<PAGE>
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 Rule 14a-11(c) or Rule 14a-12
EMCOR GROUP, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / 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:
(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:
<PAGE>
[LOGO]
EMCOR GROUP, INC.
101 MERRITT SEVEN CORPORATE PARK
NORWALK, CONNECTICUT 06851
------------------------
NOTICE OF ANNUAL MEETING
------------------------
To the Stockholders of
EMCOR Group, Inc.
The Annual Meeting of Stockholders of EMCOR Group, Inc. (the "Company")
will be held in Room 405, Princeton Club, 15 West 43 Street, New York, New York,
on July 28, 1999, at 10:00 A.M. (local time) for the following purposes:
1. To elect seven directors to serve until the next annual meeting and
until their successors are duly elected and qualify.
2. To consider a stockholder proposed resolution regarding stockholder
rights plans.
3. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for 1999.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on June 18, 1999 as
the record date for determination of stockholders entitled to receive notice of,
and to vote at, the Annual Meeting and any adjournment thereof.
YOUR ATTENTION IS RESPECTFULLY DIRECTED TO THE ACCOMPANYING PROXY
STATEMENT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
SHELDON I. CAMMAKER
Secretary
Norwalk, Connecticut
June 25, 1999
<PAGE>
EMCOR GROUP, INC.
------------------------
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 28, 1999
------------------------
The enclosed proxy is solicited by the Board of Directors of EMCOR Group,
Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held at 10:00 A.M. (local time) on Wednesday, July 28, 1999
in Room 405, Princeton Club, 15 West 43 Street, New York, New York and at any
adjournment or postponement of such meeting. The enclosed proxy may be revoked
at any time before it is exercised by delivering a written notice to the
Secretary of the Company stating that the proxy is revoked, by executing a duly
exercised proxy bearing a later date and presenting it to the Secretary of the
Company, or by attending the Annual Meeting and voting in person. Unless
otherwise specified, the proxies from holders of Common Stock will be voted in
favor of each proposal set forth in the Notice of Annual Meeting.
As of June 18, 1999, the Company had outstanding 9,603,828 shares of Common
Stock, par value $.01 per share (the "Common Stock"). Only stockholders of
record of Common Stock at the close of business on June 18, 1999 (the "Record
Date") are entitled to notice of, and to vote at, the Annual Meeting. The
mailing address of the principal executive offices of the Company is 101 Merritt
Seven Corporate Park, Norwalk, Connecticut 06851, and the approximate date on
which this Proxy Statement and the accompanying proxy are being first sent or
given to stockholders is June 25, 1999. The Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1998 accompanies this Proxy
Statement.
The Common Stock was the only voting security of the Company outstanding
and entitled to vote on the Record Date. The holders of record of a majority of
the outstanding shares of Common Stock entitled to vote will constitute a quorum
for the transaction of business at the Annual Meeting. Holders of Common Stock
are entitled to one vote per share on each matter to be voted upon at the Annual
Meeting. Assuming the presence of a quorum at the Annual Meeting, the
affirmative vote of the holders of a plurality of the votes cast by the holders
of shares of Common Stock present in person or represented by proxy and entitled
to vote at the Annual Meeting is necessary for the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required for approval of the stockholder proposed resolution and
ratification of the appointment of independent public accountants to audit the
accounts of the Company and its subsidiaries. With respect to an abstention from
voting on any matter, the shares will be considered present and entitled to vote
at the Annual Meeting. Abstentions will have the effect of a vote against
proposals brought before the meeting, but will not have an effect on the
election of directors. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular proposal (a
broker non-vote), those shares will not be treated as present and entitled to
vote on that proposal and, therefore, will be disregarded and will have no
effect on the outcome of the vote on the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of June 18, 1999 certain information
regarding beneficial ownership of the Company's Common Stock by each person or
group known by the Company to be a beneficial owner of more than five percent of
the outstanding shares of Common Stock. Except as otherwise noted, to the
Company's
<PAGE>
knowledge, each person or group listed below has sole voting and investment
power with respect to the shares listed next to its name.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
- --------------------------------------------------------------------------------------- ------------------ -------
<S> <C> <C>
Steven A. Van Dyke..................................................................... 1,427,967(1) 14.8%
777 South Harbour Island Boulevard
Tampa, Florida 33602
Oaktree Capital Management LLC......................................................... 1,268,645(2) 13.2%
550 South Hope Street
Los Angeles, California 90071
Cumberland Associates LLC.............................................................. 787,500(3) 8.2%
114 Avenue of the Americas
New York, New York 10036
Citigroup Inc.......................................................................... 1,262,597(4) 11.8%
153 East 53rd Street
New York, New York 10043
Donaldson, Lufkin & Jenrette Securities Corporation.................................... 547,942(5) 5.4%
277 Park Avenue
New York, New York 10019
</TABLE>
- ------------------
(1) As reported in Amendment No. 2 to Schedule 13D dated December 30, 1998 filed
with the Securities and Exchange Commission ("SEC") by Steven A. Van Dyke
and his affiliates, Douglas P. Teitelbaum, Bay Harbour Management, L.C.,
Tower Investment Group, Bay Harbour 90-1, Ltd., Bay Harbour 98-1 Ltd.,
Trophy Hunter Investments, Ltd., Bay Harbour Investments, Inc., Trophy
Hunters, Inc., Bay Harbour Partners, Ltd., and Trophy Hunter Partners, Ltd.
Includes 36,576 shares issuable upon conversion of the Company's Convertible
Debentures and 26,900 shares held in a joint account with Mr. Van Dyke's
wife; of these shares, Mr. Van Dyke has sole voting power and sole
dispositive power of 30,600 shares and shared voting power and shared
dispositive power of 1,397,367 shares.
(2) As reported in Amendment No. 4 to Schedule 13D dated February 26, 1999 filed
with the SEC on behalf of Oaktree Capital Management, LLC ("Oaktree"), OCM
Principal Opportunities Fund, L.P. ("Principal Fund") and Oaktree
Opportunities Fund II, L.P. ("Opportunities Fund"). Oaktree is the general
partner of the Principal Fund and the Opportunities Fund and the investment
manager of a third party account. Oaktree has sole voting power and sole
dispositive power of these shares.
(3) As reported in Schedule 13G dated December 31, 1998 filed with the SEC,
Cumberland Associates LLC has sole voting power and sole dispositive power
of 731,903 of these shares and shared voting power and shared dispositive
power of 55,597 of these shares.
(4) As reported in Schedule 13D dated May 7, 1999 filed with the SEC by
Citigroup Inc. ("Citigroup") and its affiliates Salomon Smith Barney
Holdings Inc., Salomon Brothers Holding Company Inc. and Salomon Brothers
Asset Management Inc. Includes 1,090,987 shares issuable upon conversion of
the Company's Convertible Debentures. Citigroup has shared voting power and
shared dispositive power of these shares.
(5) As reported in Schedule 13G dated December 31, 1998 filed with the SEC by
the following affiliates of Donaldson Lufkin & Jenrette Securities
Corporation ("DLJ"): AXA, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Conseil Vie Assurance Maturelle, AXA Courtage Assurance
Mutuelle, and the Equitable Companies Incorporated ("Equitable"). Includes
527,133 shares issuable upon conversion of the Company's Convertible
Debentures. DLJ is a subsidiary of Equitable. Of the 547,942 shares, DLJ has
sole voting power of 536,142 shares and sole dispositive power of 545,442
shares and shared dispositive power of 2,500 shares.
2
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected by the holders of
Common Stock to serve until the next Annual Meeting of Stockholders and until
their successors have been duly elected and qualify. To be elected as a
director, each nominee must receive the favorable vote of a plurality of the
shares present in person or represented by proxy and entitled to vote at the
meeting. Certain information concerning the nominees for election at the Annual
Meeting is set forth below. Each nominee is presently a director of the Company.
While the Board of Directors has no reason to believe that any of those named as
a nominee for election to the Board of Directors will not be available as a
candidate, should such a situation arise, the proxy may be voted for the
election of other nominees in the discretion of the persons acting pursuant to
the proxy.
Frank T. MacInnis, Age 52. Mr. MacInnis has been Chairman of the Board and
Chief Executive Officer of the Company since April 18, 1994 and President of the
Company from April 18, 1994 to April 4, 1997. From April 1990 to April 1994,
Mr. MacInnis served as President and Chief Executive Officer, and from August
1990 to April 1994 as Chairman of the Board, of Comstock Group Inc., a
nationwide electrical contracting company. From 1986 to April 1994 Mr. MacInnis
was also President of Spie Group Inc., which owns or owned Comstock Group Inc.,
Spie Construction Inc., a Canadian pipeline construction company, and Spie
Horizontal Drilling Inc., a United States company engaged in underground
drilling for pipelines and communications cable. Mr. MacInnis is also a director
of the Williams Companies, Inc.
Stephen W. Bershad, Age 57. Mr. Bershad has been Chairman of the Board and
Chief Executive Officer for more than the past five years of Axsys Technologies,
Inc. (formerly named Vernitron Corporation), a manufacturer of electronic
components and controls. Mr. Bershad has been a Director of the Company since
December 15, 1994.
David A.B. Brown, Age 55. Mr. Brown has been President of The Windsor
Group, a management consulting firm of which he is a co-founder, for more than
the past five years. Mr. Brown is also a director of BTU International, Inc.,
Marine Drilling Companies, Inc. and Technical Communications Corp. Mr. Brown has
been a Director of the Company since December 15, 1994.
Georges L. de Buffevent, Age 61. Mr. de Buffevent has been Chairman of the
Board and Chief Executive Officer of SAGED, a French company specializing in
road construction, land development and waste management, since January 1996.
For approximately four years prior thereto, he was a business consultant. From
July 1982 to February 1992, Mr. de Buffevent was Chairman of the Board of
Directors and Chief Executive Officer of Spie-Batignolles S.A., a leading French
electrical engineering and construction company with worldwide operations.
Mr. de Buffevent has been a Director of the Company since June 19, 1998.
Albert Fried, Jr., Age 69. Mr. Fried has been Managing Member of Albert
Fried & Company, LLC, a broker/dealer and member of the New York Stock Exchange,
since 1955 and Managing Member of Buttonwood Specialists, LLC, a New York Stock
Exchange specialist firm, since 1992. Mr. Fried has been a Director of the
Company since December 15, 1994.
Richard F. Hamm, Jr., Age 40. Mr. Hamm has been Vice President, Corporate
Strategic Development & Acquisitions of Carlson Companies, Inc., a global
travel, hospitality and marketing services company, since January 1999. From
January 1997 to December 1998 he was Senior Vice President, Legal and Business
Development of Tropicana Products, Inc. ("Tropicana"), a manufacturer of fruit
juices, and Vice President and General Counsel of Tropicana from June 1993 to
January 1997. Mr. Hamm has been a Director of the Company since June 19, 1998.
Kevin C. Toner, Age 35. Mr. Toner has been Principal of Aristeia Capital
LLC, an investment manager, since June 1997 and President of the Isdell 86
Foundation, a not-for-profit organization, since December 1994. He was a private
investor from March 1995 to June 1997 and a Managing Director from December 1991
to February 1995 of UBS Securities Inc., a broker/dealer and member of the New
York Stock Exchange, engaged in corporate finance, underwriting and distribution
of high grade U.S. corporate issues and Eurobonds. Mr. Toner has been a Director
of the Company since December 15, 1994.
3
<PAGE>
COMMITTEES OF THE BOARD
The Company has standing Audit, Compensation and Personnel, and Corporate
Governance Committees of the Board of Directors.
The Audit Committee, comprised of Messrs. Bershad, Brown and Hamm, serves
as the focal point for communication between the Board of Directors and the
Company's independent public accountants, chief internal auditor and management,
to the extent that their duties relate to financial or accounting reporting and
controls. The Audit Committee is responsible for engaging and discharging the
independent public accountants for the Company, reviewing their fees, reviewing
the scope and audit procedures of the independent public accountants, reviewing
annual financial statements, reviewing quarterly and annual financial results
prior to their release, and meeting with the Company's internal auditors and
independent public accountants on matters relating to, among other things, the
adequacy of the Company's internal audit controls and accounting and auditing
personnel. During 1998, the Audit Committee held four meetings.
The Compensation and Personnel Committee, comprised of Messrs. Bershad,
Fried and de Buffevent, reviews and advises the Board of Directors with respect
to the qualifications of individuals identified as candidates for positions as
the Company's Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and General Counsel and for the position of Chief Executive Officer of
each subsidiary of the Company whose proposed annual compensation is $200,000 or
more. It also reviews and recommends to the Board of Directors for its approval
any employment, severance or similar contracts, or modifications thereof, for
the Chairman of the Board and Chief Executive Officer of the Company and is
charged with fixing on an annual basis his compensation, subject to the approval
of the Board of Directors. The Compensation and Personnel Committee also is
responsible for fixing, based on proposals made by the Chief Executive Officer,
compensation for the Chief Operating Officer, Chief Financial Officer and
General Counsel of the Company as well as the compensation of other officers and
employees of the Company and each subsidiary whose annual compensation is
$200,000 or more and for approving any employment, severance or similar
contracts for such officers and employees, or modifications thereof. The
Compensation and Personnel Committee also recommends to the Board of Directors
for its approval any incentive, benefit, award or bonus plans and programs for
employees, administers the 1994 Management Stock Option Plan and reviews
executive development plans. During 1998, the Compensation and Personnel
Committee held four meetings.
The Corporate Governance Committee, comprised of Messrs. Fried, Hamm and
Toner, is responsible to the Board of Directors for the review and
recommendation of director candidates; recommendations regarding directors'
retirement age and removal; review of all committees of the Board of Directors
and recommendations regarding their number, function and membership;
recommendations with respect to compensation of and other benefits for
non-employee directors; and review of and recommendation with respect to
directors' and officers' liability insurance and indemnification agreements
between the Company and its officers and directors. The Corporate Governance
Committee will consider nominees recommended by stockholders. The Corporate
Governance Committee has not adopted formal procedures for the submission of
such recommendations. Such recommendations should be sent to the Secretary,
EMCOR Group, Inc., 101 Merritt Seven Corporate Park, Norwalk, Connecticut 06851.
The Company's by-laws specify certain time limitations, notice requirements and
other procedures applicable to the submission of nominations to be brought
before an Annual or Special Meeting of Stockholders of the Company. During 1998,
the Corporate Governance Committee held one meeting.
MEETINGS OF THE BOARD
There were nine meetings of the Board of Directors during 1998.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of June 18, 1999 certain information
regarding the beneficial ownership of the Company's Common Stock by each of the
Company's directors, its chief executive officer, each of the other four most
highly compensated executive officers of the Company and all its directors and
executive officers as a group for the fiscal year ended December 31, 1998.
Except as otherwise noted, to the Company's knowledge, each of the persons
listed below has sole voting power and investment power with respect to the
shares listed next to his name.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT
- ------------------------------ ----------------------- -------
<S> <C> <C>
Frank T. MacInnis............. 278,000(2) 2.8%
Stephen W. Bershad............ 45,695(3) *
David A. B. Brown............. 24,195(3) *
Georges de Buffevent.......... 10,617(3) *
Albert Fried, Jr.............. 27,202(3)(4) *
Richard F. Hamm, Jr........... 11,370(3) *
Kevin C. Toner................ 25,195(3) *
Jeffrey M. Levy............... 66,000(2) *
Sheldon I. Cammaker........... 60,000(2) *
Leicle E. Chesser............. 60,000(2) *
Thomas D. Cunningham.......... 38,167(2) *
All directors and executive
officers as a group......... 646,441(5) 6.3%
</TABLE>
- ------------------
* Represents less than 1%.
(1) The information contained in the table reflects "beneficial ownership" as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
All percentages set forth in this table have been rounded.
(2) Includes in the case of Mr. MacInnis 275,000 shares, in the case of
Mr. Levy 65,000 shares, in the case of each of Messrs. Cammaker and Chesser
60,000 shares, and in the case of Mr. Cunningham 38,167 shares, that may be
acquired upon the exercise of presently exercisable options or options
exercisable within 60 days granted pursuant to the Company's stock option
plans.
(3) Includes in the case of Mr. Bershad 30,695 shares, in the case of Mr. Brown
23,195 shares, in the case of Mr. de Buffevent 10,287 shares, in the case of
Mr. Fried 17,195 shares, in the case of Mr. Hamm 11,370 shares, and in the
case of Mr. Toner, 20,195 shares, that may be acquired upon exercise of
presently exercisable options or options exercisable within 60 days granted
to each non-employee director pursuant to the Company's 1995 Non-Employee
Directors' Non-Qualified Stock Option Plan and its 1997 Non-Employee
Directors' Non-Qualified Stock Option Plan, and in the case of Mr. de
Buffevent an additional 330 shares that may be issued in respect of Deferred
Stock Units granted to him pursuant to the 1997 Stock Plan for Directors.
(4) Also includes 10,007 shares owned by Albert Fried & Company, LLC ("AF&C"),
of which Mr. Fried is the Managing Member. AF&C is a market maker in both
the Company's Common Stock and Convertible Debentures. In such capacity AF&C
from time to time holds significant positions in the Company's Common Stock
and Convertible Debentures which positions are not reflected in the table
above. In addition, AF&C was a holder of prepetition unsecured claims
against the Company in its Chapter 11 proceeding concluded in December 1994.
There is a reserve of 131,610 shares of Common Stock for disputed claims
against the Company to be issued to the holders of prepetition general
unsecured allowed claims, including AF&C. To the extent such disputed claims
are disallowed, the number of shares beneficially owned by AF&C will
increase by a presently undeterminable amount.
(5) Includes 611,104 shares that may be acquired upon the exercise of presently
exercisable options or options exercisable within 60 days granted pursuant
to the Company's stock options plans.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following Summary Compensation Table sets forth the compensation
awarded to, earned by or paid to each of the Chief Executive Officer and the
other four most highly compensated executive officers of the Company
(collectively, the "named executive officers") during the fiscal years ended
December 31, 1998, 1997 and 1996 for services rendered in all capacities to the
Company and its subsidiaries. For information regarding employment agreements of
the named executive officers, see "'Employment Contracts and Termination of
Employment and Change of Control Arrangements" below.
5
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS(3)
-------------------------------------------------------------
ANNUAL NUMBER OF
COMPENSATION OTHER ANNUAL RESTRICTED SECURITIES
-------------------------- COMPENSATION STOCK UNDERLYING ALL OTHER
SALARY BONUS (2) AWARD OPTIONS/SARS(4) COMPENSATION(5)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------------------------ ---- -------- -------- ------------ ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank T. MacInnis................... 1998 700,000 800,000 31,787 None 25,000 8,400
Chairman of the Board and 1997 650,000 775,000 23,003 None None 8,400
Chief Executive Officer 1996 614,400 625,000 10,563 None None 6,300
Jeffrey M. Levy..................... 1998 450,000 400,000 8,645 None 15,000 8,400
President and 1997 325,000 400,000 10,462 None None 8,400
Chief Operating Officer 1996 309,000 300,000 6,627 None None 6,300
Sheldon I. Cammaker................. 1998 456,160 165,000 None None 10,000 8,400
Executive Vice President and 1997 430,340 150,000 None None None 8,400
General Counsel and Secretary 1996 406,000 150,000 None None None 6,300
Leicle E. Chesser................... 1998 350,000 375,000 11,936 None 10,000 8,400
Executive Vice President and 1997 325,000 340,000 19,867 None None 8,400
Chief Financial Officer 1996 309,000 225,000 4,885 None None 6,300
Thomas D. Cunningham(1)............. 1998 275,000 150,000 13,354 None 5,000 8,400
Executive Vice President 1997 126,923 100,000 15,920 None 53,000 45,827
1996 -- -- -- -- -- --
</TABLE>
- ------------------
(1) Mr. Cunningham was a director of the Company until July 15, 1997.
Mr. Cunningham joined the Company as Executive Vice President on July 15,
1997, and, accordingly, no compensation information is reported for him in
respect of 1996.
(2) The personal benefits provided to the named executive officers did not
exceed the disclosure threshold established by the SEC pursuant to
applicable rules. Figures represent amounts reimbursed for the payment of
taxes upon certain fringe benefits.
(3) The column specified by Item 402 (b) of Regulation S-K to report Long-Term
Incentive Plan Payouts has been excluded because the Company has no
long-term incentive compensation plans and has not had any such plan during
any portion of fiscal years 1998, 1997 and 1996.
(4) The awards set forth in this column are of stock options only. The Company
did not award stock appreciation rights. The grant in 1997 of options to
Mr. Cunningham consists of an option to purchase 50,000 shares of Common
Stock pursuant to the Company's 1994 Management Stock Option Plan and an
option to purchase 3,000 shares of Common Stock pursuant to the 1995
Non-Employee Directors' Non-Qualified Stock Option Plan. The grant in 1998
of options to Messrs. MacInnis, Levy, Cammaker, Chesser and Cunningham were
pursuant to the Company's 1994 Management Stock Option Plan.
(5) The amounts reported in this column include matching contributions of $3,600
made by the Company under the 401(k) part of the Company's Retirement and
Savings Plan, a defined contribution profit sharing plan, during 1998 for
the account of each of the named executive officers. The amounts reported
for 1998 also include contributions of $4,800 to be paid during 1999 in
respect of 1998 by the Company pursuant to the retirement account part of
the Company's Retirement and Savings Plan for the account of each of the
named executive officers. The amount reported in this column in respect of
1997 for Mr. Cunningham represents consulting and directors' fees paid to
him in respect of the period January 1, 1997 through July 14, 1997 prior to
his becoming an employee of the Company.
6
<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth certain information concerning certain
grants to the named executive officers of stock options during the last fiscal
year. As indicated under the Summary Compensation Table above, the Company did
not grant stock appreciation rights ("SARs") of any kind.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------
NUMBER OF % OF TOTAL GRANT DATE VALUE
SECURITIES OPTIONS -------------------------------
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH)(1) DATE VALUE($)(3)
- -------------------------------------------- ---------- ------------ ----------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Frank T. MacInnis........................... 25,000 28% $ 20.00 January 1, 2008 191,000
Jeffrey M. Levy............................. 15,000 17% $ 20.00 January 1, 2008 114,600
Sheldon I. Cammaker......................... 10,000 11% $ 20.00 January 1, 2008 76,400
Leicle E. Chesser........................... 10,000 11% $ 20.00 January 1, 2008 76,400
Thomas D. Cunningham........................ 5,000 5.5% $ 20.00 January 1, 2008 38,200
</TABLE>
- ------------------
(1) The stock option exercise price for a share of Common Stock is the fair
market value of a share of Common Stock on the date of grant. No SARs,
performance units or other instruments were granted in tandem with the stock
options reported herein.
(2) These options were granted pursuant to the Company's 1994 Management Stock
Option Plan. The options have a ten-year term and first became exercisable
on January 2, 1999 and thereafter are exercisable any time or from time to
time until January 1, 2008.
(3) Present value was calculated using the Black-Scholes option-pricing model
which involves an extrapolation of future price levels based solely on past
performance. The present value as of the date of grant, calculated using the
Black-Scholes method, is based on assumptions about future interests rates,
dividend yield and stock price volatility. In calculating the present value
as of the date of grant of the options reported in the table, the Company
assumed an interest rate of 5.3% per annum, an annual dividend yield of zero
and volatility of 33.9%. There is no assurance that these assumptions will
prove to be true in the future. The actual value, if any, that may be
realized by each individual will depend on the future market price of the
Common Stock and cannot be forecasted accurately by application of an
option-pricing model.
7
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning unexercised
options to purchase Common Stock of the Company held at the end of fiscal year
1998 by the named executive officers. None of the named executive officers
exercised any options during fiscal year 1998. No named executive officer holds
any SARs.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED FY-END(#) FY-END($)(1)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------------------------- ----------- -------- ---------------------------- -------------------------
<S> <C> <C> <C> <C>
Frank T. MacInnis........................... None -- 200,000/25,000 $ 2,300,000/0
Jeffrey M. Levy............................. None -- 50,000/15,000 $ 556,000/0
Sheldon I. Cammaker......................... None -- 50,000/10,000 $ 556,000/0
Leicle E. Chesser........................... None -- 50,000/10,000 $ 556,000/0
Thomas D. Cunningham........................ None -- 33,167/38,333 $ 104,062/0
</TABLE>
- ------------------
(1) For purposes of this column, value is calculated based on the aggregate
amount of the excess of $16.25 (the closing price of the Common Stock as
reported on the Nasdaq Stock Market on December 31, 1998) over the relevant
exercise price for a share of Common Stock with respect to the options.
8
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE OF CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Frank T. MacInnis
providing for his employment as Chief Executive Officer of the Company through
December 31, 2000 and with Jeffrey M. Levy providing for his employment as
President and Chief Operating Officer of the Company through December 31, 2000.
Each such employment agreement provides that the term of employment will
automatically be extended for successive one-year periods unless the Company or
the officer gives written notice not to extend at least six months prior to the
end of the initial term or any extended term of the employment agreement.
However, following the date of a Change of Control (as defined in their
employment agreements), their respective terms of employment shall be for a
period of three years from such date. Under Mr. MacInnis' employment agreement,
the Company is also to use its best efforts to ensure Mr. MacInnis' election as
Chairman of the Board of Directors of the Company.
Pursuant to the terms of their respective employment agreements,
Mr. MacInnis is to receive an annual base salary of $725,000 for 1999 and
Mr. Levy is to receive an annual base salary of $465,000 for 1999. Their annual
base salaries are to increase on the first day of each calendar year during the
employment periods by the percentage increase in the consumer price index for
the preceding year for the area in which the principal office of the Company is
located or an amount specified by the Board of Directors, whichever is greater.
In addition, Mr. MacInnis and Mr. Levy are each entitled to receive an annual
bonus payable in cash ("Target Bonus"), which is to be determined by a formula
agreed upon annually by the respective officer and the Compensation and
Personnel Committee of the Board of Directors (the "Compensation Committee");
provided that Mr. MacInnis' annual Target Bonus may not be less than $600,000
and Mr. Levy's annual Target Bonus may not be less than $400,000. Pursuant to
the terms of their respective employment agreements, the Company is to recommend
to the Compensation Committee that Mr. MacInnis and Mr. Levy receive annually an
option under the Company's 1994 Stock Option Plan to purchase not less than
25,000 and 15,000 shares of Common Stock, respectively, at a per share exercise
price equal to the fair market value of a share of Common Stock on the grant
date. Each option is to have a ten-year term and is to be exercisable on the
first anniversary of the grant date.
In addition, pursuant to his employment agreement, Mr. MacInnis was granted
on May 5, 1999 an option to purchase 200,000 shares of Common Stock at a per
share exercise price of $19.75, the fair market value of a share of Common Stock
on the grant date. This option has a ten-year term and will vest in full on
November 21, 2006, provided that with respect to successive groups of 50,000
shares of Common Stock, the option shall vest earlier if and when the fair
market value of a share of Common Stock first equals or exceeds $25, $30, $35
and $40, respectively.
Under the terms of their employment agreements, Mr. MacInnis and Mr. Levy
each has been provided with certain benefits customarily accorded to the
Company's executive officers. These benefits include, in Mr. MacInnis' case,
$700 per month for the leasing of an automobile; in Mr. Levy's case, $800 per
month for the leasing of an automobile and the cost of the lease capital
reduction payment; maintenance and insurance on their respective automobiles;
and reimbursement for initiation fees and monthly dues for membership in a club
suitable for entertaining clients of the Company, all legal expenses incurred in
connection with their employment agreements, and the cost of any increased tax
liability to them caused by receipt of these fringe benefits.
If, during the term of his employment agreement, Mr. MacInnis' employment
is terminated by the Company other than for Cause (as defined in his employment
agreement) or he terminates his employment for Good Reason (as defined in his
employment agreement), he will be entitled to receive a cash payment equal to
the sum of (i) the greater of (A) his base salary at the highest annual rate in
effect during his term of employment for the period from the date of termination
through December 31, 2000 and (B) two times his base salary at its then current
annual rate and (ii) the greater of (A) his Target Bonus for the calendar year
in which the termination takes place multiplied by the number of full or partial
calendar years remaining from the date of termination through December 31, 2000
and (B) two times his Target Bonus for the calendar year in which the
termination takes place; however, in the event of a termination following a
Change of Control (as defined in his employment agreement), the factor of two in
clauses (i)(B) and (ii)(B) above will be increased to three. If, during the term
of
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his employment agreement, Mr. Levy's employment is terminated by the Company
other than for Cause (as defined in his employment agreement) or he terminates
his employment for Good Reason (as defined in his employment agreement) he will
be entitled to a cash payment equal to the sum of (i) two times his base salary
at its then current annual rate and (ii) two times his Target Bonus for the
calendar year in which the termination occurs; however, in the event of a
termination following a Change of Control (as defined in his employment
agreement) the factor of two in clauses (i) and (ii) above will be increased to
three. In addition, Messrs. MacInnis and Levy each will be entitled to receive
all unpaid amounts in respect of his bonus for any calendar year ending before
the date of termination and an amount equal to his Target Bonus for the calendar
year in which the termination takes place multiplied by a fraction the numerator
of which is the number of days in such calendar year that he was an employee of
the Company and the denominator of which is 365.
The Company has entered into employment agreements with Sheldon I. Cammaker
providing for his employment as Executive Vice President and General Counsel of
the Company through December 31, 2000, with Leicle E. Chesser providing for his
employment as Executive Vice President and Chief Financial Officer of the
Company through December 31, 2000 and with Thomas D. Cunningham providing for
his employment as Executive Vice President of the Company through December 31,
2000. Each such employment agreement provides that the term of employment will
automatically be extended for successive one-year periods unless the Company or
the officer gives written notice not to extend at least six months prior to the
end of the initial term or any extended term of the employment agreement.
However, following the date of a Change of Control (as defined in their
employment agreements), their respective terms of employment shall be for a
period of three years from such date.
Pursuant to the terms of their respective employment agreements,
Mr. Cammaker is to receive an annual base salary of $365,000 for 1999,
Mr. Chesser is to receive an annual base salary of $365,000 for 1999 and
Mr. Cunningham is to receive an annual base salary of $325,000 for 1999. Annual
base salaries are to increase on the first day of each calendar year during the
employment periods by the percentage increase in the consumer price index for
the preceding year for the area in which the principal office of the Company is
located or an amount specified by the Board of Directors, whichever is greater.
In addition, each is entitled to receive an annual cash bonus determined by the
Compensation Committee, and under the term of their respective employment
agreements, the Company is to recommend to the Compensation Committee that
Messrs. Cammaker, Chesser and Cunningham receive annually an option under the
Company's 1994 Stock Option Plan to purchase not less than 10,000, 10,000 and
5,000 shares of Common Stock, respectively, at a per share exercise price equal
to the fair market value of a share of Common Stock on the grant date. Each
option is to have a ten-year term and is to be exercisable on the first
anniversary of the date of grant.
Under the terms of their employment agreements, Messrs. Cammaker, Chesser
and Cunningham have been provided with certain benefits customarily accorded to
the Company's executive officers, including in Messrs. Chesser's and
Cunningham's case, $800 per month for leasing of an automobile (plus maintenance
and insurance thereon) and the cost of the lease capital reduction payment and
in Mr. Cammaker's case, the use of a Company automobile (plus maintenance and
insurance thereon); and reimbursement for all initiation fees and monthly dues
for membership in a club suitable for entertaining clients of the Company, all
legal expenses incurred in connection with their employment agreements, and the
cost of any increased tax liability caused by receipt of these fringe benefits.
If Messrs. Cammaker's, Chesser's or Cunningham's employment is terminated
during the term of his respective employment agreement by the Company other than
for Cause (as defined in his employment agreement) or if he terminates his
employment for Good Reason (as defined in his employment agreement), he will be
entitled to receive a cash payment generally equal to the sum of (i) two times
his base salary at its then current annual rate and (ii) two times the highest
bonus paid to him during his employment by the Company; however, in the event of
a termination following a Change of Control (as defined in his employment
agreement), the factor of two in clauses (i) and (ii) above will be increased to
three. In addition, Messrs. Cammaker, Chesser and Cunningham each will be
entitled to receive all unpaid amounts in respect of his bonus for any calendar
year ending before the date of termination and an amount equal to his bonus for
the calendar year in which the termination takes place multiplied by a fraction
the numerator of which is the number of days in such calendar year that he was
an employee of the Company and the denominator of which is 365.
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CONTINUITY AGREEMENTS
Each of Messrs. MacInnis, Levy, Cammaker, Chesser and Cunningham (each
referred to herein as an "Executive") is a party to a Continuity Agreement with
the Company. The purpose of the Continuity Agreements is to retain the services
of these Executives and to assure their continued productivity without
disturbance in circumstances arising from the possibility or occurrence of a
Change of Control of the Company. For purposes of the agreements "Change of
Control" means, in general, the occurrence of (i) the acquisition by a person or
group of persons of 25% or more of the voting securities of the Company,
(ii) the approval by the Company's stockholders of a merger, business
combination or sale of the Company's assets, the result of which is that less
than 65% of the voting securities of the resulting corporation is owned by the
holders of the Company's Common Stock prior to such transaction or (iii) the
failure of Incumbent Directors (as defined in the Continuity Agreements) to
constitute at least a majority of the Board of Directors of the Company during
any two year period.
Generally, no benefits are provided under the Continuity Agreements for any
type of termination before a Change of Control, for termination after a Change
of Control due to death or disability or for Cause (as defined in the Continuity
Agreements) or for voluntary termination (other than for Good Reason) (as
defined in the Continuity Agreements).
Upon a Change of Control, the Continuity Agreements generally provide to
the Executive a severance benefit, if the Company terminates the Executive's
employment without Cause or the Executive terminates his employment for Good
Reason within two years following a Change of Control, equal to the sum of three
times (i) his base salary at the time of the Change of Control, (ii) the higher
of (x) his bonus in respect of the year prior to the Change of Control and
(y) the average of his bonuses for the three years prior to the Change of
Control and (iii) the value of perquisites provided in respect of the year prior
to the Change of Control. Other severance benefits include outplacement
assistance and a continuance of insurance benefits for three years. The
severance benefits under the Executive's Continuity Agreement are reduced by any
severance benefit payable under the Executive's employment agreement.
If all or any portion of the payments or benefits referred to in the
preceding paragraphs under "Employment Agreements" and "Continuity Agreements"
either alone or together with other payments and benefits which Messrs.
MacInnis, Levy, Cammaker, Chesser or Cunningham receives or is then entitled to
receive from the Company would constitute a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code (the "Code"), then such
officer shall be entitled to such additional payments as may be necessary to
ensure that the net after tax benefit of all such payments shall be equal to his
respective net after tax benefit as if no excise tax had been imposed under
Section 4999 of the Code.
DIRECTOR COMPENSATION
Each director who is not an officer of the Company ("non-employee
director") is entitled to receive an annual cash retainer of $30,000 and $1,000
for each meeting of the Board of Directors he attends, other than telephonic
meetings of the Board in which case each non-employee director who participates
receives $500. Each non-employee director also receives $500 for each meeting of
a committee of the Board of Directors attended by the director, and each
non-employee director who chairs a committee of the Board of Directors receives
an additional $2,000 per annum. In addition, pursuant to the 1995 Non-Employee
Directors' Non-Qualified Stock Option Plan, each non-employee director on June
19, 1998 was granted an option to purchase 3,000 shares of Common Stock at an
exercise price of $19.625 per share. These options are fully exercisable as of
the date of grant and have a term of ten years. Directors who also serve as
officers of the Company do not receive compensation for services rendered as
directors.
Under the 1997 Directors' Stock Option Plan and the 1997 Directors' Stock
Plan, each non-employee director, in lieu of all or part of his annual cash
retainer, may elect to receive in accordance with such plans (a) options to
purchase shares of Common Stock and/or (b) deferred stock units in respect of
which shares of Common Stock will be issued following the non-employee
director's termination of service as a director of the Company. For 1998, each
of Messrs. Bershad, Brown, Fried and Toner elected to receive their annual
retainer in options, and, accordingly, each was granted options to purchase
6,074 shares Common Stock at $20.00 per share.
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Mr. Hamm, who was first elected to the Board in June 1998, elected to receive
his 1998 retainer in options and was granted 3,249 options to purchase shares of
Common Stock at $19.625 per share. Mr. de Buffevent, who also was first elected
to the Board in June 1998, elected to receive his 1998 retainer in options and
deferred stock units and was granted options to purchase 2,166 shares of Common
Stock at $19.625 per share and 330 deferred stock units entitling him to receive
an equal number of shares of Common Stock following termination of his service
as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
During 1998, the Compensation and Personnel Committee of the Board of
Directors of the Company (the "Compensation Committee") was responsible for
matters concerning executive compensation.
Mr. Fried, a non-employee director, served as a member of the Compensation
Committee during 1998 and Messrs. Bershad and de Buffevent, each of whom is a
non-employee director, have served as members of the Compensation Committee of
the Board of Directors since June 1998. Mr. Malcolm Hopkins, who was a director
until June 1998, served as a member of the Compensation Committee during the
first six months of 1998. Until June 1998, Mr. Toner, a non-employee director,
also served as a member of the Compensation Committee.
During a portion of 1998, Mr. Fried was Chairman of the Board of Directors
of Portec, Inc. and Mr. MacInnis was a director of Portec, Inc. Mr. MacInnis has
served as Chairman of the Board and Chief Executive Officer of the Company since
April 18, 1994.
STOCKHOLDER PROPOSAL CONCERNING RIGHTS PLAN
OCM Principal Opportunities Fund, L.P. has submitted the resolution set
forth below for inclusion in this Proxy Statement for the Company's 1999 Annual
Meeting of Stockholders.
Resolved, that the stockholders of EMCOR Group, Inc. request the Board of
Directors to refrain from adopting any future stockholder rights plan, rights
agreement, staggered board or other device commonly known as a "poison pill",
without the prior approval of stockholders at an Annual or Special Meeting, and
to redeem or terminate any such plan, agreement or device which may be in effect
at the adoption of this resolution.
THE STOCKHOLDER'S STATEMENT OF SUPPORT
On February 14, 1997, the OCM Principal Opportunities Fund, L.P. ("OCM")
disclosed its ownership of a 7.8% stake in EMCOR Group common stock, making OCM
one of the Company's largest stockholders. On March 3, 1997, the Company adopted
a "poison pill" whereby the board of directors may designate a stockholder
owning 15% or more of the Company's stock a hostile bidder and trigger the
poison pill. On June 19, 1998, the Company adjourned its annual stockholders
meeting because of the imminent rejection by stockholders representing 58% of
EMCOR common stock of a management proposal to nearly double the pool of options
available to Company executives. On June 22, 1998, the Company granted lucrative
change in control agreements with beneficial ownership thresholds at a low 25%
(rather than 50%) to seven executives even though the poison pill imposed severe
practical limitations on a Change in Control.
The effect of such poison pill is to restrict institutional stockholders
from materially increasing their commitment of capital to EMCOR by limiting
their ability to purchase shares in the open market from investors who may have
no other means of achieving liquidity for their EMCOR shares. The poison pill
also serves to insulate the EMCOR Board of Directors from following the
corporate governance directives of its stockholders. In any case, the poison
pill needlessly conveys the image of a management more interested in
entrenchment than in benefiting stockholders and the poison pill's 15%
beneficial ownership limitation seems quite unnecessary since the Board of
Directors has chosen to approve stock option plans, change-in-control agreements
and a bank credit facility with low beneficial ownership thresholds of 25%. We
do not believe the poison pill offers any significant economic protection in
light of the fact that even with the pill the availability of the Company's tax
loss carryforwards could become limited by purchases under the 15% pill
limitation. We can only conclude that the primary rationale for maintaining the
poison pill has little to do with the Company's tax loss carryforwards.
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We believe that it is the stockholders (who are the owners of the Company),
not the directors and managers (who merely act as agents for the owners), who
should have the right to decide what is or is not appropriate when it comes to
the matter of restricting share ownership. While management may offer up
empirical studies of other companies with poison pills, the fact that EMCOR
common stock has failed to perform during the existence of the poison pill
argues strongly for its immediate removal. We urge all stockholders to VOTE FOR
this proposal.
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE PROPOSAL
The Company has in effect a stockholders rights plan (the "Rights Plan")
unanimously adopted by the Board of Directors in March 1997, and pursuant to the
Rights Plan, the Board declared a dividend distribution of one Right on each
outstanding share of the Company's Common Stock. The Board adopted the Rights
Plan to ensure that it is positioned to execute its fiduciary responsibilities
and to provide it with the ability to take what it believes are the most
effective steps to protect and maximize the value of stockholders' investment in
the Company.
The adoption of the Rights Plan by action of the Board was in accord with
the Board's responsibility under Delaware law to manage and direct the
management of the Company's business and affairs and, as a legal matter, does
not require stockholder approval.
A stockholder rights plan enables a board of directors to respond in an
orderly and considered manner to an unsolicited bid. It is designed to encourage
potential acquirors to negotiate directly with the Board, which the Company
believes is in the best position to negotiate on behalf of all stockholders,
evaluate the adequacy of any potential offer, and protect stockholders against
potential abuses during the takeover process such as partial and two tiered
tender offers and creeping stock accumulation programs, which do not treat all
stockholders fairly or equally. The Rights Plan does not affect any takeover
proposal which the Board believes is in the best interests of the Company's
stockholders. Under the terms of the Rights Plan the Board has the power to
redeem the Rights to permit an acquisition that it determines, in the exercise
of its fiduciary duties, adequately reflects the value of the Company and is in
the best interests of the stockholders. The Rights Plan is also helpful in
protecting the Company's approximate $160 million net operating loss, which
enhances its positive cash flow.
Stockholder rights plans have become very common for public companies. The
Rights do not in any way weaken the financial strength of the Company or
interfere with its business plans, have no dilutive effect, do not affect
reported earnings per share, are not taxable to the Company or stockholders, and
do not change the way in which the shares of the Company can be traded. There is
no reason to believe that the Rights Plan has had any depressing affect upon the
market price of the Company's Common Stock. In fact, since adoption of the
Rights Plan, the Company's Common Stock price has appreciated over 50%.
The consequences of stockholder rights plans were recently studied by
Georgeson & Company, Inc., a nationally recognized proxy solicitation and
investor relations firm. The Georgeson study released in November 1997 found
that (i) premiums paid to acquire companies with stockholder rights plans were
on average eight percentage points higher than premiums paid for target
companies that did not have a stockholder rights plan, (ii) the presence of a
stockholder rights plan at a target company did not increase the likelihood of
the defeat of a hostile takeover bid, nor the withdrawal of a friendly bid, and
(iii) a stockholder rights plan did not reduce the likelihood that a company
would become a takeover target; the takeover rate was similar for companies with
and without a stockholder rights plan.
Six of the seven directors on the Company's Board are outside directors.
The preponderance of outside directors, their credentials and the fiduciary
obligations imposed by law on all directors assure that this Board of Directors
will act in the best interests of the Company and all its stockholders in
deciding alternatives under the Rights Plan in the face of an unsolicited offer.
The fact that six of the seven individuals serving on the Board are outside
directors provides assurance that the Rights Plan will not be used for
entrenchment purposes. The outside directors also have a common financial
interest with the Company's stockholders. As indicated above, the Company has a
stock option plan and a stock plan whereby its outside directors may elect to
receive their annual retainer in stock options and/or deferred stock units
exchangeable for Common Stock in lieu of cash. For 1998 and 1999 all of the
outside directors elected to receive their compensation in stock options or
deferred stock units.
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These options and deferred stock units vest during the course of the calendar
year for which they were granted, and this one-year vesting accelerates in the
event of a change in control during such year.
The Board believes that the only proper time to consider redemption of the
Rights and termination of the Rights Plan is if and when a specific offer is
made to acquire the Company's Common Stock. Redemption of the Rights and
termination of the Rights Plan prior to that time would be premature and would
remove any incentive for a potential acquiror to negotiate with the Board so
that stockholders are treated fairly.
The Board has no plans to propose a staggered board, which in any event
would require an amendment to the Company's Certificate of Incorporation or
By-laws by stockholders, nor has it any plans to adopt any other stockholder
rights plan, rights agreement, or any other device commonly known as a "poison
pill".
The Board believes that the Rights Plan is in the best interests of the
Company and its stockholders. The affirmative vote of a majority of shares of
Common Stock of the Company present and entitled to vote at the annual meeting
is required for approval of this proposal. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST THIS PROPOSAL.
COMPENSATION COMMITTEE REPORT
The Compensation Committee reviews and determines, based on proposals made
by the Chief Executive Officer, the compensation of the Company's Chief
Operating Officer, Chief Financial Officer and General Counsel as well as the
compensation of other officers and employees of the Company and each subsidiary
whose annual compensation is $200,000 or more. It also reviews and approves any
employment, severance or similar agreements with such individuals. The
Compensation Committee is charged with fixing on an annual basis, the
compensation of the Chairman of the Board and the Chief Executive Officer of the
Company, subject to the approval of the Board of Directors, and reviewing and
recommending to the Board of Directors any employment, severance or similar
agreement for him. The Compensation Committee also administers the Company's
1994 Management Stock Option Plan and is charged with recommending to the Board
of Directors any incentive, benefit, award or bonus plans or programs. The
entire Board of Directors determines the amount, if any, of the Company's
contributions pursuant to its Retirement and Savings Plan. While other
compensation decisions generally are not submitted to the Board of Directors,
the Board of Directors has the ultimate power and authority with respect to
compensation matters.
The members of the Compensation Committee reviewed salaries paid to the
named executive officers for 1998, approved their employment agreements and
their salary increases for 1999 and bonuses in respect of 1998 and approved the
grant to them during 1998 of stock options.
The Compensation Committee seeks to compensate executive officers at levels
competitive with other companies in the same industry and comparable in size to
the Company and to provide short-term rewards and long-term incentives for
superior individual and corporate performance. In making compensation decisions,
the Compensation Committee periodically reviews information about the
compensation paid or payable to officers of comparably sized public companies
(there being no public companies of comparable size to the Company in businesses
similar to those of the Company), the compensation recommendations of
Mr. MacInnis, and reports from outside consultants. The Compensation Committee
does not have target amounts of stock ownership for its executive officers.
The key components of executive officer compensation are base salary,
bonuses and stock options. The Compensation Committee attempts to combine these
components in such a way as to attract, motivate and retain key executives
critical to the long-term success of the Company. A discussion of the various
components of the executives' compensation for 1998 follows.
Base Salary. Each executive officer received a base salary and has the
potential for annual salary increases largely determined by reference to the
salaries of executive officers holding comparable positions in companies of
comparable size.
Bonuses. Each executive officer was eligible for an annual bonus based upon
both his individual performance and the Company's performance. Bonuses were
awarded to the named executive officers in respect of 1998 which took into
account their performance and the Company's contractual obligations. As
indicated
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above, under the terms of their respective employment agreements, Messrs.
MacInnis and Levy are each entitled to a target bonus to be determined by a
formula agreed upon annually by the respective officer and the Compensation
Committee provided that Mr. MacInnis' annual Target Bonus may not be less than
$600,000 and Mr. Levy's Target Bonus may not be less than $400,000. For 1998,
Mr. MacInnis received a bonus of $800,000. Mr. MacInnis' bonus was based upon
achievement of several goals, including the Company attaining a predetermined
level of earnings before interest, taxes, depreciation and amortization,
reorganizing certain international operations of the Company, successful
completion of certain securities offerings, and growth of the Company's
facilities services business. For 1998, Mr. Levy received a bonus of $400,000.
Mr. Levy's bonus was also based upon achievement of several goals, including the
Company attaining a predetermined level of return on net assets, realizing
certain operating results at specifically designated subsidiaries, and growth of
the Company's facilities services business.
Stock Options. The Company's 1994 Stock Option Plan is intended to provide
executives with the promise of long-term rewards which appreciate in value with
the positive performance of the Company. As previously reported, the
Compensation Committee during 1998 granted stock options to each of the named
executive officers.
Other Compensation. The executive officers also participate in the
Retirement and Savings Plan as well as the medical, life and disability
insurance plans available to all employees of the Company.
Chief Executive Officer Compensation. The minimum compensation of
Mr. MacInnis is provided for in his employment agreement described above. The
basis for Mr. MacInnis' bonus is described earlier in this Report. As part of
its evaluation, the Compensation Committee also considered a report by
Mr. MacInnis on his activities, the Company's performance, the accomplishment of
certain goals for the Company that Mr. MacInnis set at the beginning of 1998 and
the compensation earned by other chief executive officers of companies of
comparable size during the previous year.
Section 162(m). Section 162(m) of the Internal Revenue Code provides that
the deduction by a publicly-held corporation for compensation paid in a taxable
year to the Chief Executive Officer and any of the other four most highly
compensated executive officers whose compensation is required to be reported in
the Summary Compensation Table is limited to $1 million per officer, subject to
certain exceptions. The Compensation Committee has taken, and intends to
continue to take, such actions as are necessary to reduce, if not eliminate, the
Company's non-deductible compensation expense, while maintaining, to the extent
possible, the flexibility which the Compensation Committee believes to be an
important element of the Company's executive compensation program.
By: Compensation and Personnel
Committee:
Stephen W. Bershad, Chairperson,
Georges de Buffevent
Albert Fried, Jr.
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PERFORMANCE GRAPH
Rules promulgated by the Securities and Exchange Commission require
inclusion of a graph presentation comparing cumulative five-year stockholder
returns on an indexed basis with the S&P 500 Index and either a nationally
recognized industry standard or an index of peer companies selected by the
Company. Since the common stock of the Company outstanding prior to its
reorganization was extinguished pursuant to its Plan of Reorganization and the
Common Stock of the Company as reorganized has been traded only since the
effective date of its Plan of Reorganization, such five-year presentation is not
possible. Under such circumstances, the Company is required instead to present
such information for the period since such shares were issued. The following
performance graph compares the Company's total stockholder return on its Common
Stock since January 6, 1995 as compared to the S&P 500 Index and a peer group
index consisting of The Turner Corporation, Perini Corporation, and MYR Group,
Inc. for that period. Prior to that date, prices for the Company's Common Stock
were not readily available.
Other than MYR Group, to the Company's knowledge, none of the other
companies that may be regarded as peers in its construction and facilities
services business have been publicly traded for more than two years.
Accordingly, the Company selected MYR Group and two general contractors that
serve similar marketplaces and are impacted by similar market conditions to the
Company. The following performance graph assumes $100 was invested on January 6,
1995 in Common Stock of the Company and in each of the indices and assumes
reinvestment of all dividends.
[LINE CHART]
Comparative Fifty-one Month Total Returns
EMCOR S&P 500 Peer Group
Jan 06, 95 100.00 100.00 100.00
Mar 31, 95 112.50 109.02 98.81
June 30, 95 175.00 118.61 112.36
Sept 30, 95 186.11 127.25 123.70
Dec 31, 95 213.89 134.11 101.08
Mar 31, 96 269.44 140.55 107.12
June 30, 96 336.11 146.02 130.03
Sept 30, 96 336.11 171.43 116.24
Dec 31, 96 305.56 161.29 115.89
Mar 31, 97 327.78 164.85 116.91
June 30, 97 352.78 192.73 155.11
Sept 30, 97 444.44 206.26 200.11
Dec 31, 97 455.56 211.30 216.94
Mar 31, 98 477.78 238.52 213.51
June 30, 98 425.00 246.88 221.19
Sept 30, 98 344.44 221.44 160.57
Dec 31, 98 358.33 267.65 163.38
Mar 31, 99 381.94 280.09 144.69
May 31, 99 502.78 283.46 181.95
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RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed Arthur
Andersen LLP, certified public accountants, as the Company's independent public
accountants for 1999. Arthur Andersen LLP acted as independent public
accountants of the Company for 1998 pursuant to appointment by the Audit
Committee. Arthur Andersen LLP was first appointed independent public
accountants of the Company by the Audit Committee on September 1995.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting to respond to appropriate questions and will have an opportunity to make
a statement if they desire to do so.
The report of the Company's independent public accountants on the Company's
financial statements for its two most recent fiscal years ended December 31,
1998 did not contain an adverse opinion, disclaimer of opinion or qualification
as to uncertainty, audit scope, or accounting principles.
During the Company's two most recent fiscal years ended December 31, 1998,
there were no disagreements with Arthur Andersen LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused that firm to make reference to the
subject matter of such disagreements in connection with its reports.
The affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy at the meeting and entitled to vote thereon is
required for approval of the appointment of the independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR 1999.
STOCKHOLDERS' PROPOSALS
Stockholders' proposals must be received by the Company at its headquarters
in Norwalk, Connecticut on or before February 25, 2000 in order to be considered
for inclusion in next year's Proxy Statement.
The Company's By-laws set forth advance notice provisions and procedures to
be followed by stockholders who wish to bring business before an annual meeting
of stockholders or who wish to nominate candidates for election to the Board of
Directors. A stockholder may propose business to be included in the agenda of an
annual meeting only if written notice of such stockholder's intent is given to
the Secretary of the Company, not earlier than 90 days nor later than 60 days in
advance of the anniversary of the date of the immediately preceding annual
meeting, or if the date of the annual meeting occurs more than 30 days before or
60 days after the anniversary of such immediately preceding annual meeting, not
later than the close of business on the later of (a) the sixtieth day prior to
such annual meeting and (b) the tenth day following the date on which a public
announcement of the date of such meeting is first made. Each such notice must
set forth certain background and other information specified in the By-laws,
including a description of the proposed business and the reasons for conducting
such business at the annual meeting.
A stockholder may nominate candidates for election to the Board of
Directors at an annual meeting only if written notice of such stockholder's
intent to make such nomination is given to the Secretary of the Company, not
earlier than 90 days nor later than 60 days in advance of the anniversary of the
date of the immediately preceding annual meeting, or if the date of the annual
meeting occurs more than 30 days before or 60 days after the anniversary of such
immediately preceding annual meeting, not later than the close of business on
the later of (a) the sixtieth day prior to such annual meeting and (b) the tenth
day following the date on which a public announcement of the date of such
meeting is first made. Each such notice must set forth certain background and
other information specified in the By-laws.
The time limits described above also apply in determining whether notice is
timely for purposes of Rule 14a-4(c)(1) under the Securities Exchange Act of
1934 relating to exercise of discretionary voting authority,
17
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and are separate from and in addition to the Securities and Exchange
Commission's requirements a stockholder must meet to have a proposal included in
the Company's proxy statement.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file initial
reports of ownership and reports of change in ownership of Common Stock and
other equity securities of the Company with the Securities and Exchange
Commission and to furnish copies of such statements to the Company.
To the Company's knowledge, during the fiscal year 1998 all such reports
relating to share ownership were timely filed.
OTHER INFORMATION
The cost of soliciting proxies will be borne by the Company. The Company
expects to solicit proxies primarily by mail. Proxies also may be solicited
personally and by telephone by certain officers and regular employees of the
Company. Innisfree M&A Incorporated has been retained for solicitation of all
brokers and nominees for a fee of $7,500 plus customary out-of-pocket expenses.
The Company may reimburse brokers and other nominees for their expenses in
communicating with the persons for whom they hold Common Stock of the Company.
The Board of Directors is aware of no other matters that are to be
presented to the stockholders for formal action at the Annual Meeting. If,
however, any other matters properly come before the meeting or any adjournments
thereof, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their judgment on such matters.
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER OF RECORD ON JUNE 18, 1999, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 (EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE SUPPLIED WITHOUT CHARGE. REQUESTS SHOULD BE DIRECTED TO
SHELDON I. CAMMAKER, SECRETARY, EMCOR GROUP, INC., 101 MERRITT SEVEN CORPORATE
PARK, NORWALK, CONNECTICUT 06851.
BY ORDER OF THE BOARD OF DIRECTORS
SHELDON I. CAMMAKER
Secretary
June 25, 1999
18
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/ /
The Board of Directors recommends a vote "FOR" all nominees in item 1,
"AGAINST" item 2 and "FOR" item 3.
1. Election of Directors FOR all nominees
listed below /X/
WITHHOLD AUTHORITY to vote
for all nominees listed below. /X/
EXCEPTIONS /X/
Nominees F. MacInnis, S. Bershad, D. Brown, G. de Buffevent, A. Fried, R. Hamm,
K. Toner
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
Exemptions
---------------------------------------------------------------------
2. Approval of Resolution regarding Stockholder Rights Plans.
FOR /X/ AGAINST /X/ ABSTAIN /X/
3. Appointment of Independent Public Accountants.
FOR /X/ AGAINST /X/ ABSTAIN /X/
Change of Address and/
or Comments Mark Here /X/
[insert missing copy]
Dated:
-------------------------------, 1999
- -------------------------------------------
Signature
- -------------------------------------------
Signature
Votes must be indicated (x) in Black or Blue ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
EMCOR GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
JULY 28, 1999
The undersigned hereby appoints Frank T. MacInnis, Sheldon I. Cammaker and
Leicle E. Chesser, and each of them, with full power to act without the other
and with full power of substitution, as proxies to represent and to vote, as
directed herein, all shares the undersigned is entitled to vote at the annual
meeting of the stockholders of EMCOR Group, Inc. to be held in Room 405,
Princeton Club, 15 West 43 Street, New York, New York on Wednesday, July 28,
1999 at 10:00 A.M. (local time), and all adjournments thereof, as follows:
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
Unless otherwise marked, the proxies are appointed with authority to vote
"FOR" all nominees for election, "AGAINST" the stockholder proposed resolution
regarding stockholder rights plans, and "FOR" the appointment of independent
public accountants.
(Continued and to be signed on the reverse side.)
EMCOR GROUP, INC.
P.O.BOX 11079
NEW YORK, N.Y. 10203-0079
