DEF 14A 1 proxystatement2.txt PROXY STATEMENT GENERAL OFFICE: 155 East 21st Street/P.O. Box 4667/Jacksonville, Florida 32201/ (904) 355-1781 FLORIDA ROCK INDUSTRIES INC Mining, Ready Mix Concrete, and Construction Products December 22, 2004 Dear Shareholder: I am pleased to invite you to attend our Annual Meeting of Shareholders, which will be held on Wednesday, January 26, 2005, at 9 a.m. at our offices at 155 East 21st Street, Jacksonville, Florida. Details regarding the business to be conducted at the meeting are described in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement. At the meeting, I will report on the Company's operations and plans. We also will leave time for your questions. We hope that you are able to attend the meeting. Whether or not you plan to attend, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to promptly vote and submit your proxy by signing, dating and returning the enclosed proxy card in the enclosed envelope. If you decide to attend the annual meeting, you will be able to vote in person, even if you previously have submitted your proxy. Thank you for your ongoing support of Florida Rock Industries, Inc. Sincerely, John D. Baker II President and Chief Executive Officer 2005 ANNUAL MEETING OF SHAREHOLDERS NOTICE OF ANNUAL MEETING AND PROXY STATEMENT TABLE OF CONTENTS
Notice of Annual Meeting of Shareholders ii Proxy Statement 1 Corporate Governance 5 Board Structure and Committee Membership 7 Nominating Process 10 Director Compensation 12 Director Attendance of Annual Meeting of Shareholders 13 Proposal No. 1 - Election of Directors 13 Proposal No. 2 - Proposal to Approve an Amendment to the Articles of Incorporation to Increase the Authorized Common Stock 16 Shareholder Return Performance 17 Executive Compensation 19 Compensation Committee Report 22 Compensation Committee Interlocks and Insider Participation 24 Certain Relationships and Related Transactions 24 Common Stock Ownership of Certain Beneficial Owners 25 Common Stock Ownership by Directors and Officers 26 Audit Committee Report 27 Independent Auditors 28 Shareholder Proposals 30 Section 16(a) Beneficial Ownership Reporting Compliance 30
FLORIDA ROCK INDUSTRIES, INC. 155 East 21st Street, Jacksonville, Florida 32206 ------------------------------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TIME AND DATE 9:00 a.m. on Wednesday, January 26,2005 PLACE 155 East 21st Street Jacksonville, Florida ITEMS OF BUSINESS (1) To elect three directors to a 3 year term. (2) To approve an amendment to the Articles of Incorporation to increase the authorized capital stock. (3) To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement. RECORD DATE You are entitled to vote if you were a shareholder of record at the close of business on Monday, December 6, 2004. ANNUAL REPORT Our 2004 Annual Report, which is not part of the proxy soliciting materials, is enclosed. PROXY VOTING Please submit a proxy as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. If you attend the meeting, you may withdraw your proxy and vote in person. BY ORDER OF THE BOARD OF DIRECTORS Dennis D. Frick Secretary This Proxy Statement and Proxy Card are being distributed on or about December 22, 2004. PROXY STATEMENT The Board of Directors (the "Board") of Florida Rock Industries, Inc. ("Florida Rock" or the "Company") is soliciting proxies for the Annual Meeting of Shareholders. You are receiving a proxy statement because you own shares of Florida Rock common stock that entitle you to vote at the meeting. By use of a proxy, you can vote whether or not you attend the meeting. The proxy statement describes the matters we would like you to vote on and provides information on those maters so you can make an informed decision. The information included in this proxy statement relates to proposals to be voted on at the meeting, voting process, compensation of directors and our most highly paid officers, and other required information. PURPOSE OF THE ANNUAL MEETING The purpose of the Annual Meeting is to elect directors and to conduct the business described in the Notice of Annual Meeting. ANNUAL MEETING ADMISSION You are invited to attend the meeting in person. The meeting will be held at 9:00 a.m. on Wednesday, January 26, 2004 at our offices at 155 East 21st Street, Jacksonville, Florida. No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting. QUORUM A quorum is the minimum number of shares required to hold a meeting. Under Florida Rock's Bylaws, a majority of the outstanding shares of stock entitled to vote at the meeting must be represented in person or by proxy at the meeting to establish a quorum. Both abstentions and broker non-votes are counted as present for determining the presence of a quorum. Broker non- votes, however, are not counted as shares present and entitled to be voted with respect to the matter on which the broker has not voted. Thus, broker non-votes will not affect the outcome of any of the matters to be voted on at the Annual Meeting. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (i) the broker has not received voting instructions from the beneficial owner and (ii) the broker lacks discretionary voting power to vote such shares. SHAREHOLDERS ENTITLED TO VOTE Each share of our common stock outstanding as of the close of business on December 6, 2004, the record date, is entitled to one vote at the Annual Meeting on each matter properly brought before the meeting. As of that date, there were 43,371,336 shares of common stock issued and outstanding. Most Florida Rock shareholders hold their shares through a stockbroker, bank, trustee, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially: * SHAREHOLDER OF RECORD - If your shares are registered directly in your name with Florida Rock's Transfer Agent, Wachovia Bank, N.A., you are considered the shareholder of record of those shares and these proxy materials are being sent directly to you by Florida Rock. As the shareholder of record, you have the right to grant your voting proxy directly to Florida Rock or to vote in person at the meeting. * BENEFICIAL OWNER - If your shares are held in a stock brokerage account, by a bank, trustee, or other nominee, you are considered the beneficial owner of shares held in street name and those proxy materials are being forwarded to you by your broker, trustee, or nominee who is considered the shareholder of record of those shares. As the beneficial owner, you have the right to direct your broker, trustee or nominee on how to vote and are also invited to attend the meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the meeting. Your broker, trustee, or nominee is obligated to provide you with a voting instruction card for you to use. * PROFIT SHARING PLAN AND TRUST - If your shares are held in your account in the Florida Rock Industries, Inc. Profit Sharing and Deferred Earnings Plan (the "Profit Sharing Plan"), you are considered the beneficial owner of these shares and the trustee of the plan is the shareholder of record. Participants in the Profit Sharing Plan may direct the trustee how to vote the shares allocated to their account by following the voting instructions contained on the proxy card. If voting instructions are not received for shares in the Profit Sharing Plan, those shares will be voted in the same proportion as the shares in such plan for which voting instructions are received. PROPOSALS YOU ARE ASKED TO VOTE ON AND THE BOARD'S VOTING RECOMMENDATIONS The following proposals are scheduled to be voted on at the meeting. Our Board recommends that you vote your shares as indicated below. Proposals: The Board's Voting Recommendation: ---------- ------------------ 1. The election of directors "FOR" for a 3-year term each nominee to the Board 2. Proposal to Approve an "FOR" Amendment to the Articles of Incorporation to Increase the Authorized Common Stock Other than the proposals described in this proxy statement, the Board is not aware of any other matters to be presented for a vote at the Annual Meeting. If you grant a proxy, any of the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If any of our nominees is unavailable as a candidate for director, the above-named proxy holders will vote your proxy for another candidate or candidates as may be nominated by the Board of Directors. REQUIRED VOTE Director Nominees - The nominees for election as directors at the Annual Meeting will be elected by a plurality of the votes cast at the meeting. This means that the director nominee with the most votes for a particular slot is elected for that slot. Votes withheld from one or more director nominees will have no effect on the election of any director from whom votes are withheld. Amendment to Articles of Incorporation - The affirmative "FOR" vote by the holders of a majority of the shares of common stock voting on the proposal in person or by proxy at the Annual Meeting is required to approve the amendment to the Company's Articles of Incorporation. Abstentions are not included in determining whether the requisite number of affirmative votes are received. All other proposals require the affirmative "FOR" vote of a majority of those shares present in person or represented by proxy at the meeting and entitled to vote on the matter. If you are a beneficial owner and do not provide the shareholder of record with voting instructions, your shares may constitute broker non-votes, as described in the section above entitled "Quorum." In tabulating the voting result for any particular proposal, shares that constitute broker non-votes will not be included in vote totals and will have no effect on the outcome of any vote. VOTING METHODS If you hold shares directly as the shareholder of record, you may vote by granting a proxy or, if you hold shares beneficially in street name, by submitting voting instructions to your broker or nominee. If you own shares beneficially as a participant in the Profit Sharing Plan, you may vote by submitting voting instructions to the trustee. Please refer to the summary instructions included on your proxy card or, for shares held in street name, the voting instructions card included by your broker or nominee. CHANGING YOUR VOTE You may change your proxy instructions at any time prior to the vote at the Annual Meeting. For shares held directly in your name, you may accomplish this by granting a new proxy or by voting in person at the Annual Meeting. For shares held beneficially by you, you may change your vote by submitting new voting instructions to your broker or nominee. COUNTING THE VOTE In the election of directors, you may vote "FOR" all of the nominees or your vote may be "WITHHELD" from one or more of the nominees. For the other proposals, you may vote "FOR," "AGAINST," or "ABSTAIN." If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board. Shares held in your account in the Profit Sharing Plan will be voted by the trustee as described in "Shareholders Entitled to Vote" on page 1. RESULTS OF THE VOTE We will announce preliminary voting results at the meeting and publish final results in our Quarterly Report on Form 10-Q for the quarter ending March 31, 2005. DELIVERY OF PROXY MATERIALS Securities and Exchange Commission rules now allow us to deliver a single copy of an annual report and proxy statement to any household at which two or more shareholders reside, if we believe the shareholders are members of the same family. This rule benefits both you and the Company. We believe it eliminates irritating duplicate mailings that shareholders living at the same address receive and it reduces our printing and mailing costs. This rule applies to any annual reports, proxy statements, proxy statements combined with a prospectus, or information statements. Each shareholder will continue to receive a separate proxy card or voting instruction card. Your household may have received a single set of proxy materials this year. If you prefer to receive your own copy now or in future years, please request a duplicate set by contacting John D. Milton, Jr. at (904) 355-1781 or by mail at 155 East 21st Street, Jacksonville, Florida 32206-2104. If a broker or other nominee holds your shares, you may continue to receive some duplicate mailings. Certain brokers will eliminate duplicate account mailings by allowing shareholders to consent to such elimination, or through implied consent if a shareholder does not request continuation of duplicate mailings. Since not all brokers and nominees may offer shareholders the opportunity this year to eliminate duplicate mailings, you may need to contact your broker or nominee directly to discontinue duplicate mailings from your broker to your household. LIST OF SHAREHOLDERS The names of shareholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and for ten days prior to the meeting for any purpose germane to the meeting, between the hours of 9:00 a.m. and 4:30 p.m., at our principal executive offices at 155 East 21st Street, Jacksonville, Florida, by contacting the Secretary of the Company. COST OF PROXY SOLICITATION Florida Rock will pay for the cost of preparing, assembling, printing, mailing, and distributing these proxy materials. In addition to mailing these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or by electronic communication by our directors, officers, and employees, who do not receive any additional compensation for these solicitation activities. We will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to beneficial owners of stock. TRANSFER AGENT Our Transfer Agent is Wachovia Bank, N.A. All communications concerning shareholders of record accounts, including address changes, name changes, common stock transfer requirements, and similar issues can be handled by contacting Wachovia Bank, N.A. at 1-800-829-8432, or in writing at Wachovia Bank, N.A., Corporate Trust Client Services NC-1153, 1525 West W.T. Harris Boulevard - 3C3, Charlotte, NC 28288-1153. CORPORATE GOVERNANCE CORPORATE GOVERNANCE GUIDELINES The Board of Directors is committed to good business practices, transparency in financial reporting and the highest level of corporate governance. The Board has adopted Corporate Governance Guidelines that, along with the charters of the Board committees, provide the framework for the governance of the Company. The Board's Corporate Governance and Nominating Committee is responsible for overseeing and reviewing the Guidelines at least annually, and recommending any proposed changes to the Board for approval. The Corporate Governance Guidelines are available on our Web site at www.flarock.com under Investor Relations - Corporate Governance Documents. MEETINGS OF INDEPENDENT DIRECTORS Independent directors regularly meet in executive sessions without management and may select a director to facilitate the meeting. COMMUNICATION WITH DIRECTORS The Board of Directors has adopted the following process for shareholders to send communications to members of the Board. Stockholders may communicate with the chairs of the Audit, Compensation, and Corporate Governance and Nominating Committee of the Board, or with our independent directors, by sending a letter to the following address: Board of Directors, Florida Rock Industries, Inc., c/o Corporate Secretary, 155 East 21st Street, Jacksonville, Florida 32206. Communications are distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. In that regard, the Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded, such as: * spam * junk mail and mass mailings * product inquiries * new product suggestions * resumes and other forms of job inquiries * surveys * business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out must be made available to any outside director upon request. DIRECTOR INDEPENDENCE The Board has determined that a majority of the Board of Directors are independent of management. All of the members of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee are independent directors. Pursuant to the New York Stock Exchange listing standards, the Board has adopted Standards of Board Independence (the "Standards") with respect to the determination of director independence. In accordance with these Standards, the Board must affirmatively determine that a director has no material relationship with the Company (directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company) other than as a director. The Standards specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate families with respect to past employment or affiliation with the Company or its independent auditor. The Standards also prohibit Audit Committee members from any direct or indirect financial relationship with the Company, and restrict commercial relationships of all directors with the Company. A copy of the Standards is attached hereto as Appendix A. Directors may not be given personal loans or extensions of credit by the Company, and all directors are required to deal at arm's length with the Company and its subsidiaries, and to disclose any circumstances that might be perceived as a conflict of interest. The Board of Directors has determined that Messrs. Carpenter, Druce, Knott, Thompson and Walton and Ms. Fowler are independent under these Standards. BUSINESS CONDUCT POLICIES We believe that operating with honesty and integrity has earned us trust from our customers, credibility within our communities, and dedication from our employees. Our senior executive and financial officers are bound by a Financial Code of Ethical Conduct. In addition, our directors, officers and employees are required to abide by our Code of Business Conduct and Ethics to ensure that our business is conducted in a consistently legal and ethical manner. Our Code of Business Conduct covers many topics, including conflicts of interest, confidentiality, fair dealing, protection and proper use of the Company's assets and compliance with laws, rules and regulations. Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the business conduct policies. The Audit Committee has adopted procedures to receive, retain, and treat complaints received regarding accounting, internal accounting controls, or auditing matters, and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Financial Code of Ethical Conduct and the Code of Business Conduct and Ethics are available on our Web site at www.flarock.com under Investor Relations - Corporate Governance Documents. BOARD STRUCTURE AND COMMITTEE MEMBERSHIP The Board is divided into three classes serving staggered three-year terms. The Board has eleven directors and the following five committees: Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee, and Executive Committee. The membership during 2004 and the function of each Committee are described below. During fiscal 2004, the Board of Directors held five meetings. The Audit, Compensation, and Corporate Governance and Nominating Committees held fifteen meetings, one meeting and one meeting, respectively, since the end of fiscal 2003. During the fiscal year ended September 30, 2004, the Executive Committee held no formal meetings, but acted on various resolutions by unanimous written consents. All of our directors attended at least 75% of the meetings of the Board and all committees on which the director served. The following chart shows the composition of the committees of the Board of Directors. Except for the Executive Committee, each of the committees of the Board is composed exclusively of independent directors.
Director Audit Compensation Corporate Executive Governance and Nominating -------------------------------------------------------------------- Edward L. Baker X* John D. Baker II X A.R. Carpenter X X* J. Dix Druce Jr. X X Luke E. Fichthorn The Honorable Tillie K. Fowler X* X
Francis X. Knott X John D. Milton Jr. X G. Kennedy Thompson X* William H. Walton III X
X - Committee Member * -- Committee Chair AUDIT COMMITTEE The Audit Committee assists the Board in its oversight of the integrity of the Company's financial statements, compliance with legal and regulatory requirements, the qualifications, independence, and performance of the Company's independent auditor, and the performance of the Company's internal auditing department. In addition, the Audit Committee: * Reviews the annual audited and quarterly consolidated financial statements; * Reviews the Company's financial reporting process and disclosure and internal controls and procedures, including major issues regarding accounting principles and financial statement presentation, and critical accounting policies to be used in the consolidated financial statements; * Reviews earnings press releases prior to issuance; * Appoints, oversees, and approves compensation of the independent auditor; * Reviews with the independent auditor the scope of the annual audit, including fees and staffing, and approves all audit and permitted non-audit services provided by the independent auditor; * Reviews findings and recommendations of the independent auditor and management's response to the recommendations of the independent auditor; and * Discusses policies with respect to risk assessment and risk management, the Company's major risk exposures, and the steps management has taken to monitor and mitigate such exposures. The Board of Directors has determined that all Audit Committee members are independent and financially literate and that the Chair of the Committee, G. Kennedy Thompson, has financial management expertise under the New York Stock Exchange listing standards. In addition, Mr. Thompson qualifies as "audit committee financial expert" within the meaning of SEC regulations. The charter of the Audit Committee is available at www.flarock.com under Investor Relations - Corporate Governance Documents. COMPENSATION COMMITTEE The primary function of the Compensation Committee is to (1) discharge the responsibilities of the Board of Directors relating to the compensation of the Company's executive officers, and (2) prepare an annual report on executive compensation to be included in the Company's proxy statement. In addition, the Compensation Committee: * Reviews and approves the Company's goals and objectives relevant to the compensation of the Chairman of the Board and the Chief Executive Officer and evaluates their job performance in light of those goals and objectives; * Establishes compensation levels, including incentive and bonus compensation, for the Chairman and the Chief Executive Officer; * Reviews the performance of other senior executive officers and reviews and approves the compensation levels of the other senior executive officers; * Administers the Company's stock option plans and the Management Incentive Compensation program; and * Periodically reviews succession plans for senior executive officers. The charter of the Compensation Committee is available at www.flarock.com under Investor Relations - Corporate Governance Documents. CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. Under its Charter, the principal functions of the Corporate Governance Committee are to (1) identify individuals who are qualified to serve on the Company's Board of Directors, (2) recommend for selection by the Board of Directors the director nominees for the next annual meeting of the shareholders or at any such time that there is a vacancy on the Board of Directors, (3) develop and recommend to the Board of Directors corporate governance principles with respect to the Company, and (4) oversee the evaluation of the Board and management of the Company. In addition, the Corporate Governance and Nominating Committee: * Establishes criteria for Board membership; * Recommends to the Board directors to serve on other Board committees, monitors the functions of such committees and makes recommendations to the Board regarding the functions of such other committees; * Reviews and recommends changes to the Company's Corporate Governance Guidelines, Financial Code of Ethical Conduct and Code of Business Conduct and Ethics; and * Considers all requests by any director or executive officer for waivers of the Company's Financial Code of Ethical Conduct or Code of Business Conduct and Ethics. The charter of the Corporate Governance and Nominating Committee is available at www.flarock.com under Investor Relations - Corporate Governance Documents. EXECUTIVE COMMITTEE Edward L. Baker, John D. Baker II and John D. Milton Jr. comprise the Executive Committee. To the extent permitted by law, the Executive Committee exercises the powers of the Board between meetings of the Board of Directors. During the fiscal year ended September 30, 2004, the Executive Committee held no formal meetings, but acted on various resolutions by unanimous written consents. NOMINATING PROCESS ROLE OF THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE IN THE NOMINATING PROCESS The Corporate Governance and Nominating Committee ("Committee") identifies individuals that the Committee believes are qualified to become Board members in accordance with the Director Qualifications Standards set forth below, and recommends selected individuals to the Board for nomination to stand for election at the next meeting of shareholders of the Company in which directors will be elected. In the event there is a vacancy on the Board between meetings of shareholders, the Committee identifies individuals that the Committee believes are qualified to become Board members in accordance with the Director Qualifications Standards set forth below, and recommends one or more of such individuals for appointment to the Board. NOMINEES PROPOSED BY SHAREHOLDERS FOR CONSIDERATION BY THE COMMITTEE The Committee will consider properly submitted shareholder nominees for candidates for membership on the Board of Directors. Shareholders proposing individuals for consideration by the Committee must include at least the following information about the proposed nominee: the proposed nominee's name, age, business or residence address, principal occupation or employment, and whether such person has given written consent to being named in the proxy statement as a nominee and to serving as a director if elected. Shareholders should send the required information about the nominee to: Corporate Secretary Florida Rock Industries, Inc. 155 East 21st Street Jacksonville, Florida 32206 In order for an individual proposed by a shareholder to be considered by the Committee for recommendation as a Board nominee for the Annual Meeting of Shareholders to be held in early 2006, the Corporate Secretary must receive the proposal no later than 5 p.m. Eastern Time on September 30, 2005. Such proposals must be sent via registered, certified, or express mail (or other means that allows the shareholder to determine when the proposal was received by the Company). The Corporate Secretary will send properly submitted shareholder proposed nominations to the Committee Chair for consideration at a future Committee meeting. Individuals proposed by shareholders in accordance with these procedures will receive the same consideration that individuals identified to the Committee through other means receive. NOMINATIONS BY SHAREHOLDERS AT ANNUAL MEETING The Company's Articles of Incorporation provide that only persons who are nominated in accordance with the procedures set forth in the Articles of Incorporation shall be eligible for election as directors by the shareholders. Under the Articles of Incorporation, directors may be nominated, at a meeting of shareholders at which directors are being elected, by (1) the Board of Directors or any committee or person authorized or appointed by the Board of Directors, or (2) by any shareholder who is entitled to vote for the election of directors at the meeting and who complies with certain notice procedures. These notice procedures require that the nominating shareholder make the nomination by timely notice in writing to the Secretary of the Company. To be timely, the notice must be received at the principal executive offices of the Company not less than forty (40) days prior to the meeting except that, if less than fifty (50) days' notice or prior public disclosure of the date of the meeting is given to shareholders, the notice must be received no later than ten (10) days after the notice of the date of the meeting was mailed or such public disclosure was made. The notice must contain certain prescribed information about the proponent and each nominee, including such information about each nominee as would have been required to be included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission had such nominee been nominated by the Board of Directors. DIRECTOR QUALIFICATIONS STANDARDS The Corporate Governance and Nominating Committee has established the following standards and qualifications for members of the Board of Directors: * Each director shall at all times represent the interests of the shareholders of the Company. * Each director shall at all times exhibit high standards of integrity, commitment and independence of thought and judgment. * Each director shall dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including by attending shareholder meetings and meetings of the Board and Committees of which he or she is a member, and by reviewing in advance all meeting materials. * The Board shall meet the applicable standards of independence from the Company and its management. * The Board shall encompass a range of talent, skill and expertise sufficient to provide sound and prudent guidance with respect to all of the Company's operations and interests. The Corporate Governance Guidelines establish a retirement policy at age 70 (or the expiration of their term after their 70th birthday) for directors who joined the Board after 1986. IDENIFICATION, EVALUATION AND SELECTION OF NOMINEES The Committee periodically reviews the appropriate size and composition of the Board and anticipates future vacancies and needs of the Board. In the event the Committee recommends an increase in the size of the Board or a vacancy occurs, the Committee considers qualified nominees from several sources, which may include current Board members, a director search firm, and nominees recommended by shareholders and other persons. The Committee may from time to time retain a director search firm to help the Committee identify qualified director nominees for consideration by the Committee. The Committee evaluates qualified director nominees at regular or special Committee meetings against the current Director Qualifications Standards described above and reviews qualified director nominees with the Board. The Committee and the Chairman of the Board interview candidates that meet the Director Qualifications Standards, and the Committee selects nominees that best suit the Board's current needs and recommends one or more of such individuals for appointment to the Board. DIRECTOR COMPENSATION Directors who are not employees of the Company or its subsidiaries are paid annual fees of $15,000 plus $2,000 for each directors' meeting attended. In addition, effective January 1, 2005, non-employee directors are granted non-qualified options to purchase 1,000 shares of the Company's common stock for each regularly scheduled directors' meeting attended. These options have a term of ten (10) years, have an exercise price equal to the fair market value of the underlying shares on the date of grant and are immediately exercisable. Members of the Company's Audit Committee are paid additional annual fees of $5,000 except its chair who is paid an additional annual fee of $10,000. Members of other committees (except directors who are employees) are paid additional annual fees of $1,000 except the chairs who are paid additional annual fees of $2,000. No fees are paid for attendance at committee meetings. All of the directors who are not Company employees currently participate in the Company's Directors Stock Purchase Plan under which a director may designate all, or any part, of his or her director's compensation for investment in the Company's stock purchased in the open market through a broker. The Company matches 25% of the director's designated portion and pays all broker commissions. DIRECTOR ATTENDANCE AT ANNUAL MEETINGS OF SHAREHOLDERS The Company's policy is that our directors are expected to attend the Annual Meeting of Shareholders unless extenuating circumstances prevent them from attending. All directors attended last year's Annual Meeting of Shareholders. PROPOSAL NO. 1 ELECTION OF DIRECTORS Under our Restated Articles of Incorporation, the Board of Directors is divided into three classes. One class of directors is elected at each annual meeting of shareholders for a three-year term of office. We have listed below three nominees in Class I to be re-elected. Class I directors will hold office until the 2008 annual meeting. Your proxy will be voted for the election of the persons nominated unless you indicate otherwise. If any of the nominees named should become unavailable for election for any presently unforeseen reason, the persons named in the proxy shall have the right to vote for a substitute as may be designated by the Board of Directors to replace such nominee, or the Board may reduce the number of directors accordingly. The following table sets forth information with respect to each nominee for election as a director and each director whose term of office continues after this annual meeting of shareholders. Reference is made to the sections entitled "Common Stock Ownership of Certain Beneficial Owners" and "Common Stock Ownership by Directors and Officers" for information concerning stock ownership of the nominees and directors. Class I - Nominees for Terms Expiring in 2008 ----------------------------------------------
NAME AND PRINCIPAL OCCUPATION DIRECTOR OTHER AGE SINCE DIRECTORSHIPS ----------------------------- --- ----- ------------- A. R. Carpenter 62 1993 Regency Centers Retired Vice Chairman of CSX Corporation Corporation Stein Mart, Inc. John D. Baker II 56 1979 Patriot President and Chief Transportation Executive Officer of the Holding, Inc. Company Hughes Supply, Inc. Wachovia Corporation G. Kennedy Thompson 54 1998 Wachovia Corporation Chairman, President and Chief Executive Officer, Wachovia Corporation
DIRECTORS CONTINUING IN OFFICE AFTER THE 2004 ANNUAL MEETING Class II - Terms Expiring in 2006 ---------------------------------
NAME AND PRINCIPAL OCCUPATION DIRECTOR OTHER AGE SINCE DIRECTORSHIPS ----------------------------- --- -------- -------------- Edward L. Baker 69 1970 Patriot Chairman of the Board of the Transportation Company Holding, Inc. J. Dix Druce Jr. 57 2001 Regency Centers Chairman of National P.E.T. Corporation Scan LLC John D. Milton Jr. 59 2002 Executive Vice President, Treasurer and Chief Financial Officer William H. Walton III 52 2003 St. Joe Co. Managing Member, Rockpoint Group, LLC (a real estate investment firm); Managing Principal, Westbrook Real Estate Partners, LLC (a real estate investment firm) Class I - Terms Expiring in 2007 -------------------------------- NAME AND PRINCIPAL OCCUPATION DIRECTOR OTHER AGE SINCE DIRECTORSHIPS ----------------------------- ----- -------- ------------- Thompson S. Baker II 46 1991 Patriot Vice President of the Company Transportation Holding, Inc. Luke E. Fichthorn III 63 1972 Bairnco Partner in Twain Associates Corporation (a private investment Patriot banking firm); Chairman of the Board and Chief Transportation Executive Officer Holding, Inc. of Bairnco Corporation (manufacturing) The Honorable Tillie K. Fowler 61 2001 Winn Dixie Partner with Holland & Knight Stores, Inc. LLP
Francis X. Knott 59 2003 Chairman of Partners Management Co., LLC and Partners Realty Trust, Inc. (a real estate management enterprise)
All of the nominees and directors have been employed in their respective positions for the past five years, except A. R. Carpenter, J. Dix Druce Jr., The Honorable Tillie K. Fowler, John D. Milton Jr. and G. Kennedy Thompson. Mr. Carpenter retired in February, 2001, as Vice Chairman of CSX Corporation, a position he had held since July 1999. From 1962 until February 2001, he held a variety of positions with CSX, including President and Chief Executive Officer of CSX Transportation (from 1992 to July 1999). Mr. Druce served as President and Chairman of the Board of Directors of Life Service Corp., Inc., a life insurance management company, from 1988 through June 2000, and President and director of American Merchants Life Insurance Company and its parent, AML Acquisition, from October 1992 through June 2000. He was President and director (Chairman from May 1989 to July 1991) of National Farmers Union Life Insurance Company from 1987 to 1991, and President and director of Loyalty Life Insurance Company and NFU Acquisition Company from 1987 to 1991. Ms. Fowler joined the Washington, D.C. and Jacksonville, Florida offices of Holland & Knight in April 2001 after serving from 1993 until January 2, 2001 as a member of the United States House of Representatives. Mr. Milton joined the Company in his current offices on January 1, 2001. Prior to joining the Company, Mr. Milton practiced law in Jacksonville, Florida with the law firm of Martin, Ade, Birchfield & Mickler, P.A. Mr. Thompson was elected Chairman of Wachovia Corporation effective February 18, 2003. In January 2000, Mr. Thompson was elected President and effective April 18, 2000, Chief Executive Officer of First Union Corporation, which became Wachovia Corporation on September 4, 2001. Mr. Thompson was Vice Chairman of First Union Corporation from October 1998 through December 1999. Previously, he served as Managing Director, First Union Capital Markets Group. Mr. Knott previously served as a director of the Company from 1989 to 2002. Edward L. Baker and John D. Baker II are brothers. Thompson S. Baker II is the son of Edward L. Baker. See "Compensation Committee Interlocks and Insider Participation" and "Certain Relationships and Related Transactions" for a discussion of the relationships between the Company and Patriot Transportation Holding, Inc. PROPOSAL NO. 2 PROPOSAL TO APPROVE AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK The Company's Board of Directors has approved and recommends that the shareholders approve at the Annual Meeting a proposal to amend paragraph A of Article III of the Company's Restated Articles of Incorporation to increase the number of authorized shares of common stock, par value $0.10 per share, from 50,000,000 shares to 100,000,000 shares. The Board of Directors believes that the proposed amendment to the Articles of Incorporation shown below is in the best interests of the Company and its shareholders: "A. The maximum number of shares of capital stock which the corporation shall be authorized to have outstanding at any time is one hundred million (100,000,000) shares of voting common stock with a par value of $.10 per share and ten million (10,000,000) shares of preferred stock, to be issued in such classes and series as the board of directors may, in accordance with the provisions of Florida Statutes and without further stockholder action, from time to time authorize to be issued. As of December 6, 2004, 43,371,336 shares of common stock were issued and outstanding. Approximately 3,558,290 shares were reserved for issuance under shareholder approved stock option plans. As of the close of business on December 6, 2004, none of the Company's 10,000,000 shares of authorized preferred stock have been issued. As a result, only approximately 3,070,374 shares of common stock remained available for future corporate purposes. REASONS FOR THE PROPOSAL The Board of Directors has concluded that increasing the number of authorized shares of common stock will give the Company the ability to respond to growth of the Company's business that may occur in the future. Although the Board has no specific plans or commitments for the issuance of any of the additional shares that would be authorized by the amendment, the Board believes that the increase in the number of authorized shares will provide flexibility for future stock splits (effected in the form of a stock dividend) without the expense of a special shareholder meeting or waiting until the next annual meeting, and for other actions the Company might wish to take, such as paying for acquisitions with stock of the Company, equity offerings to raise capital, and employee benefit plans. CERTAIN EFFECTS OF THE PROPOSAL If shareholders approve the proposed amendment, the Board of Directors may issue such shares without further shareholder action except as required by law, regulation, or applicable stock exchange requirements. The additional shares, when issued, will have the same voting and other rights as the Company's presently authorized common stock. The holders of common stock do not have preemptive rights to subscribe for additional shares of common stock. ANTI-TAKEOVER EFFECTS AND OTHER PROVISIONS Although the Board has no present intention of issuing any additional shares of common stock as an anti-takeover step, the issuance of additional common stock could be used to create impediments to or otherwise discourage persons attempting to gain control of the Company. For example, the issuance of additional shares could be used in a manner that would dilute the voting power of shares then outstanding. Shares of common stock could also be issued to persons or entities that would support the Board of Directors in opposing a takeover bid which the Board determines to be not in the best interests of the Company, its shareholders, and its employees. EFFECTIVE DATE The Board reserves the right to abandon the amendment set forth in this Proposal at any time before its effectiveness whether before or after shareholder approval. If approved by the shareholders and not abandoned by the Board, the amendment would become effective upon the filing with the Secretary of State of Florida of Articles of Amendment, which filing is expected to take place shortly after the shareholders approve the amendment. VOTE REQUIRED The affirmative "FOR" vote by the holders of a majority of the shares of common stock represented at the meeting in person or by proxy is required to approve this amendment to the Company's Articles of Incorporation. The Board of Directors recommends that shareholders vote "FOR" this proposal. Proxies will be voted FOR this proposal unless a contrary vote is specified. SHAREHOLDER RETURN PERFORMANCE The following graph compares the performance of the Company's Common Stock to The S&P 600 Smallcap Index and a peer group of industry companies for the five-year period commencing September 30, 1999 and ending on September 30, 2004. The graph assumes that $100 was invested on September 30, 1999 in the Company's common stock and in each of the indices and assumes the reinvestment of dividends. The Peer Group consists of the following companies: Florida Rock Industries, Inc., Lafarge Corporation, Martin Marietta Materials, Inc., Texas Industries, Inc. and Vulcan Materials Company. CHART OMITTED
1999 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- ---- Florida Rock 100 115 139 136 224 345 S&P 600 Index 100 124 111 109 138 172 Peer Group 100 97 113 98 118 163
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth information concerning the compensation of our Chief Executive Officer and our other four most highly compensated executive officers who served in such capacities during the fiscal year ended September 30, 2004: Annual Compensation -------------------
Long Term All Other Name and Principal Salary Bonus Compensation Compensation Position Year ($) (1) ($) (1) Options #(2) ($) (3) -------- ---- ------- ------- ------------- ------------ John D. Baker II 2004 576,434 870,995 22,500 42,636 President and 2003 560,312 580,663 22,500 8,028 Chief Executive Officer 2002 548,000 446,000 22,500 26,762(4) Edward L. Baker 2004 486,875 486,875 22,500 50,604 Chairman of the Board 2003 550,906 333,509 22,500 7,935 2002 485,500 256,500 22,500 26,449(5) John D. Milton,Jr. 2004 424,375 416,813 18,750 16,872 Executive Vice President, 2003 411,250 284,275 18,750 7,569 Treasurer & Chief Financial 2002 401,989 216,000 18,750 4,884 Officer Thompson S. Baker II 2004 282,500 242,250 18,750 12,024 Vice President 2003 272,500 202,813 15,000 8,770 2002 269,250 110,505 15,000 5,250 George J. Hossenlopp 2004 247,500 206,125 15,000 14,060 Vice President 2003 238,750 173,460 15,000 10,749 2002 202,917 46,389 15,000 7,187
(1) Includes amounts deferred under the Company's Profit Sharing and Deferred Earnings Plan. Bonuses are accrued in the year earned and paid in the following year. (2) Option numbers have been adjusted for the stock split to shareholders of record as of January 2, 2004. (3) The amounts shown in the column for 2004 include the Company's limited matching contribution under the Employee Stock Purchase Plan of $720 each for Edward L. Baker, John D. Milton Jr., and George J. Hossenlopp; the Company's matching contributions to the Profit Sharing and Deferred Earnings Plan of $6,150 each for Edward L. Baker, John D. Baker II, and John D. Milton Jr., $5,950 for Thompson S. Baker II and $6,226 for George J. Hossenlopp; reimbursement of uninsured medical expenses of $7,244 for John D. Baker II, $2,225 for Edward L. Baker, $428 for George J. Hossenlopp, $4,578 for Thompson S. Baker II, and $341 for John D. Milton Jr.; a bonus paid to John D. Baker II of $14,253 outside of the Company's Management Incentive Compensation Program; personal use of company cars valued at $4,490 for Edward L. Baker, $2,989 for John D. Baker II, $9,661 for John D. Milton Jr., $4,496 for Thompson S. Baker II, and $4,766 for George J. Hossenlopp; and reimbursement of costs of tax return preparation of $12,000 for John D. Baker II and $37,019 for Edward L. Baker. (4) Includes $19,056 in 2002 (paid before July 30, 2002), the present value of the benefit of a split-dollar premium paid during the fiscal year. (5) Includes $19,539 in 2002 (paid before July 30, 2002), the present value of the benefit of a split-dollar premium paid during the fiscal year. Option Grants in the Last Fiscal Year (1) -----------------------------------------
Individual Grants Grant Date Value ----------------- ---------------- Number of Percent of Securities total options/ Underlying SARs granted Options to employees Exercise or Grant Date /SARs in fiscal base price Expiration Present Name granted (#)(2) year ($/Sh)(2) Date (3) Value $ (4) ---- -------------- ------------- ----------- ---------- ----------- John D. Baker II 22,500 5.1% $38.54 12/2/13 $354,600 Edward L. Baker 22,500 5.1% $38.54 12/2/13 $354,600 John D. Milton Jr. 18,750 4.3% $38.54 12/2/13 $295,500 Thompson S. Baker II 18,750 4.3% $38.54 12/2/13 $295,500 George J. Hossenlopp 15,000 3.4% $38.54 12/2/13 $236,400
(1) All information in this table relates to nonqualified stock options. The Company has not granted any incentive stock options or stock appreciation rights ("SARs"). (2) After giving effect to the 3 for 2 stock split to shareholders of record as of January 2, 2004. (3) Options become exercisable in five equal installments each year beginning on the first anniversary of the grant date. (4) This estimate is determined using the Black-Scholes model. This model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. This hypothetical value is based on the following assumptions: an exercise price equal to the market value on day of grant; estimated dividend yield of 1.1%; expected volatility of 34.9%; risk-free interest rate of 4.7%; and expected lives of 7 years. Option Exercises and Year End Values ------------------------------------ The following table shows information with respect to stock options exercised during the fiscal year ended September 30, 2004 and the number and value of unexercised options held by each executive officer named in the Summary Compensation Table.
Number of Unexercised Value of Unexercised In-The- Options at Money Options September 30, 2004 at September 30, 2004 (1) --------------------- --------------------------- Shares Acquired on Name Exercise Value Realized Exercisable # Exercisable # Exercisable $ Unexercisable $ ---- ----------- -------------- ------------- ------------- ------------- --------------- John D. - - 250,312 61,875 $10,131,226 $1,282,305 Baker II Edward L. - - 250,312 61,875 $10,131,226 $1,282,305 Baker John D. - - 78,750 90,000 $2,522,607 $2,334,155 Milton Jr. Thompson S. - - 14,670 43,530 $425,016 $844,464 Baker II George J. Hossenlopp 7,500 $262,200 37,800 36,450 $1,423,552 $706,760
(1) The closing price of the Company's common stock on the New York Stock Exchange composite transactions on September 30, 2004 (the last trading day in fiscal 2004) of $48.99 less the exercise price, was used in calculating the value of unexercised and exercisable options. Pension Plan ------------ We have a Management Security Plan (the "MSP Plan") for certain officers, including directors who are officers and certain key employees. Benefit levels have been established on the basis of base compensation as of December 31, 2002. Upon reaching normal retirement age, a participant is entitled to receive twice the amount of his benefit level in equal monthly payments for 12 months and thereafter, until his death, the benefit level in monthly payments. The MSP Plan provides that in the event a participant dies prior to his retirement his beneficiary will receive twice the amount of such participant's benefit level in monthly payments for a period of 12 months and thereafter the benefit level in monthly payments for the next 168 months or until such time as such participant would have reached age 65, whichever is later. If a participant dies after his retirement, his beneficiary, if any, will receive such participant's benefit for a period of 15 years from the date of the participant's retirement or until the death of the beneficiary, whichever occurs first. The annual retirement benefit levels in effect at September 30, 2004 for the executive officers named above participating in the MSP Plan were: John D. Baker II $275,000 Edward L. Baker $237,500 Thompson S. Baker II $132,500 George J. Hossenlopp $100,000 COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board of Directors (the "Committee") determines the compensation of our Chief Executive Officer, reviews and approves compensation of other officers and members of management reaching a salary level established by the Board, and periodically reviews, with the Chairman of the Board and the Chief Executive Officer, the succession plans for management. In addition, the Committee administers our stock option plans and the Management Incentive Compensation ("MIC") program. The full Board ratifies the recommendations of the Committee, except that the Board of Directors has vested sole authority to administer the 2000 Stock Plan in the Compensation Committee. The Compensation Committee has adopted a Compensation Committee Charter. Under the Charter, the principal function of the Compensation Committee is to (1) discharge the responsibilities of the Board of Directors relating to the compensation of the Company's executive officers, and (2) prepare an annual report on executive compensation to be included in the Company's proxy statement. The Committee's goals are to develop and maintain executive compensation programs that preserve and enhance shareholder value. Under the direction of the Committee, management has developed a compensation structure designed to compensate fairly executives for their performance and contribution to the Company, to attract and retain skilled and experienced personnel, to reward superior performance and to align executive and shareholder long-term interests. Base salary levels for executives are established taking into consideration business conditions, the Company's size and performance and peer group and industry compensation levels. The Committee carefully analyzes the compensation paid to executives of the Company's peer companies used in preparing the Shareholder Return Performance Graph, compares the financial and shareholder return performance of the peer companies to the Company's performance, and subjectively determines a reasonable salary for the executive considering this information as well as the executive's performance and responsibilities in achieving the Board's strategic goals. In setting the Chief Executive Officer's salary and determining MIC and other compensation paid for fiscal 2004, the Committee specifically considered, without applying any particular weighting, the compensation paid to the chief executive officers of the peer companies, the relative size of the peer companies and the Company, the Company's performance in terms of stock price and key financial indices compared to these same measures for its peers, the Chief Executive Officer's extensive industry knowledge, and the performance goals established by the Board for the Chief Executive Officer. The MIC program provides officers and key employees an opportunity for annual incentive compensation. The program provides an annual cash bonus as a financial incentive to participants who achieve their business unit's and the Company's goals and objectives. Profit levels are set for various segments of the business. Depending on the level of profitability obtained, an individual may become eligible for a bonus equal to a certain percentage of his year end base salary ranging up to a maximum of 150% of base salary for the Chief Executive Officer, a maximum of 100% of base salary for the Chairman and Chief Financial Officer and a maximum of 85% of base salary for other senior executives. However, that bonus may be adjusted down based on the degree by which the individual accomplishes his individual goals and objectives for the year. The total amount of the MIC program for the entire Company in any year is limited to 15% of consolidated income before income taxes. At the beginning of each year, after taking into consideration the outlook for the general economy, the construction materials industry, the Company's markets, prior year performance and the budget for the upcoming year, the Committee approves target levels of return-on- capital-employed for the senior executive officers. For fiscal 2004, based on the Company's actual performance when compared to the return-on-capital-employed target established by the Committee at the beginning of the year, the Company's Chief Executive Officer was awarded a cash bonus under the MIC program of $870,995. The Committee believes that long-term compensation in the form of stock options is critical in motivating and rewarding the creation of long-term shareholder value by linking the compensation provided to officers and other key management personnel with gains realized by the shareholders. In addition, the vesting periods associated with stock options encourage this key group to continue in the employ of the Company. All options granted have been granted at an option price equal to the fair market value of the Company's common stock on the date of grant. In subjectively determining the number of options to be granted to an individual, including the Chief Executive Officer, the Committee takes into account the cost to exercise the option and the individual's relative base salary, scope of responsibility, ability to affect profits and value to the Company and the levels of stock option awards granted to executives in comparable positions with the peer companies. In December 2004, the Committee granted the Chief Executive Officer options to purchase 15,000 shares of common stock at an exercise price equal to the fair market value on the date of grant. In establishing this option grant, in addition to considering the factors described in the preceding paragraph, the Committee also considered the number of options currently held by the Chief Executive Officer, the level of options granted to him in prior years, the level of stock option grants awarded to the chief executive officers of the peer companies and the Company's relative size, quantitative performance and strategic goals compared to the peer companies. No particular weighting was applied to any of these factors. Submitted by: Tillie K. Fowler, Chairman Francis X. Knott William H. Walton III Members of the Compensation Committee Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that incorporate future filings, including this Proxy Statement, in whole or in part, the foregoing Compensation Committee Report and the foregoing Shareholder Return Performance Graph shall not be incorporated by reference into any such filings. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Mr. Fichthorn, who was a member of the Compensation Committee until December 31, 2003, is among the four directors of the Company who are also directors of Patriot Transportation Holding, Inc. ("Patriot"). The other three directors of both Patriot and the Company are Edward L. Baker, John D. Baker II, and Thompson S. Baker II. The four directors own approximately 48.0% of the stock of Patriot and 27.1% of the stock of the Company. Accordingly, the Bakers, who own approximately 46.6% of the stock of Patriot and 26.9% of the stock of the Company, may be considered to be control persons of both the Company and Patriot. There were no other interlocks of executive officers or board members of the Company serving on the compensation or equivalent committee of another entity which has any director or executive officer serving on the Compensation Committee, other committees or Board of Directors of the Company. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company and Patriot routinely are engaged in business together through the hauling by Patriot of petroleum products and other products for the Company and the leasing to the Company of construction aggregates mining and other properties. Patriot has numerous petroleum hauling competitors at all terminal and plant sites and the rates charged are, accordingly, established by competitive conditions. The Company paid rents, royalties construction, management services, and transportation charges to subsidiaries of Patriot totaling $7,623,000 in fiscal 2004. Approximately 6.6% of Patriot's revenue was attributable to the Company during fiscal year 2004. Under an amended agreement, the Company provides certain tax, legal, administrative, human resources, health benefits, risk management and property management services to Patriot and its subsidiaries and charged Patriot $372,000 for these services in fiscal 2004. Mr. Fichthorn provided the Company with financial consulting and other services during fiscal 2004 for which he received $60,000. In May 2004, the Company acquired from a subsidiary of Patriot a 935 acre parcel of property in Miami, Florida for $1,628,000. In May 2004, the Company acquired from a subsidiary of Patriot 108 acres of land located in the northwest quadrant of I-395 and I-495 at Edsall Road in Springfield, Virginia for $15,000,000. In March 2004, the Company purchased from a subsidiary of Patriot a 6,321 acre parcel of property near Lake City, Florida for $13,000,000. Each of these transactions was approved by a committee of independent directors. In the opinion of the Company, the terms, conditions, transactions and payments under the agreements with the persons described above were not less favorable to the Company than those which would have been available from unaffiliated persons. COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table and notes set forth the beneficial ownership of our common stock by each person known by us to own beneficially more than 5% of the common stock of the Company.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS ------------------- -------------------- -------- Baker Holdings, LP 7,433,387 (1) 17.1% Edward L. Baker 1,153,556 (1) 2.7% John D. Baker II 2,898,681 (1) 6.7% P.O. Box 4667 Jacksonville, FL 32201 __________ _______ 11,485,624 (1) 26.5% Fidelity Management & 2,257,967 (2) 5.2% Research Company Fidelity Management Trust 32,050 (2) * Company 82 Devonshire Street Boston, MA 02109 ___________ 2,290,017 (2) 5.3% Royce & Associates, Inc. 2,236,350 (3) 5.2% 1414 Avenue of the Americas New York, NY 10019
* Less than 1% (1) Baker Holdings, LP is a limited partnership in which Edward L. Baker and John D. Baker II are the sole shareholders of its general partner and as such have shared voting and dispositive power over the shares owned by the partnership. Through pass through entities, each of Edward L. Baker and John D. Baker II has a pecuniary interest in 2,856,128 shares. Ownership is reported as of October 31, 2004. See "Common Stock Ownership By Directors and Officers" including the notes thereunder for an aggregation and identification of these shares with other shares beneficially owned by Edward L. Baker and John D. Baker II. (2) Information regarding ownership by FMR Corp. and its affiliates is based on information provided in a Schedule 13G filed with the Securities Exchange Commission on June 10, 2004. Percentage calculations are based on the outstanding shares of the Company's common stock on October 31, 2004. According to that filing, (i) Fidelity Management & Research Company, a wholly- owned subsidiary of FMR Corp. ("Fidelity"), is the beneficial owner of 2,257,967 shares of the Company's common stock; both Edward C. Johnson 3d, Chairman of FMR Corp., and Fidelity have sole power to dispose of the 2,257,967 shares, but neither FMR Corp. nor Mr. Johnson has the sole power to vote or direct the voting of the shares; and (ii) Fidelity Management Trust Company ("FMTC"), a wholly-owned subsidiary of Fidelity, is the beneficial owner of 32,050 shares of the Company's common stock; Mr. Johnson, and FMR Corp., through its control of FMTC, have sole power to dispose of and vote the 32,050 shares. (3) Information regarding ownership by Royce & Associates, Inc. ("Royce") is based on information provided in a Schedule 13G filed with the Securities Exchange Commission on February 2, 2004, after giving effect to the stock split to shareholders of record as of January 2, 2004. Percentage calculations are based on the outstanding shares of the Company's common stock on October 31, 2004. Royce has sole voting and dispositive power as to the shares shown. COMMON STOCK OWNERSHIP BY DIRECTORS AND OFFICERS The following table and notes set forth the beneficial ownership of our common stock by each director and each non- director named in the Summary Compensation Table and by all officers and directors of the Company as a group as of October 31, 2004 and also includes shares held under options as of October 31, 2004 that are exercisable within 60 days of that date.
NAME OF AMOUNT AND NATURE PERCENT OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS ---------------- ------------------------- ----------- Edward L. Baker 5,730,816 (1)(2)(3)(4)(5) 13.2% John D. Baker II 5,754,809 (1)(3)(4)(5)(6) 13.3% Thompson S. Baker II 154,612 (5)(7) * A. R. Carpenter 26,690 * J. Dix Druce Jr. 3,421 * Luke E. Fichthorn III 115,761 * Francis X. Knott 2,207 * Tillie K. Fowler 4,522 * George J. Hossenlopp 54,148 * John D. Milton Jr. 118,310 (8) * G. Kennedy Thompson 9,979 * William H. Walton III 490 * All Directors and Officers as a group (18 people) 12,312,890 28.4%
*Less than 1% (1) Includes out of the 7,433,387 shares owned directly by Baker Holdings, LP, as to which Edward L. Baker and John D. Baker II, have shared voting and shared dispositive powers, for Edward L. Baker, 2,856,128 shares as to which he has a pecuniary interest and an additional 1,721,132 shares in which another person has a pecuniary interest, which 4,577,260 shares are excluded from those shown by John D. Baker II; the remaining 2,856,128 shares in which John D. Baker II has a pecuniary interest are included in the shares shown for John D. Baker II. (2) Includes 230,426 shares held in the Edward L. Baker Living Trust; 40,716 shares held directly by Edward L. Baker; 105,760 shares in the Profit Sharing and Deferred Earnings Plan of the Company; and 9,069 shares held by the wife of Edward L. Baker as to which he disclaims any beneficial interest. (3) Includes for Edward L. Baker 247,243 shares held in trust for the benefit of children of John D. Baker II, which shares are excluded from those shown for John D. Baker II and as to which each of Edward L. Baker and John D. Baker II disclaim any beneficial interest. (4) Includes out of the 3,888 shares held by the Thompson S. Baker Living Trust, as to which Edward L. Baker and John D. Baker II have shared voting and shared dispositive powers, for Edward Baker 1,296 shares as to which he has a pecuniary interest and an additional 1,296 shares in which another person has a pecuniary interest, which 2,592 shares are excluded from those shown for John D. Baker II; the remaining 1,296 shares in which John D. Baker II has a pecuniary interest are included in the shares shown for John D. Baker II. (5) Edward L. Baker, John D. Baker II and Thompson S. Baker II may be considered to be control persons of the Company. (6) Includes 1,913,469 shares held by the John D. Baker II Living Trust; and 345,105 shares owned by his spouse as to which John D. Baker II disclaims any beneficial interest. The amounts shown do not include 90,000 shares held in the John D. Baker II Irrevocable Trust #1 for which an independent trustee has voting and dispositive power as to which John D. Baker II disclaims any beneficial interest, and 44,028 shares held in the John D. Baker Irrevocable Trust #2 as to which Edward L. Baker serves as trustee and John D. Baker II disclaims any beneficial interest. (7) Includes 27,648 shares owned by the wife and three minor children of Thompson S. Baker II, as to which Thompson S. Baker II disclaims any beneficial interest. (8) With respect to Mr. Milton, the table includes options which are exercisable within 60 days of November 30, 2004. AUDIT COMMITTEE REPORT The Audit Committee reviews the Company's financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. In this context, the Committee has met and held discussions with management and the independent auditor regarding the fair and complete presentation of the Company's results. The Committee has discussed significant accounting policies applied by the Company in its financial statements, as well as alternative treatments. Management represented to the Committee that the Company's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Committee has reviewed and discussed the consolidated financial statements with management and the independent auditor. The Committee discussed with the independent auditor matters required to be discussed by Statement on Auditing Standards No. 61 (Communications With Audit Committees). In addition, the Committee has discussed with the independent auditor the auditor's independence from the Company and its management, including the matters in the written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees). The Committee also has considered whether the independent auditor's provision of non-audit services to the Company is compatible with the auditor's independence. The Committee has concluded that the independent auditor is independent from the Company and its management. The Committee discussed with the Company's internal and independent auditors the overall scope and plans for their respective audits. The Committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, the evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended September 30, 2004, for filing with the Securities and Exchange Commission. The Committee has selected the Company's independent auditor. Submitted by: G. Kennedy Thompson, Chairman A.R. Carpenter J. Dix Druce Jr. Members of the Audit Committee The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the Audit Committee Report by reference therein. INDEPENDENT AUDITORS The Audit Committee has selected KPMG LLP as the Company's independent certified public accountants to examine the consolidated financial statements of the Company for fiscal 2005. Deloitte & Touche LLP served as the Company's independent accountants for fiscal 2004. Representatives of KPMG LLP and Deloitte & Touche LLP are expected to be present at the shareholders' meeting with the opportunity to make a statement if they so desire and will be available to respond to appropriate questions. On December 7, 2004, the Company's Audit Committee dismissed Deloitte & Touche LLP as the Company's principal public accountants. Deloitte & Touche's reports on the consolidated financial statements of the Company and its subsidiaries for the two most recent fiscal years ended September 30, 2004 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that their reports included unqualified opinions with an explanatory paragraph to disclose that effective October 1, 2002, the Company changed its method of accounting for its costs of reclamation to conform to Standard of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations". During the Company's two most recent fiscal years ended September 30, 2004 and the subsequent interim periods through the date of this Proxy Statement, there were no disagreements between the Company and Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Deloitte & Touche's satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their reports; and there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K. During the Company's two most recent fiscal years ended September 30, 2004 and the subsequent interim periods through the date of this Proxy Statement, the Company did not consult KPMG with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K. AUDIT AND NON-AUDIT FEES The following table presents fees for professional audit services rendered by Deloitte & Touche for the audit of the Company's financial statements for the years ended September 30, 2004 and September 30, 2003, and fees billed by Deloitte & Touche for other services during those periods.
2004 2003 ---- ---- Audit Fees (1) $194,425 $156,070 Audit Related Fees (2) 59,865 52,173 Tax Fees (3) 140,622 131,140 All other Fees 0 0 ------- ------- Total $394,912 $ 339,383
(1) Audit fees consisted of audit work performed in the preparation of the financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as statutory audits. (2) Audit related fees consisted principally of audits of employee benefit plans. (3) Tax fees consisted principally of assistance related to tax compliance and reporting. Pre-Approval of Audit and Non-Audit Services: Under the Company's amended Audit Committee Charter, the Audit Committee is required to pre-approve all auditing services and permissible non-audit services, including related fees and terms, to be performed for the Company by its independent auditor, subject to the de minimus exceptions for non-audit services described under the Exchange Act which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee pre-approved all audit services, audit-related services and tax review, compliance and planning services performed for the Company by Deloitte & Touche during fiscal 2004. SHAREHOLDER PROPOSALS Proposals of shareholders intended to be included in the Company's proxy statement and form of proxy relating to the annual meeting of shareholders to be held in early 2006 must be delivered in writing to the principal executive offices of the Company no later than August 31, 2005. The inclusion of any proposal will be subject to the applicable rules of the Securities and Exchange Commission. Except for shareholder proposals to be included in the Company's proxy materials, the deadline for nominations for director submitted by a shareholder is forty days before the next annual meeting, and for other shareholder proposals is November 8, 2005. Proposals must be sent to the Secretary of the Company at our principal executive offices. Any notice from a shareholder nominating a person as director must include certain additional information as specified in our Restated Articles of Incorporation. The Company may solicit proxies in connection with next year's annual meeting which confer discretionary authority to vote on any shareholder proposals of which the Company does not receive notice by November 8, 2005. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers, directors and beneficial owners of 10% or more of the Company's outstanding common stock to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission, The New York Stock Exchange and the Company. Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company's executive officers and directors, the Company believes all persons subject to these reporting requirements filed the required reports on a timely basis. BY ORDER OF THE BOARD OF DIRECTORS December 22, 2004 Dennis D. Frick Secretary PLEASE RETURN THE ENCLOSED FORM OF PROXY, DATED AND SIGNED, IN THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE. SHAREHOLDERS MAY RECEIVE WITHOUT CHARGE A COPY OF FLORIDA ROCK INDUSTRIES, INC.'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES BY WRITING TO THE TREASURER AT POST OFFICE BOX 4667, JACKSONVILLE, FLORIDA 32201. THIS REPORT ALSO IS AVAILABLE AT OUR WEBSITE, www.flarock.com. APPENDIX A ---------- FLORIDA ROCK INDUSTRIES, INC. STANDARDS OF BOARD INDEPENDENCE As used in these Standards of Board Independence, the term the "Company" includes Florida Rock Industries, Inc. and any of its subsidiaries. The term "immediate family member" includes the director's spouse, parents, children, siblings, mothers-in- law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in- law, sisters-in-law and any other person (other than domestic employees) who shares the director's home. The following standards will apply in determining whether a director is an independent director for all purposes other than service on the Company's Audit Committee: 1. Disqualification. A director will not be considered an independent director under any circumstances if: A. The director is or was employed by, or any immediate family member of the director is or was an executive officer of, the Company at any time during the previous 3-year period; B. The director or any of his or her immediate family members receives or has received at any time during the previous 3-year period more than $100,000 in direct compensation from the Company, other than fees for service on the Board of Directors or any committee of the Board of Directors and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); C. The director is or has been at any time during the previous 3-year period affiliated with or employed by, or has an immediate family member who is or has been at any time during the previous 3-year period affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company; D. The director or any of his or her immediate family members is or has been, at any time during the previous 3-year period, a part of an interlocking directorate in which an executive officer of the Company serves or served on the compensation committee of another company that employs the director or his or her immediate family member, as applicable; or E. The director is or has been at any time during the previous 3-year period an executive officer or employee, or has an immediate family member who is or has been at any time during the previous 3-year period an executive officer, of a company that either makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, exceeds the greater of (A) $1,000,000 or (B) 2% of such other company's consolidated gross revenues. Each of the automatic disqualification standards set forth in Section 1(A)-(E) above contain a three-year "look-back" provision. Notwithstanding the foregoing, at all times prior to November 4, 2004, the Board of Directors shall apply a one-year "look-back" period in lieu of the three-year "look-back" period in determining whether a director is automatically disqualified as an independent director. 2. Board Determination. A director will not be considered an independent director unless the Board of Directors makes an affirmative determination that the director, either directly or as a partner, shareholder or officer of any organization that has a relationship with the Company, has no "material relationship" with the Company. A. For purposes of determining whether a director has a "material relationship" with the Company, the Board of Directors will consider all relevant facts and circumstances. "Material relationships" can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships (among others). B. For purposes of determining whether a director has a "material relationship" with the Company, a director will not be considered to have a "material relationship" with the Company solely by virtue of the fact that: (i) the director, or any of his or her immediate family members, receives consulting fees or other compensation from the Company not in excess of $100,000 per year; or (ii) the director, or any of his or her immediate family members, formerly served in public office, and in connection with such public service, received campaign contributions from the Company or any of its affiliates within the limits prescribed by all applicable laws; or (iii) the director, or any of his or her immediate family members, serves on the Board of Directors of any company on which another director of the Company serves as a director, employee or contractor; or (iv) the director, or any of his or her immediate family members, serves on the Board of Directors of Patriot Transportation Holding, Inc. Notwithstanding the foregoing, in the event that any director, or any of his or her immediate family members, has relationships that fall within two (2) or more of the foregoing categorical standards, the Board shall consider the materiality of all such relationships, in the aggregate, to determine whether such director is independent. C. The Company will disclose the categorical standards set forth herein for the Board's determination of the independence of any director in the Company's annual proxy statement. If the Board makes a determination that any director who does not meet these categorical standards is "independent," the Company will disclose the basis of the Board's determination in the Company's annual proxy statement. FLORIDA ROCK INDUSTRIES, INC. PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS CALLED FOR JANUARY 26, 2005 The undersigned hereby appoints Edward L. Baker and John D. Baker II, or either of them, the attorneys, agents and proxies of the undersigned with full power of substitution to vote all the shares of common stock of Florida Rock Industries, Inc. which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company to be held at the general offices of the Company, 155 East 21st Street, Jacksonville, Florida on January 26, 2005 at 9 o'clock in the morning, and all adjournments thereof, with all the powers the undersigned would possess if then and there personally present. Without limiting the general authorization and power hereby given, the above proxies are directed to vote as instructed on the matters below: 1. The election of three directors to serve for a term of three years. / / FOR the nominees listed / / WITHHOLD AUTHORITY below (except as marked to vote for all nominees to the contrary below) listed below A.R. Carpenter, John D. Baker II and G. Kennedy Thompson are the nominees for a term of three years. To withhold authority to vote for any individual nominee, write that nominee's name in the space provided. _________________________________________________________________ 2. The approval of the proposed amendment of the Company's Articles of Incorporation to increase the authorized capital stock. / / FOR the proposed / / AGAINST / / ABSTAIN amendment. the proposed amendment. 3. To transact such other business as may properly come before the meeting or any adjournments thereof. (Continued and to be signed on other side) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Shares represented by properly executed and returned proxies will be voted at the meeting in accordance with the directions of the undersigned shareholder, or, if no directions are indicated, will be voted in favor of the election of the nominees proposed in this proxy statement and, if any other matters properly come before the meeting, in accordance with the best judgment of the persons designated as proxies. The undersigned hereby revokes any proxy heretofore given with respect to said stock, acknowledges receipt of the Notice and the Proxy Statement for the meeting accompanying this proxy, each dated December 22, 2004 and authorizes and confirms all that the said proxies or their substitutes, or any of them, may do by virtue hereof. Dated:____________________________ Signature: _______________________ Signature if Held Jointly:______________________ IMPORTANT: Please date this proxy and sign exactly as your name or names appear(s) hereon. If the stock is held jointly, signatures should include both names. Personal representatives, trustees, guardians and others signing in a representative capacity should give full title. If you attend the meeting you may, if you wish, withdraw your proxy and vote in person. PLEASE RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE