<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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 240.14a-11(c) or 240.14a-12
ENVIROSOURCE, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ENVIROSOURCE, INC.
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act 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:
(Bulletin No. 171, 10-11-96)
___________________________________________________________________________
<PAGE>
ENVIROSOURCE, INC.
1155 Business Center Drive
Horsham, PA 19044-3454
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 1997
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 Credit Lyonnais New York Branch, 1301 Avenue of the Americas,
19th Floor, New York, New York, on Thursday, June 19, 1997 at 10:00 A.M.
(local time), for the following purposes:
1. To approve the amendment of the Company's certificate of
incorporation in order to set the size of the Board of Directors at
between six and eleven members.
2. To elect the members of Class B of the Board of 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, 1997.
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 at the close of
business on April 21, 1997 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 1996 Annual Report to Stockholders is enclosed
herewith.
By Order of the Board of Directors
/s/ LEON Z. HELLER
------------------------------------
LEON Z. HELLER
Secretary
Dated: April 30, 1997
<PAGE>
ENVIROSOURCE, INC.
1155 Business Center Drive
Horsham, PA 19044-3454
------
PROXY STATEMENT
For Annual Meeting of Stockholders
to be held on June 19, 1997
------
April 30, 1997
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 Credit Lyonnais New York Branch, 1301 Avenue of the
Americas, 19th Floor, New York, New York, on Thursday, June 19, 1997 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 at
the close of business on April 21, 1997, 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 21, 1997, there were outstanding and
entitled to vote at the Annual Meeting 40,351,446 shares of Common Stock,
$.05 par value (the "Common Stock"). Each share of Common Stock is entitled
to one vote.
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
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 5, 1997.
PROXIES AND VOTE REQUIRED
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 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 APPROVAL OF THE AMENDMENT OF THE
COMPANY'S CERTIFICATE OF INCORPORATION AND FOR THE RATIFICATION AND APPROVAL
OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997. See "Other Matters"
with respect to additional discretion and authority conferred by the
accompanying Proxy.
The presence in person or by proxy of a majority of the shares of Common
Stock outstanding and entitled to vote at the Annual Meeting is required for
a quorum. If a quorum is present, those nominees receiving a plurality of the
votes cast will be elected. Accordingly, shares not voted in the election of
directors (including shares covered by a Proxy as to which authority is
withheld to vote for all nominees) and shares not voted for any particular
nominee (including shares covered by a Proxy as to which authority is
withheld to vote for only one or
<PAGE>
less than all of the nominees) will not prevent the election of any of the
nominees for director. Approval of the amendment of the Company's certificate
of incorporation (Proposal 1) requires the affirmative vote of 66 2/3 % of
the outstanding shares of Common Stock. For all other matters submitted to
stockholders at the Annual Meeting, including Proposal 3, if a quorum is
present the affirmative vote of a majority of the shares voted is required
for approval. As a result, abstention votes with respect to any of the
foregoing matters will have the effect of a vote against such matter.
Shares held by brokers and other stockholder nominees sometimes are voted
on certain matters but not others. This can occur, for example, when a broker
is instructed by the beneficial owner of shares of Common Stock, or otherwise
has the authority, to vote on a particular matter but is not instructed on
one or more others. These are known as "non-voted" shares. Non-voted shares
will be counted for purposes of determining whether there is a quorum at the
Annual Meeting, but with respect to the matters as to which they are
"non-voted" (other than for Proposal 1) they will have no effect upon the
outcome of the vote thereon. Shares that are "non-voted" with respect to
Proposal 1 will have the effect of a vote against the proposal.
PROPOSAL 1
AMENDMENT OF CERTIFICATE OF INCORPORATION --
CHANGE OF NUMBER OF DIRECTORS
Recently, two of the Company's directors, Charles P. Rullman, Jr. and
Arthur R. Seder, Sr., indicated their desire to step down from the Board in
order to devote more time to matters unrelated to the Company. In light of
these impending resignations, the Board considered the question of its size
and concluded that it would be able to function more effectively with nine
members, rather than the current eleven. The number of directors of the
Company is presently fixed at eleven, under paragraph (a) of Article FIFTH of
its Amended and Restated Certificate of Incorporation (the "Charter"). The
Board also believes that it will be more efficient to permit the Board to set
the precise number of directors in the future, within the range of six to
eleven, rather than require that the stockholders approve each change in the
number of directors, which would be necessary if fixed in the Charter.
Accordingly, the Board has approved, and recommends that the stockholders
approve, the following amendment (the "Charter Amendment") of the Charter.
The Charter Amendment provides that the Board will consist of between six and
eleven directors, with the precise number within that range being fixed in or
as approved under the By-laws of the Company. The Board has adopted an
amendment to the By-laws, contingent upon stockholder approval of the Charter
Amendment, providing that the Board will consist of nine members. The Charter
Amendment provides as follows:
"The Amended and Restated Certificate of Incorporation of the
Company be amended by: (1) deleting paragraph (a) of Article FIFTH
thereof in its entirety; and (2) inserting in lieu thereof the
following new paragraph (a), to read in its entirety as follows:
(a) The Board of Directors of the Corporation shall
consist of such number of directors, not less than six
nor more than eleven, as shall be fixed from time to
time under or as provided in the By-laws of the
Corporation."
If the Charter Amendment is adopted, the Board will continue to consist of
three classes, Class A, Class B and Class C, and the By-law amendment
referred to above will become effective. Classes A, B and C will each consist
of three directors who will continue to serve for a three-year term and until
their respective successors have been elected and qualified (or as otherwise
provided under the By-laws of the Company).
Pursuant to the terms of the Charter, the affirmative vote of 66 2/3 % of
the outstanding shares of Common Stock is required for approval of any
amendment to the Charter.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE CHARTER AMENDMENT.
PROPOSAL 2
ELECTION OF CLASS B DIRECTORS
The Board of Directors of the Company consists of three classes: Class A,
Class B and Class C. Currently, Class A consists of three directors and
Classes B and C each consist of four directors, but if the Charter Amend-
2
<PAGE>
ment is approved, each Class will consist of three directors. Directors in
each class serve for a three-year term and until their respective successors
have been elected and qualified (or as otherwise provided under the By-laws
of the Company). The term of the present Class B directors will end with this
year's Annual Meeting, the term of the present Class C directors will end
with the 1998 Annual Meeting and the term of the present Class A directors
will end with the 1999 Annual Meeting.
If the Charter Amendment is approved, three directors, to serve as Class B
directors, will be elected at the Annual Meeting, to hold office until the
2000 Annual Meeting and until their respective successors have been elected
and qualified (or as otherwise provided under the By-laws of the Company). If
the Charter Amendment is not approved, four Class B Directors will be elected
at the Annual Meeting. The names of the nominees for director and the names
of the directors continuing in office whose terms do not expire in 1997,
together with certain information furnished to the Company by each nominee
and director, are set forth below (see also "Security Ownership of Certain
Beneficial Owners").
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR CLASS B DIRECTORS INDICATED BELOW.
NOMINEES FOR ELECTION AS CLASS B DIRECTORS
CLASS B DIRECTORS
Wallace B. Askins (age 66) 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 is a director of Trump Hotel & Casino Resorts, Inc.
John M. Roth (age 38) became a director of the Company in May 1993. Mr.
Roth joined Freeman Spogli & Co. ("FS&Co.") in March 1988 and became a
general partner in March 1993. Mr. Roth is also a director of Brylane, Inc.
J. Frederick Simmons (age 42) became a director of the Company in May
1993. Mr. Simmons joined FS&Co. in 1986 and became a general partner in
January 1991. He is also a director of Buttrey Food and Drug Stores Company.
In the event the Charter Amendment is not approved, the following
individual has been designated by the Company as a nominee for election as a
Class B director. If the Charter Amendment is approved, Mr. Seder will not be
considered a nominee.
Arthur R. Seder, Jr. (age 77) 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).
CLASS C DIRECTORS
Raymond P. Caldiero (age 62) 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. 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 33) became a director of the Company in August 1994.
Mr. Doran joined FS&Co. in 1988.
Charles P. Rullman, Jr. (age 48) became a director of the Company in
January 1995. Mr. Rullman joined Freeman Spogli & Company, Inc. ("FSCI"), an
affiliate of FS&Co., as a principal in January 1995. Mr. Rullman was a
partner at Westar Capital from October 1992 until he joined FSCI. From 1973
to 1992, Mr. Rullman was employed by BT Securities Corp., serving last as a
Managing Director. In the event (and only in the event) the Charter Amendment
is approved, Mr. Rullman intends to step down from the Board of Directors.
3
<PAGE>
Ronald P. Spogli (age 49) became a director and Chairman of the Board of
the Company in May 1993. Mr. Spogli is a founding partner of FS&Co. He is
also a director of Brylane, Inc., Buttrey Food and Drug Stores Company,
Calmar, Inc., and The Pantry, Inc.
CLASS A DIRECTORS
Louis A. Guzzetti, Jr. (age 58) has been a director and President and
Chief Executive Officer of the Company since October 1986.
Jeffrey G. Miller (age 55) 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 until
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 as a director on May 13, 1993
pursuant to the terms of the purchase agreement by which an affiliate of
FS&Co. acquired its interest in the Company.
Jon D. Ralph (age 32) has been a director of the Company since August
1993. Mr. Ralph joined FS&Co. in August 1989. Mr. Ralph is also a director of
The Pantry, Inc.
OTHER INFORMATION AS TO DIRECTORS
During the fiscal year ended December 31, 1996, the Board of Directors
held five meetings. With the exception of Mr. Rullman, during 1996 each
director attended at least 75% of the number of meetings of the Board and of
the committees of the Board on which he served.
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.
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 1996, the Executive Committee held no
meetings.
The primary function of the Audit Committee, which held two meetings
during 1996, 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
stock option plans, 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 1996.
The Company pays each director other than Mr. Guzzetti and general
partners or employees of FS&Co. and FSCI 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 reelection 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 reelection. 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 became
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
became 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.
In 1995, the Company also adopted a Stock Option Plan for Non-Affiliate
Directors (the "Plan"), which was ratified and approved by the stockholders
of the Company at the 1995 Annual Meeting. Pursuant to the Plan,
4
<PAGE>
each director of the Company who is neither an employee of the Company nor an
affiliate of FS&Co. (i) automatically is granted an option to purchase 5,000
shares of Common Stock as of January 1 of each year, and (ii) is given the
right, exercisable on or before January 1 of each year, to make an
irrevocable election to receive an option to purchase shares of Common Stock
in lieu of receiving his annual director's fee for that particular year. Each
of Mr. Askins and Mr. Seder elected to receive options to purchase shares of
Common Stock in lieu of their annual director's fees for 1995, and only Mr.
Askins elected to receive options to purchase shares of Common Stock in lieu
of his annual director's fee for 1996 and 1997.
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, 1997, 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(l) Owned of Class
--------------------------------- --------------- ----------
<S> <C> <C>
FS Equity Partners II, L.P.
c/o Freeman Spogli & Co.(2) .... 19,360,471(3) 47.8%
11100 Santa Monica Blvd.
Suite 1900
Los Angeles, CA 90025
The IBM Retirement Plan Trust
Fund .......................... 2,702,536(4) 6.7%
262 Harbor Place
Stamford, CT 06904-2399
Gabelli Funds, Inc.(5) .......... 2,072,900 5.1%
One Corporate Center
Rye, NY 10580-1434
</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 Common Stock shown as beneficially
owned by them.
(2) FS&Co., as general partner of FS Equity Partners II, L.P. ("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 Common Stock indicated as beneficially owned by FSEP.
(3) Includes 173,376 shares issuable upon exercise of warrants held by FSEP.
(4) Includes 24,203 shares issuable upon exercise of warrants held by The IBM
Retirement Plan Trust Fund (the "IBM Trust").
(5) Gabelli Funds, Inc. and its Chairman, CEO and majority stockholder, Mario
J. Gabelli, Jr., may be deemed to have beneficial ownership of these
shares. The shares are held with sole voting and investment power by
Gabelli Funds, Inc. or its affiliates, except for 80,000 shares which are
held without voting power and 150,000 shares as to which the voting power
is contingent.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
As of April 1, 1997, 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>
Common Stock
Beneficially Owned as of
April 1, 1997(1)
-----------------------------
Number of Percent
Name and Position with Company Shares of Class
-------------------------------- --------------- ----------
<S> <C> <C>
Class A Directors
Louis A. Guzzetti, Jr., President and Chief Executive
Officer ............................................. 715,831(2) 1.8%
Jeffrey G. Miller ..................................... 30,000(3) *
Jon D. Ralph .......................................... -- --
Class B Directors
Wallace B. Askins ..................................... 84,001(3) *
John M. Roth(4) ....................................... 19,360,471(5) 47.8%
Arthur R. Seder, Jr. .................................. 56,216(3) *
J. Frederick Simmons(4) ............................... 19,360,471(5) 47.8%
Class C Directors
Raymond P. Caldiero ................................... 30,000(3) *
Mark J. Doran ......................................... -- --
Charles P. Rullman, Jr. ............................... -- --
Ronald R. Spogli, Chairman of the Board(4) ............ 19,360,471(5) 47.8%
Other Four Most Highly Compensated Executive Officers
Aarne Anderson ........................................... 85,431(2) *
Jerrold I. Dolinger(6) ................................... 151,951(2) *
George E. Fuehrer ........................................ 223,409(2) *
James C. Hull ............................................ 116,000(2) *
All directors and officers as a group (18 persons) ......... 20,918,057(7) 50.4%
</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 common stock
shown as beneficially owned by them.
(2) Includes (i) shares for which options under EnviroSource's Incentive
Stock Option Plan, EnviroSource's 1993 Stock Option Plan are exercisable
by executive officers within 60 days, as follows: Mr. Guzzetti, 345,426
shares; Mr. Anderson, 62,752 shares; Mr. Dolinger, 106,133 shares; Mr.
Fuehrer, 159,733 shares; and Mr. Hull, 58,486 shares; and (ii) shares
held through the EnviroSource, Inc. Savings Plan and EnviroSource, Inc.
Profit Sharing Plan as of December 31, 1996, as follows: Mr. Guzzetti,
91,148 shares; Mr. Anderson, 10,679 shares; Mr. Dolinger, 25,818 shares;
Mr. Fuehrer, 33,526 shares; and Mr. Hull, 56,014 shares.
(3) Includes shares for which options under EnviroSource's Stock Option Plan
for Non-Affiliate Directors or otherwise are exercisable by directors
within 60 days, as follows: Mr. Askins, 67,645 shares; Mr. Caldiero,
30,000 shares; Mr. Miller, 30,000 shares; and Mr. Seder, 46,216 shares.
(4) All shares shown as beneficially owned are held 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 held
by FSEP.
(5) Includes 173,376 shares issuable upon exercise of warrants held by FSEP.
(6) Mr. Dolinger ceased to serve as an officer of the Company effective
December 31, 1996.
(7) Includes (i) 940,623 shares for which options under EnviroSource's
Incentive Stock Option Plan, EnviroSource's 1993 Stock Option Plan,
EnviroSource's Stock Option Plan for Non-Affiliate Directors or otherwise
are exercisable within 60 days; (ii) 247,700 shares held through the
EnviroSource, Inc. Savings Plan, the EnviroSource, Inc. Profit Sharing
Plan or otherwise as of December 31, 1996; (iii) 19,187,095 shares held
of record by FSEP; and (iv) 173,376 shares issuable upon exercise of
warrants held by FSEP. See footnote (4) 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. ............ 1996 $409,161 $ 0 70,000 $34,763(1)
Chief Executive Officer 1995 403,000 103,000 106,640 39,612(2)
1994 401,500 207,000 0 29,184(3)
Aarne Anderson .................... 1996 147,234 0 8,600 13,228(1)
Vice President, Taxes 1995 144,675 28,000 13,330 14,399(2)
1994 142,100 56,500 0 11,368(3)
Jerrold I. Dolinger ............... 1996 172,015 0 4,000 13,666(1)
Vice President, Corporate 1995 168,188 10,000 24,000 16,929(2)
Development 1994 161,750 80,000 0 12,587(3)
George E. Fuehrer ................. 1996 182,694 0 26,880 21,454(1)
Senior Vice President, Planning 1995 180,375 65,000 26,660 15,611(2)
1994 177,625 85,600 0 8,932(3)
James C. Hull ..................... 1996 197,716 0 14,000 21,136(1)
Vice President and Chief Financial 1995 195,250 45,000 21,330 22,963(2)
Officer 1994 192,250 84,000 0 18,612(3)
</TABLE>
- ------
(1) Includes Company contributions to accounts in the EnviroSource, Inc.
Savings Plan, as follows: Mr. Guzzetti, $9,000; Mr. Anderson, $4,411; Mr.
Dolinger, $4,500, Mr. Fuehrer, $9,000, and Mr. Hull, $9,000; Company
contributions to accounts in the EnviroSource, Inc. Profit Sharing Plan
of $7,500 each for Messrs. Guzzetti, Anderson, Dolinger, Fuehrer, and
Hull; and Company contributions to accounts in the EnviroSource, Inc.
Supplemental Executive Retirement Plan, as follows: Mr. Guzzetti,
$18,263; Mr. Anderson, $1,317; Mr. Dolinger, $1,666; Mr. Fuehrer, $4,954;
and Mr. Hull $4,636.
(2) Includes Company contributions to accounts in the EnviroSource, Inc.
Savings Plan, as follows: Mr. Guzzetti, $9,000; Mr. Anderson, $4,340; Mr.
Dolinger, $4,500; Mr. Fuehrer, $2,060; and Mr. Hull, $9,000; Company
contributions to accounts in the EnviroSource, Inc. Profit Sharing Plan
of $7,500 each for Messrs. Guzzetti, Anderson, Dolinger, Fuehrer, and
Hull; and Company contributions to accounts in the EnviroSource, Inc.
Supplemental Executive Retirement Plan, as follows: Mr. Guzzetti,
$23,112; Mr. Anderson, $2,559; Mr. Dolinger, $4,929; Mr. Fuehrer, $6,051;
and Mr. Hull, $6,463.
(3) 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 contributions 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, $2,112.
7
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Grant Date Present
Name Granted (#)(1) Fiscal Year ($/Sh)(2) Expiration Date Value ($)(3)
- ----- -------------- -------------- ------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Louis A. Guzzetti, Jr. 70,000 24% $3.75 2/14/06 $171,500
Aarne Anderson ........ 8,600 3% $3.75 2/14/06 21,070
Jerrold I. Dolinger ... 4,000 1% $3.75 2/14/06 9,800
George E. Fuehrer ..... 26,880 9% $3.75 2/14/06 65,856
James C. Hull ......... 14,000 5% $3.75 2/14/06 34,300
</TABLE>
- ------
(1) These options vest at the annual rate of 33 1/3 % beginning on the first
anniversary of the date of grant.
(2) The exercise price is equal to the closing market price of the Company's
Common Stock on the date of grant.
(3) The grant date present values were determined using the Black-Scholes
pricing model and the following assumptions: 46% expected stock price
volatility, 5.6% risk free rate of return, zero dividend yield and option
exercise at the end of the 10-year term.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number and value at December 31, 1996
of all exercisable and unexercisable options held by the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company under the Company's Incentive Stock Option Plan and the 1993 Stock
Option Plan. In 1996 none of the named executive officers exercised any
options.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
--------------- ---------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
------ --------------- ---------------
<S> <C> <C>
Louis A. Guzzetti, Jr. 286,547/173,093 $5,700/$--
Aarne Anderson ........ 55,443/21,487 1,900/--
Jerrold I. Dolinger ... 96,880/27,200 3,800/--
George E. Fuehrer ..... 141,887/52,653 3,800/--
James C. Hull ......... 46,710/34,620 3,800/--
</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, 1996 and the exercise price of such options.
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.
8
<PAGE>
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 1996 and
1997 the target bonus has been set at 50% of base compensation for the
Chief Executive Officer and 30-45% 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 pool depends on that
individual's achievement of non- financial objectives negotiated annually
between that individual and his or her supervisor and that individual's
overall performance. 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.
No bonuses were awarded to executive officers for 1996 because the
Company did not achieve the required level of operating income
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 1996, the Chief Executive Officer received a 2% increase in
his base compensation.
Compensation and Stock Option Committee
WALLACE B. ASKINS
RAYMOND R CALDIERO
JOHN M. ROTH
J. FREDERICK SIMMONS
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, the S&P Waste Management
Index, and the Dow Jones Industrial-Diversified Index assuming $100 was
invested on December 31, 1991.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ENVIROSOURCE, INC., THE RUSSELL 2000 INDEX,
THE S&P WASTE MANAGEMENT INDEX
AND THE DOW JONES INDUSTRIAL-DIVERSIFIED INDEX
250|------------------------------------------------------------------|
| * |
| & |
200|--------------------------------------------------------------@---|
| & |
| @ |
150|---------------------------*----------*---------------------------|
| @ & & |
D | & @ @ * * |
O 100|----*----------#--------------------------------------------------|
L | # # |
L | # # |
A 50|------------------------------------------------------------------|
R | |
S | |
0|----|----------|---------|-----------|-----------|-----------|----|
12/91 12/92 12/93 12/94 12/95 12/96
*=ENVIROSOURCE, INC. &=RUSSELL 2000 #=S & P WASTE MANAGEMENT
@=DOW JONES INDUSTRIAL-DIVERSIFIED
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
10
<PAGE>
CERTAIN TRANSACTIONS; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
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. 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, 1997 was $486,994.
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, and $220,000 to Mr. Fuehrer. 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, 1997
were $496,235 for Mr. Guzzetti, $127,603 for Mr. Anderson, and $311,920 for Mr.
Fuehrer.
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.
11
<PAGE>
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, 1997. 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, 1997.
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 a registered
class of the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of the Company's equity and derivative securities. Based solely upon a review
of the copies of the forms furnished to the Company, or written
representations from reporting persons, the Company believes that during 1996
all filing requirements applicable to officers and directors were met except
with respect to two reports of changes in ownership on Forms 4. Two Form 4
reports for George Milano, the Company's former Vice President and
Controller, were required to be filed following Mr. Milano's sale of the
Company's Common Stock in April and May, 1996, but inadvertently were not
filed until January, 1997.
12
<PAGE>
OTHER MATTERS
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.
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received at the Company's principal executive
offices on or before January 5, 1998 for inclusion in the Company's Proxy
Statement with respect to such meeting.
By Order of the Board of
Directors
/s/ 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, 1996 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., 1155 BUSINESS CENTER DRIVE, HORSHAM,
PA 19044-3454.
13
<PAGE>
ENVIROSOURCE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders to be held at
Credit Lyonnais New York Branch, 1301 Avenue of the Americas, 19th Floor,
New York, New York on June 19, 1997 at 10:00 A.M.
The undersigned hereby constitutes and appoints Louis A. Guzzetti, Jr.,
Leon Z. Heller and James C. Hull, and each of them, proxies for the
undersigned, with full power of substitution, to vote all shares of Common 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 19, 1997
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 completed and signed on reverse side)
A [x] Please mark your
votes as in this
example.
1. Approval of Amendment of the Company's Certificate of Incorporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Election of Class B Directors
FOR WITHHOLD
[ ] [ ]
Nominees: Wallace B. Askins
John M. Roth
J. Fredrick Simmons
Arthur R. Seder, Jr
(nominee only in the event the
amendment to the Company's Certificate
of Incorporation is not approved)
(Instructions: To withhold authority to vote for any
individual nominee, print that nominee's name on the line provided below.)
- --------------------------------------------------------------------------
3. Ratification and approval of selection of Ernst & Young LLP as the Company's
Independent Public Accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated ______________________________, 1997
__________________________________________
Signature
__________________________________________
Signature if held jointly
(Please sign exactly as the name appears herein. 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.
