<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240,14a-11(c) or (S)240,14a-12
TRC Companies, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TRC Companies, Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
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:*
(4) Proposed maximum aggregate value of transaction:
- -------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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:
- --------------------------------------------------------------------------------
Notes:
- --------------------------------------------------------------------------------
<PAGE>
[LETTERHEAD OF TRC COMPANIES INC. APPEARS HERE]
NOTICE OF ANNUAL MEETING TO BE HELD OCTOBER 25, 1996
To our Shareholders:
The Annual Meeting of Shareholders of TRC Companies, Inc. will be held Friday,
October 25, 1996 at 10:00 a.m., at the Company's executive offices, 5 Waterside
Crossing, Windsor, Connecticut, to consider and take action on the following
items:
1. The election of five directors for the ensuing year;
2. The approval of an amendment to the Company's 1979 Stock Option Plan to
increase the number of shares of Common Stock available for grants from
1,743,500 to 2,243,500;
3. The appointment of Price Waterhouse LLP as independent accountants for the
Company for the fiscal year ending June 30, 1997; and
4. Such other business as may properly come before the meeting or any
adjournments thereof.
Only holders of record of Common Stock as of the close of business on September
6, 1996 are entitled to receive notice of and vote at this meeting. If your
shares are held of record by a broker or other nominee in street name, you
cannot vote at the meeting unless the broker or nominee gives written notice to
the Company that you are its authorized representative for those shares.
By Order of the Board of Directors
/s/ John H. Claussen
John H. Claussen
Senior Vice President and Secretary
Dated at Windsor, Connecticut
September 18, 1996
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT AT ONCE IN THE ENCLOSED ENVELOPE.
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of TRC Companies, Inc. (the "Company") from the holders
of the Company's Common Stock for the Annual Meeting (the "Meeting") to be held
October 25, 1996, and any adjournment or adjournments thereof. The giving of a
proxy does not affect your right to vote should you attend the Meeting in
person, and the proxy may be revoked at any time before it is voted by voting in
person at the Meeting or by giving the Secretary of the Company a signed
instrument revoking the proxy or a signed proxy of a later date. Each properly
executed proxy not revoked will be voted in accordance with instructions
therein. If no instructions are specified in the proxy, it is the intention of
the persons named in the accompanying proxy to vote FOR the election of the
nominees named therein as directors of the Company and FOR the matters described
in items 2 and 3 in the Notice of Annual Meeting.
The vote required for the election of directors and approval of the other
proposals is set forth in the discussion of the proposals. Abstentions are not
counted as votes "for" or "against" a proposal, but where the affirmative vote
of a majority of the shares of Common Stock present or represented on a proposal
is required for approval (Proposals 2 and 3), abstentions are counted in
determining the number of shares present or represented. On proposals which
require the affirmative vote of a majority of the outstanding shares for
approval, abstentions have the same effect as a vote "against." New York Stock
Exchange rules permit brokers to vote on all three proposals in instances where
the broker has not received instructions from the beneficial owner of the
shares.
The Company's Annual Report, including financial statements, for the fiscal
year ended June 30, 1996, is being mailed to shareholders along with the Notice
of Annual Meeting and Proxy Statement. The financial statements and the
discussion and analysis by management of the Company's results of operations and
financial condition contained in the Annual Report of the Company for the fiscal
year ended June 30, 1996 are incorporated herein by reference.
The record date for determining those shareholders entitled to vote at the
Annual Meeting was September 6, 1996. On that date, the Company had 6,400,992
shares of Common Stock outstanding and entitled to vote*. Each share of Common
Stock is entitled to one vote.
The mailing address of the Company's principal executive office is 5 Waterside
Crossing, Windsor, CT 06095, and the approximate date on which this Proxy
Statement and the form of proxy are first being sent to shareholders is
September 18, 1996.
- ------------------------------
*Does not include shares issued in connection with the acquisition of the assets
of Environmental Solutions, Inc. which will not be votable until delivered in
1998 (or sooner if certain profit goals of the business conducted with the
acquired assets are met prior to 1998). See Certain Transactions, page 12.
<PAGE>
PRINCIPAL SHAREHOLDERS
The table below sets forth information as of September 6, 1996 with respect to
all persons known to the Company to be the beneficial owner of more than 5% of
the Company's Common Stock. Information in the table was reported to the
Company by the beneficial owners on forms as required by the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percent of
Beneficial Owner Beneficially Owned Common Stock
------------------- ------------------ -------------
<S> <C> <C>
State of Wisconsin Investment Board 647,900 10.1%
Madison, Wisconsin
T. Rowe Price 525,000 8.2
Baltimore, Maryland
Dimensional Fund Advisors Inc. 426,050 6.7
Santa Monica, California
FMR Corporation 382,400 6.0
Boston, Massachusetts
Bruce D. Cowen 338,929 5.2
President and Director of the Company
Windsor, Connecticut
Vincent A. Rocco 328,974 5.1
Chairman, Chief Executive Officer
and Director of the Company
Windsor, Connecticut
</TABLE>
-2-
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors held four (4) meetings during the fiscal year ended
June 30, 1996. Messrs. Cowen, Large, McNealey and Rocco had perfect attendance
records for meetings of the Board of Directors and of the committees of which
they were members. Mr. Jepsen attended all but one of the meetings of the Board
and attended all his committee meetings.
The Audit Committee of the Board of Directors, currently composed of Messrs.
Jepsen (Chairman) and McNealey, met once during the fiscal year ended June 30,
1996. The Audit Committee, which is elected annually, reviews with Price
Waterhouse LLP, the Company's independent accountants, the audit plan and the
internal accounting controls for the Company and its subsidiaries, as well as
the Company's consolidated financial statements. The Audit Committee reports to
the Board of Directors. It also recommends to the Board the selection of the
independent accountants for the Company.
The Compensation Committee of the Board of Directors, currently composed of
Messrs. Large (Chairman), Jepsen and McNealey, met two (2) times during the
fiscal year ended June 30, 1996. The Committee approves the general salary
scale for employees of the Company and its subsidiaries and specifically
establishes the compensation package for the Chairman and the executive
officers. The Committee's actions are discussed more fully in the Compensation
Committee Report on Executive Compensation (see pages 9 and 10).
The Nominating Committee of the Board of Directors, currently composed of
Messrs. McNealey (Chairman) and Large, met once during the fiscal year ended
June 30, 1996. The Committee reviews the organization, structure, size and
composition of the Board and recommends to the Board nominees to serve as
directors.
-3-
<PAGE>
ELECTION OF DIRECTORS
The five individuals named in the following table have been nominated for
election to the Board of Directors, each to serve for a one-year term and until
his successor is duly elected and qualified. All of the nominees were elected
directors at the 1995 Annual Meeting.
Should any of such nominees decline or become unable to serve as a director
prior to election, the persons named in the proxy will vote for the election of
a substitute nominee, if any, designated by the Board of Directors. The Company
has no reason to believe that any nominee will decline or be unable to serve.
<TABLE>
<CAPTION>
Name, Principal Occupation Served as
During Past Five Years and Director
Other Corporate Directorships Age Since
----------------------------- --- -----
<S> <C> <C>
Bruce D. Cowen 43 1987
President and Director of the Company
and Officer or Director of its subsidiaries
Edward G. Jepsen 53 1989
Executive Vice President, Chief Financial Officer and Director
of Amphenol Corporation; Director of United International
Holdings, Inc.; formerly Partner in the accounting
firm of Price Waterhouse
Edward W. Large, Esq. 66 1990
Counsel to the law firms of Crowell & Moring and Day, Berry
& Howard; formerly Executive Vice President and Director
of United Technologies Corporation
J. Jeffrey McNealey, Esq. 52 1985
Partner in the law firm of Porter, Wright, Morris & Arthur
Vincent A. Rocco 51 1979
Chairman, Chief Executive Officer and Director of the Company
and Officer or Director of its subsidiaries
</TABLE>
At the Annual Meeting of Shareholders held on October 27, 1995, approximately
89% of the total number of shares entitled to vote at that Meeting for the
election of directors were represented in person or by proxy. More than 99% of
the shares voting at that Meeting were cast in favor of each of the foregoing
nominees.
The affirmative vote of a plurality of the votes cast at the Annual Meeting is
required to elect each nominee.
The Board of Directors recommends a vote "FOR" the election of the above
nominees as directors of the Company.
-4-
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of September 6, 1996, the total number of
shares of the Company's Common Stock beneficially owned by each director and
named executive officer of the Company and all directors and executive officers
as a group based upon information furnished by each director and executive
officer.
<TABLE>
<CAPTION>
Shares Beneficially
Owned Directly Percent of
Name of Individual or Group or Indirectly/1/ Common Stock/2/
- --------------------------- ---------------- ----------------
<S> <C> <C>
Bruce D. Cowen 338,929 /3/ 5.2%
Richard D. Ellison - /4/ -
Edward G. Jepsen 29,500 /5/ *
Miro Knezevic 16,000 /4/ *
Edward W. Large 19,000 /5/ *
Richard J. McGuire, Jr. 232,692 3.6
J. Jeffrey McNealey 10,340 /5/ *
Vincent A. Rocco 328,974 /6/ 5.1
All directors and executive officers as a
group (10 individuals) 1,005,105 /7/ 15.2
</TABLE>
- ------------------------------
*Indicates that the number of shares owned represents less than 1% of the Common
Stock
/1/Includes shares which may be acquired within sixty (60) days by the exercise
of options and warrants.
/2/The number of shares that may be acquired within sixty (60) days by the
exercise of options and warrants have been added to the number of shares
actually outstanding for purposes of computing ownership percentages.
/3/Includes 95,571 shares that may be acquired by the exercise of outstanding
options and warrants.
/4/Excludes shares payable pursuant to the Asset Purchase Agreement dated March
21, 1994, under which the Company purchased the business assets, liabilities
and obligations of Environmental Solutions, Inc. See Certain Transactions,
page 12.
/5/Includes 4,000 shares that may be acquired by the exercise of outstanding
options.
/6/Includes 82,571 shares that may be acquired by the exercise of outstanding
options and warrants. Also includes 31,605 shares jointly owned by Mr. Rocco
and his spouse. The inclusion of such shares is not an admission of
beneficial ownership.
/7/Includes 213,476 shares for directors and executive officers that may be
acquired by the exercise of outstanding options and warrants.
-5-
<PAGE>
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives an annual retainer of
$12,000. Directors who are also employees of the Company or any of the Company's
subsidiaries receive no remuneration for serving as directors.
At the Annual Meeting in October 1992, the shareholders approved an Outside
Directors Stock Option Plan pursuant to which each outside director would be
granted, on the first day of October following each fiscal year, an option for
up to 3,000 shares of Common Stock. The number of shares was determined by a
Performance Ratio calculated by dividing the prior fiscal year's Consolidated
Net Income Before Taxes by the targeted Consolidated Net Income Before Taxes
contained in that fiscal year's Business Plan. Because the Company had a net
loss, there will be no awards for fiscal 1996. Furthermore, the Outside
Directors Stock Option Plan has been terminated, but options granted under the
Plan remain in effect according to their terms. Due to recent changes in
Securities and Exchange Commission rules, the outside directors are now eligible
to participate in the Company's Stock Option Plan for Key Employees (now known
as the "Stock Option Plan"), and that Plan has been amended to provide for such
participation.
COMPENSATION OF EXECUTIVE OFFICERS
a) Summary Compensation Table
The Summary Compensation Table that follows sets forth the compensation for
services in all capacities earned by the Company's Chairman and Chief Executive
Officer and the other four most highly compensated executive officers of the
Company and its subsidiaries (the "named executive officers") for each of the
three years in the period ended June 30, 1996.
-6-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation/1/ Compensation/2/
---------------------- --------------- All other
Name and Option Compen-
Principal Position Year Salary ($) Bonus ($) Awards (#) sation ($)/3/
------------------ ---- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Vincent A. Rocco 1996 275,000 65,000 - 6,493
Chairman and 1995 257,000 65,000 25,000 8,081
Chief Executive 1994 240,000 30,000 17,500 5,830
Officer
Bruce D. Cowen 1996 223,000 65,000 - 6,576
President 1995 207,000 65,000 25,000 8,309
1994 192,000 30,000 17,500 5,982
Richard D. Ellison 1996 392,200 - - -
Senior Vice President and 1995 455,900 - - -
Chief Engineer, President 1994 146,700/4/ - - -
of TRC Environmental
Solutions, Inc.
Miro Knezevic 1996 224,900 - - -
Executive Vice President 1995 245,900 - - -
of TRC Environmental 1994 78,500/5/ - - -
Solutions, Inc.
Richard J. McGuire, Jr. 1996 228,900 - - 6,239
President of TRC 1995 159,000 - - 4,991
Environmental Corporation 1994 9,975/6/ - - 350
</TABLE>
- ----------------
/1/Pursuant to the rules on executive compensation disclosure adopted by the
Securities and Exchange Commission, no amounts for executive perquisites and
other personal benefits are shown because the aggregate dollar amount per
executive is less than either $50,000 or 10% of annual salary and bonus.
/2/The Company has not made any restricted stock awards and its long-term
incentive awards to executive officers consist of stock options rather than
cash payments.
/3/Amounts of all other compensation include (i) contributions by the Company
under the 401(k) Retirement and Savings Plan and (ii) officers' supplemental
health benefit of up to $1,000 for each executive officer.
/4/Mr. Ellison joined the Company during fiscal 1994. Mr. Ellison's salary on an
annualized basis would have been $440,000. Mr. Ellison's salary is determined
under an employment agreement entered into in connection with the acquisition
of the business assets, liabilities and obligations of Environmental
Solutions, Inc. See pages 9 and 12.
/5/Mr. Knezevic joined the Company during fiscal 1994. Mr. Knezevic's salary on
an annualized basis would have been $235,000. Mr. Knezevic's salary is
determined under an employment agreement entered into in connection with the
acquisition of the business assets, liabilities and obligations of
Environmental Solutions, Inc. See pages 9 and 12.
/6/Mr. McGuire joined the Company during 1994. Mr. McGuire's salary on an
annualized basis would have been $120,000.
-7-
<PAGE>
b) Option Grants in Last Fiscal Year
No options to purchase the Company's Common Stock were granted during the 1996
fiscal year to the named executive officers. On February 2, 1996, the Board of
Directors adopted an option exchange program whereby previously granted options
could be exchanged for new five-year options in denominations of 50% of the
options exchanged. Recognizing that the stock of environmental firms generally
had been trading at depressed prices and that TRC's stock had been trading at
prices significantly lower than the exercise price of the vast majority of
currently outstanding options, the Board believed that those options no longer
served their intended purpose of incentivizing and retaining key employees. As
part of that exchange, Messrs. Rocco and Cowen each exchanged options to
purchase 82,500 shares with exercise prices ranging from $7.875 to $13.75 per
share and received options to purchase 41,250 shares at $6.625 per share.
Messrs. Ellison, Knezevic and McGuire did not hold any options, and therefore,
did not participate in the exchange. The Company does not have a program to
grant stock appreciation rights.
c) Aggregated Option Exercises in Last Fiscal Year and Option Values at
Fiscal Year End
The following table provides information with respect to the named executive
officers concerning the exercise of stock options during the 1996 fiscal year
and unexercised options held as of the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Acquired Options at 6/30/96 (#)/1/ 6/30/96 ($)/2/
Name on Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Rocco - - 60,000 41,250 $ - $ -
Chairman and Chief
Executive Officer
Bruce D. Cowen - - 60,000 41,250 - -
President
Richard D. Ellison - - - - - -
Senior Vice President
and Chief Engineer,
President of TRC
Environmental
Solutions, Inc.
Miro Knezevic - - - - - -
Executive Vice President
of TRC Environmental
Solutions, Inc.
Richard J. McGuire, Jr. - - - - - -
President of TRC
Environmental
Corporation
</TABLE>
- ------------------------------
/1/In fiscal 1996, the Board of Directors extended for an additional two years
the original five-year terms of certain options held by Messrs. Rocco and
Cowen that were not exchanged.
/2/Based upon the closing price of the Company's Common Stock on June 30, 1996
of $5.875
-8-
<PAGE>
d) Employment Contracts and Termination/Change-In-Control Arrangements
In 1994, the Company renewed for an additional three-year term Severance
Agreements with Messrs. Rocco and Cowen. The Agreements provide for employment
of the executives in their current capacities, provided that the Agreements can
be terminated by any party thereto upon ninety (90) days' notice, subject to the
rights described in the following two sentences. Upon certain terminations of
employment, Messrs. Rocco and/or Cowen will be paid, in addition to unpaid
salaries and benefits as are permitted by Company policies, a severance payment
of two times the salary component of their respective cash compensation for the
prior year. Among the terminations triggering such payments are a termination
by the Company in connection with a change in control of the Company and a
termination by the executives following such a change in control where there
have also been certain changes in the executives' responsibilities.
Pursuant to the Company's acquisition of Environmental Solutions, Inc., a
subsidiary of the Company entered into four-year employment agreements with
Richard D. Ellison and Miro Knezevic. The agreements expire according to their
terms on March 21, 1998 and entitled Messrs. Ellison and Knezevic to annual
salaries of $440,000 and $235,000, respectively, in the initial year subject to
adjustment upwards or downwards in subsequent years based on certain profit
goals for the TRC Environmental Solutions, Inc. business.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three independent, outside directors. The Committee is responsible
for establishing and administering the Company's executive compensation
programs. The Committee seeks to achieve the following objectives:
. Competitive pay that allows the Company to attract and retain personnel
with skills critical to the long-term success of the Company;
. Pay for performance to motivate and reward individual and team performance
in attaining business objectives and maximizing shareholder value; and
. Maintenance of compensation costs that enable the Company to remain
competitive in the pricing of its services.
The Company's executive compensation program includes three components: (1)
base salary; (2) annual bonus; and (3) long-term incentive awards. It is the
intent of the Committee to link executive compensation as directly as possible
with the Company's financial performance.
-9-
<PAGE>
Base Salary Ranges of appropriate base salaries are determined by an
analysis of salary data on positions of comparable
responsibility within the environmental services sector.
Committee approval of individual salary changes is based on
performance of the executive against financial and strategic
objectives and position of the executive in the competitive
pay range. Consistent with the compensation philosophy
discussed above, the Committee's preference will be to enhance
annual bonuses and long-term awards rather than salaries when
possible, given competitive salary conditions.
Annual Bonus Annual bonuses are paid pursuant to an Executive Incentive
Compensation Plan established in 1988 for officers and senior
managers of the Company and its subsidiaries. Under the Plan,
an incentive pool is created each fiscal year and is
distributed if certain financial goals for the Company are
met.
The amount of the incentive pool distributed depends on a
number of factors including net income objectives and
performance on strategic initiatives.
Long-Term The purpose of this element of the executive compensation
Incentive Awards program is to link management pay with the long-term interest
of shareholders, rather than performance in one single fiscal
year as is the case with annual bonuses. The Committee is
currently using five-year stock options to achieve the long-
term link and has adopted a vesting requirement for the first
three years of the grant. The options are granted pursuant to
the Company's Stock Option Plan adopted in 1979 and
subsequently amended. In determining annual stock option
grants, the Committee bases its decision on the individual
executive's performance and potential to improve shareholder
value.
The Committee established Mr. Rocco's compensation for fiscal 1996 by
reviewing the factors previously discussed. During fiscal 1996, Mr. Rocco
received $275,000 in base salary. He also received a bonus of $65,000 in fiscal
1996 based upon his achievement of goals in fiscal 1995.
Submitted by the Compensation Committee:
Edward W. Large
Edward G. Jepsen
J. Jeffrey McNealey
-10-
<PAGE>
STOCK PERFORMANCE INFORMATION
The following graph compares the cumulative, five-year total return on the
Company's Common Stock with the Standard & Poor's 500 Stock Index and an index
of peer companies. The peer group consists of six other environmental companies
providing services similar to those of TRC. The figures presented assume that
all dividends, if any, paid over the five-year period were reinvested, and the
starting value of each index and the investment in the Company's stock was $100
on June 30, 1991.
CUMULATIVE TOTAL RETURN
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TRC $100.00 $106.98 $ 65.12 $ 93.02 $ 69.77 $ 54.65
S&P 500 100.00 113.41 128.87 130.68 164.75 207.59
PEER GROUP 100.00 70.11 67.55 51.75 45.81 41.82
- ------------------------------------------------------------------
</TABLE>
The companies included in the peer group are Dames & Moore, Inc., Earth
Technology Corp. (acquired by Tyco International Ltd. in February, 1996), EMCON,
Inc., Harding Lawson Associates, Inc., ICF Kaiser International, Inc. and Roy F.
Weston, Inc. Information concerning the peer group and the Standard & Poor's
500 Stock Index was supplied to the Company by Standard & Poor's Compustat, a
division of McGraw-Hill, Inc.
-11-
<PAGE>
CERTAIN TRANSACTIONS
On March 21, 1994, a wholly-owned subsidiary of the Company acquired the
business assets, liabilities and obligations of Environmental Solutions, Inc.,
an environmental engineering and consulting business headquartered in Irvine,
California. The purchase price for the assets consisted of approximately $4.8
million in cash; a $14 million 5.75% three-year promissory note (the "Note");
and 459,770 shares of the Company's Common Stock, plus up to an additional
827,586 shares of Common Stock (or, at Company's election, additional cash or a
mixture of cash and stock) contingent on certain pre-tax profit goals for the
business conducted with the acquired assets over the next four years. None of
the stock is payable until the end of the fourth year following the acquisition
except that the stock will be payable at the end of an earlier year if the four-
year, pre-tax profit goal is realized in such earlier year. Mr. Ellison,
President of the subsidiary now known as TRC Environmental Solutions, Inc., was
a 75% shareholder of the selling company and is entitled to 75% of the purchase
consideration. Mr. Ellison received a total of $4,214,568 in principal and
interest payments on the Note in fiscal 1996. Mr. Knezevic, Executive Vice
President of the subsidiary, was a 25% shareholder of the selling company and is
entitled to 25% of the purchase consideration. Mr. Knezevic received a total of
$1,404,856 in principal and interest payments on the Note in fiscal 1996. Mr.
Ellison's spouse and two of his brothers-in-law are employed in the normal
course of business by the subsidiary at annual salaries (including bonus) of
$98,328, $177,024, and $126,416, respectively.
RATIFICATION OF AMENDMENT TO THE STOCK OPTION PLAN
In August 1979, the Company's Board of Directors adopted a non-qualified stock
option plan, known as the TRC Companies, Inc. Stock Option Plan for Key
Employees (the "Stock Option Plan"), which has been subsequently amended from
time to time. The purpose of the Stock Option Plan is to permit the Company to
attract and retain able employees for itself and its subsidiaries. All options
granted under the Stock Option Plan are granted by the Company's full Board of
Directors or the Compensation Committee, consisting of three members of the
Company's Board of Directors who are not employees of the Company. As of
September 6, 1996, options for 727,959 shares of Common Stock at an average
exercise price of $6.26 per share were outstanding under the Stock Option Plan.
All options under the Stock Option Plan must be granted at a price equal to
the fair market value of the Common Stock on the date the option is granted, and
all outstanding options are granted at a price equal to the closing price of the
Company's Common Stock on the date of grant. The amount of shares covered by
outstanding options and the price for such shares will be appropriately adjusted
in the event of certain changes in the Company's capitalization, as, for
example, in the case of stock dividends or stock splits. Options may be granted
for periods of up to ten years. The existing Stock Option Plan covers
approximately 120 employees and directors who are deemed key personnel bearing
primary responsibility for the management, growth and protection of the
Company's business. Most options have been granted for a term of five years
which vest one third in each of the three years following grant. Vesting may
accelerate in certain change-of-control conditions.
Participants exercise options by tendering cash to the Company. In addition,
a person exercising an option must pay to the Company the amount of money that
is required to be withheld
-12-
<PAGE>
for income tax purposes. Recipients of Plan options will not realize income
upon receiving such options; however, all option recipients will realize
ordinary income equal to the difference between the option price and the fair
market value of the underlying Common Stock on the date of exercise. Subject to
compliance with applicable income tax withholding requirements, the Company is
entitled to a deduction in an amount equal to the amount included in income by
the employee.
The Company's Board of Directors has decided to amend the Stock Option Plan to
increase by 500,000 shares (from 1,743,500 shares to 2,243,500 shares) the
number of shares of Common Stock for which options may be granted under the
Stock Option Plan. The Board of Directors has the authority under the Stock
Option Plan to increase the number of shares of Common Stock for which options
may be granted pursuant to the Stock Option Plan without shareholder approval.
However, the above described Amendment to the Stock Option Plan is being
submitted for ratification by the Company's shareholders in order to comply with
listing requirements of the New York Stock Exchange.
Under the rules of the New York Stock Exchange, the increase in shares to be
issued should be approved by a majority of votes cast on the proposal provided
that the total vote cast represents over 50% of all securities entitled to vote.
The Board of Directors recommends a vote "FOR" the proposal to ratify the
Amendment to the Stock Option Plan to increase by 500,000 the shares of Common
Stock for which options may be granted under the Stock Option Plan.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
nominated the firm of Price Waterhouse LLP to be independent accountants for the
Company for the fiscal year ending June 30, 1997. Price Waterhouse LLP has been
the Company's independent accountants for ten years. A representative of Price
Waterhouse LLP is expected to be present at the Annual Meeting and available to
make statements and to respond to appropriate questions from shareholders. The
affirmative vote of a majority of shares present and entitled to vote at the
Meeting is required to approve this proposal.
The Board of Directors recommends a vote "FOR" the appointment of Price
Waterhouse LLP as independent accountants of the Company.
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<PAGE>
1997 SHAREHOLDER NOMINATIONS AND PROPOSALS
Shareholders who wish to suggest nominees for election to the Board of
Directors at the 1997 Annual Meeting should write, on or before May 22, 1997, to
the Secretary of the Company at 5 Waterside Crossing, Windsor, CT 06095, stating
in detail the qualifications of such persons for consideration by the Nominating
Committee of the Board of Directors.
If any shareholder intends to present a proposal for consideration at the 1997
Annual Meeting of Shareholders, such proposal must also be received by the
Secretary of the Company on or before May 22, 1997, in order to be included in
the Company's proxy statement. Such proposals may be included in next year's
proxy statement if they comply with certain rules and regulations established by
the Securities and Exchange Commission.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matters that may be brought before the meeting. However, if any other
matters do properly come before the meeting, the persons named in the enclosed
proxy will vote upon them in their discretion and in accordance with their best
judgment.
A copy of the Company's Annual Report on Form 10-K, filed with the Securities
and Exchange Commission, Washington, D.C., is available to shareholders without
charge upon request. Address requests to: TRC Companies, Inc., 5 Waterside
Crossing, Windsor, CT 06095, Attention: Investor Relations.
The cost of preparing and mailing the Notice of Annual Meeting, Proxy
Statement and form of proxy will be paid by the Company. The Company will
request banks, brokers, fiduciaries and similar persons to forward copies of
such material to beneficial owners of the Company's Common Stock in a timely
manner and to request authority for execution of proxies, and the Company will
reimburse such persons and institutions for their out-of-pocket expenses
incurred in connection therewith. To the extent necessary in order to assure
sufficient representation, officers and regular employees of the Company may
solicit the return of the proxies by telephone, personal communication or other
methods. The extent of this solicitation by personal contact will depend upon
the response to the initial solicitation by mail. It is anticipated that the
costs of solicitation, if undertaken, will not exceed $1,000.
By Order of the Board of Directors
/s/ John H. Claussen
John H. Claussen
Senior Vice President and Secretary
Dated at Windsor, Connecticut
September 18, 1996
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<PAGE>
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SOLICITED BY THE BOARD OF DIRECTORS OF
TRC COMPANIES, INC.
PROXY
I (We) hereby appoint Vincent A. Rocco and Bruce D. Cowen and each of them, as
proxies with power of substitution and revocation to vote all my (our) shares
of Common Stock in TRC Companies, Inc., at the Annual Meeting of Shareholders
to be held October 25, 1996 at 10:00 a.m. at the executive offices of the
Company at 5 Waterside Crossing, Windsor, Connecticut and at any adjournment
thereof: (Please place mark in one box only.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
ITEM 1--Election of 5 nominees for directors.
Bruce D. Cowen, Edward G. Jepsen, Edward W.
FOR WITHHELD Large, J. Jeffrey McNealey and Vincent A.
[_] [_] Rocco.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
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ITEM 2--Approval of an amendment to the Company's 1979 Stock Option Plan to
increase the number of shares of Common Stock available for grants of
options thereunder from 1,743,500 to 2,243,500.
[_] FOR [_] AGAINST [_] ABSTAIN
ITEM 3--The appointment of Price Waterhouse LLP as independent accountants for
the Company for the fiscal year ending June 30, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
The Proxies named above will, in their sole discretion, vote upon such other
matters as may properly come before the meeting and any adjournment or
adjournments thereof.
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<PAGE>
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THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE 5 NOMINEES FOR DIRECTOR AND FOR
ITEMS 2 AND 3.
Dated ________________, 1996
___________________________________________
___________________________________________
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES
APPEAR ON THIS PROXY. JOINT OWNERS SHOULD
EACH SIGN. ATTORNEYS, EXECUTORS, ADMINIS-
TRATORS, TRUSTEES OR GUARDIANS SHOULD SO
INDICATE WHEN SIGNING.
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