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
[ X ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
TOSCO CORPORATION
(Name of Registrant as Specified in Its Charter)
TOSCO CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ]$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
[ ] 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:
Notes:
TOSCO CORPORATION
Notice of Annual Meeting of Stockholders
to be held May 17, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Tosco Corporation ("Tosco") will be held at The
Sheraton Stamford Hotel, One
First Stamford Place, Stamford, Connecticut on May 17, 1994 at
10:00 o'clock in the morning for the following purposes:
I. To elect eight (8) Directors of Tosco.
II. To ratify and approve the Tosco Corporate
Incentive Plan.
III. To ratify and approve the appointment of
Coopers & Lybrand as
independent accountants of Tosco for the fiscal year
ending December 31,
1994.
IV. To transact such other business as may
properly come before
the meeting, or any adjournment thereof.
Stockholders of record at the close of business on
March 31, 1994
shall be entitled to vote at the meeting.
By order of the Board of Directors,
Wilkes McClave III
Secretary
Dated: April 11, 1994
Stamford, Connecticu
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED IN ORDER TO
ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU
ATTEND THE MEETING YOU MAY VOTE IN PERSON IF
YOU WISH TO DO SO EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
TOSCO CORPORATION
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of
Directors of Tosco Corporation, a Nevada corporation ("Tosco"),
for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on May 17, 1994 at 10:00 a.m. at
The Sheraton Stamford Hotel, One First Stamford Place, Stamford,
Connecticut, or any adjournment of the Annual Meeting, at which
stockholders of record at the
close of business on March 31, 1994 shall be entitled to vote.
The cost of solicitation of proxies will be borne by Tosco.
Tosco may use
the services of
its Directors, officers, stockholders of record and others to
solicit proxies,
personally or by mail or telephone. Arrangements may also be
made with brokerage
houses and other custodians, nominees, fiduciaries and
stockholders of record to
forward solicitation material to the beneficial owners of the
stock held of
record by such persons. Tosco may reimburse such solicitors for
reasonable
out-of-pocket expenses incurred by them in soliciting, but no
compensation will be paid for their services. Tosco has retained
Hill and Knowlton, Inc. to assist in the solicitation of proxies
for a fee estimated at $12,000 plus out-of-pocket expenses. Any
Proxy granted as a result of this solicitation may be revoked at
any time before its exercise by granting a subsequently
dated Proxy, by attending the Annual Meeting and voting in person
or by mailing a notice of revocation to Tosco Corporation, 72
Cummings Point Road, Stamford, Connecticut 06902, Attention:
Secretary.
The date of this Proxy Statement is the approximate date
on which this Proxy Statement and accompanying Proxy were first
sent or given to stockholders.
The principal executive offices of Tosco are located at
72 Cummings Point Road, Stamford, Connecticut 06902.
On March 31, 1994, Tosco had outstanding and entitled to
vote with respect to all matters to be acted upon at the Annual
Meeting 32,262,117 shares of Common
Stock, par value $.75 per share ("Common Stock"). Each holder of
Common Stock will be entitled to one vote for each share of
Common Stock held by such holder.
The presence of holders representing a majority of the
outstanding shares will constitute a quorum at the meeting.
Abstentions are counted for purposes of
determining the presence or absence of a quorum for the
transaction of business.
Abstentions and broker non-votes are not counted in determining
the votes cast
with respect to any of the matters submitted to a vote of
stockholders.
It is expected that the following business will be
considered at the Annual Meeting and action taken thereon:
I. ELECTION OF DIRECTORS
It is proposed to elect eight (8) Directors at the Annual
Meeting to hold office until the 1995 Annual Meeting of
Stockholders and until their successors
are duly elected and qualify. It is intended that the
accompanying form of Proxy
will be voted for the nominees set forth below, each of whom is
presently a Director of Tosco. To be elected as a director, each
nominee must receive the affirmative vote of the holders of a
plurality of the stock of Tosco voted for
directors. If some unexpected occurrence should make necessary,
in the Board of
Directors' judgment, the substitution of some other person or
persons for any of the nominees, shares will be voted for such
other person or persons as the Board of Directors may select.
The Board of Directors is not aware that any nominee
will be unable or unwilling to serve as a Director. The following
table sets forth certain information with respect to each of the
nominees.
NOMINEES FOR ELECTION
Served as
a Director Principal Occupation and
Name Age Since Positions Held
Jefferson F. Allen 48 1990 Executive Vice President and
Chief Financial Officer of
Tosco since June 1990;
Treasurer of Tosco since
July 1990; various positions
including Chairman and CEO,
with Comfed Bancorp, Inc.
and related entities from
November 1988 to June 1990.
Joseph B. Carr 75 1993 Business Executive; Former
Chairman & Chief Executive
Officer, Carr & McDonnell;
Chairman, Eurogolf Travel;
Former Director, Allied
Irish Bank, The Friends
Provident Insurance Company,
and the British & Irish
Steampacket Company.
Houston I. Flournoy 64 1978 Special Assistant to the
President for Governmental
Affairs, University of
Southern California (USC),
for a period in excess of
five years and Professor of
Public Administration, USC,
from 1976 to 1993.
Clarence G. Frame 75 1978 Business consultant;
Chairman of the Board of
Directors of Tosco from 1984
to 1989; Chief Executive
Officer of Tosco from August
1986 to December 1989;
President of Tosco from
September 1986 to January
1987 and from June 1989 to
October 1989.
Edmund A. Hajim 57 1991 Chairman and Chief Executive
Officer of Furman Selz
Incorporated since October
1983; Managing Director and
member of the Board of
Directors of Lehman Brothers
Kuhn Loeb prior to 1983.
Joseph P. Ingrassia 69 1991 Petroleum consultant to E.
T. Petroleum Inc. since
January 1, 1992; Petroleum
consultant to Saudi
Petroleum International Inc.
from 1988 to 1992; Managing
Director Norbec Ltd. from
1983 to 1988.
Charles J. Luellen 64 1992 Retired Executive; President
and Chief Operating Officer
of Ashland Oil, Inc. from
March 1986 to January 1992.
Thomas D. O'Malley 52 1988 Chairman of the Board and
Chief Executive Officer of
Tosco since January 1990;
President of Tosco since
1993 and from October 1989
to May 1990; Chairman and
Chief Executive Officer of
Argus Investments, Inc.
since July 1988 and Argus
Energy Corporation since
December 1987; Chairman of
Comfed Bancorp, Inc. from
December 1988 to December
1989; Vice Chairman of
Salomon Inc. from 1983 to
December 1986.
Mr. Flournoy is a director of Fremont General Corporation and
Lockheed Corporation. Mr. Frame is a director of Chicago
Milwaukee Corporation, the
Milwaukee Land Company, and Independence One and Voyageur Funds.
Mr. Luellen is
a director of Alliant Techsystems, Inc. and National Convenience
Stores, Inc. Mr. Hajim is a director of NFO Research Inc.
Tosco's Board of Directors has a Committee on Audit, Ethics
and Conflicts of
Interest (the "Audit Committee"), consisting of Messrs. Flournoy,
Frame, Ingrassia and Luellen, a Compensation Committee consisting
of Messrs. Flournoy,
Frame, and Hajim, an Executive Committee consisting of Messrs.
Allen, Ingrassia,
and O'Malley, and a Nominating Committee consisting of Messrs.
Hajim, Ingrassia,
and O'Malley. The Audit Committee's functions include
recommending to the Board
of Directors the engaging and discharging of the independent
accountants,
reviewing with the independent accountants the plan and results
of the audit
engagement, reviewing the scope and results of Tosco's procedures
for internal
auditing, reviewing the independence of the accountants, and
reviewing the
adequacy of Tosco's system of internal accounting controls. The
Compensation
Committee is responsible for reviewing and setting the
compensation of Tosco's
management, and considering, recommending, and administering its
cash incentive
and long-term stock incentive plans. The Nominating Committee's
functions
include reviewing potential nominees for the Board of Directors
and recommending
the annual slate of nominees for election to the Board of
Directors.
During 1993, there were nine meetings of the Board of
Directors, seven
meetings of the Audit Committee, four meetings of the
Compensation Committee, one
meeting of the Executive Committee, and one meeting of the
Nominating Committee.
During 1993, each of the Directors then in office attended in
excess of 75% of
the aggregate of the total number of meetings of the Board of
Directors and the
total number of meetings of all committees on which he served.
Tosco is not aware of any family relationship between any
Director or
executive officer.
STOCK OWNERSHIP OF OFFICERS AND DIRECTORS
The following table sets forth the number of shares of Common
Stock of Tosco
beneficially owned by each Director, by each of the five most
highly compensated
executive officers and by all executive officers and Directors as
a group at
March 1, 1994, and the percentage of the outstanding shares of
Common Stock so
owned by each Director, executive officer, and such group.
Amount and
nature of
beneficial Percent of
Name ownership Class
Jefferson F. Allen 182,037(1) *
Joseph B. Carr 24,000(2) *
James M. Cleary 124,981(3) *
Houston I. Flournoy 24,516(4) *
Clarence G. Frame 35,216(5) *
Edmund A. Hajim 30,000(6) *
Joseph P. Ingrassia 24,500(7) *
Robert J. Lavinia 100,000(8) *
Charles J. Luellen 25,000(9) *
Thomas D. O'Malley 1,555,137(10) 4.76%
Dwight L. Wiggins 75,400(11) *
All executive officers
and Directors
(13 persons, including
those listed above) 2,414,867(12) 7.21%
_____________
* Represents less than 1% of the outstanding shares of Common
Stock.
(1) Consists of 1,621 shares of Common Stock, 416 shares
of Common Stock issuable upon conversion of 200 shares of Series
F Preferred Stock, options to purchase 165,000 shares of Common
Stock under the 1989 Stock Incentive Plan (the "1989 Plan"), and
options to purchase 15,000 shares of Common Stock under the 1992
Stock Incentive Plan (the "1992 Plan").
(2) Consists of options to purchase 24,000 shares of
Common Stock under the 1989 Plan.
(3) Consists of 7,881 shares of Common Stock, options to
purchase 30,100,55,000 and 32,000 shares of Common Stock under
the Long Term Incentive Plan of 1979 (the "LTIP"), the 1989 Plan
and the 1992 Plan, respectively.
(4) Consists of 100 shares of Common Stock, options to
purchase 24,000 shares of Common Stock under the 1989 Plan and
416 shares of Common Stock issuable upon conversion of 200 shares
of Series F Preferred Stock.
(5) Consists of 800 shares of Common Stock, options to
purchase 24,000 shares of Common Stock under the 1989 Plan and
10,416 shares of Common Stock issuable upon conversion of 5,000
shares of Series F Preferred Stock.
(6) Consists of 6,000 shares of Common Stock and options
to purchase 24,000 shares of Common Stock under the 1989 Plan.
(7) Consists of 500 shares of Common Stock and options to
purchase 24,000 shares of Common Stock under the 1989 Plan.
(8) Consists of options to purchase 25,000 and 75,000
shares of Common Stock under the 1989 Plan and 1992 Plan,
respectively.
(9) Consists of 1,000 shares of Common Stock and options
to purchase 24,000 shares of Common Stock under the 1989 Plan.
(10) Consists of 970,032 shares of Common Stock, 8,333
shares of Common
Stock issuable upon conversion of 4,000 shares of
Series F Preferred
Stock, options to purchase 350,000 and 25,000 shares
of Common Stock under the 1989 Plan and the 1992 Plan,
respectively,and 9,999 shares of Common Stock issuable upon
conversion of 4,800 shares of Series F
Preferred Stock owned by Mr. O'Malley's wife. In
addition, the shares listed in the table include 20,000 shares
held by Argus Energy Limited Partnership (AELP), 73,728 shares
held by Argus Energy Corporation, and 98,045 shares held by
ArgusInvestments, Inc., of which Mr. O'Malley is the sole
shareholder. Mr. O'Malley disclaims
beneficial ownership of the shares of Series F Preferred Stock
owned by his wife and in 16,518 shares held by AELP.
(11) Consists of 400 shares of Common Stock and options to
purchase 25,000 and 50,000 shares of Common Stock under the 1989
Plan and the 1992 Plan, respectively.
(12) Consists of 1,193,020 shares of Common Stock, 30,414
shares of Common Stock issuable upon conversion of 14,600 shares
of Series F Preferred Stock, and options to purchase 43,433,
874,000 and 274,000 shares of Common Stock under the LTIP, the
1989 Plan and the 1992 Plan, respectively.
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires Tosco's Directors,
executive officers and holders of
more than 10% of Tosco's Common Stock to file with the Securities
and Exchange Commission initial reports of ownership and reports
of changes in ownership of
Common Stock and other equity securities of Tosco. Tosco
believes that during
the fiscal year ended December 31, 1993, its officers, directors,
and holders of more than 10% of Tosco's Common Stock complied
with all Section 16(a) filing requirements, with the following
exception. As a result of the call for
redemption by Tosco International Finance, N.V., a wholly owned
subsidiary of Tosco, on August 13, 1993 of its 8% Convertible
Subordinated Debentures due
October 15, 1995, the right to convert those debentures to Common
Stock of Tosco was terminated. As a result, the ability of Mr.
Jefferson F. Allen, an officer
and Director of Tosco to acquire 133 shares of Common Stock of
Tosco at a price equivalent to $186.875 per share was
involuntarily terminated. The loss of this
right should have been reported on a Form 4 in September 1993 but
was reported on his year-end Form 5. In making this statement
Tosco has relied upon the
written representations of its Directors and Officers.
EXECUTIVE COMPENSATION
Summary Compensation Table
The summary Compensation Table shows certain compensation
information for Thomas D. O'Malley, the Chief Executive Officer
of Tosco, and for the four other most highly compensated
executive officers of Tosco for the year ended December 31, 1993.
The information includes the dollar amount of salaries, bonuses
and other compensation for these officers as well as the
number of stock options granted.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Other
Annual Restricted All Other
Compen- Stock LTIP Compen-
Name and sation Award(s) Options/ Payouts sation
Principal Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)1
Thomas D. O'Malley 1993 500,000 1,526,000 25,000 25,286
Chairman, CEO and 1992 500,000 298,148 100,000
President 1991 400,000 515,000 75,000
Jefferson F. Allen 1993 300,000 687,000 15,000 25,484
Executive Vice President, 1992 298,000 134,167 50,000
Treasurer, and Chief
Financial Officer 1991 250,000 225,000 50,000
James M. Cleary 1993 300,000 424,688 12,000 20,115
Senior Vice President 1992 300,000 205,200 20,000
1991 260,000 209,144 20,000
Robert J. Lavinia 1993 300,000 299,453 75,000 34,312
Vice President
Dwight L. Wiggins 1993 300,000 299,453 50,000 111,478
Vice President
- ------------------------
(1) All other compensation consists of the following: (a) contributions pursuant to Tosco's Capital Accumulation Plan
for Messrs. Allen, Cleary, Lavinia, O'Malley, and Wiggins in the amounts of $22,259, $17,295, $8,007, $22,259 and
$10,611, respectively, (b) split dollar life insurance premiums of $1,920, $1,515 and $867 for Messrs. Allen, Cleary
and O'Malley, respectively, (c) group term life insurance benefits of $1,305, $1,305, $1,305, $2,160 and $867 for
Messrs. Allen, Cleary, Lavinia, O'Malley and Wiggins, respectively, and (d) a $100,000 employment bonus for Mr. Wiggins and
a $25,000 relocation allowance for Mr. Lavinia.
Tosco has severance agreements (the "Agreements") with
Messrs. Cleary, Lavinia, and Wiggins, which provide that if an
executive's employment is terminated by Tosco without cause, or
upon a change of control of Tosco, or is terminated by the
executive for good reason, as all such terms are defined in
the Agreements and as set forth below, then the executive shall
be entitled to a lump sum severance payment and all of the
terminated executives' options or
restricted shares, if any, which are not then vested shall vest
immediately and all such restrictions shall lapse. In the event
of a Change of Control, Tosco
may elect to continue the executive's employment for a specified
period. If Tosco elects to continue the executive's employment,
but the executive refuses
such employment, the executive will not receive any lump sum
payment. If Tosco elects to continue the executive's employment
and the executive agrees, then
at the expiration of the specified period Tosco will pay the
executive 75% of the lump sum payment if Tosco and the executive
are unable to agree as to
further employment. The lump sum severance payments for Messrs.
Cleary and Lavinia are 24 months of their base salary at the time
of termination and for Mr. Wiggins is 36 months of his base
salary at the time of termination,
dropping to 24 months of his base salary on the third anniversary
of the agreement. At March 1, 1994, and based upon salary levels
currently in effect,
in the event Tosco had caused their employments to be terminated
or upon a change of control, Messrs. Cleary, Lavinia, and Wiggins
would have been
entitled pursuant to the Agreements to receive a lump sum of
approximately $600,000, $600,000 and $900,000, respectively,
together with the accelerated
vesting of their options. The Agreements have a one-year term,
but will be automatically renewed for successive one-year terms
unless Tosco notifies the
executive at least six months prior to any renewal date. Such
notification by Tosco shall entitle the executive to terminate
his employment for Good Reason
and shall be deemed to be a termination without Cause if the
executive's employment terminates before the end of the
Agreement. The Agreements further
provide that under certain circumstances payments thereunder are
subject to reduction in order to ensure that such payments
(including any other payments
pursuant to any other plans, arrangements or agreements with
Tosco) will be deductible by Tosco under the Internal Revenue
Code of 1986, as amended (the
"Code"), and will not be deemed to be excess parachute payments
under the Code.
Such reduction in payments may be waived by the Board of
Directors. As used
in the Agreements, the following terms generally have the
following meanings:
Cause means material and intentional failure to perform his
duties, fraud, misappropriation of property or intentional damage
to Tosco's property; Good
Reason means a reduction in base annual compensation or a
significant reduction
in the nature of employment; and Change in Control means a person
or group of
persons become the beneficial owner of more than 50% of Tosco's
Common Stock, stockholders approve a merger of Tosco into another
entity or a change in the
composition of a majority of the members of the Board of
Directors.
In May 1990 Tosco entered into Agreements with Messrs.
O'Malley and Allen
which provide for a lump sum payment equal to 24 months of their
annual compensation (including a monthly amount equal to the
average of bonuses paid
during the previous three years, or any shorter period of time of
employment preceding the termination of employment) at the time
of termination. Effective December 1992, such Agreements were
amended to reduce the applicable payment
to 30 months of base salary (excluding bonuses). The Agreements
of Messrs. Allen and O'Malley were restated effective January
1993. At March 1, 1994, and
based on salary levels currently in effect, Messrs. Allen and
O'Malley would have been entitled pursuant to their Agreements to
receive lump sums of
approximately $750,000 and $1,250,000, respectively, together
with the accelerated vesting of their options.
In 1993, each Director who was not also an officer of
Tosco was paid a
fee of $25,000 per year (or pro rata portion thereof for period
of service as a Director) plus $1,000 for each Board of Directors
meeting attended and $1,000
for each committee meeting attended, provided such committee
meeting was not
held on the same day as a Board of Directors meeting. From time
to time Directors who are not officers provide services to the
Corporation in their
areas of expertise, for which they are compensated at the rate
paid for attending Board meetings. Such fees were $4,000,
$12,000, $1,000 and $27,000
for Messrs. Frame, Flournoy, Hajim and Ingrassia, respectively.
In 1991, Tosco created the Directors' Charitable Award
Program (the "Program") which allows each Director to recommend a
donation to educational
institutions and/or charitable organizations designated by them.
The Program is funded by joint life insurance policies of which
Tosco is the sole owner and
beneficiary, with each policy insuring the lives of two eligible
Directors.
Tosco pays all premiums due and at the time of the death of the
second of two
Directors, receives a tax-free death benefit of approximately $2
million, thereby recovering the costs of the Program.
Tosco will make charitable contributions in the name of each
Director, within
ten years following the Director's death, to the institution(s)
designated by the Director. The Directors may recommend one
organization to receive a
donation of $1 million, or two or more organizations to receive
$1 million in the aggregate.
After five years of service as a Director, Tosco
Directors who are not
employees are eligible to participate in a retirement plan. The
Plan generally
provides that upon the later of age 65 or retirement, an annual
retirement benefit equal to annual retainer fees in effect at the
time of retirement will
be paid. One year of retirement payments for each year of Board
service, up
to a maximum of 20 years, is provided. Upon the Director's
death, remaining
payments will continue to the spouse during the period of her
life, subject to the maximum set forth above. A Director may
elect to receive such retirement
benefits as an actuarially equivalent lump sum.
Pension Plans
The following table shows the estimated annual benefits
payable to
participants upon retirement under the Tosco Pension Plan (the
"Pension Plan").
Of Tosco's five highest paid executives, Messrs. Cleary, Lavinia
and Wiggins
are participants in the Pension Plan.
Estimated Annual Retirement Benefits
Final Years of Service
3-year
Avg. Comp. 10 15 20 25 30 35
$300,000 $35,756 $53,634 $71,512 $88,801 $105,500 $115,641
350,000 35,756 53,634 71,512 88,801 105,500 115,641
400,000 35,756 53,634 71,512 88,801 105,500 115,641
450,000 35,756 53,634 71,512 88,801 105,500 115,641
500,000 35,756 53,634 71,512 88,801 105,500 115,641
550,000 35,756 53,634 71,512 88,801 105,500 115,641
600,000 35,756 53,634 71,512 88,801 105,500 115,641
For 1993, no more than $235,840 of cash compensation,
excluding bonuses, may be taken into account in calculating
benefits payable under the Pension
Plan. The cash compensation limit was reduced to $150,000 for
1994 by federal law but accrued benefits as of December 31, 1993
are not affected. Benefits shown in the table are single life
annuities payable at age 65.
Pension benefits, which are integrated with Social Security
benefits, will be reduced
for amounts payable under prior Tosco pension plans or
predecessor employer
plans. Messrs. Cleary, Lavinia and Wiggins have 13, 1 and 28
years of credited service under the Pension Plan.
In 1990, Tosco adopted a Senior Executive Retirement Plan
("SERP") to
provide retirement benefits to selected senior executives and
their beneficiaries. Of Tosco's five highest paid executive,
Messrs. Allen, Cleary
and O'Malley are eligible for benefits under the SERP. The table
that follows shows the estimated annual benefits payable under
the SERP. Amounts payable
will be reduced for amounts payable under the Tosco Pension Plan,
or, if applicable, certain predecessor employer plans.
Estimated Annual Retirement Benefits
Final Years of Service
3-year
Avg. Comp. 10 15 20 25 30 35
$300,000 $135,000 $180,000 $180,000 $180,000 $180,000 $180,000
350,000 157,500 210,000 210,000 210,000 210,000 210,000
400,000 180,000 240,000 240,000 240,000 240,000 240,000
450,000 202,500 270,000 270,000 270,000 270,000 270,000
500,000 225,000 300,000 300,000 300,000 300,000 300,000
550,000 247,500 330,000 330,000 330,000 330,000 330,000
600,000 270,000 360,000 360,000 360,000 360,000 360,000
Benefits shown are life annuities payable at age 65 and
are based on a
percentage of eligible compensation. SERP benefits are reduced
by the amount of benefits payable under the Pension Plan.
Eligible compensation is the
average of base pay plus incentive compensation (limited to an
aggregate maximum of $600,000) during the highest
three-consecutive calendar years of
employment after January 1, 1990. Normal retirement age is 65
with early retirement benefits (reduced by 1% for each year
preceding age 65) commencing
at age 55 and three years of service. There is no reduction if
age plus years of service equal or exceed 75 at date of
retirement.
For participants in the Tosco Pension Plan, amounts up to
$115,641 would be paid pursuant to that Plan.
Messrs. O'Malley, Allen and Cleary have four years of
credited service under the SERP as of December 31, 1993. Messrs.
Lavinia and Wiggins are not participants in the SERP.
Miscellaneous Transactions
Since 1987, Tosco has entered into indemnity agreements
(the "Indemnity Agreements") with its Directors and certain of
its officers (collectively, the "Indemnitees") which provide for
Tosco to indemnify the Indemnitees against
expenses incurred by the Indemnitees in any proceedings which may
be maintained against them by reason of any action or omission to
act by any Indemnitee in
his capacity as a Director, officer, employee, agent or fiduciary
of Tosco.
Tosco's obligations are subject to certain limitations, including
the limitation that no payment will be made which is prohibited
by applicable law.
The Indemnity Agreements provide for the advancement of expenses
incurred by Indemnitees in advance of the final disposition of
any proceedings and require
Tosco to establish a trust (the "Trust") for the benefit of the
Indemnitees.
In the event of a Change in Control (as defined in the Indemnity
Agreements),
Tosco will, from time to time upon written request of an
Indemnitee, fund the
Trust in an amount sufficient to satisfy any and all expenses
reasonably
anticipated to be incurred in connection with any proceedings.
As of December 31, 1993, Tosco was obligated under a
lease for approximately 12,654 square feet of office space in a
building in Stamford, Connecticut owned by an entity in which Mr.
O'Malley holds minority economic
interest. The lease expires April 30, 1997 unless sooner
terminated in
accordance with its terms. Continental-Tosco Limited Partnership
("CTLP"), of
which Tosco owned approximately 48% during 1993, entered into a
lease for approximately 7,256 square feet of space in the same
building.
Said lease
expires September 30, 1997. Tosco no longer owns an interest in
CTLP and has
no direct or indirect obligation with respect to the lease. The
monthly base rents, excluding utilities, paid by Tosco and CTLP
under the leases was
approximately $16,905 and $13,301, respectively. The monthly
rents were
determined to be generally at market rates for similar buildings
and locations
at the time they were entered into and are at the lowest per
square foot rates
of any tenants in the building for comparable space. Tosco may
terminate its
lease at any time upon payment of specified amounts.
OPTIONS GRANTS IN 1993
Percent of
Total
Options
Granted Exercise Grant Date
Granted in Price Expiration Present
Name (#) 1993 ($/SH) Date2 Value1
Thomas D. O'Malley 25,000 4.41% $21.6875 January 25, 2003 $120,253
Jefferson F. Allen 15,000 2.65% $21.6875 January 25, 2003 $ 72,152
James M. Cleary 12,000 2.12% $24.2500 May 18, 2003 $ 65,449
Robert J. 50,000 8.83% $21.6875 January 25, 2003 $240,505
Lavinia(2) 25,000 4.41% $24.2500 May 18, 2003 $136,353
Dwight L. Wiggins 50,000 8.83% $21.6875 January 25, 2003 $240,505
<1> The grant date present value per option was calculated
using a modified Black-Scholes American Options Pricing Model, adjusted to
reflect the risk of forfeiture. Assumptions underlying the
Black-Scholes valuation were as follows:
1 -Expected time to exercise = 6.751 years, based on
option vesting periods (3 years for all 1993 grants) plus 3.751 years
(the average duration between the time employee options become
exercisable and actual exercise by the option holders during 1988 - 1993);
2 -Expected dividend yield = 2.77% for options granted on
January 26, 1993 and 2.47% for options granted on May 19, 1993 based
on an expected annual cash dividend of $0.60 divided by the stock price
on the date of grant;
3 -Risk-free rate of return = 6.08% for options granted
on January 26 and 5.67% for options granted on May 19, based on interest
rates on U.S. government bonds on the dates of grant weighted to
reflect a 6.751 year time to maturity;
4 -Expected volatility = 36.33%, the standard deviation
of Tosco's Common Stock during 1988-1993.
Based on these inputs, the Black-Scholes value per option was
$7.798 for options granted on January 26 and $8.842 for options granted on
May 19, 1993.
These values were then adjusted for the 61.69% risk of
forfeiture. The forfeiture risk factor applied to the Black-Scholes values was
61.69%; i.e., the Black-Scholes values were multiplied by 61.69% before the
values shown were calculated. This figure reflects an average annual forfeiture of
6.91% of all options outstanding, compounded over the 6.751 years (the
expected time to exercise). 6.91% was the weighted-average annualized occurrence
cancellation for Tosco employee options during 1988-1993.
<2> Robert J. Lavinia was granted options on two dates during
1993.
Aggregated Option/SAR Exercises in 1993 and December 31, 1993 Option/SAR Values
Number of Unexercised Value of Unexercised
Options/SARs at in-the-Money
December 31, 1993 Options/SARs at
Shares December 31, 1993
Acquired
Name On Exercise(a) Value Realized(a) Exercisable Unexercisable Exercisable Unexercisable
Thomas D. O'Malley
233,333 116,667 $1,766,917 $ 370,896
Jefferson F. Allen
100,000 65,000 728,208 227,229
James M. Cleary
88,433 32,000 927,730 103,100
Robert J. Lavinia
75,000 493,750
Dwight L. Wiggins
50,000 371,875
421,766 338,667 $3,422,855 $1,566,850
__________________
(a) There were no exercises of options by Tosco's current executives during 1993.
Tosco Performance
The following graph shows a five year comparison of
cumulative total returns for Tosco, the Standard & Poor's ("S&P")
500 Composite Stock Prices Index and an index of peer companies
selected by Tosco. The graph assumes that the value of the
investment in Tosco's Common Stock and each index was $100 at
January 1, 1989 and that all dividends were reinvested.
Measurement Period
(Fiscal Year) Tosco Peer Group S&P 500
1988 $100.00 $100.00 $100.00
1989 147.52 130.99 131.68
1990 100.38 98.88 127.58
1991 176.36 120.31 166.47
1992 144.83 105.59 179.20
1993 210.64 132.65 197.26
Peer Group includes Ashland Oil, Crown Central, Diamond
Shamrock, Tesoro Petroleum, and Valero Energy. Assumes $100
invested 1/1/89 in Tosco common
stock, an Index of stock in Peer Group companies (weighted by
market capitalization) and the S&P 500 Index. Assumes reinvested
dividends. Fiscal year ends December 31.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee, which consists entirely of
Directors who are not employees of Tosco, reviews and approves
all remuneration arrangements for
Tosco's executive officers, Directors and other employees, and
reviews and approves compensation plans in which officers and
employees are eligible to
participate. Mr. Frame, a member of the Committee, was an
officer of Tosco from 1986 to 1989. The Committee met four times
during 1993. Tosco's philosophy for compensating executive
officers is that a substantial portion
of the executive's compensation should be incentive based and
determined by Tosco's and the executive's performance. The
policy is designed to attract,
reward, motivate and retain key executives who are capable of
achieving Tosco's objectives in a highly competitive industry.
Tosco's executive compensation program consists of the
following key elements: salary based on the committee's
assessment of individual performance
and contributions to Tosco; an annual bonus that is directly
related to the performance of the executive's business unit and
Tosco as a whole; and grants
of stock options designed to motivate individuals to enhance the
long-term value of Tosco's stock. The Committee does not
allocate a fixed percentage of
compensation to each of these three elements, nor does the
Committee use any
specific qualitative or quantitative measures or factors in
assessing individual performance, except with respect to the
award of bonuses as described below.
The salaries of key executives and the incentive plans in
which they participate are reviewed annually by the Compensation
Committee in light of the
committee's assessment of individual performance, contribution to
Tosco and level of responsibility. The Committee generally
assigns equal weight to each
of these factors. Annual base salaries for the executives set
forth above were not increased during 1993. The Committee
believes Mr. O'Malley's salary
reflects his experience and personal contributions to Tosco's
performance.
During 1993 Tosco had three different cash bonus plans as
an incentive for executive officers (and other employees): the
Tosco Refining Company Cash
Incentive Plan (the "Avon CIP") for those who work in California
at Tosco
Refining Company; the Bayway Refining Company Cash Incentive Plan
(the "Bayway CIP") for those working for Tosco's wholly-owned
subsidiary in Linden, New Jersey; and a bonus plan for senior
corporate executives who are not
participants in the Avon or Bayway CIP, the Tosco Corporate
Incentive Plan (the "Tosco Corporate Plan"). Messrs. Allen and
O'Malley participate only in the
Tosco Corporate Plan. Mr. Cleary participated in the Avon CIP,
and Messrs. Lavinia and Wiggins participated in the Bayway CIP.
Also, a portion
(approximately 25%) of the annual bonuses of Messrs. Cleary,
Lavinia and Wiggins is based on the Tosco Corporate Plan to
foster cooperation among
Tosco's various business units. No bonuses are payable under the
CIPs or the Tosco Corporate Plan unless all dividends on Tosco's
preferred stock and the
interest on its First Mortgage Bonds is paid when due. The Avon
and Bayway CIPs are generally designed for members of middle and
senior management of each
applicable business unit and set forth suggested awards which are
computed as a percentage of a participant's base salary, which
percentage is dependent upon
the particular business unit's pre-tax income. The percentage
for executive officers who participate in such plans ranges from
0% to 200% of their base
salary. The CIPs provide that awards payable to senior
management participants
in the CIPs are determined by the Compensation Committee. The
Tosco Corporate
Plan provides for the payment of a bonus dependent on the per
share (common shares plus common share equivalents) pre-tax
operating earnings ("OPEPS") of
Tosco. For 1993, no bonus was payable under the Tosco Corporate
Plan unless OPEPS exceeded $1.30. For each one dollar (and, on a
pro-rata basis, for each
fraction thereof) of OPEPS over the first $1.30, a percentage of
the executive's annual base salary was paid as cash bonus. The
percentages for executive officers who participate in the Tosco
Corporate Plan range from 10%
to 100% of their base salary. The percentage for each executive
officer is based on the committee's assessment of the officer's
performance, contribution
to Tosco and level of responsibility. Messrs. Allen, Cleary,
Lavinia, O'Malley, and Wiggins were participants in the Tosco
Corporate Plan and the
percentage applicable to each of them was 75, 10, 10, 100 and 10,
respectively.
Tosco has several stock option plans which are designed
to link the interests of executive officers with Tosco's
shareholders and provide such
executives with an equity interest in Tosco. The options are
designed to enhance shareholder values by benefiting executives
only if other shareholders
of Tosco also benefit. The purpose of the plans is to encourage
executives and others to acquire larger stock ownership and
proprietary interest in Tosco and
thereby stimulate the active interest of such persons in the
development and financial success of Tosco. All options granted
in 1993 were granted at the
fair market value of Tosco Common Stock on the date of grant and
become exercisable over three years commencing one year from the
date of grant, and
only if the holder is still employed by Tosco. The number of
options that the
Compensation Committee grants to executive officers is based on
individual
performance and level of responsibility. The Committee generally
assigns equal weight to these two factors. In addition, the
committee also considers the
number of options previously granted to and the total number of
options held by such officers. Stock options were the only
long-term incentives granted to
executive officers in 1993. Since stock options are tied to the
future performance of Tosco's Common Stock, they will provide
value only if the price
of Tosco Common Stock exceeds the exercise price of the options.
There is no relationship between the future performance of Tosco
and the number of stock options granted.
Mr. O'Malley's compensation for 1993 was based on the
same performance
and other criteria as summarized in the preceding paragraphs
relative to all executive officers.
In 1993, the tax laws were amended to limit the deduction
a publicly held
company is allowed for compensation paid in 1994 and thereafter
to the chief executive officer and to the four other most highly
compensated executive
officers. Generally, amounts paid in excess of $1 million, other
than performance-based compensation, may not be deducted. In
order to be considered
performance-based compensation, one of the criteria imposed by
the tax law is
that the plan relating to such compensation must be approved by a
company's stockholders. In order to maximize the deductibility
of executive compensation, the Tosco Corporate Incentive Plan is
being submitted to Tosco's
stockholders for approval. The committee will continue to
evaluate maximizing
the deductibility of executive compensation, while retaining the
discretion it deems necessary to compensate executive officers.
Compensation Committee
Houston I. Flournoy
Clarence G. Frame
Edmund A. Hajim
II. APPROVAL OF THE TOSCO CORPORATE INCENTIVE PLAN
The Compensation Committee of the Board of Directors of
Tosco put in place an annual cash incentive plan, the Tosco
Corporate Incentive Plan, based on Tosco Corporation's earnings
per share (the "Tosco Corporate Plan"), as
discussed above. The Tosco Corporate Plan provides for the
payment of an annual bonus to certain executive officers of Tosco
dependent on the pre-tax
operating earnings per share (common shares plus common share
equivalents) ("OPEPS") of Tosco Corporation. No bonus is payable
under the Tosco Corporate
Plan unless OPEPS exceeds a hurdle rate set by the Compensation
Committee at the beginning of the year. For 1991 the hurdle rate
was $1.00 per share. It
was increased to $1.30 for each of 1992 and 1993, and to $1.50
for 1994. For
each one dollar (and, on a pro-rata basis, for each fraction
thereof) of OPEPS
over the hurdle, a multiple ("participation factor") of the
executive's annual
base salary is paid as a cash bonus. The participation factors
of the participants for 1994 range from 0.10 to 1.00. Messrs.
Allen, Cleary, Lavinia,
O'Malley, and Wiggins are participants in the 1994 Tosco
Corporate Plan and the
participation factor applicable to each of them is 0.75,0.10,
0.10, 1.00 and 0.10, respectively. Under the Budget
Reconciliation Act of 1993, compensation
to any individual employee in excess of $1 million per year is
not deductible as a business expense unless such compensation is
incentive based (i) as
provided by pre-determined standards, with the outcome
substantially in doubt
at the time the standards are set, (ii) is payable in accordance
with a plan approved by an independent Compensation Committee (or
independent subcommittee
thereof), and (iii) such plan has been approved by the
stockholders. In order
to preserve the maximum tax deductions available to Tosco in the
event an individual were to receive annual compensation in excess
of $1 million as a result of the Tosco Corporate Plan, the
stockholders are requested to ratify and approve said Plan.
The affirmative vote of holders of a majority of the
shares of stock of Tosco present, or represented by proxy, and
entitled to vote at the meeting is
required for approval of the Tosco Corporate Plan.
The Board of Directors recommends a vote FOR ratification
and approval of the Tosco Corporate Plan.
III. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of Tosco, upon recommendation of
the Audit Committee, has selected Coopers & Lybrand as the
independent accountants of
Tosco for 1994. Coopers & Lybrand has acted in such capacity
since 1977. Stockholders are requested to ratify and approve
such appointment. A representative of Coopers & Lybrand is
expected to be present at the meeting
with the opportunity to make a statement if he or she so desires
and to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification
and approval of the appointment of Coopers & Lybrand as Tosco's
auditors.
OTHER MATTERS
Certain Security Holdings
At December 31, 1993, to the knowledge of Tosco, from
Statements on Schedule 13G provided to Tosco, beneficial owners
of more than 5% of any class
of the outstanding voting securities of Tosco were as follows:
Amount and
Nature of
Name and Address of Beneficial Percent
Title of Class Beneficial Owner Ownership* of Class
Common Stock FMR Corp. 4,639,304 14.45%
82 Devonshire Street shares <1>
Boston, Massachusetts
02109
Common Stock Capital Growth 1,947,300 6.11%
Management, L.P. shares <2>
One International Place
Boston, Massachusetts
02110
______________________
<*> The beneficial owner of such shares reports that it
has sole voting and investment power with respect to such
securities, except where otherwise indicated.
<1> According to a Statement on Schedule 13G filed with the
Commission on February 11, 1994, consists of 4,396,600 shares of
common stock and 242,704 shares of common stock issuable upon
conversion of 116,500 shares of Series F Convertible Preferred
Stock. Such holdings are managed by various entities owned,
controlled, or affiliated with FMR Corp. (Fidelity Investments).
<2> According to a Statement on Schedule 13G filed with the
Commission on February 9, 1994, voting power with respect to such
shares is held by the individual clients of Capital Growth
Management, L.P.
Miscellaneous
Proposals of stockholders intended to be presented at
Tosco's 1995 Annual Meeting of Stockholders must be received by
Tosco on or prior to December 12, 1994, to be eligible for
inclusion in Tosco's Proxy Statement and form of Proxy
to be used in connection with the 1995 Annual Meeting.
The By-Laws of Tosco currently provide that nominations
for the election of Directors may be made by a shareholder
entitled to vote for the election of
Directors provided that (a) such shareholder delivers written
notice by first
class mail to the Secretary of Tosco not less than 14 days nor
more than 50 days prior to any meeting of the shareholders called
for the election of
Directors (if less than 21 days' notice of the meeting is given
to shareholders, the shareholder's written notice may be
delivered to the
Secretary of Tosco not later than the close of the seventh day
following the day on which notice of the meeting was mailed to
shareholders); and (b) such written notice contains background
information as to each nominee, including
(i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice, (ii) the
principal occupation or employment
of each nominee, (iii) the number of shares of stock of Tosco
beneficially owned by each nominee, and (iv) any information with
respect to each nominee's
affiliation with a competitor of Tosco.
At the date of this Proxy Statement, the only business
which the Board
of Directors intends to present or knows that others will present
at the meeting is that hereinabove set forth. If any other
matter or matters are
properly brought before the meeting, or any adjournment thereof,
it is the intention of the persons named in the accompanying form
of Proxy to vote the
Proxy on such matters in accordance with their judgment.
Wilkes McClave III
Secretary
Dated: April 11, 1994
TOSCO CORPORATION
Annual Meeting of Stockholders May 17, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
The undersigned, revoking any proxy heretofore given,
hereby appoints Thomas D. O'Malley, Jefferson F. Allen and Wilkes
McClave III, or any of them, proxies of the undersigned, with
full power of substitution, with respect to all of the shares of
stock of TOSCO CORPORATION ("Tosco") which the undersigned
is entitled to vote at Tosco's Annual Meeting of Stockholders to
be held at The Sheraton Stamford Hotel, One First Stamford Place,
Stamford, Connecticut, on Tuesday, May 17, 1994 at 10:00 A.M.
Eastern Daylight Savings Time, and at any adjournment thereof.
I. ELECTION OF DIRECTORS: to elect
the eight (8) nominees for Director listed below for a term of
one year.
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the to vote for all nominees
contrary below) listed below
Jefferson F. Allen, Joseph B. Carr, Houston I. Flournoy,
Clarence G. Frame, Edmund A. Hajim, Joseph P. Ingrassia, Charles
J. Luellen, Thomas D. O'Malley.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
II. Proposal to ratify and approve the Tosco
Corporate Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
III. Proposal to ratify and approve the appointment of
Coopers & Lybrand as independent auditors of Tosco for the fiscal
year ending December 31, 1994.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
IV. In their discretion, upon any other matters which
may properly come before the meeting or any adjournment thereof.
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 ALL NOMINEES
LISTED IN PROPOSAL I AND FOR PROPOSALS II and III.
Receipt of the Notice of Annual Meeting and of the Proxy
Statement and Annual Report to Stockholders of Tosco is hereby
acknowledged.
Dated , 1994
(L.S.)
(Signature of Stockholder)
(L.S.)
(Signature of Stockholder)
Your signature should appear the same as
your name appears hereon. If signing as
attorney, executor, administrator, trustee
or guardian, please indicate the capacity
in which signing. When signing as joint
tenants, all parties to the joint tenancy
must sign. When the proxy is given by a
corporation, it should be signed by an
authorized officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.