SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240-14a-12
THE MONARCH CEMENT COMPANY________________________
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
______________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________________________
5) Total fee paid:
______________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
______________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
______________________________________________________________________________
3) Filing Party:
______________________________________________________________________________
4) Date Filed:
______________________________________________________________________________
<Page>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
(April 13, 2005)
The annual meeting of the stockholders of The Monarch Cement Company,
a Kansas corporation, will be held Wednesday, April 13, 2005, at 2:00 in the
afternoon of that day, at the Company's corporate offices, 449 1200 Street,
Humboldt, Kansas, to consider and act upon the following:
1. The election of three directors to serve until the
annual meeting of the stockholders of the Company
in 2008;
2. Any other business which may properly come before
the meeting;
3. Adjourning the meeting from time to time.
The Board of Directors has fixed the close of business on February 14,
2005 as the record date for the determination of the stockholders entitled to
notice of and to vote at the meeting. Only stockholders of record at that
time will be entitled to vote at the meeting, or any adjournment thereof.
The Board of Directors of the Company solicits you to sign, date and
return the enclosed proxy. Your proxy may be revoked at any time before it
is exercised.
THE MONARCH CEMENT COMPANY
Debra P. Roe, CPA
Assistant Secretary
Humboldt, Kansas
March 14, 2005
<Page>
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Walter H. Wulf, Jr., Robert M. Kissick and
Byron K. Radcliff as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote all of the shares of
Capital Stock and Class B Capital Stock of The Monarch Cement Company held of
record by the undersigned on February 14, 2005 at the annual meeting of
stockholders to be held on April 13, 2005, or any adjournment or adjournments
thereof, as fully and with the same effect as the undersigned might or could
do if personally present, with respect to the following business proposed by
the Company to be conducted at the meeting:
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY to
below (except as marked vote for all
to the contrary below) [ ] nominees listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW.)
David L. Deffner Gayle C. McMillen Richard N. Nixon
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
A majority of said Proxies, or their substitutes, present and acting at
said meeting, or any adjournment thereof (or if only one be present and
acting, that one) shall have and may exercise all of the powers of all of said
Proxies. This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ABOVE-NAMED NOMINEES. The undersigned hereby
ratifies and confirms all that said Proxies, or any of them or their
substitutes, may lawfully do or cause to be done by virtue hereof and
acknowledges receipt of the notice of said meeting and the Proxy Statement
accompanying it.
PLEASE SIGN EXACTLY AS NAME APPEARS.
When shares are held by joint
tenants, both should sign. When
signing as attorney, as 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
partnership name by authorized
person.
_____________________________
Signature
Dated_________________, 2005. _____________________________
Signature if held jointly
Please mark, sign, date and return this proxy promptly using the enclosed
envelope.
<Page>
THE MONARCH CEMENT COMPANY
P.O. Box 1000
Humboldt, Kansas 66748-0900
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
(2:00 p.m., April 13, 2005)
GENERAL INFORMATION
The enclosed proxy is being solicited on behalf of the Board of Directors
of The Monarch Cement Company and all expenses of the solicitation will be
borne by the Company. In addition to solicitation by mail, a number of
regular employees may solicit proxies in person or by telephone. The Company
does not expect to pay any compensation for the solicitation of proxies. The
proxy may be revoked at any time before it is exercised by giving written
notice to the Secretary of the Company. Stockholders sharing the same address
are provided only one proxy statement and annual report unless the Company has
been notified that separate copies are desired. Stockholders sharing
addresses who wish to receive a separate proxy statement or annual report
should contact the Company in writing at P.O. Box 1000, Humboldt, Kansas 66748
or call 620-473-2222 to make their request. The enclosed proxy and this Proxy
Statement were first sent or given to the holders of Monarch stock on or about
March 14, 2005.
The record date with respect to this solicitation is February 14, 2005
and only holders of Capital Stock and/or Class B Capital Stock of the Company
as of the close of business on that date are entitled to vote, either in
person or by proxy, at the meeting. At the close of business on that date
2,406,197 shares of Capital Stock and 1,620,761 shares of Class B Capital
Stock were issued and outstanding. Holders of Capital Stock are entitled to
one vote per share standing in their names on the record date. Holders of
Class B Capital Stock are entitled to ten votes per share standing in their
names on the record date.
Directors are elected by a plurality (a number greater than those cast
for any other candidates) of the votes cast, in person or by proxy, by the
stockholders entitled to vote at the annual meeting for that purpose. The
affirmative vote of the holders of a majority of the votes of the Company's
stock entitled to vote at the annual meeting is required for the approval of
such other matters as properly may come before the annual meeting or any
adjournment thereof.
A stockholder entitled to vote in the election of directors can withhold
authority to vote for all nominees for director or can withhold authority to
vote for certain nominees for director. "Broker non-votes" occur when a
broker indicates that it lacks authority to vote on a matter in the absence of
instructions from the beneficial owner. Broker non-votes are treated as
shares of the Company's stock as to which voting power has been withheld by
the respective beneficial holders and, therefore, as shares not entitled to
vote on the proposal as to which there is the broker non-vote.
To the knowledge of the Company, there are no special arrangements or
understandings between any of the directors and officers other than each of
them acting solely in their capacity as such.
<Page>
ELECTION OF DIRECTORS AND RELATED INFORMATION
The Board of Directors is divided into three classes. Class I is
comprised of three directors and Classes II and III are each comprised of four
directors. At each annual meeting of stockholders, one class of directors is
elected for a three-year term.
The three directors to be elected at the forthcoming annual meeting of
stockholders will serve as directors in Class I of the Board of Directors.
Their term of office will commence upon election and will continue until the
2008 annual meeting of stockholders and until their successors are elected and
qualified.
The Board of Directors, acting as the nominating committee, has selected
the nominees for directors. Shares represented by a proxy given pursuant to
this solicitation will be voted in favor of the nominees listed below. Each
nominee is at present a member of Class I of the Board of Directors. If any
of such nominees should unexpectedly become unavailable for election, the
shares represented by the proxy will be voted for such substituted nominee or
nominees as the Board of Directors may name. Each of the nominees hereinafter
named has indicated his willingness to serve if elected and it is not
anticipated that any of them will become unavailable for election. The names
of the nominees are as follows:
David L. Deffner Gayle C. McMillen Richard N. Nixon
The Board of Directors recommends that you vote FOR the election of each
of the three nominees named above as directors in Class I of the Board of
Directors.
Stockholder Nomination Policy
The Board of Directors performs the functions of a nominating committee
and selects all nominees for election at stockholder meetings. The Board of
Directors does not believe a separate nominating committee is necessary as the
Company is not currently required to have a separate committee and the full
Board of Directors desires to participate in the discussions regarding the
structure, qualifications and needs of the Board. The members of the Board of
Directors who participate in the nomination process are Messers Jack R.
Callahan, Ronald E. Callaway, David L. Deffner, Robert M. Kissick, Gayle C.
McMillen, Richard N. Nixon, Byron J. Radcliff, Byron K. Radcliff, Michael R.
Wachter, Walter H. Wulf, Jr. and Walter H. Wulf, III. Applying the definition
of the term "independent director" under Rule 4200(a)(15) of the National
Association of Securities Dealers' listing standards as permitted under the
requirements of paragraph (d)(3)(iv) of Item 7 of Schedule 14A, Messers Jack
R. Callahan, Ronald E. Callaway, David L. Deffner, Gayle C. McMillen, Richard
N. Nixon and Michael R. Wachter are independent, and Messers Robert M.
Kissick, Byron J. Radcliff, Byron K. Radcliff, Walter H. Wulf, Jr. and Walter
H. Wulf, III are not independent.
The Board has not established specific minimum qualifications for
recommended nominees, but does evaluate recommended nominees for directors
based on their character, judgment, independence, financial or business
acumen, diversity of experience, ability to represent and act on behalf of all
stockholders, as well as the needs of the Board of Directors. The Board of
Directors will consider nominations from stockholders at the annual meeting of
stockholders as required under Kansas law. The Board of Directors does not
have a policy of considering stockholder nominations for inclusion in the
Company's proxy statement sent to stockholders in connection with the election
of directors. The Board of Directors does not believe such a policy is
necessary at this time as it has not received requests from stockholders to
submit nominations to the Board of Directors. The Board of Directors will
continue to monitor this and evaluate whether such a policy is desirable.
Communications with Directors
The Board of Directors does not have a formal process by which
stockholders may send communications to the full Board of Directors or
individual directors, but stockholders can mail communications to the Board or
individual members at the Company's offices at P.O. Box 1000, Humboldt, Kansas
66748-0900, to the attention of the Chief Financial Officer. The Chief
Financial Officer will forward such communications to the Board or the
specific Director. Stockholders are also permitted to communicate with the
Board of Directors at the Company's annual meeting of stockholders. The Board
is of the view that this process is sufficient for allowing stockholders to
communicate with the Board.
The Company does not currently have a formal policy regarding directors'
attendance at the annual meeting of stockholders, but historically all members
of the Board have attended such meetings. All members of the Board attended
the 2004 annual meeting of stockholders.
<Page>
<Table>
Information Concerning Nominees for Election to Board of Directors
and Directors Continuing in Office
Family relationship
Present position Principal occupation Director Term between
Name Age with Company last five years since expires Directors and Officers
NOMINEES
C L A S S I:
David L. Deffner 54 Director Director of Music 1997 2008 None
Davis Community Church
Davis, California
Gayle C. McMillen 55 Director Instrumental Music 1999 2008 None
Teacher, USD 305,
Salina, Kansas
Richard N. Nixon 63 Director Partner in law firm of 1990 2008 None
Stinson Morrison Hecker
LLP, Kansas City, MO
DIRECTORS CONTINUING IN OFFICE
C L A S S II:
Byron J. Radcliff 48 Director Rancher 1976 2006 Son of Byron K. Radcliff,
Vice Chairman, Secretary, Treasurer
and Director
Michael R. Wachter 44 Director Civil Engineer and 1994 2006 None
Director of Operations,
Concrete Technology Corp.
(a precast/prestressed
concrete producer)
Tacoma, Washington
Walter H. Wulf, Jr. 60 Chairman Position with Company 1971 2006 Father of
of the Board, Walter H. Wulf, III,
President and Director
Director
Walter H. Wulf, III 31 Director Area Sales Manager, 2001 2006 Son of Walter H. Wulf, Jr.,
General Motors Corporation Chairman of the Board,
President and Director
</Table>
<Page>
<Table>
Information Concerning Nominees for Election to Board of Directors
and Directors Continuing in Office (continued)
Family relationship
Present position Principal occupation Director Term between
Name Age with Company last five years since expires Directors and Officers
DIRECTORS CONTINUING IN OFFICE (continued)
C L A S S III:
Jack R. Callahan 73 Director President, The Monarch 1980 2007 None
Cement Company, until
retirement on 10-31-97
Ronald E. Callaway 69 Director Transport truck driver, 1990 2007 None
Agricultural Carriers,
Inc., Wichita, Kansas
until retirement on
6-30-97
Robert M. Kissick 68 Vice President Chairman, Hydraulic 1972 2007 None
and Director Power Systems, Inc.
(manufacturer of
construction equipment)
N. Kansas City, Missouri
Byron K. Radcliff 67 Vice Chairman, Owner/Manager, 1960 2007 Father of Byron J.
Secretary, Radcliff Ranch(9000 acres) Radcliff, Director
Treasurer and Dexter, Kansas
Director
There is no arrangement or understanding between any director and any other person pursuant to which such director was
selected as a director.
</Table>
<Page>
<Table>
INFORMATION CONCERNING EXECUTIVE OFFICERS
Term of Family Relationship
Present Position Office Principal Occupation between
Name Age with Company Began Last Five Years Directors and Officers
Walter H. Wulf, Jr. 60 Chairman of the Board 2001 Position with Father of Walter H. Wulf, III
President 1997 Company Director
Director 1971
*Robert M. Kissick 68 Vice President 1980 See page 5 of None
Director 1972 this Proxy
Statement
*Byron K. Radcliff 67 Vice Chairman of Board 2001 See page 5 of Father of Byron J. Radcliff,
Secretary 1999 this Proxy Director
Treasurer 1976 Statement
Director 1960
Debra P. Roe 49 Chief Financial 2003 Position with None
Officer and Assistant Company
Secretary-Treasurer 1998
Rick E. Rush 52 Vice President 2001 Position with None
Company
Roy L. Owens 67 Vice President- 2000 Position with None
Operations Company
____________________
* Not actively involved in the daily affairs of the Company.
There is no arrangement or understanding between any executive officer and any other person pursuant to which any
of such executive officers have been selected to their respective positions.
</Table>
<Page>
<Table>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth those known to the Company to be
beneficial owners of more than five percent of any class of the Company's
securities as of February 1, 2005:
Name and Address of Amount and Nature of Percent
Beneficial Owner Title of Class Beneficial Ownership of Class
Byron K. Radcliff Capital Stock 205,160 shares (a) 8.526%
P.O. Box 100 Class B Capital Stock 211,960 shares (b) 13.078%
Dexter, KS 67038
Walter H. Wulf, Jr. Capital Stock 173,102 shares (c) 7.194%
700 Wulf Drive Class B Capital Stock 177,942 shares (d) 10.979%
Humboldt, KS 66748
____________________
(a) Includes 199,715 shares owned individually; 2,495 shares owned jointly
with wife; and 2,950 shares owned by wife. Mr. Radcliff disclaims beneficial
ownership of the 2,950 shares owned by wife.
(b) Includes 207,715 shares owned individually; 2,495 shares owned jointly
with wife; and 1,750 shares owned by wife. Mr. Radcliff disclaims beneficial
ownership of the 1,750 shares owned by wife.
(c) Includes 8,310 shares held individually and 1,900 shares owned by wife.
In addition, Walter H. Wulf, Jr. is: (i) trustee of 75,000 shares under three
trusts for the respective benefit of Walter H. Wulf, Jr. and his two sisters;
(ii) manager of 40,300 shares held in Walter H. Wulf Company, LLC for the
benefit of Walter H. Wulf, Jr., his two sisters and their children; (iii)
trustee of 4,000 shares held in the Walter H. Wulf and May L. Wulf Charitable
Foundation; and (iv)manager of 43,592 shares held in the Wulf General, LLC for
the benefit of Walter H. Wulf, Jr. and his two sisters. Mr. Wulf disclaims
beneficial ownership of 1,900 shares owned by wife and 50,000 shares held by
him as trustee under two trusts for the respective benefit of Mr. Wulf's two
sisters.
(d) Includes 12,950 shares held individually; 500 shares held jointly with
wife; and 1,900 shares owned by wife. In addition, Walter H. Wulf, Jr. is
trustee of 75,000 shares under three trusts for the respective benefit of
Walter H. Wulf, Jr. and his two sisters and manager of 87,592 shares held in
the Wulf General, LLC for the benefit of Walter H. Wulf, Jr. and his two
sisters. Mr. Wulf disclaims beneficial ownership of 1,900 shares owned by
wife and 50,000 shares held by him as trustee under two trusts for the
respective benefit of Mr. Wulf's two sisters.
</Table>
<Table>
The security ownership of directors and executive officers of the Company
as of February 1, 2005 is as follows:
Amount and Nature of
Beneficial Ownership
Percent of Ownership
Number of Shares Class B
Class B Capital Capital
Beneficial Owner Capital Stock Capital Stock Stock Stock
Jack R. Callahan - 1,000 (1) - *
Ronald E. Callaway 12,636 13,337 * *
David L. Deffner 16,462 16,463 * 1.016%
Robert M. Kissick 36,303 (2) 39,903 (3) 1.509% 2.462%
Gayle C. McMillen 69,220 (4) 69,220 (4) 2.877% 4.271%
Richard N. Nixon 5,000 1,000 * *
Byron J. Radcliff 2,950 (5) 1,250 (5) * *
Byron K. Radcliff 205,160 (6) 211,960 (7) 8.526% 13.078%
Michael R. Wachter 250 250 * *
Walter H. Wulf, Jr. 173,102 (8) 177,942 (9) 7.194% 10.979%
Walter H. Wulf, III 3,700 3,700 * *
Debra P. Roe 1,175 (10) 825 (10) * *
Rick E. Rush 50 (11) - * -
Roy L. Owens 100 (12) - * -
All directors & executive
officers as a group,
14 persons 526,108 536,850 21.865% 33.123%
___________________
*Less than 1%
Footnotes to Security Ownership of Certain Beneficial Owners and Management
( 1) Held jointly with spouse.
( 2) Includes 6,428 shares in trusts of which Robert M. Kissick is sole
trustee and 29,875 shares owned in wife's trust of which she is sole trustee.
Mr. Kissick disclaims beneficial ownership of 29,875 shares owned by wife's
trust.
( 3) Includes 6,428 shares in trusts of which Robert M. Kissick is sole
trustee and 33,475 shares owned in wife's trust of which she is sole trustee.
Mr. Kissick disclaims beneficial ownership of 33,475 shares owned by wife's
trust.
( 4) Includes 11,220 shares held jointly with spouse and 58,000 shares owned
in wife's parents' trusts of which Mrs. McMillen is beneficiary. Mr. McMillen
disclaims beneficial ownership of 58,000 shares owned by wife's parents'
trusts.
( 5) Includes 250 shares owned by minor son of which Byron J. Radcliff is
custodian and as to which Mr. Radcliff disclaims beneficial ownership.
( 6) See Footnote (a) to preceding Table.
( 7) See Footnote (b) to preceding Table.
( 8) See Footnote (c) to preceding Table.
( 9) See Footnote (d) to preceding Table.
(10) Held jointly with spouse.
(11) Held jointly with spouse.
(12) Held jointly with spouse.
</Table>
EXECUTIVE COMPENSATION
The following table summarizes the total compensation of the Chief
Executive Officer and the Company's other executive officers whose total
compensation exceeded $100,000 for the fiscal year ended December 31, 2004, as
well as the total compensation paid to each such individual for the Company's
two previous fiscal years.
<Table>
SUMMARY COMPENSATION TABLE
Name and Annual Compensation
Principal Position Year (Salary) (Bonus)
Walter H. Wulf, Jr. 2004 $194,250 -0-
Chairman of the 2003 184,350 -0-
Board and President 2002 175,350 -0-
Debra P. Roe 2004 $112,890 $ -0-
Chief Financial Officer 2003 103,830 7,500
and Assistant 2002 98,100 -0-
Secretary-Treasurer
Rick E. Rush 2004 $112,890 $ -0-
Vice President 2003 103,830 7,500
2002 98,100 -0-
Roy L. Owens 2004 $148,440 -0-
Vice President-Operations 2003 143,430 -0-
2002 137,820 -0-
</Table>
The officers who are directors receive a monthly salary and do not receive
additional compensation for attending Board of Directors' meetings or
committee meetings. All other directors, including those serving on the Audit
Committee, receive $1,250 for attending each board meeting. However, if it is
necessary to hold more than one board meeting on the same date, or if the
board meeting takes more than one day, only $1,250 is paid. Also, all
directors are reimbursed for their actual travel expenses incurred in
attending board meetings.
The Board of Directors held three meetings during 2004. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and all committees of the Board on which he served during
2004. The Board of Directors does not have a standing compensation or
nominating committee, or other committee performing similar functions.
Richard N. Nixon, director, is an attorney and during 2004 was a partner
in the law firm of Stinson Morrison Hecker LLP, Kansas City, Missouri. During
2004, the total legal fees and expenses paid by the Company to Stinson
Morrison Hecker did not exceed five percent of such law firm's gross revenues
for 2004.
DEFINED BENEFIT RETIREMENT PLAN
The retirement plan available to salaried employees, including the persons
named in the Summary Compensation Table above, is a defined benefit plan which
provides for fixed benefits, after a specific number of years of service, for
the remainder of the employee's life. The monthly retirement benefits are
computed by multiplying the employee's years of service by one and six-tenths
percent (1.6%) and multiplying this result by 1/60th of the employee's last
sixty calendar months of earnings or the employee's highest five consecutive
calendar years of earnings out of the last ten calendar years of service,
whichever is greater; however, the maximum retirement benefit is limited to
fifty percent (50%) of the average monthly earnings used in computing
retirement benefits. For the year 2004, the maximum annual compensation for
determining retirement benefits is $205,000. The normal retirement age at
which retirement plan benefits become payable is age 65.
The following table sets forth the estimated annual aggregate retirement
benefits at normal retirement for various classifications of earnings and
years of service.
<Table>
PENSION PLAN TABLE
Average
5 Years Years of Service
Earnings 15 20 25 30 35
$100,000 $24,000 $32,000 $40,000 $48,000 $50,000
125,000 30,000 40,000 50,000 60,000 62,500
150,000 36,000 48,000 60,000 72,000 75,000
175,000 42,000 56,000 70,000 84,000 87,500
200,000 48,000 64,000 80,000 96,000 100,000
225,000 49,200 65,600 82,000 98,400 102,500
250,000 49,200 65,600 82,000 98,400 102,500
</Table>
The earnings used for the purpose of determining the retirement plan
benefits consists of annual compensation (salary) of the type disclosed in the
Summary Compensation Table above. Pension benefits under the retirement plan
are not subject to any deduction for social security benefits or other offset
amounts.
The persons named in the Summary Compensation Table above have the
following years of credited service for pension benefits under the retirement
plan: Mr. Wulf, 33 years; Ms. Roe, 28 years; Mr. Rush, 16 years; and Mr.
Owens, 22 years.
SEVERANCE PAY PLAN
On July 18, 1985 the Board of Directors of the Company adopted a
Severance Pay Plan for Salaried Employees (the "Plan"). The Plan is designed
to recognize the past service of long-standing salaried employees and reduce
their concerns, if any, if a change in control of the Company should occur.
The Plan provides that if employment of any "covered employee" is
terminated for any reason other than death or disability within 24 months
after a "change in control", such employee is entitled to receive severance
pay equal to the employee's monthly salary times the number of full years that
such employee has been employed by the Company. The amount of the severance
pay is subject to certain reductions where the employee is entitled to
certain retirement benefits under the Company's pension plan or where the
severance pay is not fully deductible by the Company for federal income tax
purposes. A "covered employee" is any full-time salaried employee who has
been employed for at least 10 years prior to the "change in control". A
"change in control" is any merger, consolidation or disposition of all or
substantially all of the assets of the Company or any acquisition by any
person or group of persons acting in concert who after such acquisition
would own more than 30% of the Company's outstanding voting stock. If there
had been a change in control and termination of employment on December 31,
2004, the following persons would have been entitled to receive severance pay
pursuant to the Plan as follows: Mr. Wulf, $541,200; Ms. Roe, $269,360; Mr.
Rush, $153,920; and Mr. Owens, $137,170. The Plan also provides that any
covered employee who, at the time of termination, has been employed on a
full-time basis for 20 years or more, is entitled to receive the same life and
health insurance generally made available by the Company to retired employees.
The Plan may be amended or terminated by the affirmative vote of a least
two-thirds of the members of the full Board of Directors of the Company except
that no amendment or termination may adversely affect any right of a covered
employee who is employed by the Company at the time the Board of Directors has
knowledge of any change in control or a proposal for any change in control.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
There currently is no compensation committee of the Board of Directors
(or committee performing equivalent functions). Accordingly, the Board of
Directors itself is responsible for the establishment of the general
compensation policies of the Company and the specific compensation for
executive officers. In carrying out this responsibility, however, the Board
of Directors requests and considers the recommendations of the Executive
Committee of the Board of Directors (consisting of Jack R. Callahan, Robert M.
Kissick, Byron K. Radcliff and Walter H. Wulf, Jr.).
Executive Compensation Policy
The Board of Directors believes that the compensation of its executive
officers, including Mr. Wulf, the Company's President and Chief Executive
Officer (CEO), should be influenced by the Company's long-term profitability.
However, the Board does not attempt to establish a direct correlation between
the Company's profitability and executive compensation.
Executive Officer Compensation
Each year, including 2004, the Executive Committee of the Board of
Directors makes its recommendations to the Board of Directors as to the
salaries for the Company's executive officers. These recommendations are
based on a salary adjustment percentage which the committee establishes to
serve as a guideline in setting the compensation for all salaried employees
of the Company. The determination of this salary adjustment is based on the
Executive Committee's assessment of the change in the cost of living and of
the Company's long-term profitability. The application of the salary
adjustment percentage to the salaries of the Company's salaried employees
results generally in the Company's executive officers as a group, including
the CEO, receiving the same percentage increase as the other salaried
employees of the Company. A subjective determination as to whether the
individual salaried employee is performing satisfactorily is also made. In
April 2004, upon the recommendation of the Executive Committee, the Board of
Directors approved an overall increase in compensation of 3.5 percent. These
increases are reflective of, although not directly tied to, the Company's
continued good performance in 2003.
Chief Executive Officer Compensation
The compensation of the Company's CEO is established by the Board of
Directors in the same way as compensation is established for the Company's
other executive officers. As indicated in the above discussion, the increase
in the CEO's salary, and that of the other executive officers, largely is
determined by the application of the salary adjustment percentage selected by
the Executive Committee to the CEO's salary. A subjective determination as to
whether the individual salaried employee is performing satisfactorily is also
made.
THE BOARD OF DIRECTORS:
Jack R. Callahan Ronald E. Callaway
David L. Deffner Robert M. Kissick
Gayle C. McMillen Richard N. Nixon
Byron J. Radcliff Byron K. Radcliff
Michael R. Wachter Walter H. Wulf, Jr.
Walter H. Wulf, III
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No officer who is not also a director, and no other person, participated
in deliberations of the Board of Directors concerning executive officer
compensation. The members of the Board of Directors who are also executive
officers have no interlocking relationships with any other entity which are
required by the rules of the Securities and Exchange Commission to be reported
in this Proxy Statement.
COMPANY PERFORMANCE
The following performance graph shows a five-year comparison of
cumulative total returns for the Company, the S&P 500 composite index and an
index of peer companies selected by the Company.
<Table>
Comparison of Five Year Cumulative Total Return
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
MONARCH CEMENT 100.00 90.78 100.66 98.70 111.93 137.23
S&P 500 Index 100.00 90.90 80.09 62.39 80.29 89.03
Peer Group 100.00 82.75 125.14 104.70 137.36 189.44
</Table>
<Table>
Annual Return Percentage
Years Ending
Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
MONARCH CEMENT -9.22 10.89 -1.95 13.40 22.61
S&P 500 Index -9.10 -11.89 -22.10 28.68 10.88
Peer Group -17.25 51.22 -16.33 31.19 37.92
</Table>
The cumulative total return on investment for each of the periods for the
Company, the S&P 500 and the peer group is based on the stock price or
composite index at January 1, 2000. The performance graph assumes that the
value of an investment in the Company's capital stock and each index was $100
at January 1, 2000 and that all dividends were reinvested. The information
presented in the performance graph is historical in nature and is not intended
to represent or guarantee future returns.
The performance graph compares the performance of the Company with that
of the S&P 500 composite index and an index of peer companies in the Company's
industry in which the returns are weighted according to each company's market
capitalization. Companies in the peer group index are Lafarge North America
Inc., Lone Star Industries (acquired October 1999), Southdown Inc. (acquired
November 2000) and Texas Industries, Inc.
INDEPENDENT AUDITORS
The Company's Audit Committee of the Board of Directors has selected BKD
LLP ("BKD") to examine its accounts and the accounts of its subsidiaries for
the prior and current fiscal year. It is anticipated that no representative
of BKD will be present at the annual meeting of the stockholders and therefore
no one from BKD will make a statement or be available to answer questions
which may arise.
Audit Fees
The aggregate fees billed by BKD in 2003 for professional services
rendered for the audit of the Company's financial statements included in the
Company's Annual Report on Form 10-K for the years ended December 31, 2003 and
2002 and for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for the three-month, six-month and nine-month
periods ended March 31, 2003, June 30, 2003 and September 30, 2003,
respectively, were approximately $55,000.
The aggregate fees billed by BKD in 2004 for professional services
rendered for the audit of the Company's financial statements included in the
Company's Annual Report on Form 10-K for the years ended December 31, 2004 and
2003 and for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for the three-month, six-month and nine-month
periods ended March 31, 2004, June 30, 2004 and September 30, 2004,
respectively, were approximately $55,000.
Audit-Related Fees
The aggregate audit-related fees billed by BKD for services rendered to
the Company for fiscal years ended December 31, 2003 and 2004, were
approximately $12,500 and $13,500, respectively, which included fees and
expenses related to the audit of employee benefit plans.
Tax Fees
The aggregate tax fees billed by BKD for services rendered to the Company
for fiscal years ended December 31, 2003 and December 31, 2004 were $-0- as
BKD did not provide any tax services to the Company in either of these years.
All Other Fees
The aggregate fees billed by BKD for services rendered to the Company
other than the services described above under "Audit Fees" for the fiscal year
ended December 31, 2003 were approximately $500, which included fees and
expenses related to miscellaneous clerical matters.
The aggregate fees billed by BKD for services rendered to the Company
other than the services described above under "Audit Fees" for the fiscal year
ended December 31, 2004 were approximately $43,000, which included fees
related to computer software training.
Pre-Approval Policy
The Audit Committee of the Company pre-approves with an engagement letter
all audit and non-audit services performed by BKD. One hundred percent (100%)
of the non-audit services provided by BKD were pre-approved by the Audit
Committee.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of BKD LLP.
Audit Committee Report
The Company's Audit Committee of the Board of Directors (the "committee")
operates under a written charter approved by the committee and adopted by the
Company's Board of Directors. The member of the committee, Jack R. Callahan,
is independent as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards. The member of the committee is not an
"audit committee financial expert" as defined in the rules of the Securities
and Exchange Commission because Mr. Callahan does not meet the specific
guidelines set forth by the Securities and Exchange Commission. However, the
Company believes that the background and financial sophistication of Mr.
Callahan is sufficient to fulfill the duties of the Audit Committee. The
Company is not currently required to have an "audit committee financial
expert".
In fulfilling its responsibilities, the committee reviewed and discussed
The Monarch Cement Company's audited financial statements for the fiscal year
ended December 31, 2004 with the Company's management and independent
auditors, BKD LLP ("BKD").
The committee also discussed with BKD, its independent auditors, the
matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees". In addition, the committee received
the written disclosures and the letter from the independent auditors required
by Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees", and discussed with the independent auditors their
independence in relation to us and the Company's management. The committee
also considered the non-audit services provided to it by the independent
auditors and concluded that such services were compatible with maintaining
their independence.
Based upon the reviews and discussions referred to above, the committee
has recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2004 to be filed with the Securities and
Exchange Commission.
Submitted by the Audit Committee
/s/ Jack R. Callahan
Jack R. Callahan
Code Of Ethics
As of the date of this Proxy Statement, the Company has not adopted a
Code of Ethics that applies to its CEO, CFO, principal accounting officer or
controller, or any person performing a similar function with the Company for
the following reasons: (1) only two officers at the Company, the CEO and the
CFO, would be subject to such a code; (2) the Board of Directors has always
maintained close oversight of the executive officers' activities; (3) the
Company has an informal policy of expecting high ethical conduct from its
directors, officers and employees; (4) the Company has not experienced abuses
to its informal policy; and (5) at this time, the Company is not required to
adopt a formal code of ethics. The Board plans to monitor the desirability
for a formal code of ethics for the Company's CEO, CFO and other financial
officers.
DEADLINE FOR STOCKHOLDER PROPOSALS
No stockholder proposal will be included in the Company's proxy statement
and form of proxy relating to the annual meeting of stockholders to be held on
April 12, 2006 which is not received by the Company at P.O. Box 1000,
Humboldt, Kansas 66748-0900 on or before November 15, 2005.
Stockholders who intend to present a proposal at the 2006 annual meeting
without inclusion of such proposal in the proxy materials are required to
provide notice to us no later than January 13, 2006.
FINANCIAL STATEMENTS
The annual report of the Company containing financial statements for the
year ended December 31, 2004 is enclosed with the Proxy Statement.
OTHER BUSINESS
The proxy solicited confers discretionary authority with respect to the
voting of the shares represented thereby on any other business that may
properly come before the meeting. However, the Board of Directors has no
knowledge of any other business which will be presented at the meeting and
does not itself intend to present any such other business.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
generally requires the Company's directors and executive officers, and persons
who own more than 10% of a class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership in the Company's capital stock and other
equity securities. Securities and Exchange Commission regulations require
directors, executive officers and greater than 10% stockholders to furnish the
Company with copies of all Section 16(a) reports they file. To the Company's
knowledge, based solely on review of copies of such reports and written
representations that no other reports were required, during the year ended
December 31, 2004, all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% stockholders were complied
with.
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