<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Pierce Leahy Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
PIERCE LEAHY CORP.
631 PARK AVENUE
KING OF PRUSSIA, PA 19406
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, MAY 15, 1998
The Annual Meeting of Shareholders of Pierce Leahy Corp. (the "Company")
will be held on Friday, May 15, 1998, at 10:00 a.m., at the Sheraton Valley
Forge Hotel, 1160 First Avenue, King of Prussia, Pennsylvania 19406, for the
following purposes:
1. To elect three directors to hold office until the annual meeting of
shareholders in 2001.
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for 1998.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 1, 1998 as
the record date for the meeting. Only shareholders of record at that time are
entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof. In the event that the meeting is adjourned for one or
more periods aggregating at least 15 days due to the absence of a quorum, those
shareholders entitled to vote who attend the adjourned meeting, although
otherwise less than a quorum, shall constitute a quorum for the purpose of
acting upon any matter set forth in this notice.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached Proxy Statement for further information with
respect to the business to be transacted at the meeting.
You are cordially invited to attend the meeting in person. The Board of
Directors urges you to sign, date and return the enclosed proxy card promptly.
The return of the enclosed proxy card will not affect your right to vote in
person if you choose to attend the meeting.
Joseph P. Linaugh
Secretary
April 10, 1998
<PAGE>
PIERCE LEAHY CORP.
631 PARK AVENUE
KING OF PRUSSIA, PA 19406
____________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 1998
____________________
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Pierce Leahy Corp. (the "Company") for use
at the Company's annual meeting of shareholders which will be held on the date,
at the time and place, and for the purposes set forth in the foregoing notice.
This Proxy Statement, the foregoing notice and the enclosed proxy card are first
being sent to shareholders on or about April 10, 1998.
The Board of Directors does not intend to bring any matter before the
meeting except those as specifically indicated in the notice and does not know
of anyone else who intends to do so. If any other matters properly come before
the meeting, however, the persons named in the enclosed proxy card, or their
duly constituted substitutes acting at the meeting, will be authorized to vote
or otherwise act thereon in accordance with their judgment on such matters.
When your proxy card is returned properly signed prior to voting at the
meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. If your proxy card is signed and returned without
specifying choices, the shares will be voted as recommended by the directors.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing, by delivering a duly executed proxy bearing a later date,
or by attending the meeting and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on April 1, 1998, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the meeting,
16,477,728 shares of the Company's Common Stock (the "Common Stock") were
outstanding and entitled to vote. Only the record holders of the Common Stock
on the record date will be entitled to vote. There are no other classes of
voting securities outstanding. The presence at the meeting, in person or by
proxy, of holders of shares entitled to cast at least a majority of the votes
that may be cast by all shares of Common Stock outstanding as of the record date
will constitute a quorum. Each share of Common Stock is entitled to one vote;
there are no cumulative voting rights with respect to the election of directors.
Abstentions and broker "non-votes" are counted as present and entitled to
vote for purposes of determining whether a quorum is present at the meeting. A
broker "non-vote" occurs when the nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not
<PAGE>
have discretionary voting power with respect to that item and has not received
instructions from the beneficial owner. A plurality of the votes duly cast is
required for the election of directors (i.e., the nominees receiving the
greatest number of votes will be elected). Abstentions or broker "non-votes" are
not counted for purposes of the election of directors. The affirmative vote by
the holders of a majority of the shares present in person or represented by
proxy and entitled to vote on the matter is required to approve any other matter
to be acted upon at the meeting. An abstention is counted as a vote against and
a broker non-vote is not counted for purposes of approving other matters to be
acted upon at the meeting.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership as of April 1, 1998 of each person who was known to the
Company to be the beneficial owner of more than 5% of the Common Stock. Each of
the shareholders named below has sole voting and investment power with respect
to such shares, unless otherwise indicated.
Common Stock
Name and Address of ---------------------------
Beneficial Owner Number of Shares Percent
- ------------------- ---------------- -------
Leo W. Pierce, Sr. 9,123,614(1)(2) 55.4%
J. Peter Pierce 9,086,114(1)(3) 55.1
Leo W. Pierce, Jr. 1,371,251(1)(4) 8.3
Michael J. Pierce 1,223,708(1)(5) 7.4
Mary E. Pierce 1,396,953(1)(6) 8.5
Barbara P. Quinn 1,540,310(1)(7) 9.3
Constance P. Buckley 1,221,167(1)(8) 7.4
Thomas W. Smith 1,134,900(9) 6.9
Thomas N. Tryforos 1,034,900(9) 6.3
- ---------------
(1) A total of 9,086,114 shares of Common Stock are either held in a Voting
Trust pursuant to a Voting Trust Agreement dated June 24, 1997 (as amended
or restated from time to time, the "Voting Trust") or are subject to
proxies (the "Proxies"). Leo W. Pierce, Sr. and J. Peter Pierce are the
Trustees of the Voting Trust and the persons granted voting rights under
the Proxies and, as such, each has shared power to vote the shares held in
the Voting Trust or subject to the Proxies. In the event that the two
Trustees disagree as to how to vote the shares held subject to the Voting
Trust or the Proxies, one-half of the shares subject to the Voting Trust or
the Proxies will be voted at the direction of each Trustee. With the
exception of 37,500 shares beneficially owned by Leo W. Pierce, Sr. which
are discussed in Note (2) below, all of the shares beneficially owned by
Leo W. Pierce, Sr., J. Peter Pierce, Leo W. Pierce, Jr., Michael J. Pierce,
Mary E. Pierce, Barbara P. Quinn, and Constance P. Buckley are held in the
Voting Trust or are subject to Proxies. The beneficial owners of interests
in the Voting Trust or the shares subject to the Proxies have the right to
dispose of the shares to which they have beneficial interests. The address
of each of the foregoing shareholders is c/o Pierce Leahy Corp., 631 Park
Avenue, King of Prussia, PA 19406.
2
<PAGE>
(2) Mr. Pierce has a direct beneficial interest in the 383,813 shares of Common
Stock held in the Voting Trust and, as such, has sole dispositive power
with respect to such shares. Mr. Pierce is also a co-trustee of the Pierce
Family Foundation (the "Foundation"), which owns 37,500 shares of Common
Stock. In such capacity, Mr. Pierce has shared voting and dispositive power
with respect to such shares. Mr. Pierce disclaims beneficial ownership of
the shares held by the Foundation.
(3) Mr. Pierce has a direct beneficial interest in the 746,668 shares of Common
Stock and, as such, has sole dispositive power with respect to such shares.
He also has a beneficial interest in 180,047 shares of Common Stock as
custodian for the benefit of his child. In addition, Mr. Pierce
beneficially owns 435,290 shares of Common Stock as co-trustee of a trust.
All of such shares are subject to Proxies. Mr. Pierce disclaims beneficial
ownership of the shares held by the trust.
(4) Mr. Pierce has a direct beneficial interest in 783,460 shares of Common
Stock. He also has a beneficial interest in an aggregate of 200,169 shares
as custodian for the benefit of his children and an aggregate of 30,186
shares in which his wife is custodian for the benefit of his children. In
addition, Mr. Pierce beneficially owns 357,436 shares as trustee of a
trust. All of such shares are held in the Voting Trust. Mr. Pierce
disclaims beneficial ownership of the shares held by the trust.
(5) Mr. Pierce has a direct beneficial interest in 1,117,798 shares of Common
Stock. He also has a beneficial interest in an aggregate of 105,910 shares
as custodian for the benefit of his child. All of such shares are held in
the Voting Trust or are subject to Proxies.
(6) Ms. Pierce has a direct beneficial interest in 1,396,953 shares of Common
Stock held in the Voting Trust.
(7) Ms. Quinn has a direct beneficial interest in 670,707 shares of Common
Stock. She also has a beneficial interest in an aggregate of 564,500
shares as custodian for the benefit of her children and an aggregate of
21,183 shares in which her husband is custodian for the benefit of her
children. In addition, Ms. Quinn beneficially owns 148,356 shares as
trustee of a trust and an aggregate of 135,564 shares as co-trustee of
three separate trusts. All of such shares are held in the Voting Trust or
are subject to Proxies. Ms. Quinn disclaims beneficial ownership of all
shares held by the trusts.
(8) Ms. Buckley has a direct beneficial interest in 715,145 shares of Common
Stock. She also has a beneficial interest in an aggregate of 152,512
shares as custodian for the benefit of her children and an aggregate of
8,472 shares in which her husband is custodian for the benefit of her
children. In addition, Ms. Buckley beneficially owns 222,535 shares as
trustee of a trust and an aggregate of 122,503 shares as co-trustee of four
separate trusts. All of such shares are held in the Voting Trust or are
subject to Proxies. Ms. Buckley disclaims beneficial ownership of all
shares held by the trusts.
(9) The information is based on a Schedule 13D, dated January 16, 1998, of
Thomas W. Smith and Thomas N. Tryforos filed with the Securities and
Exchange Commission. Based on their Schedule 13D, Messrs. Smith and
Tryforos beneficially own an aggregate of 1,034,900 shares of Common Stock
in their capacity as investment managers for certain managed accounts. Mr.
Smith beneficially owns an additional 100,000 shares. The address of
Messrs. Smith and Tryforos is 323 Railroad Avenue, Greenwich, CT 06830.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership as of April 1, 1998 of (i) each director, (ii) each of the
Named Executives (as hereinafter defined) and (iii) all the directors and
executive officers as a group. Each of the shareholders named below has sole
voting and investment power with respect to such shares, unless otherwise
indicated.
Name of Beneficial Owner Number of Shares(1) Percent of Class
- ------------------------ ------------------- ----------------
Leo W. Pierce, Sr. 9,123,614(2) 55.4%
J. Peter Pierce 9,086,114(3) 55.1
Douglas B. Huntley 107,993(4) *
Alan B. Campell 20,000 *
Delbert S. Conner 1,000 *
J. Anthony Hayden 72,000(5) *
Thomas A Decker 500 *
Ross M. Engelman 107,743(4) *
J. Michael Gold 107,393(6) *
Joseph A. Nezi 68,841(7) *
Christopher J. Williams 113,393(4) *
All executive officers and directors 9,833,814(8) 57.6%
as a group (13 persons)
- --------------
* Less than 1 percent.
(1) With respect to each shareholder, includes any shares issuable upon
exercise of any options held by such shareholder that are or will become
exercisable within sixty days of the record date.
(2) See Notes (1) and (2) to previous table.
(3) See Notes (1) and (3) to previous table.
(4) Includes options to purchase 107,393 shares of Common Stock.
(5) Includes 55,000 shares of Common Stock beneficially owned through an IRA.
(6) Consists of options to purchase 107,393 shares of Common Stock.
(7) Consists of options to purchase 68,841 shares of Common Stock.
(8) Includes options to purchase an aggregate of 604,747 shares of Common
Stock.
4
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities and Exchange Act of 1934,
the Company's directors and executive officers are required to file reports with
the Securities and Exchange Commission, within specified monthly and annual due
dates, relating to their ownership of and transactions in the Common Stock. The
Common Stock began to be publicly traded on July 1, 1997, and as of such date
the Company's directors and executive officers became subject to the Section 16
reporting requirements. During the transition to a reporting company, four of
the Company's directors or executive officers, J. Anthony Hayden, David Marsh,
Joseph A. Nezi and Christopher J. Williams, each failed to file on a timely
basis one Form 4 with respect to one transaction.
5
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
At the meeting, the shareholders will elect three Class I Directors to
hold office until the annual meeting of shareholders in 2001 and until their
respective successors have been duly elected and qualified. The Board of
Directors is divided into three classes serving staggered three-year terms, the
term of one class of directors to expire each year. The term of the Class I
Directors, J. Peter Pierce, Thomas A. Decker and Alan B. Campell, expires at the
1998 annual meeting of shareholders. The Board has nominated Messrs. J. Peter
Pierce, Thomas A. Decker and Alan B. Campell to serve as directors. Each is
currently serving as a Class I Director and has indicated a willingness to
continue serving as a director. Unless contrary instructions are given, the
shares represented by a properly executed proxy will be voted "FOR" the election
of Messrs. J. Peter Pierce, Thomas A. Decker and Alan B. Campell. Should any of
the nominees become unavailable to accept election as a director, the persons
named in the enclosed proxy will vote the shares which they represent for the
election of such other person as the Board of Directors may recommend.
The current members of the Board of Directors, including the nominees
for Class I Director, together with certain information about them, are set
forth below:
DIRECTOR TERM POSITIONS WITH THE
NAME AGE SINCE EXPIRES COMPANY
- ---- --- -------- ------- ------------------
Class I Directors
J. Peter Pierce 52 * 1998 President, Chief Executive
Officer and Director
Alan B. Campell 46 1994 1998 Director
Thomas A. Decker 52 1997 1998 Director
Class II Directors
Douglas B. Huntley 38 1994 1999 Vice President, Chief Financial
Officer and Director
Delbert S. Conner 67 1990 1999 Director
Class III Directors
Leo W. Pierce, Sr. 79 1957 2000 Chairman of the Board
J. Anthony Hayden 54 1997 2000 Director
- --------------
* Mr. J. Peter Pierce has served as a director since the early 1970s.
6
<PAGE>
Mr. J. Peter Pierce has served as President and Chief Executive Officer of the
Company since January 1995 and has been a director since the early 1970s. Mr.
Pierce served as President and Chief Operating Officer of the Company from
January 1984 to January 1995, prior to which he served in various other
capacities with the Company, including as Vice President of Operations, General
Manager of Connecticut, New York and New Jersey and Sales Executive. Mr. Pierce
attended the University of Pennsylvania and served in the United States Marine
Corps.
Mr. Alan B. Campell has served as a director of the Company since 1994. Since
1997, Mr. Campell has been a consultant. From 1986 until 1997, Mr. Campell was
a Managing Director of Campell Vanderslice Furman, an investment banking firm.
Prior thereto, Mr. Campell was a Vice President at Chase Manhattan Bank, N.A.
Mr. Campell holds a B.A. degree from Brown University and an M.A. from the
University of Southern California.
Mr. Thomas A. Decker has served as a director of the Company since 1997. Since
January 1997, Mr. Decker has served as Senior Vice President, General Counsel
and Secretary, of Unisource Worldwide, Inc. From 1994 until January 1997, Mr.
Decker was Executive Vice President, Chief Operating Officer and General Counsel
of Saint Gobain Corporation, and from 1994 until 1996, Mr. Decker was Executive
Vice President and General Counsel of Saint-Gobain Corporation. During the
period 1994 through 1997, he was responsible for all corporate staff activities
including Law, Human Resources, Finance and Information Systems at Saint-Gobain
Corporation and its three principal subsidiaries. Mr. Decker was Vice
President, General Counsel and Secretary of Saint Gobain Corporation from 1991
through 1994. From 1974 to 1991, Mr. Decker was Vice President, General Counsel
and Secretary of Certainteed Corporation. Mr. Decker holds a B.A. degree from
the University of Pennsylvania and a J.D. degree from the University of Virginia
School of Law.
Mr. Douglas B. Huntley has served as Chief Financial Officer since January
1994 and as a director of the Company since 1994. From May 1993 until December
1993, Mr. Huntley served as Assistant to the President of the Company. From
August 1989 to March 1993, he was an Executive Advisor and a Project Manager of
Rockwell International in connection with a multi-billion dollar NASA contract.
Prior thereto, Mr. Huntley was an accountant for Deloitte Haskin & Sells. Mr.
Huntley holds a B.S. degree from Bucknell University and an M.B.A. from the
University of Pennsylvania, Wharton School of Business and is a Certified Public
Accountant.
Mr. Delbert S. Conner has served as a director of the Company since 1990.
Since May 1995, Mr. Conner has served as Vice Chairman of USCO Distribution
Services, Inc. on a semi-retired basis. From January 1994 through April 1995,
he was the Vice Chairman of USCO on a full-time basis and its President and
Chief Executive Officer from February 1983 to December 1993. Mr. Conner holds a
B.S. degree from Bryant College.
Mr. Leo W. Pierce, Sr. has served as Chairman of the Board of the Company
since its formation in 1957. Mr. Pierce served as the Chief Executive Officer
of the Company from its formation to January 1995 and as President from its
formation to January 1984. Prior to forming the Company, Mr. Pierce was a sales
representative for Lefebure Corporation and an accountant for Price Waterhouse.
Mr. Pierce holds a B.A. degree from St. John's University. Leo W. Pierce, Sr.
is the father of J. Peter Pierce.
Mr. J. Anthony Hayden has served as a director of the Company since 1997.
Since March 1996, Mr. Hayden has served as President and Chief Executive Officer
of Hayden Real Estate, Inc. From 1975
7
<PAGE>
until March 1996, Mr. Hayden served in various capacities with Cushman and
Wakefield Commercial Real Estate Company, including Executive Vice President of
the Mid-Atlantic/Mid-West Region. Mr. Hayden holds a B.S. degree from LaSalle
University. Mr. Hayden is also a director of Liberty Property Trust.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1997, the Board of Directors held six formal meetings. After
completion of the Company's initial public offering of Common Stock, the Board
established an Executive Committee and an Audit Committee. The Board also
reconstituted the Compensation Committee so that it is now comprised entirely of
non-employee directors. The Compensation Committee held one formal meeting in
1997 and neither the Executive Committee nor the Audit Committee held formal
meetings in 1997. The Executive Committee is empowered to approve acquisitions
and other transactions up to a specified amount. Messrs. Leo W. Pierce, Sr., J.
Peter Pierce and Huntley are currently the members of the Executive Committee.
The Compensation Committee considers and recommends to the Board both salary
levels and bonuses for the officers of the Company. The Compensation Committee
also reviews and makes recommendations with respect to the Company's existing
and proposed compensation plans, and it serves as the committee responsible for
administering the Company's stock option plans. Messrs. Decker and Conner are
currently the members of the Compensation Committee. The Audit Committee
reviews the Company's internal accounting controls and handles matters relating
to the Company's independent public accountants. Messrs. Campell, Conner and
Hayden are currently members of the Audit Committee.
During 1997, each director attended more than 75% of the aggregate of the
total number of meetings of the Board of Directors and meetings held by all
committees of the Board of Directors on which he served.
COMPENSATION OF DIRECTORS
All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. All nonemployee
directors also receive $3,500 for each meeting of the Board of Directors
attended. In addition, each nonemployee director was granted in January 1998 an
option to purchase 2,500 shares of Common Stock at the fair market value on the
date of grant. The options vest in five equal annual installments beginning on
the first anniversary of the date of grant.
8
<PAGE>
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
Subject to shareholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has reappointed Arthur Andersen LLP to
serve as the Company's independent public accountants for the current fiscal
year. If the shareholders do not ratify this appointment by the affirmative
vote of a majority of the votes cast at the meeting, other independent public
accountants will be considered by the Board upon recommendation of the Audit
Committee.
A representative of Arthur Andersen is expected to be present at the meeting.
Such representative will have the opportunity to make a statement if he desires
to do so and will be available to respond to appropriate questions.
The affirmative vote of a majority of votes cast at the meeting in
person or by proxy is required to ratify the reappointment of Arthur Andersen.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" RATIFICATION OF THE REAPPOINTMENT
OF ARTHUR ANDERSEN.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid by the Company as
well as certain other compensation paid or accrued during fiscal 1995, 1996 and
1997 to the Company's Chief Executive Officer and the Company's five other
highest paid executive officers (together with the Chief Executive Officer, the
"Named Executives") for services to the Company in 1995, 1996 and 1997:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------------------ COMPENSATION
OTHER ------------
ANNUAL AWARDS ALL OTHER
NAME AND FISCAL COMPENSA- ---------- COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) TION ($) OPTIONS (#) ($)
<S> <C> <C> <C> <C> <C> <C>
J. Peter Pierce, 1997 250,000 87,760 - - 7,122(1)
President and Chief 1996 251,485 93,400 - - 6,967(1)
Executive Officer 1995 186,800 93,400 - - 6,681(1)
Ross M. Engelman, 1997 130,000 45,635 - 31,773 5,403(2)
Vice President, 1996 130,000 65,000 - 54,014 5,216(2)
Operations- South 1995 130,422 65,000 - 90,024 4,813(2)
J. Michael Gold, 1997 130,000 45,635 - 31,773 4,092(3)
Vice President, 1996 130,000 65,000 - 54,014 3,739(3)
Operations- 1995 129,905 65,000 - 90,024 3,417(3)
Northeast
Douglas B. Huntley, 1997 130,000 45,635 - 31,773 5,442(4)
Vice President, Chief 1996 130,000 65,000 - 54,014 5,231(4)
Financial Officer 1995 129,520 65,000 - 90,024 4,802(4)
Joseph A. Nezi, 1997 130,000 97,635(5) - - 6,335(6)
Vice President, 1996 130,000 92,370(5) - 37,068 6,256(6)
Sales and 1995 133,020 97,841(5) - 90,024 5,748(6)
Marketing
Christopher J. 1997 130,000 45,635 - 31,773 5,442(7)
Williams, 1996 130,000 65,000 - 54,014 5,339(7)
Vice President, 1995 129,905 65,000 - 90,024 5,089(7)
Operations-West
</TABLE>
__________________________
(1) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,268 and $2,310 representing an employer match under the Company's 401(k)
Plan, $1,872, $1,699 and $1,371 in net premiums for a guaranteed term
10
<PAGE>
life insurance policy on behalf of Mr. Pierce and $3,000, $3,000 and $3,000
representing contributions made by the Company under its Profit Sharing
Plan.
(2) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,245,
$2,249 and $2,107 representing an employer match under the 401(k) Plan,
$158, $158 and $98 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Engelman and $3,000, $2,809 and $2,608 representing
contributions made by the Company under the Profit Sharing Plan.
(3) Included in such amounts for 1997, 1996 and 1995, respectively, are $900,
$750 and $700 representing an employer match under the 401(k) Plan, $192,
$191 and $119 in net premiums for a guaranteed term life insurance policy
on behalf of Mr. Gold and $3,000, $2,798 and $2,598 representing
contributions made by the Company under the Profit Sharing Plan.
(4) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,250 and $2,093 representing an employer match under the 401(k) Plan,
$192, $191 and $119 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Huntley and $3,000, $2,790 and $2,590 representing
contributions made by the Company under the Profit Sharing Plan.
(5) Includes $52,000, $27,370 and $32,842 paid as commissions in 1997, 1996 and
1995, respectively.
(6) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,260 and $2,310 representing an employer match under the 401(k) Plan,
$1,135, $996 and $438 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Nezi and $3,000, $3,000 and $3,000 representing
contributions made by the Company under the Profit Sharing Plan.
(7) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,250 and $2,066 representing an employer match under the 401(k) Plan,
$192, $191 and $125 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Williams and $3,000, $2,898 and $2,898 representing
contributions made by the Company under the Profit Sharing Plan.
11
<PAGE>
STOCK OPTION GRANTS
The following table contains information concerning grants of stock options to
the Chief Executive Officer and to each of the other Named Executives during
1997:
OPTION GRANTS IN 1997
---------------------
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable Value at
Number of Assumed Annual Rates of Stock
Securities % of Total Price Appreciation for Option
Underlying Options Granted Exercise Term(2)
Options to Employees in Price Expiration -----------------------------
Name Granted(#)(1) 1997 ($/Sh) Date 5% 10%
- ---- ---------- ---------------- --------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. Peter Pierce - - - - - -
Ross M. Engelman 31,773 20.7 5.09 * 101,708 257,748
J. Michael Gold 31,773 20.7 5.09 * 101,708 257,748
Douglas B. Huntley 31,773 20.7 5.09 * 101,708 257,748
Joseph A. Nezi - - - - - -
Christopher J. 31,773 20.7 5.09 * 101,708 257,748
Williams
</TABLE>
____________________
* The options have no specified expiration date.
(1) All options were granted under the Company's Nonqualified Stock Option
Plan. The options were originally scheduled to vest in five equal annual
installments commencing on the first anniversary of the date of grant.
However, upon the completion of the initial public offering of the
Company's Common Stock on July 1, 1997, these options became fully vested
and exercisable. The Company may make loans with respect to vested
options.
(2) Illustrates the value that might be received upon exercise of options
immediately prior to the assumed expiration of their term at the specified
compounded rates of appreciation based on the market price for the Common
Stock when the options were granted. There was no established trading
market for the Common Stock at the time the options were issued, so the
market price is based upon the formula set forth in the Plan based upon a
multiple of EBITDA, as well as the amount of cash, cash equivalents,
outstanding indebtedness and other obligations of the Company. Since the
options granted to the Named Executives do not have a specified expiration
date, for purposes of calculating the assumed appreciation, the options
have been deemed to expire ten years from the date of grant. Assumed rates
of appreciation are not necessarily indicative of future stock performance.
12
<PAGE>
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth the value of options held by each of the Named
Executives at December 31, 1997. None of the Named Executives exercised any
options during 1997.
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1997 (#) AT DECEMBER 31, 1997 ($)(1)
----------------------- ---------------------------
SHARES VALUE
ACQUIRED ON REALIZED UNEXERCI- UNEXERCI
NAME EXERCISE (#) ($) EXERCISABLE SABLE EXERCISABLE -SABLE
- ---- ------------ --------- ----------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Peter Pierce - - - - - -
Ross M. Engelman - - 107,393 68,418 1,637,750 1,029,007
J. Michael Gold - - 107,393 68,418 1,637,750 1,029,007
Douglas B. Huntley - - 107,393 68,418 1,637,750 1,029,007
Joseph A. Nezi - - 68,841 58,251 1,048,892 880,153
Christopher J. - - 107,393 68,418 1,637,750 1,029,007
Williams
</TABLE>
- ----------------
(1) The value of unexercised in-the-money options is based on the difference
between the last sale price of a share of Common Stock as reported by the
New York Stock Exchange on December 31, 1997 ($20.50) and the exercise
price of the options, multiplied by the number of options.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
return on the Common Stock during the period from the commencement of public
trading of the Common Stock on July 1, 1997 until December 31, 1997, and the
cumulative total return on the S&P 500 Index and the Russell 2000 Index during
such period. The comparison assumes $100 was invested at the beginning of such
period in Common Stock and in each of the foregoing indices and assumes the
reinvestment of any dividends. Since July 1, 1997, the Common Stock has been
traded under the symbol PLH on the New York Stock Exchange.
COMPARISON OF CUMULATIVE TOTAL RETURN
PIERCE LEAHY COMMON STOCK, S&P 500 INDEX AND RUSSELL 2000 INDEX
FISCAL YEAR ENDING
------------------
COMPANY 7/01/97 12/31/97
- ------- ------- --------
PIERCE LEAHY CORP 100.00 113.89
RUSSELL 2000 INDEX 100.00 111.02
BROAD MARKET 100.00 110.58
THE PEER GROUP CHOSEN WAS:
RUSSELL 2000 INDEX
THE BROAD MARKET INDEX CHOSEN WAS:
S&P 500 INDEX
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(800) 649-6826
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for the oversight and administration of executive compensation.
Since December 1997, the Committee has been composed of two non-employee
directors. Prior to the Company's initial public offering of Common Stock in
July 1997 and until the Compensation Committee was reconstituted in December,
the Compensation Committee was comprised of Leo W. Pierce, Sr., J. Peter Pierce,
and Alan B. Campell.
The Committee is charged with determining the salary and other compensation of
the Company's President and Chief Executive Officer as well as the Company's
other executive officers. The Committee consults with the President and Chief
Executive Officer regarding the compensation for the other executive
14
<PAGE>
officers. To date, compensation of executive officers has been comprised
primarily of salary and cash bonuses. Compensation levels for 1997 were set when
the Company was still privately held. At such time, the Company was taxed as a
Subchapter S corporation, which limited the number of shareholders the Company
could have and hence the use of equity as a component of compensation.
Compensation in 1997 for each of the executive officers was comprised of a
base salary, a bonus plus, in the case of all of the executives other than the
President and Chief Executive Officer and one other executive officer, stock
options. Salaries were based on historical levels and, the Committee believes,
are relatively modest for corporations with the performance similar to the
Company (primarily based on revenue and EBITDA (earnings before interest, taxes,
deprecation, amortization and certain other charges)).
Bonuses for 1997 were based on targets for EBITDA, with each executive officer
entitled to achieve up to 70% of base salary. Based on the Company's
performance for 1997, including the substantial growth in both revenue and
EBITDA and the successful completion and integration of 17 acquisitions as well
as an initial public offering, the Compensation Committee awarded the executive
officers, including the President and Chief Executive Officer, bonuses equal to
approximately 35% of base salary.
In addition, the executive officers, other than the President and Chief
Executive Officer and one other executive officer of the Company, also received
stock options. The number of options received were based on the Committee's
assessment of the level that would sufficiently motivate senior management to
increase the long-term value of the Company and were priced according to a
formula in the option plan the Company utilized prior to its initial public
offering.
Going forward, the Committee believes that executive compensation should
continue to be comprised of these three elements: base salary; bonus
opportunities; and stock options.
Base Salaries
The Committee plans to review base salaries annually and adjust them based on
Company performance as well as a review of compensation programs in other
companies in similar industries with similar capitalization and revenues. In
determining base salaries, the Committee considers the executive's overall level
of responsibility, other comparable labor markets in which the Company competes
for employees, and the compensation of similarly situated individuals in the
records management industry, to the extent this information is available.
Bonuses
The Committee believes that bonuses are an important part of an executive's
compensation because it places a portion of the executive's performance at risk
and encourages sustained high performance each year. In the past, bonuses have
been based primarily on budgeted EBITDA targets. The Committee sets a bonus
target each year for the President and Chief Executive Officer and the other
executive officers. The target is based on the achievement of a combination of
Company-wide goals and individual performance goals. The Company goals are
expected to continue to be primarily based on EBITDA, which is the benchmark
used by many of the financial covenants in the Company's financing agreements
and is a criterion customarily used to evaluate records management companies and
EBTDA (earnings before
15
<PAGE>
taxes, deprecation, amortization and certain other charges), which is a measure
of cash flow after interest expense. Other measures of Company performance
expected to be used are exceeding sales targets, controlling capital budgets,
and other objective and subjective measures which increase the long-term value
of the Company.
Stock Options
Stock options are the third element of compensation. In conjunction with its
initial public offering, the Company adopted a new stock option plan which
permits the granting of incentive and nonqualified options. The Committee also
administers the stock option plan. Stock options serve to align management with
the interests of the Company's shareholders and to incentivize them to manage
with a view towards long-term growth rather than focusing solely on short-term
goals. Given the substantial level of the stock ownership of President and
Chief Executive Officer, to date the Committee has not granted options to the
President when it granted options to other executives. As the Company's
outstanding shares increase, the Committee believes that over the long-term it
will be appropriate to grant stock options to the President and Chief Executive
Officer along with the other executive officers.
Summary
The Committee believes that the compensation program described above
effectively links executive and shareholder interests and provides incentives
that are consistent with the long-term goals and strategies of the Company to
continue to succeed in the records management industry.
Executive Compensation Tax Deductibility
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
generally limits the deductible amount of annual compensation paid to certain
individual executive officers to no more than $1 million. The Committee does
not deem Section 162(m) of the Code to be applicable to the Company at this
time. The Committee will continue to review tax consequences as well as other
relevant consideration in connection with compensation decisions.
Submitted by the Compensation Committee:
Delbert S. Conner
Thomas A. Decker
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company leases from four separate limited partnerships its corporate
headquarters in King of Prussia, Pennsylvania and its facilities in Suffield,
Connecticut, Orlando, Florida and Charlotte, North Carolina. J. Peter Pierce,
the Company's President and Chief Executive Officer, is the general partner of
three of the limited partnerships and members of the Pierce family and certain
other officers and directors of the Company and their affiliates own substantial
limited partnership interests in each of the four limited partnerships. The
lease on the Company's corporate headquarters expires on April 30, 2003, without
any renewal options. The leases for the Suffield, Orlando and Charlotte
facilities terminate on December 31, 2005, October 31, 2004 and August 31, 2001,
respectively. Each of such leases contains
16
<PAGE>
two five-year renewal options. The aggregate rental payments by the Company for
such properties during 1997 was $961,000.
The Company believes that the terms of its leases with the related parties are
as favorable to the Company as those generally available from unaffiliated third
parties. There are no plans by the Company to lease additional facilities from
officers, directors or other affiliated parties.
The Company provides an annual pension in the amount of $96,000 to Leo W.
Pierce, Sr. and to his spouse, if she survives him.
The Company has entered into a tax indemnification agreement with the
shareholders of the Company prior to its initial public offering which provides
for: (i) the distribution to such shareholders of cash equal to the product of
the Company's taxable income for the period from January 1, 1997 until the date
the Company's initial public offering was completed and the sum of the highest
effective federal and state income tax rate applicable to any current
shareholder (or in the case of shareholders that are trusts, any beneficiaries),
less any prior distributions to such shareholders to pay taxes for such period,
and (ii) an indemnification of such shareholders for any losses or liabilities
with respect to any additional taxes (including interest, penalties and legal
fees) resulting from the Company's operations during the period in which it was
a Subchapter S corporation.
During 1997, Alan B. Campell, a director of the Company, was a managing
director of Campell Vanderslice Furman ("CVF"), an investment banking firm that
provided investment banking services to the Company. During 1997, the Company
paid CVF approximately $ 1.8 million in connection with the Company's initial
public offering of Common Stock and its concurrent notes offering.
CERTAIN TRANSACTIONS
As of December 31, 1997, J. Michael Gold, the Company's Vice President,
Operations-Northeast, had borrowed a total of $210,266 from the Company.
Interest accrues on the loan at the rate of 8.875% per annum.
In 1997, the Company paid $88,000 to Hayden Real Estate, Inc., a company owned
by J. Anthony Hayden, a director of the Company, for commissions on various real
estate transactions.
SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of the Board of Directors'
proxies for the meeting, including the cost of preparing, assembling and mailing
proxy materials, the handling and tabulation of proxies received, and charges of
brokerage houses and other institutions, nominees and fiduciaries in forwarding
such materials to beneficial owners. In addition to the mailing of the proxy
materials, such solicitation may be made in person or by telephone, telegraph or
telecopy by directors, officers or regular employees of the Company, or by a
professional proxy solicitation organization engaged by the Company.
17
<PAGE>
PCLCM-PS-97
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------
PIERCE LEAHY CORP.
- ------------------------------
RECORD DATE SHARES:
-------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------
- ---------Shareholder sign here---------------------Co-owner sign here-----
DETACH CARD
1. Election of three Class I Directors. FOR ALL WITH FOR ALL
NOMINEES HOLD EXCEPT
J. PETER PIERCE
THOMAS A. DECKER [_] [_] [_]
ALAN B.CAMBELL
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
2. Ratification of the appointment of Arthur Andersen FOR AGAINST ABSTAIN
LLP as independent public accountants of the Company. [_] [_] [_]
3. To transact such other business as may properly come before the meeting.
Mark box at right if an address change or comment has been noted on the
reverse side of this card.[_]
DETACH CARD
PIERCE LEAHY CORP.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and
operation of your Corporation that require your immediate attention and
approval. These are discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right
to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then signed the card, detach it and return your proxy vote in
the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders,
May 15, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Pierce Leahy Corp.
<PAGE>
PIERCE LEAHY CORP.
631 PARK AVENUE, KING OF PRUSSIA, PENNSYLVANIA 19406
ANNUAL MEETING OF SHAREHOLDERS - MAY 15, 1998
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Douglas B. Huntley
and Joseph P. Linaugh as Proxies, and each of them acting individually, with
full power of substitution to each, to vote for and on behalf of the undersigned
at the 1998 Annual Meeting of Shareholders of PIERCE LEAHY CORP. to be held at
the Sheraton Valley Forge Hotel, 1160 First Avenue, King of Prussia,
Pennsylvania 19406, on Friday, May 15, 1998, at 10:00 a.m., and at any
adjournment or postponement thereof. The undersigned hereby directs the said
proxies to vote in accordance with their judgment on any matters which may
properly come before the Annual Meeting, all as indicated in the Notice of
Annual Meeting, receipt of which is hereby acknowledged, and to act on the
following matters set forth in such notice as specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" THE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND "FOR" PROPOSAL 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________________ ___________________________________
_____________________________________ ___________________________________
_____________________________________ ___________________________________
