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
COMMERCIAL METALS COMPANY
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(Name of Registrant as Specified in its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
TELEPHONE (214) 689-4300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 23, 2003
The Annual Meeting of Stockholders of Commercial Metals Company, a Delaware
corporation, will be held in the Horchow Auditorium, Dallas Museum of Art, 1717
North Harwood, Dallas, Texas, on January 23, 2003, at 10:00 a.m., Central
Standard Time. If you are planning to attend the meeting in person, please check
the appropriate space on the enclosed proxy card. A map is included on the back
cover of the attached Proxy Statement. The meeting will be held for the
following purposes:
(1) To elect three persons to serve as directors until the 2006 annual
meeting of stockholders and until their successors are elected;
(2) To consider and act upon a proposal to amend our General Employees
Stock Purchase Plan to increase by 1,000,000 the maximum number of shares
that may be available for issuance pursuant to the Plan and to increase the
maximum number of shares that an eligible employee may elect to purchase
annually from 200 shares to 400 shares;
(3) To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the fiscal year ending August 31, 2003; and
(4) To transact such other business as may properly come before the
meeting or any adjournments of the meeting.
Only stockholders of record on November 25, 2002, are entitled to notice of
and to vote at the meeting or any adjournment or adjournments of the meeting.
You are cordially invited to attend the annual meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL OUT, SIGN AND MAIL
PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE ON WHICH NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. ALTERNATIVELY, YOU MAY VOTE YOUR SHARES
VIA TELEPHONE OR THE INTERNET AS DESCRIBED ON THE ENCLOSED PROXY CARD. PROXIES
FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS REQUESTED BY
THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED IN FURTHER
COMMUNICATION.
By Order of the Board of Directors,
/s/ DAVID M. SUDBURY
DAVID M. SUDBURY
Vice President, Secretary
and General Counsel
Dallas, Texas
December 11, 2002
COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
TELEPHONE (214) 689-4300
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 23, 2003
This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of Commercial Metals Company for use at the
annual meeting of our stockholders to be held on January 23, 2003, and at any
and all adjournments of the meeting. The approximate date on which this proxy
statement and accompanying proxy card are first being sent or given to
stockholders is December 17, 2002.
Shares represented by each proxy, if properly executed and returned to us
prior to the meeting, will be voted as directed, but if not otherwise specified,
will be voted for the election of three directors, for approval of the proposal
to amend our General Employees Stock Purchase Plan to increase by 1,000,000 the
maximum number of shares available for issuance pursuant to the Plan and to
increase the maximum number of shares that an eligible employee may elect to
purchase annually from 200 shares to 400 shares, and to ratify the appointment
of Deloitte & Touche LLP as independent auditors, all as recommended by our
board of directors. A stockholder executing the proxy may revoke it at any time
before it is voted by giving written notice to the Secretary of Commercial
Metals Company, by subsequently executing and delivering a proxy or by voting in
person at the meeting (although attending the meeting without executing a ballot
or executing a subsequent proxy will not constitute revocation of a proxy).
Stockholders of record can simplify their voting and reduce our cost by
voting their shares via telephone or the Internet. The telephone and Internet
voting procedures are designed to authenticate stockholders' identities, allow
stockholders to vote their shares and to confirm that their instructions have
been properly recorded. If a stockholder's shares are held in the name of a bank
or broker, the availability of telephone and Internet voting will depend upon
the voting processes of the bank or broker. Accordingly, stockholders should
follow the voting instructions on the form they receive from their bank or
broker.
Stockholders who elect to vote via the Internet may incur
telecommunications and Internet access charges and other costs for which they
are solely responsible. The Internet and telephone voting facilities for
stockholders of record will close at 4:00 p.m., Eastern Standard Time, on the
evening before the annual meeting. Instructions for voting via telephone or the
Internet are contained in the enclosed proxy card.
OUTSTANDING VOTING SECURITIES
On November 25, 2002, the record date for determining stockholders entitled
to vote at the annual meeting, we had outstanding 28,420,735 shares of our
common stock, par value $5.00 per share, not including 3,844,431 treasury
shares. Each share of our common stock is entitled to one vote for each director
to be elected and upon all other matters to be brought to a vote. We had no
shares of preferred stock outstanding at November 25, 2002.
The presence of a majority of our outstanding common stock represented in
person or by proxy at the meeting will constitute a quorum. Shares represented
by proxies that are marked "abstain" will be counted as shares present for
purposes of determining the presence of a quorum. Proxies relating to "street
name" shares that are voted by brokers on some matters will be treated as shares
present for purposes of determining the presence of a quorum, but will not be
treated as shares entitled to vote at the annual meeting on those matters
as to which authority to vote is withheld by the broker. Such shares as to which
authority to vote is withheld are called broker non-votes.
The three nominees receiving the highest vote totals will be elected as
directors. Accordingly, abstentions and broker non-votes will not affect the
outcome of the election of directors.
All other matters to be voted on will be decided by the affirmative vote of
a majority of the shares present or represented at the meeting and entitled to
vote. On any such matter, an abstention will have the same effect as a negative
vote. A broker non-vote will not be counted as an affirmative vote or a negative
vote because shares held by brokers will not be considered entitled to vote on
matters as to which the brokers withhold authority.
Management has designated the proxies named in the accompanying form of
proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
On the basis of filings with the Securities and Exchange Commission and
other information including adjustment for the June, 2002 stock dividend, we
believe that as of the record date the following persons, including groups of
persons, beneficially owned more than 5% of our outstanding common stock:
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF CLASS
---------------- ----------------------- --------
Moses Feldman 1,565,320(1) 5.5%
P.O. Box 931
Doylestown, PA 18901
Dimensional Fund Advisors 1,935,258(2) 6.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
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(1) Based on filings with the Securities and Exchange Commission, which indicate
the reporting person has sole voting and dispositive power over 160,338
shares and shared voting and dispositive power over 1,404,982 shares.
Includes 16,038 shares subject to options exercisable within 60 days.
(2) Based on a Schedule 13G report filed with the Securities and Exchange
Commission on February 12, 2002 as adjusted for a two-for-one stock split in
the form of a 100% stock dividend paid June 28, 2002 to stockholders of
record on June 7, 2002.
2
The following table sets forth information known to us about the beneficial
ownership of our common stock as of December 4, 2002, by each director and
nominee for director, the Chief Executive Officer, the other executive officers
included in the Summary Compensation Table, and all current directors and
executive officers as a group. Unless stated otherwise in the notes to the
table, each person named below has sole authority to vote and invest the shares
listed.
OWNED
SHARES OF OPTION SHARES TOTAL SHARES OF PERCENTAGE OF
COMMON OF COMMON COMMON STOCK COMMON STOCK
NAME STOCK STOCK(1) BENEFICIALLY OWNED BENEFICIALLY OWNED
---- --------- ------------- ------------------ ------------------
Feldman, Moses(2)............ 1,549,282 16,038 1,565,320 5.5%
Ghormley, Hugh M. ........... 238,584 105,060 343,644 1.2%
Howell, Leo.................. 113,178 30,600 143,778 *
Loewenberg, Ralph E.(3)...... 0 24,596 24,596 *
Massaro, Anthony A. ......... 2,000 24,596 26,596 *
McClean, Murray R. .......... 2,000 24,440 26,440 *
Neary, Robert D. ............ 4,000 2,806 6,806 *
Owen, Dorothy G. ............ 376,350 24,596 400,946 1.4%
Rabin, Stanley A. ........... 370,246 215,400 585,646 2.1%
Selig, Clyde P. ............. 81,954 111,042 192,996 *
Selig, Marvin................ 0 38,900 38,900 *
Womack, Robert R. ........... 8,000 24,596 32,596 *
All current directors and
executive officers as a
group (19 persons)......... 3,026,562 834,558 3,861,120 13.6%
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* Less than one percent
(1) Represents shares subject to options exercisable within 60 days of December
4, 2002.
(2) Moses Feldman has sole voting and dispositive power over 160,338 shares and
shared voting and dispositive power over 1,404,982 shares. Includes
1,167,382 shares owned by the Marital Trust under the Trust Indenture
created by the Will of Jacob Feldman of which Moses Feldman is one of four
trustees and 237,600 of 800,000 shares owned by the Feldman Family Limited
Partnership of which Moses Feldman is managing partner. Excludes 1,381,282
shares owned of record by The Feldman Foundation a sec.501(c)(3) private
charitable foundation, of which Moses Feldman is one of three voting
trustees. Moses Feldman disclaims beneficial ownership as to all shares
held by The Feldman Foundation, the Marital Trust and 562,400 shares held
by the Feldman Family Limited Partnership.
(3) Mr. Loewenberg is one of four trustees of the Marital Trust under the Trust
Indenture created by the Will of Jacob Feldman which owns 1,167,382 shares.
Mr. Loewenberg disclaims any beneficial interest as to such shares.
PROPOSAL I
ELECTION OF DIRECTORS
Our restated certificate of incorporation divides the board of directors
into three classes. The term of office of the Class II directors expires at this
annual meeting of stockholders. The three Class III directors will serve until
the 2004 annual meeting of stockholders. The terms of the three Class I
directors end at the 2005 annual meeting of stockholders. Nominee Anthony A.
Massaro was previously elected by the stockholders in 1999. In March 2001, the
directors elected nominee Robert D. Neary to the board of directors as a Class
II director. In June 2002, the directors elected nominee Clyde P. Selig to the
board of directors as a Class III director. To equally divide our nine directors
into three classes of three directors, Mr. Selig agreed to stand for election at
this annual meeting of stockholders with the other Class II nominees. Each of
the three nominees
3
currently serves as a director and stands for election to a three-year term of
office expiring at the 2006 annual meeting and until a successor is duly
elected. Proxies cannot be voted for the election of more than three persons to
the board of directors at the meeting.
Each nominee has consented to being named in this proxy statement and to
serve if elected. If any nominee becomes unavailable for any reason, the shares
represented by the proxies will be voted for the person, if any, as may be
designated by our board of directors. However, management has no reason to
believe that any nominee will be unavailable.
The following table sets forth information about the directors. All
directors have been employed in substantially the same positions set forth in
the table for at least the past five years except for Messrs. Rabin, Womack and
Selig. Mr. Rabin was elected to the additional position of Chairman of
Commercial Metals Company in March 1999. Mr. Womack was Chairman and Chief
Executive Officer of Zurn Industries, Inc. prior to its merger in 1998 with U.S.
Industries. Mr. Womack retired as Chairman and Chief Executive Officer of Zurn
Industries, Inc. and Chief Executive of U.S. Industries Bath and Plumbing
Products Group in January 2000. Mr. Selig was elected to the additional position
of Chief Executive Officer of the CMC Steel Group in June 2002.
NOMINEES
SERVED AS
NAME, PRINCIPAL DIRECTOR
OCCUPATION AND BUSINESS AGE SINCE
----------------------- --- ---------
CLASS II -- TERM TO EXPIRE IN 2006
Anthony A. Massaro 58 1999
Chairman and Chief Executive Officer
Lincoln Electric Holdings, Inc.
Robert D. Neary 69 2001
Retired - Former Co-Chairman of
Ernst & Young
Clyde P. Selig 70 2002
Vice President, Commercial Metals Company; President
and Chief Executive Officer,
CMC Steel Group
DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM TO EXPIRE IN 2004
Moses Feldman 62 1976
President, AeroMed, Inc.
Ralph E. Loewenberg 63 1971
President, R. E. Loewenberg Capital Management
Corporation
Stanley A. Rabin 64 1979
Chairman, President and Chief Executive Officer,
Commercial Metals Company
4
SERVED AS
NAME, PRINCIPAL DIRECTOR
OCCUPATION AND BUSINESS AGE SINCE
----------------------- --- ---------
CLASS I -- TERM TO EXPIRE IN 2005
A. Leo Howell 81 1977
Vice President, Commercial Metals Company; President,
Howell Metal Company
Dorothy G. Owen 67 1995
Retired - Former Chairman of the Board, Owen Steel
Company, Inc.; Management of Investments
Robert R. Womack 65 1999
Retired - Former Chairman and Chief Executive Officer,
Zurn Industries, Inc. and Chief Executive of U.S.
Industries Bath and Plumbing Products Group
Clyde P. Selig is the uncle of Jeffrey H. Selig, an executive officer.
There are no other family relationships among the directors, nominees and
executive officers.
Mr. Massaro is a director of Lincoln Electric Holdings, Inc., Thomas
Industries, Inc. and PNC Financial Services Group, Inc. Mr. Neary is a director
of Cold Metal Products, Inc., Strategic Distribution, Inc. and is Chairman of
the Board of Trustees of Armada Funds. Mr. Womack is a director of Covanta
Energy, Inc., Precision Partners, Inc. and U.S. Industries, Inc.
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
Audit Committee. The board of directors has a standing audit committee
which performs the activities more fully described in the Audit Committee Report
on page 17. The members of the audit committee during fiscal year 2002 were
Messrs. Womack (Chairman), Feldman, and Neary and Ms. Owen. During the fiscal
year ended August 31, 2002, the audit committee met nine times.
Compensation Committee. The board of directors has a standing compensation
committee that provides recommendations to the board of directors regarding
compensation for executive officers including issuance of stock options. During
2002 the compensation committee consisted of Messrs. Loewenberg (Chairman),
Feldman, Neary and Massaro. The compensation committee met three times during
the fiscal year ended August 31, 2002, to establish salaries and bonuses for
executive officers, to review compensation policies and approve the issuance of
stock options.
Executive, Nominating and Corporate Governance Committee. The executive,
nominating and corporate governance committee consists of Messrs. Massaro
(Chairman), Feldman, Loewenberg, Neary, and Womack and Ms. Owen. The committee
met three times during the fiscal year ended August 31, 2002, to consider board
structure, corporate governance matters, candidates for directors, executive
officer succession and our business strategy. The committee will consider
persons recommended by stockholders for inclusion as nominees for election to
our board of directors if the names, biographical data and qualifications of
such persons are submitted in writing in a timely manner to the Secretary of
Commercial Metals Company.
During the fiscal year ended August 31, 2002, the entire board of directors
met eight times, of which six were regularly scheduled meetings and two were
special meetings. All directors attended at least seventy-five percent or more
of the meetings of the board of directors and of the committees of the board of
directors on which they served.
Compensation of Non-employee Directors. None of our employees receive
additional compensation for serving as a director. Messrs. Feldman, Loewenberg,
Massaro, Neary, and Womack and Ms. Owen were paid an annual retainer fee of
$27,000 per year and $1,200 for each board meeting or $600 for each committee
meeting they attended during the 2002 fiscal year. Chairmen of the audit,
compensation and executive,
5
nominating and corporate governance committees receive an additional payment of
$1,500 per year. We also reimburse the directors for expenses in connection with
their attendance at the board and committee meetings.
The Non-Employee Director Stock Option Plan approved at the 2000 Annual
Meeting of Stockholders provides that each non-employee director receive on the
date of each annual meeting of stockholders an option to acquire, as adjusted
for our June, 2002, two-for-one stock dividend, 3,000 shares. Directors elected
to fill vacancies between annual meetings receive a grant for a pro rata amount
based on their period of service before the next annual meeting. Each
non-employee director received on January 24, 2002, an option to acquire, after
adjustment for our June, 2002, two-for-one stock dividend, 3,000 shares of
common stock at $18.0475. In addition, each non-employee director may make an
irrevocable election prior to January 1 of each year, to accept an additional
option grant in lieu of all or part of the annual cash retainer to be paid for
that year. The number of shares subject to option as a result of this election
will be determined by dividing the amount of the annual retainer by the
Black-Scholes value for one share as of the grant date. The grant date shall be
the date of the annual meeting of stockholders following the calendar year
covered by the election. Messrs. Loewenberg, Massaro and Womack and Ms. Owen
each received an option to acquire 8,538 shares of common stock at $18.0475 on
January 24, 2002 in lieu of receipt of the annual cash retainer for calendar
year 2001. Messrs. Loewenberg and Massaro and Ms. Owen have elected to accept an
option for a number of shares to be determined and granted January 23, 2003, in
lieu of their retainer fee for the calendar year 2002.
The exercise price for all options granted non-employee directors shall be
the fair market value on the day of grant. One-half of the number of the shares
covered by each 3,000 share option vests on the first anniversary of the date of
grant with the remaining one-half vesting on the second anniversary or
immediately upon a change in control. All options received as a result of a
non-employee director's election to receive an option in lieu of the cash
retainer are fully vested on the date of grant. All non-employee director
options terminate on the earliest of (i) the seventh anniversary of the date of
grant; (ii) one year after termination of service by reason of death or
disability; (iii) two years after termination of service by reason of retirement
after age sixty-two; or (iv) thirty days following termination of service for
any other reason. These options are "non-qualified" options under sec.422A of
the Internal Revenue Code.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and beneficial owners of more than 10% of our
common stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of our common stock and any of
our other equity securities. Based solely upon our review of the copies of such
forms received by us or written representations that no Form 5's were required
from reporting persons, we believe that all such reports were submitted on a
timely basis during the year ended August 31, 2002.
6
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid
during each of the last three fiscal years to the Chief Executive Officer and
the named executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------- -----------------
FISCAL SALARY BONUS AWARDS OF STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTION/SARS(#)(1) COMPENSATION($)(2)
-------------------------------------- ------ ------- ------- ----------------- ------------------
Stanley A. Rabin...................... 2002 475,000 350,000 38,000 87,941
Chairman, President and 2001 475,000 295,000 38,000 39,087
Chief Executive Officer 2000 430,000 650,000 28,000 95,679
Marvin Selig(3)....................... 2002 390,000 225,000 0 81,049
CMC Steel Group - 2001 390,000 250,000 0 37,547
Chairman and Chief Executive Officer 2000 380,000 500,000 22,000 79,886
A. Leo Howell......................... 2002 340,000 240,000 0 63,236
Vice President; President - 2001 340,000 350,000 0 39,659
Howell Metal Company 2000 330,000 610,000 17,000 82,807
Clyde P. Selig........................ 2002 320,000 235,000 0 69,335
Vice President; CMC Steel Group - 2001 320,000 241,000 0 28,929
President and Chief Operating
Officer 2000 312,100 347,000 15,800 59,158
Hugh M. Ghormley...................... 2002 315,000 150,000 0 27,148
Vice President; CMC Steel Group - 2001 315,000 200,000 0 31,598
President - Fabrication Plants 2000 308,100 314,000 16,200 56,081
Murray R. McClean..................... 2002 310,000 295,000 13,720 45,622
Vice President; Marketing and 2001 310,000 110,000 14,880 24,560
Distribution Segment - President 2000 300,000 290,000 10,000 11,933
---------------
(1) These awards were granted under our 1996 Long-Term Incentive Plan. The
exercise price is the fair market value of such share on the date granted.
Although our 1996 Long-Term Incentive Plan provides for the granting of
stock appreciation rights, performance awards and incentive stock options
qualified under sec.422A of the Internal Revenue Code, none have been made
and each of the awards shown represent stock options which do not qualify
under sec.422A. The options are exercisable one half at one year from grant
date and the second half two years from grant date and expire seven years
from grant date. All options may vest earlier upon a change in control as
defined in the plan.
(2) The compensation reported represents contributions to and forfeitures
allocated to the account of the recipient under the Commercial Metals
Companies Profit Sharing and 401(k) Plan or, in the case of Marvin Selig and
Clyde P. Selig, the Structural Metals, Inc. Profit Sharing and 401(k) Plan
and contributions to the account of the recipient pursuant to the Benefit
Restoration Plan, a non-qualified plan for certain executives. All of the
amounts reported are fully vested in the recipient. The compensation for the
named executive officers for fiscal year 2002 include a credit to the
account of each under the Benefit Restoration Plan in the following amounts:
Mr. Rabin - $78,160; Mr. Marvin Selig - $71,087; Mr. Howell - $53,455; Mr.
Clyde P. Selig - $59,374; Mr. Ghormley - $17,368 and Mr. McClean - $38,391.
(3) Mr. Marvin Selig resigned as a director and Chairman and Chief Executive
Officer of the CMC Steel Group in June 2002 and retired from employment
effective September 1, 2002. We paid Mr. Selig $1,145,835 on September 12,
2002, representing a non-qualified retirement benefit that we owed him.
7
The following table provides information on options granted Stanley A.
Rabin and Murray R. McClean in fiscal year 2002. There were no option grants to
the other executive officers included in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM($)(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
---- ------------- ------------ ----------- ---------- --------- ---------
Stanley A. Rabin............. 38,000 5.0 17.165 2/4/09 $265,539 $618,819
Murray R. McClean............ 13,720 1.8 17.165 2/4/09 $ 95,874 $223,426
Potential Future Commercial Metals Company Stock Price................................ $ 24.15 $ 33.45
---------------
(1) These options become exercisable in two equal installments, one-half
February 4, 2003, and one-half February 4, 2004 or earlier upon a change of
control as defined in our 1996 Long-Term Incentive Plan.
(2) The exercise price is the fair market value (mean of high and low sales
price) on the date of grant.
(3) The dollar amounts in the last two columns are the result of calculations at
the 5% or 10% compound annual rates set by the Securities and Exchange
Commission and are not intended to forecast future appreciation of our
stock.
The following table provides information concerning the exercise of options
during fiscal year 2002 and unexercised options held as of August 31, 2002, for
the executive officers included in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
SHARES AT FY-END(#)(1) FY-END($)(1)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Stanley A. Rabin......... 64,000 693,600 215,400 87,000 $1,198,633 $395,395
Marvin Selig............. 135,114 770,754 38,900 0 160,007 0
A. Leo Howell............ 66,750 557,899 30,600 0 126,030 0
Clyde P. Selig........... 44,684 463,903 111,042 0 593,166 0
Hugh M. Ghormley......... 0 0 105,060 0 558,588 0
Murray R. McClean........ 35,000 210,909 24,440 21,160 125,949 85,794
---------------
(1) Amounts set forth in the table reflect the number and value of shares and
options only because we have not awarded stock appreciation rights (SARs).
(2) The amounts shown represent the difference between the market value of our
common stock on August 31, 2002, of $19.32, and the exercise price of such
options.
8
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
We entered into an Employment and Consulting Agreement with Marvin Selig on
June 7, 2002 pursuant to his resignation from his positions as a director and
officer of Commercial Metals Company and our subsidiaries as of June 7, 2002 and
his retirement effective September 1, 2002. The agreement expires December 31,
2004, unless terminated earlier. Mr. Selig agreed that during the term of the
agreement and for two years thereafter, he will not, without the consent of our
board of directors, participate in any business that is competitive with our
business. From September 1, 2002 through December 31, 2004, we have agreed to
pay Mr. Selig $20,833.34 per month for his consulting services. We may terminate
Mr. Selig's consulting services for cause as provided in the agreement. We paid
Mr. Selig $1,145,835 on September 12, 2002, representing a non-qualified
retirement benefit that we owed him. In addition, pursuant to the terms of the
agreement, we conveyed title to a car to Mr. Selig and we have agreed to provide
him with secretarial support.
We entered into an employment agreement with Murray R. McClean on September
1, 1999. Mr. McClean is employed as a Vice President of Commercial Metals
Company and as President of the marketing and distribution segment. The initial
term of the employment agreement expired August 31, 2002, but the agreement
automatically extends for three consecutive one-year terms, beginning September
1, 2002, unless either party terminates the agreement. Mr. McClean's minimum
base salary is $300,000 per year. He is also eligible to earn a discretionary
annual bonus. Mr. McClean is eligible to participate in or receive benefits
under any plan or arrangement made generally available to our employees. If we
terminate Mr. McClean's employment for cause, or for nonperformance due to
disability, or if Mr. McClean terminates his own employment, then we have no
further payment obligations. If we terminate Mr. McClean's employment without
cause, then we must pay his base salary for a period of 12 months. Mr. McClean
has agreed that during the term of his employment and for two years after his
termination, he will not participate in any business that is competitive with
our business.
RETIREMENT BENEFITS
Substantially all of our employees and our domestic subsidiaries
participate in one of three profit sharing and 401(k) plans, all defined
contribution plans. We have no defined benefit pension plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee of our board of directors are
Messrs. Loewenberg, Feldman, Massaro and Neary. None of the members of the
compensation committee was at any time during fiscal year 2002, or at any other
time, an officer or employee of Commercial Metals Company. No member of the
compensation committee serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our board of directors or compensation committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the compensation committee concerning
compensation policies applicable to our fourteen executive officers and the
basis for Mr. Rabin's compensation as Chief Executive Officer, for fiscal year
ended August 31, 2002. The compensation committee is comprised of non-employee
directors, Messrs. Loewenberg (Chairman), Feldman, Massaro and Neary.
OBJECTIVES AND STRATEGY
During fiscal year 2001 the committee engaged a compensation consultant to
review and make recommendations with regard to existing and new compensation
policies. Based on that review we implemented changes to certain compensation
policies effective in fiscal year 2002. The committee approved two new cash
incentive plans, the Key Employee Annual Incentive Plan and the Key Employee
Long-Term Performance Plan. All of our executive officers, with the exception of
two executive officers, and certain other
9
key employees participate in both plans. Two executive officers only participate
in the Key Employee Long-Term Performance Plan. These two executive officers
also received a discretionary bonus in fiscal year 2002 approved by the
compensation committee and are eligible to receive a discretionary bonus in
fiscal year 2003.
The objectives of our annual incentive plan include:
- payment for short-term results which encourages longer term value
creation by achieving annual business and financial performance targets;
- directly linking compensation to consolidated financial results;
- maintaining an entrepreneurial culture among management by linking
compensation to results in defined areas of responsibility;
- communicating expectations, results and incentive payouts;
- paying competitive or above market total cash compensation for high
performance; and
- funding incentive payouts from financial results while maintaining
acceptable stockholder returns.
The plan provides for target award opportunities expressed as a percentage of
base salary with threshold and superior award levels. The plan establishes a
maximum limitation as a percentage of operating profit on all annual bonuses.
The plan's primary performance measure is operating profit defined as FIFO
operating profit before taxes but after interest expense. The plan provides for
the participant's award opportunity to be determined based on corporate,
business unit and individual performance. For instance, the chief executive
officer's annual award is based entirely on our consolidated performance, and
the annual award of each president of our segments is a pro rata performance
award based on that segment's performance and our consolidated performance.
The objectives of our long-term performance plan include:
- linking compensation to factors that create long-term financial success;
- providing greater long-term orientation and competitiveness in total
compensation by establishing a performance based component in addition to
our existing stock option incentives;
- providing a balance to short-term incentives in the decision making
process;
- encouraging management to promote our overall interest by linking
performance to company-wide financial results;
- remaining competitive with respect to compensation in attracting and
retaining superior talent; and
- funding cash payments through improved business results.
The plan provides cash payments contingent on the attainment of multi-year
performance goals. At the beginning of the performance period, the committee
establishes goals and measures results over a three-year period. The committee
establishes target award opportunities as a percentage of base salary for each
participant. The awards may be paid if we achieve the targeted performance at
the end of the performance period. Threshold and maximum award levels are also
established. The plan's primary performance measure is growth in earnings before
interest, taxes, depreciation and amortization, which we call EBITDA. The
committee establishes achievement levels at the beginning of each performance
period using our historical EBITDA as a base line. We measure growth in EBITDA
against our highest EBITDA amount prior to the commencement of the three-year
measurement period. Participants earn awards only if we exceed the previous
record EBITDA. Since the plan uses overall corporate financial performance to
determine award levels, we do not consider segment results.
The committee believes the adoption of these plans supports our
long-standing practice of basing a significant portion of total compensation for
key executives as risk contingent upon financial results. This strategy
continues our philosophy of having competitive base salaries, and providing an
opportunity for above-average annual cash bonuses with attainable long-term
equity incentive expectations. In addition, the
10
committee has continued to award stock option grants to executive officers at
levels which have been considered below those of comparable companies. The
committee believes this strategy is consistent with the highly cyclical nature
of our business which is characterized by wide periodic swings in steel and
metal prices.
In evaluating compensation matters, the committee reviews information
prepared or compiled by our employees, confers with independent executive
compensation consultants as appropriate and makes decisions based on the
business experience of each committee member.
CASH COMPENSATION
Base Salary. During fiscal year 2002 the base salaries of eight executive
officers remained at the same level as fiscal year 2001. Two executive officers
received increases consistent with our guidelines for 2002 salary adjustments.
Three newly elected executive officers received substantial base salary
increases to compensate for their additional responsibilities. The committee
believes the base salary of each executive officer reflects his or her
individual contribution, is within the salary range for similar positions in
companies of comparable size and complexity, and is aligned with our total
compensation strategy.
Annual Incentive Bonus. The committee approved cash bonus payments for
each executive officer in 2002 based upon the committee's evaluation of
individual contribution, the respective segment performance and our overall
consolidated financial results for 2002. Net earnings increased 70% over the
prior year with earnings per share increasing 59%. While fiscal year 2002
represented a significant improvement, fiscal year 2001 results were
significantly below expectations and the committee determined that cash bonus
levels for 2002 should be established at levels generally consistent with the
annual incentive plan but below the increase in profitability. As a result, the
aggregate bonus we paid to the fourteen executive officers for their 2002
performance increased $316,500 or approximately 14% compared to 2001 levels. The
committee believes these bonus payments are consistent with the evaluation of
our overall financial results and the intent of our annual incentive plan.
LONG-TERM COMPENSATION
Equity-Based. We issued stock option grants to nine of the fourteen
executive officers during fiscal year 2002 and to 232 other employees. The
number of shares subject to grants awarded to executive officers during the
fiscal year 2002 was 119,450, approximately 16% of the shares awarded to all
employees for option grants during the fiscal year 2002. We made these periodic
grants based on an evaluation of each executive's responsibilities and ability
to influence long-term growth and profitability. The committee believes equity
based incentives align stockholder interest with compensation levels. The
committee intends to continue issuing periodic stock option grants, usually each
year, when it is appropriate, subject to stockholder approval required to
increase the number of shares available for issuance.
Long-Term Incentive Plan. No awards were earned during fiscal year 2002
under the long-term incentive plan because performance measures established
under the plan were not met. The committee will continue to monitor the
appropriateness of the performance measures adopted under the plan. The
committee considers high, yet attainable, results over a three-year period to be
a significant factor in executive officer compensation strategy.
Retirement Benefits. We have no defined benefit pension plans. The only
long-term compensation retirement plans we have for our employees in the United
States are the defined contribution profit sharing and 401(k) plans. As a result
of limitations mandated by federal tax law and regulations that limit defined
contribution plan retirement benefits of more highly compensated employees,
including executive officers, our board of directors in 1996 approved the
Benefit Restoration Plan. The Benefit Restoration Plan is a non-qualified plan
for certain executives subject to reduced benefits. Following each year-end we
contribute to a trust created under the Benefit Restoration Plan an amount equal
to the additional contribution which the participant would have received under
the profit sharing and 401(k) plan had the executive's benefit not been reduced.
The payments we make to the Benefit Restoration Plan for the benefit of
participants, including executive officers, vest under the same terms and
conditions as the relevant profit sharing and 401(k) plan. The committee
believes these payments are an important element in our long-term compensation
program
11
because they restore a reasonable level of retirement benefits for executive
officers and other key employees. The committee has previously authorized the
additional non-qualified retirement benefit for Marvin Selig which we paid
following his retirement as described on page 9.
CEO COMPENSATION
The committee annually sets Mr. Rabin's salary based on similar positions
in comparable companies. Mr. Rabin's annual bonus is based on the same factors
considered for other members of the executive officer group as described under
the annual incentive plan and is tied to our overall performance with no
weighting for individual segment performance. Mr. Rabin's salary for fiscal year
2002 remained at $475,000, his base salary for 2001. Mr. Rabin's cash bonus for
fiscal year 2002 was set at $350,000, an increase of $55,000, or 19% above the
prior year cash bonus amount. As a result, his overall compensation increased
7%. The annual incentive cash bonus paid to Mr. Rabin reflected the committee's
determination that as Chief Executive Officer his performance was superior in
the achievement of our strategy and objectives despite continuing difficult
market conditions in most metals related businesses. In addition, the committee
believes Mr. Rabin's bonus is consistent with the intent of our annual incentive
plan. The committee determined that Mr. Rabin's salary for fiscal year 2003
should be increased to $525,000. Mr. Rabin received a stock option grant for
38,000 shares during fiscal year 2002, identical to his last option grant in
2001 after adjustment for the June, 2002 stock dividend.
CONCLUSION
The committee believes that current total compensation arrangements are
reasonable, competitive, consistent with the compensation philosophy and plans
described above and reflect our financial results. The committee will continue
to monitor the federal tax treatment to us and to our executive officers of
various payments and benefits and in particular the limitations on deductibility
of compensation payments to certain officers under Section 162(m) of the
Internal Revenue Code. To date, this limitation has not had a significant impact
on the deductibility of compensation we have paid. The committee has not
recommended that the annual incentive plan or long-term incentive plan be
submitted to stockholders for approval due, in part, to the fact that we have
incurred no significant loss of tax deductions for compensation to our executive
officers. The committee will continue to monitor the impact of this restriction
and may in certain circumstances limit executive compensation to that which is
deductible under Section 162(m) of the Internal Revenue Code. The committee
shall continue to administer compensation programs for executive officers,
evaluate recommendations for establishment of performance measures under
existing plans and consider new compensation policies when appropriate.
COMPENSATION COMMITTEE
Ralph E. Loewenberg (Chairman)
Moses Feldman
Anthony A. Massaro
Robert D. Neary
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Commencing in July 2000, pursuant to the terms of Murray R. McClean's
employment agreement, we made three loans evidenced by three notes to Mr.
McClean, President of our marketing and distribution segment. The purpose of the
loans was to assist with Mr. McClean's expenses, including the purchase of a
home, in connection with his relocation from Australia to our headquarters in
Dallas. The largest aggregate amount of Mr. McClean's indebtedness during fiscal
year 2002 was $715,000. Two unsecured notes in the original aggregate principal
amount of $330,000 bear interest at a variable rate fixed annually each
September 1 equal to U.S. Treasury Securities adjusted to a constant maturity of
one year for the preceding month of July plus one percent. As of September 1,
2001, the applicable rate on the unpaid balance of $330,000 on these two notes
was 4.62%. As of September 1, 2002, the interest rate was 2.96%. The third note
in the original principal amount of $385,000 is secured by a second lien on a
residence purchased by Mr. McClean and does not bear interest.
During fiscal year 2002, Mr. McClean made principal payments of $86,889.64
and interest payments of $25,725.34 on these notes. On October 10, 2002, Mr.
McClean made an additional principal payment of $133,110.35 and an additional
interest payment of $14,606.19. On November 18, 2002 Mr. McClean paid in full
the remaining unpaid balance owed on the note secured by a second lien on his
residence. As of December 5, 2002, the aggregate unpaid principal amount of the
two outstanding notes was $264,000.
We have historically made charitable contributions of a portion of
consolidated earnings, to various charitable entities, including the Feldman
Foundation, a private charitable foundation exempt from federal income tax under
Internal Revenue Code sec.501(c)(3). The Feldman Foundation is the record and
beneficial owner of 1,381,282 shares of our common stock. Director Moses Feldman
and brothers, Robert L. Feldman and Dr. Daniel E. Feldman, are trustees of the
Feldman Foundation. During 2002 we established a policy discontinuing future
charitable contributions to the Feldman Foundation.
13
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return of our common
stock during the five year period beginning August 31, 1997, and ending August
31, 2002, with the Standard & Poor's 500 Composite Stock Price Index also known
as the "S&P 500" and the Standard & Poor's Steel Industry Group Index also known
as the "S&P Steel Group." Each index assumes $100 invested at the close of
trading August 31, 1997, and reinvestment of dividends.
(Performance Graph)
Cumulative Total Return
-------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
-------------------------------------------------------------------------------------------
Commercial Metals
Company $100.00 $80.55 $103.38 $95.97 $110.09 $134.67
S&P 500 $100.00 $108.09 $151.14 $175.81 $132.93 $108.84
S&P Steel $100.00 $61.60 $77.57 $54.37 $64.17 $ 58.36
14
PROPOSAL II
PROPOSED AMENDMENT TO THE GENERAL EMPLOYEES STOCK PURCHASE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
Our board of directors believes that investment by employees in our common
stock through the General Employees Stock Purchase Plan, or the Plan, has in the
past and will continue in the future to emphasize the mutuality of interests
that exists between our employees and our stockholders. We believe that the Plan
creates incentive, promotes employee morale and helps to attract and retain
desirable personnel. Our board of directors has concluded that it is in the best
interests of stockholders to continue to stimulate employee savings and
investment through the Plan. Our board of directors recommends the adoption of
an amendment that will authorize the reservation of an additional 1,000,000
shares of our common stock for sale to our employees pursuant to the Plan and
the increase in the maximum number of shares of our common stock that an
employee may elect to purchase annually from 200 shares to 400 shares.
When the Plan was adopted in 1968, 40,000 shares of our common stock were
reserved for issuance thereunder. In 1973, 1976, 1980, 1988, 1993 and 1998, our
stockholders approved amendments, respectively, to increase the number of shares
available by 35,000, 50,000, 125,000, 300,000, 500,000 and 500,000. The number
of shares authorized under the Plan has also increased as a result of the
application of the anti-dilution provisions of the Plan and the thirteen stock
dividends we have paid since inception of the Plan. During calendar year 2001,
1,281 employees completed purchases of 257,260 shares of which all but 600 were
issued in January, 2002. As of November 30, 2002, subscriptions were outstanding
to purchase an additional 233,920 shares during 2002. If all of these
outstanding subscriptions are completed and none are canceled, only 379,406
shares will remain reserved under the Plan for future purchase by employees. The
adoption of the amendment reserving an additional 1,000,000 shares will bring
the total shares available under the Plan for sales to employees in the future
to 1,379,606.
All terms and conditions of the Plan, which are summarized below, will
remain unchanged with the exception of the number of shares of common stock an
eligible employee may elect to purchase.
Eligibility and Purchase Price. Each employee with at least one year's
continuous service with us, or a subsidiary or predecessor of us, on January 1
of each year is eligible to participate. Officers may participate only with
approval of our board of directors or designated committee. The compensation
committee of the board functions as the Plan Committee. Approximately 5,000
employees are estimated to be eligible to participate in the Plan. Eligible
employees may continue to participate during each succeeding year. Each eligible
employee in December of each year may elect to purchase, within the limits to be
prescribed each year by the Plan Committee, 10 to 200 shares of our common stock
at 50% to 90% of market value. Market value is the average of the mean of the
highest and lowest prices of one share of our common stock on the New York Stock
Exchange -- Consolidated Tape, or such other reporting services as the Plan
Committee may select, for each of the first ten days in December during which
the New York Stock Exchange is open for business. In the absence of reported
sales on any day the most recent previous day for which sales were reported
shall be used in calculating the ten day average. During the past several years,
including 2001 and 2002, the percentage of the purchase price paid by employees
was established by the Plan Committee at 75%.
Contributions. Each participating employee pays his or her contribution by
substantially equal payroll deductions over a period of one year beginning with
the employee's first payroll period after January 1 of each year. Our employees
are not given periodic reports on the status of their accounts; however,
employees may obtain information as to the amount and status of their accounts
at any time upon written request to their payroll department or the Secretary of
Commercial Metals Company. Upon completion of the employee's deductions or
payments, we contribute from current net income or accumulated earned surplus
the remaining percentage of the purchase price of such shares. Within 30 days
after full payment therefor, a certificate for the shares purchased is delivered
to the participating employee.
Withdrawal, Cancellation and Termination. Until final payment, the
employee, at his option, may cancel his purchase and we refund his entire
contribution to date without interest. In the event that an employee fails to
pay an installment not previously deducted from his gross pay within 10 days
after its due
15
date without making other arrangements satisfactory to us for discharging his
indebtedness, such action is deemed equivalent to a notice of cancellation, and
we refund his entire contribution. Should the employee leave his employment for
any reason other than retirement or death prior to completing payment for the
shares, we refund his entire contribution. In the event of retirement or death
of the employee prior to completing payment for the shares, the employee or his
estate, as the case may be, within the 90 days following such retirement or
death, may elect (a) to receive in cash the employee's entire contribution, (b)
to receive a certificate for such number of full shares as the contribution will
purchase at the subscription price, or (c) by payment of the balance due to
receive a certificate for the full number of shares which the employee was
entitled to purchase under the subscription.
General. No employee may sell, assign, transfer, pledge or otherwise
dispose of or encumber his right to participate in the Plan or his interest in
any share to be issued upon payment of the amount due. No employee has rights as
a stockholder until payment for the shares has been completed and a certificate
has been issued.
We will continue the Plan until all of our shares of common stock reserved
for the purposes of the Plan have been subscribed for and sold. However, we
reserve the right to amend, modify, suspend, revoke or terminate the Plan or any
part thereof at any time, provided that no such action may increase the maximum
number of shares which may be sold pursuant to the Plan; change the manner of
determining the sales price; or, without the written consent of the employee,
materially or adversely affect the rights of any employee under any effective
purchase application.
In the event of stock splits, stock dividends, redemptions and other
similar changes in our capitalization, appropriate adjustments reflecting such
action are made in the number and price of shares covered by the Plan and by
outstanding purchase agreements.
We contribute the proceeds we receive from the sale of shares to employees
under the Plan to our working capital and use the proceeds for general corporate
purposes.
Market Value of the Securities. The market value of our common stock is
$16.49 per share, based on the closing price of our common stock on the New York
Stock Exchange on December 5, 2002.
VOTE REQUIRED
The affirmative vote of the holders of a majority of our common stock
present or represented at the meeting is required to adopt the amendment to the
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE PLAN.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information as of August 31, 2002,
with respect to compensation plans under which shares of our common stock may be
issued.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED WEIGHTED-AVERAGE EQUITY COMPENSATION PLANS
UPON EXERCISE OF EXERCISE PRICE OF (EXCLUDING SECURITIES
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, REFLECTED IN THE FIRST
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN)
------------- -------------------- -------------------- -------------------------
Equity compensation plans approved
by security holders.............. 3,528,515 $ 14.30 2,305,184
Equity compensation plans not
approved by security holders..... -0- Not applicable -0-
Total.............................. 3,528,515 $ 14.30 2,305,184
16
AUDIT COMMITTEE REPORT
For many years we have had a standing audit committee of our board of
directors. Our board of directors annually selects the members of the committee.
Four non-employee directors, Messrs. Womack (Chairman), Feldman and Neary and
Ms. Owen are presently members of the committee. Each member of the committee is
qualified to serve. The committee satisfies all applicable financial literacy
requirements and each member is independent as "independence" is currently
defined by the applicable listing standards of the New York Stock Exchange.
Furthermore, we believe that each member will be considered "independent" based
on proposed changes to the New York Stock Exchange requirements regarding
independence.
The Audit Committee Charter sets forth the duties and responsibilities of
the committee. A copy of the Charter which our board of directors adopted on
March 17, 2000 was attached as Appendix "A" to the proxy statement dated
December 11, 2000 for the Annual Meeting of Stockholders held January 25, 2001.
The committee is evaluating the charter in light of new laws, recent regulations
and proposed changes to New York Stock Exchange listing requirements.
Appropriate changes to the Charter will be considered during fiscal year 2003.
During the fiscal year ended August 31, 2002, the committee met nine times. The
committee among other activities, recommends to our board of directors whether
the audited financial statements should be included in our Annual Report on Form
10-K, recommends the selection of the independent auditors, reviews quarterly
financial statements with management and independent auditors and reviews with
internal audit staff and independent auditors our financial controls and
procedures.
The committee has reviewed and discussed the audited financial statements
for the fiscal year ended August 31, 2002, with management and with the
independent auditors. Those discussions included the matters required to be
disclosed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The committee has received the written disclosures and letter from
the independent accountants as required by Independence Standards Board Standard
No. 1 concerning independence discussions with audit committees. The committee
has discussed with the independent accountants their independence under such
standards and has determined that the services provided by Deloitte & Touche LLP
are compatible with maintaining their independence. Based on the committee's
discussion and review with management and the independent auditors, the
committee recommended to our board of directors that the audited financial
statements for the fiscal year ended August 31, 2002, be included in our Annual
Report on Form 10-K as filed November 26, 2002 with the Securities and Exchange
Commission.
AUDIT COMMITTEE
Robert R. Womack, Chairman
Moses Feldman
Robert D. Neary
Dorothy G. Owen
PROPOSAL III
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
Our board of directors has appointed Deloitte & Touche LLP as the
independent auditors for the fiscal year ending August 31, 2003, subject to
stockholder ratification. Deloitte & Touche LLP or its predecessors have
conducted the audits of our financial statements for over forty years. Fees
billed by Deloitte & Touche LLP to us for services during the fiscal year ended
August 31, 2002 were:
Audit Fees. Deloitte & Touche LLP billed us an aggregate of $768,075 for
professional services rendered in connection with the audit of our fiscal year
2002 annual financial statements and review of our quarterly statements during
fiscal year 2002.
Financial Information Systems Design and Implementation Fees. Deloitte &
Touche LLP billed us an aggregate of $55,033 for information technology services
during fiscal year 2002.
17
All Other Fees. Deloitte & Touche LLP billed us an aggregate of $66,786
for all other services during fiscal year 2002.
Representatives of Deloitte & Touche LLP will be present at the meeting,
will have the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions. The board of directors requests
that stockholders ratify the appointment of Deloitte & Touche LLP as independent
auditors to conduct the 2003 audit of our financial statements.
GENERAL
The annual report to stockholders covering fiscal year 2002 has been mailed
to stockholders with this mailing or previously. The annual report does not form
any part of the material for the solicitation of proxies.
Pursuant to the rules of the Securities and Exchange Commission, a proposal
to be presented by a stockholder at the 2004 annual meeting must be received by
us at our principal executive offices no later than August 11, 2003.
We will bear the expense of solicitation of proxies. In addition to
solicitation by mail, our directors, officers and employees may solicit proxies
personally or by telephone or facsimile. We will request brokers, dealers or
other nominees to send proxy material to and obtain proxies from their
principals and will, upon request, reimburse such persons for their reasonable
expenses.
OTHER BUSINESS
Management knows of no other matter that will come before the meeting.
However, if other matters do come before the meeting, the proxy holders will
vote in accordance with their best judgment.
By Order of the Board of
Directors,
/s/ DAVID M. SUDBURY
DAVID M. SUDBURY
Vice President, Secretary
and General Counsel
December 11, 2002
18
[Map for Annual Meeting]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED PLEASE MARK
SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. YOUR VOTES AS
INDICATED IN [X]
THIS EXAMPLE
1. ELECTION OF DIRECTORS 2. AMENDMENT TO THE GENERAL EMPLOYEES STOCK PURCHASE PLAN TO FOR AGAINST ABSTAIN
INCREASE BY 1,000,000 THE NUMBER OF SHARES AVAILABLE FOR [ ] [ ] [ ]
FOR all nominees WITHHOLD ISSUANCE PURSUANT TO THE PLAN AND TO INCREASE THE MAXIMUM
listed except as AUTHORITY NUMBER OF SHARES THAT AN ELIGIBLE EMPLOYEE MAY ELECT TO
marked to the to vote for all PURCHASE ANNUALLY FROM 200 TO 400 SHARES.
contrary nominees listed
3. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS FOR AGAINST ABSTAIN
[ ] [ ] INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING [ ] [ ] [ ]
AUGUST 31, 2003.
NOMINEES: 01 ANTHONY A. MASSARO, 4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
02 ROBERT D. NEARY, 03 CLYDE P. SELIG AS MAY PROPERLY COME BEFORE THE MEETING.
INSTRUCTION: To withhold authority to vote
for any individual nominee, write that
nominee's name in the space provided below.
I PLAN TO ATTEND
------------------------------------------- THE MEETING. [ ]
Dated:
-------------------------------------------------------
-------------------------------------------------------------
Signature
-------------------------------------------------------------
Secured Signature if held Jointly
When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee,
or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign
in the partnership name by authorized person.
PLEASE MARK, DATE AND RETURN PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET TELEPHONE MAIL
http://www.eproxy.com/cmc 1-800-435-6710
Use the Internet to vote your proxy. Use any touch-tone telephone to Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. You will be OR card in hand when you call. You will OR and
prompted to enter your control be prompted to enter your control return it in the
number, located in the box below, to number, located in the box below, enclosed postage-paid
create and submit an electronic and then follow the directions envelope.
ballot. given.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
PROXY
COMMERCIAL METALS COMPANY
7800 STEMMONS FREEWAY
DALLAS, TEXAS 75247
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned Shareholder(s) of Commercial Metals Company hereby appoint(s) A.
Leo Howell, Stanley A. Rabin and David M. Sudbury, or any of them as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote and act for the undersigned at the 2003 Annual Meeting of
Stockholders of Commercial Metals Company to be held on Thursday, January 23,
2003 at 10:00 a.m., Central Standard Time in the Horchow Auditorium, Dallas
Museum of Art, 1717 N. Harwood, Dallas, Texas, and any adjournment,
continuation, or postponement of the meeting, according to the number of votes
which the undersigned is now, or may then be, entitled to cast, hereby revoking
any proxies previously executed by the undersigned for the meeting.
All powers may be exercised by a majority of said proxy holders or substitutes
voting or acting or, if only one votes and acts, then by that one. The
undersigned instructs such proxy holders or their substitutes to vote as
specified below on the proposals set forth in the Proxy Statement.
PLEASE MARK, DATE AND SIGN THIS PROXY ON REVERSE SIDE
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o FOLD AND DETACH HERE o
YOU CAN NOW ACCESS YOUR CMC ACCOUNT ONLINE.
Access your CMC shareholder account online via Investor ServiceDirect(R) (ISD).
Mellon Investor Services LLC, agent for Commercial Metals Company, now makes it
easy and convenient to get current information on your shareholder account.
After a simple, and secure process of establishing a Personal Identification
Number (PIN), you are ready to log in and access your account to:
o View account status o View payment history for dividends
o View certificate history o Make address changes
o View book-entry information o Obtain a duplicate 1099 tax form
o Establish/change your PIN
VISIT US ON THE WEB AT http://www.melloninvestor.com
AND FOLLOW THE INSTRUCTIONS SHOWN ON THIS PAGE.
STEP 1: FIRST TIME USERS - ESTABLISH A PIN STEP 2: LOG IN FOR ACCOUNT ACCESS STEP 3: ACCOUNT STATUS SCREEN
You must first establish a Personal Identification You are now ready to log in. To access You are now ready to access your
Number (PIN) online by following the directions your account please enter your: account information. Click on the
provided in the upper right portion of the web appropriate button to view or
screen as follows. You will also need your Social o SSN initiate transactions.
Security Number (SSN) available to establish a PIN.
o PIN o Certificate History
INVESTOR SERVICEDIRECT(R) IS CURRENTLY ONLY AVAILABLE
FOR DOMESTIC INDIVIDUAL AND JOINT ACCOUNTS. o Then click on the Submit button o Book-Entry Information
o SSN If you have more than one account, o Issue Certificate
you will now be asked to select the
o PIN appropriate account. o Payment History
o Then click on the Establish PIN button o Address Change
Please be sure to remember your PIN, or maintain o Duplicate 1099
it in a secure place for future reference.
FOR TECHNICAL ASSISTANCE CALL 1-877-978-7778 BETWEEN
9AM-7PM MONDAY-FRIDAY EASTERN TIME