- -0- -0-
Finance 1995 190,000 85,500 Company -- 58,500 4,664
Chaparral 19,000 -0- -0-
1994 190,000 43,130 Company 16,500 38,000 3,600
Chaparral -- -0- -0-
Melvin G. Brekhus............... 1996 151,250 47,644 Company -- 129,500 5,122
Vice President -- 1995 140,000 63,000 Company 22,500 51,000 4,476
Cement 1994 140,000 31,780 Company -- 28,000 3,892
Tommy A. Valenta................ 1996 146,250 46,069 Company -- 127,750 3,898
Vice President -- 1995 135,000 60,750 Company 22,000 50,250 3,768
Concrete 1994 135,000 30,645 Company -- 27,000 2,746
Robert C. Moore(3).............. 1996 150,000 47,250 Company 17,000 92,500 4,454
Vice President, General Chaparral -- -0- -0-
Counsel and Secretary 1995 150,000 67,500 Company -- 42,500 3,953
Chaparral 3,000 -0- -0-
1994 130,000 29,510 Company 11,500 26,000 3,200
Chaparral -- -0- -0-
</TABLE>
- ---------------
(1) Mr. Rogers is Chairman of the Board of Chaparral and participates in its
stock option program.
(2) Mr. Fowler also serves as Vice President -- Finance and Treasurer of
Chaparral and participates in Chaparral's profit sharing, stock option and
performance share programs. During 1996, 1995 and 1994, he received profit
sharing payouts of $65,003, $27,631 and $19,038, respectively. He received
annual increments of profit sharing earned in 1989 but deferred of $309 in
1996, 1995 and 1994, respectively. Under the performance share program, he
received dividends of $5,123, $2,529 and $1,422 in 1996, 1995 and 1994,
respectively.
(3) Mr. Moore also serves as Vice President -- General Counsel and Secretary of
Chaparral and participates in its profit sharing and stock option programs.
During 1996, 1995 and 1994, he received profit sharing payouts of $44,195,
$21,814 and $13,026, respectively.
(4) Payment of all but $100,000 of this bonus was deferred pursuant to the terms
of Mr. Rogers' employment contract.
(5) Vested and non-vested portion of amounts contributed and allocated by
employer to employee benefit plans.
Effective June 1, 1996, the Company entered into a new five-year employment
contract with Mr. Robert D. Rogers, its President and Chief Executive Officer.
Under the contract, Mr. Rogers will receive an annual salary consisting of a
$300,000 base and an annual award of 10,816 shares of Common Stock, or the
market value thereof in cash. In the event the annual salary earned in a year is
greater than $900,000, the Board of Directors may, in its discretion, defer
payment of salary earned in excess of $900,000 until termination of employment.
Such deferred amounts shall be treated in the same manner as the deferred
incentive compensation discussed below. The contract also has two incentive
components. So long as he acts as the chief
6
<PAGE> 9
operating officer of the Company's cement/concrete business segment, Mr. Rogers
will participate in that segment's annual incentive plan approved each year by
the Board of Directors. In addition, the contract provides that in the event the
Company's consolidated average return on equity for the two consecutive fiscal
year periods ending May 31, 1997 and the three consecutive fiscal year periods
ending May 31, 1998, 1999, 2000 and 2001, respectively, equal or exceeds a
return on equity objective of 16%, Mr. Rogers will receive an incentive payment
in respect of each year in which such objective is achieved as follows: if the
average return on equity is equal to or greater than 16% but less than 21%, an
incentive payment equal to 80% of salary; if 21% or greater, the incentive
payment will equal 160% of salary. Fifty percent of this latter incentive will
be paid in cash and 50% deferred until termination of employment and distributed
in three equal annual installments. Deferred incentive compensation is
denominated in shares of the Company's Common Stock determined by reference to
the fair market value of the stock at the time of deferral and dividends are
credited to the deferred account in the form of Common Stock at a value equal to
the fair market value of the stock on the date of payment of such dividend. The
shares of Common Stock credited to the account are adjusted to reflect any
increase or decrease in the number of shares outstanding as a result of stock
splits, combination of shares, recapitalizations, mergers or consolidations.
The Company offers a Financial Security Plan for substantially all of its
senior managerial and executive employees, including officers of its
subsidiaries. The Plan includes disability benefits under certain circumstances
and death benefits payable to beneficiaries for a period of ten years or until
the participant would have attained age 65, whichever last occurs. Participants
who retire at or after attaining age 65 (age 60 in the case of executive
officers) will be entitled to a supplemental retirement benefit. In the event of
termination of employment under certain circumstances following a change in
control (as defined in the Plan), a participant will be deemed to be fully
vested in any supplemental retirement benefit, without reduction, provided by
the Plan.
1996 STOCK OPTION GRANTS
The following table sets forth certain information concerning options
granted during the fiscal year ended May 31, 1996, to each executive officer
named in the Summary Compensation Table under the Company's stock option plans.
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE OF ASSUMED
NO. OF OPTIONS ANNUAL RATE OF STOCK PRICE
SECURITIES GRANTED EXERCISE APPRECIATION FOR OPTION
UNDERLYING TO OR BASE TERM(4)(2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION ---------------------------
NAME GRANTED(1) IN 1996 SHARES($) DATE 0% 5% 10%
- ---------------------------------------- ---------- --------- --------- -------------- --- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Rogers........................ -- -- -- -- -- -- --
Richard M. Fowler....................... 21,000 12.6% 43.6875 July 14, 2005 -0- 577,080 1,463,123
Melvin G. Brekhus....................... -- -- -- -- -- -- --
Tommy A. Valenta........................ -- -- -- -- -- -- --
Robert C. Moore......................... 17,000 10.2% 43.6875 July 14, 2005 -0- 467,203 1,184,433
</TABLE>
- ---------------
(1) The options to purchase Common Stock become exercisable in annual
installments beginning one year from the date of grant.
(2) The dollar amounts under these columns are the result of calculation at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of
the price of the Company stock. The Company did not use an alternative
formula for a grant date value as it is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
7
<PAGE> 10
OPTION EXERCISES AND YEAR-END VALUES
The following table provides information concerning each option exercised
during the 1996 fiscal year ended May 31, 1996, under the Company's and
Chaparral's stock option plans by each of the named executive officers and the
value of unexercised options held by such executive officer on May 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
NUMBER OF YEAR END YEAR END($)(1)
SHARES ----------------- --------------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ISSUER ON EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------ --------- ----------- ----------- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
Robert D. Rogers........ Company -0- -- 60,000/40,000 2,698,625/1,157,500
Chaparral -0- -- 82,000/48,000 269,000/286,000
Richard M. Fowler....... Company 9,000 248,960 7,600/30,900 294,078/779,457
Chaparral -0- -- 45,000/24,000 152,500/141,250
Melvin G. Brekhus....... Company -0- -- 12,700/22,800 468,817/766,488
Tommy A. Valenta........ Company 1,450 42,144 10,637/22,400 387,890/753,688
Robert C. Moore......... Company 10,000 288,150 4,600/23,900 177,388/588,019
Chaparral -0- -- 22,000/6,000 79,000/32,250
</TABLE>
- ---------------
(1) Computed based upon the difference between aggregate fair market value and
aggregate purchase price.
8
<PAGE> 11
PERFORMANCE GRAPH
The Company has two major business segments -- a cement/concrete business
segment operating under Texas Industries, Inc., and a steel segment operating
under Chaparral Steel Company, an 84%-owned subsidiary of the Company. The
Company's consolidated financial statements include the accounts of Chaparral.
The following chart compares the Company's cumulative total shareholder return
on its Common Stock for the five-year period ended May 31, 1996, with the
cumulative total return of the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500"), the Standard & Poor's Steel Index (the "S&P Steel Group") and a
Cement Peer Group comprised of LaFarge Corporation, Lone Star Industries, Inc.,
Medusa Corp. and Southdown, Inc. (the "Cement Peer Group"). These comparisons
assume the investment of $100 on May 31, 1991 and the reinvestment of dividends.
<TABLE>
<CAPTION>
Measurement Period Texas Indus- S & P Steel Cement Peer
(Fiscal Year Covered) tries, Inc. S&P 500 Group Group
<S> <C> <C> <C> <C>
1991 100.00 100.00 100.00 100.00
1992 112.60 109.85 114.63 113.11
1993 108.29 122.61 172.45 115.04
1994 154.10 127.83 195.16 158.49
1995 179.99 153.64 164.42 145.99
1996 301.85 197.33 164.32 180.89
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of three
non-employee Directors. The Committee establishes the general compensation
policies of the Company and the compensation plans for executive officers,
except for Chaparral Steel Company and its executive officers. It also
administers the Company's Stock Option Plan. The Company's benefit plans, such
as the Company's Retirement Plan and group insurance plan, are administered by
the Company's Human Resources Department.
General. The objective of the Company's management compensation program is
to (i) attract and retain highly qualified and productive individuals; (ii)
motivate such individuals; and (iii) align their interests with those of the
Company's Shareholders by building long-term value and thereby improving the
return to the Company's Shareholders. The program provides for competitive base
salaries, annual bonus opportunities, long-term incentives in the form of a
rolling three-year incentive plan, stock options and competitive benefits
including health, life and disability insurance, vacation, a Financial Security
Plan and a savings and defined contribution retirement plan. Typically,
executives receive annual performance reviews. Such reviews cover
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considerations such as revenue generated, operating profit, return on assets,
cost improvements, operational efficiency, safety, customer service, and
cooperation with other employees, depending on the responsibilities of the
executive. Only the Chief Executive Officer of the Company is subject to an
employment agreement.
Compensation Elements. The executive officers' total compensation objective
consists of three basic elements -- salaries, annual incentives and long-term
incentives. Annual and long-term incentives are a significant portion of total
compensation and are strongly linked to financial performance.
Salaries. Salaries comprise approximately 45% of the total compensation
objective for an executive other than the Chief Executive Officer. Salaries of
the Company's executive officers are determined by the Chief Executive Officer
within the general compensation policies established by the Committee.
Subjective criteria, such as the impact the executive has on the Company, the
skills and experience required by the job, individual performance and internal
equities are considered in determining salary levels. Quantitative relative
weights are not assigned to the different criteria nor is a mathematical formula
followed. Salaries are also reviewed periodically and compared to industry and
geographic salary surveys to assure that they are in line with competitive
market levels. During the year, the salaries of the Vice President -- Cement and
the Vice President -- Concrete were increased to what was considered to be an
appropriate level based on the criteria mentioned above. The Company may at
times suspend or limit salary increases when the operating performance of the
Company will not support such increases.
Annual Incentives. The Board of Directors annually considers the adoption
for the ensuing fiscal year of a cash incentive plan for employees, including
executives, of the business units comprising the Company's cement/concrete
business segment who do not participate in production plans. Under this annual
incentive plan, a cash bonus equal to a designated percentage of an eligible
executive's annual wages is earned if pre-established levels of rates of return
on assets (as defined in the plan, "ROA") for each of the business units, and
overall for the entire cement/concrete business segment, are achieved.
Executives earn an incentive award under the plan only if the pre-established
ROA for the entire cement/concrete business segment is achieved. If the
threshold level below which no incentives would be paid is exceeded, the cash
incentive awards increase based upon specified ROA levels pre-established by the
Committee. Target ROA levels and the designated percentage of an executive's
salary are not established for executives individually; rather they are the same
for all executives in order to foster a team-based approach. The Board of
Directors has approved an annual incentive plan for the cement/concrete business
segment for fiscal year 1997 under which a threshold ROA of 21% has been
established for the entire cement/concrete business segment. The threshold level
pre-established for the incentive plan for fiscal year 1996 was exceeded by the
cement/concrete business segment as a whole enabling eligible executives to earn
a cash incentive equal to 31.5% of their salaries. Approximately 10% of the
total compensation objective for an executive is based on this annual cash
incentive plan.
Long-Term Incentives. Long-term incentives, which comprise approximately
45% of the executive's total compensation objective, are provided under a
rolling three-year executive cash incentive plan and the Company's stock option
plan.
In June 1991, a continuous rolling three-year cash incentive plan was
established for certain executives of the Company's cement/concrete business
segment including, except for the chief executive officer, the named executives.
For an executive to earn an annual cash incentive award under this plan, the
cement/concrete business segment must reach or surpass the average return on
asset or average return on equity threshold established for the three-year
period ending in the year in respect of which the incentive is earned. If the
average threshold is reached or surpassed, the participating executives can earn
a cash incentive award ranging from 35% to 120% or more of the executive's base
salary, depending on the return on asset or return on equity achieved, as the
case may be, and the recommendation of the chief executive officer based upon
his subjective evaluation of the executive's individual performance. Under this
plan, a minimum threshold to be achieved in order to earn a cash incentive award
is established annually for the next three-year period. Minimum thresholds based
on a calculated average return on assets for the cement/concrete business
segment have been established for each of the consecutive three-year periods
through May 31, 1998. In 1996, the Compensation Committee established a minimum
threshold for the three-year period ending May 31, 1999 based on a
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calculated average return on equity for this segment. The Committee believes
that the rolling three-year plan focuses plan participants on growth and
profitability for the Company. The average return on asset threshold established
by the Committee for the rolling three years ending with the Company's 1996
fiscal year was achieved and the participating executives were awarded incentive
payments ranging from 61% to 77% of their base salaries.
The Committee believes that ownership of the Company's stock is an
important element of its executive compensation program. When granted under the
Company's Stock Option Plan, stock options have exercise prices of not less than
100% of the fair market value of the Company's Common Stock on the date of
grant, become exercisable 20% after one year, 40% after two years, 60% after
three years, 80% after four years and 100% five years after grant, and all
expire not more than ten years after grant. Unlike cash, the value of a stock
option award will not be immediately realized and will be dependent on the
market value of the Common Stock in the future; thus, the option not only
provides the executive an incentive for years after it has been awarded but ties
this incentive program directly into increasing shareholder value. Stock options
also strengthen the ability of the Company to attract, motivate and retain
executives of superior capability required to achieve the Company's business
objectives in an intensely competitive environment. Options are granted under
guidelines established under the general compensation policies of the Company.
An executive is targeted to have between three to five times annual salary in
accumulated options priced at the time of grant, such grants occurring
approximately every two to three years. Under these guidelines, during fiscal
year 1996, Richard M. Fowler was granted an option covering 21,000 shares and
Robert C. Moore was granted an option covering 17,000 shares.
Chief Executive Officer's 1996 Compensation. Compensation for the Chief
Executive Officer ("CEO") is determined through a process similar to that
discussed above for executive officers in general and is embodied in the terms
of an employment contract. During 1996, the CEO's compensation was paid in
accordance with the terms of an employment contract which expired at the end of
the 1996 fiscal year. Pursuant to this contract, in fiscal year 1996 the CEO
received an annual salary consisting of a $300,000 base component and an award
in cash equal to the fair market value of 10,816 shares of Common Stock and
participated in two performance incentives. As chief operating officer of the
Company's cement/concrete business segment, he participated in the annual
incentive plan established for the segment for fiscal year 1996. In order for an
incentive award to be earned under the plan, the segment had to achieve a return
on its assets of 25% for the year. The segment surpassed this return on asset
threshold and the CEO earned an incentive bonus of $271,666 under the plan. The
contract also provided for the CEO to earn an incentive bonus equal to one
percent of the Company's consolidated pre-tax net income, if consolidated net
pre-tax income for the year equaled 20% or more of the average common
shareholder's equity for the year, and an additional one percent of such
consolidated net pre-tax income which is in excess of 20% of average common
shareholder equity for the year. The Company achieved consolidated net pre-tax
income during the year equal to 21% of average common shareholder's equity and
the CEO earned a bonus under this incentive provision of $1,729,000.
Tax Deductibility of Executive Compensation. The Omnibus Budget
Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue Code.
Section 162(m) makes certain "non-performance based" compensation to certain
executives of the Company in excess of $1,000,000 non-deductible to the Company.
To qualify as "performance-based compensation", performance goals must be
pre-established and such goals approved by the Company's Stockholders before
such compensation is paid. To satisfy the requirements of Section 162(m), the
Company intends to submit the incentive payment provisions of the Chief
Executive Officer's employment contract to the Company's Shareholders for
approval at the Annual meeting of Shareholders (see Proposal 2). The Company
generally intends to structure the compensation with its executives to achieve
maximum deductibility under Section 162(m) with minimum sacrifices in
flexibility and corporate objectives.
RICHARD I. GALLAND, Chairman JAMES M. HOAK
ROBERT ALPERT
11
<PAGE> 14
PROPOSAL NO. 2
APPROVAL OF PERFORMANCE-BASED INCENTIVE COMPENSATION
PROVISIONS CONTAINED IN EMPLOYMENT CONTRACT OF
THE COMPANY'S CHIEF EXECUTIVE OFFICER
At the Annual Meeting, the Shareholders are being asked to approve the
terms relating to incentive compensation to be paid to Robert D. Rogers, the
Company's President and Chief Executive Officer, set forth in an employment
contract entered into between the Company and Mr. Rogers effective June 1, 1996
(the "1996 Employment Contract"). The Contract contains two incentive
components, one of which is tied to performance goals relating to the
consolidated financial results of the Company and Chaparral and the other of
which is tied to performance goals for the Company's cement/concrete business
segment as set forth in the incentive plan adopted annually for such segment by
the Board of Directors. See "Executive Compensation" and "Report of the
Compensation Committee on Executive Compensation" for descriptions of the
Contract and the annual incentive plan performance goals. The terms of the
Contract were negotiated at arm's length and the performance goals for
cement/concrete business segment incentive plan are pre-established annually by
the Compensation Committee, which is comprised solely of non-employee directors,
and approved by the Board of Directors. The Company believes that the
incentive-related provisions of the Contract provide performance incentives that
are and will be beneficial to the Company and its Shareholders.
As discussed above, recent changes in the Internal Revenue Code limit the
Company's tax deduction for expense in connection with compensation of its chief
executive officer and its four other most highly-compensated executive officers
for any fiscal year to the extent that the remuneration of such person exceeds
$1,000,000 during such fiscal year, excluding remuneration that qualifies as
"performance-based compensation". Section 162(m) of the Code provides that in
order for remuneration to be treated as qualified performance-based
compensation, the material terms of the performance goals must be disclosed to
and approved by the shareholders of the employer.
Approval of the performance-based incentive compensation provisions
contained in the 1996 Employment Contract requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock represented at
the Annual Meeting of Shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE TO
APPROVE THE INCENTIVE COMPENSATION PROVISIONS CONTAINED IN THE 1996 EMPLOYMENT
CONTRACT WITH THE CHIEF EXECUTIVE OFFICER.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 generally 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 ("10% owners") to file
with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Directors, executive officers and
10% owners are required by the Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on review of copies of such reports furnished to the Company and written
transaction reports of its Directors and executive officers that no other
reports were required to be filed during the 1996 fiscal year, the Company
believes that all filing requirements applicable to its Directors, executive
officers and 10% owners were complied with in accordance with Section 16(a).
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INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP were the Company's independent auditors for the last
fiscal year and will continue to be for the current year. A representative of
Ernst & Young LLP will attend the Shareholders' Meeting; and although such
representative does not intend to make a statement to the Shareholders, he will
be available to respond to any relevant questions of the Shareholders.
ANNUAL REPORT
A copy of the Company's Annual Report for the fiscal year ended May 31,
1996, is being mailed to each Shareholder of record along with the proxy
material, but is not to be considered as a part of the proxy soliciting
materials.
1997 SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be presented at the next Annual
Meeting of Shareholders presently scheduled for October 14, 1997, must be
received by the Secretary of the Company not later than May 7, 1997, to be
eligible for inclusion in the proxy statement and form of proxy relating to that
meeting.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors was not aware
that any matters not referred to in this Proxy Statement would be presented for
action at the Meeting. If any other matters should come before the Meeting, the
persons named in the accompanying proxy will have the discretionary authority to
vote all proxies in accordance with their best judgment.
By Order of the Board of Directors,
/s/ ROBERT C. MOORE
-----------------------------------
ROBERT C. MOORE
Secretary
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FOR SHARES OF COMMON STOCK
TEXAS INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OCTOBER 15, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT ALPERT, GERALD R. HEFFERNAN and
ROBERT D. ROGERS, or any of them, attorneys and proxies, with power of
substitution and revocation, to vote, as designated on the reverse side, all
shares of stock which the undersigned is entitled to vote, with all powers
which the undersigned would possess if personally present, at the Annual
Meeting (including all adjournments thereof) of shareholders of Texas
Industries, Inc. to be held on Tuesday, October 15, 1996 at 9:30 A.M. at the
Dallas Public Schools Environmental Education Center, 1600 Bowers Road,
Seagoville, Texas.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE> 17
<TABLE>
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<S> <C> <C>
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS JUST SIGN BELOW; Please mark / X /
NO BOXES NEED TO BE CHECKED your votes as
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3 indicated in
this example
Item 1 - Election of Directors (see reverse). Robert Alpert, Richard I. Galland and Elizabeth C. Williams to serve in a
class of directors with a term expiring 1999.
FOR all nominees WITHHOLD
(except as AUTHORITY
specified hereon) to vote for all nominees (Instruction: To withhold authority to vote for an individual nominee write
listed at right that nominee's name on the space provided below.)
/ / / /
----------------------------------------------------------------------------
Item 2 - Proposal FOR approval of the performance- Item 3 - To transact such other business that may properly
based incentive compensation provision of the 1996 come before the meeting.
Employment Contract of Texas Industries, Inc. Chief
Executive Officer.
FOR AGAINST ABSTAIN
/ / / / / / THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IN THE
ABSENCE OF SUCH INSTRUCTIONS THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN ITEM 1 AND FOR THE PROPOSALS
IN ITEMS 2 AND 3.
(Sign exactly as name(s) appear hereon. If shares are
held jointly each holder should sign. If signing for
estate, trust or corporation, title or capacity should
be stated.)
Please date, sign and return this Proxy in the enclosed
business envelope.
Dated: , 1996
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o FOLD AND DETACH HERE o
</TABLE>
