SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
TOSCO CORPORATION
(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 previously paid 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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(4) Date Filed:___________________________________________
TOSCO CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
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 15, 1997, at 10:00 o'clock in the
morning for the following purposes:
I. To elect ten (10) Directors of Tosco.
II. To ratify and approve the appointment of Coopers &
Lybrand L.L.P. as independent accountants of Tosco for the
fiscal year ending December 31, 1997.
III. 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, 1997 shall
be entitled to vote at and be present at the meeting.
By order of the Board of Directors,
Wilkes McClave III
Secretary
Dated: April 11, 1997
Stamford, Connecticut
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 15, 1997 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, 1997 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, 1997, Tosco had outstanding and entitled to vote with
respect to all matters to be acted upon at the Annual Meeting 145,114,481 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 ten (10) Directors at the Annual Meeting to
hold office until the 1998 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,
except for Mr. Budd and Mrs. Malmivirta, 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
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION AND
POSITIONS HELD
Jefferson F. Allen 51 1990 Executive Vice President and
Chief Financial Officer of Tosco
since June 1990; Treasurer of
Tosco from June 1990 to October
1995; various positions,
including Chairman and CEO,
with Comfed Bancorp, Inc. and
related entities from
November 1988 to June 1990.
Patrick M.deBarros 52 1995 Director of Petrogal, Petroleos
de Portugal, SA since July 1995;
Chairman and Chief Executive
Officer of Argus Resources Ltd.
since 1988 and Chairman of
Fundacao Monteiro de Barros and
Protea Holdings Inc. since
1980.
Wayne A. Budd 55 ____ Senior Vice President, NYNEX
Corp. since April 1996; Senior
Partner, Goodwin, Procter &
Hoar, Attorneys, from February
1993 to April 1996;
Commissioner, United States
Sentencing Commission, October
1994 to May 1996; Associate
Attorney General of the United
States from March 1992 to
January 1993; United States
Attorney for the District of
Massachusetts from April 1989
to March 1992.
Houston I. Flournoy 67 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.
Edmund A. Hajim 60 1991 Chairman and Chief Executive
Officer of Furman Selz LLC
since October 1983; Managing
Director and member of the
Board of Directors of Lehman
Brothers Kuhn Loeb prior to
1983.
Joseph P. Ingrassia 72 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 67 1992 Retired Executive; President
and Chief Operating Officer of
Ashland Inc. from March 1986 to
January 1992.
Eija Malmivirta 56 ____ Chairman and principal owner of
Merei Energy Consulting Oy Ltd.,
Helsinki, Finland, a consulting
company with expertise in the
oil industry, oil trading and
risk management, since October
1996; for more than 27 years
prior thereto, Mrs. Malmivirta
was employed by Neste Oy,
a Finnish oil refining and
marketing company, with her last
position as Executive Vice
President.
Mark R. Mulvoy 56 1996 Retired Executive; Editor,
Sports Illustrated magazine from
1992 to 1996; various positions
with Sports Illustrated for more
than five years prior thereto.
Thomas D. O'Malley 55 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.
Mr. de Barros is a director of Petrogal, Petroleos de Portugal; Grupo
Espirito Santo and of Telecel. Mr. Budd is a director of the Bank of Boston,
which is the agent under Tosco's credit agreement. Mr. Flournoy is a director of
Fremont General Corporation and Lockheed Martin Corporation. Mr. Hajim is a
director of NFO Corporation.
Tosco's Board of Directors has a Committee on Audit, Ethics and
Conflicts of Interest (the "Audit Committee"), consisting of Messrs. Carr,
Flournoy, Frame, Ingrassia and Luellen, a Compensation Committee consisting of
Messrs. Flournoy, Hajim and Luellen, an Executive Committee consisting of
Messrs. Allen, Ingrassia, and O'Malley, a Business Affairs Committee consisting
of Messrs. Carr, de Barros, Ingrassia, Luellen, Mulvoy and O'Malley, a
Government & Regulatory Affairs Committee consisting of Messrs. Flournoy, Frame
and Allen and a Nominating Committee consisting of Messrs. de Barros, Hajim and
Ingrassia. 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 1996, there were ten meetings of the Board of Directors, three
meetings of the Audit Committee, five meetings of the Compensation Committee and
two meetings of the Nominating Committee. During 1996, 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 nominee for Director, by each
of the five most highly compensated executive officers and by all executive
officers and Directors as a group at March 1, 1997, and the percentage of the
outstanding shares of Common Stock so owned by each Director, nominee, executive
officer, and such group. All shares and per share data contained herein have
been adjusted to reflect the three-for-one stock split distributed February 25,
1997 to shareholders of record on February 13, 1997.
Amount and
nature of
Name beneficial Percent of
ownership Class
Jefferson F. Allen 721,110(1) *
Patrick M. de Barros 721,662(2) *
Wayne A. Budd - -
Joseph B. Carr 72,000(3) *
Houston I. Flournoy 73,548(4) *
Clarence G. Frame 33,648(5) *
Edmund A. Hajim 90,000(6) *
Joseph P. Ingrassia 73,500(7) *
Robert J. Lavinia 442,500(8) *
Charles J. Luellen 75,000(9) *
Eija Malmivirta - -
Wilkes McClave 489,852(10) *
Mark R. Mulvoy 72,000(11) *
Thomas D. O'Malley 4,750,368(12) 3.59%
Dwight L. Wiggins 420,000(13) *
All executive officers and
Directors (22 persons, 9,012,345(14) 6.64%
including those listed above)
- -------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Consists of 16,110 shares of Common Stock, options to purchase 495,000
shares of Common Stock under the 1989 Stock Incentive Plan (the "1989
Plan"), and options to purchase 210,000 shares of Common Stock under the
1992 Stock Incentive Plan (the "1992 Plan").
(2) Consists of 649,662 shares of Common Stock owned by a Trust of which Mr.
de Barros is a beneficiary, and options to purchase 56,001 and 15,999
shares of Common Stock under the 1989 Plan and the 1992 Plan,
respectively.
(3) Consists of options to purchase 72,000 shares of Common
Stock under the 1989 Plan. Mr. Carr will be retiring as
a director after the Annual Meeting.
(4) Consists of 1,548 shares of Common Stock and options to purchase 72,000
shares of Common Stock under the 1989 Plan.
(5) Consists of 33,648 shares of Common Stock. Mr. Frame will
be retiring as a director after the Annual Meeting.
(6) Consists of 18,000 shares of Common Stock and options to purchase 72,000
shares of Common Stock under the 1989 Plan.
(7) Consists of 1,500 shares of Common Stock and options to purchase 72,000
shares of Common Stock under the 1989 Plan.
(8) Consists of options to purchase 75,000 and 367,500 shares of Common Stock
under the 1989 Plan and the 1992 Plan, respectively.
(9) Consists of 3,000 shares of Common Stock and options to purchase 72,000
shares of Common Stock under the 1989 Plan.
(10) Consists of 31,353 shares of Common Stock and options to purchase
240,000 and 218,499 shares of Common Stock under the 1989 Plan and 1992
Plan, respectively.
(11) Consists of options to purchase 72,000 shares of Common Stock under the
1989 Plan.
(12) Consists of 2,853,723 shares of Common Stock, options to purchase
1,050,000 and 300,000 shares of Common Stock under the 1989 Plan and
the 1992 Plan, respectively, and 29,997 shares of Common Stock owned by
Mr. O'Malley's wife. In addition, the shares listed in the table
include 221,595 shares held by Argus Energy Corporation and 295,053
shares held by Argus Investments, Inc., of which Mr. O'Malley is the
sole shareholder. Mr. O'Malley disclaims beneficial ownership of the
29,997 shares of Common Stock owned by his wife.
(13) Consists of 7,500 shares of Common Stock and options to purchase 75,000
and 337,500 shares of Common Stock under the 1989 Plan and the 1992
Plan, respectively.
(14) Consists of 4,214,346 shares of Common Stock and options to purchase
2,543,001 and 2,254,998 shares of Common Stock under the 1989 Plan and
the 1992 Plan, respectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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, 1996, its officers, directors and holders of more than 10% of Tosco's Common
Stock complied with all Section 16(a) filing requirements.
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, 1996. 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
Compen- Stock Options LTIP Other
Name and Salary Bonus sation Award(s) /SARs Payouts Compen-
Principal Position Year ($) ($) ($) ($) (#) ($) sation
($)
Thomas D. O'Malley 1996 600,000 3,257,331 75,000 68,211(1)
Chairman, CEO and 1995 550,000 1,451,799 150,000 69,734(2)
President 1994 500,000 975,000 75,000 83,604(3)
Jefferson F. Allen 1996 400,000 1,628,665 45,000 45,302(1)
Executive Vice President 1995 325,000 635,162 120,000 46,323(2)
and Chief Financial 1994 300,000 438,750 45,000 54,328(3)
Officer
Robert J. Lavinia 1996 400,000 1,628,665 37,500 10,620(1)
Executive Vice President 1995 325,000 650,900(4) 105,000 10,452(2)
1994 300,000 886,750(4) 75,000 134,621(3)
Dwight L. Wiggins 1996 400,000 1,628,665 37,500 12,552(1)
Executive Vice President 1995 325,000 681,000 150,000 10,148(2)
1994 300,000 146,250 75,000 9,825(3)
Wilkes McClave 1996 340,000 1,139,966 37,500 45,881(1)
Senior Vice President and 1995 300,000 471,935 114,999 46,758(2)
General Counsel 1994 280,000 327,500 30,000 54,301(3)
- --------------
1 All other compensation consists of the following: (a)
contributions pursuant to Tosco's Capital Accumulation Plan
for Messrs. Allen, Lavina, McClave, O'Malley, and Wiggins in
the amounts of $17,433, $9,756, $19,500, $19,126, and $9,000,
respectively, (b) the value of certain premiums paid by Tosco under a
split dollar life arrangement for Messrs. Allen, McClave and O'Malley in
the amounts of $25,699, $25,098 and $45,710 respectively, and (c) group
term life insurance benefits of $2,160, $864, $1,283, $3,375 and $3,552 for
Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins, respectively.
2 All other compensation consists of the following: (a)
contributions pursuant to Tosco's Capital Accumulation Plan
for Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins in
the amounts of $17,256, $9,756, $19,500, $17,256 and $9,000,
respectively, (b) the value of certain premiums paid by
Tosco under a split dollar life arrangement for Messrs.
Allen, McClave and O'Malley in the amounts of $26,619,
$25,779 and $50,030 respectively, and (c) group term life
insurance benefits of $2,448, $696, $1,479, $2,448 and $1,148
for Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins,
respectively.
3 All other compensation consists of the following: (a)
contributions pursuant to Tosco's Capital Accumulation Plan
for Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins
in the amounts of $17,255, $9,755, $19,500, $17,255 and
$9,429, respectively, (b) the value of certain premiums paid
by Tosco under a split dollar life arrangement for Messrs.
Allen, McClave and O'Malley in the amounts of $35,768,
$33,496 and $64,189, respectively, (c) group term life
insurance benefits of $1,305, $696, $1,305, $2,160 and $396
for Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins,
respectively, and (d) a $124,170 relocation allowance for Mr.
Lavinia.
4 Mr. Lavinia's bonus for 1995 and 1994 includes a $100,000 and $250,000
employment bonus, respectively, in connection with his employment as
president of Tosco Northwest Company.
AGREEMENTS WITH OFFICERS AND DIRECTORS
Tosco has severance agreements (the "Agreements") with Messrs. Allen,
Lavinia, McClave, O'Malley and Wiggins, which provide that if an executive's
employment is terminated by Tosco without cause, or upon a change of control of
Tosco (followed by termination of employment), 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 executive's options or restricted shares, if
any, which are not then vested shall vest immediately and all such restrictions
shall lapse. The lump sum severance payments for Messrs. Allen, McClave and
O=Malley is 30 months of base salary at the time of termination and for Messrs.
Lavinia and Wiggins is 24 months of base salary at the time of termination;
provided, however, upon a change in control, the severance payments shall be
based on salary plus bonus. At March 1, 1997, and based upon salary levels
currently in effect, in the event Tosco had caused their employments to be
terminated, Messrs. Allen, Lavinia, O'Malley, McClave and Wiggins would have
been entitled pursuant to the Agreements to receive a lump sum of approximately
$1,063,000, $850,000, $1,625,000, $938,000 and $850,000, respectively; if such
terminations had resulted from a change in control, they would have been
entitled to receive an additional approximately $2,830,000, $2,180,000,
$5,886,000, $2,015,000 and $2,310,000, respectively; in each case 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. 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 includes 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.
Effective February 16, 1996, James Cleary's employment with the Company was
terminated and he received $700,000.
In 1996, each Director who was not also an officer of Tosco was paid a
fee of $30,000 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.
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 the
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 first
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.
In 1996, Tosco adopted a mandatory retirement policy for Directors.
The policy requires Directors to retire upon the completion of the annual term
of office during which the Director's seventy-fifth birthday occurs.
PENSION PLANS
The following table shows the estimated annual benefits payable to
participants upon retirement under the Tosco Pension Plan (the "Pension Plan").
The covered compensation consists of the salary, but not the bonus, reported in
the Summary Compensation Table. Of Tosco's five highest paid executives, Messrs.
Lavinia and Wiggins are participants in the Pension Plan.
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFITS
_______________________YEARS OF SERVICE AT AGE 65______________________
3-YEAR
AVG. COMP.
10 15 20 25 30 35
$300,000 $31,573 $49,439 $67,305 $85,171 $102,684 $119,676
350,000 31,573 49,439 67,305 85,171 102,684 119,676
400,000 31,573 49,439 67,305 85,171 102,684 119,676
450,000 31,573 49,439 67,305 85,171 102,684 119,676
500,000 31,573 49,439 67,305 85,171 102,684 119,676
550,000 31,573 49,439 67,305 85,171 102,684 119,676
600,000 31,573 49,439 67,305 85,171 102,684 119,676
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 has been reduced to $150,000 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. Lavinia and Wiggins have 3 and 30 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. Messrs. Allen, Lavinia, McClave, O'Malley and Wiggins are
eligible for benefits under the SERP. The table that follows shows the estimated
annual benefits payable under the SERP.
SERP Table
Years of Service
Final 10 15 20 25 30 35
3-year
Avg.Comp.
$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
650,000 292,500 390,000 390,000 390,000 390,000 390,000
669,000 301,050 401,400 401,400 401,400 401,400 401,400
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 Tosco Pension Plan, or, if applicable, certain
predecessor employer plans. Eligible compensation is the average of base pay
plus incentive compensation (limited to an aggregate maximum of $669,000 as
increased by the Consumer Price Index commencing December 31, 1996) 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.
Messrs. Allen, McClave and O'Malley have seven years of credited
service while Messrs. Lavinia and Wiggins each have three years and seven months
of credited service under the SERP as of December 31, 1996.
CERTAIN RELATIONSHIPS AND RELATED 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. Change in Control is defined to include the following events: (a)
Tosco would be required to report a change in control under the Securities
Exchange Act of 1934; (b) any person becomes the beneficial owner of 20% or more
of the voting power of Tosco's outstanding stock without the approval of Tosco's
Board of Directors; (c) Tosco is a party to a merger, consolidation or sale of
assets; (d) certain changes in the composition of Tosco's Board of Directors; or
(e) a person who owns 9.5% or more of the voting power of Tosco's stock
increases his beneficial ownership by 5% or more.
As of December 31, 1996, Tosco was obligated under leases for
approximately 25,686 square feet of office space in a building in Stamford,
Connecticut owned by an entity in which Mr. O'Malley holds a minority economic
interest. The leases expire between April 30, 1997 and July 31, 2001 unless
sooner terminated in accordance with their terms. The total monthly base rent,
excluding utilities, paid by Tosco under the leases was approximately $44,972.
The monthly rent was determined to be generally at market rate for similar
buildings and locations at the time each lease was entered into and is at the
lowest per square foot rate of any tenants in the building for comparable space.
Tosco may terminate its leases at any time upon payment of specified amounts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee, which consists of Messrs.
Flournoy, Hajim and Luellen, have entered into the Indemnity Agreements
discussed under "Certain Relationships and Related Transactions". The Indemnity
Agreements provide for Tosco to indemnify the Indemnitees against expenses
incurred by the Indemnitees in any proceedings which may be maintained against
them by reason of any action or omission to act by any Indemnitee in his
capacity as a Director, officer, employee, agent or fiduciary of Tosco. Tosco's
obligations are subject to certain limitations, including the limitation that no
payment will be made which is prohibited by applicable law. The Indemnity
Agreements provide for the advancement of expenses incurred by Indemnitees in
advance of the final disposition of any proceedings and require Tosco to
establish the Trust for the benefit of the Indemnitees. In the event of a Change
in Control (as defined in the Indemnity Agreements), Tosco will, from time to
time upon written request of any Indemnitee, fund the Trust in an amount
sufficient to satisfy any and all expenses reasonably anticipated to be incurred
in connection with any proceedings.
OPTIONS GRANTS IN 1996
PERCENT OF
TOTAL
OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE VALUE (1)
GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME (#) IN 1996 ($/SH) DATE (2) PRESENT VALUE
Thomas D. O'Malley 75,000 7.90% $12.42 Jan 16, 2006 $289,754
Jefferson F. Allen 45,000 4.74% 12.42 Jan 16, 2006 173,853
Robert J. Lavinia 37,500 3.95% 12.42 Jan 16, 2006 144,877
Dwight L. Wiggins 37,500 3.95% 12.42 Jan 16, 2006 144,877
Wilkes McClave 37,500 3.95% 12.42 Jan 16, 2006 144,877
(1) The grant date present value per option was calculated using a
modified Black Scholes American Options Pricing Model, then adjusted
to reflect the risk of forfeiture. Assumptions underlying the
Black-Scholes valuation were as follows:
1- Expected Time to Exercise = 9 years, based on option vesting
periods (3 years for all 1996 grants) plus 6 years (the historical
average duration between the time the options became exercisable and
actual exercise by Tosco's executive officers);
2- Expected Dividend Yield = 1.93%, based on an expected annual cash
dividend divided by the stock price on the date of grant;
3- Risk-free rate of return = 5.74%, based on grant date U.S.
government bond interest rates reported by the U.S. Federal Reserve,
adjusted to reflect a 9 year time to maturity;
4- Expected Volatility = 28.71%, the standard deviation of Tosco
Common Stock for the five year period preceding the grant date. Based
on this input, the Black- Scholes value per option was $4.634 for
options granted on January 16. This value was then adjusted for the
risk of forfeiture. The forfeiture risk factor applied to the
Black-Scholes value was 83.37%; i.e., the Black-Scholes value was
multiplied by 83.37% before the value shown was calculated. This
figure reflects an average annual forfeiture of 2% of all options
outstanding, compounded over the 6 year expected time to exercise. 2%
was the annualized weighted-average occurrence of cancellations for
Tosco employee options during 1992 - 1996.
(2) These options may not be exercised prior to one year from the date of
grant and may be exercised 33 1/3% per year thereafter, subject to
acceleration upon the occurrence of certain events.
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND DECEMBER 31, 1996 OPTION/SAR VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED DECEMBER 31, 1996 DECEMBER 31, 1996
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Thomas D. O'Malley 1,150,000 200,000 $21,272,690 $3,069,784
Jefferson F. Allen 565,000 140,000 10,341,367 2,151,871
Robert J. Lavinia 310,000 132,500 5,628,955 2,046,977
Dwight L. Wiggins 250,000 162,500 4,506,764 2,546,530
Wilkes McClave 334,333 124,166 6,066,869 1,908 562
--------- ------- ------------ ------------
2,609,333 759,166 $47,816,645 $11,723,724
========= ======= =========== ===========
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 Price 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, 1991 and that all dividends were reinvested.
Peer Group includes Ashland, Crown Central Petrol-CLB, Diamond
Shamrock (now known as Ultramar/Diamond Shamrock), Tesoro Petroleum, and Valero
Energy. Assumes $100 invested on January 1, 1991 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.
COMPARISON OF FIVE YEAR TOTAL RETURN
TOSCO, INDUSTRY PEER GROUP AND S&P 500 INDEX
[Performance Chart]
1991 1992 1993 1994 1995 1996
TOSCO CORP $100.00 $ 82.16 $119.54 $122.09 $162.88 $342.00
S&P 500 INDEX $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
PEER GROUP $100.00 $ 85.98 $104.80 $105.13 $118.19 $149.44
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 certain other employees, and
reviews and approves compensation plans in which officers and employees are
eligible to participate. The Committee met five times during 1996. 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 the individual's level
of responsibility, 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 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. The Committee believes Mr. O'Malley's salary reflects his
experience and personal contributions to Tosco's performance. The base salaries
of the four other most highly compensated executive officers reflect their
individual job performance and contribution to Tosco.
During 1996 Tosco's executive officers participated in the Tosco
Corporate Incentive Plan (the "Tosco Corporate Plan"). Their bonuses are
determined in accordance with a formula and factors set by the Committee prior
to the beginning of the year. The plan provides that no bonuses are payable
unless the interest on Tosco's Mortgage Bonds is paid when due. 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 1996 no bonus was payable under the Tosco Corporate Plan
unless OPEPS exceeded $.50. For each $.33 (and, on a pro-rata basis, for each
fraction thereof) of OPEPS over the first $.50, a percentage of the executive's
annual base salary was paid as cash bonus. The hurdle rate was determined by the
Committee prior to the beginning of the year in light of Tosco's annual budget
and anticipated performance. Annual bonus under the Tosco Corporate Plan is
computed in accordance with a formula, the variables of which are the amount of
OPEPS, if any, in excess of the hurdle rate and the individual's percentage
participation factor. The percentages for executive officers who participate in
the Tosco Corporate Plan range from 25% 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, Lavinia, McClave, O'Malley and Wiggins were participants in the
Tosco Corporate Plan and the percentage applicable to each of them was 75, 75,
60, 100 and 75, 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 1996 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 (with certain exceptions for severance agreements).
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. 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 1996 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 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. The Tosco Corporate
Plan was approved by Tosco's stockholders in 1994.
COMPENSATION COMMITTEE
Houston I. Flournoy
Edmund A. Hajim
Charles J. Luellen
II. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of Tosco, upon recommendation of the Audit
Committee, has selected Coopers & Lybrand L.L.P. as the independent accountants
of Tosco for 1997. Coopers & Lybrand L.L.P. has acted in such capacity since
1977. Stockholders are requested to ratify and approve such appointment. A
representative of Coopers & Lybrand L.L.P. 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 L.L.P. AS TOSCO'S AUDITORS.
OTHER MATTERS
CERTAIN SECURITY HOLDINGS
At February 14, 1997, 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
BENEFICIAL PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP* OF CLASS
Common Stock FMR Corp. 20,259,507 15.3%
82 Devonshire Street shares (1)
Boston, Massachusetts 02109
Common Stock Tiger Management L.L.C. 18,950,400 14.5%
Tiger Performance L.L.C. shares (2)
Panther Partners, L.P.
Panther Management Company, L.P.
Julian H. Robertson, Jr.
101 Park Avenue
New York, New York 10178
Common Stock Provident Investment Counsel, Inc. 6,632,397 5.1%
300 North Lake Avenue shares (3)
Pasadena, California 91101
- ---------------------
* All share information has been adjusted to reflect the three-for-one
stock split distributed February 25, 1997 to shareholders of record on
February 13, 1997. 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 13, 1997, wholly-owned subsidiaries or affiliates of FMR
Corp. ("Fidelity Funds"), including a registered investment advisor,
own these shares. FMR does not have the power to vote or direct the
voting of shares owned by the Fidelity Funds, which power resides with
Fidelity Funds' Board of Trustees.
(2) According to a Statement on Schedule 13G filed with the Commission
on February 12, 1997, (i) Tiger Management L.L.C. and Tiger
Performance L.L.C., investment advisers registered under Section 203
of the Investment Advisers Act of 1940, reported beneficial ownership
of an aggregate of 17,784,600 shares; (ii) Panther Partners, L.P., an
investment company registered under Section 8 of the Investment
Company Act, reported beneficial ownership of 313,400 shares; (iii)
Panther Management Company, L.P., an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, reported
beneficial ownership of 1,045,800 shares; and (iv) Julian H.
Robertson, Jr. reported beneficial ownership of 18,950,400 shares.
Julian H. Robertson, Jr. is the ultimate controlling person of Tiger
Management L.L.C., Tiger Performance L.L.C. and Panther Management
Company, L.P. Other persons are known to have the right to receive
dividends from, or proceeds from, the sale of such shares. The
interest of one such person, The Jaguar Fund N.V., a Netherlands
Antilles corporation, is more than 5%.
(3) According to a Statement on Schedule 13G filed with the Commission
on February 12, 1997, voting power with respect to such shares is held
by the investment advisory clients of Provident Investment Counsel,
Inc.
MISCELLANEOUS
Proposals of stockholders intended to be presented at Tosco's 1998
Annual Meeting of Stockholders must be received by Tosco on or prior to December
13, 1997, to be eligible for inclusion in Tosco's Proxy Statement and form of
Proxy to be used in connection with the 1998 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.
Registered stockholders attending the meeting may be asked for
identification. If you are a beneficial owner of Tosco stock held by a bank or
broker ("in street name"), you will need proof of ownership to be admitted to
the meeting. A recent brokerage statement or letter from the broker or bank
indicating you are an owner as of the record date are examples of proof of
ownership.
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, 1997
TOSCO CORPORATION
Annual Meeting of Stockholders May 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned, revoking any proxy heretofore given, hereby appoints
R Thomas D. O'Malley, Jefferson F. Allen and Wilkes McClave III, or any
O of them, proxies of the undersigned with full power of substitution,
X with respect to all of the shares of stock of TOSCO CORPORATION
Y ("Tosco") which the undersigned is entitled to vote at Tosco's
Annual Meeting of Stockholders to be held on Thursday, May 15, 1997,
and at any adjournment thereof.
(Continued, and to be marked, dated and signed, on the reverse side)
SEE REVERSE
SIDE
DETACH HERE
Please mark
X vote as in this
example
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 1 AND 2.
1. ELECTION OF DIRECTORS: To elect the
ten (10) nominees for Director listed below
for a term of one year. FOR AGAINST ABSTAIN
Nominees: Jefferson F. Allen,
Patrick M. DeBarros, Wayne A. 2. Proposal to ratify and approve
Budd, Houston I. Flournoy, the appointment of Coopers &
Edmund A. Hajim, Joseph P. Lybrand L.L.P. as independent
Ingrassia, Charles J. Luellen, auditors of Tosco for the fiscal
Eija Malmivirta, Mark R. year ending December 31, 1997.
Mulvoy, Thomas D. O'Malley.
/ / FOR / / WITHHELD 3. In their discretion, upon any
ALL FROM ALL other matters which may
NOMINEES NOMINEES properly come before the
meeting or any adjournment
thereof.
MARK HERE
FOR ADDRESS / /
CHANGE AND
_________________ NOTE AT LEFT
For all nominees except as noted above
Receipt of the Notice of Annual
Meeting and of the Proxy
Statement and Annual Report to
Stockholders of Tosco is hereby
acknowledged.
PLEASE DATE, SIGN AND RETURN
THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
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.
Signature______________ Date___________ Signature_______________ Date____