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
[ ] 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 Rule 14a-12
U.S. CONCRETE, INC.
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(Name of Registrant as specified in its charter)
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(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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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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[LOGO - US CONCRETE]
April 4, 2003
Dear Stockholder:
On behalf of the Board of Directors, we invite you to attend the 2003 Annual
Meeting of Stockholders of U.S. Concrete, Inc. We will hold the meeting at 9:00
a.m., Central Time, on Tuesday, April 29, 2003, at the Hilton Houston Westchase
& Towers, 9999 Westheimer Road, Houston, Texas.
On the following pages you will find the Notice of Annual Meeting of
Stockholders and Proxy Statement giving information concerning the matters to be
acted on at the meeting. Our Annual Report to Stockholders describing U.S.
Concrete's operations during the year ended December 31, 2002 is enclosed.
We hope you will be able to attend the meeting in person. Whether or not you
plan to attend, please take the time to vote by completing and returning your
proxy card in the enclosed envelope before the meeting. If you attend the
meeting, you may, if you wish, revoke your proxy and vote in person.
Thank you for your interest in U.S. Concrete.
Sincerely,
/s/ Vincent D. Foster /s/ Eugene P. Martineau
------------------------------------- -------------------------------------
Vincent D. Foster Eugene P. Martineau
Chairman of the Board President and Chief Executive Officer
U.S. CONCRETE, INC.
2925 Briarpark, Suite 500, Houston, Texas 77042
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 29, 2003
---------------------
To the Stockholders of U.S. Concrete, Inc.:
The Annual Meeting of Stockholders of U.S. Concrete, Inc. will be held on
Tuesday, April 29, 2003, at 9:00 a.m. local time at the Hilton Houston Westchase
and Towers, 9999 Westheimer Road, Houston, Texas. At the meeting, we will ask
you to consider and take action on the following:
(1) election of two Class I directors as members of the Board of Directors
of U.S. Concrete to serve until the 2006 Annual Meeting of
Stockholders or until their successors have been duly elected and
qualified (Proposal No. 1);
(2) ratification of the appointment of PricewaterhouseCoopers LLP as the
independent auditors of U.S. Concrete for the year ending December 31,
2003 (Proposal No. 2); and
(3) transaction of any other business that may properly come before the
annual meeting or any adjournment or postponement of the meeting.
We are sending this notice and the attached proxy statement to our
stockholders on or about April 4, 2003. Our Board of Directors has set the close
of business on March 18, 2003 as the record date for determining stockholders
entitled to receive notice and vote at the annual meeting. A list of all
stockholders entitled to vote is available for inspection during normal business
hours at our principal offices at 2925 Briarpark, Suite 500, Houston, Texas
77042. This list also will be available at the meeting.
Your vote is very important. Whether or not you plan to attend the annual
meeting, we encourage you to read the proxy statement. Further, to be sure your
vote counts and to ensure a quorum, please vote, sign, date and return the
enclosed proxy card whether or not you plan to attend the meeting.
By Order of the Board of Directors
/s/ Donald C. Wayne
----------------------------------
Donald C. Wayne
Vice President, General Counsel
and Corporate Secretary
Houston, Texas
April 4, 2003
U.S. CONCRETE, INC.
PROXY STATEMENT
FOR 2003 ANNUAL MEETING OF STOCKHOLDERS
---------------
QUESTIONS AND ANSWERS ABOUT
THE MEETING AND VOTING
Q: What am I being asked to vote on?
A: We are asking you to vote on the following:
o the election of two members to our Board of Directors to serve until
2006;
o the ratification of the appointment of PricewaterhouseCoopers LLP as
our independent auditors for 2003; and
o any other business that may properly come before the meeting or any
adjournment or postponement of the meeting.
Q: Who may vote?
A: All stockholders of record as of the close of business on March 18, 2003,
are entitled to vote. Holders of our common stock are entitled to one vote
per share. As of March 18, 2003, 27,945,012 shares of our common stock were
outstanding and entitled to vote.
Q: Who may attend the meeting?
A: All stockholders as of the record date, or their duly appointed proxies,
may attend the meeting.
Q: How do I vote?
A: You may vote in two ways:
o you may come to the annual meeting and cast your vote in person; or
o you may vote by signing and returning the enclosed proxy card. If you
do, the persons named on the card will vote your shares in the manner
you indicate.
Q: Who is soliciting my proxy?
A: U.S. Concrete is soliciting your proxy on behalf of its Board of Directors.
Q: What happens if I do not indicate how I wish to vote on one or more of the
proposals?
A: If you return your signed proxy card, but do not indicate how you wish to
vote, the persons named as proxies will vote your shares FOR election of
all the nominees for director (Proposal No. 1) and FOR ratification of the
appointment of PricewaterhouseCoopers LLP (Proposal No. 2). We are unaware
of any other matters that may come before the annual meeting. If they do,
the proxy holders will vote the proxies according to their best judgment.
Q: What if I vote by proxy and then change my mind?
A: You can revoke your proxy at any time before the annual meeting by:
o writing to U.S. Concrete's Secretary at the mailing address in the
answer to the last question on the next page;
o delivering a properly executed proxy dated after the date of the proxy
you want to revoke; or
o attending the annual meeting and casting your vote in person.
Q: When did U.S. Concrete first distribute this proxy statement and the
accompanying form of proxy to stockholders?
A: We first distributed this proxy statement and the accompanying form of
proxy to our stockholders on or about April 4, 2003.
Q: What constitutes a quorum?
A: The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock entitled to vote at the meeting
constitutes a quorum. We need a quorum of stockholders to hold a valid
annual
1
meeting. If you have properly signed and returned your proxy card, you will
be considered part of the quorum. We will count abstentions and broker
non-votes as present for the purpose of establishing a quorum. A broker
non-vote occurs when a broker votes on some matters on the proxy card, but
not on others because the broker does not have the authority to do so. If a
quorum is not present, the chairman or the holders of a majority of the
shares of common stock present in person or by proxy at the annual meeting
may adjourn the meeting, without notice other than an announcement at the
meeting, until the required quorum is present.
Q: What vote is required for the passage of each of the proposals up for
consideration at the annual meeting?
A: Directors are elected by a plurality of the shares of common stock present
in person or by proxy and voting at the meeting in the election of
directors. Ratification of PricewaterhouseCoopers LLP as our independent
auditors for 2003 requires the affirmative vote of a majority of the votes
cast on the proposal. Abstentions and broker non-votes will have no effect
on the vote for directors or the ratification of the appointment of our
independent auditors.
Q: Who will count the votes?
A: Representatives of American Stock Transfer & Trust Company will tabulate
the votes.
Q: What shares are included on the proxy card?
A: The shares listed on your card represent all the shares of common stock
held in your name, as distinguished from shares held by a broker in
"street" name. You will receive a separate card from your broker if you
hold shares in "street" name.
Q: What does it mean if I get more than one proxy card?
A: It indicates that your shares are held in more than one account, such as
two brokerage accounts, and are registered in different names. You should
vote each of the proxy cards to ensure that all your shares are voted.
Q: What is U.S. Concrete's mailing address?
A: Our mailing address is U.S. Concrete, Inc., 2925 Briarpark, Suite 500,
Houston, Texas 77042.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership of our common stock
as of March 25, 2003 by (1) each person we know who beneficially owns more than
5% of the outstanding shares of our common stock, (2) each of our directors, (3)
our chief executive officer and each of our other executive officers the summary
compensation table in this proxy statement names and (4) all our directors and
executive officers as a group. Unless otherwise indicated in the footnotes
below, the address of all these persons is c/o U.S. Concrete, Inc., 2925
Briarpark, Suite 500, Houston, Texas 77042.
Shares of Common Stock
Beneficially Owned
------------------------
Name Number Percent
---- ----------- ----------
Robert S. Walker(1) 2,249,338 8.02%
Strong Capital Management, Inc.(2) 1,996,052 7.12%
Wellington Management Company, LLP(3) 1,805,200 6.44%
William T. Albanese(4) 1,396,474 4.97%
Thomas J. Albanese (5) 1,396,204 4.97%
Eugene P. Martineau(6) 727,733 2.57%
Vincent D. Foster(7) 585,493 2.08%
Michael W. Harlan(8) 455,073 1.61%
Michael D. Mitschele(9) 441,029 1.57%
Murray S. Simpson(10) 90,353 *
John R. Colson(11) 52,308 *
T. William Porter(12) 24,206 *
Mary P. Ricciardello 0 0
Directors and executive officers as a group 7,532,756 26.01%
(13 persons)(13)
----------------
* Less than 1%.
(1) Includes 10,000 shares of common stock which Mr. Walker has the right to
acquire within 60 days on the exercise of stock options and 2,239,338
shares deemed beneficially owned by Mr. Walker as co-trustee of the Walker
Family Trust and as general partner of Karob, L.P.
(2) Based solely on an amendment to a Schedule 13G filed with the SEC on March
14, 2003 reporting ownership as of December 31, 2002. This stockholder's
address is 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051. The
Schedule 13G/A reports shared voting power for 1,987,942 shares of common
stock and shared dispositive power for 1,996,052 shares of common stock.
(3) Based solely on an amendment to a Schedule 13G filed with the SEC on
February 12, 2003 reporting ownership as of December 31, 2002. This
stockholder's address is 75 State Street, Boston, Massachusetts 02109. The
Schedule 13G/A reports shared voting power for 1,058,000 shares of common
stock and shared dispositive power for 1,805,200 shares of common stock.
(4) Includes 37,500 shares of common stock which Mr. Albanese has the right to
acquire within 60 days on the exercise of stock options and 1,358,974
shares deemed beneficially owned by Mr. Albanese as co-trustee of the
William T. Albanese 1981 Trust and as the manager of WTA Investments, LCC.
(5) Includes 37,500 shares of common stock which Mr. Albanese has the right to
acquire within 60 days on the exercise of stock options and 1,358,704
shares deemed beneficially owned by Mr. Albanese as co-trustee of the
Thomas J. Albanese Trust.
(6) Includes 311,250 shares of common stock which Mr. Martineau has the right
to acquire within 60 days on the exercise of stock options and 55,432
restricted shares.
(7) Includes 100,000 shares of common stock which Mr. Foster has the right to
acquire within 60 days on the exercise of stock options and 300 shares
deemed beneficially owned by Mr. Foster as custodian under the Texas
Uniform Gifts to Minors Act.
3
(8) Includes 233,750 shares of common stock which Mr. Harlan has the right to
acquire within 60 days on the exercise of stock options, 50,000 shares Mr.
Harlan owns as trustee of the Michael and Bonnie Harlan 1996 Trust and
42,129 restricted shares.
(9) Includes 12,500 shares of common stock which Mr. Mitschele has the right to
acquire within 60 days on the exercise of stock options.
(10) Includes 30,591 shares owned by the Cora S. Simpson 1990 Trust of which Mr.
Simpson's wife serves as trustee, 34,762 shares deemed beneficially owned
by Mr. Simpson as trustee of the Murray S. Simpson 1990 Trust and 25,000
shares of common stock which Mr. Simpson has the right to acquire within 60
days on the exercise of stock options. Mr. Simpson disclaims beneficial
ownership of the 30,591 shares the Cora S. Simpson 1990 Trust owns.
(11) Includes 25,000 shares of common stock which Mr. Colson has the right to
acquire within 60 days on the exercise of stock options.
(12) Includes 12,206 shares of common stock which Mr. Porter has the right to
acquire within 60 days on the exercise of stock options.
(13) Includes 912,956 shares of common stock which the directors and executive
officers as a group have the right to acquire within 60 days on the
exercise of stock options.
Except as otherwise indicated, all persons listed in the table above have
sole voting and investment power with respect to their shares. The number of
shares and percentage of ownership for each person listed and for the directors
and executive officers as a group assume that shares of common stock those
persons may acquire within 60 days are outstanding, unless otherwise indicated.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board currently consists of ten members. Our certificate of
incorporation divides our Board into three classes (Class I, Class II and Class
III), having staggered terms of three years each. The present term of office of
the directors in Class I will expire at this annual meeting.
The Board has nominated Eugene P. Martineau and T. William Porter, two of
the three Class I directors who currently serve on the Board, as nominees for
re-election at the annual meeting. The third Class I director who currently
serves on the Board, Michael W. Harlan, who also serves as our Senior Vice
President and Chief Financial Officer, has elected to resign from the Board
immediately prior to the annual meeting. In addition, Michael D. Mitschele, a
current Class II director who also serves as the President of our Atlantic
Region, and William T. Albanese, a current Class III director who also serves as
the President of our Bay Area Region, have each elected to resign from the Board
immediately prior to the annual meeting, so that after that time the Board will
consist of a majority of independent directors. At the time of the annual
meeting the number of positions on the Board will be reduced from ten to seven
and the number of Class I directors will be reduced to two, the number of Class
II directors will be reduced to three and the number of Class III directors will
be reduced to two. Each of Messrs. Harlan, Mitschele and Albanese will continue
to serve in their same capacities as executive officers after the annual
meeting. For information about these individuals and a description of their
business backgrounds, see "Executive Officers and Key Employees" below. The
respective terms of our current directors, other than Messrs. Harlan, Mitschele
and Albanese, and nominees for director expire on the dates set forth below.
Information regarding their ages and backgrounds also is set forth below.
If a quorum is present, the election of any director requires the favorable
vote of the holders of a plurality of the shares of common stock present and
voting, in person or by proxy, at the annual meeting. Any abstentions or broker
non-votes will not affect the vote. If you properly sign and return the enclosed
proxy, and unless you withhold authority to vote for one or more of the
nominees, the persons named as proxies will vote FOR the election of the
nominees listed below. We do not expect that any of the nominees will refuse or
be unable to act as a director of U.S. Concrete for the term specified. If,
however, any nominee becomes unable or unwilling to serve as a director prior to
the vote, the persons named as proxies intend to vote the proxy shares for the
election of any other person the Board of Directors may designate.
4
Nominees as Class I Directors
for election for terms expiring
at the 2006 Annual Meeting Age Position(s) Held
-------------------------- --- ----------------
Eugene P. Martineau 63 Director, Chief Executive
Officer and President
T. William Porter 61 Director
Class II Directors whose terms expire
at the 2004 Annual Meeting Age Position(s) Held
-------------------------- --- ----------------
John R. Colson 55 Director
Vincent D. Foster 46 Director and Chairman of the
Board
Mary P. Ricciardello 47 Director
Class III Directors whose terms expire
at the 2005 Annual Meeting Age Position(s) Held
-------------------------- --- ----------------
Murray S. Simpson 65 Director
Robert S. Walker 59 Director
Eugene P. Martineau has served as our Chief Executive Officer and President
since September 1998 and as one of our directors since March 1999. Mr. Martineau
has over 30 years of experience in the concrete industry. From 1992 until
joining us, he served as Executive Vice President for the Concrete Products
Group of Southdown, Inc., a publicly traded, integrated cement and ready-mixed
concrete company that Cemex S.A. de C.V. acquired in November 2000. From April
1990 through March 1992, Mr. Martineau served as Vice President and General
Manager of Southdown's Florida Mining and Materials. Prior to March 1992, Mr.
Martineau held various executive management positions with Allied Ready Mix,
Inc., Ready Mix Concrete Company, the Lehigh Portland Cement Company and Allied
Products Company. Mr. Martineau has served as a director of the National
Ready-Mixed Concrete Association, the industry's largest trade organization (the
"NRMCA"), since January 2000 and also as a director and member of the Executive
Committee of the NRMCA from 1996 until May 1999. He served as chairman of the
NRMCA's Promotion Committee from 1997 through March 1999. From 1994 through
1997, Mr. Martineau served as the National Director of RMC 2000, a program that
has been adopted by the NRMCA to promote ready-mixed concrete as a building and
paving material and improve the overall image of the ready-mixed concrete
industry.
T. William Porter has served as one of our directors since September 2001.
Mr. Porter is the Chairman of Porter & Hedges, L.L.P., a Houston, Texas law
firm, of which Mr. Porter has been a partner since its founding in 1981. Mr.
Porter is also a director of Gundle/SLT Environmental, Inc., a geosynthetic
lining products company.
John R. Colson has served as one of our directors since May 1999. He has
served as Chief Executive Officer of Quanta Services, Inc., an electrical and
telecommunications contracting company, since December 1997. From 1991 to
February 1998, he served as President of PAR Electrical Contractors, Inc., a
company that Quanta Services, Inc. acquired in February 1998. Mr. Colson is also
a director of Quanta Services, Inc.
Vincent D. Foster has served as one of our directors since August 1998 and
became nonexecutive Chairman of the Board of Directors in May 1999. Mr. Foster
is a Senior Managing Director of Main Street Mezzanine Fund, LLC, a licensed
small business investment corporation, and served as Senior Managing Director of
Main Street Equity Ventures II, L.P. (and its predecessor firm), a venture
capital firm, from 1997 through 2002. Mr. Foster is a director of Quanta
Services, Inc., and served as nonexecutive Chairman of the Board of Directors of
Quanta Services, Inc. from February 1998 through May 2002. From September 1988
through October 1997, Mr. Foster was a partner of Andersen Worldwide and Arthur
Andersen LLP, where he served as the director of the corporate finance practice
and the mergers
5
and acquisitions practice in the southwestern United States. Mr. Foster is also
a director of Carriage Services, Inc., a death-care company.
Mary P. Ricciardello has served as one of our directors since February
2003. Ms. Ricciardello served as Senior Vice President and Chief Accounting
Officer of Reliant Energy, Incorporated, a diversified energy company now known
as CenterPoint Energy, Inc., from 1999 through 2002, where she also served as
Vice President and Comptroller from 1996 through 1999, as Corporate Comptroller
from 1993 through 1996 and in various other positions from 1982 through 1993.
Ms. Ricciardello also served as Senior Vice President and Chief Accounting
Officer of Reliant Resources, Inc. from 2001 through 2002, a company to which
Reliant Energy transferred its unregulated energy business in 2001.
Murray S. Simpson has served as one of our directors since May 1999. From
1975 until 1991, Mr. Simpson served as President and Chief Executive Officer of
Super Concrete Corporation. Following that company's merger with British
construction materials producer Evered, plc, which is now known as Aggregate
Industries, plc, Mr. Simpson served in various roles, including Executive Vice
President, Corporate Development, for its United States operations and Director
and Counsel for its mid-Atlantic area subsidiary, Bardon, Inc. Mr. Simpson has
served on the board of directors of the NRMCA for 20 years and as chairman of
the board from 1997 to 1998. He has also served as a director of the National
Aggregates Association.
Robert S. Walker has served as one of our directors since May 1999 and
served as Executive Vice President - Operations of our Bay Area Region from May
1999 to December 2000. From 1965 until May 1999, Mr. Walker served as President
of Walker's Concrete, Inc., a company we acquired in May 1999. He is currently a
real estate developer.
Your Board recommends a vote "for" the election of each of the two persons
nominated for election as Class I directors.
6
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND COMMITTEES
Director Meetings
Our Board met four times and took action by unanimous written consent
on four occasions during 2002. Our Board has standing audit, compensation and
nominating committees. During 2002, each member of the Board then in office
attended at least 75% of the aggregate number of meetings of the Board and any
committee of the Board on which he served.
Audit Committee
The audit committee, which met five times during 2002, consists of Messrs.
Colson, Simpson and Foster. The audit committee is governed by a charter that it
has adopted. We attached a copy of that charter to the proxy statement for our
2001 Annual Meeting of Stockholders. You can obtain a copy of that charter by
making a request for a copy to our Corporate Secretary. U.S. Concrete's
securities are listed on the Nasdaq National Market and are governed by the
listing standards of the National Association of Securities Dealers (the
"NASD"). Each member of the audit committee is independent as defined by the
NASD's listing standards, except for Mr. Foster. Mr. Foster does not qualify as
an independent director because we paid a bonus to Mr. Foster in 2002 in excess
of the NASD's standard for determination of director independence, in connection
with certain capital raising and acquisition services he provided to us during
2001. For additional information about this payment, see "Certain Transactions"
below. Mr. Foster, who is neither an employee of U.S. Concrete nor an immediate
family member of any U.S. Concrete employee, has an extensive financial and
accounting background. For information about Mr. Foster and a description of his
business background, see "Election of Directors" above. Our Board determined
that appointing Mr. Foster to the audit committee was in the best interest of
U.S. Concrete because the Board believes his broad financial and accounting
experience enables him to make significant contributions to the audit committee.
The audit committee's role is one of financial oversight. Our management is
responsible for preparing our financial statements, and our independent auditors
are responsible for auditing those financial statements. The audit committee is
not providing any expert or special assurance as to our financial statements or
any professional certification as to the independent auditor's work. The
following functions are the key responsibilities of the audit committee in
carrying out its oversight:
o recommending the appointment of our independent auditors to the Board
of Directors;
o reviewing the scope of the independent auditors' examination and, at
the conclusion of that examination, reviewing the results of the
audit, including any comments or recommendations of the independent
auditors;
o reviewing our financial policies and accounting systems and controls
and our audited and interim unaudited financial statements;
o preparing a report for inclusion in our proxy statement regarding its
review of our audited financial statements, including a statement on
whether it recommended that the Board include those financial
statements in our annual report on Form 10-K for that year;
o approving and ratifying the duties and compensation of our independent
auditors, both for audit and non-audit services; and
o reviewing and assessing, on an annual basis, the adequacy of the audit
committee's charter and recommending revisions to the Board.
The audit committee meets separately with the independent auditors to provide an
open avenue of communication. The audit committee and the Board of Directors are
ultimately responsible for the selection, evaluation and replacement of the
independent auditors.
7
Compensation Committee
The compensation committee, which met three times and took action by
unanimous written consent on three occasions during 2002, consists of Messrs.
Foster, Porter and Colson. The compensation committee:
o administers our incentive compensation plans; and
o determines salaries for executive officers and incentive compensation
for senior employees and other key management personnel.
For additional information, see "Report of the Compensation Committee Regarding
Executive Compensation."
Nominating Committee
The nominating committee, which met once during 2002, consists of Messrs.
Simpson, Walker, Mitschele and Porter. The nominating committee:
o interviews and evaluates new candidates for director of U.S. Concrete;
o recommends to the full Board all nominees for election to the Board by
our stockholders;
o recommends directors to be elected by the Board to fill vacancies on
the Board;
o reviews, and makes recommendations to the Board with respect to,
compensation of the non-employee directors; and
o reviews, and makes recommendations to the Board regarding, corporate
governance matters.
The nominating committee will consider nominees stockholders recommend.
Stockholders may submit nominations to the nominating committee in care of
Corporate Secretary, U.S. Concrete, Inc., 2925 Briarpark, Suite 500, Houston,
Texas 77042.
As to each person a stockholder proposes to nominate for election as a
director, our bylaws provide that the nomination notice must (1) include the
name, age, business address and principal occupation or employment of that
person, the number of shares of common stock that person owns beneficially or of
record and any other information relating to that person that Section 14 of the
Securities Exchange Act of 1934 and the related SEC rules and regulations
require and (2) be accompanied by the written consent of the person that
stockholder proposes to nominate for election as a director to be named in the
proxy statement as a nominee and to serve as a director if elected. The
nomination notice must also include, as to that stockholder and that beneficial
owner, if any, of common stock on whose behalf that stockholder is making the
nomination or nominations:
o the name and address of that stockholder, as they appear on U.S.
Concrete's books and the name and address of that beneficial owner;
o the number of shares of common stock which that stockholder and that
beneficial owner each owns beneficially or of record;
o a description of all arrangements and understandings between that
stockholder or that beneficial owner and each proposed nominee of that
stockholder and any other person or persons (including their names)
pursuant to which that stockholder will make the nomination(s);
o a representation by that stockholder that he or she intends to appear
in person or by proxy at that meeting to nominate the person(s) named
in that nomination notice; and
o any other information relating to that stockholder and that beneficial
owner that Section 14 of the Securities Exchange Act of 1934 and the
related SEC rules and regulations require.
To be timely for consideration at our 2004 annual meeting, our corporate
secretary must receive a stockholder's nomination notice at our principal
executive offices, at the address set forth above, no earlier than November 1,
2003 and no later than the close of business on January 30, 2004.
Director Compensation
We pay to each of our nonemployee directors the following fees:
8
o an annual retainer of $10,000;
o $5,000 for each Board meeting attended in person and $2,500 for each
Board meeting attended telephonically;
o $5,000 for each audit committee meeting attended by the chairperson of
the audit committee, whether attended in person or telephonically and
whether or not the meeting is held on the same day as a Board meeting;
o $4,000 for each audit committee meeting attended by each other member
of the audit committee, whether attended in person or telephonically
and whether or not the meeting is held on the same day as a Board
meeting; and
o $1,000 for each other Board committee meeting attended in person and
$500 for each such other Board committee meeting attended
telephonically, unless the committee meeting is held on the same day
as a Board meeting, in which case the committee member receives no fee
for attending that committee meeting.
We also annually grant each nonemployee director an option to purchase 10,000
shares of common stock under our 1999 Incentive Plan. We do not pay any
additional compensation to our employees for serving as directors, but we
reimburse all directors for out-of-pocket expenses they incur in connection with
attending Board and Board committee meetings or otherwise in their capacity as
directors. For a discussion of additional compensation we have paid to Mr.
Foster, the Chairman of our Board, see "Certain Transactions -Transactions
Involving Certain Officers, Directors and Stockholders."
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table provides information about our current executive
officers and key employees:
Name Age Position(s) held
---- --- ----------------
Eugene P. Martineau 63 Director, Chief Executive
Officer and President
Michael W. Harlan 42 Director, Senior Vice President
and Chief Financial Officer
William T. Albanese 59 Director and President of Bay
Area Region
Michael D. Mitschele 46 Director and President of
Atlantic Region
Thomas J. Albanese 57 Executive Vice President of
Sales of Bay Area Region
Cesar Monroy 42 Vice President - Finance *
Terry Green 55 Vice President - Operational
Integration *
Raymond C. Turpin 65 Vice President - Technical
Affairs *
Donald C. Wayne 36 Vice President, General Counsel
and Secretary
Richard A. Williams 61 Vice President - Marketing and
Sales
-------------
* Key employee.
For a description of the business background of Mr. Martineau, see
"Election of Directors" above.
Michael W. Harlan has served as our Senior Vice President and Chief
Financial Officer since September 1998. Mr. Harlan also served as our Secretary
from September 1998 to August 1999. Mr. Harlan served as Senior Vice President
and Chief Financial Officer of Apple Orthodontix, Inc., an orthodontic practice
management company, from March 1997 to August 1998. From December 1996 to
February 1997, Mr. Harlan served as a consultant to Apple Orthodontix on
financial and accounting matters. In January 2000, approximately 17 months after
Mr. Harlan departed from Apple Orthodontix, Apple Orthodontix filed a voluntary
case under chapter 11 of the federal bankruptcy code. From April 1991 through
December 1996, Mr. Harlan held various positions in the finance and acquisitions
departments, including Treasurer from September 1993 to December 1996, of
Sanifill, Inc., a publicly traded international environmental services company
that USA Waste Services, Inc. acquired in 1996. From May 1982 through April
1991, he held various positions in the tax and corporate financial consulting
services division of Arthur Andersen LLP, where he had been a manager since July
1986. Mr. Harlan is also a director of Waste Connections, Inc., a solid waste
services company.
William T. Albanese has served as President of our Bay Area Region since
June 1999. From 1987 through May 1999, Mr. Albanese served as President of
Central Concrete Supply Co., Inc., one of the companies we acquired in May
9
1999 as the platform business of our Bay Area Region into which we subsequently
consolidated other Bay Area operations. Previously, he served in various other
capacities for Central since 1966.
Michael D. Mitschele has served as President of our Atlantic Region since
December 2001. Previously, he served as President of Baer Concrete,
Incorporated, now known as Eastern Concrete Materials, Inc., one of our
subsidiaries within our Atlantic Region, from 1986 to November 2001, where he
also served in various other capacities since 1972. Mr. Mitschele is a founding
board member of the New Jersey Concrete and Aggregate Association. He has served
as a member of the NRMCA for over 10 years and has held several leadership
positions with it, including service as a member of its board of directors for
two terms, and Chairman of its membership committee and visionary leadership
taskforce and service on its financial management committee. Mr. Mitschele was
re-elected to the board of directors of the NRMCA in January 2003 for an
additional three-year term.
Thomas J. Albanese has served as Executive Vice President of Sales of our
Bay Area Region since June 1999. From 1987 through May 1999, Mr. Albanese served
as Vice President of Central Concrete Supply Co., Inc., one of the companies we
acquired in May 1999 as the platform business of our Bay Area Region into which
we subsequently consolidated other Bay Area operations. Previously, he served in
various other capacities for Central since 1969.
Cesar Monroy has served as our Vice President - Finance since March 2003,
and served as our Vice President - Accounting from June 2002 through March 2003.
From 1995 through May 2002, Mr. Monroy was self-employed as a business
consultant to various companies, including as a consultant to U.S. Concrete from
March 2000 through May 2002. From 1993 through 1995, he served as the Chief
Financial Officer of Fairchild Aircraft, a commercial aircraft manufacturer.
Terry Green has served as our Vice President - Operational Integration
since May 1999. Mr. Green has managed the operations of ready-mixed concrete
producers and other transportation-related businesses for over 20 years. From
August 1998 until May 1999, he served as Vice President of Maintenance for
Armellini Express Lines, Inc. From January 1989 until June 1998, Mr. Green
served as Director of Maintenance, Equipment and Purchasing for the concrete
products division of Southdown, Inc. From 1980 until 1989, Mr. Green held
various positions with Kraft, Inc., serving as Private Fleet Operations Manager
from 1988 until 1989.
Raymond C. Turpin has served as our Vice President - Technical Affairs
since January 2001. From January 2000 through January 2001 he served as our Vice
President - Technical Marketing and Development. Mr. Turpin has over 35 years of
experience in the construction materials industry. From 1988 until joining us,
he was Director of Technical Service and New Product Development of Blue Circle
Cement, North America, a producer and supplier of cement to the construction
industry that Lafarge S.A. acquired in July 2001. From 1984 until 1988, Mr.
Turpin served as Technical Director of Williams Brothers Concrete, which Blue
Circle Cement acquired in 1986, supervising the manufacture of chemical
admixtures for concrete. From 1972 until 1984, Mr. Turpin was self-employed as a
consultant to the concrete industry and, during that time, developed two patents
relating to the use of fly ash in concrete.
Donald C. Wayne has served as our Vice President and General Counsel since
May 1999 and as our Secretary since August 1999. From October 1994 until joining
us, Mr. Wayne served as an attorney with the law firm of Akin, Gump, Strauss,
Hauer & Feld, L.L.P.
Richard A. Williams has served as our Vice President - Marketing and Sales
since June 2002, and served as our Director of Marketing and Sales from
September 2001 through May 2002. From May 2000 through August 2001, he served as
a consultant to us. From 1998 through May 2000, Mr. Williams served as President
of Matrix Master Inc., a manufacturer of cement slurry processes for the
ready-mixed concrete industry. From 1990 through 1998, he served as President of
ECOT Incorporated, a chemical manufacturing company that S.C. Johnson, Inc.
purchased in 1998. Prior to that time, Mr. Williams served for 25 years in
various capacities for ready-mixed concrete and related businesses.
10
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary Compensation Table
The following table sets forth the compensation we paid during 2000, 2001
and 2002 to our chief executive officer and our four other most highly
compensated executive officers in 2002 (the "named executive officers").
Annual Compensation(1) Long-Term Compensation
--------------------------- -------------------------
Name and All Other
Principal Position Year Salary Bonus(2) Shares Underlying Options Compensation (3)
------------------------ ---- ---------- ------------ ------------------------- ----------------
Eugene P. Martineau 2002 $ 297,639 $ 385,000(4) 100,000 $ 49,742(5)
President, Chief 2001 274,395 483,675 100,000 183,784(6)
Executive Officer 2000 185,416 -- 90,000 70,939(7)
and Director
Michael W. Harlan 2002 211,671 265,000(8) 80,000 9,483(9)
Senior Vice 2001 204,227 347,725 60,000 135,971(10)
President, Chief 2000 167,708 -- 70,000 4,469
Financial Officer
and Director
William T. Albanese 2002 236,250 84,000 25,000 8,600
President of Bay Area 2001 218,750 114,710 25,000 8,500
Region and Director 2000 200,000 -- 25,000 8,305
Thomas J. Albanese 2002 236,250 84,000 25,000 8,600
Executive Vice 2001 218,750 114,710 25,000 8,500
President of Sales of 2000 200,000 -- 25,000 8,305
Bay Area Region
Michael D. Mitschele 2002 190,000 19,500 20,000 5,500
President of Atlantic 2001 164,977 85,950 15,000 6,782
Region and Director 2000 100,000 -- -- 4,387
----------
(1) Excludes the value of perquisites and other personal benefits for each of
the named executive officers because the aggregate amounts did not exceed
10% of the total annual salary and bonus reported for any named executive
officer.
(2) The amount shown in 2001 for each named executive officer includes (a) cash
and the fair market value of shares of our common stock that we granted
effective April 10, 2001 in recognition of the overall contribution he made
to our various capital raising initiatives and (b) cash that we paid in
2002 and the fair market value of shares of our common stock that we
granted in 2002 under our bonus plan for services he performed in 2001. The
following table summarizes these amounts:
April 10, 2001 2001 Bonus Awards
Incentive Compensation Made on February 28, 2002
---------------------------------------------------------------------
Grant Date Fair Grant Date Fair
Market Value of Market Value of
Shares of Shares of
Executive Officer Cash Common Stock Cash Common Stock Total
----------------- ---- ------------ ---- ------------ -----
Eugene P. Martineau $93,470 $140,205 $125,000 $125,000 $483,675
Michael W. Harlan 79,090 118,635 75,000 75,000 347,725
William T. Albanese 25,884 38,826 50,000 -- 114,710
Thomas J. Albanese 25,884 38,826 50,000 -- 114,710
Michael D. Mitschele 14,380 21,570 50,000 -- 85,950
11
The amounts shown in the cash column under April 10, 2001 Incentive
Compensation represent estimated taxes payable by each executive officer on
the cash and shares of common stock that we granted effective as of that
date. The amounts shown in the cash column under 2001 Bonus Awards Made on
February 28, 2002 for Messrs. Martineau and Harlan represent estimated
taxes payable by each of them on the shares of our common stock that we
granted effective as of that date and the forgiveness of the loans referred
to in footnotes (6) and (10) below.
(3) Unless otherwise provided in a separate footnote, the amounts in this
column represent matching contributions to the 401(k) plan account of such
named executive officers.
(4) The amount shown represents $135,000 in cash and 55,432 shares of
restricted stock, valued at $4.51 per share (the fair market value of a
share of our common stock as of the date of grant).
(5) The amount shown represents $8,600 in matching contributions to Mr.
Martineau's 401(k) plan account, $1,246 in imputed interest on a loan U.S.
Concrete extended to Mr. Martineau and $39,896 in deferred compensation.
(6) The amount shown includes the forgiveness of a $175,000 loan U.S. Concrete
extended to Mr. Martineau, $8,500 in matching contributions to Mr.
Martineau's 401(k) plan account and $284 paid for unused vacation in 2000.
(7) The amount shown represents $7,083 in matching contributions to Mr.
Martineau's 401(k) plan account and a $63,856 relocation expense
reimbursement.
(8) The amount shown represents $75,000 in cash and 42,129 shares of restricted
stock, valued at $4.51 per share (the fair market value of a share of our
common stock as of the date of grant).
(9) The amount shown represents $8,600 in matching contributions to Mr.
Harlan's 401(k) plan account and $883 in imputed interest on a loan U.S.
Concrete extended to Mr. Harlan.
(10) The amount shown includes the forgiveness of a $125,000 loan U.S. Concrete
extended to Mr. Harlan, $8,500 in matching contributions to Mr. Harlan's
401(k) plan account and $2,471 paid for unused vacation in 2000.
Option Grants in Last Fiscal Year
The following table sets forth information regarding stock options we
granted during 2002 to each of the named executive officers:
Individual Grants Potential Realizable Value
----------------------------------------------------------- at Assumed Annual Rates
Percentage of of Stock Price Appreciation
Number of Shares Total Options Exercise for Option Term(4)
Underlying Options Granted in Price (Per Expiration ----------------------------
Name Granted (1) 2002 (2) Share)(3) Date 5% 10%
---- ------------------ -------------- ------------ ---------- --------- ---------
Eugene P. Martineau 100,000 8.79% $6.27 2/28/12 $394,317 $999,277
Michael W. Harlan 80,000 7.03 6.27 2/28/12 315,454 799,421
William T. Albanese 25,000 2.20 6.27 2/28/12 98,579 249,819
Thomas J. Albanese 25,000 2.20 6.27 2/28/12 98,579 249,819
Michael D. Mitschele 20,000 1.76 6.27 2/28/12 78,863 199,855
----------
(1) The options become exercisable in annual increments of 25% beginning on the
first anniversary of the grant date and expire 10 years from the grant date
or earlier on termination of employment.
(2) Based on an aggregate of 1,137,985 shares subject to options granted in
2002 to our employees, directors and consultants, including the named
executive officers.
(3) We granted options at an exercise price at least equal to the fair market
value of our common stock on the grant date.
(4) The potential realizable value assumes an annual rate of appreciation of 5%
and 10% for 10 years. Actual gains, if any, will depend on the future
performance of our common stock.
12
Stock Option Exercises and 2002 Year-End Option Values
The following table details the number and value of securities underlying
unexercised options held by the named executive officers at December 31, 2002.
No options were exercised by the named executive officers during 2002.
Number of Shares Underlying Value of Unexercised In-the-
Unexercised Options at Money Options at
December 31, 2002 December 31, 2002(1)
------------------------------ -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ------------- --------------- ------------- --------------
Eugene P. Martineau 238,750 276,250 -- --
Michael W. Harlan 181,250 203,750 -- --
William T. Albanese 18,750 56,250 -- --
Thomas J. Albanese 18,750 56,250 -- --
Michael D. Mitschele 3,750 31,250 -- --
----------
(1) Based on the closing price of $5.47 for our common stock on the Nasdaq
Stock Market on December 31, 2002.
Employment Agreements
We expect to enter into new employment agreements in April 2003 with
several key employees and each of the named executive officers, including
Messrs. Martineau, Harlan, Albanese, Albanese and Mitschele. Each of these
agreements will:
o provide for an annual minimum base salary;
o entitle the employee to participate, on the same basis generally as
other executive officers, in general employee benefit plans and
programs available to our employees; and
o have an initial term of three years in the case of Messrs. Martineau
and Harlan and an initial term of two years in the case of Messrs.
Albanese, Albanese and Mitschele.
Beginning in April 2005, in the case of the agreements with Messrs.
Martineau and Harlan, and April 2004, in the case of the agreements with Messrs.
Albanese, Albanese and Mitschele, each of these agreements will be subject to an
automatic daily extension, such that it will then provide for a continuous
one-year term, subject to the right of either party to terminate the employee's
employment at any time. If we terminate that employment without cause or the
employee terminates that employment for good reason, we generally will be
required to pay to the employee (1) his base salary at the time of termination
for the longer of the balance of the initial term or 12 months, (2) a bonus
equal to the average amount of the employee's bonus in the preceding three years
multiplied by the percentage of full weeks the employee was employed by us
during the year of termination, and (3) health insurance premiums for 18 months
following termination. Additionally, all options, restricted stock awards and
similar awards granted to the employee prior to the termination would
immediately vest and become exercisable in full and remain outstanding in
accordance with their terms.
Under each of the new employment agreements, if there is a change in
control of our company, all stock options, restricted stock awards and similar
awards granted to the employee prior to the change in control would immediately
vest and become exercisable and would remain outstanding in accordance with
their terms. Additionally, if within one year after the change in control the
employee terminates his employment for good reason or is terminated without
cause, the employee will receive the same severance as described in the
preceding paragraph, except the severance will be three times the base salary in
the case of Messrs. Martineau and Harlan and two times the base salary in the
case of Messrs. Albanese, Albanese and Mitschele. If after the first anniversary
of the change in control the employee terminates his employment for good reason
or is terminated without cause, the employee will receive the same severance as
described in the preceding paragraph.
In addition to their severance payments, on the occurrence of a
change in control, these employees would be entitled to receive, at each
employee's election, either (1) options to purchase stock of the acquiring
company for the same number of shares as they would have received had they
exercised their U.S. Concrete options immediately prior to the transaction
resulting in a change in control and received for the shares acquired on
exercise of such options shares
13
of the acquiring company in the change in control transaction; the aggregate
exercise price for the shares covered by such options would be equal to the
aggregate exercise price for the U.S. Concrete options; or (2) a lump-sum
after-tax payment not less than the amount of gain they would have realized on
exercise of such options of the acquiring company and sale of the underlying
shares.
Each of these agreements also provides for benefits if the employee dies or
becomes disabled. If the employment of the employee terminates for any reason
other than for cause by us or without good reason by the employee, that
termination will not affect the term or exercisability of any incentive plan
stock options the employee holds.
Compensation Committee Interlocks and Insider Participation
In 2002, Messrs. Foster, Colson and Porter served as members of the
compensation committee. Mr. Foster is a Senior Managing Director of Main Street
Mezzanine Fund, LLC. We paid Main Street $396,578 in 2002 for reimbursement of
expenses primarily related to our acquisition program and other business
development activities. Mr. Colson is an investor in Main Street. Porter &
Hedges, L.L.P., a Houston, Texas law firm of which Mr. Porter is Chairman,
performed legal services for us in 2002.
CERTAIN TRANSACTIONS
On completion of our IPO in 1999, we entered into new facilities leases, or
extended existing leases, with former stockholders or affiliates of former
stockholders of Central and Eastern Concrete Materials, Inc. (formerly known as
Baer Concrete, Incorporated). Those leases generally provide for initial lease
terms of 15 to 20 years, with one or more extension options we may exercise. The
following summarizes the current annual rentals we must pay during the initial
lease terms:
Number of Aggregate
Facilities Annual Rentals
---------- --------------
Central........................... 2 $316,950
Eastern........................... 2 294,195
We believe the rentals we must pay under each of these leases are at fair market
rates. William T. Albanese, a former owner of Central and the President of our
Bay Area Region, and Michael D. Mitschele, the former owner of Eastern and the
President of our Atlantic Region, are members of our Board of Directors,
although each of them has elected to resign from the Board effective immediately
prior to the annual meeting.
Central purchased building materials for $277,750 during 2002 from a
company owned by two trusts of which William T. Albanese and Thomas J. Albanese
are co-trustees. We believe the amount we paid was fair and substantially
equivalent to amounts we would have paid to an unaffiliated third party. Both
trusts sold their interests in this company in early 2002.
Central sold $14.1 million of ready-mixed concrete to a company owned by a
cousin of Messrs. Albanese and Albanese in 2002. We believe the amount we
received was fair and substantially equivalent to what we would have received
from an unaffiliated third party.
On completion of our acquisition of Beall Industries, Inc. and affiliated
companies in February 2000, we entered into eight new facilities leases with
their former stockholders or affiliates of those stockholders, of which we
currently lease seven. The leases generally provide for initial lease terms of
five years, with three five-year renewal options we may exercise. We must pay an
aggregate of $214,800 in current annual rent during the initial terms of these
leases. We believe these rentals represent fair market rates. Robert S. Beall, a
former owner of these companies, beneficially owned more than 5% of the
outstanding shares of our common stock during a portion of 2002.
Beall Concrete Enterprises, Ltd., one of our subsidiaries, purchases
aggregates from time to time from a company that Mr. Beall has controlled since
June 2001. These purchases totaled $180,269 in 2002. We believe the amount we
paid was fair and substantially equivalent to amounts we would have paid to an
unaffiliated third party.
14
Mr. Beall purchased ready-mixed concrete from Beall Concrete Enterprises
during 2002 in the amount of $88,097, in connection with the development of a
real estate project. We sold this concrete to Mr. Beall at fair market value.
We paid Main Street $396,578 in 2002 for reimbursement of expenses
primarily related to our acquisition program and other business development
activities. Vincent D. Foster is a Senior Managing Director of Main Street, and
John R. Colson is an investor in Main Street. We believe the amount we paid was
fair and substantially equivalent to amounts we would have paid to an
unaffiliated third party.
In February 2002, we paid a bonus to Mr. Foster, the Chairman of the Board,
in the amount of 15,949 shares of our common stock, valued at $6.27 per share,
and $50,000 in cash.
During 2000, we extended loans of $175,000 to Mr. Martineau, our chief
executive officer and one of our directors, and $125,000 to Mr. Harlan, our
chief financial officer and one of our directors. We subsequently forgave these
loans in 2002. The loans, which would have been payable in full on March 1,
2005, did not bear interest. During 2002, we extended loans of $70,595 to Mr.
Martineau and $50,000 to Mr. Harlan. These loans do not bear interest.
In March 2001, we modified our non-compete arrangements with Neil J.
Vannucci, one of our directors for a portion of 2002. We originally established
these arrangements in the acquisition agreement for Bay Cities Building
Materials Co., Inc., of which he is a former stockholder. The modifications
further limit Mr. Vannucci's right to compete against us in exchange for three
annual cash payments of $138,000 each to Mr. Vannucci or a designate of Mr.
Vannucci, of which we paid $92,000 in 2002.
T. William Porter, a member of our board of directors, is the Chairman of
Porter & Hedges, L.L.P., a Houston, Texas law firm. Porter & Hedges, L.L.P.
performed legal services for us in 2002; however, the amount of fees paid to
them was not material.
We employ Karl Walker, the son of Robert S. Walker. We paid Karl Walker an
aggregate of $65,402 in salary, bonus compensation and 401(k) plan matching
contributions in 2002. In 2002, we granted options to Mr. Walker for 2,500
shares of our common stock. We granted these options on the same terms and
conditions as the options we granted to other employees in 2002.
Our subsidiary, Central, employs Lauren Cerrito, the daughter of William T.
Albanese, Daniel Albanese, the son of William T. Albanese, and Joseph Cerrito,
the son-in-law of William T. Albanese. Central paid Ms. Cerrito an aggregate of
$114,638 in salary, bonus compensation and 401(k) plan matching contributions in
2002. Central paid Daniel Albanese an aggregate of $80,729 in salary, bonus
compensation and 401(k) plan matching contributions in 2002. Central paid Mr.
Cerrito an aggregate of $78,412 in salary, bonus compensation and 401(k) plan
matching contributions in 2002. In 2002, we granted options to Ms. Cerrito,
Daniel Albanese and Mr. Cerrito for 7,000 shares, 500 shares and 1,000 shares of
our common stock, respectively. We granted these options on the same terms and
conditions as the options we granted to other employees in 2002.
Our subsidiary, Superior Concrete Materials, Inc., employs Todd Martineau,
the son of Eugene P. Martineau. Superior paid Todd Martineau an aggregate of
$74,463 in salary, bonus compensation and 401(k) plan matching contributions in
2002. In 2002, we granted options to Todd Martineau for 1,500 shares of our
common stock. We granted these options on the same terms and conditions as the
options we granted to other employees in 2002.
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and any persons beneficially owning more than 10%
of our common stock to report their initial ownership of common stock and any
subsequent changes in that ownership to the SEC. Specific due dates for these
reports have been established, and we are required to disclose in this proxy
statement any failure to file by these dates. All required 2002 filings were
made on a timely basis, except that Richard A. Williams and Thomas J. Albanese
each failed to timely make one filing. In making these disclosures, we relied
solely on written statements of directors, executive officers and stockholders
and copies of the reports that they have filed with the SEC.
REPORT OF THE AUDIT COMMITTEE
To the Board of Directors of U.S. Concrete, Inc.:
We have reviewed and discussed with management U.S. Concrete's audited
financial statements as of and for the year ended December 31, 2002.
In addition, we have discussed with PricewaterhouseCoopers LLP, U.S.
Concrete's independent accountants, the matters required to be discussed by
Statement of Auditing Standards No. 61, Communication with Audit Committees, as
amended, issued by the Auditing Standards Board of the American Institute of
Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independent Standards Board's Standard
No. 1, Independence Discussions with Audit Committees, as amended, and we have
discussed with that firm its independence from U.S. Concrete. We also considered
whether PricewaterhouseCoopers LLP's provision of services that are not related
to the audit of U.S. Concrete's financial statements is compatible with
maintaining that firm's independence from U.S. Concrete.
Based on the reviews and discussions referred to above, we recommended to
the Board of Directors of U.S. Concrete that the audited financial statements
referred to above be included in U.S. Concrete's annual report on Form 10-K for
the year ended December 31, 2002 for filing with the Securities and Exchange
Commission.
The Audit Committee
John R. Colson, Chairman
Murray S. Simpson
Vincent D. Foster
16
REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
The compensation committee (the "Committee") administers U.S. Concrete's
executive compensation program. The Committee is responsible for establishing
appropriate compensation goals for executive officers and evaluating the
performance of executive officers in meeting those goals. No member of the
Committee is a current or former employee or officer of U.S. Concrete.
The Committee seeks to reward senior management for building long-term
stockholder value. In addition, the Committee designs executive compensation
programs to provide the ability to attract, motivate and retain the management
personnel necessary to U.S. Concrete's success by providing an executive
compensation program comparable to that offered by competitive companies to
their management personnel. Finally, the Committee believes we must compensate
our executive officers fairly for their contributions to our short-term and
long-term performance. The Committee uses annual base salaries, annual bonuses
and equity incentives to achieve these goals.
Base Salary
Base salaries for executives are determined initially by evaluating
executives' levels of responsibility, prior experience, breadth of knowledge,
internal equity issues and external pay practices. The Committee reviews
executive salaries annually based on a variety of factors, including individual
performance, general levels of market salary increases and U.S. Concrete's
overall results. The Committee grants salary increases within a
pay-for-performance framework. Performance for base salary purposes is assessed
using a qualitative, rather than a quantitative, performance assessment; no
specific performance formula or weighting of factors is used in determining base
salary levels. However, the Committee considers operating performance, execution
of our business strategy, earnings levels and progress in implementing business
development efforts in establishing base salary increases for executives. Mr.
Martineau received a base salary of $297,639 during 2002, which was an increase
from 2001. The Committee is aware that base salaries of our executive officers
were below those paid by comparably sized, publicly traded companies, and
increased Mr. Martineau's salary in recognition of that fact and based on his
individual performance during the year.
Annual Bonus Plan
The Committee has adopted an annual bonus plan to provide executive
officers and other key employees with additional performance incentives in the
form of an annual bonus for meeting certain financial, operational and personal
goals set on an annual basis. The annual bonus plan provides that a portion of
each key employee's annual bonus is determined based on achieving predetermined
earnings targets. The remainder of each key employee's bonus is based on
individual performance in achieving predetermined goals set by the employee and
approved by a supervisor. Bonus levels vary in accordance with each key
employee's level of responsibility. Mr. Martineau earned a bonus of $135,000 in
cash and $250,000 in restricted stock during 2002, which U.S. Concrete paid in
2003. A portion of that bonus was discretionary, and was based on Mr.
Martineau's overall performance and contributions to U.S. Concrete during 2002.
Incentive Compensation
The Committee grants executives discretionary annual stock options under
U.S. Concrete's 1999 Incentive Plan at an exercise price per share not less than
the fair market value of a share of common stock on the grant date. Accordingly,
stock options have value only if the price of the common stock appreciates after
the grant date. We intend for this design to focus executives on the creation of
stockholder value over the long term and increases their proprietary interest in
U.S. Concrete.
The Committee granted options to purchase a total of 250,000 shares of
common stock to the named executive officers during 2002. All the options
granted to executive officers vest at the rate of 25% per year, commencing on
the first anniversary of the grant date, and expire 10 years from the grant date
or three months following termination of employment.
In 2002, Mr. Martineau was granted an option to purchase 100,000 shares of
common stock, with an exercise price of $6.27 per share. In determining the
number of shares subject to the option granted to Mr. Martineau, the Committee
considered numerous subjective factors indicative of his dedication to the
success of U.S. Concrete.
17
As of March 25, 2003, Mr. Martineau owned 416,483 shares of common stock
(55,432 of which are restricted shares) and held options to purchase a total of
515,000 shares. The Committee believes that this equity interest provides an
appropriate link to the interests of our company's stockholders.
Other Compensation
During 2000, U.S. Concrete extended loans of $175,000 to Mr. Martineau and
$125,000 to Mr. Harlan. These loans were forgiven in 2002 in recognition of
Messrs. Martineau's and Harlan's efforts during 2001.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a deduction
to public companies to the extent of excess annual compensation over one million
dollars paid to certain executive officers, except for qualified
performance-based compensation. U.S. Concrete had no nondeductible compensation
expense for the year ended December 31, 2002. The Committee plans to review this
matter as appropriate and take action as may be necessary to preserve the
deductibility of compensation payments to the extent reasonably practical and
consistent with U.S. Concrete's compensation objectives.
This report is furnished by the Compensation Committee of the Board of
Directors.
John R. Colson, Chairman
Vincent D. Foster
T. William Porter
18
PERFORMANCE GRAPH
The following graph compares, for the period from May 26, 1999, the date of
our IPO, to December 31, 2002, the cumulative stockholder return on our common
stock with the cumulative total return on the Standard & Poor's 500 Index and a
peer group index we selected that includes six public companies within our
industry. The comparison assumes that (1) $100 was invested on May 26, 1999 in
our common stock, the S&P 500 Index and the peer group index and (2) all
dividends were reinvested.
The companies that comprise the peer group index are Lafarge Corporation,
Texas Industries, Inc., Florida Rock Industries, Inc., Centex Construction
Products, Inc., Martin Marietta Materials, Inc. and Vulcan Materials Company.
This group is the same as the group we used in the proxy statement for our 2002
annual meeting of stockholders, except that we removed U.S. Aggregates, Inc.
from the peer group this year because it was delisted from the New York Stock
Exchange effective November 26, 2001 for failure to meet the NYSE's requirements
for continued listing.
Comparison of Cumulative Total Return
[GRAPH]
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5/26/99 6/30/99 12/31/99 6/30/00 12/31/00 6/30/01 12/31/01 6/30/02 12/31/02
------- ------- -------- ------- -------- ------- -------- ------- --------
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U.S. Concrete 100.00 118.75 75.00 100.00 78.13 99.63 82.50 82.13 68.38
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S&P 500 100.00 103.06 111.00 110.53 100.89 94.14 88.90 77.20 69.26
-------------------------------------------------------------------------------------------------------------------------
Peer Group 100.00 102.94 84.95 79.90 87.41 103.72 102.20 96.21 85.65
-------------------------------------------------------------------------------------------------------------------------
19
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
On May 16, 2002, our Board dismissed Arthur Andersen LLP as our independent
auditors for the year ended December 31, 2002 and appointed
PricewaterhouseCoopers LLP as our independent auditors for year ended December
31, 2002. The appointment of PricewaterhouseCoopers LLP was made at the
recommendation of the audit committee of our Board of Directors.
Our Board has selected PricewaterhouseCoopers LLP to serve as our
independent auditors for the year ending December 31, 2003. The Board has
directed that this appointment be submitted to the stockholders for ratification
at the Annual Meeting. We expect representatives of PricewaterhouseCoopers LLP
will be present at the meeting, will be given the opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions of any stockholders.
During the two years ended December 31, 2000 and 2001, and the subsequent
interim period through May 16, 2002, there were no disagreements between Arthur
Andersen LLP and us on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Arthur Andersen LLP, would
have caused Arthur Andersen LLP to make a reference to the subject matter of the
disagreements in connection with its reports on our consolidated financial
statements for those years; and, during that period, we did not experience any
"reportable events" of the kinds listed in Item 304(a)(1)(v) of Regulation S-K.
The audit reports of Arthur Andersen LLP on our consolidated financial
statements as of and for the years ended December 31, 2000 or 2001 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting principles.
During the two years ended December 31, 2000 and 2001, and the subsequent
interim period through May 16, 2002, U.S. Concrete did not consult with
PricewaterhouseCoopers LLP regarding any of the matters or events set forth in
Item 304(a)(2)(i) and (ii) of Regulation S-K.
Assuming the presence of a quorum, the affirmative vote of a majority of
the votes cast on the proposal is necessary to ratify the selection of
PricewaterhouseCoopers LLP as our independent auditors for the year ending
December 31, 2003. The enclosed form of proxy provides a means for you to vote
for the ratification of the selection of independent auditors, to vote against
it or to abstain from voting with respect to it. If you execute and return a
proxy, but do not specify how to vote the shares represented by your proxy, the
persons named as proxies will vote FOR the ratification of the selection of
PricewaterhouseCoopers LLP as independent auditors. In determining whether this
item has received the requisite number of affirmative votes, abstentions and
broker non-votes will not affect the vote.
Your Board recommends a vote "FOR" the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors for 2003.
Audit Fees
PricewaterhouseCoopers LLP's fees and related expenses for our 2002 audit
were $362,100.
Financial Information Systems Design and Implementation Fees
We did not incur any fees to PricewaterhouseCoopers LLP in 2002 with
respect to financial information systems design and implementation services.
All Other Fees
PricewaterhouseCoopers LLP's fees for all other professional services
rendered to us during 2002 were $22,400.
20
EXPENSES RELATING TO THIS PROXY SOLICITATION
We will pay all expenses relating to this proxy solicitation. In addition
to this solicitation by mail, our officers, directors and regular employees may
solicit proxies by telephone or personal call without extra compensation for
that activity. We also expect to reimburse banks, brokers and other persons for
reasonable out-of-pocket expenses in forwarding proxy material to beneficial
owners of our common stock and obtaining the proxies of those owners. We
estimate these expenses to be approximately $6,000.
OTHER INFORMATION
Date for Submission of Stockholder Proposals
Under rules the SEC has established, any stockholder who wishes to have a
qualified proposal considered for inclusion in our proxy statement for our 2004
Annual Meeting of Stockholders must send notice of the proposal to our Corporate
Secretary at our principal executive offices, 2925 Briarpark, Suite 500,
Houston, Texas 77042, so that we receive that notice by no later than the close
of business on December 6, 2003. If you submit a stockholder proposal, you must
provide your name and address, the number of shares of common stock you hold of
record or beneficially, the date or dates on which you acquired those shares and
documentary support for any claim of beneficial ownership.
In addition, our bylaws establish an advance-notice procedure for
stockholder proposals to be brought before an annual meeting. The procedure
provides that stockholders must submit proposals to us in writing containing
certain information specified in our bylaws no earlier than the 180th day and no
later than the close of business on the 90th day prior to the first anniversary
of our preceding year's annual meeting. These requirements are in addition to
the SEC's requirements with which a stockholder must comply to have a
stockholder proposal included in our proxy statement. Stockholders may obtain a
copy of our bylaws by making a written request to our Corporate Secretary.
Under these bylaw provisions, we must receive stockholder proposals for our
2004 Annual Meeting of Stockholders no earlier than November 1, 2003 and no
later than the close of business on January 30, 2004. Stockholders must deliver
the proposals to Corporate Secretary, U.S. Concrete, Inc., 2925 Briarpark, Suite
500, Houston, Texas 77042.
Other Matters
The Board of Directors does not intend to bring any other matters before
the annual meeting and has not been informed that any other matters are to be
presented by others. If any other matters properly come before the annual
meeting, the persons named in the enclosed form of proxy will vote all proxies
according to their best judgment. The form of proxy provides that the persons
named as proxies have discretionary authority to vote on matters not known or
determined on the date of this proxy statement.
By Order of the Board of Directors
/s/ Donald C. Wayne
----------------------------------
Donald C. Wayne
Vice President, General Counsel
and Corporate Secretary
Houston, Texas
April 4, 2003
21
(Front of Card)
U.S. CONCRETE, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael W. Harlan and Donald C. Wayne, and each
of them, with full power of substitution and resubstitution, to represent the
undersigned and to vote all the shares of Common Stock in U.S. Concrete, Inc., a
Delaware corporation (the "Company"), which the undersigned is entitled to vote
at the Annual Meeting of Stockholders of the Company to be held on April 29,
2003 and at any adjournment or postponement thereof (1) as hereinafter specified
upon the proposals listed on the reverse side and as more particularly described
in the Proxy Statement of the Company dated April 4, 2003 (the "Proxy
Statement") and (2) in their discretion upon such other matters as may properly
come before the meeting.
ALL SHARES OF COMMON STOCK REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THOSE SHARES WILL BE VOTED FOR THE NOMINEES LISTED IN
PROPOSAL NO. 1 AND FOR PROPOSAL NO. 2.
(Back of Card)
ANNUAL MEETING OF STOCKHOLDERS
U.S. CONCRETE, INC.
APRIL 29, 2003
PLEASE MARK, SIGN, DATE AND MAIL YOUR PROXY CARD
AS SOON AS POSSIBLE
Please detach and mail in the envelope provided.
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A vote FOR the following proposals is recommended by the Board of
Directors:
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE: [X]
PROPOSAL NO. 1. To elect the nominees listed below to the Board of
Directors to serve until the 2006 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified:
[ ] FOR ALL NOMINEES [ ] Eugene P. Martineau
[ ] WITHHOLD AUTHORITY FOR ALL [ ] T. William Porter
NOMINEES
[ ] FOR ALL NOMINEES EXCEPT (see instruction below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark "FOR ALL NOMINEES EXCEPT" and fill in the circle next to each nominee
you wish to withhold, as shown here: [X]
------------------------------------------------------------------------------.
PROPOSAL NO. 2. To ratify the appointment of PricewaterhouseCoopers LLP as
the Company's independent auditors for the year ending December 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE FOR
ADDRESS
[ ] CHANGE AND
NOTE AT LEFT
In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the meeting or any adjournment or
postponement thereof, including procedural and other matters relating to the
conduct of the meeting.
The undersigned hereby revokes all previous proxies given by the
undersigned with respect to the shares represented hereby in connection with the
Company's 2003 Annual Meeting of Stockholders. This Proxy may be revoked at any
time prior to a vote thereon. Receipt of the accompanying Proxy Statement and
Annual Report of the Company for the fiscal year ended December 31, 2002, is
hereby acknowledged.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
To change the address on your account, please check the box at [ ]
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the account
may not be submitted via this method.
Please sign exactly as your name(s) appears on this proxy card. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer with full title as such. If the signer is a
partnership please sign in partnership's name by authorized person.
Signature of Stockholder: Date:
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Signature of Stockholder: Date:
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