FORM 10-K/A No. 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission file number 0-2315
EMCOR GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 11-2125338
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
101 Merritt Seven Corporate Park
Norwalk, Connecticut 06851-1060
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (203) 849-7800
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of each class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filings pursuant to Item
405 Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.X
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant on April 15, 1999 was approximately
$160,126,447.
Number of shares of Common Stock outstanding as of the close of business on
April 15, 1999: 9,667,003 shares.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Identification of Directors
Frank T. MacInnis, Age 52. Mr. MacInnis has been Chairman of the Board and
Chief Executive Officer of the Company since April 1994 and President of the
Company from April 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 Senior
Vice President and Chief Financial Officer of Comstock Group, Inc. In addition,
from 1986 to April 1994 Mr. MacInnis was also President of Spie Group Inc.,
which 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 39. 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.
Identification of Executive Officers
Frank T. MacInnis, Age 52; Chairman of the Board and Chief Executive
Officer of the Company since April 1994 and President of the Company from April
1994 to April 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 1990, Mr. MacInnis was Senior Vice
President and Chief Financial Officer of Comstock Group, Inc. In addition, from
1986 to April 1994 Mr. MacInnis was also President of Spie Group Inc., which
owned Comstock Group, Inc., Spie Construction Inc., a Canadian pipeline
construction company, and Spie Horizontal Drilling Inc., a U.S. company engaged
in underground drilling for pipelines and communications cable.
Jeffrey M. Levy, Age 46; President of the Company since April 1997 and
Chief Operating Officer of the Company since February 1994, Executive Vice
President of the Company from November 1994 to April 1997 and Senior Vice
President of the Company from December 1993 to November 1994. From May 1992 to
December 1993, Mr. Levy was President and Chief Executive Officer of the
Company's subsidiary EMCOR Mechanical/Electrical Services (East) Inc. From
January 1991 to May 1992 Mr. Levy served as Executive Vice President and Chief
Operating Officer of Lehrer McGovern Bovis, Inc., a construction management and
construction company.
Sheldon I. Cammaker, Age 59; Executive Vice President and General Counsel
of the Company since September 1987 and Secretary of the Company since May 1997.
Prior to September 1987, he was a senior partner of the New York City law firm
of Botein, Hays & Sklar.
Leicle E. Chesser, Age 52; Executive Vice President and Chief Financial
Officer of the Company since May 1994. From April 1990 to May 1994 Mr. Chesser
served as Executive Vice President and Chief Financial Officer of Comstock
Group, Inc. and from 1986 to May 1994 he was also Executive Vice President and
Chief Financial Officer of Spie Group, Inc.
Thomas D. Cunningham, Age 49; Executive Vice President of the Company since
July 1997. From March 1994 to May 1997, Mr. Cunningham was Executive Vice
President and Chief Financial Officer of Swiss Army Brands, Inc., an importer
and distributor of Swiss Army knives and watches and Sabatier and Forschner
cutlery. For more than five years prior thereto, Mr. Cunningham was a Managing
Director of J.P. Morgan & Co., an international bank.
R. Kevin Matz, Age 40; Vice President and Treasurer of the Company since
April 1996 and Staff Vice President - Financial Services of the Company from
March 1993 to April 1996. From March 1991 to March 1993, Mr. Matz was Treasurer
of Sprague Technologies Inc., a manufacturer of electronic components.
Mark A. Pompa, Age 34; Vice President and Controller of the Company since
September 1994. From June 1992 to September 1994, Mr. Pompa was an Audit and
Business Advisory Manager of Arthur Andersen LLP, an accounting firm.
(c) 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.
Item 11. 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 Agreements" and "Continuity
Agreements" below.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation Awards(3)
-------------------------------- ------------------------------- ----------------
Number of
Other Annual Restricted Securities All Other
Compensation Stock Underlying Compensation
Salary Bonus (2) Award Options/SARs(4) (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, 1997 430,340 150,000 None None None 8,400
General Counsel and 1996 406,000 150,000 None None None 6,300
Secretary
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 Securities and Exchange
Commission 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 $4,800 to be paid
during 1999 in respect of 1998 by the Company pursuant to the retirement
account part of the Company's Retirement and Savings Plan for the account
of each of the named executive officers. The amount reported in this column
in respect of 1997 for Mr. Cunningham represents consulting and directors'
fees paid to him for the period January 1, 1997 through July 14, 1997 prior
to his becoming an employee of the Company.
Stock Options and Stock Appreciation Rights
The following table sets forth certain information concerning certain
grants to the named executive officers of stock options during the last fiscal
year. As indicated under the Summary Compensation Table above, the Company did
not grant stock appreciation rights ("SARs") of any kind.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants Grant Date Value
----------------- ----------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or Grant Date
Options Employees in Base Price Expiration Present
Granted(2) Fiscal Year ($/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 $38,200
</TABLE>
(1) The stock option exercise price for a share of Common Stock was the fair
market value of a share of Common Stock on the date of grant. No SARs,
performance units or other instruments were granted in tandem with the
stock options reported herein.
(2) These options were granted pursuant to the Company's 1994 Management Stock
Option Plan. The options have a ten-year term and first became exercisable
on January 2, 1999 and thereafter are exercisable any time or from time to
time until January 2, 2008.
(3) Present value was calculated using the Black-Scholes option-pricing model
which involves an extrapolation of future price levels based solely on past
performance. The present value as of the date of grant, calculated using
the Black-Scholes method, is based on assumptions about future interests
rates, dividend yield and stock price volatility. In calculating the
present value as of the date of grant of the options reported in the table,
the Company assumed an interest rate of 5.3% per annum, an annual dividend
yield of zero and volatility of 33.9%. There is no assurance that these
assumptions will prove to be true in the future. The actual value, if any,
that may be realized by each individual will depend on the future market
price of the Common Stock and cannot be forecasted accurately by
application of an option-pricing model.
Option Exercises and Holdings
The following table sets forth certain information concerning unexercised
options to purchase Common Stock of the Company held at the end of fiscal year
1998 by the named executive officers. None of the named executive officers
exercised any options during fiscal year 1998. No named executive officer holds
any SARs.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year And
Fiscal Year-End Option Value
Value of Unexercised
Number of Unexercised In-the-Money
Shares Value Options at Options at
Acquired on Realized FY-End (#) FY-End ($)(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.
Employment Agreements
The Company has entered into employment agreements effective as of January
1, 1998 with Frank T. MacInnis providing for his employment as Chief Executive
Officer of the Company for a period of three years expiring December 31, 2000
and with Jeffrey M. Levy providing for his employment as President and Chief
Operating Officer of the Company for a period of three years expiring 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 Mr.
Levy's employment agreement), the term of Mr. Levy's 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 Management 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 the 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 is to be
granted 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 the Common Stock
on the grant date. This option is to have 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 the Common Stock, the option shall vest earlier if and when the fair
market value of a share of the 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 or (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 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 effective as of January
1, 1998 with Leicle E. Chesser providing for his employment as Executive Vice
President and Chief Financial Officer of the Company for a period of three years
expiring December 31, 2000 and with Thomas D. Cunningham providing for his
employment as Executive Vice President of the Company for a period of three
years expiring December 31, 2000 and an employment agreement effective as of
February 1, 1999 with Sheldon I. Cammaker providing for his employment as
Executive Vice President and General Counsel for a period of two years expiring
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.
Chesser is to receive an annual base salary of $365,000 for 1999, Mr. Cunningham
is to receive an annual base salary of $325,000 for 1999, and Mr. Cammaker is to
receive an annual base salary of $365,000 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
Management 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 the 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. Chesser's, Cammaker'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. Chesser, Cammaker 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.
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 are 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 the
incumbent Directors to constitute 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, disability, any termination for "Cause" (as that term
is defined in the Continuity Agreement) or for voluntary termination (other than
for (i) "Good Reason" (as that term is defined in the Continuity Agreements) or
(ii) the voluntary termination takes place during the 30 day period following
the first anniversary of the Change of Control).
Upon a Change of Control the Continuity Agreements generally provide to the
Executive a severance benefit within two years following a Change of Control
equal to three times the sum of (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 or (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 (a) if the Company terminates the
Executive's employment without Cause or the Executive terminates his employment
with Good Reason or (b) the Executive voluntarily terminates his employment
during the thirty day period immediately following the first anniversary of the
Change of Control. Other severance benefits include outplacement assistance and
a continuance of insurance benefits for three years. The severance benefits
under the Continuity Agreements 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 were granted options to purchase
6,074 shares Common Stock at $20.00 per share. 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.
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 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 and factors 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 a 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 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 L. de Buffevent
Albert Fried, Jr.
<TABLE>
<CAPTION>
Performance Graph
EMCOR S & P 500 PEER
----- --------- ----
<S> <C> <C> <C>
Jan 6, 1995 100.00 100.00 100.00
Mar 31, 1995 112.50 109.02 101.15
Jun 30, 1995 175.00 118.61 115.27
Sep 30, 1995 186.11 127.25 126.61
Dec 31, 1995 213.89 134.11 94.76
Mar 31, 1996 269.44 140.55 103.61
Jun 30, 1996 336.11 146.02 133.70
Sep 30, 1996 336.11 171.43 115.42
Dec 31, 1996 305.56 161.29 103.79
Mar 31, 1997 327.78 164.85 110.06
Jun 30, 1997 352.78 192.73 134.03
Sep 30, 1997 444.44 206.26 170.79
Dec 31, 1997 455.56 211.30 207.85
Mar 31, 1998 477.78 238.52 216.18
Jun 30, 1998 425.00 246.88 203.24
Sep 30, 1998 344.44 221.44 128.67
Dec 31, 1998 358.33 267.65 138.32
Mar 31, 1999 381.94 280.09 108.18
</TABLE>
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.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of April 15, 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 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
Beneficially Owned Owned
------------------ -------
Name and Address of Beneficial Owner
<S> <C> <C>
Steven A. Van Dyke .................................. 1,427,967(1) 14.7%.
777 South Harbour Island Boulevard
Tampa, Florida 33602
Oaktree Capital Management LLC....................... 1,268,695(2) 13.1%
550 South Hope Street
Los Angeles, California 90071
Cumberland Associates LLC............................ 787,500(3) 8.1%
114 Avenue of the Americas
New York, New York 10036
Donaldson, Lufkin & Jenrette Securities Corporation.. 547,942(4) 5.3%
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 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
to vote and shared dispositive power of 1,397,367 shares.
(2) As reported in Amendment No. 4 dated February 26, 1999 to Schedule 13D
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 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"). DLJ is a
subsidiary of Equitable. Includes 527,133 shares issuable upon conversion
of the Company's Convertible Debentures. Of these 547,942 shares, DLJ has
sole voting power of 536,142 shares and sole dispositive power of 545,452
shares and shared dispositive power of 2,500 shares.
The following table sets forth as of April 15, 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 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.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent
<S> <C> <C>
Frank T. MacInnis. 228,000(2) 2.3%
Stephen W. Bershad 43,988(3) *
David A. B. Brown. 22,488(3) *
Georges L. de Buffevent 8,910(3) *
Albert Fried, Jr. 25,495(3)(4) *
Richard F. Hamm, Jr. 9,663(3) *
Kevin C. Toner 23,488(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. 586,199(5) 5.7%
</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 225,000 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 28,988 shares, in the case of Mr. Brown
21,488 shares, in the case of Mr. de Buffevent 8,580 shares, in the case of
Mr. Fried 15,488 shares, in the case of Mr. Hamm 9,663 shares, and in the
case of Mr. Toner 18,488 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 550,862 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.
Item 13. Certain Relationships and Related Transactions
None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
EMCOR GROUP, INC.
(Registrant)
Date: April 30, 1999 By: /s/ FRANK T. MACINNIS
--------------------------
Frank T. MacInnis
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on April 30, 1999 by the following persons on
behalf of the Registrant and in the capacities indicated.
/s/ FRANK T. MACINNIS Chairman of the Board of Directors and
- ---------------------------------- Chief Executive Officer
Frank T. MacInnis
/s/ STEPHEN W. BERSHAD Director
- ----------------------------------
Stephen W. Bershad
/s/ DAVID A.B. BROWN Director
- ----------------------------------
David A.B. Brown
/s/ GEORGES L. DE BUFFEVENT Director
- ----------------------------------
Georges L. de Buffevent
/s/ ALBERT FRIED, JR. Director
- ----------------------------------
Albert Fried, Jr.
/s/ RICHARD F. HAMM, JR. Director
- ----------------------------------
Richard F. Hamm, Jr.
/s/ KEVIN C. TONER Director
- ----------------------------------
Kevin C. Toner
/s/ LEICLE E. CHESSER Executive Vice President and
- ---------------------------------- Chief Financial Officer
Leicle E. Chesser
/s/ MARK A. POMPA Vice President and Controller
- ----------------------------------
Mark A. Pompa
As independent public accountants, we hereby consent to the incorporation
of our reports, incorporated by reference into this Form 10-K/A, into the
Company's previously filed Registration Statement File Nos. 333-44369 and
333-02819.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
April 29, 1999
