<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 sec. 240.14a-11(c) or
sec. 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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 - (972)
647-6700
</TABLE>
August 29, 1997
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Texas Industries, Inc., to be held at 10:30 A.M. Central Daylight Time, on
Tuesday, October 21, 1997, at the Texas Star Golf and Conference Centre, 1400
Texas Star Parkway, Euless, 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 1997 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 21, 1997
The Annual Meeting of Shareholders of Texas Industries, Inc. (the
"Company") will be held at the Texas Star Golf and Conference Centre, 1400 Texas
Star Parkway, Euless, Texas, on Tuesday, October 21, 1997, at 10:30 A.M.
(C.D.T.) for the following purposes:
1. To elect two (2) Directors to terms expiring in 2000.
2. To amend the Company's Certificate of Incorporation to change the
name of the Company to "TXI Corp."
3. To amend the Texas Industries, Inc. 1993 Stock Option Plan to
increase the number of shares of Common Stock available thereunder by
2,000,000 shares.
4. 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 27, 1997,
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, 1997
<PAGE> 3
<TABLE>
<S> <C>
TEXAS INDUSTRIES, INC.
[TXI LOGO] 1341 W. MOCKINGBIRD LANE - DALLAS, TEXAS 75247 - (972)
647-6700
</TABLE>
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 1997
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 21,
1997, and at any adjournment thereof. The approximate date on which this Proxy
Statement and accompanying proxy were first sent to Shareholders is August 29,
1997.
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 27, 1997,
were 20,934,975 shares of Common Stock. 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 27, 1997, 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, 1997.
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER SECURITY OF BENEFICIAL OWNERSHIP OF CLASS
------------------- -------- ----------------------- --------
<S> <C> <C> <C>
Trimark Financial Corporation Common Stock 1,311,070(1) 5.9%
One First Canadian Place, Suite 5600
Toronto, Ontario M5X 1E5
Neuberger & Berman L.P. Common Stock 1,275,000(2) 5.77%
605 Third Ave.
New York, New York 10158-3698
</TABLE>
- ---------------
(1) Based upon Schedule 13G dated February 5, 1997 which indicates that Trimark
Financial Corporation has sole voting and dispositive power over 655,535
shares, which became 1,311,070 shares upon the occurrence of the 2 for 1
stock split of the Company's Common Stock on February 3, 1997.
(2) Based upon Schedule 13G dated February 12, 1996 which indicates the
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, which became 1,275,000 shares upon the occurrence of the 2 for 1
stock split of the Company's Common Stock on February 3, 1997.
2
<PAGE> 5
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, two of which
have been nominated for reelection. Mr. Ralph B. Rogers is retiring from the
Board after 46 years of service. The proxies solicited hereby cannot be voted
for a greater number of persons than the two 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 2000 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>
Gordon E. Forward...... 61 President and Chief Executive Officer of Chaparral Steel 1991 2000
Company(a)(b)
James M. Hoak, Jr...... 53 Chairman of Heritage Media Corporation (broadcasting and 1995 2000
advertising), Dallas, Texas; Chairman of HBW Holdings, Inc.,
Dallas, Texas since 1997; Principal 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 1995-1997; Chairman and Chief
Executive Officer of Crown Media, Inc. (cable television),
Dallas, Texas, from 1991-1995(c)
</TABLE>
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>
Ralph B. Rogers........ 87 Chairman of the Board of Directors of the Company(d) 1951 1997
Robert D. Rogers....... 61 President and Chief Executive Officer of the Company(a)(d)(e) 1970 1998
Ian Wachtmeister....... 64 President and Chief Executive Officer of The Empire, AB, 1977 1998
Stockholm, Sweden
Gerald R. Heffernan.... 77 President, G.R. Heffernan & Associates, Ltd., Toronto, 1986 1998
Ontario, Canada(a)
Robert Alpert.......... 65 Chairman of the Board of Alpert Companies (investments) 1975 1999
Dallas, Texas(a)(e)
Richard I. Galland..... 81 Attorney at Law since January 1991(f) 1974 1999
Elizabeth C. 54 Vice President for Business & Finance/Treasurer, Southern 1995 1999
Williams............. Methodist University, Dallas, Texas
</TABLE>
- ------------------------------
* Based upon information provided by the Directors to the Company as of July
1, 1997.
(a) Messrs. Forward, Rogers, Heffernan and Alpert are members of the Board of
Directors of Chaparral Steel Company.
(b) Mr. Forward is a member of the Board of Directors of Noranda Forest Inc.
3
<PAGE> 6
(c) Mr. Hoak is a member of the Board of Directors of Dynamex, Inc., MidAmerican
Energy Company, PanAmSat and Pier 1 Imports, Inc.
(d) Mr. Ralph B. Rogers is the father of Mr. Robert D. Rogers.
(e) Messrs. Rogers and Alpert are members of the Board of Directors of CNF
Transportation, Inc.
(f) Mr. Galland is a member of the Board of Directors of D.R. Horton, Inc. and
Associated Materials, 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 one time 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 Heffernan, Wachtmeister and Williams, met twice 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 six times during the last fiscal year. Except
for Mr. Ralph B. Rogers, who missed one special meeting and one regular meeting
of the Board of Directors, each Director attended more than 75% of the meetings
of the Board of Directors.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its affiliates currently
receive $10,000 per year plus $1,000 for each day that a Board and/or a
Committee meeting is attended in person and $250 for each meeting attended by
conference telephone. In addition, on January 1 of each year, each non-employee
director receives an award of 500 restricted shares of the Company's Common
Stock under the Company's directors restricted award plan. The restrictions on
the shares are removed at the time the director ceases holding such position.
Until such time, the director is entitled to vote the shares and to receive all
cash dividends. Under a deferred compensation arrangement. Annual and meeting
fees 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 every third year 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,
1996).
4
<PAGE> 7
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, 1997, the approximate number
of shares of Common Stock of the Company and common stock of the Company's 84.5%
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............................................. 12,110(4) * 5,000(5) *
Melvin G. Brekhus......................................... 45,024(4) * None *
Gordon E. Forward......................................... 41,140 * 149,100(5) *
Richard M. Fowler......................................... 125,264(4) * 58,700(5) *
Richard I. Galland(6)..................................... 28,056(4) * None *
Gerald R. Heffernan(7).................................... 255,000(4) 1.2% 4,000(5) *
James M. Hoak, Jr. ....................................... 8,500(4) * None *
Robert C. Moore........................................... 52,844(4) * 26,800(5) *
Ralph B. Rogers(8)........................................ 59,155(4) * 5,000 *
Robert D. Rogers(9)....................................... 382,906(4) 1.8% 146,800(5) *
Tommy A. Valenta.......................................... 35,474(4) * None *
Ian Wachtmeister(10)...................................... 13,242(4) * None *
Elizabeth C. Williams..................................... 4,700(4) * None *
All Directors and Executive Officers as a Group (19
Persons)................................................ 1,192,925(4) 5.6% 401,650(5) 1.4%
</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.
(1) Chaparral common stock is listed for trading on the New York Stock
Exchange.
(2) Based on the sum of (i) 20,900,375 shares of Common Stock, which on June
30, 1997, 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) 28,446,963 shares of common stock, which on June
30, 1997, 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, 1997, as follows: Ralph B.
Rogers, 12,000 shares; Robert D. Rogers, 82,000 shares; Robert Alpert,
6,000 shares; Melvin G. Brekhus, 34,000 shares; Richard M. Fowler, 43,200
shares; Richard I. Galland, 12,000 shares; Gerald R. Heffernan, 14,000
shares; James M. Hoak, Jr., 4,000 shares; Robert C. Moore, 32,000 shares;
Tommy A. Valenta, 32,574 shares; Ian Wachtmeister, 8,000 shares; Elizabeth
C. Williams, 4,000 shares; and all Directors and Executive Officers as a
Group, 387,174 shares.
(5) Includes, with respect to such person(s) shares of common stock subject to
options exercisable within 60 days of June 30, 1997, as follows: Gordon E.
Forward, 134,000 shares; Robert Alpert, 4,000 shares; Richard M. Fowler,
57,600 shares; Gerald R. Heffernan, 4,000 shares; Robert C. Moore, 26,200
shares; Robert D. Rogers, 106,000 shares; and all Directors and Executive
Officers as a Group, 338,000 shares.
5
<PAGE> 8
(6) The wife of Richard I. Galland owns 8,000 shares of Common Stock as to
which he disclaims beneficial ownership.
(7) The wife of Mr. Heffernan owns 8,000 shares of Common Stock as to which he
disclaims beneficial ownership.
(8) The wife of Mr. Rogers owns 10,428 shares of Common Stock as to which he
disclaims beneficial ownership.
(9) The wife of Mr. Rogers owns 4,000 shares of Chaparral common stock as to
which he disclaims beneficial ownership.
(10) Includes 200 shares of Common Stock owned by the wife of Mr. Wachtmeister.
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, 1997, 1996 and 1995, of those persons who were, at May 31, 1997,
(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($) ISSUER OPTIONS PAYOUTS($) ($)(7)
------------------ ---- --------- --------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Rogers(1)............ 1997 838,745 218,074 Company 110,000 670,996(5) 22,736
President and Chief Chaparral -- -0- -0-
Executive Officer 1996 862,432 2,000,666 Company -- -0- 21,829
Chaparral -- -0- -0-
1995 637,324 727,050(4) Company 100,000 -0- 22,787
Chaparral 40,000 -0- -0-
Richard M. Fowler(2)........... 1997 225,000 58,500 Company 29,600 270,000(6) 3,000
Vice President -- Chaparral -- -0- -0-
Finance 1996 220,625 69,497 Company 42,000 148,750 3,000
Chaparral -- -0- -0-
1995 190,000 85,500 Company -- 58,500 4,664
Chaparral 19,000 -0- -0-
Melvin G. Brekhus.............. 1997 170,000 44,200 Company 30,000 204,000(6) 6,054
Vice President -- 1996 151,250 47,644 Company -- 129,500 5,122
Cement 1995 140,000 63,000 Company 45,000 51,000 4,476
Tommy A. Valenta............... 1997 165,000 42,900 Company 29,000 198,000(6) 4,958
Vice President -- 1996 146,250 46,069 Company -- 127,750 3,898
Concrete 1995 135,000 60,750 Company 44,000 50,250 3,768
Robert C. Moore(3)............. 1997 150,000 39,000 Company 20,000 180,000(6) 4,807
Vice President, General Chaparral -- -0- -0-
Counsel and Secretary 1996 150,000 47,250 Company 34,000 92,500 4,454
Chaparral -- -0- -0-
1995 150,000 67,500 Company -- 42,500 3,953
Chaparral 3,000 -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 1997, 1996 and 1995, he received profit
sharing payouts of $56,250, $65,003 and $27,631, respectively. He received
annual increments of profit sharing earned in 1989 but deferred $309 in
1997, 1996 and 1995, respectively. Under the performance share program, he
received dividends of $5,150, $5,123 and $2,529 in 1997, 1996 and 1995
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 1997, 1996 and 1995, he received profit sharing payouts of $37,500,
$44,195 and $21,814, respectively.
6
<PAGE> 9
(4) Payment of all but $100,000 of this bonus was deferred pursuant to the terms
of Mr. Rogers' employment contract.
(5) Payment of one-half of this cash incentive was deferred pursuant to the
terms of Mr. Rogers' employment contract.
(6) Incentives paid under continuous three-year cash incentive plan.
(7) 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 receives an annual salary consisting of a
$300,000 base and an annual award of 21,632 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 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 (as defined in the employment contract) 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.
1997 STOCK OPTION GRANTS
The following table sets forth certain information concerning options
granted during the fiscal year ended May 31, 1997, to each executive officer
named in the Summary Compensation Table under the Company's stock option plans.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF VALUE OF ASSUMED
NO. OF TOTAL ANNUAL RATE OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO OR BASE TERM
OPTIONS EMPLOYEES PRICE PER ---------------------------
NAME GRANTED(1) IN 1997 SHARES($) EXPIRATION DATE 0% 5% 10%
---- ---------- ---------- --------- ---------------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Rogers................... 110,000 13.6% 32.53125 July 12, 2006 -0- 2,250,463 5,702,263
Richard M. Fowler.................. 29,600 3.7% 24.90625 January 15, 2007 -0- 463,351 1,174,935
Melvin G. Brekhus.................. 30,000 3.7% 24.90625 January 15, 2007 -0- 469,613 1,190,813
Tommy A. Valenta................... 29,000 3.7% 24.90625 January 15, 2007 -0- 453,959 1,151,119
Robert C. Moore.................... 20,000 2.5% 24.90625 January 15, 2007 -0- 313,075 793,875
</TABLE>
- ---------------
(1) The options to purchase Common Stock become exercisable in annual
installments beginning one year from the date of grant.
7
<PAGE> 10
(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.
OPTION EXERCISES AND YEAR-END VALUES
The following table provides information concerning each option exercised
during the 1997 fiscal year ended May 31, 1997, 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, 1997.
<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 100,000 1,881,125 40,000/170,000 286,250/429,375
Chaparral -0- -- 106,000/24,000 444,750/159,000
Richard M. Fowler....... Company 2,000 44,315 28,200/76,400 255,094/230,438
Chaparral -0- -- 57,600/11,400 244,100/75,525
Melvin G. Brekhus....... Company 10,000 209,388 27,600/63,400 276,663/314,755
Tommy A. Valenta........ Company 7,100 154,878 26,174/61,800 260,332/309,542
Robert C. Moore......... Company -0- -- 20,600/56,400 179,831/168,763
Chaparral -0- -- 26,200/1,800 109,825/11,925
</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 84.5%-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, 1997, 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, 1992 and the reinvestment of dividends.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TEXAS CEMENT PEER
(FISCAL YEAR COVERED) INDUSTRIES S & P 500 S & P STEEL GROUP
<S> <C> <C> <C> <C>
1992 100 100 100 100
1993 96.18 111.61 150.43 101.70
1994 136.87 116.36 170.25 140.11
1995 159.86 139.86 143.43 129.06
1996 268.09 179.63 143.34 159.91
1997 207.39 232.25 148.40 205.73
</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 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,
9
<PAGE> 12
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. 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 1998 under which a threshold ROA of 26% has been
established for the entire cement/concrete business segment. The threshold level
pre-established for the incentive plan for fiscal year 1997 was exceeded by the
cement/concrete business segment as a whole enabling eligible executives to earn
a cash incentive equal to 26% 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, 1999. In 1997, the Compensation Committee established a minimum
threshold for the three-year period ending May 31, 2000 based on a 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 1997 fiscal year
was achieved and the participating executives were awarded incentive payments
equal to 120% 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
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<PAGE> 13
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 1997, Robert D.
Rogers, Richard M. Fowler, Melvin G. Brekhus, Tommy A. Valenta and Robert C.
Moore received stock option awards of 110,000, 29,600, 30,000, 29,000, and
20,000 respectively.
Chief Executive Officer's 1997 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 1997, the CEO's compensation was paid in
accordance with the terms of an employment contract which expires at the end of
the fiscal year ending May 31, 2000. Pursuant to the terms of the employment
contract (see Executive Compensation), 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 21,632 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 1997. 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 $218,074 under the plan. The Company's
average return on equity for fiscal years 1996 and 1997 was 19.2%. Accordingly,
under long term incentive portion of his contract, the CEO earned an incentive
bonus of $670,996, the payment of one-half of which was deferred.
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 Shareholders before
such compensation is paid. To satisfy the requirements of Section 162(m), the
Company submitted and obtained approval of the Company's Shareholders of the
incentive payment provisions of the Chief Executive Officer's employment
contract. 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
AMENDMENT OF CERTIFICATE OF INCORPORATION OF THE COMPANY
On July 16, 1997, the Board of Directors adopted and approved, subject to
the approval of the Company's Shareholders at the Annual Meeting, a resolution
to amend Article First of the Company's Certificate of Incorporation to change
the corporate name. The applicable text of the Board's resolution is as follows:
"RESOLVED, that Article First of the Company's Certificate of
Incorporation be amended to read in its entirety as follows:
"First. The name of the corporation is TXI CORP."
In the judgment of the Board, the change of corporate name is desirable in
view of the Company's strategic program to expand its business operations
geographically.
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
Annual Meeting. If approved by the Shareholders, the amendment to Article First
will become effective upon filing with the Secretary of State of Delaware a
Certificate of Amendment to the Company's Certificate of Incorporation, which
filing is expected to take place shortly after the Annual Meeting. However, the
Board of Directors will be authorized, without a further vote of the
Shareholders, to abandon the name change and determine not to file the
Certificate of Amendment if the Board concludes that such action would be in the
best interest of the Company and its Shareholders. If this proposal is not
approved by the Shareholders, then the Certificate of Amendment will not be
filed.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE
TO APPROVE THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY TO
CHANGE THE CORPORATE NAME TO "TXI CORP."
PROPOSAL NO. 3
AMENDMENT TO TEXAS INDUSTRIES, INC. 1993 STOCK OPTION PLAN
On July 16, 1997 the Board of Directors adopted and approved, subject to
the approval of the Company's Shareholders at the Annual Meeting, a resolution
to amend the Texas Industries, Inc. 1993 Stock Option Plan (the "Plan") to
increase the number of shares of Common Stock available under the Plan by
2,000,000 shares. The applicable text of the Board's resolution is as follows:
"RESOLVED, that the Texas Industries, Inc. 1993 Stock Option Plan (the
"Plan") is hereby amended by increasing the number of shares of Common
Stock which may be issued under the Plan from 2,000,000 to 4,000,000
shares.
The increase in the number of shares of Common Stock available under the
Plan was adopted by the Board because of the small remaining number of shares
with respect to which options may be granted under the Plan is inadequate to
continue the Plan's primary purposes of enabling the Company to attract and
retain the most qualified persons as key employees.
As of May 31, 1997, 83,103 shares had been issued pursuant to the exercise
of options granted under the Plan and 1,676,457 shares were subject to
outstanding options granted under the Plan, leaving only 240,440 shares
available for future option grants. The approval of this proposal will assure
that ample shares of Common Stock will continue to be authorized for future
issuances under the Plan.
In accordance with Rule 16b-3 of the Securities and Exchange Commission,
the affirmative vote of the holders of a majority of the Common Stock of the
Company present, in person or by proxy, and entitled to vote at the Annual
Meeting is required to approve this proposal.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE
TO APPROVE THE AMENDMENT OF THE TEXAS INDUSTRIES, INC. 1993 STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN BY
2,000,000 SHARES.
12
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING 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 1997 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).
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,
1997, 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.
1998 SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be presented at the next Annual
Meeting of Shareholders presently scheduled for October 20, 1998, must be
received by the Secretary of the Company not later than April 28, 1998, 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
13
<PAGE> 16
FOR SHARES OF COMMON STOCK
TEXAS INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OCTOBER 21, 1997
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 21, 1997 at 10:30 A.M. at the
Texas Star Golf and Conference Centre, 1400 Texas Star Parkway, Euless, Texas.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
* FOLD AND DETACH HERE *
<PAGE> 17
To vote in accordance with the Board of Directors' recommendations just sign
below; no boxes need to be checked
Board of Directors Recommends a Vote FOR Items 1, 2, 3, and 4
Please mark your vote
as indicated in this
example. [X]
Item 1- Election of Directors (see reverse).
Gordon E. Forward and James M. Hoak, Jr. to serve in a class of directors
with a term expiring 2000.
FOR all nominees WITHHOLD
(except as AUTHORITY
specified hereon) to vote for all nominees
listed at right
(Instruction: To withhold authority to vote for an individual nominee write
that nominee's name on the space provided below.)
- ----------------------------------------------------------------------------
Item 2- Proposal FOR approval to amend Texas Industries, Inc.'s Certificate of
Incorporation to change the name of the company to "TXI Corp."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 3- Proposal FOR approval to amend the Texas Industries, Inc. 1993 Stock
Option Plan to increase the number of shares of common stock available
thereunder by 2,000,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 4- To transact such other business that may properly come before the
meeting.
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, 3,
and 4.
(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 state.)
Please date, sign and return this Proxy in the enclosed business envelope.
Dated: , 1997
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