<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 [ ]
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)(l) 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 28, 1998
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 20, 1998, at the University of North Texas Music and Fine Arts
Education Center, 2100 North I-35E, Denton, 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 1998 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 20, 1998
The Annual Meeting of Shareholders of Texas Industries, Inc. (the
"Company") will be held at the University of North Texas Music and Fine Arts
Education Center, 2100 North I-35E, Denton, Texas, on Tuesday, October 20, 1998,
at 9:30 A.M. (C.D.T.) for the following purposes:
1. To elect three (3) Directors to terms expiring in 2001.
2. 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 26, 1998,
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
August 28, 1998
<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 20, 1998
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 20,
1998, and at any adjournment thereof. The approximate date on which this Proxy
Statement and accompanying proxy were first sent to Shareholders is August 28,
1998.
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 26, 1998,
were 21,219,286 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 26, 1998, 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
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, all of whom have
been nominated for reelection. 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. 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 2001 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>
Gerald R. Heffernan..... 78 President, G.R. Heffernan & Associates, 1986 2001
Ltd., Toronto, Ontario, Canada
Robert D. Rogers........ 62 President and Chief Executive Officer of 1970 2001
the Company(a)
Ian Wachtmeister........ 65 Chairman of The Empire, AB, Stockholm, 1977 2001
Sweden
</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>
Robert Alpert........... 66 Chairman of the Board of The Alpert 1975 1999
Companies (investments), Dallas,
Texas(a)
Eugenio Clariond 55 Director General and Chief Executive 1998 1999
Reyes................. Officer of Grupo IMSA, S.A.; President,
Mexico -- U.S. Chamber of Commerce;
Director, Instituto Tecnologico y de
Estudias Superiores de Monterrey, A.C.
Richard I. Galland...... 82 Attorney at Law(b) 1974 1999
Elizabeth C. Williams... 55 Vice President for Business & Finance/ 1995 1999
Treasurer, Southern Methodist
University, Dallas, Texas
John M. Belk............ 78 Chairman of the Board of Belk, Inc.(c) 1998 2000
Gordon E. Forward....... 62 Vice Chairman of the Board of the Company; 1991 2000
President and Chief Executive Officer of
Chaparral Steel Company until July 15,
1998(d)
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SERVED AS
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE DURING PAST FIVE YEARS* SINCE EXPIRE
---- --- ----------------------- --------- -------
<S> <C> <C> <C> <C>
James M. Hoak, Jr....... 54 Chairman and a Principal of Hoak Capital 1995 2000
Corporation (private equity investment
firm) since September 1991; Chairman of
HBW Holdings, Inc. (investment bank)
since July 1996; Chairman of Heritage
Media Corporation (broadcasting and
marketing service firm), Dallas, Texas,
from August 1987 until August 1997;
Chairman and Chief Executive Officer of
Crown Media, Inc. (cable television),
Dallas, Texas, from February 1991 until
January 1995(e)
</TABLE>
- ---------------
* Based upon information provided by the Directors to the Company as of July
1, 1998.
(a) Messrs. Rogers and Alpert are members of the Board of Directors of CNF
Transportation, Inc.
(b) Mr. Galland is a member of the Board of Directors of D.R. Horton, Inc. and
Associated Materials, Inc.
(c) Mr. Belk is a member of the Board of Directors of Lowes Companies, Inc. and
Coca-Cola Bottling Co. Consolidated.
(d) Mr. Forward is a member of the Board of Directors of Noranda Forest Inc.
(e) Mr. Hoak is a member of the Board of Directors of Dynamex, Inc., PanAmSat
Corporation and Pier 1 Imports, 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, currently composed of Directors Clariond
Reyes, Alpert and Hoak, met two 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 Belk, 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 seven times during the last fiscal year. 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. Further, Chairman of
the Board, Gerald R. Heffernan, received an additional 2,000 restricted shares
of the Company's Common Stock. The restrictions on the shares are removed at the
time the
3
<PAGE> 6
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 agreement, 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
agreement. 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 an option to purchase 5,000
shares of Common Stock each time 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,
1997).
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, 1998, the approximate number
of shares of Common Stock of the Company 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 COMMON SHARES
---------------------------
BENEFICIALLY OWNED** %(1)
-------------------- ----
<S> <C> <C>
Robert Alpert............................................... 10,610(2) *
John M. Belk................................................ 11,816 *
Melvin G. Brekhus........................................... 54,024(2) *
Eugenio Clariond Reyes...................................... 1,000 *
Gordon E. Forward........................................... 30,928(2) *
David A. Fournie............................................ 5,049(2) *
Richard M. Fowler........................................... 146,184(2) *
Richard I. Galland.......................................... 32,913(2) *
Gerald R. Heffernan(3)...................................... 261,500(2) 1.2%
James M. Hoak, Jr........................................... 13,000(2) *
Robert D. Rogers............................................ 424,906(2) 2.0%
Ian Wachtmeister(4)......................................... 16,794(2) *
Elizabeth C. Williams....................................... 11,200(2) *
All Directors and Executive Officers as a Group (26
Persons).................................................. 1,274,889(2) 5.9%
</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) Based on the sum of (i) 21,202,437 shares of Common Stock, which on June 30,
1998, 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
<PAGE> 7
(2) Includes, with respect to such person(s) shares of Common Stock subject to
options exercisable within 60 days of June 30, 1998, as follows: Robert D.
Rogers, 124,000 shares; Robert Alpert, 4,000 shares; Melvin G. Brekhus,
33,000 shares; Gordon E. Forward, 12,000 shares; David A. Fournie, 4,800
shares; Richard M. Fowler, 49,620 shares; Richard I. Galland, 12,000 shares;
Gerald R. Heffernan, 8,000 shares; James M. Hoak, Jr., 6,000 shares; Ian
Wachtmeister, 8,000 shares; Elizabeth C. Williams, 10,000 shares; and all
Directors and Executive Officers as a Group, 412,004 shares.
(3) The wife of Mr. Heffernan owns 18,000 shares of Common Stock as to which he
disclaims beneficial ownership.
(4) 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, 1998, 1997 and 1996, of those persons who were, at May 31, 1998,
(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($) OPTIONS(#) PAYOUTS($) ($)(3)
------------------ ---- --------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Rogers............................ 1998 1,318,651 303,290 45,000 1,054,921(2) 23,676
President and Chief Executive Officer 1997 838,745 218,074 110,000 670,996(2) 22,736
1996 862,432 2,000,666 -- -0- 21,829
Gordon E. Forward(1)........................ 1998 300,000 105,000 11,000 165,386 19,913
Vice Chairman of the Board 1997 300,000 385,000 60,000 278,499 19,630
1996 300,000 88,389 -- 15,356 4,963
Richard M. Fowler(1)........................ 1998 225,000 130,500 8,200 416,175 3,000
Vice President -- Finance 1997 225,000 114,250 29,600 275,150 3,000
1996 220,625 134,500 42,000 153,873 3,000
David A. Fournie(1)......................... 1998 180,000 63,000 6,600 321,102 3,385
Vice President -- Structural Products 1997 180,000 171,000 24,000 5,415 3,385
1996 180,000 53,033 -- 5,386 2,809
Melvin G. Brekhus........................... 1998 181,251 41,688 8,900 280,000 6,827
Executive Vice President -- 1997 170,000 44,200 30,000 204,000 6,054
Cement, Aggregates and Concrete 1996 151,250 47,644 -- 129,500 5,122
</TABLE>
- ---------------
(1) Includes compensation for fiscal year 1996 through December 31, 1997 paid by
Chaparral Steel Company.
(2) Payment of one-half of this cash incentive was deferred pursuant to the
terms of Mr. Rogers' employment contract.
(3) Vested and non-vested portion of amounts contributed and allocated by
employer to employee benefit plans.
On December 31, 1997, the Company acquired through a merger the separate
15.7% public ownership of Chaparral Steel Company ("Chaparral"). In anticipation
of the merger, the executive officers of Chaparral were elected to similar
positions in the Company, although they continued to participate in Chaparral's
separate compensation and incentive plans during the 1998 fiscal year. In
determining the most highly compensated executive officers of the Company during
the 1998 fiscal year, the executive officers of Chaparral were considered as if
they had been executive officers of the Company for the full fiscal year. None
of Chaparral's executive officers are employed under contract. They participate
on the same basis as other
5
<PAGE> 8
employees of Chaparral in its broad-based employee benefits program which
includes a retirement savings plan, group medical coverage and life insurance.
They also participate in a financial security plan similar to the plan offered
by the Company to its executive officers. During the fiscal year, the steel
segment exceeded the consolidated tangible return of assets thresholds
established by Chaparral's Compensation Committee for both the cash incentive
plans adopted for all employees of Chaparral for the 1998 fiscal year and the
continuous rolling three-year cash incentive plan offered only for executive
officers, and cash incentives were paid under such plans. The continuous
three-year plan will be integrated into the Company's three-year plan beginning
with the Company's 1999 fiscal year. Certain of the Chaparral executives have
also been granted performance shares under a performance share plan established
in 1976. The value of a performance share is based upon Chaparral's annual
financial results averaged over the preceding five years and a cash dividend is
paid on a performance share at the end of each fiscal year, equal to 10% of
Chaparral's earnings per share for such fiscal year, based on an assumed 4.5
million shares. Performance shares are 40% vested after three years, 60% vested
after four years, and 100% vested after five years. At five-year intervals, the
plan requires, subject to several restrictions and conditions, that a percentage
of the vested portion be redeemed based on the age of the executive such that
100% of vested shares are redeemed by the time the executive reaches 65 years of
age. In 1986, grants under the plan were discontinued. Messrs. Gordon E.
Forward, Richard M. Fowler and David A. Fournie received payouts under the plan
for fiscal year 1998.
Under an employment contract which extends through May 31, 2000, Mr. Robert
D. Rogers, the President and Chief Executive Officer of the Company, 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 and 2000, respectively, equals 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 financial security plans for substantially all of its
senior managerial and executive employees, including officers of its
subsidiaries. The plans include 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 plans), a participant will be deemed to be fully
vested in any supplemental retirement benefit, without reduction, provided by
the plans.
6
<PAGE> 9
1998 STOCK OPTION GRANTS
The following table sets forth certain information concerning options
granted during the fiscal year ended May 31, 1998, to each executive officer
named in the Summary Compensation Table under the Company stock option plans.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NO. OF PERCENT OF OF ASSUMED ANNUAL RATE OF
SECURITIES TOTAL OPTIONS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE PER ---------------------------
NAME GRANTED(#)(1) IN 1998 SHARES($) EXPIRATION DATE 0% 5% 10%
---- ------------- ------------- ---------- ---------------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Rogers........... 45,000 13.82% 46.375 January 14, 2008 -0- 1,312,424 3,325,941
Gordon E. Forward.......... 11,000 3.38% 46.375 January 14, 2008 -0- 320,815 813,008
Richard M. Fowler.......... 8,200 2.52% 46.375 January 14, 2008 -0- 239,153 606,060
David A. Fournie........... 6,600 2.03% 46.375 January 14, 2008 -0- 192,489 487,805
Melvin G. Brekhus.......... 8,900 2.73% 46.375 January 14, 2008 -0- 259,568 657,797
</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's Common 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 fiscal year ended May 31, 1998, under the Company'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, 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR END(#) YEAR END($)(1)
ACQUIRED ON VALUE --------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISED/UNEXERCISED EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- --------------------- -------------------------
<S> <C> <C> <C> <C>
Robert D. Rogers.............. -0- -- 82,000/173,000 3,142,438/4,648,500
Gordon E. Forward............. -0- -- 12,000/ 59,000 413,625/1,797,500
Richard M. Fowler............. 14,500 304,047 34,620/ 63,680 1,397,971/2,181,076
David A. Fournie.............. -0- -- 4,800/ 25,800 165,450/ 747,600
Melvin G. Brekhus............. 8,000 259,240 41,000/ 50,900 1,779,740/1,736,075
</TABLE>
- ---------------
(1) Computed based upon the difference between aggregate fair market value and
aggregate purchase price.
7
<PAGE> 10
PERFORMANCE GRAPH
The Company has two major business segments -- a cement/concrete segment
and a steel segment. The following chart compares the Company's cumulative total
shareholder return on its Common Stock for the five-year period ended May 31,
1998, 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, 1993 and the
reinvestment dividends.
<TABLE>
<CAPTION>
Measurement Period Texas Cement Peer
(Fiscal Year Covered) Industries S & P 500 S & P Steel Group
<S> <C> <C> <C> <C>
1993 100.00 100.00 100.00 100.00
1994 142.30 104.26 113.17 137.76
1995 166.21 125.31 95.34 126.90
1996 278.74 160.94 95.29 157.24
1997 215.62 208.28 98.65 202.29
1998 536.94 272.19 98.68 323.52
</TABLE>
8
<PAGE> 11
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. It
also administers the Company's Stock Option Plan. The Company's benefit plans,
such as the Company's retirement plans and insurance plans, 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, financial security
plans and savings and defined contribution retirement plans. 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, 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 Company's business units 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 the
Company, are 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 combined steel and cement/concrete business segments for fiscal
year 1999 under which a threshold ROA of 12% has been established. The threshold
level pre-established for the cement/concrete segment incentive plan for fiscal
year 1998 was exceeded, enabling eligible executives of this segment to earn a
cash incentive equal to 23% 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.
For an executive to earn an annual cash incentive award under the rolling
three-year cash incentive plan, the Company must reach or surpass the 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,
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and the recommendation of the chief executive officer based upon his subjective
evaluation of the executive's individual performance. 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 have been established for each of the consecutive three-year periods
through May 31, 2001. In 1998, the Compensation Committee established a minimum
threshold for the three-year period ending May 31, 2001. The Committee believes
that the rolling three-year plan focuses plan participants on growth and
profitability for the Company. The threshold established by the Committee for
the cement/concrete segment for the rolling three years ending with the
Company's 1998 fiscal year was achieved and the participating executives were
awarded incentive payments up to 70% of their base salaries. Beginning in fiscal
year 1999 executives of both the Company's steel and cement/concrete business
segments will participate in the same continuous three-year plan.
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 1998, Robert D. Rogers, Gordon E. Forward, Richard M. Fowler, David A.
Fournie and Melvin G. Brekhus received stock option awards of 45,000, 11,000,
8,200, 6,600, and 8,900 respectively.
Chief Executive Officer's 1998 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 fiscal year 1998, 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 1998. In order for an incentive
award to be earned under the plan, the segment had to achieve a return on its
assets of 23% for the year. The segment surpassed this return on asset threshold
and the CEO earned an incentive bonus of $303,290 under the plan. The Company's
average return on equity for the three fiscal years ending 1998 was 19.4%.
Accordingly, under long term incentive portion of his contract, the CEO earned
an incentive bonus of $1,054,921, 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.
James M. Hoak, Jr., Chairman
Eugenio Clariond Reyes, Member
Robert Alpert, Member
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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 indicating that no
other reports were required to be filed during the 1998 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)
except that one transaction report for Carlos E. Fonts and Richard I. Galland
was filed late.
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,
1998, 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.
1999 SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be presented at the next Annual
Meeting of Shareholders presently scheduled for October 19, 1999, must be
received by the Secretary of the Company not later than April 30, 1999, to be
eligible for inclusion in the proxy statement and form of proxy relating to that
meeting.
Proposals of Shareholders intended to be presented at the next Annual
Meeting of Shareholders which are not received by the Secretary of the Company
before April 30, 1999 shall be untimely. Upon the presentation at the next
Annual Meeting of Shareholders of any matter not timely proposed, the persons
named in the proxy accompanying the Company's proxy statement relating to that
meeting will have the discretionary authority to vote all proxies on such
matters in accordance with their best judgment.
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 20, 1998
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 20, 1998 at 9:30 A.M. at the
University of North Texas Music and Fine Arts Education Center, 2100 North
I-35E, Denton, Texas.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
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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 AND 2 indicated in
this example
Item 1 - Election of Directors (see reverse). Gerald R. Heffernan, Robert D. Rogers and Ian Wachtmeister to serve in a
class of directors with a term expiring in 2001.
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.)
/ / / /
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Item 2 - 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 PROPOSAL
IN ITEM 2.
(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: , 1998
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