SCHEDULE 14A INFORMATION
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 ss.240.14a-11(c) or ss.240.14a-12
ZEMEX CORPORATION
--------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of filing fee (check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i) (1) 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:
[ ] 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 of Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
April 30, 2002
[ZEMEX LOGO]
ZEMEX CORPORATION
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
P.O. Box 703
Toronto, Ontario
Canada M5J 2S1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, JUNE 14, 2002
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Zemex
Corporation will be held in the Patty Watt Room at the Design Exchange, 234 Bay
Street, Toronto, Ontario, M5K 1B2, on Friday, June 14, 2002 at 10:00 a.m.
(Toronto time) for the following purposes:
1. to receive the audited consolidated financial statements of the
Corporation for the fiscal year ended December 31, 2001, together with
the auditors' report thereon;
2. to elect directors of the Corporation;
3. to ratify the appointment of Deloitte & Touche LLP, as independent
public auditors of the Corporation and to authorize the directors to
fix the remuneration to be paid to the auditors; and
4. to transact such other business as may properly come before the
meeting.
The accompanying proxy statement provides additional information relating to the
matters to be dealt with at the meeting and forms part of this notice.
If you are unable to attend the meeting in person, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope. All proxies to
be used at the meeting must be deposited with the Corporation or at the office
of the Corporation's transfer agent, CIBC Mellon Trust Company in Toronto,
Ontario not later than 4:00 p.m. (Toronto time) on June 12, 2002. Any person
giving a proxy has the power to revoke it at any time prior to its exercise at
the meeting. Even though you execute the proxy, you may still vote your stock in
person at the meeting. It is important that your stock be represented regardless
of the number of shares you may hold. We hope that you can attend the meeting.
By Order of the Board of Directors,
/s/ Lorna D. MacGillivray
Toronto, Ontario Lorna D. MacGillivray
April 29, 2002 Assistant Secretary
ZEMEX CORPORATION
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
P.O. Box 703
Toronto, Ontario
Canada M5J 2S1
PROXY STATEMENT
SOLICITATION OF PROXIES
The information contained in this proxy statement is furnished in connection
with the solicitation of proxies by Zemex Corporation (the "Corporation" or
"Zemex"), a company incorporated under the Canada Business Corporations Act
("CBCA"), to be used at the Annual Meeting of Shareholders (the "Meeting") of
the Corporation to be held in the Patty Watt Room at the Design Exchange, 234
Bay Street, Toronto, Ontario, M5K 1B2 on Friday, June 14, 2002 at 10:00 a.m.
and, at any adjournment thereof, for the purposes set forth in the accompanying
notice of meeting. This proxy statement, the accompanying notice of meeting and
form of proxy are being mailed on or about May 7, 2002 to each shareholder of
record as of the close of business on May 6, 2002. The Corporation's Annual
Report on Form 10-K for the year ended December 31, 2001, which includes its
financial statements, was mailed on or about April 25, 2002. Such Annual Report,
however, is not to be deemed to be part of this proxy solicitation material. If
a person has acquired ownership of shares since May 6, 2002 he/she may, in
accordance with the provisions of the Corporation's by-laws, produce properly
endorsed share certificates or otherwise establish that he/she owns such shares
and demand, not later than the close of business on June 4, 2002, to be included
in the list of shareholders entitled to vote at the Meeting, in which case the
transferee is entitled to vote his/her shares at the Meeting.
The expense of solicitation of proxies will be borne by the Corporation.
Following the mailing of the proxy material, solicitation of proxies may be made
by mail, telephone, facsimile, telegram or personal interview by directors,
officers or regular employees of the Corporation or its subsidiaries, who will
receive no additional compensation for their services. The Corporation has also
retained Georgeson Shareholder Communications Inc. to solicit proxies personally
or by mail, telephone, facsimile, or telegraph from brokerage houses,
custodians, fiduciaries and nominees for a fee of $4,000 plus expenses. In
addition, the Corporation will reimburse brokers and other nominees for their
expenses in forwarding soliciting material to beneficial owners.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Corporation's board of directors (the "Board") has fixed the close of
business on May 6, 2002 as the record date for the determination of shareholders
of the Corporation entitled to vote at the Meeting. As of April 29, 2002, the
Corporation had approximately 8,195,437 common shares (the "Common Shares")
issued and outstanding.
Each Common Share is entitled to one vote. Two shareholders present in person or
by proxy are required in order to constitute a quorum for the transaction of
business. Abstentions are treated as present and entitled to vote, and will have
the effect of a vote against any matter requiring the affirmative vote of a
majority of the Common Shares present and entitled to vote at the Meeting.
As indicated on page 6 under the heading "Principal Shareholders and Security
Ownership of Management", The Dundee Bank, beneficially owns 36.6% of the issued
and outstanding Common Shares of the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named as proxies in the enclosed form of proxy accompanying this
proxy statement are directors and/or officers of the Corporation. A shareholder
of the Corporation has the right to appoint a person other than the person
specified in such form of proxy and who need not be a shareholder of the
Corporation to attend and act for him/her and on his/her behalf at the Meeting.
Such rights may be exercised by striking out the name of the persons specified
in the form of proxy, inserting the name of the person to be appointed in the
blank space provided in the form of proxy, signing the form of proxy and
returning it in the reply envelope in the manner set forth in the accompanying
notice of meeting.
ANY SHAREHOLDER GIVING A PROXY IN THE ACCOMPANYING FORM OF PROXY HAS THE RIGHT
TO REVOKE IT AT ANY TIME PRIOR TO THE VOTING THEREOF BY DELIVERY OF NOTICE OF
REVOCATION TO THE CORPORATION OR BY DELIVERY OF A SUBSEQUENT PROXY UP TO 4:00
P.M. (TORONTO TIME) ON THE LAST BUSINESS DAY PRECEDING THE DAY OF THE MEETING,
OR ANY ADJOURNMENT THEREOF. SUCH NOTICES OF REVOCATION SHOULD BE ADDRESSED TO
EITHER OF THE ADDRESSES LISTED BELOW:
ZEMEX CORPORATION CIBC MELLON TRUST COMPANY
CANADA TRUST TOWER, BCE PLACE 200 QUEEN'S QUAY EAST
161 BAY STREET, SUITE 3750 UNIT #6
TORONTO, ONTARIO TORONTO, ONTARIO
CANADA M5J 2S1 CANADA M5A 4K9
ATTENTION: ASSISTANT SECRETARY ATTENTION: PROXY DEPARTMENT
TELEPHONE: (416) 365-8080 TELEPHONE: (416) 643-5500
FAX: (416) 365-8094 FAX: (416) 368-2502
WRITTEN REVOCATION MAY ALSO BE SUBMITTED TO THE CHAIRMAN OF THE MEETING PRIOR TO
THE COMMENCEMENT OF THE MEETING ON THE DATE OF THE MEETING OR ANY ADJOURNMENT
THEREOF OR IN ANY OTHER MANNER PERMITTED BY LAW.
VOTING OF SHARES REPRESENTED BY MANAGEMENT PROXIES
The persons named as proxies in the enclosed form of proxy will vote the shares
in respect of which they are appointed by proxy on any ballot that may be called
for in accordance with the instructions therein. In the absence of such
specification, such shares will be voted in favour of each of the matters
referred to herein.
The enclosed form of proxy confers discretionary authority upon the persons
named therein with respect to amendments to or variations of matters identified
in the notice of meeting and with respect to other matters, if any, which may
properly come before the Meeting. At the date of this proxy statement, the
management of the Corporation knows of no such amendments, variations or other
matters to come before the Meeting. However, if any other matters, which are not
known to management, should properly come before the Meeting, the proxy will be
voted on such matters in accordance with the best judgment of the named proxy.
DOLLAR FIGURES
Unless expressly stated to the contrary, all "$" figures contained in this proxy
statement refer to U.S. dollars.
ZEMEX CORPORATION 2
BUSINESS OF THE MEETING
ELECTION OF DIRECTORS
A board of nine directors is to be elected at the Meeting. All directors so
elected will hold office until the next annual meeting of shareholders of the
Corporation or until their successors are elected or appointed. It is not
expected that any nominee will be unable or will decline to serve as a director;
however, if that should occur for any reason at or prior to the Meeting, the
persons named in the enclosed form of proxy reserve the right to vote for the
nominee designated by the present Board to fill the vacancy.
Unless otherwise instructed, the management representatives named in the
enclosed form of proxy will vote the proxies received by them for the
Corporation's nine nominees named below, unless the shareholder who has given
such proxy has directed that the shares be withheld from voting in the election
of directors.
Opposite the name of each nominee for election as a director is (i) his age;
(ii) his position with the Corporation, his principal occupation and his
business experience during the past five years; and (iii) the year in which he
first became a director of the Corporation. All information is as of April 29,
2002.
PROPOSAL I
NOMINEES FOR ELECTION AS A DIRECTOR
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POSITION WITH THE CORPORATION;
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DURING PAST DIRECTOR
NAME AGE FIVE YEARS SINCE
- ---------------------------------------------------------------------------------------------------------------------
Paul A. Carroll 61 Member of the Corporate Governance Committee; Counsel to 1991
Gowling Lafleur Henderson LLP (Toronto law firm) since
May 1999; Chairman and Chief Executive Officer, World
Wide Minerals Ltd. (Toronto-based mining company) since
January 1997; Counsel, Smith Lyons (Toronto law firm)
from 1997-1999 and prior thereto Partner of Smith Lyons
since 1973; Chairman, Juno Limited; Director, Dundee
Bancorp Inc.
- ---------------------------------------------------------------------------------------------------------------------
Morton A. Cohen 67 Chairman, President and Chief Executive Officer, Clarion 1991
Capital Corporation (Cleveland-based venture capital
company); Director, Cohesant Technologies, Inc.;
Director, DHB Capital Group
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John M. Donovan 74 Chairman of the Audit Committee; Member of the Executive 1991
Compensation/Pension Committee; Member of the
Executive Committee; Chartered Accountant; Director,
Philex Gold Inc. (Toronto-based mining company)
- ---------------------------------------------------------------------------------------------------------------------
ZEMEX CORPORATION 3
- ---------------------------------------------------------------------------------------------------------------------
POSITION WITH THE CORPORATION;
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DURING PAST DIRECTOR
NAME AGE FIVE YEARS SINCE
- ---------------------------------------------------------------------------------------------------------------------
R. Peter Gillin 53 Financial Consultant; Chairman of the Corporate 1999
Governance Committee; Chairman of the Executive
Compensation / Pension Committee; Vice Chairman and
Director, N M Rothschild & Sons Canada Limited
(investment bank) from 1996 - 2002; Director, Canadian
Stage Company (Non-Profit)
- ---------------------------------------------------------------------------------------------------------------------
Jonathan Goodman 40 Nominee; President and Chief Executive Officer, Dundee Nominee
Resources Ltd. (resource holding company); Director of
Dundee Bancorp Inc. (merchant banking and financial
services company), Dundee Precious Metals Inc.
(investment company) and Dundee Wealth Management Inc.
(financial service company); Director, Major Drilling
Group International Inc. (mineral exploration drilling
company); Director of Breakwater Resources Ltd., Diagem
International Resource Corp., Hope Bay Gold Corporation,
Odyssey Resources Ltd., Repadre Capital Corporation and
Tahera Corporation (natural resource companies)
- ---------------------------------------------------------------------------------------------------------------------
Peter Lawson-Johnston 75 Chairman of the Board of Directors, Member of the 1960
Executive Committee; Honorary Chairman and Trustee,
Solomon R. Guggenheim Foundation; Chairman of the Board,
The Harry Frank Guggenheim Foundation; Senior Partner,
Guggenheim Brothers; President and Director, Elgerbar
Corporation; Director, National Review, Inc.; Limited
Partner Emeritus, Alex Brown & Sons, Inc.
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Richard L. Lister 63 President and Chief Executive Officer of the Corporation 1991
since May 1993; Chairman of the Executive Committee
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Garth A.C. MacRae 68 Member of the Audit Committee; Member of the Executive 1998
Committee; Member of the Executive Compensation /
Pension Committee; Vice Chairman and Director, Dundee
Bancorp Inc.; Director, Breakwater Resources Ltd.;
Director, ChondroGene Limited; Director, Dundee Precious
Metals Inc.; Director, Dynamic Global Fund Corporation;
Director, Black Hawk Mining Inc.; Director, Dimethaid
Research Inc.; Director, Eurogas Corporation; Director,
Dundee Wealth Management Inc.
- ---------------------------------------------------------------------------------------------------------------------
William J. vanden Heuvel 72 Member of the Audit Committee; Member of the Corporate 1989
Governance Committee; Of Counsel, Stroock, Stroock &
Lavan (attorneys at law, New York); Senior Advisor,
Allen & Company Inc. (investment bankers); Co-Chairman,
Council of American Ambassadors; Chairman, Franklin and
Eleanor Roosevelt Institute; Chairman, Amromco Energy LLC.
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ZEMEX CORPORATION 4
VOTE REQUIRED FOR ELECTION OF DIRECTORS
Directors will be elected at the Meeting by a majority of the votes cast at the
Meeting by the holders of Common Shares represented in person or by proxy. Votes
may be cast for, or withheld from, each nominee.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE FOREGOING PERSONS.
PROPOSAL II
AUDITORS
RATIFICATION OF AUDITORS
Deloitte & Touche LLP, independent certified public accountants, were first
appointed auditors of the Corporation in 1993. The management representatives,
named in the enclosed form of proxy, intend to vote the shares represented by
such proxy in favour of a resolution ratifying the appointment of Deloitte &
Touche LLP as independent auditors of the accounts of the Corporation and its
subsidiaries for the fiscal year ending December 31, 2002 and authorizing the
Board to fix the remuneration of the auditors, unless the shareholder who has
given such proxy has directed that the shares represented thereby be withheld
from voting in the ratification of the appointment of auditors. Representatives
of Deloitte & Touche LLP will be present at the Meeting and will be available to
respond to questions and may make a statement if they so desire.
VOTE REQUIRED FOR RATIFICATION OF AUDITORS
Ratification of the appointment of the auditors requires the affirmative vote of
a majority of the votes cast by holders of Common Shares represented in person
or by proxy.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2002.
REPORTS REQUIRED BY SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
directors and executive officers, and persons who own more than 10% of the
Corporation's Common Shares to file reports of ownership and changes in
ownership of the Corporation's Common Shares with the Securities and Exchange
Commission and any exchange on which the Corporation's Common Shares are traded.
Based solely on its review of the copies of Forms 3, 4 and 5 received by the
Corporation, or written representations from certain reporting persons that no
Form 5's were required for such persons, the Corporation believes that, during
the fiscal year ended December 31, 2001, all Section 16(a) filing requirements
applicable to its officers, directors and 10% shareholders were complied with.
ZEMEX CORPORATION 5
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 29, 2002, information concerning the
Common Shares beneficially owned by each person who, to the knowledge of the
Corporation, is the holder of 5% or more of the Common Shares of the
Corporation, each director or nominee, and each Named Officer (as defined on
page 10 under the heading Compensation of Named Officers and Directors) who
was an executive officer as of that date, and all executive officers and
directors of the Corporation as a group. Except as otherwise noted, each
beneficial owner has sole investment and voting power with respect to the listed
shares.
SHARES PERCENTAGE
NAME OF BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER(1)(2) OWNED(3) OWNED
- ------------------------------------------------------------------------------------------------------------
The Dundee Bank 2,995,175 36.6%
P.O. Box HM 2706
Hamilton, HM KX
Bermuda
- ------------------------------------------------------------------------------------------------------------
Paul A. Carroll 39,550 (4)(6) *
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Morton A. Cohen 328,886 (4)(5) 4.0%
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John M. Donovan 42,346 (4) *
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R. Peter Gillin 26,000 (4) *
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Jonathan Goodman nil (6) --
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Peter Lawson-Johnston 109,518 (4)(7) 1.3%
- ------------------------------------------------------------------------------------------------------------
Richard L. Lister 782,203 (8)(9)(10)(12) 9.3%
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
Toronto, Ontario, Canada M5J 2S1
- ------------------------------------------------------------------------------------------------------------
Garth A.C. MacRae 25,000 (4)(6) *
- ------------------------------------------------------------------------------------------------------------
William J. vanden Heuvel 55,022 (4) *
- ------------------------------------------------------------------------------------------------------------
Allen J. Palmiere 100,520 (9) 1.3%
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Peter J. Goodwin 90,631 (9)(12) 1.1%
- ------------------------------------------------------------------------------------------------------------
Terrance J. Hogan 113,485 (9)(11)(12) 1.4%
- ------------------------------------------------------------------------------------------------------------
All Directors and Named Officers 1,713,161 (4)(5)(7)(8)(9)(10)(11)(12) 19.3%
as a group (12 persons)
- ------------------------------------------------------------------------------------------------------------
* Denotes less than 1% of Common Shares outstanding
(1) A Schedule 13G, prepared for Merrill Lynch & Co., Inc. (on behalf of
Merrill Lynch Investment Managers ("MLIM")), was filed with the Securities
and Exchange Commission indicating that MLIM could be construed to be a
beneficial owner of 881,910 (10.77%) Common Shares as of January 30, 2002.
However, MLIM disclaims any beneficial ownership of the Common Shares
because they are held in proprietary trading accounts.
(2) Franklin Resources, Inc. ("Franklin") has filed a Schedule 13G with the
Securities and Exchange Commission indicating that Franklin could be
deemed to be a beneficial owner of 480,000 (5.9%) Common Shares as of
February 12, 2002. However, Franklin disclaims any beneficial ownership of
the
ZEMEX CORPORATION 6
Common Shares as they are owned by one or more open or closed-end
investment companies or held in discretionary accounts managed by
Franklin.
(3) Computed in accordance with Rule 13d-3(d)(1) of the Securities Exchange
Act of 1934, as amended.
(4) On April 21, 1997, Messrs. Carroll, Cohen, Donovan, Lawson-Johnston and
vanden Heuvel were each granted options for 10,000 Common Shares at $7.00
per Common Share exercisable in two instalments of 5,000 each beginning on
April 21, 1998 and April 21, 1999, respectively. These options expire
April 21, 2003. On May 15, 1998, Messrs. Carroll, Cohen, Donovan,
Lawson-Johnston and vanden Heuvel were granted options for an additional
7,500 Common Shares at $10.1875 per Common Share exercisable in two
instalments of 3,750 each beginning on May 15, 1999 and May 15, 2000,
respectively. These options expire May 15, 2004. On October 1, 1998, upon
joining the Board, Mr. MacRae was granted options for 15,000 Common Shares
at $6.50 per Common Share exercisable in two instalments of 7,500 each
beginning on October 1, 1999 and October 1, 2000, respectively, and
expiring on October 1, 2004. On January 15, 1999, upon joining the Board,
Mr. Gillin was granted options for 15,000 Common Shares at $6.5625 per
Common Share exercisable in two instalments of 7,500 each beginning on
January 15, 2000 and January 15, 2001, respectively, and expiring on
January 15, 2005. On May 26, 1999, stock options for 15,000 Common Shares
at $6.2625 per Common Share were granted to Messrs. Cohen, Donovan,
Lawson-Johnston and vanden Heuvel exercisable in two instalments of 7,500
each beginning on May 26, 2000 and May 26, 2001, respectively, and expire
on May 26, 2009. On May 26, 1999, stock options for 7,500 Common Shares at
$6.2625 per Common Share were granted to Messrs. Carroll, Gillin and
MacRae; these stock options are exercisable in two instalments of 3,750
each beginning on May 26, 2000 and May 26, 2001, respectively, and
expiring on May 26, 2009. On February 14, 2001, Messrs. Carroll, Cohen,
Donovan, Gillin, Lawson-Johnston, MacRae and vanden Heuvel were granted
options for 5,000 Common Shares at $5.21 per Common Share exercisable in
two instalments of 2,500 each beginning on February 14, 2002 and February
14, 2003, respectively, and expiring on February 14, 2007. All options
were granted at the market value at the time of grant.
(5) Includes 288,040 Common Shares owned by Clarion Capital Corporation, a
company of which Mr. Cohen may be deemed to be the beneficial owner.
(6) Messrs. Carroll, Goodman and MacRae are directors of Dundee Bancorp Inc.
of which The Dundee Bank is an indirect wholly-owned subsidiary.
(7) Includes 18,733 Common Shares beneficially owned by Elgerbar Corporation.
Mr. Lawson-Johnston is President and Director of Elgerbar Corporation and
has shared voting and investment power with respect to the Common Shares
held by it.
(8) In 1991, Richard L. Lister, President and Chief Executive Officer of the
Corporation, acquired 357,000 Common Shares under the Corporation's Key
Executive Stock Purchase Plan for an aggregate purchase price of
$1,749,300. The Corporation lent Mr. Lister the full amount of the
purchase price. This non-interest bearing loan, which was originally
scheduled to mature in 1997, has been reviewed by the Compensation /
Pension Committee and extended to December 31, 2003. During 2000, Mr.
Lister repaid $490,000 of this loan leaving a residual obligation of
$1,259,300. The loan is evidenced by a promissory note. If Mr. Lister
leaves the employ of the Corporation at any time prior to full payment of
the loan, the principal amount will be due in full 30 days after the date
his employment terminates. Any balance remaining unpaid on the loan after
it is due will bear interest at the prime rate plus 1.0%. So
ZEMEX CORPORATION 7
long as the loan is outstanding, Mr. Lister is required to vote 176,000
Common Shares in a manner consistent with the recommendation of the Board.
(9) Includes Common Shares issuable upon exercise of vested options as
follows: Mr. Lister, 250,000 Common Shares; Mr. Palmiere, 95,000 Common
Shares; Mr. Goodwin, 62,500 Common Shares; Mr. Hogan, 58,500 Common
Shares; and all Named Officers and directors as a group, 648,500 Common
Shares.
(10) During 1997, the Corporation agreed to guarantee a personal loan in the
amount of $600,000 drawn down by Mr. Lister. The proceeds of the loan were
used to acquire 85,700 Common Shares on the open market.
(11) As part of the Corporation's purchase of Alumitech, Inc., in May 1995, Mr.
Hogan was issued 28,558 Common Shares and options for an additional 22,000
Common Shares at $9.75 per share, in exchange for his interest in
Alumitech, Inc. The options expired on May 12, 2001 and were replaced by
options for 22,000 Common Shares at $7.25 exercisable in two instalments
of 11,000 Common Shares each beginning on May 24, 2002 and May 24, 2003
respectively.
(12) Includes Common Shares purchased from January 1, 1995 to March 31, 2002 in
accordance with the terms and conditions of the Corporation's employee
stock purchase plan as follows: Mr. Lister, 49,030 Common Shares; Mr.
Goodwin, 28,687 Common Shares; and Mr. Hogan, 21,892 Common Shares.
REPORT OF THE
EXECUTIVE COMPENSATION / PENSION COMMITTEE
The following is the report of the Executive Compensation / Pension Committee of
the Corporation describing the compensation policies and rationale with respect
to compensation paid to executive officers for the year ended December 31, 2001.
The information contained in the report shall not be deemed to be soliciting
material or to be filed with the Securities and Exchange Commission nor shall
such information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Corporation specifically incorporates it
by reference into such filing.
The Corporation applies a consistent philosophy to compensation for all
employees. This philosophy is based on the premise that the achievements of the
Corporation result from the co-ordinated efforts of all individuals working
toward common objectives. The Corporation strives to achieve those objectives
through teamwork that is focused on meeting the expectations of customers and
shareholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with business
objectives and performance, and to enable the Corporation to attract, retain and
reward executive officers who contribute to the long term success of the
Corporation. The Corporation's compensation program for executive officers,
including the President and Chief Executive Officer ("CEO"), is based on the
same five principles applicable to compensation decisions for all employees of
the Corporation:
o The Corporation compensates competitively. The Corporation is
committed to providing a compensation program that helps attract and
retain the best people in the industry. To ensure that its
compensation is competitive, the Corporation regularly compares its
compensation practices with those of other leading companies and
sets its compensation parameters based on this review.
o The Corporation compensates for relative sustained performance.
Executive officers are rewarded based upon corporate performance,
business unit performance and individual performance. Corporate
performance and business unit performance are evaluated by reviewing
the extent to which strategic and business plan goals are met,
including such factors as operating profit, performance relative to
competitors, new product introductions and execution of long term
strategy. Individual performance is evaluated by reviewing
ZEMEX CORPORATION 8
organizational and management development progress against set
objectives and the degree to which teamwork and Corporation values
are fostered.
o The Corporation strives for fairness in the administration of
compensation.
o The Corporation strives to achieve a balance of the compensation
paid to a particular individual and the compensation paid to other
executives both inside the Corporation and at comparable companies.
o The Corporation believes that employees should understand how the
performance evaluation and compensation administration process
works.
The process of assessing performance is as follows:
o At the beginning of the performance cycle, the evaluating manager
sets objectives and key goals and submits these for review by the
head of that division and the President and CEO of the Corporation.
o The evaluating manager gives the employee ongoing feedback on
performance.
o At the end of the performance cycle, the manager evaluates the
employee's accomplishment of objectives and key goals.
o The division manager compares the results to the results of peers
within the operating unit and reviews the overall process with the
head of that division.
o The evaluating manager communicates the comparative results to the
employee.
o The comparative results affect decisions on salary, bonuses and
stock options.
COMPENSATION
The Corporation has had a history of using a simple total compensation program
that consists of cash and, since 1990, equity-based compensation. Having a
compensation program that allows the Corporation to successfully attract and
retain key employees, permits it to provide useful products and services to
customers, enhance shareholder value, motivate technological innovation, foster
teamwork, and adequately reward employees. The compensation vehicles are:
o CASH-BASED COMPENSATION
Salary: The Corporation sets base salary for employees by reviewing
the aggregate of base salary and annual bonus for competitive
positions in the market.
o EQUITY-BASED COMPENSATION
Stock Option and Stock Purchase Programs: The purpose of these
programs is to provide additional incentives to employees to work to
maximize shareholder value. The option and stock purchase programs
also utilize vesting periods to encourage key employees to continue
in the employ of the Corporation.
o BONUS PROGRAM
The Corporation maintains a bonus program for certain key employees
which is specifically designed to grant greater compensation to
those key employees to recognize their performance in the plan year.
ZEMEX CORPORATION 9
2001 PERFORMANCE
In accordance with the procedure discussed above, at the beginning of fiscal
2001, the Executive Compensation / Pension Committee reviewed performance
objectives for the Corporation. Performance relative to these objectives was the
basis for determining the 2001 bonus of the President and CEO.
Similarly, 2001 performance goals for the other Named Officers were approved by
the President and CEO at the beginning of the year. Performance measures were
similar to those of the President and CEO. Their performance for 2001 was
evaluated by the President and CEO and bonuses were awarded based on this
evaluation.
EXECUTIVE COMPENSATION/PENSION COMMITTEE
PAUL A. CARROLL
JOHN M. DONOVAN
PETER LAWSON-JOHNSTON
During 2001, the Executive Compensation/Pension Committee was comprised of Paul
A. Carroll (Chairman), John M. Donovan and Peter Lawson-Johnston. In March 2002,
the Executive Compensation/Pension Committee was reconstituted and is currently
comprised of R. Peter Gillin (Chairman), John M. Donovan and Garth A.C. MacRae.
COMPENSATION OF NAMED OFFICERS AND DIRECTORS
The following table sets forth the annual and long-term compensation,
attributable to all service in the fiscal years 2001, 2000 and 1999, paid to
those persons who were at the end of the 2001 fiscal year (i) the chief
executive officer; and (ii) the other three executive officers of the
Corporation who received at least $100,000 in compensation during the fiscal
year 2001 (collectively, the "Named Officers").
ZEMEX CORPORATION 10
NAMED OFFICERS
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------ ----------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARDS(1) SARS(2) PAYOUTS SATION(3)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------------- ------ ---------- ---------- ----------- ------------ ----------- ---------- -------------
Richard L. Lister 2001 292,068 131,200 33,128 30,000 100,000 -- 152,940 (4)
President & Chief 2000 284,755 151,200 22,925 30,000 -- -- 245,050 (4)
Executive Officer 1999 255,896 245,000 22,585 25,200 120,000 -- 114,043 (5)
- --------------------------------------------------------------------------------------------------------------------
Peter J. Goodwin 2001 225,000 82,000 8,458 22,500 30,000 -- --
President, 2000 204,000 41,000 10,436 18,744 25,000 -- --
Industrial Minerals 1999 197,125 96,000 8,833 18,744 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Allen J. Palmiere 2001 154,948 48,744 38,916 -- 20,000 -- --
Vice President, Chief 2000 161,572 46,788 40,735 -- 60,000 -- --
Financial Officer & 1999 169,297 74,034 17,499 -- -- -- 60,000 (5)
Corporate Secretary
- --------------------------------------------------------------------------------------------------------------------
Terrance J. Hogan 2001 177,399 -- 2,408 17,200 37,000 -- --
President, 2000 172,000 -- 1,985 17,200 -- -- --
Alumitech, Inc. 1999 167,923 -- 6,225 13,323 -- -- --
- --------------------------------------------------------------------------------------------------------------------
(1) Represents benefits under the Corporation's ESPP whereby employees may
elect to invest up to 10% of their earnings and the Corporation matches
funding for the purchase of the Corporation's Common Shares. Common Shares
purchased under this plan are held for a one-year vesting period. Amounts
shown for Mr. Lister do not include imputed interest of $74,803, $99,827
and $87,465 in 2001, 2000 and 1999, respectively, on a loan Mr. Lister
received under the Corporation's Key Executive Stock Purchase Plan. The
Corporation does not reimburse Mr. Lister for any tax consequences arising
from this loan. (See Note 9 under "Principal Shareholders and Security
Ownership of Management".)
(2) On May 26, 1999, Mr. Lister was granted stock options for 120,000 Common
Shares at an exercise price of $6.2625. On July 26, 2000 and May 11, 2000,
Messrs. Goodwin and Palmiere were granted options for 25,000 and 60,000
Common Shares at exercise prices of $7.5625 and $8.1875, respectively. On
February 14, 2001, Messrs. Lister, Goodwin, Palmiere and Hogan were
granted options for 100,000, 30,000, 20,000 and 15,000 Common Shares
respectively at an exercise price of $5.21. On May 24, 2001, Mr. Hogan was
granted options for 22,000 Common Shares at an exercise price of $7.25.
(3) Constitutes premiums for term life insurance exceeding amounts eligible to
most employees, automobile benefits, memberships/dues, and employer
matched contributions to a group registered retirement plan.
(4) Represents the portion of Mr. Lister's retroactive salary adjustment paid
in fiscal 2000. The remaining portion of the retroactive adjustment was
paid in 2001.
ZEMEX CORPORATION 11
(5) Includes benefit from stock options. Mr. Lister exercised options for
120,000 Common Shares at a per share exercise price of $5.50; such options
were expiring May 26, 1999. Mr. Lister was issued 14,610 Common Shares,
representing the difference between the aggregate fair market value of the
Common Shares underlying such options and aggregate exercise price of such
options. Such number of shares was calculated by multiplying the number of
Common Shares underlying such stock options multiplied by the difference
between the exercise price of $5.50 and a fair market value of $6.2625
(determined as described below), and dividing the result by such fair
market value. Similarly, on November 8, 1999, Mr. Palmiere exercised
options for 60,000 Common Shares at a per share exercise price of $7.125;
such options were expiring November 8, 1999. Mr. Palmiere received a cash
payment of $60,000. Such payment was calculated by multiplying the number
of Common Shares underlying the stock options by the difference between
the exercise price of $7.125 and a fair market value of $8.125. In both
cases, the fair market value of the Common Shares was determined as the
lower of (i) the closing price of the Common Shares on the New York Stock
Exchange (the "NYSE") on the date of expiration of the stock options; and
(ii) the average of the closing prices of the Corporation's Common Shares
on the NYSE for the five days preceding such expiration date.
The Corporation has agreed to enter into discussions with Messrs. Lister,
Goodwin and Palmiere to provide comprehensive employment agreements which will
address, but not be limited to compensation, incentive compensation, benefits,
postretirement benefits, protection in the case of a change of control, and
where applicable, succession planning. These agreements, when finalized, will
replace all existing employment related agreements and arrangements. The intent
is to provide equitable employment contracts that provide the Corporation with
the long-term commitment of the executives and the executives with comprehensive
and competitive employment arrangements.
CHANGE OF CONTROL CONTRACTS
The Corporation has entered into agreements with each of the Named Officers
providing for certain benefits in the event such Named Officer is no longer
employed by the Corporation or its subsidiaries following a change in control
transaction. Except for Mr. Lister, if, within two years after a change in
control transaction, the Corporation either dismisses the Named Officer without
cause or after the Named Officer terminates his employment following a
triggering event (which includes a specified adverse change in duties, benefits,
title, reporting, or regular work location), he is entitled to payment of twice
his then current annual base salary, benefits and average annual bonus over the
prior two years, immediate vesting of stock options and shares purchased
pursuant to the Corporation's employee stock purchase plan and certain
outplacement services. Mr. Lister is entitled to the same benefits except that
no triggering event is required, and his severance payment is equal to three
times his then current annual base salary, benefits and his average annual bonus
over the prior three years. These agreements, which expire on December 31, 2004
unless extended, were filed as exhibits to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, and reference is made
thereto for further information.
ZEMEX CORPORATION 12
DIRECTORS
During the fiscal year ended December 31, 2001 each director who is not a
salaried employee of the Corporation was paid $15,000 per annum on a semi-annual
basis for his services as a director. Directors were also paid a fee of $1,000
for each board and committee meeting attended, and reimbursement of their travel
related expenses. From time to time, directors may, at the discretion of the
Board or any committee thereof, be paid a per diem fee, approximating the
meeting fee, for special assignments. In 2001, directors were paid an aggregate
of $217,000 in directors' and other fees.
On February 14, 2001, each director who was not a salaried employee of the
Corporation was granted options under the Corporation's 1999 Stock Option Plan
to acquire 5,000 Common Shares of the Corporation exercisable at $5.21 per
share, the market price at the time of the grant. These options are exercisable
as to 2,500 Common Shares on February 14, 2002 and are fully exercisable on
February 14, 2003. They expire on February 14, 2007.
In 2001, the Corporation purchased directors' and officers' liability insurance
with a liability limit of $15,000,000 for which the Corporation paid an annual
premium of $70,000. The policy provides for a deductible payable by the
Corporation of $100,000.
OPTION EXERCISES AND YEAR-END VALUES TABLE
With respect to the Named Officers, the following table sets forth the number of
options exercised and the value realized upon exercise and the value of
outstanding options at December 31, 2001, using $6.45, the closing price of the
Common Shares on the New York Stock Exchange on December 31, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL AT FISCAL YEAR-END
ACQUIRED ON VALUE YEAR-END EXERCISABLE/ EXERCISABLE/
NAMED OFFICER EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------
Richard L. Lister 200,000 / 100,000 $22,500 / $124,000
- --------------------------------------------------------------------------------------------------------------------
Allen J. Palmiere 55,000 / 50,000 $0 / $24,800
- --------------------------------------------------------------------------------------------------------------------
Peter J. Goodwin 47,500 / 42,500 $0 / $37,200
- --------------------------------------------------------------------------------------------------------------------
Terrance J. Hogan 40,000 / 37,000 $0 / $18,600
- --------------------------------------------------------------------------------------------------------------------
ZEMEX CORPORATION 13
OPTION GRANTS TO NAMED OFFICERS
In the year ended December 31, 2001, the following options were granted to the
Named Officers of the Corporation pursuant to the Corporation's 1999 Stock
Option Plan.
- --------------------------------------------------------------------------------------------------------------------
PERCENT POTENTIAL REALIZABLE
NUMBER OF OF TOTAL VALUE AT ASSUMED ANNUAL
COMMON SHARES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION
OPTIONS EMPLOYEES IN EXPIRATION TERM*
NAME GRANTED FISCAL YEAR EXERCISE PRICE DATE 5% 10%
- --------------------------------------------------------------------------------------------------------------------
Richard L. Lister 100,000 36.3% $5.21 Feb. 14, 2007 $177,190 $401,983
- --------------------------------------------------------------------------------------------------------------------
Allen J. Palmiere 20,000 7.3% $5.21 Feb. 14, 2007 $35,438 $80,397
- --------------------------------------------------------------------------------------------------------------------
Peter J. Goodwin 30,000 10.9% $5.21 Feb. 14, 2007 $53,157 $120,595
- --------------------------------------------------------------------------------------------------------------------
Terrance J. Hogan 37,000 13.5% 15,000 - $5.21 Feb. 14, 2007 $26,579 $60,298
22,000 - $7.25 May 24, 2007 $54,245 $123,064
- --------------------------------------------------------------------------------------------------------------------
*Potential realizable values are net of exercise price and are before taxes and
are based on the assumption that the Corporation's Common Shares appreciate at
the annual rates shown, compounded annually, from the date of grant until the
expiration of the option term. These numbers are calculated based on the
requirements of the Securities and Exchange Commission and do not reflect the
Corporation's estimates of future stock price growth.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
The following chart summarizes any indebtedness to the Corporation in excess of
$60,000 as at December 31, 2001 of the Corporation's directors and Named
Officers entered into in connection with a purchase of Common Shares of the
Corporation, excluding routine indebtedness.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
UNDER SECURITIES PURCHASE PROGRAMS
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL
ASSISTED NUMBER OF COMMON
LARGEST AMOUNT AMOUNT SECURITIES SHARES HELD AS
NAME AND PRINCIPAL INVOLVEMENT OF OUTSTANDING OUTSTANDING AS AT PURCHASED SECURITY FOR
POSITION THE CORPORATION DURING 2001 DECEMBER 31, 2001 DURING 2001 INDEBTEDNESS
- --------------------------------------------------------------------------------------------------------------------
Richard L. Lister Lender $1,259,300 $1,259,300 176,000*
President & CEO
- --------------------------------------------------------------------------------------------------------------------
Richard L. Lister Guarantor $ 600,000 $ 600,000 85,700
President & CEO
- --------------------------------------------------------------------------------------------------------------------
*Jointly secures this debt and the $500,000 debt described in the next table.
The following chart summarizes any indebtedness to the Corporation as at
December 31, 2001 of the Corporation's directors and Named Officers not entered
into in connection with a purchase of Common Shares of the Corporation,
excluding routine indebtedness.
ZEMEX CORPORATION 14
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
UNDER OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS
- --------------------------------------------------------------------------------------------------------------------
NAME AND INVOLVEMENT OF THE LARGEST AMOUNT OUTSTANDING AMOUNT OUTSTANDING AS AT
PRINCIPAL POSITION CORPORATION DURING THE YEAR DECEMBER 31, 2001
- --------------------------------------------------------------------------------------------------------------------
Richard L. Lister Lender $500,000* $500,000
President & CEO
- --------------------------------------------------------------------------------------------------------------------
Paul A. Carroll Lender $118,489** $111,000
Director
- --------------------------------------------------------------------------------------------------------------------
* This loan bears interest at a rate equal to the average cost of borrowing
under the Corporation's credit facilities plus 1/4% and is jointly secured
by a pledge of 176,000 Common Shares as described in the table above.
** This loan bears interest at a rate equal to the average cost of borrowing
under the Corporation's credit facilities, is supported by a promissory note
and secured by a pledge of 9,500 Common Shares. All directors' fees paid in
cash are applied to reduce the loan.
PENSION PLAN
Pursuant to the Corporation's pension plan, employees are entitled to pension
benefits after five years of service with the Corporation. The amount of such
benefits depends upon salary and length of service as shown in the table below.
The service factor is 1.5% per year. As of January 1, 2002, the number of
credited years of service and the compensation covered by the pension plan for
the Named Officers are: Richard L. Lister, 16.9 and $161,160; and Peter J.
Goodwin, 8.9 and $200,000.
- --------------------------------------------------------------------------------------------------------------------
AVERAGE FINAL
COMPENSATION CREDITED SERVICE AS OF NORMAL RETIREMENT DATE ("NRD")
AS OF NRD ---------------------------------------------------------------------------------------------
15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------------
$ 50,000 $7,700 $10,267 $12,833 $15,400 $17,967
- --------------------------------------------------------------------------------------------------------------------
$ 75,000 $13,325 $17,767 $22,208 $26,650 $31,092
- --------------------------------------------------------------------------------------------------------------------
$100,000 $18,950 $25,267 $31,583 $37,900 $44,217
- --------------------------------------------------------------------------------------------------------------------
$125,000 $24,575 $32,767 $40,958 $49,150 $57,342
- --------------------------------------------------------------------------------------------------------------------
$150,000 $30,200 $40,267 $50,333 $60,400 $70,467
- --------------------------------------------------------------------------------------------------------------------
$175,000 $35,825 $47,767 $59,708 $71,650 $83,592
- --------------------------------------------------------------------------------------------------------------------
$200,000 $41,450 $55,267 $69,083 $82,900 $96,717
- --------------------------------------------------------------------------------------------------------------------
$225,000 $41,450 $55,267 $69,083 $82,900 $96,717
- --------------------------------------------------------------------------------------------------------------------
Note: All benefits shown were estimated using the 2002 Social Security Law and
assume the employee terminates employment during 2002 on his NRD (age 65). The
benefits shown are payable at NRD as a Five Year Certain and Life Annuity, the
normal form for an unmarried participant. All amounts are annual.
CORPORATE GOVERNANCE
The Corporation has established a series of guidelines for effective corporate
governance (the "Guidelines"). These guidelines deal with matters such as the
constitution and independence of corporate boards, their functions, the
effectiveness and education of board members and other items dealing with sound
corporate governance. As a matter of transparency, and in accordance with the
disclosure rules of the TSE, the Corporation's approach to corporate governance
is described below.
ZEMEX CORPORATION 15
BOARD MEETINGS AND COMMITTEES
The Board met eight times during 2001. All directors attended 75% of the
meetings of the Board and its committees held during the period in 2001 except
Mr. Cohen who attended 62% of the meetings.
Committee Structure
Currently, there are four committees of the Board of Directors, namely the Audit
Committee, the Corporate Governance Committee, the Executive Committee and the
Executive Compensation / Pension Committee. The following sets forth the mandate
of each Committee.
Audit Committee
The Audit Committee has oversight responsibility for the Corporation's financial
reporting procedures, internal controls and the performance of the financial
management and independent auditors of the Corporation. The Audit Committee also
reviews the annual audited financial statements and recommends their acceptance
to the Board. The Audit Committee reviews the quarterly financial statements and
discusses with the auditors , the results of their quarterly review. In
fulfilling its responsibility, the Audit Committee recommended to the Board,
subject to shareholder approval, the selection of Deloitte & Touche LLP as the
Corporation's independent auditors. During 2001, the Audit Committee met with
the Corporation's management and with representatives of Deloitte & Touche LLP
without the Corporation's management being present. The Audit Committee met four
times during 2001. During 2001, the members of the Audit Committee were John M.
Donovan (Chairman), Garth A.C. MacRae and William J. vanden Heuvel. All of the
members of the Audit Committee are independent from management and the
Corporation as defined in the NYSE's listing standards Section 303.01.
Executive Committee
The Executive Committee has been mandated to act on behalf of the board in
respect of the authorization and approval of major capital expenditures, all of
which are subsequently ratified by the full board. The Executive Committee is
comprised of Peter Lawson-Johnston, John M. Donovan, Garth A.C. MacRae and
Richard L. Lister (Chairman). The Executive committee did not meet during 2001.
Executive Compensation / Pension Committee
This Committee sets policies and guidelines with respect to compensation and
pensions and is responsible for administering the Corporation's share incentive
plans. During 2001, the Executive Compensation / Pension Committee was comprised
of Paul A. Carroll (Chairman), John M. Donovan and Peter Lawson-Johnston. The
Executive Compensation / Pension Committee met three times during 2001. In March
2002, the Executive Compensation / Pension Committee was reconstituted and is
currently comprised of R. Peter Gillin (Chairman), John M. Donovan and Garth
A.C. MacRae.
Corporate Governance Committee
As described above, the Corporate Governance Committee is responsible for
developing and monitoring the Guidelines described herein and to make
recommendations to the full board of directors on an ongoing basis with respect
to further development of a Corporate Governance system. Although the
Corporation has a Corporate Governance Committee, issues of corporate governance
continue to be discussed and decided at the Board level. The Board continues to
have responsibility for, among other things, nominating new directors, reviewing
the adequacy and form of compensation of directors, providing orientation and
education programs for new recruits to the Board, and approving requests of
directors to engage outside advisors at the expense of the Corporation. The
Corporate Governance Committee also considers and makes recommendations to the
Board on these matters. The Corporate Governance Committee is comprised of R.
Peter Gillin (Chairman), Paul A. Carroll and William J. vanden Heuvel. The
Corporate Governance Committee met twice during 2001.
In developing the Guidelines, the Corporate Governance Committee and the Board
each have considered the guidelines for corporate governance adopted by the TSE
and below is a table setting out the Guidelines and commentary concerning the
extent to which the Guidelines conform or comply with those of the TSE.
ZEMEX CORPORATION 16
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DOES THE
TSE CORPORATE CORPORATION CORPORATION
GOVERNANCE GUIDELINES COMPLY? PRACTICE
---------------------------------------------------------------------------------------------------------------------
1. Board should explicitly assume
responsibility for stewardship of
the Corporation, and specifically
for:
(a) Adoption of a strategic planning Yes The Board annually participates in strategic planning as
process; the acceptor/adoptor of the strategic plans proposed by
senior management. The strategic planning process is the
responsibility of senior management. The Board will continue
to review the Corporation's strategic plans on an annual
basis.
(b) Identification of principal risks Yes The Board, on an ongoing basis, considers the principal
of the Corporation's business risks of the Corporation's business and receives reports
and ensure the implementation of of management's assessment and management of those risks.
appropriate risk-management The Board evaluates, and considers, actions to mitigate
systems; these risks.
(c) Succession planning and Yes It is the mandate of the Governance Committee to review
monitoring senior management; organizational design, succession planning and senior
management's performance and make recommendations to the
full Board with respect thereto.
(d) Communications policy; and Yes The Board ensures effective communication between the
Corporation, its stakeholders and the public. Only the
President and the Chief Executive Officer or his delegate
is authorized to speak on behalf of the Corporation.
(e) Integrity of internal control and Yes The Board directly, and through its Audit Committee,
management systems. assesses the integrity of, and confirms compliance with,
the Corporation's internal control, financial policies and
management information systems.
2. Majority of directors should be Yes Richard L. Lister (President and Chief Executive Officer)
"unrelated". is the only Board member who is related. Mr. MacRae is
Vice Chairman of Dundee Bancorp Inc., of which The Dundee Bank
is a subsidiary. Mr. Carroll is also a Director of Dundee
Bancorp Inc. Mr. Goodman, a nominee for election as a
director, is Executive Vice President of Dundee Bancorp Inc.
ZEMEX CORPORATION 17
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DOES THE
TSE CORPORATE CORPORATION CORPORATION
GOVERNANCE GUIDELINES COMPLY? PRACTICE
---------------------------------------------------------------------------------------------------------------------
3. Disclose for each director Yes Richard L. Lister (President and Chief Executive Officer)
whether he or she is related, and is the only Board member who is related.
how that conclusion was reached.
None of the other Directors or their associates are employees
or officers of the Corporation, nor do any of them have material
contracts with the Corporation, or receive remuneration in excess
of stated director's fees.
4. Appoint a committee composed Yes The Governance Committee has been given the mandate to,
exclusively of non-management among other things, recommend candidates for the Board and
directors, the majority of whom are annually review credentials of nominees. All the members
unrelated, with the responsibility of the Governance Committee are unrelated directors.
of proposing new board nominees and
assessing directors.
5. Implement a process for assessing Yes The Governance Committee has been given the mandate to
the effectiveness of the board, its assess the relationship between the members of the board
committees and individual directors. and management.
6. Provide orientation and education Yes The Governance Committee views orientation and education
programs for new directors. as an ongoing matter. As such, the Guidelines provide for
ongoing informal discussions between management and members
of the board as well as more formal presentations by
management throughout the year in addition to regularly
scheduled site visits to the Corporation's operations.
7. Examine the size of the Board Yes A Board must have enough directors to carry out its duties
with a view to effectiveness and to efficiently, while presenting a diversity of views and
consider reducing the size of the experience. The Governance Committee considers the size of
Board. the board given the complexity and size of the Corporation,
with a view to the impact of size upon the Board's effectiveness.
The Governance Committee has recommended the increase in the size
of the Board to nine and is currently undertaking a search
to identify an additional independent director to join the
Board.
8. Review compensation of directors Yes The Governance Committee periodically reviews the adequacy
in light of risks and and form of compensation of directors and makes
responsibilities. recommendations to the full board in respect thereof.
9. Committees should generally be Yes Each of the Corporation's four committees, other than the
composed of non-management directors Executive Committee, are composed of non-management
and a majority of committee members directors. Richard L. Lister, the President and Chief
should be unrelated. Executive Officer of the Corporation, is the only
management director on the Executive Committee.
ZEMEX CORPORATION 18
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DOES THE
TSE CORPORATE CORPORATION CORPORATION
GOVERNANCE GUIDELINES COMPLY? PRACTICE
---------------------------------------------------------------------------------------------------------------------
10. Assume responsibility or appoint Yes The Governance Committee has been delegated this
a separate committee responsible for responsibility by the full board of directors. The
the approach to corporate governance Governance Committee considers matters and then reports
issues. and makes recommendation to the full board of directors.
11. Define limits to management's Yes The Board has expressly adopted the obligations mandated
responsibilities by developing by the Canada Business Corporations Act, being the duty to
mandates for: manage the business and affairs of the Corporation and to act with
a view to the best interests of the Corporation.
(a) The Board; and
(b) The Chief Executive Officer. Yes The Board has authorized the Chief Executive Officer to
supervise the business and affairs of the Corporation and
to develop a strategic plan for the approval by the full
board of directors.
12. Establish procedures to enable Yes The Board has functioned, and is of the view that it can
the Board to function independently continue to function, independently of management, as
of management. required. The Board meets independently of management
where required but not less than once a year and time is
reserved during each scheduled Board meeting for an
Unrelated Directors only discussion.
13. (a) Establish an Audit Yes The mandate of the Audit Committee is as described above
Committee with a specifically and as set out in the Audit Committee Charter, a copy of
defined mandate. which was attached to the Proxy Statement in respect of
the May 24, 2001 Annual and Special Meeting.
(b) All members of the Audit Yes The Audit Committee is comprised exclusively of
Committee should be non-management directors.
non-management directors.
14. Implement a system to enable Yes Individual directors, with the knowledge of the Governance
individual directors to engage Committee, can engage outside advisors. Pursuant to its
outside advisors, at the charter, the Audit Committee may, with the prior approval
Corporation's expense. of the Board, investigate any matter or activity involving
financial accounting and financial reporting, as well as
internal controls of the Corporation and in that regard, the Audit
Committee has the authority to approve the retention of
external professionals to render advice and counsel in such
matters.
ZEMEX CORPORATION 19
REPORT OF THE
AUDIT COMMITTEE
Management has the primary responsibility for the integrity of the Corporation's
financial information. Deloitte & Touche LLP, the Corporation's independent
auditors, is responsible for conducting independent audits of the Corporation's
financial statements in accordance with generally accepted auditing standards
and expressing an opinion on the financial statements based upon those audits.
The Audit Committee is responsible for overseeing the conduct of these
activities by management and Deloitte & Touche LLP.
As part of its responsibility, the Audit Committee has reviewed and discussed
the audited financial statements with management and Deloitte & Touche LLP. The
Audit Committee also has discussed with Deloitte & Touche LLP the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee has received the
written disclosures and the letter from Deloitte & Touche LLP required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and has discussed with Deloitte & Touche LLP that firm's
independence.
Based upon these reviews and discussion, the Audit Committee recommended to the
Board that the audited financial statements be included in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2001 for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE
JOHN M. DONOVAN
GARTH A.C. MACRAE
WILLIAM J. VANDEN HEUVEL
MATTERS RELATING TO
THE INDEPENDENT AUDITORS
Deloitte & Touche LLP acted as the Corporation's auditors for the fiscal year
ended December 31, 2001. Representatives of Deloitte & Touche LLP are expected
to be present at the Annual Meeting and will have an opportunity to make a
statement if they wish and to respond to appropriate shareholder questions.
Audit Fees
The aggregate fees billed for professional services rendered for the audit of
the Corporation's consolidated financial statements for the fiscal year ended
December 31, 2001 and for the reviews of the Corporation's consolidated
financial statements included in its Quarterly Reports on Form 10-Q for that
fiscal year was $301,000.
Financial information Systems Design and Implementation Fees
During 2001, Deloitte & Touche LLP did not perform any services for the
Corporation relating to the design or implementation of the Corporation's
financial information systems.
All Other Fees
During 2001, Deloitte & Touche LLP billed $415,000 in aggregate fees primarily
for tax services rendered by Deloitte & Touche LLP, in addition to the audit
services described above. The Audit Committee of the Board has considered
whether providing these non-audit services is compatible with maintaining
Deloitte & Touche LLP's independence.
ZEMEX CORPORATION 20
BOARD PERFORMANCE
Although the Board did not formally assess the effectiveness of the Board of
Directors in 2001, the Board continually assesses the performance of management
and the Corporation. In that regard, the Board believes that management and the
Corporation performed well in fiscal 2001.
SHAREHOLDER PROPOSALS
All shareholder or investment community inquiries are directed to the Assistant
Secretary. Shareholder inquiries are responded to promptly by the appropriate
individual at the Corporation. In order to be considered for inclusion in the
Corporation's proxy statement for the 2003 Annual Meeting of Shareholders,
proposals from shareholders must be received by the Corporation on or before
January 29, 2003. Such proposals should be addressed to the Assistant Secretary,
Zemex Corporation, Canada Trust Tower, BCE Place, 161 Bay Street, Suite 3750,
Toronto, Ontario, Canada M5J 2S1.
EXPECTATIONS OF MANAGEMENT
The Board believes it is critical that management of the Corporation provides
complete and accurate information with respect to the business and affairs of
the Corporation and an analysis of the industries in which the Corporation
operates. To date the Board believes management has provided detailed quarterly
information, which has allowed the Board to be effective in supervising the
business and affairs of the Corporation.
BOARD APPROVAL
The Board has no formal policy setting out what specific matters must be brought
by management to the Board for approval; however, there is a clear understanding
between management and the Board through historical Board practice and accepted
legal practice that all transactions or matters of a material nature must be
presented by management for approval by the Board. It has been the experience to
date of the Board that they have been kept well informed as to the business and
affairs of the Corporation and that the matters which have been brought forward
to the Board for approval have been appropriate.
PERFORMANCE GRAPH
The performance graph compares the performance of the Corporation's Common
Shares to the Dow Jones Industrial Average Index and the Dow Jones Basic
Materials Average Index over the past five-year period. The graph assumes that
the value of the investment in the Corporation's Common Shares and each index
was $100 at December 31, 1996 and that all dividends were reinvested. As a
diversified producer of industrial minerals and specialty products, many of the
companies with which the Corporation competes are private and peer group
comparative data is not available.
ZEMEX CORPORATION 21
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
YEARS ENDING DECEMBER 31
[PERFORMANCE GRAPH]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Zemex Total Cumulative Return 100 128 94 135 81 96
Dow Jones Industrial Average 100 125 148 188 179 169
Dow Jones Basic Materials Average 100 112 102 130 110 111
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
The Corporation provides management services to a company owned by its largest
shareholder, Dundee Bancorp Inc. ("Dundee"). The Corporation charged $69,000,
$67,000 and $67,000 in 2001, 2000 and 1999, respectively. The fee has been
established based upon fees charged for comparable services provided by a
consultant operating on an arms length basis.
During the year the Corporation paid $74,000 (2000, $87,000 and 1999, $88,000)
to a subsidiary of Dundee for services provided as a financial advisor for the
management of the Corporation's pension plan.
OTHER MATTERS
Management is not aware of any other matters to be considered at the Meeting
other than as set forth in this proxy statement. However, if any other matters
properly come before the Meeting, it is the intention of the persons named in
the accompanying form of proxy in their discretion to vote the proxies in
accordance with their best judgment on such matters.
ZEMEX CORPORATION 22
DIRECTORS APPROVAL
The Board has approved the contents and the sending of this proxy statement to
the Corporation's shareholders.
By Order of the Board of Directors,
/s/ Lorna D. MacGillivray
Lorna D. MacGillivray
April 29, 2002 Assistant Secretary
ZEMEX CORPORATION 23
ZEMEX CORPORATION 24
PROXY
ZEMEX CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
The undersigned, as record holder(s) of the shares listed below, hereby revokes
any previous proxies and appoints Peter Lawson-Johnston, Richard L. Lister and
Allen J. Palmiere and (or each of them, or their assignees), or instead of any
of them ____________________________________ proxies for the undersigned, with
full power of substitution, to represent the undersigned, to act for the
undersigned in the same manner and with the same effect as if the undersigned
were personally present and to vote all of the Common Shares which the
undersigned is entitled to vote at the ANNUAL MEETING OF SHAREHOLDERS OF ZEMEX
CORPORATION (THE "CORPORATION") TO BE HELD ON FRIDAY, JUNE 14, 2002 AT 10:00
A.M. AND ANY ADJOURNMENT THEREOF, as follows:
1. Election of directors nominees: Paul A. Carroll, Morton A. Cohen, John M.
Donovan, R. Peter Gillin, Jonathan Goodman, Peter Lawson-Johnston, Richard
L. Lister, Garth A.C. MacRae and William J. vanden Heuvel:
[ ] FOR all the directors [ ] WITHHOLD AUTHORITY to vote for all
the directors
[ ] A security holder may withhold authority to vote for any nominee by
lining through or otherwise striking out the name of any nominee.
2. Proposal to ratify the appointment of Deloitte & Touche LLP as independent
public auditors for the Corporation for the fiscal year ending December
31, 2002:
[ ] FOR the auditors [ ] WITHHOLD AUTHORITY to vote for
auditors
3. To vote or otherwise represent the shares on any other business which may
properly come before the annual meeting of shareholders or any
adjournments thereof, according to their decision and in their discretion:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
AND WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR ALL THE PROPOSALS LISTED ABOVE IN THE MANNERS DESCRIBED IN THE
PROXY STATEMENT.
DATE:
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SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK CERTIFICATES. A
corporation is requested to sign its name by its president: administrators,
trustees, etc., are requested to so indicated when signing. If stock is
registered in two names, it is preferred that both sign. If this form of proxy
is not dated in the space above, it will be deemed to bear the date on which it
is mailed by management. PLEASE RETURN YOUR PROXY IN THE ENVELOPE PROVIDED.