SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by Registrant {X}
Filed by a Party other than the Registrant { }
Check the appropriate box:
{ } Preliminary Proxy Statement { } CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6 (E) (2))
{X} Definitive Proxy Statement
{ } Definitive Additional Materials
{ } Soliciting Material Pursuant to Section 2401.14a-11(c) or Section 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Hagler Bailly, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
{X} No fee required
{ } Fee computed on table below per Exchange Act Rule 14a-6 (I) (4) and 0-11.
(1) Title of each class of securities to which transaction applies:
<PAGE>
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction
(5) Total fee paid:
{ } Fee paid previously with preliminary materials
{ } Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
Hagler Bailly
ARLINGTON, VIRGINIA
April 7, 1999
TO OUR STOCKHOLDERS:
It is our pleasure to invite you to our 1999 Annual Meeting of Stockholders
("Annual Meeting") to be held at Hagler Bailly, Inc.'s corporate headquarters at
1530 Wilson Boulevard, Suite 400, Arlington, Virginia 22209 on Thursday, May 13,
1999 at 2:00 p.m., Eastern Daylight Time.
The following Notice of Meeting of Stockholders ("Notice of Meeting") identifies
each business item for your action. These items and the vote the Board of
Directors recommends are as follows:
<TABLE>
<CAPTION>
<S> <C>
Item Recommended Vote
1. Election of three directors, FOR
2. Amendment to the Stock Option Plan, and FOR
3. Ratification of Ernst & Young LLP as independent auditors. FOR
</TABLE>
We have also included a Proxy Statement that contains more information about
these items and the Annual Meeting.
We urge you to read the Notice of Meeting and Proxy Statement so that you may be
informed about business to come before the Annual Meeting. At your earliest
convenience, please sign and return the accompanying Proxy Card in the
postage-paid envelope provided. To make sure your shares will be represented you
should sign and return the Proxy Card, whether or not you plan to attend the
Annual Meeting.
If you attend the Annual Meeting and wish to vote in person, the ballot that you
submit at the Annual Meeting will supersede your proxy.
We look forward to seeing you at the Annual Meeting. On behalf of the management
and directors of Hagler Bailly, Inc., we want to thank you in advance for your
continued support and confidence in 1999.
/s/ WILLIAM E. DICKENSON /s/ HOWARD W. PIFER III
President and Chief Executive Officer Chairman of the Board
<PAGE>
Hagler Bailly
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE OWNERS OF HAGLER BAILLY, INC. COMMON STOCK:
The Annual Meeting of Stockholders ("Annual Meeting") of Hagler Bailly, Inc., a
Delaware corporation, will be held at Hagler Bailly, Inc.'s corporate
headquarters at 1530 Wilson Boulevard, Suite 400, Arlington, Virginia 22209 on
Thursday, May 13, 1999, at 2:00 p.m., Eastern Daylight Time, for the following
purposes:
1. To elect the following directors for a term of three years: Messrs.
William E. Dickenson, Robert W. Fri and Richard H. O'Toole (designated as
Proposal 1 in the accompanying Proxy Statement).
2. To consider and take action upon an amendment to the Hagler Bailly, Inc.
Employee Incentive and Non-Qualified Stock Option and Restricted Stock Plan
to provide for an increase in the number of shares subject to options that
may be awarded to non-employee directors each year from 3,000 to 7,500
(designated as Proposal 2 in the accompanying Proxy Statement).
3. To consider and take action upon a proposal to ratify the selection, by the
Audit Committee of the Board of Directors, of Ernst & Young, L.L.P. as
independent auditors to audit consolidated financial statements of Hagler
Bailly, Inc. for 1999 (designated as Proposal 3 in the accompanying Proxy
Statement).
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Stockholders of record of common stock, par value $0.01 per share, at the close
of business on April 2, 1999, the record date fixed by the Board of Directors,
are entitled to notice of, and to vote at, the Annual Meeting, as more fully
described in the accompanying Proxy Statement.
Stockholders who cannot attend are urged to sign, date and otherwise complete
the enclosed Proxy Card and return it promptly in the postage-paid envelope
provided. Any stockholder giving a proxy has the right to revoke it any time
before it is voted. Any stockholder who is present at the Annual Meeting may
vote in person instead of by proxy, thereby canceling any previous proxy.
By Order of the Board of Directors,
/s/ Glenn J. Dozier
Secretary
EACH STOCKOLDER IS URGED TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED
PROXY CARD. IF A STOCKHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY REVOKE
THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE>
1
HAGLER BAILLY, INC.
1530 WILSON BOULEVARD, SUITE 400
ARLINGTON, VIRGINIA 22209
APRIL 7, 1999
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hagler Bailly, Inc. ("Hagler Bailly" or the
"Company") for use at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Thursday, May 13, 1999 at Hagler Bailly, Inc.'s corporate
headquarters located at 1530 Wilson Boulevard, Suite 400, Arlington, Virginia,
22209 commencing at 2:00 p.m., Eastern Daylight Time, and at any adjournment or
postponement thereof, for the purpose of considering and acting upon the matters
set forth in the accompanying Notice of Annual Meeting of Stockholders ("Notice
of Meeting").
VOTING AT ANNUAL MEETING; RECORD DATE
This Proxy Statement and the accompanying Proxy Card are first being mailed to
stockholders on or about April 10, 1999 to stockholders entitled to vote at the
Annual Meeting. Proxies are solicited to give all stockholders of record on
April 2, 1999 (the "Record Date") an opportunity to vote on matters to be
presented at the Annual Meeting. Shares can be voted at the meeting only if the
stockholder is present or represented by proxy.
Only holders of record of common stock on April 2, 1999 will be entitled to
notice of, and to vote at, the Annual Meeting. On that date 16,606,466 shares of
common stock were issued and outstanding. Each share of common stock, par value
$0.01 per share, represented at the Annual Meeting is entitled to one vote on
each matter properly brought before the meeting.
REQUIRED VOTE
Directors are elected by plurality of the votes cast by the shares entitled to
vote at a meeting at which a quorum is present. The two matters that the Board
of Directors has submitted for shareholder approval at the meeting shall be
determined by a majority of the votes cast.
The presence in person or by proxy of the holders of a majority of the votes
entitled to be cast at the Annual Meeting is necessary to constitute a quorum.
An abstention is deemed "present" but is not deemed a "vote cast." As a result,
abstention and broker "non-votes" are not included in the tabulation of the
voting results on the election of directors or issues requiring approval of a
majority of the votes cast. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power on that item and has not
received instruction from the beneficial owner.
<PAGE>
Broker "non-votes" and the shares as to which a stockholder abstains are
included in determining whether a quorum is present.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted as
instructed on those proxies. If no instructions are indicated, the shares will
be voted as recommended by the Board of Directors.
If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed form of proxy and acting
thereunder will have discretion to vote on those matters in accordance with
their own judgment to the same extent as the person signing the proxy would be
entitled to vote. In accordance with the Company's By-laws, the Annual Meeting
may be adjourned in order to permit the solicitation of additional proxies. The
Company does not anticipate that any other matters will be raised at the Annual
Meeting.
Any proxy may be revoked at any time before it is voted by (i) filing with the
Secretary of the Company, at or before the taking of the vote at the Annual
Meeting, a written notice of revocation or a duly executed proxy, in either case
dated later than the prior proxy relating to the same shares or (ii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not of itself revoke a proxy). Any written notice of revocation or
subsequent proxy should be sent so as to be delivered to Hagler Bailly, Inc.,
1530 Wilson Boulevard, Suite 400, Arlington, Virginia, 22209, Attention:
Secretary, or hand delivered to the Secretary, before the taking of the vote at
the Annual Meeting.
A copy of the Company's Annual Report to Stockholders for the year 1998,
including financial statements, is being mailed simultaneously with the Proxy
Statement to all stockholders entitled to vote at the Annual Meeting.
ELECTION OF DIRECTORS (Proposal 1)
The Board of Directors is currently divided into three classes. The terms of
Class I directors expire in 2001, those of Class II directors expire in 1999 and
those of Class III directors in 2000. The directors of each class are elected
for a three-year term. The Board of Directors proposes the three nominees listed
below for election as directors to serve until the 2002 Annual Meeting and until
their successors are elected and qualified or until their earlier resignation or
removal. The persons named in the enclosed proxy intend to vote such proxy for
the election of each of the three nominees named below, unless the stockholder
indicates on the proxy that the vote should be withheld from any or all of the
nominees. The terms of the other directors will expire at the Company's Annual
Meetings of Stockholders in 2000 and 2001, as indicated above.
The Company expects each nominee for election as a director at the Annual
Meeting to be able to accept such election. If any nominee is unable to accept
such election, proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees. A brief listing of the
principal occupation, other major affiliations and age of each nominee and each
incumbent director follows.
Nominees for Election at This Meeting to Terms Expiring in 2002
- --------------------------------------------------------------------------------
William E. Dickenson Age 50
Mr. Dickenson is president and chief executive officer of the Company and
president and chief executive officer of its wholly-owned subsidiary, PHB Hagler
Bailly, Inc. (PHB Hagler Bailly). He served as president and chief executive
officer of Putnam, Hayes & Bartlett, Inc. (PHB), the predecessor to PHB Hagler
Bailly, since 1991, and was the managing director responsible for its litigation
support practice area from 1983 through 1991. From 1978 to 1983, Mr. Dickenson
managed major antitrust litigation and consulting assignments at Dickenson,
O'Brien & Associates, which he founded and served as president. Prior to that he
was employed at Cambridge Research Institute and also served in a variety of
positions at the Tennessee Valley Authority. Mr. Dickenson was elected to the
Company's Board of Directors in March 1999.
Mr. Dickenson is a member of the Executive Compensation Committee of the Board
of Directors.
- --------------------------------------------------------------------------------
Robert W. Fri Director since 1995
Age 63
Mr. Fri is currently director of the National Museum of Natural History at the
Smithsonian Institution, and senior fellow emeritus at Resources for the Future,
where he served as president from 1986 to 1995. Mr. Fri is a director of
American Electric Power Company, a member of the University of Chicago Board of
Governors for the Argonne National Laboratory and a trustee of Science Service,
Inc., publisher of Science News and organizer of the Westinghouse Science Talent
Search. In 1971, Mr. Fri became the First Deputy Administrator of the United
States Environmental Protection Research and Development Administration. Mr. Fri
served as acting administrator of both agencies for extended periods. From 1978
to 1986, Mr. Fri operated Energy Transition Corporation. Mr. Fri began his
career with McKinsey & Company, where he was elected a principal.
Mr. Fri is a member of the Audit Committee, the Executive Compensation Committee
and the Stock Option Committee of the Board of
Directors.
- --------------------------------------------------------------------------------
Richard H. O'Toole Director since 1997
Age 52
Mr. O'Toole is currently a member of the Board of Directors of ABB Europe
Limited. Mr. O'Toole has extensive international experience on trade, investment
and regulatory issues and has also acted as advisor and consultant to a variety
of public and private sector organizations. A former diplomat, Mr. O'Toole has
served in posts in Paris, Geneva and Brussels. From 1976 to 1979, Mr. O'Toole
was Special Assistant in the Office of Executive Director of the Organization
for Economic Co-operation and Development's (OECD) International Energy Agency.
From 1979 to 1982, Mr. O'Toole was European Correspondent in the Political
Division of the Irish Foreign Ministry. He was Irish Deputy Permanent
Representative to the United Nations in Geneva from 1983 to 1984. In 1985, Mr.
O'Toole was nominated Chef de Cabinet in the European Commission with
responsibilities in the areas of competition policy, institutional issues and
social policy. In 1989, he joined GPA Group plc and became Managing Director of
its GPA Technologies Division. From 1993 to 1995, he was appointed Assistant
Director General of the General Agreement on Tariffs and Trade (GATT) where he
was a leading member of the Secretariat team supervising the conclusion of the
Uruguay Round of trade negotiations and the creation of the World Trade
Organization (WTO) as a successor to the GATT arrangements.
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Incumbent Directors - Term Expiring 2000
- --------------------------------------------------------------------------------
Henri-Claude A. Bailly Director since 1995
Age 52
Mr. Bailly is vice chairman of the Company. He has served as the Company's chief
executive officer from its founding in 1980 to March 1999. From 1984 to 1987 and
from May 1995 to March 1999, Mr. Bailly was the firm's president; he served as
chairman of the Board of Directors from 1984 to August 1998 and continues to
serve as a member of the Board of Directors. From 1984 to 1995, RCG
International, Inc. ("RCG"), the consulting arm of Reliance Group Holdings,
employed Mr. Bailly in a series of management positions culminating in senior
vice president, and chairman of the board and chief executive officer of
RCG/Hagler Bailly, Inc. Prior to founding Hagler Bailly, Mr. Bailly was employed
in successive positions from associate to managing director of Resource Planning
Associates, an international energy, utilities and environmental management
consulting firm. Mr. Bailly serves on the Board of Directors of the United
States Energy Association, the Alliance to Save Energy, and is a member of the
National Coal Council.
- --------------------------------------------------------------------------------
R. Gene Brown Director since 1998
Age 66
Dr. Brown has served as a member of the Board of Directors of the Company since
August 1998. Dr. Brown is a founding investor of Advanced Micro Devices, Inc.
and remains a member of its Board of Directors and chairs its Audit Committee.
From 1974 to 1976, Dr. Brown was president and chief executive officer of
Berkeley Bio Engineering, Inc. as well as president and vice chairman of
Monterey Life Systems, Inc. (the majority shareholder of Berkeley Bio
Engineering). From 1968 to 1974, he was vice president of Corporate Development
for Syntex Corporation. Prior to service in those corporate positions, Dr. Brown
served on the faculties of the graduate schools of business administration at
Harvard and Stanford universities. Dr. Brown is a Certified Public Accountant.
Dr. Brown is a member of the Audit Committee, the Executive Compensation and the
Stock Option Committees of the Board of Directors.
- --------------------------------------------------------------------------------
<PAGE>
Alain M. Streicher Director since 1995
Age 50
Mr. Streicher is executive vice president, international operations of the
Company and president and chief executive officer of the Company's wholly-owned
subsidiary, Hagler Bailly Services, Inc. ("Hagler Bailly Services"). He has been
employed by Hagler Bailly in various management positions including senior vice
president and acting chief operating officer. From 1976 to 1980, Mr. Streicher
was chief energy analyst at the CEREN in Paris.
- --------------------------------------------------------------------------------
Incumbent Directors - Term Expiring 2001
- --------------------------------------------------------------------------------
Jasjeet S. Cheema Age 54
Mr. Cheema is executive vice president, U.S./Canada operations of the Company
and PHB Hagler Bailly. Mr. Cheema joined the Company through its merger with
TB&A Group, Inc. and its wholly-owned subsidiary, Theodore Barry & Associates
(collectively, "TB&A") in February 1998. At TB&A, he held various positions and
served as president since 1980. Prior to joining TB&A, he worked for Getty Oil
Company as a manager of its corporate technical applications group. Mr. Cheema
was elected to the Company's Board of Directors in March 1999.
- --------------------------------------------------------------------------------
Howard W. Pifer III Director since 1998
Age 57
Dr. Pifer has served as the chairman of the Company's Board of Directors since
August 1998. He served as chairman of the Board of Directors of PHB since 1991,
having previously served as PHB's president and chief executive officer. Dr.
Pifer also serves as Chairman of PHB Hagler Bailly and leads its energy global
business sector. Dr. Pifer, who specializes in rigorous analysis of corporate
strategies and public policies, has advised senior management, boards of
directors and governments in Australia, Canada, England and Wales, Hong Kong,
New Zealand, Norway, Scotland, Singapore and Spain, as well as throughout the
United States. Prior to founding PHB in 1976, Dr. Pifer was a member of the
Harvard Business School faculty, where he taught courses in managerial
economics, finance, public policy and strategic planning. From 1973 to 1976, Dr.
Pifer was Vice President, Energy & Environment Group at Temple, Barker & Sloane,
Inc.
Dr. Pifer is member of the Governance Committee of the Board of Directors.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Fred M. Schriever Director since 1995
Age 68
Mr. Schriever retired in April 1996 from RCG. Mr. Schriever was employed by RCG
in various positions since 1971, most recently as its chairman and chief
executive officer. Prior to joining RCG, Mr. Schriever was a partner of Booz
Allen & Hamilton. Since 1996, Mr. Schriever has been a consultant to various
industry groups. Mr. Schriever is a member of the National Executive Service
Corps Board of Directors. Mr. Schriever is also a fellow of both the Institute
of Directors and the Institute of Management Consultants and the American
Society of Mechanical Engineers, and is a Certified Management Consultant.
Mr. Schriever is a member of the Audit Committee, the Executive Compensation
Committee and the Stock Option Committee of the Board of Directors.
- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has designated three principal standing committees and a
standing subcommittee of one of such committees.
The AUDIT COMMITTEE, established in 1997 after the Company became a publicly
traded company, consists of three members, all of whom are independent,
non-employee directors. Members of the committee are Messrs. R. Gene Brown
(Chairman), Richard H. O'Toole and Fred M. Schriever. The Audit Committee met
three times in 1998. The Audit Committee overseas all internal and external
audits of the Company and its subsidiaries, conducts inquiries and
investigations of the Company's internal controls and compliance with law and
makes recommendations and reports to the Board of Directors. In fulfillment of
those responsibilities it reviews the qualifications of Hagler Bailly's
independent auditors, makes recommendations to the Board of Directors regarding
the selection of independent auditors, reviews the scope, fees and results of
any audit and reviews non-audit services and related fees provided by the
independent auditors.
The EXECUTIVE COMPENSATION COMMITTEE consists of four members, three of whom are
independent, non-employee directors. Members of the committee are Messrs.
William E. Dickenson, R. Gene Brown, Robert W. Fri and Fred M. Schriever
(Chairman). The Executive Compensation Committee met once during 1998. This
committee is responsible for the review and approval of the compensation,
including bonuses, conditions of employment of officers of the Company and
administration of all salary and incentive compensation plans for the officers
of Hagler Bailly, Inc. Its Report on Executive Compensation is set forth herein
under the caption "Compensation Committee Report on Compensation of Executive
Officers of the Company."
The STOCK OPTION COMMITTEE, a subcommittee of the Executive Compensation
Committee, has three members, all of whom are independent, non-employee
directors. Members of the committee are Messrs. R. Gene Brown, Robert W. Fri and
Fred M. Schriever (Chairman). The Stock Option Committee met four times during
1998. This committee administers the Hagler Bailly, Inc. Employee Incentive and
Non-Qualified Stock Option and Restricted Stock Plan (the "Plan") and has the
authority, as does the full Board of Directors, to grant options and restricted
stock thereunder.
The GOVERNANCE COMMITTEE has three members, Robert W. Fri (Chairman), Richard H.
O'Toole and Howard W. Pifer, III. The Governance Committee serves as a
nominating committee for candidates for election to the Board of Directors,
screens and identifies candidates for election to management of the Company and
makes recommendations to the president and chief executive officer and the Board
of Directors for senior management positions. The Governance Committee also
reviews and makes recommendations to the Board of Directors on the compensation
of non-employee directors of the Board of Directors and makes recommendations to
the Board of Directors on corporate governance.
During 1998, the Board of Directors met seven times. No incumbent director
attended fewer than 75% of the total number of meetings of the Board of
Directors. No incumbent director attended fewer than 75% of the total number of
meetings of the committees of which he was a member.
DIRECTOR COMPENSATION
Directors who are not executive officers of the Company are paid an annual
retainer of $10,000 and a fee of $1,000 for each meeting of the Board of
Directors and of each meeting of a Committee or subcommittee of the Board of
Directors attended in person or by telephone. All directors are reimbursed for
travel expenses incurred in connection with attending Board of Directors and
Committee meetings. Each committee and subcommittee chairman is paid in addition
an annual stipend of $3,000. Pursuant to the terms of the Plan, each director of
the Company who is not otherwise employed by the Company is at the time of each
annual election of directors entitled to an automatic option grant. Messrs.
Schriever, Fri and O'Toole, each non-employee directors of the Company, were
each granted options to purchase 3,000 shares of common stock in 1998. The Board
of Directors amended the Plan in March 1999 to increase the number of shares of
common stock subject to automatic option grants to non-employee directors
annually from 3,000 to 7,500.
Stockholders are being asked to approve and ratify the amendment at the Annual
Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is the name, address, stock ownership and voting power of each
person or group of persons known to the Company to own beneficially more than
five percent (5%) of the outstanding shares of the Company's common stock as of
March 1, 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Amount and Nature of Beneficial Percent of Class
of Beneficial Owner Ownership
- ------------------------------------------------ ----------------------------------- --------------------------
Henri-Claude A. Bailly 858,912(1) 5.1
c/o Hagler Bailly, Inc.
1530 Wilson Blvd.
Arlington, VA 22209
- ------------------------------------------------ -- ----------------------------------- --- --------------------------
</TABLE>
(1) Includes 72,500 shares of common stock held in trust by Mr. Bailly and
Mr. Streicher on the behalf of Mr. Streicher's children and options to
purchase 323,267 shares of common stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of common stock as of March 1, 1999, by (i) each director and director
nominee, (ii) the chief executive officer and the four most highly paid
executive officers who earned more than $100,000 during the year ended December
31, 1998 (the "Named Executive Officers"), and (iii) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
<S> <C> <C>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
Henri-Claude A. Bailly 858,912 (1) 5.1
- --------------------------------------------------------- ---------------------------- ------------------------------
R. Gene Brown 13,118 *
- --------------------------------------------------------- ---------------------------- ------------------------------
Jasjeet S. Cheema 53,862 (2) *
- --------------------------------------------------------- ---------------------------- ------------------------------
Vinod K. Dar 468,631 2.8
- --------------------------------------------------------- ---------------------------- ------------------------------
William E. Dickenson 446,594 2.7
- --------------------------------------------------------- ---------------------------- ------------------------------
Robert W. Fri 18,700 (3) *
- --------------------------------------------------------- ---------------------------- ------------------------------
Richard H. O'Toole 6,000 (4) *
- --------------------------------------------------------- ---------------------------- ------------------------------
Howard W. Pifer, III 446,594 2.7
- --------------------------------------------------------- ---------------------------- ------------------------------
Fred M. Schriever 77,398 (5) *
- --------------------------------------------------------- ---------------------------- ------------------------------
Alain M. Streicher 490,677 (6) 2.9
- --------------------------------------------------------- ---------------------------- ------------------------------
Michael D. Yokell 480,389 2.9
====================================================================================== ==============================
All Directors and Executive Officer as a Group 5,359,741 31.3
====================================================================================== ==============================
* Less than one percent of the outstanding shares.
(1) Includes 72,500 shares of common stock held in trust by Mr. Bailly and Mr.
Streicher on the behalf of Mr. Streicher's children and options to purchase
323,267 shares of common stock.
(2) Includes options to purchase 3,750 shares of common stock.
(3) Includes options to purchase 11,187 shares of common stock.
(4) Consists of options to purchase 6,000 shares of common stock.
(5) Includes 50,000 shares of common stock held by Mr. Schriever's spouse and
options to purchase 11,186 shares of common stock.
(6) Includes 72,500 shares of common stock held in trust by Mr. Bailly and Mr.
Streicher on behalf of Mr. Streicher's children and options to purchase 117,580
shares of common stock.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). SEC regulations require the Company's executive officers, directors and
greater than 10% stockholders to furnish the Company with copies of the reports
they are required to file. Based solely on a review of the copies of such
reports furnished to the Company, the Company believes that during 1998, its
executive officers, directors, and greater than 10% beneficial owners complied
with all applicable Section 16(a) filing requirements, except that one report
regarding one transaction by Mr. Daniel M. Rouse, a former executive officer of
the Company, was filed late.
<PAGE>
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee of the Company in 1998 was composed of
three independent, non-employee directors, R. Gene Brown, Robert W. Fri and Fred
M. Schriever, and Henri-Claude A. Bailly, President and Chief Executive Officer.
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth compensation awarded or earned by the Named
Executive Officers during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
<S> <C> <C> <C> <C> <C> <C>
Annual Long-Term
Compensation Compensation
------------------------------------------ ---------------
All Other Securities Other Annual
Name and Principal Position Salary Bonus Compensation Underlying Compensation
Year ($) ($) ($) Options (#) ($)
- -----------------------------------
Henri-Claude A. Bailly 1998 393,759 -- -- -- --
President and Chief Executive 1997 376,184 200,000 -- 172,876 14,357
Officer of Hagler Bailly, Inc. 1996 325,000 606,954 93,195 51,863 13,931
- ----------------------------------- ------ ------------ ------------- --------------- ---------------- -----------------
Jasjeet S. Cheema 1998 102,247 (1) 569,838 (2) -- 15,000 4,090(3)
Executive Vice President, 1997 -- -- -- -- --
U.S./Canada Operations for Hagler 1996 -- -- -- -- --
Bailly and PHB Hagler Bailly
- ----------------------------------- ------ ------------ ------------- --------------- ---------------- -----------------
Vinod K. Dar 1998 363,128 -- -- -- --
Senior Vice President of PHB 1997 352,694 140,000 -- -- 14,357
Hagler Bailly 1996 308,753 -- 454,000 (4) -- 13,931
- ----------------------------------- ------ ------------ ------------- --------------- ---------------- -----------------
Alain M. Streicher 1998 225,023 -- -- -- --
Executive Vice President, 1997 225,880 115,000 -- -- 14,357
International Operations of 1996 176,357 270,245 -- -- 13,931
Hagler Bailly, Inc., President
and Chief Executive Officer of
Hagler Bailly Services
- ----------------------------------- ------ ------------ ------------- --------------- ---------------- -----------------
Michael D. Yokell 1998 224,406 -- -- -- --
Senior Vice President of PHB 1997 216,251 -- -- -- 14,357
Hagler Bailly 1996 176,357 377,076 -- -- 13,931
- ----------------------------------- ------ ------------ ------------- --------------- ---------------- -----------------
</TABLE>
(1) Represents base salary payments pro-rated from February 23, 1998, the date
of Hagler Bailly's acquisition of TB&A, to year-end 1998. See "Employment
Arrangements."
(2) Represents a one-time cash payment of $100,000 as consideration for
entering into an employment agreement with Hagler Bailly Consulting, Inc.,
a wholly-owned subsidiary of the Company, and $469,838 in bonus payments
pursuant to TB&A's incentive compensation plan pro-rated from February 23,
1998 to year-end 1998. See "Employment Arrangements."
(3) Represents profit sharing payment under TB&A's 401(k) Profit Sharing Plan
pro-rated from February 23, 1998 to year-end 1998. See "Employment
Arrangements."
(4) Represents payment by the Company to the Hagler Bailly, Inc. Deferred
Compensation Plan Trust for Vinod K. Dar. In September 1996, the Company
contributed $454,000 to a trust under an individual deferred compensation
plan for Vinod K. Dar. The trust used such deferred compensation to
purchase 345,754 shares of Hagler Bailly common stock from the Company at a
price of $1.31 per share.
STOCK OPTION GRANTS DURING 1998
The following table presents information with respect to stock option grants
during the year ended December 31, 1998 to the Named Executive Officers.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Individual Grants
------------------------------------------------------------------ -------------------------
Number of % of Total Potential Realizable
Securities Options Granted Value At Assumed Annual
Underlying to Employees in Exercise Rate of Stock Price
Options Fiscal Year Or Base Price Expiration Appreciation for Option
Name Granted (#) ($/Sh) Date Term
- -------------------------- ---------------- ----------------- --------------- --------------- -------------------------
5% ($) 10% ($)
----------- ----------
Henri-Claude A. Bailly -- -- -- -- -- --
Jasjeet S. Cheema 15,000(1) 1 24.00 2/23/08 226,402 573,747
Vinod K. Dar -- -- -- -- -- --
Alain M. Streicher -- -- -- -- -- --
Michael D. Yokell -- -- -- -- -- --
- -------------------------- ---------------- ----------------- --------------- --------------- ----------- -- ----------
</TABLE>
(1) These options become exercisable in equal amounts over four years commencing
on February 23, 1999.
STOCK OPTION EXERCISES AND VALUES IN 1998
The following table sets forth information regarding options of Named Executive
Officers that were exercised during and held on December 31, 1998.
Aggregate Option Exercises During 1998
And Values on December 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End
(#) ($)(1)
Shares
Acquired
upon Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ------------- ------------ --------------- --------------- --------------- ----------------
Henri-Claude A. Bailly 15,000 366,675(2) 288,692 103,726 5,296,533 1,411,792
Jasjeet S. Cheema -- -- -- 15,000 -- -- (3)
Vinod K. Dar -- -- -- -- -- --
Alain M. Streicher -- -- 117,580 -- 2,332,787 --
Michael D. Yokell -- -- -- -- -- --
- ---------------------------- ------------- ------------ --------------- --------------- --------------- ----------------
</TABLE>
(1) Options are in-the-money if the market value of the shares covered
thereby is greater than the option exercise price. Options are
out-of-the-money if the market value of the shares covered thereby is
less than the option exercise price. Value is calculated based on the
fair market value of the Common Stock at December 31, 1998 of $20.00
(as reported on The Nasdaq Stock Market), less the exercise price.
(2) Value is calculated based on the fair market value of the Company's
common stock at March 27, 1998 (date of exercise) of $24.625 (as
reported on The Nasdaq Stock Market), less the exercise price.
(3) Mr. Cheema's options are out-of-the-money; the $24.00 exercise price
exceeds the $20.00 fair market value of the Company's common stock at
December 31, 1998 (as reported on The Nasdaq Stock Market).
EMPLOYMENT ARRANGEMENTS
The Company has entered into employment agreements with Messrs. Bailly,
Dickenson, Pifer and Cheema.
Mr. Bailly originally entered into an employment agreement on May 25, 1995 in
connection with the management repurchase of the Company from RCG. Such
agreement was amended and restated effective upon consummation of Hagler
Bailly's initial public offering and was amended and restated again, to become
effective on August 28, 1998, in connection with the acquisition of PHB. Each of
Mr. Dickenson's and Mr. Pifer's employment agreements became effective upon
Hagler Bailly, Inc.'s acquisition of PHB. Mr. Bailly's agreement ends, unless
earlier terminated, on July 3, 2000. Messrs. Dickenson's and Pifer's agreements
end, unless earlier terminated, on August 27, 2001.
Under the terms of their respective agreements, Messrs. Bailly, Dickenson and
Pifer each received an initial base salary in 1998 at an annual rate of
$393,750, $343,592 and $343,592, respectively. This rate is increased each
January 1 by an amount that is no less than 5.0% over the annual rate of base
salary in effect the preceding year, or the increase in the Consumer Price Index
for the year, whichever is greater. Each is entitled to a bonus for each
calendar year equal to an amount determined by the Executive Compensation
Committee of the Board of Directors. Each is also entitled to participate in all
of the benefit programs provided by the Company. Upon a change in control as
defined in the employment agreement, each is entitled to a lump sum payment of
four times his base salary as well as payments for thirty-six months at an
annual rate equal to his base salary in effect on the date of termination. The
definition of change in control in the employment agreements includes any
circumstances where, other than as a result of death, disability or termination
for cause (i) Mr. Dickenson shall cease to serve as chief executive officer of
PHB Hagler Bailly or as executive vice president and chief operating officer of
the Company before January 1, 2000, or after January 1, 2000, as chief executive
officer of the Company or as a member of the Company's Board of Directors; (ii)
Dr. Pifer shall cease to serve as chairman of the Company's Board of Directors
before January 1, 2000 or as a member of the Company's Board of Directors or
(iii) Mr. Bailly shall cease to serve as chief executive officer of the Company
before January 1, 2000, or after January 1, 2000, as chairman of the Company's
Board of Directors.
On March 31, 1999, the Company's Board of Directors elected Mr. Dickenson
President and Chief Executive Officer of the Company. At the same time, the
Board of Directors determined that Mr. Bailly will become Chairman of the Board
of Directors on September 1, 1999. Until such time Dr. Pifer will continue to
serve as Chairman of the Board of Directors. Such actions by the Board of
Directors could be deemed to have caused a change in control of the Company
under the employment agreements of Messrs. Bailly, Dickenson and Pifer. None of
Messrs. Bailly, Dickenson and Pifer has terminated his employment agreement.
Messrs. Bailly, Dickenson and Pifer each has agreed not to exercise his right to
terminate his employment agreement as a result of the Board of Directors'
actions on March 31, 1999 for so long as the other two individuals each exercise
such powers and perform such duties as are set forth for their respective
offices in the current bylaws of the Company. Any such termination would entitle
the executive to the payments referred to above.
Under the terms of Mr. Cheema's employment agreement, which became
effective upon Hagler Bailly's acquisition of TB&A, for the calendar year 1998
he received an initial base salary at an annual rate of $120,000, and bonus in
accordance with TB&A's compensation policies then in effect. For the calendar
year 1999 and each calendar year thereafter, his employment agreement provides
that Mr. Cheema's salary and bonus are determined by the Company in accordance
with the compensation policies of the Company for officers of comparable rank.
In consideration for entering into the employment agreement, Mr. Cheema received
a one-time cash payment of $100,000. Mr. Cheema is also entitled to participate
in all of the benefit programs provided by the Company.
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS OF THE
COMPANY
The responsibilities of the Executive Compensation Committee of the Company's
Board of Directors (the "Committee") include (i) establishing compensation
programs for executive officers of the Company designed to attract, motivate and
retain key executives responsible for the Company's success; (ii) administering
and maintaining such programs in a manner that will benefit the long-term
interests of the Company and its stockholders; and (iii) determining the
compensation of the Company's chief executive officer. The Committee is composed
of three directors who have never served as employees of the Company and the
Company's Chief Executive Officer. The Company's Chief Executive Officer does
not participate in discussions concerning matters relating to his own
compensation.
Compensation Philosophy
The Committee has furnished this report on executive compensation to describe
the philosophy that underlies the cash and equity-based components of the
Company's executive compensation program. It also describes the details of each
element of the program, as well as the rationale for compensation paid to the
Company's Chief Executive Officer and its executive officers in general.
[GRAPHIC OMITTED] The Committee considers it essential to
the vitality of the Company that the total compensation
opportunity for executive officers remains competitive with
similar companies in order to attract and retain the talent needed
to manage and build the Company's business.
[GRAPHIC OMITTED] Compensation is tied to performance. A
significant part of the total compensation opportunity is at risk,
to be earned only if specific goals are met. Incentive
compensation is designed to reinforce the achievement of both
short- and long-term corporate objectives.
[GRAPHIC OMITTED] Executives' interest in the business
should be directly linked to the interests and benefits received
by the Company's stockholders.
The process used by the Committee in determining Chief Executive Officer
compensation levels for all of these components is based upon the Committee's
subjective judgment and takes into account both qualitative and quantitative
factors. No weights are assigned to such factors with respect to any
compensation component. The Committee as a whole reviews, makes recommendations
and approves the compensation for the Company's executive officers.
The Company's compensation program has three elements: annual base salary;
annual bonuses, which are based on both the Company and the individual attaining
certain performance objectives; and awards under a long-term incentive
compensation plan, which are based on both Company performance and individual
performance. The Committee has approved these elements of compensation to make
the Company's total compensation program comparable to and competitive with that
of other companies of similar size.
Annual Compensation
Annual compensation for the executive officers at Hagler Bailly is comprised of
base salary and bonus, an approach consistent with the compensation programs of
most leading management consulting firms. The Committee determines annual base
salary and bonuses for executive officers of the Company annually upon the
recommendation of the Company's Chief Executive Officer. Bonus awards are based
on the attainment of certain financial and non-financial performance criteria.
Payment of any bonus may be in cash or in stock options, generally in the first
quarter.
The Chief Executive Officer's salary, bonus and long-term awards follow the
policies set forth above. For the 1998 fiscal year, Mr. Bailly received $393,759
in base salary. Mr. Bailly did not receive a bonus in cash or stock options with
respect to his performance in 1998. Pursuant to the terms of his employment
agreement, Mr. Bailly's base annual salary increased five percent in 1999 to
$413,400.
Stock Options
The Board of Directors has adopted the Plan. The Plan is designed to enhance the
long-term profitability and stockholder value of Hagler Bailly by offering
common stock to those individuals who are key to the growth and success of the
Company. The Plan also helps to attract and retain executives with experience
and ability on a basis competitive with industry practice, and to encourage
executives to acquire and maintain stock ownership in the Company.
The Stock Option Committee administers the Plan. The Stock Option Committee has
authority (i) to grant awards of stock options or restricted stock under the
Plan; (ii) to make all interpretations and determinations affecting the Plan;
and (iii) to determine the individuals to whom awards are granted, the amount of
such awards, any applicable vesting schedule, and any other terms of awards.
Awards may consist of incentive stock options qualified under Section 422 of the
Internal Revenue Code, "nonqualified" stock options and restricted stock.
The maximum number of shares of Hagler Bailly common stock that may be issued
and sold under the Plan is 5,000,000 shares.
Stock Option Committee Executive Compensation Committee
R. GENE BROWN HENRI-CLAUDE A. BAILLY
ROBERT W. FRI R. GENE BROWN
FRED M. SCHRIEVER ROBERT W. FRI
FRED M. SCHRIEVER
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, Alain M. Streicher, a director and executive vice president,
international operations of the Company, was indebted to the Company in a
maximum amount of $97,898.39. This amount consisted of an outstanding balance of
$21,292.32 on a loan established in 1995 with an interest rate of 9.0 percent
per year and accrued interest of $1,606.07. The remainder of $75,000.00
constituted an advance of a bonus, bore no interest and was for an indeterminate
term. The loan was repaid in full in December 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
Set forth below is a graph comparing the percentage change in the cumulative
total stockholder return on Hagler Bailly common stock with the Nasdaq Stock
Market ("Nasdaq") and a group of the following peer issuers: The Metzler Group,
Inc., Forrester Research, Inc., and Superior Consultant Holdings Corp.
<TABLE>
<CAPTION>
PERFORMANCE GRAPH (1)
<S> <C> <C> <C> <C> <C> <C> <C>
7/3/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
Hagler Bailly (2) 100.000 149.265 132.353 147.059 152.206 114.706 117.647
Nasdaq 100.000 114.860 107.001 125.080 129.104 115.415 149.406
Peer Issuers (3) 100.000 108.664 98.668 129.754 148.495 142.115 168.196
</TABLE>
(1) Assumes that the value of the investment in Hagler Bailly common stock,
the Nasdaq Stock Market, and the Peer Issuers was $100 on July 3, 1997
and that all dividends were reinvested. The stock performance graph
above is not necessarily indicative of future stock performance.
(2) Hagler Bailly's common stock trades on The Nasdaq Stock Market under
the symbol HBIX. Hagler Bailly's common stock began trading on The
Nasdaq Stock Market on July 3, 1997, the date of Hagler Bailly's
initial public offering.
(3) The Peer Group is weighted by market capitalization.
AMENDMENT TO THE STOCK OPTION PLAN (PROPOSAL 2)
The Board of Directors has amended the Plan to provide for an increase from
3,000 to 7,500 in the number of shares of common stock subject to options that
are awarded to non-employee directors each year. The Board increased the amount
of options awarded to non-employee directors as part of an overall increase in
non-employee director compensation which resulted from the Board of Directors'
review of the work required and the responsibilities borne by the non-employee
directors.
The Company will present to the meeting the following resolution:
"RESOLVED, that the action of the Board of Directors in amending
the Hagler Bailly, Inc. Employee Incentive and Non-Qualified Stock
Option and Restricted Stock Plan to provide for the award of options to
purchase 7,500 shares Hagler Bailly, Inc. common stock each year to
non-employee directors is hereby ratified and approved."
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR the proposal to
ratify and approve the amendment to the Plan. Proxies received by the Board of
Directors will be voted FOR the proposal unless stockholders specify a contrary
choice in their proxies or attend the Annual Meeting and vote against the
proposal.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (Item 3)
The Audit Committee of the Board of Directors each year selects and engages on
behalf of the Company independent auditors to audit the consolidated financial
statements of the Company for such year. The Board of Directors has directed
that the Audit Committee's selection of independent auditors for fiscal year
ending December 31, 1999 shall be submitted for ratification or rejection at the
Annual Meeting. Stockholder approval is not required for the appointment of
independent auditors, since the Board of Directors has responsibility for
selecting independent auditors. The appointment is, however, being submitted for
approval at the Annual Meeting. If the stockholders should reject the selection
of the Audit Committee, the Board of Directors would reconsider the selection.
The Audit Committee has selected Ernst & Young L.L.P. to audit the
consolidated financial statements of the Company for the year 1999. This firm
has audited the Company's financial statements since the Company's inception and
is considered well qualified. Representatives of Ernst & Young are expected to
be present at the meeting with the opportunity to make a statement and to
respond to appropriate questions.
The Company will present to the meeting the following resolution:
"RESOLVED, that the selection by the Audit Committee of the Board of
Directors of Ernst & Young L.L.P. as independent auditors to audit the
consolidated financial statements of the Company for the fiscal year
ending December 31, 1999 be and hereby is ratified."
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR the proposal to
ratify the appointment of Ernst & Young L.L.P. as independent auditors of the
Company for 1999 fiscal year. Proxies received by the Board of Directors will be
voted FOR the proposal unless stockholders specify a contrary choice in their
proxies or attend the Annual Meeting and vote against the proposal.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by the
Company. The Company does not expect to pay any compensation for the
solicitation of proxies, but may pay brokers, nominees, fiduciaries and other
custodians their reasonable fees and expenses for sending proxy material to
principals and obtaining their instructions. In addition to solicitation by
mail, proxies may be solicited in person, or by telephone, facsimile
transmission or other means of electronic communication, by directors and by
officers and other employees of the Company.
STOCKHOLDER PROPOSALS
Any stockholder proposal submitted under SEC Rule 14a-8 for inclusion in the
Proxy Statement for the 2000 Annual Meeting of Stockholders should be submitted
in writing to: Secretary, Hagler Bailly, Inc., 1530 Wilson Boulevard, Suite 400,
Arlington, Virginia 22209 and received no later than December 9, 1999. Any other
stockholder proposals intended to be presented at the 2000 Annual Meeting of
Stockholders must be received by the Company on or before February 22, 2000 to
be eligible for inclusion in the Company's Proxy Statement and proxy relating to
that meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
Neither the Company nor any member of the Board of Directors know of any matter
to be presented at the meeting or intends to bring before the meeting any
matters other than those referred to in the accompanying Notice of Meeting.
However, if any other matters properly come before the meeting, the persons
appointed as proxies in the enclosed form of proxy/voting instruction card
intend to vote in accordance with their judgment.
OTHER INFORMATION
A COPY OF THE ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1998 (EXCLUDING EXHIBITS)
WILL BE FURNISHED, WITHOUT CHARGE, BY WRITING TO: MARGARET M. RAY, INVESTOR
RELATIONS, HAGLER BAILLY, INC., 1530 WILSON BOULEVARD, SUITE 400, ARLINGTON,
VIRGINIA 22209.
The above notice of Annual Meeting and Proxy Statement are sent by order of the
Company's Board of Directors.
/s/ Glenn J. Dozier
Secretary
Arlington, Virginia
April 7, 1999
