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 Section 240.14a-11(c) or
Section 240.14a-12
UNITED ROAD SERVICES, 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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>
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
April 27, 1999
Dear Stockholder of United Road Services, Inc.:
You are invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of United Road Services, Inc., a Delaware corporation (the
"Company"), to be held on Monday, May 24, 1999, beginning at 10:00 a.m. Eastern
Daylight Time, at the Albany Marriott, 189 Wolf Road, Albany, New York. At the
Annual Meeting, you will be asked to consider and act upon the following
proposals:
1. To elect three Class I directors of the Company; and
2. To consider and transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
The Company's Board of Directors believes that these proposals are in
the best interest of the Company and its stockholders and recommends that the
stockholders vote FOR these proposals.
The enclosed Notice and Proxy Statement contain details concerning the
above proposals. We urge you to read and consider these documents carefully.
Whether or not you plan to be at the Annual Meeting, please be sure to sign,
date and return the enclosed proxy card in the enclosed envelope as promptly as
possible so that your shares may be represented at the Annual Meeting and voted
in accordance with your wishes. Your vote is important regardless of the number
of shares you own.
Sincerely,
Edward T. Sheehan
Chairman of the Board and Chief Executive Officer
<PAGE>
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 24, 1999
To the Stockholders of
UNITED ROAD SERVICES, INC.
The Annual Meeting of Stockholders (the "Annual Meeting") of United
Road Services, Inc., a Delaware corporation (the "Company"), will be held at the
Albany Marriott, 189 Wolf Road, Albany, New York, on Monday, May 24, 1999,
beginning at 10:00 a.m.
Eastern Daylight Time, for the following purposes:
1. To elect three Class I directors of the Company; and
2. To consider and transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on April 2, 1999
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors,
Edward T. Sheehan
Chairman of the Board, Chief Executive Officer and
Secretary
April 27, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE DATE, SIGN
AND MAIL THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED (WHICH REQUIRES NO
POSTAGE FOR MAILING IN THE UNITED STATES). A PROMPT RESPONSE IS HELPFUL, AND
YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 24, 1999
------------------
This Proxy Statement is being mailed to stockholders on or about April
27, 1999 and is furnished in connection with the solicitation by the Board of
Directors of United Road Services, Inc., a Delaware corporation (the "Company"),
of proxies for the Annual Meeting of Stockholders to be held on May 24, 1999
(the "Annual Meeting") for the purpose of considering and acting upon the
following proposals:
1. To elect three Class I directors of the Company; and
2. To consider and transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
If the form of Proxy which accompanies this Proxy Statement is executed
and returned, it will be voted. A Proxy may be revoked at any time prior to the
voting thereof by written notice to the Secretary of the Company.
A majority of the outstanding shares entitled to vote at the Annual
Meeting and represented in person or by proxy will constitute a quorum. With
regard to the election of directors, approval requires the affirmative vote of a
plurality of the shares entitled to vote and represented in person or by proxy
at the Annual Meeting. With respect to any other proposal which may be submitted
to a vote, approval requires the affirmative vote of a majority of the shares
entitled to vote and represented in person or by proxy at the meeting. Shares
represented by proxies which are marked "abstain" or to deny discretionary
authority on any matter will be treated as shares present and entitled to vote,
which will have the same effect as a vote against any such matter. Broker
"non-votes" will not be counted as part of the total number of votes cast and
thus will not affect the determination of the outcome of the vote on any matter
to be decided at the meeting.
Expenses incurred in the solicitation of proxies will be borne by the
Company. Officers of the Company may make additional solicitations in person or
by telephone.
The Annual Report to Stockholders for fiscal year 1998 accompanies this
Proxy Statement. If you did not receive a copy of the report, you may obtain one
by writing to the Secretary of the Company.
As of April 2, 1999, the Company had outstanding 17,746,141 shares of
Common Stock and such shares are the only shares entitled to vote at the Annual
Meeting. Each share is entitled to one vote on each matter to be voted upon at
the Annual Meeting.
<PAGE>
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the
Company's Common Stock as of April 2, 1999 by (i) each stockholder known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock, (ii) each director or nominee, (iii) each executive officer named
in the Summary Compensation Table, and (iv) all directors and executive officers
as a group. Unless otherwise indicated, each such person (alone or with family
members) has sole voting and dispositive power with respect to the shares listed
opposite such person's name. Except as otherwise indicated, the address of each
beneficial owner is c/o United Road Services, Inc., 17 Computer Drive West,
Albany, New York 12205.
NUMBER OF
BENEFICIALLY-OWNED PERCENT OF
SHARES CLASS(1)
------ --------
Edward T. Sheehan 728,568(2) 4.1%
Edward W. Morawski 692,277 3.9
Todd Q. Smart 297,267 1.7
Donald F. Moorehead, Jr. 138,667(3) *
Robert J. Adams, Jr. 23,333(4) *
Richard A. Molyneux -- --
Allan D. Pass, Ph.D 38,333(4) *
Donald J. Marr 28,333(4) *
Grace M. Hawkins 6,667(4) *
Mark J. Henninger 377,624 2.1
Robert L. Berner, III(5) -- --
Merril M. Halpern(5) -- --
Michael S. Pfeffer(5) -- --
Charter URS LLC 5,000,000(6) 22.0
Mark McKinney(7) 930,000 5.2
Ross Berner(8) 930,000 5.2
All directors and executive officers as
a group (13 persons) 2,331,069 13.1
- ------------------------
* Less than one percent.
(1) The applicable percentage of ownership is based upon 17,746,141 shares
of Common Stock outstanding as of April 2, 1999.
(2) Includes 11,235 shares held by children of Mr. Sheehan. Mr. Sheehan
disclaims beneficial ownership of such shares. Also includes 704,000
shares held of record by the Edward T. Sheehan 1992 Revocable Trust and
13,333 shares issuable pursuant to options exercisable within sixty
days.
<PAGE>
(3) Includes 6,667 shares issuable pursuant to options exercisable within
sixty days.
(4) Consists entirely of shares issuable pursuant to options exercisable
within sixty days.
(5) The address of this director is c/o Charterhouse Group International,
Inc., 535 Madison Avenue, New York, New York 10022.
(6) Consists entirely of shares issuable upon conversion of the Company's
8% Convertible Subordinated Debentures due 2008 (the "Debentures") held
by Charter URS LLC, a Delaware limited liability company
("Charterhouse"). According to a Schedule 13D dated as of December 7,
1998, Charterhouse Equity Partners III, L.P., a Delaware limited
partnership ("CEP III"), is the principal member of Charterhouse. The
general partner of CEP III is CHUSA Equity Investors III, L.P., whose
general partner is Charterhouse Equity III, Inc., a wholly-owned
subsidiary of Charterhouse Group International, Inc., a Delaware
corporation ("Charterhouse International"). Each of Charterhouse and
CEP III has shared voting and dispositive power over the shares held of
record by Charterhouse and may be deemed to beneficially own these
shares. Mr. Halpern serves as Chairman of the Board and Chief Executive
Officer of Charterhouse International. Mr. Berner serves as Managing
Director of Charterhouse International. Mr. Pfeffer serves as Senior
Vice President of Charterhouse International. Messrs. Berner, Halpern,
and Pfeffer disclaim beneficial ownership with respect to the shares
held of record by Charterhouse. The address of Charterhouse is c/o
Charterhouse Group International, Inc., 535 Madison Avenue, New York,
New York 10022.
(7) The address of this stockholder is 2239 Versailles Court, Henderson,
Nevada 89014.
(8) The address of this stockholder is 1360 Lombard #302, San Francisco,
California 94109.
ELECTION OF DIRECTORS
The Amended and Restated Certificate of Incorporation of the Company
provides that the Board of Directors of the Company shall be divided into three
classes, as nearly equal in number as possible, with one class being elected
each year for a three-year term. The Board of Directors has fixed the number of
directors at eleven persons. The ten individuals identified below are currently
serving on the Board of Directors, with one vacancy which may be filled by the
Board of Directors when a suitable candidate is located.
At the Annual Meeting, three Class I directors are to be elected to
serve until the Company's annual meeting of stockholders in 2002 or until their
successors are elected and qualified, and the remaining seven directors will
continue to serve in accordance with their prior election or appointment.
It is intended that the proxies (except proxies marked to the contrary)
will be voted for the Class I nominees listed below, all of whom are members of
the present Board of Directors. It is expected that each of the nominees will
serve, but if any nominee declines or is unable to serve for any unforeseen
cause, the proxies will be voted to fill any vacancy so arising in accordance
with the discretionary authority of the persons named in the proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE CLASS I NOMINEES.
<PAGE>
NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to the
nominees and the continuing directors:
<TABLE>
Name, Age, and Principal Occupation and
Month and Year First Elected Director Other Information
------------------------------------- -----------------
CLASS I NOMINEES FOR ELECTION WITH TERMS EXPIRING IN 2002
<S> <C>
Edward W. Morawski, Age 50, May 1998 Mr. Morawski has served as a Vice President of the
Company since May 1998. In 1977, Mr. Morawski founded
Northland Auto Transporters, Inc. and Northland Fleet
Leasing, Inc. (collectively, "Northland"), one of the
businesses acquired by the Company in connection with
its initial public offering (all such businesses
collectively, the "Founding Companies"), and served as
the President of Northland from inception until its
acquisition by the Company in May 1998.
Michael S. Pfeffer, Age 35, March 1999 Mr. Pfeffer has been a Senior Vice President of
Charterhouse International since May 1998. From
September 1996 to May 1998, Mr. Pfeffer served in
executive positions in the equity capital group of
General Electric Capital Corporation, most recently as
Senior Vice President. From August 1993 to September
1996, Mr. Pfeffer was Vice President of Charterhouse
Environmental Capital Group.
Todd Q. Smart, Age 34, May 1998 Mr. Smart has provided the Company with
acquisition-related consulting services since May
1998. In 1987, Mr. Smart founded Absolute Towing and
Transporting, Inc. ("Absolute"), one of the Founding
Companies, and served as the President of Absolute from
inception until its acquisition by the Company in May
1998. Since June 1998, Mr. Smart has also operated an
official police garage in the City of Los Angeles,
California.
<PAGE>
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2000
<S> <C>
Robert L. Berner, III, Age 37, December 1998 Mr. Berner is a Managing Director of Charterhouse
International and a member of its Investment Committee.
Mr. Berner joined Charterhouse International in January
1997. From 1986 through December 1996, Mr. Berner was
a Principal in the Merger and Acquisitions Department
at Morgan Stanley & Co.
Grace M. Hawkins, Age 53, May 1998 Ms. Hawkins is the President of Lotus Publications,
Inc., a publishing company specializing in marketing
for the transportation industry, a position she has
held since 1991.
Donald F. Moorehead, Jr., Age 48, May 1998 Mr. Moorehead has served as a consultant to Waste
Management, Inc. (formerly known as USA Waste Services,
Inc. ("USA Waste")) since August 1997. Since June 1,
1998, Mr. Moorehead has also served as Chairman and
Chief Executive Officer of EarthCare Co. Group, Inc., a
liquid waste management company. From June 1995 to
August 1997, Mr. Moorehead served as Vice Chairman and
Chief Development Officer of USA Waste. From October
1990 to June 1995, he served as USA Waste's Chairman,
and from October 1990 to May 1994 he also served as its
Chief Executive Officer. Mr. Moorehead currently
serves as a member of the Board of Directors of FYI,
Inc., a document reproduction and storage company, and
EarthCare Co. Group, Inc.
CLASS III DIRECTORS WITH TERMS EXPIRING IN 2001
<S> <C>
Merril M. Halpern, Age 64, December 1998 Mr. Halpern founded Charterhouse International in 1973
and serves as its Chairman of the Board and Chief
Executive Officer. Mr. Halpern also serves on the
Boards of Directors of Microwave Power Devices, Inc., a
manufacturer of highly linear power amplifiers
primarily for the wireless telecommunications market,
and NetCare Health Systems, Inc., an integrated health
provider network.
<PAGE>
Mark J. Henninger, Age 41, August 1998 Mr. Henninger has provided the Company with
acquisition-related consulting services since August
1998. In 1991, Mr. Henninger founded Keystone Towing,
Inc. ("Keystone") and served as the President of
Keystone from inception until its acquisition by the
Company in August 1998.
Richard A. Molyneux, Age 48, June 1998 Mr. Molyneux has been a partner of United Ventures
L.L.C. since March 1998. From 1975 through 1997, Mr.
Molyneux served in various executive positions with
KeyBank, National Association, and its affiliates, most
recently as its Vice Chairman.
Edward T. Sheehan, Age 56, October 1997 Mr. Sheehan has served as the Chairman of the Board and
Chief Executive Officer of the Company since October
1997. Mr. Sheehan was President of United Waste
Systems, Inc. ("United Waste") from December 1992 to
August 1997, and Chief Operating Officer of United
Waste from 1994 to August 1997, when United Waste was
sold to USA Waste. Mr. Sheehan also serves as a
director of Gundle/SLT Environmental, Inc.
</TABLE>
Messrs. Berner, Halpern and Pfeffer were nominated by Charterhouse to
serve as directors of the Company pursuant to the provisions of a certain
Investor's Agreement between the Company and Charterhouse dated as of November
19, 1998.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
executive officers of the Company who are not directors of the Company:
<TABLE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Name and Age Principal Occupation and Other Information
------------ ------------------------------------------
<S> <C>
Allan D. Pass, Ph.D, Age 49 Dr. Pass has served as President and Chief Operating
Officer of the Company since September 1998. From
January 1998 through September 1998, Dr. Pass was
Senior Vice President and Chief Operating Officer of
the Company. From 1986 to February 1998, Dr. Pass
served as Chief Executive Officer and President of
National Behavioral Consultants, Inc., a consulting
firm specializing in innovative productivity and
<PAGE>
profitability enhancement and human resource programs.
From September 1991 until June 1995, Dr. Pass also
served as Corporate Vice President for Chambers
Development Corporation.
Donald J. Marr, Age 40 Mr. Marr has served as Senior Vice President and Chief
Financial Officer of the Company since January 1998.
From 1986 through 1997, Mr. Marr held a series of
management positions with KeyCorp, most recently as
Senior Vice President, Planning and Analysis.
Robert J. Adams, Jr., Age 36 Mr. Adams has served as Senior Vice President and Chief
Acquisition Officer of the Company since June 1998.
From February 1998 through May 1998, Mr. Adams provided
acquisition-related consulting services to the
Company. From April 1996 through January 31, 1998, Mr.
Adams served as a Manager of Corporate Development for
Republic Industries, Inc. From October 1995 through
March 1996, Mr. Adams was employed by RJA, Inc., and
from June 1990 through September 1995, he was employed
by Waste Management, Inc. as an Operations Manager.
</TABLE>
ORGANIZATION AND REMUNERATION OF BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee reviews with the Company's independent auditors the
scope of their annual and interim examinations and consults with the auditors
during any audit when appropriate. The Audit Committee is also responsible for
(i) making recommendations to the Board of Directors with respect to the
independent auditors who conduct the annual examination of the Company's
accounts, (ii) reviewing the scope of the annual audit and meeting periodically
with the Company's independent auditors to review their findings and
recommendations, (iii) approving major accounting policies or changes thereto
and (iv) periodically reviewing the Company's principal internal financial
controls. The Audit Committee held one meeting during the fiscal year ended
December 31, 1998. The current members of the Audit Committee are Messrs.
Molyneux, Smart, Moorehead and Pfeffer.
The Compensation Committee (i) develops and monitors compensation
arrangements for the executive officers of the Company based upon
recommendations of the Chief Executive Officer, (ii) reviews the compensation of
any employee of the Company whose compensation exceeds $100,000 per annum, (iii)
adopts amendments to all of the Company's plans intended to qualify under
Section 401 of the Internal Revenue Code of 1986, as amended, (iv) administers
the Company's 1998 Stock Option Plan and (v) performs such other activities and
<PAGE>
functions related to executive compensation as the Board of Directors of the
Company may from time to time direct. The Compensation Committee held two
meetings during the fiscal year ended December 31, 1998. The current members of
the Compensation Committee are Ms. Hawkins and Messrs. Moorehead and Molyneux.
The Company's Board of Directors held four meetings during the fiscal
year ended December 31, 1998, and also acted from time to time by unanimous
written consent. Each director attended at least 75% of all of the meetings held
by the Board of Directors and any committees on which said director served.
As compensation for service as a director of the Company, each director
who is not an employee or consultant of the Company or any of its subsidiaries
or affiliated with Charterhouse is entitled to receive (i) upon election as
director and on the date of each annual meeting of the Board of Directors
thereafter, a grant of options to purchase 20,000 shares of Common Stock at the
fair market value on the date of grant and (ii) cash compensation of
approximately $2,500 for each meeting attended. In addition, all directors are
reimbursed for their out-of-pocket expenses incurred in connection with
attending meetings of the Board of Directors and committees thereof. The Company
also has consulting or employment agreements with certain directors. See
"Certain Relationships and Related Transactions."
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents summary information concerning
compensation of the Chief Executive Officer and each of the three other most
highly compensated executive officers of the Company as of December 31, 1998
(together, the "Named Executive Officers") for services rendered to the Company
and its subsidiaries during fiscal year 1998. Except for the Named Executive
Officers, no other executive officer of the Company received salary and bonus
payments exceeding $100,000 in the aggregate during fiscal year 1998. No
compensation was paid by the Company to the Named Executive Officers during
fiscal year 1997.
<TABLE>
Securities
Underlying All Other
Name and Principal Position Salary Bonus Options Compensation
- --------------------------- ------ ----- ------- ------------
<S> <C> <C> <C> <C>
Edward T. Sheehan $ 141,678(1) $ -- 90,000 $ --
Chairman of the Board and
Chief Executive Officer
Allan D. Pass, Ph.D 125,765 -- 155,000 8,887(3)
President and Chief
Operating Officer(2)
Robert J. Adams, Jr. 110,002 -- 110,000 4,554(5)
Senior Vice President and
Chief Acquisition Officer(4)
Donald J. Marr 75,000 50,000 125,000 --
Senior Vice President and
Chief Financial Officer
<PAGE>
- ------------------------
(1) Mr. Sheehan has served as the Chairman of the Board and Chief Executive
Officer of the Company since October 1997, but he did not receive a
salary from the Company prior to the Company's initial public offering.
(2) Dr. Pass became employed by the Company on April 20, 1998. From January
1, 1998 through April 19, 1998, Dr. Pass provided consulting services
to the Company.
(3) Consists of housing expenses paid by the Company on behalf of the Named
Executive Officer.
(4) Mr. Adams became employed by the Company on June 1, 1998. From February
1, 1998 through June 1, 1998, Mr. Adams provided acquisition-related
consulting services to the Company.
(5) Consists of relocation expenses paid by the Company on behalf of the
Named Executive Officer.
</TABLE>
OPTION GRANTS IN 1998
The following table sets forth information concerning the grant of
stock options during 1998 to the Named Executive Officers:
<TABLE>
Potential Realizable
Value at Assumed
Number of Percentage of Annual Rates of
Shares Total Options Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees in Price Expiration Option Term(2)
Name Granted(1) Fiscal Year (per share) Date 5% 10%
- ---- ---------- ----------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Edward T. Sheehan
40,000 3.7% $15.875 5/15/08 $399,352 $1,012,040
50,000 4.6 9.500 10/9/08 298,735 757,035
Allan D. Pass, Ph.D
90,000 8.3 9.000 1/23/08 509,400 1,290,879
25,000 2.3 15.875 5/15/08 249,595 632,525
40,000 3.7 9.500 10/9/08 238,988 605,628
Robert J. Adams, Jr.
25,000 2.3 9.000 1/23/08 141,500 358,595
45,000 4.2 15.625 6/1/08 442,197 1,120,608
40,000 3.7 9.500 10/9/08 238,988 605,628
Donald J. Marr
50,000 4.6 9.000 1/23/08 283,000 717,190
35,000 3.2 15.875 5/15/08 349,433 885,535
40,000 3.7 9.500 10/9/08 238,988 605,628
- ------------------------
(1) All of such options were granted pursuant to the Company's 1998 Stock
Option Plan, were issued at fair market value on the date of grant and
vest over a period of three years at a rate of 33 1/3% per year
beginning on the first anniversary of the date of grant.
<PAGE>
(2) Represents the potential realizable value of each grant of options
assuming that the market price of the underlying securities appreciates
in value from the date of grant to the end of the option term at the
rates of 5% and 10% compounded annually.
</TABLE>
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning fiscal year-end
option values. No options were exercised by any of the Named Executive Officers
during 1998.
<TABLE>
Number of Securities Value of
Underlying Options at In-the-Money Options at
December 31, 1998 December 31, 1998(1)
----------------- --------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward T. Sheehan -- 90,000 $ -- $ 543,750
Allan D. Pass, Ph.D -- 155,000 -- 1,261,250
Robert J. Adams, Jr. -- 110,000 -- 713,125
Donald J. Marr -- 125,000 -- 911,250
- ------------------------
(1) Calculated as the difference between the aggregate fair market value of
such options based on the last reported sale price of the Common Stock
on December 31, 1998 ($18.375 per share) and the aggregate exercise
price.
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has employment agreements with each of the Named Executive
Officers. Pursuant to these agreements, each executive officer is entitled to
receive a base salary and is eligible for a performance bonus as determined by
the Compensation Committee of the Board of Directors.
The employment agreements with Mr. Sheehan, Dr. Pass and Mr. Adams have
an initial term of three years with an evergreen extension continuing after the
initial term unless either the Company or the executive officer gives ten days'
notice of termination. Pursuant to their current employment agreements, Mr.
Sheehan, Dr. Pass and Mr. Adams are entitled to receive an annual salary of not
less than $300,000, $250,000 and $200,000, respectively. If any of the
agreements are terminated without "Cause" by the Company, if the Board of
Directors determines in good faith that the executive officer has been assigned
duties, responsibilities or status materially inconsistent with the duties,
responsibilities and status set forth in his employment agreement, or, in the
case of Dr. Pass and Mr. Adams, if such executive officer terminates his
employment with the Company within six months after any termination of Mr.
Sheehan's employment with the Company, the Company is obligated to pay such
executive officer a termination fee equal to approximately two times such
executive officer's base salary and bonus. In addition, all stock options
granted to the executive pursuant to any of the Company's stock option plans
prior to the effective date of termination will continue to vest as if such
termination had not occurred and the executive will be entitled to continue to
receive health, life and disability insurance benefits for a period of two years
after termination. Upon the happening of certain events following a "Change of
Control," including a termination of the executive officer's employment for any
reason other than "Cause," each executive officer has the option, exercisable
within one year after the Change of Control, to receive a lump sum payment equal
to approximately three times the executive's base salary and bonus. In addition,
<PAGE>
all of the executive officer's stock options that are unvested as of the
effective date of the Change of Control will become immediately vested and the
executive officer will be entitled to continue to receive health, life and
disability insurance benefits for a period of three years after the executive
officer's termination. Each of the agreements contains a covenant prohibiting
the executive officer from competing with the Company for a period of one year
following any expiration or termination of the agreement. The agreements also
provide for customary benefits and perquisites.
The Company's agreement with Mr. Marr, which was effective as of May 1,
1998, has a term of three years. Pursuant to his employment agreement, Mr. Marr
is entitled to receive an annual salary of not less than $75,000 and an annual
bonus of at least $50,000. If the agreement is terminated without "Cause," or if
Mr. Marr terminates his employment with the Company within six months after any
termination of Mr. Sheehan's employment with the Company, the Company is
obligated to pay Mr. Marr a termination fee (over a period of twelve months)
equal to Mr. Marr's annual salary for a period of one year. In addition, in the
event that Mr. Marr's employment is terminated within ninety days after the
effective date of a "Change of Control," all of Mr. Marr's unvested stock
options will immediately become vested and the Company will be obligated to pay
Mr. Marr an aggregate payment (over a period of 36 months) equal to three times
Mr. Marr's annual salary. The agreement contains a covenant prohibiting Mr. Marr
from competing with the Company for a period of one year following any
expiration or termination of his agreement. The agreement also provides for
customary benefits and perquisites.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is a report from the Compensation Committee describing
the policies pursuant to which compensation was paid to executive officers of
the Company for performance during 1998.
COMPENSATION PHILOSOPHY AND APPROACH
Generally, the Company seeks to attract, retain and motivate its
executive officers through a combination of base salary, incentive awards based
upon individual performance and stock option awards under the Company's 1998
Stock Option Plan. The Compensation Committee believes that a substantial
portion of the annual compensation of each executive officer should be
influenced by the performance of the Company, as well as the individual
contribution of each executive officer.
Base Salaries
The Company's base salary levels are set in the Company's employment
agreements with each executive officer. The Compensation Committee believes that
the base salaries of the Company's executive officers for 1998 were generally
below those for other comparable positions within the motor vehicle and
equipment towing, recovery and transport service industry and similar
industries. The Company places significant emphasis on incentive awards and
stock option grants as a means of motivating and rewarding its management. The
Compensation Committee believes that this strategy provides optimal incentives
for management to create long-term shareholder value.
<PAGE>
Incentive Compensation Payments
In addition to base pay, the Company's senior executives (including the
Company's Chief Executive Officer) are eligible to receive bonuses and stock
option awards. Bonuses and stock options are awarded by the Compensation
Committee based upon the individual performance of each executive officer.
Except for a bonus of $50,000 to Mr. Marr, no cash bonuses were paid to the
Company's executive officers during 1998. Stock option grants made to the Named
Executive Officers during 1998 are described in "Option Grants in 1998."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation policies applicable to Mr. Sheehan, Chairman of the
Board, Chief Executive Officer and Secretary of the Company, are similar to
those applicable to the Company's other executive officers. The Compensation
Committee considers Mr. Sheehan's knowledge and experience to be critical to the
Company's continued growth and prosperity. The Company entered into an
employment agreement with Mr. Sheehan in February 1998, which was amended and
restated effective as of January 1, 1999 and further amended effective as of
March 30, 1999. Pursuant to the agreement in effect during 1998, Mr. Sheehan was
scheduled to receive a base salary of $200,000 for fiscal year 1998. Mr.
Sheehan, however, did not receive a salary prior to the Company's initial public
offering, and therefore he actually received a base salary of $141,678 for
fiscal year 1998.
During 1998, Mr. Sheehan was also granted options to purchase shares of
the Company's Common Stock, as indicated in the following table:
Date of Award Number of Shares Exercise Price
------------- ---------------- --------------
May 15, 1998 40,000 $15.875
October 9, 1998 50,000 9.500
The options granted to Mr. Sheehan vest over a period of three years,
at a rate of 33 1/3% each year, beginning on the first anniversary of the date
of grant. The exercise price for each option was based on the fair market value
of the Common Stock on the date of the grant, and all of the options expire
after a term of ten years. Mr. Sheehan's stock option awards were based on the
Compensation Committee's subjective assessment of Mr. Sheehan's contribution to
the Company's success in 1998.
The Compensation Committee believes that Mr. Sheehan's base salary and
overall compensation package for 1998 were at the lower end of the range for
similar positions in the motor vehicle and equipment towing, recovery, and
transport service industry and similar industries. However, stock option grants
provide a mechanism for the Chief Executive Officer, along with other senior
executive officers of the Company, to benefit directly from strong management
performance. In addition, Mr. Sheehan holds a significant equity position in the
Company. Thus, a substantial portion of Mr. Sheehan's total compensation is tied
directly to the creation of stockholder value.
<PAGE>
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION PER YEAR
Internal Revenue Code section 162(m), in general, precludes a public
corporation from claiming a tax deduction for compensation in excess of $1
million paid in any taxable year to any Named Executive Officer. Because the
total compensation for executive officers of the Company is significantly below
the $1 million threshold, the Board of Directors has not yet had to address the
issues relative thereto.
This report by the Compensation Committee shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities and Exchange Act of
1933, as amended, or the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and shall not otherwise be deemed filed under such Acts.
Respectfully Submitted By:
THE COMPENSATION COMMITTEE
Grace M. Hawkins
Donald F. Moorehead, Jr.
Richard A. Molyneux
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Moorehead and Molyneux and Ms. Hawkins are members of the
Compensation Committee of the Board of Directors. No member of the Compensation
Committee is an officer of the Company. No member of the Compensation Committee
served as a director or member of the Compensation Committee of another entity,
one of whose executive officers served as a director or member of the
Compensation Committee of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1998, the Company sold an aggregate of 218,736 shares of
Common Stock to private investors for cash consideration of $735,000. Mr.
Moorehead purchased 29,760 of these shares for $100,000. All of the private
investors, including Mr. Moorehead, agreed not to sell any of the shares for a
period of one year from the date of the Company's initial public offering.
Each of Messrs. Henninger, Morawski and Smart is a former owner of a
business acquired by the Company during 1998. The following table sets forth the
consideration paid and the indebtedness assumed by the Company in connection
with such acquisitions:
Acquired Cash Paid Shares of Common Stock Debt Assumed
Director Business In Acquisition Paid in Acquisition In Acquisition
- -------- -------- -------------- ------------------- --------------
Morawski Northland $8,307,000 692,277 $1,433,000
Smart Absolute 3,567,000 297,267 651,000
Henninger Keystone 4,531,000 377,624 712,000
The Company is required to make earn-out payments to each of Messrs.
Henninger, Morawski and Smart for each of the years 1998 through 2002, if their
respective businesses achieve target levels of net revenue. For each business,
<PAGE>
the 1998 target level of net revenue was 110% of the business' 1997 net revenue.
The target level of net revenue for each business, for the years 1999 through
2002, is generally 110% of the greater of its actual net revenue or its target
net revenue for the prior year. If the target net revenue is achieved for a
particular year, the Company must make an initial payment equal to generally 5%
of the excess of actual net revenue over the target level. In addition, once the
target level of net revenue for a particular year is met, the Company must make
subsequent and equal payments for each year through 2002, but only if the actual
net revenue for the respective subsequent year exceeds the actual net revenue
for the year that the earn-out target was first achieved. The earn-out payment
to be made to Mr. Morawski with respect to 1998 net revenue for Northland is
expected to be approximately $95,000. Neither Mr. Smart nor Mr. Henninger is
expected to receive an earn-out payment in excess of $60,000 based on the
performance of their respective businesses during 1998.
Prior to the Company's acquisition of Absolute, Absolute distributed to
Mr. Smart personal assets not included in the transaction with a book value of
approximately $65,000. Prior to the Company's acquisition of Keystone, Keystone
made a cash distribution of less than $150,000 to Mr. Henninger to pay taxes on
S Corporation earnings. In addition, Keystone distributed to Mr. Henninger
personal assets not included in the transaction with a book value of
approximately $56,000.
Pursuant to the agreements entered into in connection with the
Company's acquisition of Northland, Absolute and Keystone, Messrs. Morawski,
Smart and Henninger have agreed not to compete with the Company for a period of
five years from the date of the Company's initial public offering in defined
business and geographic areas.
In connection with the Company's purchases of Absolute and Keystone,
the Company entered into consulting agreements with Mr. Smart and Mr. Henninger.
Pursuant to these agreements, Mr. Smart and Mr. Henninger are each entitled to
receive a consulting fee equal to two percent (2%) of the gross revenue of each
business they assist the Company in acquiring, with the fee to be based on the
acquired business' gross revenue for the twelve months immediately preceding its
acquisition by the Company. Each consulting agreement is for a term of three
years.
From February through June 1998 (when he became Senior Vice President
and Chief Acquisition Officer of the Company), Mr. Adams was a party to a
consulting agreement with the Company which was substantially similar to the
consulting agreements described above between the Company and Messrs. Smart and
Henninger.
In connection with the Company's acquisition of Northland, the Company
entered into an employment agreement with Mr. Morawski pursuant to which he
serves as one of the Company's vice presidents for a term of three years, with
an annual base salary of $150,000.
The employment and consulting agreements described above also contain
covenants not to compete for one year after termination of the agreement.
In June 1998, Mr. Smart was awarded a contract for police towing in a
police district in Los Angeles. Mr. Smart conducts these operations through a
newly formed business that he controls. The Company has the option to buy Mr.
<PAGE>
Smart's business, beginning 18 months after the Company's purchase of Absolute
and ending three years thereafter. The purchase price under this option is equal
to 13 times the after-tax income of the business for the 12 month period prior
to the exercise of the option. Mr. Henninger is also seeking the award of a
contract for police towing in another district in Los Angeles. If Mr. Henninger
is awarded the contract, he will also conduct these operations through a newly
formed business that he controls. The Company will have a right to buy Mr.
Henninger's business on the same terms described above, beginning one year after
the Company's purchase of Keystone and ending three years thereafter.
COMMON STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total shareholder return on its Common Stock for the period during
which the Common Stock was registered under Section 12 of the Exchange Act
against the cumulative total return of the Nasdaq Total Return (U.S.) Index (the
"Nasdaq Index") and the cumulative total return of the Nasdaq Transportation
Index(1) (the "Transportation Index") for the same period. The graph assumes an
investment of $100 on May 1, 1998(2) in each of the Common Stock and the stocks
comprising the Nasdaq Index and the Transportation Index, and assumes
reinvestment of dividends, if any.
[graph omitted]
May 1, 1998 December 31, 1998
----------- -----------------
United Road Services, Inc. 100 141
Nasdaq Index 100 119
Transportation Index 100 81
- ------------------------
(1) The Transportation Index includes 119 railroads, trucking companies,
airlines, pipelines (except natural gas) and services such as
warehousing and travel arrangements.
(2) The Company's Common Stock began trading on the Nasdaq National Market
on May 1, 1998. Prior to May 1, 1998, the Common Stock was not publicly
traded. Comparative data is presented for the period beginning on May
1, 1998 and ending on December 31, 1998.
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
Common Stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are also required
by SEC regulations to furnish the Company with copies of all Section 16(a)
reports that they file with the SEC.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
AUDITORS
KPMG LLP has been selected as the Company's independent auditors for
the 1999 fiscal year. KPMG LLP has acted as principal accountant to the Company
since the Company's inception. Representatives of KPMG LLP will be present at
the Annual Meeting and will have the opportunity to make a statement if they
desire to do so. They also will be available to respond to appropriate questions
of the stockholders.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal relating to the Company's Annual Meeting of
Stockholders to be held in 2000 must be received at the Company's executive
offices no later than December 29, 1999, for evaluation as to inclusion in the
proxy statement in connection with such meeting.
Under the Company's Amended and Restated Bylaws, in order for a
stockholder to propose business (including to nominate a candidate for director)
to be considered at an annual meeting of stockholders, timely written notice of
such business must be given to the Company's Secretary. To be timely with
respect to the Company's Annual Meeting of Stockholders to be held in 2000, such
notice must be received at the principal executive offices of the Company
between February 23 and March 25, 2000 (except in the event that the date of
such annual meeting is prior to April 24, 2000 or after July 23, 2000, in which
event a stockholder's notice must be so delivered not earlier than the 90th day
prior to the date of the annual meeting and not later than the 60th day prior to
such date or the 10th day following the day on which public announcement of the
date of such meeting is first made by the Company). Such notice must provide
certain information as specified in the Amended and Restated Bylaws regarding
the stockholder giving the notice and the nature of the business to be proposed
or the candidate to be nominated. Such notice is separate from and in addition
to the requirements a stockholder must meet to have a proposal included in the
Company's proxy statement.
<PAGE>
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no other business which
may come before the Annual Meeting. However, if any other matters are properly
presented to the Annual Meeting or any adjournment thereof, the persons named in
the proxies will vote upon them in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
Edward T. Sheehan
Chairman of the Board,
Chief Executive Officer and Secretary
Date: April 27, 1999
<PAGE>
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except to vote for all
as directed to the nominees
contrary below) listed at right
1. ELECTION OF
DIRECTORS.
Three Class I / / / /
directors are NOMINEES: Edward W. Morawski
to be elected Michael S. Pfeffer
to serve until the Company's Todd Q. Smart
annual meeting in 2002.
INSTRUCTIONS: To withhold vote for any
individual nominee(s), write that nominee's
name in the space provided below.
___________________________________________
If any other matters properly come
before the Meeting or any adjournment
thereof, this proxy will be voted
according to the judgment of the persons
named on the reverse side as Proxies.
THIS PROXY WILL BE VOTED AS
SPECIFIED AT LEFT WITH RESPECT TO THE
ACTIONS TO BE TAKEN ON THE PROPOSAL IN
THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE
PROPOSAL.
THE UNDERSIGNED HEREBY ACKNOWLEDGES
RECEIPT OF THE NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS OF THE COMPANY AND THE
PROXY STAEMENT DATED APRIL 27, 1999.
THIS PROXY IS SOLICITED AND THE
MATTERS HEREIN PROPOSED BY THE BOARD OF
DIRECTORS OF THE COMPANY, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN
FAVOR OF THE PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Signature______________________ Signature____________________ Dated:__________
IF HELD JOINTLY
NOTE:For shares held jointly, each joint owner should personally sign. If
signing as executor, or in any other representative capacity, or as an
officer of a corporation, please indicate your full title as such.
