SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ECHELON INTERNATIONAL CORPORATION
------------------------------------------------
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
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(Name of Person(s) Filing Proxy Statement, other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which the transaction applies:
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(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):
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[ ] 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:
(4) Date Filed:
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[LOGO]
ECHELON INTERNATIONAL CORPORATION
450 CARILLON PARKWAY, SUITE 200
ST. PETERSBURG, FLORIDA 33716
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
To the Stockholders of
Echelon International Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Echelon
International Corporation will be held on Tuesday, the 18th day of May, 1999,
at 8:00 a.m., Local Time, at The Fairmont Hotel, 1717 North Akard Street,
Dallas, Texas, for the following purposes:
1. To elect two Class III directors, each to serve for a three-year term;
2. To ratify the appointment of KPMG LLP as the Company's independent
certified public accountants for fiscal year 1999;
3. To adopt the Echelon International Corporation 1999 Non-Employee
Directors' Stock Plan; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on March 16, 1999, has been fixed by the Board of
Directors as the record date for the determination of the stockholders entitled
to notice of and to vote at the meeting or any adjournment thereof.
STOCKHOLDERS ARE REQUESTED TO PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED ADDRESSED ENVELOPE. If you should be
present at the meeting and desire to vote in person, you may withdraw your
proxy.
By Order of the Board of Directors,
[GRAPHIC OMITTED]
/s/ SUSAN JOHHSON
Susan Glatthorn Johnson
Corporate Secretary
March 29, 1999
<PAGE>
[LOGO]
ECHELON INTERNATIONAL CORPORATION
450 CARILLON PARKWAY, SUITE 200
ST. PETERSBURG, FLORIDA 33716
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
To the Stockholders of March 29, 1999
Echelon International Corporation:
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Echelon International Corporation
("Echelon" or "Company") from the holders of the Company's Common Stock
("Common Stock") for use at the Annual Meeting of Stockholders ("Annual
Meeting") and at any adjournment thereof. This meeting will be held at 8:00
a.m., Local Time, on Tuesday, May 18, 1999, at The Fairmont Hotel, 1717 North
Akard Street, Dallas, Texas.
YOU ARE URGED, REGARDLESS OF THE NUMBER OF SHARES OF STOCK OWNED, TO DATE,
SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. IT IS IMPORTANT THAT PROXIES BE
RETURNED PROMPTLY TO AVOID UNNECESSARY EXPENSE.
The giving of the proxy does not affect the right to vote in person should
the stockholder attend the meeting. Any proxy given pursuant to this
solicitation may be revoked by notice in writing to the Corporate Secretary
prior to the voting, by delivering a proxy bearing a later date or by attending
the Annual Meeting and voting the shares in person. No such notice of
revocation or later-dated proxy, however, will be effective until received by
the Corporate Secretary at or prior to the Annual Meeting. Unless the proxy is
revoked, the shares represented thereby will be voted at the Annual Meeting or
any adjournment thereof.
The entire cost of preparing and mailing the proxy material will be borne
by the Company. Solicitation of proxies will be made by mail, personally, or by
telephone or telegraph, by officers, directors and regular employees of the
Company. The Company will request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting material to the stockholders,
and the Company will reimburse such institutions for their out-of-pocket
expenses incurred thereby.
<PAGE>
The approximate date on which this proxy is first given or mailed to
stockholders is March 29, 1999.
Shares of Common Stock are the only outstanding voting securities of the
Company.
The Board of Directors ("Board") in accordance with the Bylaws has fixed
the close of business on March 16, 1999, as the record date for determining the
stockholders entitled to notice of and to vote at the Annual Meeting of
Stockholders and adjournments thereof. At the close of business on such date,
the outstanding number of voting securities of the Company was 6,681,254 shares
of Common Stock, each of which is entitled to one vote. All votes will be
tabulated by employees of EquiServe, Limited Partnership, the Company's
transfer agent, whose representatives will serve as inspectors of election.
Abstentions and broker non-votes are each included in the determination of the
number of shares present but are not counted on any matters brought before the
meeting. Because of limitations under Florida law, registered stockholders will
not be permitted to vote by telephone, Internet or other electronic means.
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SECURITY OWNERSHIP
The following table sets forth, as of February 19, 1999, the number of
shares of the Company's Common Stock beneficially owned by: i) each person
known to the Company as having beneficial ownership of more than 5% of the
Company's Common Stock together with such person's address; ii) each of its
directors and nominees to become a director;
iii) each "executive officer" named in the Summary Compensation Table; and iv)
all directors and executive officers as a group.
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL PERCENT
OR NUMBER IN GROUP OWNERSHIP(1) OF CLASS
- - --------------------------------- ------------------ ---------
DARRYL A. LECLAIR ............... 339,358(2) 5.0
450 Carillon Parkway
Suite 200
St. Petersburg, FL 33716
W. MICHAEL DORAMUS .............. 59,480(3) *
500 N. Akard
Suite 3000
Dallas, TX 75201
JOSEPH H. RICHARDSON ............ 3,075(4) *
One Progress Plaza
Suite 2500
St. Petersburg, FL 33701
THOMAS W. MAHR .................. 2,650(5) *
3 Stamford Landing
Suite 250
Stamford, CT 06902
JONATHAN BLUM ................... 2,250(6) *
One New York Plaza
18th Floor
New York, NY 10292
L. RAYMOND EASTIN ............... 790 *
Two Parkway Center
1800 Parkway Place
Suite 1100
Marietta, GA 30067
SUSAN GLATTHORN JOHNSON ......... 17,473(7) *
450 Carillon Parkway
Suite 200
St. Petersburg, FL 33716
LARRY J. NEWSOME ................ 53,779(8) *
450 Carillon Parkway
Suite 200
St. Petersburg, FL 33716
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<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL PERCENT
OR NUMBER IN GROUP OWNERSHIP(1) OF CLASS
- - --------------------------------------------------- ------------------ ---------
<S> <C> <C>
JULIO A. MAGGI .................................... 11,300(9) *
450 Carillon Parkway
Suite 200
St. Petersburg, FL 33716
ALL DIRECTORS AND NAMED EXECUTIVE OFFICERS
as a Group (9 persons) ........................... 490,155(10) 7.2
JEFFREY S. HALIS .................................. 679,800(11) 10.2
500 Park Avenue
Fifth Floor
New York, NY 10022
FRANKLIN ADVISORY SERVICES, INC. .................. 500,000(12) 7.5
One Parker Plaza
16th Floor
Fort Lee, NJ 07028
FIR TREE, INC. .................................... 468,592(13) 7.0
535 Fifth Avenue
31st Floor
New York, NY 10017
INGALLS & SNYDER LLC .............................. 457,928(14) 6.9
61 Broadway
New York, NY 10006
KESTREL INVESTMENT MANAGEMENT CORPORATION ......... 373,000(15) 5.6
411 Borel Avenue
Suite 403
San Mateo, CA 94402
TWEEDY, BROWNE COMPANY LLC ........................ 349,945(16) 5.2
and TBK Partners, L.P.
c/o John D. Spears
52 Vanderbilt Avenue
New York, NY 10017
</TABLE>
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* Less than 1% of the Company's outstanding Common Stock.
(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as to
which a person has or shares voting power and/or investment power. Except
as otherwise indicated, all shares are held with sole voting and
investment power.
(2) Includes 194,011 shares subject to a risk of forfeiture which lapses as to
one-fourth of the shares each January 31st, commencing on January 31, 1998
(of which, 97,006 remain subject to such risk of forfeiture); 41,767
shares subject to a risk of forfeiture which lapses, and which number is
subject to downward adjustment, depending on the achievement of certain
performance goals for the Company's 1997 through 1999 fiscal years, as
determined in accordance with Mr. LeClair's employment agreement; and
14,608 shares subject to a risk of forfeiture which lapses, and which
number is subject to downward adjustment, depending on the achievement of
certain performance goals
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for the Company's 1998 through 2000 fiscal years, as determined in
accordance with Mr. LeClair's employment agreement. Also includes 86,226
shares deemed to be beneficially owned by Mr. LeClair by virtue of certain
stock options that are currently exercisable.
(3) Includes 13,425 shares subject to a risk of forfeiture which lapses, and
which number is subject to downward adjustment, depending on the
achievement of certain performance goals for the Company's 1997 through
1999 fiscal years, as determined in accordance with Mr. Doramus'
employment agreement; and 6,956 shares subject to a risk of forfeiture
which lapses, and which number is subject to downward adjustment,
depending on the achievement of certain performance goals for the
Company's 1998 through 2000 fiscal years, as determined in accordance with
Mr. Doramus' employment agreement. Also includes 32,250 shares deemed to
be beneficially owned by Mr. Doramus by virtue of certain stock options
that are currently exercisable.
(4) Includes 1,393 shares held by Mr. Richardson's wife. Also includes 1,000
shares deemed to be beneficially owned by Mr. Richardson individually by
virtue of certain stock options that are currently exercisable.
(5) 1,650 shares are held jointly by Mr. Mahr and his wife. Also includes
1,000 shares deemed to be beneficially owned by Mr. Mahr individually by
virtue of certain stock options that are currently exercisable.
(6) Includes 1,000 shares deemed to be beneficially owned by Mr. Blum by
virtue of certain stock options that are currently exercisable.
(7) Includes 12,934 shares subject to a risk of forfeiture which lapses as to
one-fifth of the shares each January 31st, beginning January 31, 1998 (of
which, 7,760 remain subject to such risk of forfeiture); 1,000 shares
subject to a risk of forfeiture which lapses as to one-fifth of the shares
each January 31st, beginning January 31, 2000; and 2,200 shares deemed to
be beneficially owned by virtue of certain stock options that are
currently exercisable.
(8) Includes 32,335 shares subject to a risk of forfeiture which lapses as to
one-fourth of the shares each January 31st, commencing on January 31, 1998
(of which 16,618 remain subject to such risk of forfeiture); 13,524 shares
subject to a risk of forfeiture which lapses, and which number is subject
to downward adjustment, upon satisfaction of certain performance goals for
the Company's 1997 through 1999 fiscal years, as determined in accordance
with Mr. Newsome's employment agreement; and 4,730 shares subject to a
risk of forfeiture which lapses, and which number is subject to downward
adjustment, upon satisfaction of certain performance goals for the
Company's 1998 through 2000 fiscal years, as determined in accordance with
Mr. Newsome's employment agreement. Also includes 1,250 shares deemed to
be beneficially owned by Mr. Newsome by virtue of certain stock options
that are currently exercisable.
(9) Includes 7,500 shares subject to a risk of forfeiture which lapses as to
one-fifth of the shares each January 5th, beginning January 5th, 1999 (of
which 6,000 remain subject to such risk of forfeiture); and 3,800 shares
deemed to be beneficially owned by virtue of certain stock options that
are currently exercisable.
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(10) Includes 342,790 shares of the Company's Common Stock granted to executive
officers under the Echelon International Corporation Long-Term Incentive
Plan ("LTIP") and subject to certain risks of forfeiture. Also includes
128,726 shares deemed to be beneficially owned by certain executive
officers by virtue of stock options that are currently exercisable.
(11) This information is derived from a Form 13F dated November 11, 1998, filed
by Jeffrey S. Halis for himself, Halo Capital Partners, L.P. and Michael
Lowenstein. The Company believes that such persons possess the sole power
to direct the disposition and voting of all shares shown.
(12) This information is derived from a Schedule 13G dated January 19, 1998,
filed jointly by Franklin Advisory Services, Inc., Charles B. Johnson,
Rupert H. Johnson, Jr. and Franklin Resources, Inc. The Company believes
that Franklin Advisory Services, Inc. possesses the sole power to direct
the disposition and voting of all shares shown and that all such persons
may be deemed to beneficially own such shares.
(13) This information is derived from a Form 13F filed February 16, 1999, by
Fir Tree, Inc., which the Company believes possesses the sole power to
direct the disposition and voting of all shares shown.
(14) This information is derived from a Schedule 13G filed February 9, 1999, by
Ingalls & Snyder LLC, which the Company believes possesses the sole power
to direct the disposition and voting of 13,900 of such shares and shared
power to direct the disposition of the remaining 444,028 shares shown.
(15) This information is derived from a Schedule 13G dated February 17, 1999,
filed jointly by Kestrel Investment Management Corporation, David J.
Steirman and Abbott J. Keller. The Company believes that such persons
possess the sole power to direct the disposition and voting of 309,700 of
such shares and sole power to direct the disposition of the remaining
63,300 shares shown.
(16) This information is derived from a Schedule 13D dated February 17, 1999,
filed jointly by Tweedy, Browne Company LLC ("TBC") and TBK Partners, L.P.
("TBK"). The Company believes that TBC has the sole power to direct the
voting and shared power to direct the disposition of 299,035 of such
shares and shared power to direct the disposition of an additional 22,410
of such shares, and that TBK has the sole power to direct the voting and
disposition of 28,500 of such shares.
1. ELECTION OF DIRECTORS.
The Bylaws of the Company provide that the number of directors shall not
be less than three nor more than nine. The exact number is fixed by the Board
of Directors. The number of directors is currently set at six. The Company's
Amended and Restated Articles of Incorporation provide that the Board of
Directors shall be divided into three classes of approximately equal size. The
current terms of the three classes of directors expire in 1999 (Class III
directors), 2000 (Class I directors) and 2001 (Class II directors). Directors
are generally elected for three-year terms.
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<PAGE>
Two directors are to be elected at the 1999 Annual Meeting to fill the two
Class III director seats. The Board of Directors has nominated the following
persons to stand for election at the 1999 Annual Meeting for the two open Class
III director seats (terms expiring in 2002):
Darryl A. LeClair
W. Michael Doramus
It is the intention of the persons named in the enclosed form of proxy,
unless otherwise directed, to vote such proxy "FOR" the election of Darryl A.
LeClair and W. Michael Doramus as the Class III directors of the Company, to
serve for the terms described above. See "Management - Directors and Executive
Officers" for further information on such nominees. The nominees that receive a
plurality of the votes cast by the shares entitled to vote at the Annual
Meeting shall be elected as the Class III directors.
The proposed nominees for director are willing to serve. If, as a result
of circumstances not now known or foreseen, a nominee shall be unavailable or
unwilling to serve as a director, proxies may be voted for the election of such
other person as the Board of Directors may select. The Board of Directors has
no reason to believe that the nominees will be unable or unwilling to serve.
The Board of Directors recommends that you vote "FOR" the election of
Darryl A. LeClair and W. Michael Doramus as the Class III directors of the
Company.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS.
The firm of KPMG LLP ("KPMG") has been the Company's independent certified
public accountants since 1996. KPMG has been recommended by the Audit Committee
and approved by the Board of Directors as the Company's independent certified
public accountants for the year ending December 31, 1999. Representatives of
KPMG are expected to be present at the Annual Meeting of Stockholders, with the
opportunity to make a statement if they desire to do so, and such
representatives are expected to be available to respond to appropriate
questions by stockholders. Ratification of the Company's independent certified
public accountants is not required by the Company's Bylaws or otherwise, but
the Board of Directors has decided to seek such ratification as a matter of
good corporate practice.
The Board of Directors recommends that you vote "FOR" ratification of the
appointment of KPMG as independent certified public accountants for the period
specified.
3. PROPOSAL TO APPROVE THE ECHELON INTERNATIONAL CORPORATION 1999 NON-EMPLOYEE
DIRECTORS' STOCK PLAN.
In 1996, we adopted the Echelon International Corporation Non-Employee
Directors' Stock Plan (the "Original Plan"). A total of 13,989 of the 25,000
shares of our Common Stock authorized under the Original Plan have been issued
or are covered by outstanding options under such plan. On March 10, 1999, our
Board of Directors adopted, subject to stockholder
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<PAGE>
approval, the Echelon International Corporation 1999 Non-Employee Directors'
Stock Plan (the "1999 Plan") covering 75,000 shares of our Common Stock. We
believe that the 1999 Plan will continue to align the interests of our
directors who are not employees of the Company or its subsidiaries with those
of our stockholders and provide an incentive to such non-employee directors to
remain in their capacities with us. Under the Original Plan, non-employee
directors received their annual retainers in the form of our Common Stock, and
an automatic grant of options to purchase 1,000 shares of our Common Stock upon
each annual meeting of our stockholders. Under the 1999 Plan, if approved by
the stockholders, such non-employee directors will receive their annual
retainer (currently $10,000) paid quarterly in the form of our Common Stock and
an automatic grant of options to purchase 5,000 shares of our Common Stock upon
each annual meeting of our stockholders.
We will not implement the 1999 Plan unless it is approved by the
affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy. This proposal summarizes the
essential features of the 1999 Plan. You should read the 1999 Plan for a full
statement of its legal terms and conditions. If you wish to obtain a copy of
the 1999 Plan, please submit your request in writing to our Corporate Secretary
at the address indicated on the first page of this proxy statement. Upon our
receipt of your written request, we will mail to you, without charge, a copy of
the 1999 Plan.
The 1999 Plan, if approved by our stockholders, provides for the option or
award of 75,000 shares of our Common Stock (subject to adjustment due to
certain changes in our Common Stock, as described below). Shares remaining or
forfeited under the Original Plan and shares subject to any options under the
1999 Plan that terminate without being exercised will be added to the shares
available under the 1999 Plan. Upon the effectiveness of the 1999 Plan, we will
not make any further awards under the Original Plan. Either authorized and
unissued shares or treasury shares may be issued under the 1999 Plan.
Under the 1999 Plan, each non-employee director would automatically
receive his or her annual retainer in shares of our Common Stock which would be
issued on March 31, June 30, September 30 and December 31 of each calendar
quarter. The number of shares granted to a non-employee director at the end of
each such calendar quarter will be determined using the following formula:
25% of the director's annual retainer
DIVIDED BY
the fair market value of a share of our Common Stock on the first day of such
quarter.
Upon the adjournment of each annual meeting of our stockholders, each
non-employee director who has been elected, re-elected or who is continuing as
a member of the Board of Directors will receive options to purchase 5,000
shares of our Common Stock. The exercise price of such options will equal the
fair market value of our Common Stock (generally the closing price of the
Common Stock on The New York Stock Exchange) on the date of the annual meeting
of stockholders. The fair market value of a share of our Common Stock on March
10, 1999, was $21.00. The exercise price of an option will be payable in full
upon
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exercise of the option and may be paid in cash or by check or as otherwise
permitted by the Board of Directors under the 1999 Plan.
Options may be exercised to purchase Common Stock only to the extent that
such exercise rights have vested. Generally, options will by 100% vested one
year after the date of grant. No option may be exercised after five years from
its date of grant.
Generally, vested options held at the time a non-employee director ceases
to be a member of the Board of Directors may be exercised for a period of five
years from the date of grant; however, if a non-employee director is removed or
resigns in connection with a breach of his or her fiduciary duty or an act of
dishonesty with respect to the Company, then his or her unexercised options
will be canceled and voided.
Non-employee directors are not permitted to transfer or assign their
options or rights to receive Common Stock under the 1999 Plan. However,
following a non-employee director's death, the personal representative, legatee
or distributee of his or her estate may exercise such deceased director's
vested options prior to expiration of such options.
The Board of Directors will administer the 1999 Plan. The Board of
Directors is elected by our stockholders, and our Bylaws provide that we may
have between three and nine directors. The Board of Directors is divided into
three classes of approximately equal size with directors generally elected for
three-year terms. Directors are subject to being removed by our stockholders
only for cause. Each of our four (4) directors who are not also executive
officers will be eligible to have their retainers paid in shares of Common
Stock, and receive options, under the 1999 Plan. As of March 10, 1999, all of
our directors and nominees for directors, who are not also executive officers,
as a group, hold outstanding options under the Original Plan to purchase a
total of 7,000 shares of our Common Stock.
If approved by the stockholders, the 1999 Plan will terminate on May 18,
2009, unless terminated earlier by action of the Board of Directors.
The number of shares of our Common Stock available under the 1999 Plan,
and the number and type of shares, and the exercise price per share, under
outstanding options, as applicable, will be proportionately and appropriately
adjusted if we split our shares of Common Stock or issue a stock dividend or
otherwise change the number of shares of Common Stock without receiving
consideration, or, subject to any required action by the stockholders, if any
change in the Common Stock occurs by reason of a recapitalization,
reorganization, merger or similar capital change. Outstanding options will
terminate if the Company liquidates or dissolves.
The Board of Directors may, from time to time in accordance with
applicable law, suspend or discontinue the 1999 Plan or revise or amend it in
any way. However, the Board of Directors would be required to obtain approval
of the stockholders to change the class of persons eligible to receive options
under the 1999 Plan, change the total number of shares of Common Stock
available for issuance or decrease the price at which options may be granted
under the 1999 Plan or otherwise materially increase the benefits to
non-employee
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directors under the 1999 Plan (except as described in the immediately preceding
paragraph in connection with certain adjustments in the Common Stock), or
remove the administration of the 1999 Plan from the Board of Directors.
The following is a brief summary of the principal federal income tax
consequences of the 1999 Plan to us and our non-employee directors who may
participate in the plan, based on federal income tax laws currently in effect.
This summary is not intended to cover all tax consequences that may apply to us
or such non-employee directors, such as those under state, local or foreign tax
laws, or the effect of estate or gift taxes.
/bullet/ Upon the issuance of shares of Common Stock to a non-employee
director in payment of his or her annual retainer, the
non-employee director will recognize taxable income at ordinary
income rates in an amount equal to the fair market value of such
shares of Common Stock on the date of such issuance. At that
time, we will be entitled to a corresponding income tax
deduction.
/bullet/ Because we do not anticipate that any option granted under the
1999 Plan will have a readily ascertainable fair market value at
the time of grant, a non-employee director receiving such an
option should not recognize any taxable income or loss for
federal income tax purposes at the time the option is granted.
The exercise of an option, however, will result in immediate
recognition of taxable income by its holder at ordinary income
rates equal to the difference between the exercise price paid for
the shares purchased under the option and the fair market value
of such shares received at the time of exercise. At that time, we
will receive a corresponding income tax deduction.
/bullet/ Any appreciation or depreciation in the fair market value of
shares of Common Stock following issuance to a non-employee
director in payment of his or her retainer, or following purchase
upon exercise of his or her option, under the 1999 Plan, will
generally result in a capital gain or loss of such non-employee
director at the time he or she disposes of such shares.
The Board of Directors recommends that you vote "FOR" this proposal to
approve the Echelon International Corporation 1999 Non-Employee Directors'
Stock Plan.
4. OTHER BUSINESS.
It is not expected that any other matters are likely to be brought before
the meeting. However, if any other matters are presented, it is the intention
of the persons named in the proxy to vote the proxy in accordance with their
best judgment.
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MANAGEMENT
The following table sets forth certain information regarding the Company's
current executive officers named in the Summary Compensation Table, continuing
directors and nominees for directors.
<TABLE>
<CAPTION>
HAS SERVED
AS DIRECTOR
DIRECTORS AND EXECUTIVE OFFICERS AGE POSITIONS SINCE
- - ---------------------------------- ----- ---------------------------------------- ------------
<S> <C> <C> <C>
Darryl A. LeClair ................ 40 Chairman of the Board, President, 1992
Chief Executive Officer and Director
(term expiring in 1999)
W. Michael Doramus ............... 48 Executive Vice President and Director 1996
(term expiring in 1999)
Joseph H. Richardson ............. 49 Director (term expiring in 2000) 1992
Thomas W. Mahr ................... 41 Director (term expiring in 2001) 1996
Jonathan Blum .................... 42 Director (term expiring in 2000) 1997
L. Raymond Eastin ................ 69 Director (term expiring in 2001) 1998
Susan Glatthorn Johnson .......... 41 General Counsel, Senior Vice President
and Corporate Secretary
Larry J. Newsome ................. 50 Senior Vice President and Chief
Financial Officer
Julio A. Maggi ................... 42 Vice President, Commercial Development
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
DARRYL A. LECLAIR has served as Chief Executive Officer and President of
Echelon since its formation in late 1996 in connection with the spin-off of the
real estate, leasing and lending businesses of Florida Progress Corporation
("Florida Progress"). In October 1997, Mr. LeClair assumed the additional
position of Chairman of the Board of Echelon. Prior to Echelon, Mr. LeClair had
been employed by Florida Progress or its affiliates for more than 14 years,
serving in a variety of executive positions, particularly those regarding real
estate development, management and finance, and aircraft leasing and finance.
While employed with Florida Progress, Mr. LeClair served in a variety of
capacities, including Vice President of Mergers, Acquisitions and Divestitures
of Florida Progress from 1991 through 1996, and as the President of Progress
Credit Corporation ("PCC"), Talquin Development Company ("Talquin") and
Progress Leasing Corporation ("Progress Leasing") from 1992 to the time such
companies were combined with and into Echelon, which was formerly known as PLC
Leasing Corporation ("PLC Leasing"). From 1988 to 1992 he was Vice President of
Talquin, heading up operations, including the real estate group.
W. MICHAEL DORAMUS has served on the Board of Echelon since 1996 and was
elected to the position of Executive Vice President of Echelon in October 1997
in connection with the Company's acquisition of certain assets of Mission
Development Company ("Mission"), a real estate development and consulting
company wholly-owned by Mr. Doramus. Mr. Doramus brings more than two decades
of experience in all phases of multi-family
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residential real estate development and operations, including project planning,
acquisition, development, financing, management and disposition. Mr. Doramus
founded Mission in Dallas, Texas, in January 1996 and served as its President
until Echelon acquired substantially all of its assets in October 1997. He
served as Executive Vice President and National Partner of JPI Development
Partners, Inc., Dallas, Texas, from 1992 to 1995. Mr. Doramus served as
President of Rosewood Management and Acquisition Group, Inc., from 1990 to
1992. Prior to 1990, he served as President of various companies including two
Trammel Crow companies (Brentwood Properties and Trammell Crow Advisory
Services, Inc.). Mr. Doramus is also President of Echelon Residential
Incorporated, a wholly-owned subsidiary of Echelon which develops multi-family
communities.
JOSEPH H. RICHARDSON has been employed by Florida Progress or its
affiliates for more than 20 years. He joined Florida Power Corporation
("Florida Power"), a subsidiary of Florida Progress, in 1976 as Assistant
Counsel, was promoted to Corporate Counsel in 1977 and became Assistant General
Counsel of Florida Progress in 1983. In 1986, he joined Talquin as Vice
President and was promoted to President and Chief Executive Officer in 1990.
While at Talquin, he also served as Group Vice President and Senior Vice
President of the Development Group of Florida Progress. Mr. Richardson served
as Chairman of the Board of PLC Leasing from 1992 to 1995. In 1993, Mr.
Richardson became Senior Vice President, Legal and Administrative Services at
Florida Power and in 1995 became Senior Vice President of Energy Distribution.
In April 1996, he became a member of the Board of Directors of Florida Power
and was promoted to President and Chief Operating Officer of Florida Power and
continues to serve as a Group Vice President of the Utility Group of Florida
Progress. Mr. Richardson was elected Chief Executive Officer of Florida Power
in May 1997.
THOMAS W. MAHR has more than 17 years of experience in the airline
industry including aircraft leasing and finance. He has held positions in the
treasury and financial planning functions for regional, national and major
airlines and more recently has held executive positions with firms focusing
solely on aviation investment banking. Since June 1996, Mr. Mahr has been a
Managing Director of The Seabury Group LLC, a firm specializing in aviation
investment banking located in Stamford, Connecticut. Mr. Mahr was a principal
with Fieldstone Private Capital Group, an investment banking firm in New York,
New York, from 1991 until joining The Seabury Group in 1996. From 1989 to 1991,
he served as Vice President of Marketing for Chrysler Capital Corporation,
Greenwich, Connecticut, responsible for all aviation investments.
JONATHAN BLUM joined Prudential Securities, Inc. as a Managing Director in
February 1998. In the preceding two years, Mr. Blum was a Director of the
Mergers and Acquisitions Department of Salomon Smith Barney, Inc. Prior to
1996, he was a Managing Director specializing in Mergers and Acquisitions with
Chemical Securities, Inc. ("Chemical") for seven years, providing valuations
and financial and advisory services on divestitures and acquisitions. Prior to
joining Chemical, Mr. Blum was Vice President of the Mergers and
12
<PAGE>
Acquisitions Department of Citicorp. He has extensive investment banking
experience in real estate, light and industrial manufacturing, distribution,
building products, apparel and shipping industries.
L. RAYMOND EASTIN has served since June 1997, as President and Chief
Executive Officer of Blue Circle Materials, Inc., the concrete and masonry
operations of Blue Circle America, Inc. in the United States and Canada. Mr.
Eastin joined Blue Circle America, Inc. in 1988 and has had a wide array of
responsibilities. Beginning as President of Blue Circle West, Inc., he rose to
Executive Vice President and Chief Operating Officer of Blue Circle America,
and soon after to President and CEO of Blue Circle Williams, Inc., now known as
Blue Circle Materials, Inc. Mr. Eastin has operated cement terminals as well as
concrete, concrete block, aggregates, and trucking operations. Prior to joining
Blue Circle, Mr. Eastin was with Tarmac, USA and Medusa Aggregates and
Construction Co.
SUSAN GLATTHORN JOHNSON was elected to the position of Senior Vice
President and General Counsel in 1998. Ms. Johnson has over 15 years of diverse
experience including real estate finance, operations, strategic planning,
marketing and branch administration with several banks. She joined Florida
Progress in 1986 as a manager in Trust Administration which administers the
Florida Progress qualified and non-qualified benefit plans. In 1990, as
Director of Strategic Planning, she spearheaded the initiation of strategic
planning at Florida Progress and its subsidiaries. In 1994, Ms. Johnson left
Florida Progress to pursue her law degree and graduated Salutatorian in May
1997 from Stetson University College of Law. Ms. Johnson joined the Company
full time as Vice President Legal Services & Administration and Corporate
Secretary in June 1997.
LARRY J. NEWSOME has served as Senior Vice President and Chief Financial
Officer of Echelon since its formation in late 1996. Prior to Echelon's
formation, Mr. Newsome was employed by Florida Progress or its affiliates for
more than 25 years, serving in a variety of tax, financial and managerial
positions. He served as Vice President of Tax Administration at Florida
Progress from 1992 to 1996 and held the same position at Florida Power from
1994 to 1996. He was the Director of Tax Administration at Florida Progress
from 1983 to 1992. Mr. Newsome also served on the Board of Directors of
Progress Leasing from 1983 until 1993 and was Assistant Treasurer from 1984
until 1993. He also served on the Board of Directors of PLC Leasing and was
Assistant Treasurer from 1985 until 1993.
JULIO A. MAGGI joined the Company in January 1998 as Vice President of
Commercial Development. For the previous 14 years, Mr. Maggi was with Lincoln
Property Company ("Lincoln"), a full service real estate company dealing in all
phases of commercial and multi-family real estate, headquartered in Dallas,
Texas. From December 1995 until joining the Company, Mr. Maggi served as the
Senior Vice President of Commercial Development for Lincoln's southeast
operations based in Orlando, Florida. His development experience includes over
five million square feet of office, hotel and retail. Mr. Maggi graduated cum
laude with a bachelor's degree in building science and a master's degree in
architecture, both from Rensselaer Polytechnic Institute. He is a State of
Florida Class A general contractor and holds a Florida real estate license.
13
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held eight meetings during 1998. Each incumbent
director attended all meetings of the Board, except Mr. Richardson who attended
seven.
The Board of Directors has a standing Audit Committee, Compensation
Committee and Nominating Committee. Each committee member attended all of their
respective committee meetings during 1998.
The members of the Audit Committee are Messrs. Mahr and Blum. The Audit
Committee held three meetings in 1998. The Audit Committee's principal
responsibilities are to recommend annually a firm of independent auditors to
the Board of Directors, to review the annual audit of the Company's financial
statements, to review the Company's internal audit activities and to meet with
the independent auditors of the Company from time to time in order to review
the Company's general policies and procedures with respect to audits and
accounting and financial controls.
The members of the Compensation Committee are Messrs. Mahr and Blum. The
Compensation Committee held four meetings during 1998. The principal
responsibilities of the Compensation Committee include the establishment of
compensation policies for the executive officers and administration of any
stock-based compensation plans, except the Non-Employee Directors' Stock Plan.
The members of the Nominating Committee are Messrs. Doramus, Richardson
and Eastin. The Nominating Committee did not meet formally in 1998, however, it
did consult with Mr. LeClair prior to the appointment of Mr. Eastin to the
Board. The principal responsibilities of the Nominating Committee include the
consideration of recommendations for nominees for election to the Board of
Directors submitted by stockholders. The Nominating Committee will consider
written recommendations from stockholders for positions on the Board of
Directors in accordance with the procedures set forth in the Company's Amended
and Restated Articles of Incorporation. See "Stockholder Proposals For
Presentation At The 2000 Annual Meeting" for further information.
COMPENSATION OF DIRECTORS
Under the Echelon International Corporation Non-Employee Directors' Stock
Plan, non-employee directors receive an annual retainer of $15,000 paid
quarterly, in arrears, in the form of Company Common Stock and an automatic
annual grant of options to purchase 1,000 shares of Company Common Stock.
Options granted under the plan have an exercise price equal to the fair market
value of the Common Stock on the date of grant and are 100% exercisable one
year from the date of grant. In addition, non-employee directors receive $1,000
for each Board meeting attended and $500 for each committee meeting attended.
Non-employee directors who serve as chairman of a Board committee receive an
additional $750 for each meeting chaired.
No director who is an employee of the Company receives separate
compensation for services rendered as a director.
14
<PAGE>
COMPENSATION COMMITTEE REPORT
The duties of the Compensation Committee ("Committee") include the review
of compensation and performance of Echelon's executive officers and the
administration of any stock-based compensation plans, except for the Echelon
International Corporation Non-Employee Directors' Stock Plan. The Committee
consists of Thomas W. Mahr and Jonathan Blum, neither of whom are employees of
the Company.
GENERAL POLICIES
The Company's executive compensation system is intended to attract, retain
and motivate high quality executives. The system individually tailors market
and performance based compensation packages that reward the achievement of
specific goals and the enhancement of stockholder value. The Committee believes
that linking executive compensation to corporate performance results in a
better alignment of compensation with corporate goals and stockholder
interests. In evaluating the performance of executive officers, the Committee's
approach is to consult with the Chief Executive Officer ("CEO"), except when
evaluating his performance. In evaluating the CEO, the Committee meets and
deliberates independently without the CEO being present.
For the Company's executive officers in 1998, compensation was paid in
accordance with the terms of employment agreements and awards from the
Executive Officer Performance-Based Compensation Awards Program, which was
approved in September 1998 by the Committee and the Board of Directors.
Compensation paid under the employment agreements is made up of three principal
components: base salary, annual incentive cash compensation and long-term
incentive awards through stock options, stock appreciation rights and/or
restricted stock. The Committee's policies with respect to each of these
elements are discussed below.
BASE SALARY
The annual base salary of each executive officer is based upon the scope
of his or her responsibility with the Company, as well as experience and
performance criteria. In setting the level of base salary for executive
officers, other than the CEO, the Committee's approach is to review the CEO's
recommendations together with market information. For the CEO, the Committee
independently reviews market information and assesses the CEO's performance.
The base salaries of the executive officers were reviewed during 1998 and
in some cases were found to be below market. In those cases, various
compensation elements were used to bring the executive officers' total
compensation to market.
INCENTIVE COMPENSATION
Echelon executive officers participate in a Management Incentive
Compensation Plan ("MICP"). The MICP sets threshold, target and maximum goals
which correspond to annual
15
<PAGE>
incentive cash compensation which are based on a percentage of the executive's
base salary. The MICP compensation is then paid upon the achievement of
corresponding performance goals. The performance goals under the MICP are based
on objective measures of individual and corporate performance.
Under the MICP, annual corporate performance goals for executive officers
are based on the Company's achievement of projected net income. The incentive
compensation "target" levels for executive officers, other than the Chief
Executive Officer, range from 15% to 40% of base salary.
In addition, in 1998 the Committee and the Board approved the Executive
Officer Performance-Based Compensation Awards Program to provide periodic
incentive compensation to executive officers. The awards may be in the form of
cash, stock, stock options or other forms of compensation. Except in the case
of the CEO, the Committee and the Board review the CEO's recommendations
together with market data, and corporate and individual performance to
determine awards. For the CEO, the Committee and Board review market
information, and corporate and individual performance in establishing an award.
LONG-TERM INCENTIVE COMPENSATION
To facilitate stock ownership by executive officers and to align their
interests with those of Echelon's stockholders, the Committee may award stock
options, stock appreciation rights or shares of stock under the Echelon
International Corporation Long-Term Incentive Plan ("LTIP") and stock options
from the Echelon International Corporation 1996 Stock Option Plan ("SOP").
Generally, the Chief Executive Officer will recommend the number and type of
awards to be granted (other than for the Chief Executive Officer) and will
present this information along with appropriate supporting information to the
Committee for its review and consideration.
Some executive officers, under the terms of their employment agreements,
are able to earn stock and/or stock options from the LTIP. Generally, certain
executive officers will receive shares and/or options based on the achievement
of cumulative three-year goals.
In 1998, under the LTIP the Committee awarded 12,000 shares of stock to
executive officers. In addition, the Committee awarded to executive officers
18,000 stock options from the LTIP and 28,000 stock options from the SOP.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1998
As with the Company's other executive officers, the Chief Executive
Officer's compensation for 1998 was paid in accordance with the terms of his
employment agreement and the Executive Officer Performance-Based Compensation
Award Program. Employment agreement compensation has three principal
components: base salary, annual incentive cash compensation and long-term
incentive compensation awards of stock (time vested restricted and
performance-based) and stock options. Compensation was also awarded to the CEO
under the Executive Officer Performance-Based Compensation Award Program based
upon individual and Company performance, and market data.
The CEO's base salary for 1998 was $280,000, the same as 1997. After a
review of market data, the Committee concluded that the CEO's total
compensation was significantly
16
<PAGE>
below market. As a result, on a recommendation from the Committee to the Board
of Directors, the Board approved a 1999 base salary of $325,000. In addition,
on a recommendation from the Committee to the Board of Directors, the Board
approved an award under the Executive Officer Performance-Based Compensation
Awards Program which, effective December 1998, forgave the CEO's debt to the
Company, including tax-related consequences. The Committee found that this
compensation was appropriate and consistent with the general compensation
policies of Echelon, the scope of his responsibilities, the performance and
experience of the CEO and was fair relative to market.
The CEO received a cash bonus under the MICP based on the Company's
achievement of predetermined threshold, target or maximum net income levels.
The threshold, target or maximum levels are 25%, 50% and 75% of his base
salary, respectively. The 1998 maximum net income level was achieved and thus
the CEO received the maximum MICP payment.
The CEO also received an LTIP award of performance-based restricted stock
for the performance period of 1998 - 2000 ("Performance Period 98-00"), similar
to the award for the 1997 - 1999 performance period ("Performance Period
97-99"). The awards establish a threshold, target and maximum cumulative net
income level for which the CEO will earn the Common Stock equivalent of 37.5%,
75% and 112.5% of his base salary, respectively. The number of shares of Common
Stock earned by the CEO upon satisfaction of the applicable performance goal is
determined by dividing the applicable award amount by $21.5625 for the
Performance Period 98-00. See Long-Term Incentive Plan Award Table.
In approving the levels, amounts and terms of cash and other compensation,
including the award made under the Executive Officer Performance-Based
Compensation Awards Program that was paid to the Chief Executive Officer for
1998, the Committee considered information provided by independent compensation
consultants including compensation surveys and market data on the level of
equity ownership for similar executives with comparable positions and
responsibilities in peer companies.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In general, Echelon's policy with respect to the deductibility limit of
Section 162(m) of the Internal Revenue Code, which disallows a tax deduction
for certain compensation that exceeds $1,000,000 paid in any fiscal year to a
corporation's chief executive officer and four other most highly compensated
officers, is to preserve the deductibility of compensation paid when it is
appropriate and is in the best interests of Echelon and its stockholders.
Echelon reserves the authority to award non-deductible compensation in other
circumstances as deemed appropriate. Also, because of the ambiguities and
uncertainties as to the application and interpretation of Section 162(m) and
the regulations issued thereunder, no assurance can be given, notwithstanding
the efforts of Echelon in this area, that compensation intended by Echelon to
satisfy the deductibility requirements under Section 162(m) does, in fact, do
so.
Thomas W. Mahr
Jonathan Blum
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of the companies in the S&P 500
Index and a Peer Group(1) constructed by the Company. Cumulative total return
for each of the periods shown in the Performance Graph is measured assuming an
initial investment of $100 on December 18, 1996, the date of the spin-off from
Florida Progress, and the reinvestment of any dividends paid by companies in
the Peer Group.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
DECEMBER 18, 1996 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
<S> <C> <C> <C> <C>
ECHELON 100 120.16 172.55 171.59
PEER GROUP 100 103.41 140.56 107.41
S&P 500 100 101.26 135.04 173.64
</TABLE>
Source: Standard & Poor's Compustat.
- - ----------------
(1) The Peer Group comprises publicly traded companies which are engaged
principally or in significant part in: (i) the development, ownership and
management of commercial and multi-family residential real estate or (ii)
collateralized financing of commercial real estate and leasing of aircraft
and other assets, and which are viewed as being in competition with the
company. The returns of each company have been weighted according to their
respective stock market capitalization for purposes of arriving at a Peer
Group average. The members of the Peer Group are Insignia Financial Group,
Inc., Colonial Properties Trust, FM Properties Inc., Catellus Development
Corporation, Atlantic Gulf Communities Corporation, Major Realty
Corporation (acquired by Pembroke Acquisitions 9/21/98; therefore, not
included in the 1998 Peer Group return calculation), First Union Real
Estate Equity & Investments, Resurgence Properties, Inc., Lexford
Residential Trust, Forest City Enterprises, Inc., P.S. Group Holdings, Inc.
and Airlease Limited.
18
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
Chief Executive Officer and President of the Company, and the four other
executive officers of Echelon as of the year ended December 31, 1998, who were
the most highly compensated executive officers and whose total annual salary
and bonus exceeded $100,000. Information set forth in the table reflects
compensation earned by such individuals for services with Echelon and for
periods prior to December 18, 1996, with Florida Progress or its respective
subsidiaries.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------------
ANNUAL
COMPENSATION(1) AWARDS PAYOUTS
---------------------------- ----------------------------- ---------------
RESTRICTED
NAME AND PRINCIPAL STOCK LTIP ALL OTHER
POSITION WITH ECHELON YEAR SALARY($) BONUS($) AWARD(S)($)(2) OPTIONS(#) PAYOUTS($)(3) COMPENSATION($)(4)
- - --------------------------- ------ ----------- ---------------- ---------------- ------------ --------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Darryl A. LeClair 1998 280,516 210,000 -- -- -- 522,141
Chief Executive 1997 280,558 210,000 -- -- -- 594
Officer and President 1996 238,491 144,000 2,594,897 129,340 34,953 55,610
W. Michael Doramus(5) 1998 232,402 138,750 -- -- 78,750 644
Executive Vice President 1997 50,456 45,000 -- 125,000 -- 348
Larry J. Newsome 1998 170,516 89,250 -- -- -- 88,051
Senior Vice President 1997 170,557 89,250 -- -- -- 1,009
and Chief Financial 1996 143,977 115,300(6) 434,494 2,500 31,561 64,647
Officer
Susan G. Johnson(7) 1998 141,960 74,813 22,500 18,000 -- 377
General Counsel, Senior 1997 90,048 27,344 250,596 1,000 -- 238
Vice President and
Corporate Secretary
Julio A. Maggi(8) 1998 145,243 91,250 173,925 28,000 -- 377
Vice President,
Commercial Development
</TABLE>
- - ----------------
(1) Other Annual Compensation, other than salary and bonuses, does not exceed
the minimum amounts required to be reported pursuant to Securities and
Exchange Commission Rules.
(2) The aggregate restricted stock holdings and value of such holdings at
December 31, 1998, for Mr. LeClair were 145,509 shares and $3,246,670
respectively; for Mr. Newsome were 24,251 shares and $541,100,
respectively; for Ms. Johnson were 10,348 shares and $230,890,
respectively; and for Mr. Maggi were 7,500 shares and $167,344,
respectively. With respect to Messrs. LeClair and Newsome, the foregoing
aggregate restricted stock holdings and value of such holdings do not
include certain restricted shares they may be eligible to receive under
the terms of their employment agreements upon the satisfaction of certain
performance criteria. The shares of restricted stock granted to Messrs.
LeClair and Newsome are subject to a substantial risk of forfeiture which
lapses as to one-fourth of the shares each January 31st commencing on
January 31, 1998. The shares of restricted stock granted to Ms. Johnson
are subject to a substantial risk of forfeiture which lapses as to
one-fifth of the shares each January 31st, commencing on January 31, 1998.
The shares of restricted stock granted to Mr. Maggi are subject to a
substantial risk of forfeiture which lapses as to one-fifth of the shares
each January 5th, commencing on January 5, 1999. Dividends on all
restricted shares issued to the executive officers are paid at the same
rate as paid to all stockholders. The Company currently intends to retain
all future earnings for the development of its business and does not
anticipate paying any cash dividends for the foreseeable future.
19
<PAGE>
(3) These amounts reflect payouts made by Florida Progress to Messrs. LeClair
and Newsome under the Florida Progress Long-Term Incentive Plan and LTIP
payouts in the form of 3,500 shares of Common Stock made by the Company to
Mr. Doramus.
(4) For 1998 reflects imputed insurance premiums paid by the Company with
respect to group term life insurance for the benefit of the executive
officers. These amounts also include debt forgiveness amounts (including
gross-up for applicable taxes) of $521,897 for Mr. LeClair and $86,985 for
Mr. Newsome, which were awarded under the Executive Officer
Performance-Based Compensation Awards Program. For 1997 reflects imputed
insurance premiums paid by the Company with respect to group term life
insurance for the benefit of the executive officers. For 1996 reflects
Florida Progress matching contributions to its Savings Plan and/or its
Executive Optional Deferred Compensation Plan and includes payouts under
the Florida Progress Nondiscrimination Plan and/or Supplemental Employee
Retirement Plan of $48,470 and $62,493, for Messrs. LeClair and Newsome,
respectively.
(5) Mr. Doramus began his employment with the Company in October 1997 as
Executive Vice President. Options awarded in 1997 included 1,000 options
awarded in his capacity as a director prior to his employment with the
Company.
(6) Includes a one-time special bonus paid in connection with the completion of
the spin-off of Echelon from Florida Progress.
(7) Ms. Johnson began full-time employment with the Company in June 1997 as
Vice President, Legal Services & Administration. From November 1996 until
June 1997, Ms. Johnson was employed by the Company on a part-time basis.
(8) Mr. Maggi began his employment with the Company in January 1998 as Vice
President, Commercial Development.
OPTION/SAR GRANTS TABLE
The following table sets forth information concerning stock options
granted by the Company for the year ended December 31, 1998, for the executive
officers shown in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF GRANT DATE
SHARES % OF TOTAL MARKET PRICE VALUE(1)
UNDERLYING OPTIONS GRANTED EXERCISE OR OF COMMON --------------
OPTIONS TO EMPLOYEES IN BASE PRICE STOCK ON EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR ($/SH) DATE OF GRANT DATE PRESENT VALUE
- - ------------------------ --------------- ----------------- ------------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Darryl A. LeClair ...... -- -- -- -- -- --
W. Michael Doramus ..... -- -- -- -- -- --
Larry J. Newsome ....... -- -- -- -- -- --
Susan G. Johnson ....... 18,000(2) 12 $ 21.563 $ 21.563 2/3/2008 $43,851
Julio A. Maggi ......... 18,000(3) 12 $ 21.563 $ 21.563 2/3/2008 $43,851
10,000(4) 7 $ 23.188 $ 23.188 1/5/2008 $22,755
</TABLE>
- - ----------------
(1) The options were valued using a Black-Scholes based option pricing method
using the following assumptions: volatility 30%; dividend rate 0%;
expected lives of three years; and a risk free rate of return of 5.10%.
(2) On February 4, 1998, Ms. Johnson received 9,000 stock options under the
SOP, which vest at 20% per year over a five-year period beginning February
4, 1999. In addition, 9,000 stock options were issued under the LTIP,
which vest at the end of nine years with a provision to cliff vest in
three years based on certain individual performance criteria.
20
<PAGE>
(3) On February 4, 1998, Mr. Maggi received 9,000 stock options under the SOP,
which vest at 20% per year over a five-year period beginning February 4,
1999. In addition, 9,000 stock options were issued under the LTIP, which
vest at the end of nine years with a provision to cliff vest in three
years based on certain individual performance criteria.
(4) On January 5, 1998, as set forth in his employment agreement, Mr. Maggi
received 10,000 stock options under the LTIP, which vest at 20% per year
over a five-year period beginning January 5, 1999.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning stock option values
at December 31, 1998, for stock options granted by the Company to the
individuals shown in the Summary Compensation Table.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---------------------------- -----------------------------
<S> <C> <C>
Darryl A. LeClair ............... 43,113 / 86,227 $ 2,695 / $5,389
W. Michael Doramus(2) ........... 32,250 / 93,750 $54,052 / $153,343
Susan Glatthorn Johnson ......... 200 / 18,800 $ 13 / $13,541
Larry J. Newsome ................ 625 / 1,875 $ 39 / $117
Julio A. Maggi .................. -0- / 28,000 $ 0 / $13,491
<FN>
- - ----------------
(1) This represents the excess of the fair market value of the Company's Common
Stock of $22.3125 per share as of December 31, 1998, above the exercise
price of the options.
(2) Includes options to purchase 1,000 shares granted to Mr. Doramus solely for
services as a non-employee director prior to his becoming an executive
officer of the Company on October 1, 1997.
</FN>
</TABLE>
21
<PAGE>
LONG-TERM INCENTIVE PLAN AWARD TABLE
The following table sets forth information concerning awards under the
LTIP during fiscal 1998 for the individuals shown in the Summary Compensation
Table.
<TABLE>
<CAPTION>
ESTIMATED STOCK PAYOUT AT END OF PERIOD
----------------------------------------------
NUMBER OF RESTRICTED PERFORMANCE
NAME SHARES OR OTHER RIGHTS PERIOD THRESHOLD TARGET MAXIMUM
- - ------------------------------ ------------------------ ------------ --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Darryl A. LeClair(1) ......... 41,767 shares 1997-1999 13,922 shares 27,845 shares 41,767 shares
14,608 shares 1998-2000 4,869 shares 9,739 shares 14,608 shares
W. Michael Doramus(1) ........ 13,425 shares 1997-1999 4,475 shares 8,950 shares 13,425 shares
6,956 shares 1998-2000 2,318 shares 4,637 shares 6,956 shares
Susan G. Johnson(2) .......... 1,000 shares -- -- -- --
Larry J. Newsome(1) .......... 13,524 shares 1997-1999 4,508 shares 9,016 shares 13,524 shares
4,730 shares 1998-2000 1,578 shares 3,153 shares 4,730 shares
Julio A. Maggi(3) ............ 7,500 shares -- -- -- --
</TABLE>
- - ----------------
(1) The Compensation Committee of the Board of Directors has approved
threshold, target and maximum goals of Company cumulative net income for
Messrs. LeClair, Doramus and Newsome and also individual performance goals
for Mr. Doramus for the performance periods 1997-1999 and 1998-2000. The
Committee has approved corresponding threshold, target and maximum awards
that will be paid in shares of Common Stock for Messrs. LeClair, Doramus
and Newsome and options for Mr. Doramus if such performance goals are
achieved at the end of the performance period. The threshold, target and
maximum stock awards are based on percentages of the individual's total
base salary for the performance period as previously established under the
terms of the employment agreement, while the option awards are
predetermined amounts determined at the discretion of the Compensation
Committee and the Board and defined in the individual's employment
agreement. No payout will be made if less than threshold cumulative net
income is achieved, and no payout will be made in excess of the maximum
awards. The number of shares of Common Stock is determined by dividing the
award amount by the closing price of the Company's Common Stock on January
2, 1998, as reported on the New York Stock Exchange for the 1997-1999
Performance Period and by the closing price of the Company's Common Stock
on February 4, 1998, as reported on the New York Stock Exchange for the
1998-2000 Performance Period. Upon termination of Messrs. LeClair, Doramus
and Newsome's employment "Without Cause" or upon a "Change in Control" (as
such terms are defined in their respective employment agreements), each
will be entitled to receive a cash payment equal to the then current value
of the number of restricted shares that he would be entitled to assuming
the target level of cumulative net income had been achieved for each cycle.
(2) Awarded in December 1998 under the Executive Officer Performance-Based
Compensation Awards Program. The shares vest at 20% per year over a
five-year period beginning, January 31, 2000.
(3) The shares were awarded under Mr. Maggi's employment agreement and vest at
20% per year for five years, beginning January 5, 1999.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of its
executive officers. The term of the agreement for Mr. LeClair is through
December 31, 2001, and automatically renews each January 1st for a remaining
term of three years; for Mr. Doramus and Mr. Maggi is through December 31,
2000, and automatically renews each January 1st for a one-year term; and for
Mr. Newsome and Ms. Johnson is through December 31, 1999, and automatically
renews each January 1st for a one-year term. Pursuant to their
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employment agreements, the annual base salaries of Messrs. LeClair, Doramus,
Newsome and Maggi and Ms. Johnson will be at least $325,000, $250,000,
$170,000, $150,000 and $170,000, respectively for 1999. Under their employment
agreements, Messrs. LeClair, Doramus, Newsome and Maggi and Ms. Johnson are
eligible for annual incentive cash bonuses under the Company's MICP which is
based upon the annual results of the Company's operations and, in the case of
Mr. Doramus and Mr. Maggi, a portion is based on satisfying individual
performance goals. Messrs. LeClair and Newsome's employment agreements provide
them with the opportunity under the LTIP to earn shares of Common Stock based
upon the cumulative results of the Company's operations for the three-year
periods ending December 31, 1999 and 2000. In addition, Mr. Doramus' employment
agreement provides him with the opportunity under the LTIP to earn shares of
Common Stock and stock options based on the cumulative results of the Company's
operations and satisfaction of individual performance goals for the three-year
periods ending December 31, 1999 and 2000. Mr. Maggi's employment agreement
provides him with the opportunity under the LTIP to earn options to purchase
Common Stock based upon the cumulative results of the Company's operations and
satisfaction of individual performance goals for the three-year period ending
December 31, 2000. Pursuant to their employment agreements, Messrs. LeClair,
Newsome and Maggi and Ms. Johnson have been granted shares of Common Stock
under the LTIP, which shares are subject to risks of forfeiture. No payment
will be made under the LTIP if less than the threshold cumulative net income or
the minimum individual goals are achieved and no payout will be made in excess
of the maximum awards. In addition, Messrs. LeClair, Doramus, Newsome and Maggi
and Ms. Johnson have been granted options to purchase additional shares of
Common Stock under the LTIP, which options are subject to vesting schedules.
See "Summary Compensation Table," "Option/SAR Grants Table" and "Long-Term
Incentive Plan Award Table."
The employment agreements provide that executive officers are entitled to
certain severance benefits in the event that their employment is terminated by
the Company "without good cause" or by such executive within one year following
a "change in control" of the Company (both as defined in the employment
agreements). In the event of termination "without good cause," the executive
will receive for the remainder of the then effective employment term or the
greater of 12 months (24 months for Mr. LeClair), his or her base salary and
the greater of the target MICP bonus for the year of termination or the target
MICP bonus for the year of termination multiplied by the number of years (and
fractions thereof) in the unexpired term of the agreement.
In the event of termination within one year after a "change in control,"
Messrs. LeClair and Doramus will receive a cash payment equal to the sum of
three times their base salary and three times their maximum annual MICP bonus,
and the target level cash value of the LTIP bonus for the outstanding
three-year cycles; Messrs. Newsome and Maggi and Ms. Johnson will each receive
a cash payment equal to the sum of two times their base salary and two times
their maximum annual MICP bonus; Mr. Newsome will also receive a
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payment equal to the target level cash value of his LTIP bonus for the
outstanding three-year cycles. In addition, depending on the year of
termination, Mr. LeClair will receive a cash payment of between $500,000 and
$2,000,000; Mr. Doramus will receive a cash payment of between $600,000 and
$1,200,000; Ms. Johnson will receive a cash payment of between $400,000 and
$800,000; and Mr. Maggi will receive a cash payment of between $150,000 and
$500,000. In the event of Mr. LeClair's termination from the Company, Mr.
Doramus also has a right (subject to certain restrictions) for a period of six
months, to terminate his employment and upon such termination to receive for
the remainder of the then effective employment term or the greater of 12
months, his base salary, the greater of the target MICP bonus for the year of
termination or the target MICP bonus for the year of termination multiplied by
the number of years (and fractions thereof) in the unexpired term of the
agreement, and the cash value of his LTIP bonus for the outstanding three-year
cycles. In addition, Mr. Doramus' target level stock options under the
outstanding LTIP cycles will become immediately exercisable. For a termination
without good cause or upon the occurrence of a change in control, all vesting,
performance or similar requirements in respect of any award shall be deemed to
have been fully satisfied and each executive will receive an additional cash
payment in an amount necessary to pay any federal excise taxes. Each employment
agreement is subject to termination in the event of disability, death or
voluntary retirement by the individual or his or her termination for cause.
Each employment agreement includes certain non-competition covenants applicable
to certain activities following any termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee as of December 31,
1998, were Thomas W. Mahr and Jonathan Blum.
Mr. Richardson, a director of Echelon following the formation of Echelon
in late 1996, is an executive officer of both Florida Progress and Florida
Power. During 1996, Florida Progress entered into various agreements with
Echelon governing the relationships between Florida Progress and Echelon
subsequent to the formation of Echelon and providing for the allocation of tax,
employee benefits and certain other liabilities and obligations arising from
periods prior to the spin-off of Echelon from Florida Progress, including the
Distribution Agreement, Tax Sharing Agreement, Employee Benefits Allocation
Agreement and Transition Services Agreement. Copies of such agreements have
been filed as exhibits to the Registration Statement of Echelon in respect of
the registration of Common Stock under the Securities Exchange Act of 1934, as
amended ("Exchange Act").
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In addition, Florida Progress and Florida Power have leases for commercial
office space with Echelon. The leases are on terms which reflect market rates
and conditions and have been entered into by the parties in the ordinary course
of their respective businesses. The following table summarizes the leases as of
December 31, 1998:
<TABLE>
<CAPTION>
RENTABLE SQUARE APPROXIMATE
LOCATION FEET LEASED REMAINING TERM
- - ----------------------------------- ----------------- -------------------------------
<S> <C> <C>
FLORIDA PROGRESS
NationsBank Tower ................. 74,981(1) 8 years
FLORIDA POWER
Highpoint Center .................. 1,831 8 years
Bayboro (land lease only) ......... 104,152 Cancelable upon written notice
from Florida Power
Bayboro Station ................... 80,991 9.5 years
Central Station ................... 133,279 14.5 years
</TABLE>
- - ----------------
(1) The rentable square feet leased will be 95,428 as of April 1, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Seabury Group LLC, of which Mr. Mahr is a Managing Director, was paid
$49,000 in 1998 for debt refinancing and aircraft rental fair market value
analysis services rendered to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
To the Company's knowledge, based solely on a review of the forms, reports
and certificates furnished to the Company by the Company's directors and
officers and the holders of more than 10% of the Company's Common Stock, all
Section 16(a) filing requirements were complied with by such persons in fiscal
1998.
STOCKHOLDER PROPOSALS FOR PRESENTATIONS
AT THE 2000 ANNUAL MEETING
Pursuant to the general rules under the Exchange Act, proposals of
stockholders intended to be presented at the 2000 Annual Meeting of
Stockholders must be received by management of the Company at its executive
offices on or before December 1, 1999.
The Company's Articles of Incorporation and Bylaws, as amended to date,
also require certain advance notice to the Company of any stockholder proposal
and of any nominations by stockholders of persons to stand for election as
directors at a stockholders' meeting. Notice of stockholder proposals and of
director nominations must be timely given in writing to the Corporate Secretary
prior to the meeting at which the directors are to be elected. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not less than 60 days prior to the
date of the meeting, regardless of any postponements, deferrals or adjournments
of that meeting to a
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later date; provided, however, that if less than 70 days' notice or prior
public disclosure of the date of the scheduled meeting is given or made, notice
by the stockholder, to be timely, must be so delivered or received not later
than the close of business on the 10th day following the earlier of the day on
which notice was given or such public disclosure was made.
A stockholder's notice shall set forth as to each matter the stockholder
proposes to bring before the annual meeting, in addition to any other
information as may be required by the Florida Business Corporation Act, the
Exchange Act or other law, (a) a brief description of the proposal desired to
be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear on the
Company's books, of the stockholder proposing such business and any other
stockholders known by such stockholder to be supporting such proposal, (c) the
class and number of shares of the Company's stock which are beneficially owned
by the stockholder on the date of such stockholder notice and by any other
stockholders known by such stockholder to be supporting such proposal on the
date of such stockholder notice, and (d) any financial interest of the
stockholder in such proposal.
A stockholder's notice with respect to a director nomination shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director, (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the class and number of shares of capital stock of the
Company which are beneficially owned by the person, and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Schedule 14A
under the Exchange Act; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the Company's books, of the stockholder and
(ii) the class and number of shares of the Company's stock which are
beneficially owned by the stockholder on the date of such stockholder notice.
The Company may require any proposed nominee to furnish such other information
as may reasonably be required by the Company to determine the eligibility of
such proposed nominee to serve as a director of the Company.
Copies of the complete provisions of the Company's Articles of
Incorporation and Bylaws governing these matters are available to any
stockholder upon request without charge from the Corporate Secretary of the
Company.
By Order of the Board of Directors,
/s/ SUSAN GLATTHORN JOHNSON
Susan Glatthorn Johnson
CORPORATE SECRETARY
March 29, 1999 4600PS99
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PROXY
ECHELON INTERNATIONAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 1999
The undersigned, a stockholder of ECHELON INTERNATIONAL CORPORATION (the
"Company"), does hereby appoint Darryl A. LeClair, Larry J. Newsome and Susan
Glatthorn Johnson, and each of them acting individually, as the attorney and
proxy of the undersigned, with power of substitution, for and on behalf of the
undersigned, to attend the Annual Meeting of Stockholders of the Company to be
held at 8:00 a.m., Local Time, at The Fairmont Hotel, 1717 North Akard Street,
Dallas, Texas, on May 18, 1999, and any adjournment or adjournments thereof (the
"Annual Meeting"), to represent the undersigned at the Annual Meeting, and there
to vote all the shares of Common Stock of the Company which the undersigned is
entitled to vote at the Annual Meeting, in any manner and with the same effect
as if the undersigned were personally present at the Annual Meeting, all as
described in the Company's proxy statement dated March 29, 1999, relating to the
Annual Meeting, and the undersigned hereby authorizes and instructs the above
named proxy to vote as specified on the reverse side.
The shares represented by this Proxy will be voted only if this Proxy is
properly executed and timely returned. In that event, such shares will be voted
in the manner directed herein. IF NO DIRECTION IS MADE, THE SHARES WILL BE VOTED
FOR THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE, FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, FOR
THE PROPOSAL TO ADOPT THE ECHELON INTERNATIONAL CORPORATION 1999 NON-EMPLOYEE
DIRECTORS' STOCK PLAN AND IN THE DISCRETION OF THE PROXIES FOR OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE FOLLOWING PROPOSALS:
1. Election of Directors. NOMINEES FOR CLASS III DIRECTORS:
Darryl A. LeClair and W. Michael Doramus
FOR WITHHELD
BOTH FROM BOTH
NOMINEES NOMINEES MARK HERE
[ ] [ ] IF YOU PLAN TO
ATTEND THE [ ]
MEETING
[ ] _______________________________________________ MARK HERE
FOR, except vote withheld from nominee named above. FOR ADDRESS
CHANGE AND [ ]
NOTE BELOW
2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
KPMG LLP as the Company's independent [ ] [ ] [ ]
certified public accountants for fiscal
year 1999.
3. Proposal to adopt the Echelon International FOR AGAINST ABSTAIN
Corporation 1999 Non-Employee Directors' [ ] [ ] [ ]
Stock Plan.
4. Other Matters. Unless a line is stricken through this sentence, the proxies
herein named may in their discretion vote the shares represented by this
Proxy upon such other matters as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of (1) the Company's 1998 Annual Report to
Stockholders and (2) the Company's Notice of Annual Meeting and Proxy Statement
dated March 29, 1999 relating to the Annual Meeting. The undersigned does hereby
revoke any proxy previously given with respect to the shares represented by this
Proxy.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT USING THE
ENCLOSED ENVELOPE.
NOTE: Your signature should appear as your name appears hereon. As to shares
held in joint names, each joint owner should sign. If the signer is a
corporation, please sign full corporate name by a duly authorized officer. If a
partnership, please sign in partnership name by an authorized person. If signing
as attorney, executor, administrator, trustee, guardian, or in other
representative capacity, please give full title as such.
Signature:_____________________________________________________ Date:__________
Signature:_____________________________________________________ Date:__________
