<PAGE>
________________________________________________________________________________
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary proxy statement [ ] Confidential, for use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
</TABLE>
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
------------------------
ENVIROSOURCE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ENVIROSOURCE, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
------------------------
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
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:
(Bulletin No. 161. 02-03-95)
________________________________________________________________________________
<PAGE>
ENVIROSOURCE, INC.
FIVE HIGH RIDGE PARK
P.O. BOX 10309
STAMFORD, CT 06904-2309
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 15, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
ENVIROSOURCE, INC., a Delaware corporation (the 'Company'), will be held at the
offices of Chemical Bank, 270 Park Avenue, New York, New York, on Thursday, June
15, 1995 at 10:00 A.M. (local time), for the following purposes:
1. To elect four members of Class C of the Board of Directors.
2. To ratify and approve the adoption of the EnviroSource, Inc. Stock
Option Plan for Non-Affiliate Directors.
3. To ratify and approve the selection of Ernst & Young LLP as the
Company's independent public accountants for the fiscal year ending
December 31, 1995.
4. To transact such other and further business as may properly come
before the meeting or any adjournment or adjournments thereof.
Holders of record of shares of the Company's Common Stock or Class G
Preferred Stock at the close of business on April 20, 1995 are entitled to
notice of and to vote at the meeting. A complete list of the Company's
stockholders will be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for ten days prior to the
meeting at the offices of American Stock Transfer & Trust Company, 40 Wall
Street, 46th Floor, New York, New York. The list will also be produced and kept
at the time and place of the meeting and may be inspected by any stockholder who
is present.
A copy of the Company's 1994 Annual Report to Stockholders is enclosed
herewith.
By Order of the Board of Directors
Christina E. Huben
Christina E. Huben
Secretary
Dated: May 5, 1995
<PAGE>
ENVIROSOURCE, INC.
FIVE HIGH RIDGE PARK
P.O. BOX 10309
STAMFORD, CT 06904-2309
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 1995
------------------------
May 5, 1995
To the Stockholders:
This Proxy Statement is furnished to you in connection with the Annual
Meeting of the Stockholders (the 'Annual Meeting') of EnviroSource, Inc., a
Delaware corporation (the 'Company'), and the related solicitation by the Board
of Directors of the Company of Proxies in the accompanying form, to be held at
the offices of Chemical Bank, 270 Park Avenue, New York, New York, on Thursday,
June 15, 1995 at 10:00 A.M. (local time) and at any subsequent time that may be
necessary by the adjournment thereof.
If you were a holder of record of shares of the Company's Common Stock or
Class G Preferred Stock at the close of business on April 20, 1995, you are
entitled to vote at the Annual Meeting. If you cannot be present at the Annual
Meeting in person, a form of Proxy is enclosed, which the Board of Directors
requests you to execute and return as soon as possible. A Proxy can be revoked
at any time before it is voted, in person at the Annual Meeting, by executing
and submitting a new Proxy that is dated a date after the Proxy to be revoked or
by delivery of a duly executed written statement to that effect addressed to the
Secretary of the Company.
As of the close of business on April 20, 1995, there were outstanding and
entitled to vote at the Annual Meeting 40,098,559 shares of Common Stock, $.05
par value (the 'Common Stock'), and 237,420 shares of Class G $7.25 Cumulative
Convertible Preferred Stock, $.25 par value (the 'Class G Preferred Stock').
Each share of Common Stock and Class G Preferred Stock is entitled to one vote.
In the event of a 'broker non-vote' with respect to any issue coming before the
meeting, arising from the absence of authorization by the beneficial owner to
vote as to that issue, the Proxy will be counted as present for purposes of
determining the existence of a quorum but will not be deemed as present and
entitled to vote as to that issue for purposes of determining the total number
of shares required for adoption.
ALL STOCKHOLDERS ARE URGED TO FILL IN, SIGN, DATE AND MAIL THE ENCLOSED
PROXY. If mailed in the United States in the enclosed envelope, no postage is
required. The prompt return of your Proxy to vote your shares of Common Stock or
Class G Preferred Stock will save the Company the expense of further
communication. If you attend the Annual Meeting and vote in person, the Proxy
will not be used.
The Proxy Statement and the Proxies in the accompanying form are first
being sent to stockholders on or about May 9, 1995.
PROXIES
THE PERSONS NAMED IN THE ACCOMPANYING PROXY INTEND TO VOTE PROXIES FOR THE
ELECTION OF NOMINEES FOR DIRECTOR DESCRIBED HEREIN UNLESS AUTHORITY TO VOTE FOR
ANY OR ALL OF THE NOMINEES IS WITHHELD. In the event that any nominee at the
time of election shall be unable or for good reason unwilling to serve (which
contingencies are not now contemplated or foreseen) and in consequence other
nominees shall be nominated, the persons named in the Proxy shall have the
discretion and authority to vote or refrain from voting in accordance with their
judgment on such other nominations. IN ADDITION, UNLESS OTHERWISE SPECIFIED IN
THE PROXY, PROXIES WILL BE VOTED FOR THE RATIFICATION AND APPROVAL OF THE
ADOPTION OF THE COMPANY'S STOCK OPTION PLAN FOR NON-AFFILIATE DIRECTORS AND FOR
THE
<PAGE>
RATIFICATION AND APPROVAL OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1995. See
'Other Matters' with respect to additional discretion and authority conferred by
the accompanying Proxy.
PROPOSAL 1
ELECTION OF CLASS C DIRECTORS
The Board of Directors of the Company consists of three classes: Class A,
Class B and Class C. Class A consists of three directors and Classes B and C
each consist of four directors. Directors in each class serve for a three-year
term and until their respective successors have been elected and qualified. The
term of the present Class C directors will end with this year's Annual Meeting,
the term of the present Class A directors will end with the 1996 Annual Meeting
and the term of the present Class B directors will end with the 1997 Annual
Meeting.
Four directors, to serve as Class C directors, are to be elected at the
Annual Meeting, to hold office until the 1998 Annual Meeting and until their
respective successors have been elected and qualified. The names of the four
nominees for director and the names of the directors continuing in office whose
terms do not expire in 1995, together with certain information furnished to the
Company by each nominee and director, are set forth below (see also 'Certain
Transactions' and 'Security Ownership of Certain Beneficial Owners'). Assuming
the presence of a quorum, directors shall be elected by a plurality of the votes
present or represented by proxy at the Annual Meeting. THE BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES FOR CLASS
C DIRECTORS INDICATED BELOW.
NOMINEES FOR ELECTION AS CLASS C DIRECTORS
Raymond P. Caldiero (age 60) has served as a director of the Company since
February 1992. Mr. Caldiero has served as Chairman of Caldiero International,
Inc. (a consultant in the areas of hotel development, lobbying, marketing and
sales) since 1989. From 1973 to 1988, Mr. Caldiero served as Vice President and
Assistant to the President of Marriott Corporation (a hotel and restaurant
company). He is a director of Capital Bank and served as a director of
Envirosafe Services, Inc. ('Envirosafe') from 1987 until February 1992. Mr.
Caldiero became a director of the Company in February 1992 pursuant to the terms
of a merger agreement between Envirosafe and a wholly-owned subsidiary of the
Company.
Mark J. Doran (age 31) became a director of the Company in August 1994 to
fill the vacancy created upon the resignation of William M. Wardlaw, one of
three additional designees of F.S. Equity Partners II L.P. ('FSEP'), an
affiliate of Freeman Spogli & Co. ('FS&Co.'), appointed to the Board of
Directors following the completion of the transactions contemplated in the Stock
Purchase Agreement (the 'Purchase Agreement') described under the caption
'Certain Transactions'. Mr. Doran joined FS&Co. in 1988. Prior to joining
FS&Co., Mr. Doran was employed by Kidder, Peabody & Co. Incorporated.
Charles P. Rullman, Jr. (age 46) became a director of the Company in
January 1995 to fill the vacancy created upon the resignation of William H.
Sherer, one of four FS&Co. designees initially appointed to the Board of
Directors on May 13, 1993 pursuant to the Purchase Agreement. Mr. Rullman joined
Freeman Spogli & Company, Inc. ('FSCI'), an affiliate of FS&Co., as a principal
in January 1995. Prior to joining FSCI, Mr. Rullman was a partner at Westar
Capital since October 1992. From 1973 to 1992, Mr. Rullman was employed by BT
Securities Corp., serving last as a Managing Director.
Ronald P. Spogli (age 47) became a director and Chairman of the Board of
the Company in May 1993. Mr. Spogli is one of four FS&Co. designees initially
appointed to the Board of Directors on May 13, 1993. He is a founding partner of
FS&Co. Mr. Spogli is also a director of Mac Frugal's BargainsClose-Outs Inc.,
Orchard Supply Hardware Stores Corporation and Buttrey Food and Drug Stores
Company.
2
<PAGE>
CLASS A DIRECTORS
Louis A. Guzzetti, Jr. (age 56) has been a director and President and Chief
Executive Officer of the Company since October 1986. From June 1983 until April
1986, Mr. Guzzetti was employed by United Brands Company ('United Brands')(a
diversified international company), serving as its Executive Vice President and
Chief Administrative Officer from June 1983 until August 1985 and as President
and Chief Executive Officer of its United Fruit Company subsidiary from October
1984 until April 1986. He was also a director of United Brands from August 1984
until June 1986.
Jeffrey G. Miller (age 53) was re-elected as a director of the Company in
August 1993. Mr. Miller has been a professor of Environmental Law at Pace
University School of Law since 1987. He has also been of counsel to the Seattle
and Washington D.C. law firm of Perkins Coie since 1987 practicing Environmental
Law. Mr. Miller was a director of Envirosafe from 1987 to February 1992. He
became a director of the Company in February 1992 pursuant to the terms of a
merger agreement between Envirosafe and a wholly-owned subsidiary of the
Company. Mr. Miller resigned on May 13, 1993 pursuant to the terms of the
Purchase Agreement. Mr. Miller is one of the three additional FS&Co. designees
elected to the Board of Directors.
Jon D. Ralph (age 30) has been a director of the Company since August 1993.
He joined FS&Co. in August 1989. Prior to joining FS&Co., Mr. Ralph was employed
in the Investment Banking Division of Morgan Stanley & Co. Incorporated
beginning in 1986. Mr. Ralph is one of the three additional FS&Co. designees
elected to the Board of Directors.
CLASS B DIRECTORS
Wallace B. Askins (age 64) has been a director of the Company since 1978.
Mr. Askins served as Executive Vice President and Chief Financial Officer of
Armco Inc. ('Armco') (a manufacturer of steel and other products) from June
1984, and as a director of Armco from December 1985, until his retirement in
November 1992. Mr. Askins has served as a director of Trump Castle and Resort,
Inc. since 1992 and of Trump Plaza Casino and Resort, Inc. since 1994.
John M. Roth (age 36) became a director of the Company in May 1993. Mr.
Roth is one of the four FS&Co. designees initially appointed to the Board of
Directors on May 13, 1993. He joined FS&Co. in March 1988 and became a general
partner in March 1993. From 1984 to 1988, Mr. Roth was a Vice President in the
Merger and Acquisition Group of Kidder, Peabody & Co. Incorporated. From 1983 to
1984, Mr. Roth worked as a management consultant with McKinsey & Company, Inc.
Arthur R. Seder, Jr. (age 75) has served as a director of the Company since
June 1988. Mr. Seder is a consultant in matters relating to the natural gas
industry. He served as Special Counsel to Columbia Gas Transmission Corporation
from June 1988 until 1992. From 1985 to 1988, he was of counsel to the
Washington, D.C. office of the law firm of Sidley & Austin. From 1976 until
April 1985, he was Chairman and Chief Executive Officer of American Natural
Resources Company (a diversified energy and transportation company).
J. Frederick Simmons (age 40) became a director of the Company in May 1993.
Mr. Simmons is one of the four FS&Co. designees initially appointed to the Board
of Directors on May 13, 1993. He joined FS&Co. in 1986 and became a general
partner in January 1991. Prior to 1986, Mr. Simmons was Vice President of
Bankers Trust Company's lending group specializing in leveraged buyouts and
health care. Mr. Simmons is also a director of Buttrey Food and Drug Stores
Company and Orchard Supply Hardware Stores Corporation.
OTHER INFORMATION AS TO DIRECTORS
During the fiscal year ended December 31, 1994, the Board of Directors held
six meetings.
The Board of Directors has an Executive Committee, consisting of Messrs.
Guzzetti, Simmons and Spogli; an Audit Committee, consisting of Messrs. Askins,
Rullman and Seder; and a Compensation and Stock Option Committee (the
'Compensation Committee'), consisting of Messrs. Askins, Caldiero, Roth and
Simmons.
3
<PAGE>
The function of the Executive Committee is to exercise the powers and
authority of the full Board of Directors, to the extent permitted by law, when
it is not in session. During 1994, the Executive Committee held no meetings but
twice acted by consent in lieu of meeting.
The primary function of the Audit Committee, which held two meetings during
1994, is to review the scope and results of each year's annual audit as well as
the Company's internal accounting procedures.
The function of the Compensation Committee is to administer the Company's
Incentive Stock Option Plan, to award stock options thereunder and to review and
make recommendations concerning other Company plans, executive compensation and
such other matters referred to it by the Board of Directors. The Compensation
and Stock Option Committee held one meeting during 1994.
The Company pays each director other than Mr. Guzzetti and general partners
or employees of FS&Co. an annual fee of $15,000 (payable in four equal quarterly
installments). In addition, the Company pays the reasonable expenses of each
director in connection with his attendance at each meeting of the Board of
Directors or any committee thereof. In connection with their election in
February 1992 as directors of the Company, each of Mr. Caldiero and Mr. Miller
was granted an option to purchase 20,000 shares of Common Stock of the Company
at an exercise price of $2.625 per share, which became exercisable in September
1993 and expires in March 2002. Pursuant to its terms, Mr. Miller's option would
have expired 90 days after his resignation in May 1993. In connection with his
re-election to the Board of Directors in August 1993, the Company amended Mr.
Miller's option to provide that his option will remain in effect, as if he had
not resigned, during the period from May 13, 1993 until such re-election. On
August 5, 1993, Mr. Askins was granted an option to purchase 20,000 shares of
Common Stock of the Company at an exercise price of $4.25 per share, which
becomes exercisable in August 1995 and expires in August 2003. On November 1,
1993, the Company granted an option to purchase 20,000 shares of Common Stock of
the Company to Mr. Seder at an exercise price of $4.25 per share, which becomes
exercisable in November 1995 and expires in November 2003. Mr. Seder's
previously issued option to purchase 20,000 shares of Common Stock at an
exercise price of $7.75 was terminated at the same time.
The Company has also adopted a Stock Option Plan for Non-Affiliate
Directors (the 'Plan'), subject to ratification and approval of the stockholders
of the Company at the Annual Meeting (see also 'Proposal 2 -- Ratification and
Approval of Adoption of EnviroSource, Inc. Stock Option Plan for Non-Affiliate
Directors'). Pursuant to the Plan each director of the Company who is neither an
employee of the Company nor an affiliate of FS&Co. (i) was granted an option to
purchase 5,000 shares of Common Stock as of January 1, 1995 at an exercise price
equal to the closing sales price of such stock as reported on the National
Association of Securities Dealers Automated Quotation National Market System
(the 'NASDAQ-NMS') on the last business day prior to the date of grant and (ii)
had the right to elect to receive an option to purchase shares of Common Stock
in lieu of receiving his annual director's fee for 1995. Each of Mr. Askins and
Mr. Seder elected to receive options to purchase shares of Common Stock in lieu
of receiving the annual director's fee for 1995.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company's records and other information obtained by the Company from
outside sources indicate that as of April 1, 1995, unless otherwise stated, the
following persons were the beneficial owners of more than 5% of the outstanding
shares of the Common Stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER(1) CLASS OWNED OF CLASS
- - - - - - - -------------------------------------------------------- ------------- ------------ --------
<S> <C> <C> <C>
FS Equity Partners II, L.P.
c/o Freeman Spogli & Co.(2) .......................... Common Stock 20,227,325(3) 49.1%
11100 Santa Monica Blvd.
Suite 1900
Los Angeles, CA 90025
The IBM Retirement Plan Trust Fund ..................... Common Stock 2,823,548(4) 7.0%
262 Harbor Place
Stamford, CT 06904-2399
</TABLE>
- - - - - - - ------------
(1) To the best of the Company's knowledge, except as otherwise provided herein,
the persons named in the table have sole voting and investment power with
respect to all shares of equity securities shown as beneficially owned by
them.
(2) FS&Co., as general partner of FSEP, has the sole power to vote and dispose
of such shares. Messrs. Roth, Simmons and Spogli, each of whom is a director
of the Company, and Bradford M. Freeman and William M. Wardlaw are general
partners of FS&Co., and as such may be deemed to be the beneficial owners of
the shares of the Company's capital stock indicated as beneficially owned by
FSEP.
(3) Includes 1,123,179 shares issuable upon exercise of warrants held by FSEP.
(4) Includes 156,794 shares issuable upon exercise of warrants held by The IBM
Retirement Plan Trust Fund (the 'IBM Trust').
SECURITY OWNERSHIP OF MANAGEMENT
As of April 1, 1995, the following directors, executive officers and all
directors and officers as a group, were the beneficial owners of shares of
Common Stock of the Company.
<TABLE>
<CAPTION>
EQUITY SECURITIES OF THE COMPANY
BENEFICIALLY OWNED AS OF
APRIL 1, 1995(1)
-------------------------------------------
NUMBER OF PERCENT
NAME AND POSITION WITH COMPANY CLASS SHARES OF CLASS
- - - - - - - --------------------------------------------------------------- ------------- ---------- --------
<S> <C> <C> <C>
Class A Directors
Louis A. Guzzetti, Jr., President and Chief Executive
Officer................................................. Common Stock 531,437(3) 1.3%
Jeffrey G. Miller......................................... Common Stock 20,000(3) *
Jon D. Ralph.............................................. -- -- --
Class B Directors
Wallace B. Askins......................................... Common Stock 16,356 *
John M. Roth(2)........................................... Common Stock 20,227,325(4) 49.1%
Arthur R. Seder, Jr. ..................................... Common Stock 10,000 *
J. Frederick Simmons(2)................................... Common Stock 20,227,325(4) 49.1%
</TABLE>
(table continued on next page)
5
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
EQUITY SECURITIES OF THE COMPANY
BENEFICIALLY OWNED AS OF
APRIL 1, 1995(1)
-------------------------------------------
NUMBER OF PERCENT
NAME AND POSITION WITH COMPANY CLASS SHARES OF CLASS
- - - - - - - --------------------------------------------------------------- ------------- ---------- --------
<S> <C> <C> <C>
Class C Directors
Raymond P. Caldiero Common Stock 20,000(3) *
Mark J. Doran............................................. -- -- --
Charles P. Rullman, Jr.................................... -- -- --
Ronald P. Spogli, Chairman of the Board(2)................ Common Stock 20,227,325(4) 49.1%
Other Four Most Highly Compensated Executive Officers
Aarne Anderson............................................ Common Stock 47,636(3) *
Jerrold I. Dolinger....................................... Common Stock 100,013(3)(5) *
George E. Fuehrer......................................... Common Stock 127,354(3) *
James C. Hull............................................. Common Stock 69,180(3) *
All directors and officers as a group (18 persons)............. Common Stock 21,291,007(6) 51.2%
</TABLE>
- - - - - - - ------------
* Less than 1%
(1) Unless otherwise disclosed, the persons named in the table have sole voting
and investment power with respect to all shares of equity securities shown
as beneficially owned by them.
(2) All shares shown as beneficially owned are held of record by FSEP. As
general partner of FSEP, FS&Co. has the sole power to vote and dispose of
such shares. Messrs. Roth, Simmons and Spogli, each of whom is a director of
the Company, are general partners of FS&Co., and as such may be deemed to be
the beneficial owners of the shares of the Company's Common Stock indicated
as beneficially owned by each of them.
(3) Includes (i) shares for which options under EnviroSource's Incentive Stock
Option Plan, EnviroSource's 1993 Stock Option Plan or otherwise are
exercisable within 60 days, as follows: Mr. Guzzetti, 136,600 shares; Mr.
Anderson, 25,000 shares; Mr. Dolinger, 43,200 shares; Mr. Fuehrer, 72,200
shares; Mr. Hull, 25,200 shares; and Messrs. Caldiero and Miller, 20,000
shares each; and (ii) shares held through the EnviroSource, Inc. Savings
Plan and the EnviroSource, Inc. Profit Sharing Plan as of December 31, 1994,
as follows: Mr. Anderson, 10,636 shares; Mr. Dolinger, 36,813 shares; Mr.
Fuehrer, 25,004 shares; Mr. Guzzetti, 89,487 shares; and Mr. Hull, 42,480
shares.
(4) Includes 1,123,179 shares issuable upon exercise of warrants held by FSEP.
(5) Excludes 2,000 shares owned by members of Mr. Dolinger's immediate family as
to which Mr. Dolinger disclaims beneficial ownership.
(6) Includes (i) 396,867 shares for which options under EnviroSource's Incentive
Stock Option Plan, EnviroSource's 1993 Stock Option Plan or otherwise are
exercisable within 60 days; (ii) 266,959 shares held through the
EnviroSource, Inc. Savings Plan and the EnviroSource, Inc. Profit Sharing
Plan as of December 31, 1994; (iii) 19,104,146 shares held of record by
FSEP; and (iv) 1,123,179 shares issuable upon exercise of warrants held by
FSEP. See footnote (2) for an explanation of the relationship between
certain directors and FSEP.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Chief Executive Officer and the other four most highly compensated
executive officers of the Company for the last three completed fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------- -------------
NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS COMPENSATION
- - - - - - - -------------------------------------------- ---- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Louis A. Guzzetti, Jr. ..................... 1994 $401,500 $207,000 0 $ 29,184(1)
Chief Executive Officer 1993 390,750 0 168,000 20,786(2)
1992 367,750 0 0 20,171(3)
Aarne Anderson ............................. 1994 142,100 56,500 0 11,368(1)
Vice President, Taxes 1993 137,812 0 32,500 11,270(2)
1992 129,562 0 0 11,144(3)
Jerrold I. Dolinger ........................ 1994 161,750 80,000 0 12,587(1)
Vice President, Corporate Development 1993 155,625 0 56,000 22,291(2)(4)
1992 144,438 0 0 22,542(3)(4)
George E. Fuehrer .......................... 1994 177,625 85,600 0 8,932(1)
Senior Vice President, Planning 1993 172,000 0 76,000 8,615(2)
1992 161,000 0 0 9,074(3)
James C. Hull .............................. 1994 192,250 84,000 0 18,612(1)
Vice President and Chief Financial Officer 1993 187,312 0 16,000 18,360(2)
1992 177,188 0 0 18,737(3)
</TABLE>
- - - - - - - ------------
(1) Includes Company contributions to accounts in the EnviroSource, Inc. Savings
Plan, as follows: Mr. Guzzetti, $9,000; Mr. Anderson, $4,263; Mr. Dolinger,
$4,500; and Mr. Hull, $9,000; Company contributions to accounts in the
EnviroSource, Inc. Profit Sharing Plan, as follows: Mr. Guzzetti, $7,500;
Mr. Anderson, $7,105; Mr. Dolinger, $7,500; Mr. Fuehrer, $7,500; and Mr.
Hull, $7,500; and Company contribution to accounts in the EnviroSource, Inc.
Supplemental Executive Retirement Plan, as follows: Mr. Guzzetti, $12,684;
Mr. Dolinger, $587; Mr. Fuehrer, $1,432 and Mr. Hull, $2,112.
(2) Includes Company contributions to accounts in the EnviroSource, Inc. Savings
Plan, as follows: Mr. Guzzetti, $8,994; Mr. Anderson, $4,372; Mr. Dolinger,
$4,497; and Mr. Hull, $8,994; and Company contributions to accounts in the
EnviroSource, Inc. Profit Sharing Plan as follows: Mr. Guzzetti, $11,792;
Mr. Anderson, $6,898; Mr. Dolinger, $7,794; Mr. Fuehrer, $8,615; and Mr.
Hull, $9,366.
(3) Includes Company contributions to accounts in the EnviroSource, Inc. Savings
Plan, as follows: Mr. Guzzetti, $8,728; Mr. Anderson, $3,898; Mr. Dolinger,
$4,347; and Mr. Hull, $8,728; and Company contributions to accounts in the
EnviroSource, Inc. Profit Sharing Plan as follows: Mr. Guzzetti, $11,443;
Mr. Anderson, $7,246; Mr. Dolinger, $8,195; Mr. Fuehrer, $9,074; and Mr.
Hull, $10,009.
(4) Includes $10,000 of loan forgiveness. See 'Employee Loans'.
------------------------
In February 1995, the Compensation Committee granted stock options to each
of the named executive officers in recognition of their accomplishments during
1994 in the following amounts: Mr. Guzzetti, 106,640; Mr. Anderson, 13,330; Mr.
Dolinger, 24,000; Mr. Fuehrer, 26,660; and Mr. Hull, 21,330.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number and value at December 31, 1994 of
all exercisable and unexercisable options held by the Chief Executive Officer
and the other four most highly compensated
7
<PAGE>
executive officers of the Company under the Company's Incentive Stock Option
Plan and the 1993 Stock Option Plan. In 1994 none of the named executive
officers exercised any options.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
--------------- --------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(1)
- - - - - - - ---------------------------------------------------------------------------- --------------- --------------
<S> <C> <C>
Louis A. Guzzetti, Jr. ..................................................... 136,600/146,400 $14,580/$9,720
Aarne Anderson.............................................................. 25,000/30,000 4,860/3,240
Jerrold I. Dolinger......................................................... 43,200/52,800 9,720/6,480
George E. Fuehrer........................................................... 72,200/68,800 9,720/6,480
James C. Hull............................................................... 23,200/22,800 9,720/6,480
</TABLE>
- - - - - - - ------------
(1) The value of unexercised in-the-money options represents the difference
between the fair market value of the underlying securities as of December
31, 1994 and the exercise price of such options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Askins,
Caldiero, Roth and Simmons. Mr. Askins was an executive officer of the Company's
predecessor, White Motor Corporation, from December 1976 until June 1984.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of two
independent outside directors and two directors who are general partners of
FS&Co. The Compensation Committee has responsibility for administering the
policies that govern employee compensation programs and executive compensation,
and for reviewing and making recommendations concerning the Company's employee
benefit plans, executive compensation and such other matters as are referred to
it by the Board of Directors. The Compensation Committee has furnished the
following report on executive compensation:
The Compensation Committee believes it is important to align the
financial interests of the Company's senior managers, including the Chief
Executive Officer, with those of its stockholders. In furtherance of this
objective, the Company relies to a significant degree on annual incentive
compensation and stock options in addition to base compensation.
BASE COMPENSATION. The Company attempts to offer new executive
officers base compensation believed to be somewhat below average for
companies of comparable size, complexity and geographic location. Annual
increases in base compensation have generally been intended to approximate
competitive wage escalation including, where appropriate, adjustments based
on merit. The Compensation Committee has not historically reviewed initial
decisions regarding base compensation for new executive officers (other
than the Chief Executive Officer), but the Compensation Committee does
approve annual increases for executive officers.
INCENTIVE COMPENSATION. The remainder of executive compensation is
tied to corporate performance. The Company relies on annual incentive
compensation and stock options to provide incentives to executives to meet
the Company's business, financial and strategic objectives, and to reward
and retain executives who perform in furtherance of those objectives.
The Company's incentive compensation program for executive officers is
based on a combination of financial and non-financial goals. The annual
incentive compensation 'pool' is the sum of the target bonuses of each of
the Company's executive officers, escalated up to 150% of target or reduced
to as low as zero, depending on the extent to which the Company meets
specified financial targets, typically expressed in relation to budgeted
annual cash flow, operating income or net income. For 1994 and 1995 the
target bonus has been set at 50% of base compensation for the Chief
Executive Officer and 40-45% of base compensation for the Company's other
executive officers. The extent to which an individual executive officer
participates in bonuses, if any, from the
8
<PAGE>
pool depends on that individual's achievement of non-financial objectives
negotiated annually between that individual and his or her supervisor.
Non-financial objectives involve projects or programs within each executive
officer's area of responsibility. Early each year the Compensation
Committee reviews management's proposed incentive compensation program
financial targets, and the non-financial objectives of each of the
Company's executive officers, for that fiscal year, as well as proposed
awards, if any, in respect of the preceding fiscal year.
The bonuses awarded to executive officers for 1994 and reflected in
the Summary Compensation Table were based on the Company's achievement of
operating income established by the Compensation Committee at the beginning
of 1994 and each executive officer's individual achievements of his
non-financial objectives also established at such time.
STOCK OPTIONS. The Compensation Committee believes that stock options
represent a desirable long-term compensation method because they reward
Company performance that increases the value of stockholders' ownership.
All options granted to executive officers under the Company's stock option
plans have an exercise price at least equal to the fair market value of the
Company's Common Stock on the date of grant, and all such options granted
to executive officers since 1986 vest or have vested over periods of
several years. These features help ensure the long-term nature of
compensation through stock options.
Early each year the Compensation Committee reviews the Chief Executive
Officer's proposals for option awards, if any, to executive officers and
other key employees, taking into account the Company's recent performance
as well as the responsibilities, past performance, anticipated performance
requirements of each of such individuals and previous option awards. The
Company has not established any particular target ownership level for
Company equity holdings by its executive officers. Options are also granted
to newly-hired officers based on responsibilities and anticipated
performance requirements.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The compensation of Mr.
Guzzetti as Chief Executive Officer is based on a combination of
performance indicators and long-term increase in stockholder value. Mr.
Guzzetti's current base salary is somewhat above the average salary of
peers at other comparable companies in recognition of his experience, years
of service with the Company and the complexity of the Company's businesses.
In 1994, the Chief Executive Officer received a 2.75% increase in this base
compensation. This increase reflected the fact that Mr. Guzzetti achieved
his individual non-financial targets set by the Compensation Committee for
1993, which included strengthening the Company's capital structure and
financial position, maximizing returns on pre-existing assets and
developing a regulatory compliance program. The increase also included an
adjustment for competitive wage escalations.
Mr. Guzzetti received an annual bonus in respect of 1994 due to
achieving the budgeted corporate earnings for the year. Mr. Guzzetti was
not awarded any stock options during 1994.
Compensation and Stock Option Committee
Wallace B. Askins
Raymond P. Caldiero
John M. Roth
J. Frederick Simmons
The Revenue Reconciliation Act of 1993 limits the annual deduction a
publicly held corporation may take for certain types of compensation paid or
accrued with respect to certain executives to $1 million per year per executive
for taxable years beginning after December 31, 1993. The Company does not
believe that compensation paid currently to its executives is affected by such
limitation. However, the Company has reviewed its compensation plans in the
context of the requirements for tax deductibility under these rules, and is in
the process of determining whether, and to what extent, revisions of such plans
will be necessary or desirable.
9
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative total
return on the Company's Common Stock, on an indexed basis, against the
cumulative total returns of the Russell 2000 Index and the S&P Pollution Control
Index, assuming $100 was invested on December 31, 1989.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ENVIROSOURCE, INC., THE RUSSELL 2000 INDEX
AND THE S & P POLLUTION CONTROL INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Envirosource Inc............... 100 34 19 43 29 28
Russell 2000................... 100 80 117 139 166 163
S & P Pollution Control........ 100 89 105 105 77 80
</TABLE>
* $100 INVESTED ON 12/31/89 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
CERTAIN TRANSACTIONS
THE FSC TRANSACTION
In May 1993, the Company sold the equivalent of 13.3 million shares of
Common Stock to an affiliate of FS&Co. and another investor (collectively, the
'Investors'). At the same time, the Investors purchased from The
Dyson-Kissner-Moran Corporation ('DKM') and WM Financial Corporation ('WM
Financial') the following: (i) 5,636,568 shares of Common Stock, (ii) all
107,000 outstanding shares of Class H Preferred Stock, par value $.25 per share,
all of which were immediately exchanged for 3,066,667 newly issued shares of
Common Stock, and (iii) warrants to purchase 1,695,652 shares of Common Stock at
exercise prices of $3.50 and $4.00 per share. FS&Co. sold a portion of the
aforementioned securities to The IBM Retirement Plan Trust Fund (the 'IBM
Trust'). As a result of these transactions, FS&Co. owns approximately 48% of the
Common Stock of the Company.
MANAGEMENT AGREEMENT
FS&Co. provides advice and assistance to the Company regarding corporate
and financial planning and the development of business strategies. The Company
does not pay FS&Co. a fee for such services but has agreed to reimburse FS&Co.
for all expenses incurred in connection with such advice and assistance.
EMPLOYEE LOANS
In 1986, the Company granted Mr. Guzzetti a loan of $500,000 (the '1986
Loan') bearing interest at 7.5% per annum and repayable in ten equal annual
installments. The first three $50,000 annual installments were repaid in 1988,
1989 and 1990. In each of 1991 and 1992, the Company deferred the principal
installment payment then due, extended the maturity of such loan by one year and
loaned Mr.
10
<PAGE>
Guzzetti $26,250 to finance the payment of interest then due, represented by new
notes bearing interest at 7.5% per annum. Effective March 31, 1993, the Company
and Mr. Guzzetti agreed to amend the terms of the 1986 Loan to (i) increase the
principal amount of such loan by the amount of interest otherwise due on March
31, 1993, (ii) reduce the interest rate commencing April 1, 1993 to 6% per
annum, payable annually half in cash and half by adding to the principal amount
of the loan on each due date of such interest, (iii) provide for a lump sum
payment of principal and accrued and unpaid interest thereon on March 31, 1998,
in lieu of annual installment payments, (iv) require payment in full within 30
days of termination of employment and (v) provide for forgiveness of all
outstanding amounts due in the event Mr. Guzzetti dies while still employed by
the Company. The outstanding principal amount (including financed interest
payments) of the 1986 Loan as of April 1, 1995 was $459,039.
In connection with Common Stock purchases by certain executive officers of
the Company in January 1989, the Company loaned $350,000 to Mr. Guzzetti,
$90,000 to Mr. Anderson, $220,000 to Mr. Fuehrer, and $150,000 to Mr. Dolinger.
All of such indebtedness bore interest payable annually at the annual rate of
8%, and its principal amount was payable on the earlier of January 13, 1994 or
the date of such borrower's termination of employment with the Company. On each
of April 1, 1991 and April 1, 1992, the Company agreed to increase the principal
amount of such loans by the amount of interest payments then due. Effective
April 1, 1993, the Company agreed to (i) increase the principal amount of such
loans by the amount of interest payments otherwise due on April 1, 1993, (ii)
extend the maturity of such loans to March 31, 1998, (iii) reduce the interest
rate payable on such loans to 6% per annum, payable annually half in cash and
half by adding to the principal amount of such loans on each due date of such
interest, (iv) require payment in full of all outstanding amounts due under the
loans, including accrued interest, within 30 days of termination of employment
and (v) provide for forgiveness of all outstanding amounts due under the loans
in the event of the officer's death while still employed by the Company. The
aggregate principal amounts (including financed interest payments) of such loans
as of April 1, 1995 were $467,750 for Mr. Guzzetti, $120,278 for Mr. Anderson,
$294,015 for Mr. Fuehrer, and $200,465 for Mr. Dolinger.
PROPOSAL 2
RATIFICATION AND APPROVAL OF
ADOPTION OF ENVIROSOURCE, INC. STOCK OPTION
PLAN FOR NON-AFFILIATE DIRECTORS
Effective January 1, 1995, the Board of Directors adopted the EnviroSource,
Inc. Stock Option Plan for Non-Affiliate Directors (the 'Plan') and on January
1, 1995 options for an aggregate of 20,000 shares of Common Stock were awarded
thereunder to four directors of the Company, in each case subject to approval of
the Plan by the Company's stockholders. The Board of Directors recommends
approval and ratification of such adoption by the Company's stockholders. The
principal terms of the Plan are set forth below and the full text of the Plan is
set forth as Appendix A hereto. The description in this Proxy Statement of the
principal terms of the Plan is qualified in its entirety by the full text of the
Plan.
Upon approval of this Proposal by the Company's stockholders, 750,000
shares of Common Stock will be reserved for issuance upon the exercise of
options granted to directors of the Company who are not employees of the Company
or affiliates of FS&Co. pursuant to the Plan.
Options granted under the Plan are not subject to Section 422 of the
Internal Revenue Code of 1986, as amended ('NQSO'). The Plan provides for two
separate stock option grant features to the Company's non-affiliate directors.
Under the Plan's first feature, as of January 1 of each year, each non-affiliate
director is automatically granted an option to purchase 5,000 shares of the
Common Stock at an exercise price equal to the closing sales price of such stock
as reported on the National Association of Securities Dealers Automated
Quotation National Market System (the 'NASDAQ-NMS') on the last business day
prior to the date of grant (the 'Automatic Grant Feature'). Such options are
exercisable one year after the date of grant, so long as the director is still a
director as of such date. The Plan's second feature grants each non-affiliate
director the right to elect on or before January 1 of each year (the 'Election
Date') to receive an option to purchase shares of Common Stock in lieu of
receiving his annual director's fee (currently, $15,000 per anum, the
'Director's Fee') for such year (the 'Election
11
<PAGE>
Feature') at a discount to the market value of such stock equal to the amount of
the Director's Fee. If he elects to participate, on the date (the 'Grant Date')
which is six months following the Election Date of such year, the director will
be granted an option to purchase the number of shares of the Common Stock equal
to the amount of the Director's Fee for such year divided by 20% of the closing
sales price of the Common Stock as reported on the NASDAQ-NMS on the last
business day prior to the Grant Date (the 'Grant Date Stock Price'). The
exercise price will be 80% of the Grant Date Stock Price. The option will become
exercisable on the January 1 next succeeding the Grant Date. If a director's
membership on the Board terminates for any reason before the next succeeding
January 1, the number of shares subject to the option shall be reduced to
reflect the pro rata portion of the Director's Fee that he would have received
for his time in office. For 1995, two of the Company's four non-affiliate
directors, Messrs. Askins and Seder, have exercised their rights pursuant to the
Election Feature.
All options granted under the Plan, to the extent not exercised, expire on
the earlier of (i) the tenth anniversary of the date of grant or (ii) one year
after such optionee ceases to be a director of the Company.
The Plan will be administered by a committee of three disinterested members
of the Board of Directors (the 'Committee'), although the grant of options is
automatic and the pricing formula non-discretionary. The composition of the Plan
will at all times satisfy the provisions of Rule 16b-3 ('Rule 16b-3') under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'). The Committee may amend or terminate the Plan, provided that (i) no such
amendment or termination may adversely affect the then existing rights of any
participant without the consent of such participant and (ii) to the extent
required by Rule 16b-3 or any other law, regulation or stock exchange rule, no
amendment shall be effective without the approval of the Company's stockholders.
The purpose of the Plan is to provide present and prospective directors of
the Company who are not affiliated with the Company or FS&Co. with the
opportunity to obtain equity ownership interest in the Company through the
exercise of stock options. The following table sets forth the number, exercise
price and present value of options granted to the persons indicated therein
under the Plan in January 1995, subject to stockholder approval:
<TABLE>
<CAPTION>
NUMBER OF
SHARES EXERCISE MARKET
UNDERLYING PRICE PRICE
NAME OPTIONS PER SHARE(1) PER SHARE(2)
- - - - - - - -------------------------------------------------- --------- ------------ ------------
<S> <C> <C> <C>
Wallace B. Askins................................. 5,000(3)(4) $ 3.3125 $ 4.3125
Raymond P. Caldiero............................... 5,000(3) 3.3125 4.3125
Jeffrey G. Miller................................. 5,000(3) 3.3125 4.3125
Arthur R. Seder, Jr. ............................. 5,000(3)(4) 3.3125 4.3125
Executive Group................................... 0 -- --
Non-Executive Director Group...................... 20,000(3)(4) 3.3125 4.3125
Non-Executive Officer Employee Group.............. 0 -- --
</TABLE>
(1) The exercise price is equal to the closing market price of the Company's
Common Stock on the last business day preceeding the date of grant.
(2) The market price per share was determined as of May 4, 1995.
(3) Options to purchase shares of Common Stock automatically granted pursuant to
the Automatic Grant Feature.
(4) Does not include options to be issued pursuant to the elections made by such
persons under the Plan's Election Feature to receive options to purchase
shares of Common Stock in lieu of receipt of 1995 Director's Fees since such
options are not currently determinable.
------------------------
The principal United States federal income tax consequences under current
federal income tax law related to awards under the Plan are briefly summarized
as follows: Generally, upon exercise of an NQSO, the excess of the fair market
value of the shares on the exercise date over the exercise price will be taxable
as ordinary income to the optionee. Thereafter, any appreciation or depreciation
realized upon a subsequent sale of the shares should qualify as long-term or
short-term capital gain or loss,
12
<PAGE>
depending upon the optionee's holding period of the shares. The Company should
be entitled to a tax deduction in an amount equal to the ordinary income
recognized by the optionee upon exercise.
The affirmative vote of a majority of the outstanding shares of Common
Stock and the Class G Preferred Stock, voting together as a class, is required
for approval and ratification of the adoption of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION AND APPROVAL OF THE ADOPTION OF THE COMPANY'S STOCK OPTION PLAN FOR
NON-AFFILIATE DIRECTORS.
PROPOSAL 3
RATIFICATION AND APPROVAL OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP ('Ernst & Young') as
the Company's independent public accountants for the fiscal year ending December
31, 1995. Although it is not required to do so, the Board of Directors is
submitting its selection of Ernst & Young to the stockholders for ratification
and approval. If the selection is not ratified and approved, the Board of
Directors will reconsider its choice but will not be bound by the refusal of the
stockholders to ratify and approve the selection of Ernst & Young. A
representative of Ernst & Young is expected to be present at the Annual Meeting,
will have the opportunity to make a statement if such representative desires to
do so and is expected to be available to respond to appropriate questions. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION
AND APPROVAL OF THE SELECTION OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1995.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. For fiscal
year 1994, Mr. Doran, who was elected as a director of the Company on August 1,
1994, inadvertently effected a late filing of his Form 3 report. Such report was
filed on February 13, 1995. All reportable transactions for all directors and
officers are now properly reflected in their most recent filings under Section
16(a) of the Exchange Act.
OTHER MATTERS
Effective January 15, 1992, due to dividend arrearages, the holders of the
Class G Preferred Stock became entitled to elect two additional directors to the
Company's Board of Directors. As of the date of this statement, the Company has
not received notice from any holder of the Class G Preferred Stock of an intent
to exercise its rights in this regard.
The Board of Directors of the Company knows of no other matters that are to
be brought before the Annual Meeting. If any other matter should be presented
for proper action, the persons named in the Proxy shall have discretion and
authority to vote or to refrain from voting in accordance with their judgment on
such matters. In addition, the persons named in the Proxy shall have discretion
and authority to vote or to refrain from voting in accordance with their
judgment with respect to matters incidental to the conduct of the Annual
Meeting.
The cost of solicitation will be borne by the Company. Solicitation will be
by mail, except for any incidental personal solicitation made by directors,
officers and regular employees of the Company, none of whom will receive
compensation therefor. The Company will also request banks and brokers to
solicit their customers who have a beneficial interest in shares of Common Stock
registered in the names of nominees and will reimburse such banks and brokers
for their reasonable out-of-pocket expenses. In addition, the Company's transfer
agent, American Stock Transfer & Trust Company, Inc., will assist in the
solicitation of Proxies from brokers, bank nominees and other institutional
holders.
13
<PAGE>
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received at the Company's principal executive
offices on or before December 29, 1995 for inclusion in the Company's Proxy
Statement with respect to such meeting.
By Order of the Board of Directors,
Louis A. Guzzetti, Jr.
Louis A. Guzzetti, Jr.
President and Chief Executive Officer
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO
NOT EXPECT TO ATTEND IN PERSON ARE URGED TO FILL IN, SIGN, DATE AND RETURN THE
ENCLOSED PROXY.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY BE
OBTAINED WITHOUT CHARGE (EXCEPT FOR EXHIBITS TO SUCH ANNUAL REPORT, WHICH WILL
BE FURNISHED UPON PAYMENT OF THE COMPANY'S REASONABLE EXPENSES IN FURNISHING
SUCH EXHIBITS) BY ANY PERSON SOLICITED HEREUNDER BY WRITING TO: CORPORATE
SECRETARY, ENVIROSOURCE, INC., FIVE HIGH RIDGE PARK, P.O. BOX 10309, STAMFORD,
CT 06904-2309.
14
<PAGE>
APPENDIX A
ENVIROSOURCE, INC.
STOCK OPTION PLAN FOR NON-AFFILIATE DIRECTORS
SECTION 1. PURPOSE OF PLAN.
The purpose of this Stock Option Plan for Non-Affiliate Directors (the
'Plan') of EnviroSource, Inc., a Delaware corporation (the 'Company'), is to
provide present and prospective directors of the Company who are not affiliated
with the Company with the opportunity to obtain equity ownership interests in
the Company through the exercise of stock options.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN.
Participation in this Plan is limited to non-affiliate directors. A
non-affiliate director (referred to herein as a 'Director') is a director of the
Company who, at the time stock options are granted to him or her under the Plan,
is not an employee of the Company or of any subsidiary of the Company and is not
an employee, partner or significant stockholder in any entity having 'control'
over or with the Company, as such term is defined in the federal securities laws
and regulations..
SECTION 3. ADMINISTRATION.
This Plan shall be administered by a Committee (the 'Committee') of three
disinterested (as such term is defined in Rule 16b under the Securities Exchange
Act of 1934, as amended (the 'Act')) members of the Board of Directors (the
'Board') of the Company. The grant of options (the 'Options') to purchase shares
of Common Stock, par value $.05 per share, of the Company (the 'Common Shares')
under this Plan and the amount, price and nature of the awards shall be
automatic as described in Section 4. However, subject to the provisions of this
Plan, the Committee, in its sole and absolute discretion, is authorized to do
all things necessary or desirable in connection with the administration of this
Plan, including, without limitation, the following:
(i) subject to Section 8, adopt, amend and rescind rules and
regulations relating to this Plan;
(ii) determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof; and
(iii) interpret and construe, and make factual determinations with
respect to, this Plan and the terms and conditions of any Option granted
hereunder; all of such determinations and interpretations to be final and
binding on all parties.
SECTION 4. TERMS AND CONDITIONS OF OPTIONS.
(a) Amount, Exercise Price and Exercisability of Automatic Annual Grants.
Each Director shall automatically be granted, as of January 1 of each year (the
'Date of Grant'), an Option (an 'Automatic Option') to purchase 5,000 Common
Shares (subject to adjustment as provided in Section 7). The exercise price for
each Automatic Option granted pursuant to this Section 4(a) shall be the Fair
Market Value (as defined below) of the Common Shares at the close of business on
the business day preceding the Date of Grant (the 'Exercise Price'). For all
purposes hereunder, the 'Fair Market Value' of a Common Share on any day shall
be equal to the last sale price per Common Share on such day or, in case no such
sale takes place on such day, the average of the closing bid and asked prices in
either case as reported in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use. An Automatic Option granted under this Plan shall
vest and become exercisable on, and only if the recipient of the Automatic
Option (the 'Optionee') continues to serve as a Director until, the January 1
following the Date of Grant of such Automatic Option.
(b) Amount, Exercise Price and Exercisability of Grants in Lieu of Annual
Retainer Fees. In addition to the grants made pursuant to Section 4(a), each
Director shall have the right, exercisable on or before January 1 of each year
(the 'Election Date'), to make an irrevocable election to receive an Option (a
'Retainer Option') in lieu of 100%, but not less than 100%, of the Director's
Retainer (as defined hereafter) for such year. Such election must be in writing
and signed by the Director making the
A-1
<PAGE>
election. The number of Common Shares for which a Retainer Option granted
pursuant to this Section 4(b) is exercisable shall be equal to the amount of the
Retainer divided by 20% of the Fair Market Value of the Common Shares on the
date of grant of such Retainer Option (the 'Retainer Option Date of Grant')
which shall be the six-month anniversary of the Election Date. The exercise
price (the 'Retainer Option Exercise Price') for a Retainer Option granted
pursuant to this Section 4(b) shall be 80% of the Fair Market Value of the
Common Shares at the close of business on the Retainer Option Date of Grant. A
Director's 'Retainer' is the cash retainer that is not dependent upon attendance
at meetings or service as a chairperson and which is fixed by the Board from
time to time. If a Director's membership on the Board terminates for any reason
during a year when an election is made to receive a Retainer Option under this
subsection 4(b), the number of shares subject to such Retainer Option shall be
reduced to reflect the pro-rata portion of the Retainer he otherwise would have
received for his actual period of service for such year. Notwithstanding the
preceding sentence, a Retainer Option granted under this Plan shall become
exercisable on the January 1 following the Retainer Option Date of Grant of such
Retainer Option.
(c) Manner of Exercise. Any vested and exercisable Option shall be
exercised by the holder thereof by giving written notice, signed by such holder,
to the Company stating the number of Common Shares with respect to which the
Option is being exercised, accompanied by payment in full of the aggregate
exercise price in cash or by check payable to the Company. No Option may be
exercised with respect to any fractional shares; cash shall be paid in lieu of
fractional shares. As promptly as practicable following the receipt of a notice
hereunder, the Company shall issue a stock certificate registered in the name of
the Optionee exercising such Option, representing the number of Common Shares
issued to such Optionee upon exercise of the Option.
(d) Termination or Expiration. Each Option shall expire on the earlier of
the tenth anniversary of the date of grant or one year after the date the
Optionee ceases to be a director of the Company.
(e) Transferability. Neither the Option nor any interest therein may be
sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred
in any manner other than by will or the laws of descent and distribution. During
the recipient's lifetime, an Option may only be exercised by the Optionee or the
Optionee's guardian or legal representative.
(f) Payment of Withholding Taxes. If the Company is obligated by law to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option (such amount shall be referred to herein as
the 'Withholding Liability'), the Optionee shall, on the first date upon which
the Company becomes obligated to pay the Withholding Liability to the
appropriate taxing authority, pay the Withholding Liability to the Company in
full in cash or by check.
(g) Stock Exchange Requirements; Applicable Laws. Notwithstanding anything
to the contrary in this Plan, no Common Shares purchased upon exercise of an
Option, and no certificate representing all or any part of such shares, shall be
issued or delivered if (a) such shares have not been admitted to listing upon
official notice of issuance on each stock exchange upon which shares of that
class are then listed or (b) in the opinion of counsel of the Company, such
issuance or delivery would cause the Company to be in violation of or to incur
liability under any federal, state or other securities law, or any requirement
of any stock exchange listing agreement to which the Company is a party, or any
other requirement of law or of any administrative or regulatory body having
jurisdiction over the Company. It is the Company's intent that this Plan comply
in all respects with Rule 16b-3 of the Act, and any regulations promulgated
thereunder. If any provisions of this Plan is later found not to be in
compliance with Rule 16b-3, such provisions shall be deemed null and void. All
grants and exercises of Options under this Plan shall be executed in accordance
with the requirements of Section 16 of the Act, and amended, and any regulations
promulgated thereunder.
(h) Stock Option Agreement. Each grant of an Option under this Plan shall
be evidenced by an agreement duly executed on behalf of the Company and the
Optionee, dated as of the applicable Date of Grant. Each such agreement shall
set forth the number of Common Shares subject to the Option, the Exercise Price,
the date upon which the Option becomes exercisable and such other terms and
provisions not inconsistent with this Plan as the Committee shall determine and
shall incorporate by reference the terms and conditions of this Plan.
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<PAGE>
SECTION 5. STOCK SUBJECT TO PLAN.
(a) The maximum number of Common Shares that may be issued pursuant to all
Options granted under this Plan is 750,000, subject to adjustment as provided in
Section 7 hereof (such maximum number, as so adjusted, shall be referred to
herein as the 'Share Limitation').
(b) Notwithstanding Sections 4(a) and (b) of this Plan, no Option shall be
granted under this Plan unless, on the date of grant, the sum of (i) the maximum
number of Common Shares issuable at any time pursuant to such Option, plus (ii)
the number of Common Shares that have previously been issued pursuant to the
exercise of Options granted under this Plan, plus (iii) the maximum number of
Common Shares that may be issued at any time thereafter pursuant to the exercise
of Options granted under this Plan that are outstanding on such date, does not
exceed the Share Limitation.
SECTION 6. DURATION OF PLAN.
(a) No Options shall be granted under this Plan after December 31, 2004.
Although Common Shares may be issued after December 31, 2004 pursuant to Options
granted prior to such date, no Common Shares shall be issued under this Plan
after December 31, 2014.
SECTION 7. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION.
If the outstanding securities of the class then subject to this Plan are
increased, decreased, changed into or exchanged for a different number or kind
of shares of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, upon
proper authorization of the Board of Directors, an appropriate and proportionate
adjustment shall be made in (a) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to Options
theretofore granted under this Plan and (b) the maximum number and type of
shares or other securities that may be issued pursuant to Options thereafter
granted under this Plan.
SECTION 8. AMENDMENT AND TERMINATION OF PLAN.
The Committee may amend or terminate this Plan at any time and in any
manner. However, (a) no such amendment or termination shall deprive the
recipient of any Option theretofore granted under this Plan, without the consent
of such recipient, of any of his or her rights thereunder or with respect
thereto, (b) no such amendment shall be effective without the approval of the
stockholders of the Company, if stockholder approval of the amendment is then
required pursuant to Rule 16b-3 under the Act, or the applicable rules of any
securities exchange, and (c) to the extent prohibited by Rule 16b-3(c)(2)(ii)(B)
under the Act, this Plan may not be amended more than once every six months.
SECTION 9. EFFECTIVE DATE OF PLAN.
This Plan shall be effective as of January 1, 1995; provided, however, that
no Common Shares shall be issued under this Plan until it has been approved,
directly or indirectly, by the affirmative vote of the holders of a majority of
the securities of the Company present, or represented and entitled to vote, at a
meeting duly held in accordance with the laws of the State of Delaware.
SECTION 10. NO RIGHTS AS STOCKHOLDER AND RIGHTS OF DIRECTORS.
Neither the recipient of an Option under this Plan nor an Optionee's
successor or successors in interest shall have rights as a stockholder of the
Company with respect to any Common Shares subject to an Option granted to such
person until the date of issuance of a stock certificate for such Common Shares.
Neither this Plan, nor the granting of an Option hereunder, nor any other action
taken pursuant to this Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that a Director has a right to continue as a
Director for any period of time or at any particular rate of compensation.
SECTION 11. GOVERNING LAW.
This Plan and all rights and obligations under this Plan shall be construed
in accordance with and governed by the laws of the State of Delaware.
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<PAGE>
APPENDIX 1
PROXY CARD
ENVIROSOURCE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT CHEMICAL BANK,
270 PARK AVENUE, NEW YORK, NEW YORK ON JUNE 15, 1995 AT 10:00 A.M.
The undersigned hereby constitutes and appoints Louis A. Guzzetti, Jr.,
Christina E. Huben and James C. Hull, and each of them, proxies for the
undersigned, with full power of substitution, to vote all shares of Common Stock
and Class G Preferred Stock of EnviroSource, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on June 15, 1995 or any adjournment or adjournments thereof,
on all matters that may come before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS SPECIFIED, THIS PROXY
WILL BE VOTED "FOR" ALL OF THE PROPOSALS LISTED HEREIN. In their discretion, the
Proxies are authorized to vote upon such other and further business as may
properly come before the Annual Meeting or any adjournment or adjournments
thereof.
(To be signed on reverse side)
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD NOMINEES: Raymond P. Caldiero
1. ELECTION Mark J. Doran
OF [ ] [ ] Charles P. Rullman, Jr.
CLASS C Ronald P. Spogli
DIRECTORS
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, PRINT THAT NOMINEE'S NAME ON THE
LINE PROVIDED BELOW.)
----------------------------------------------------
FOR AGAINST ABSTAIN
2. RATIFICATION AND APPROVAL OF ADOPTION
OF ENVIROSOURCE, INC. STOCK OPTION PLAN [ ] [ ] [ ]
FOR NON-AFFILIATE DIRECTORS.
3. RATIFICATION AND APPROVAL OF SELECTION
OF ERNST & YOUNG LLP AS THE COMPANY'S [ ] [ ] [ ]
INDEPENDENT PUBLIC ACCOUNTANTS.
Dated -----------------------------------------------, 1995
- - - - - - - -----------------------------------------------------------
Signature
- - - - - - - -----------------------------------------------------------
Signature if held jointly
(Please sign exactly as the name appears hereon. If stock is held in names
of joint owners, each should sign. Attorneys, executors, administrators,
etc., should so indicate.)
If this proxy is properly executed, the shares represented by this proxy will
be voted upon the proposals listed herein in accordance with the directions
given by the stockholder, but if no such directions are given, this proxy will
be voted FOR all of such proposals.
