<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.1)
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 Under Rule 14a-12
ENVIROSOURCE, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
Envirosource, Inc.
1155 Business Center Drive
Horsham, PA 19044-3454
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 8, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
ENVIROSOURCE, INC., a Delaware corporation (the "Company"), will be held at The
Homestead Restaurant, Three Village Road, Horsham, Pennsylvania 19044 on
Thursday, June 8, 2000 at 10:00 A.M. (local time), for the following purposes:
1. To elect three members of Class B of the Board of Directors.
2. 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 10, 2000 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 Company's
offices located at 1155 Business Center Drive, Horsham, Pennsylvania. 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 1999 Annual Report to Stockholders is enclosed
herewith.
By Order of the Board of Directors
/s/ Leon Z. Heller
LEON Z. HELLER
Secretary
Dated: April 28, 2000
<PAGE>
Envirosource, Inc.
1155 Business Center Drive
Horsham, PA 19044-3454
---------------------
PROXY STATEMENT
For Annual Meeting of Stockholders
to be held on June 8, 2000
---------------------
April 28, 2000
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 Homestead Restaurant, Three Village Road, Horsham, Pennsylvania 19044, on
Thursday, June 8, 2000 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 10, 2000, 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, either 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 10, 2000, there were outstanding and
entitled to vote at the Annual Meeting 5,813,394 shares of Common Stock, $.05
par value (the "Common Stock"). On June 22, 1998, the Company completed a
1-for-7 reverse split of the Common Stock; numbers of shares and per share
amounts throughout this proxy statement have been restated to reflect this
reverse split. 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 1, 2000.
PROXIES AND VOTE REQUIRED
The persons named in the accompanying Proxy intend to vote Proxies FOR the
election of the 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. 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 less than all of the nominees) will not prevent the
election of any of the nominees for director. For all other matters submitted
to stockholders at the Annual Meeting, 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 (other than
Proposal 1) will have the effect of a vote against such matter.
<PAGE>
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, and
does not have such authority, to vote 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" they will have no effect upon
the outcome of the vote thereon.
PROPOSAL 1
ELECTION OF CLASS B DIRECTORS
The Board of Directors of the Company consists of three classes: Class A,
Class B and Class C. Each Class consists 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
2001 Annual Meeting, and the term of the present Class A directors will end
with the 2002 Annual Meeting.
Three directors, to serve as Class B directors, will be elected at the
Annual Meeting, to hold office until the 2003 Annual Meeting and until their
respective successors have been elected and qualified (or as otherwise provided
under the By-laws of the Company). The names of the nominees for Class B
director and the names of the directors continuing in office whose terms do not
expire in 2000, 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 69) 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 41) 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 Advance Stores Company,
Inc. and AFC Enterprises, Inc.
J. Frederick Simmons (age 45) became a director of the 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 Miller Publishing Group, Century Maintenance
Supply, Inc. and Vibe/Spin Ventures.
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. He is a director of the Autry Museum and Technology
Solutions Corp. 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.
Robert N. Gurnitz (age 61) became a director of the Company in November
1997 and became Chairman of the Board in December 1998. Mr. Gurnitz served as
President and Chief Executive Officer of Northwestern Steel and Wire Co. from
1991 to 1993 and as its Chairman and Chief Executive Officer from 1993 to 1997.
Prior to that he served in various senior management capacities with Rockwell
International Corporation, Bethlehem Steel Corporation and Webcraft
Technologies.
2
<PAGE>
Ronald P. Spogli (age 52) became a director and Chairman of the Board of
the Company in May 1993. In December 1998, Mr. Spogli stepped down from the
Chairman of the Board post, but retained his position as Chairman of the
Executive Committee of the Board of Directors. Mr. Spogli is a founding partner
of FS&Co. He is also a director of AFC Enterprises, Inc., Century Maintenance
Supply, Inc., Galyan's Trading Company, Inc., Hudson Respiratory Care Inc.,
Medical Arts Press, Inc. and MVP.com, Inc.
Class A Directors
John T. DiLacqua (age 47) has been a director and President and Chief
Executive Officer of the Company since January 1999. From October 1997 to
December 1998, Mr. DiLacqua served as President of the U.S. Ferrous Operations
of Philip Metals, Inc., which included, among others, the former Luria Brothers
Division of Connell Limited Partnership ("Luria Brothers"). Prior to that, he
served as the President of Luria Brothers from May 1994 to October 1997, and,
from December 1990 to May 1994, he served as its Vice President of Finance and
Administration.
Jeffrey G. Miller (age 58) 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 was of counsel to the Seattle and
Washington D.C. law firm of Perkins Coie from 1987 to 1997 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 35) 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
Century Maintenance Supply, Inc., Hudson Respiratory Care Inc. and The Pantry,
Inc.
Other Information as to Directors
During the fiscal year ended December 31, 1999, the Board of Directors
held four meetings. With the exception of Messrs. Ralph and Spogli, during 1999
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.
DiLacqua, Simmons and Spogli; an Audit Committee, consisting of Messrs. Askins,
Gurnitz and Miller; 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 1999, the Executive Committee held one meeting.
The primary function of the Audit Committee, which held three meetings
during 1999, is to review the scope and results of each year's annual audit as
well as the Company's internal accounting procedures and controls.
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 executive compensation and such other matters
referred to it by the Board of Directors. The Compensation and Stock Option
Committee held two meetings during 1999.
The Company pays each director other than Messrs. DiLacqua and Gurnitz 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 2,857 shares of
Common Stock of the Company at an exercise price of $18.375 per share, which
became exercisable in September 1993 and expires in March 2002. On August 5,
1993, Mr. Askins was granted an option to purchase 2,857 shares of Common Stock
of the Company at an exercise price of $29.75 per share, which became
exercisable in August 1995 and expires in August 2003.
3
<PAGE>
In 1995, the Company also adopted a Stock Option Plan for Non-Affiliate
Directors, which was ratified and approved by the stockholders of the Company
at the 1995 Annual Meeting. Pursuant to this plan, 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 714 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. No director has elected to receive options to
purchase shares of Common Stock in lieu of his annual director's fees for
either 1999 or 2000.
As of January 20, 1999, Mr. Gurnitz became an employee of the Company at
an annual salary of $75,000. Because Mr. Gurnitz is an employee of the Company,
he is not paid directors' fees, and he is no longer eligible to receive options
under the Stock Option Plan for Non-Affiliate Directors. In February 1999, the
Company granted Mr. Gurnitz an option under its 1993 Stock Option Plan to
purchase 50,000 shares of Common Stock at $4.00 per share, which option vests
in equal annual increments over a three-year period.
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, 2000, the following persons were
the beneficial owners of more than 5% of the outstanding shares of the Common
Stock of the Company.
Number of
Shares
Name and Address Beneficially Percent
of Beneficial Owner(l) Owned of Class
- -------------------------------------------- -------------- ---------
FS Equity Partners II, L.P.
c/o Freeman Spogli & Co.(2) ............... 2,741,013 47.1%
11100 Santa Monica Blvd.
Suite 1900
Los Angeles, CA 90025
Gabelli Funds, Inc.(3) ..................... 1,020,287 17.6%
One Corporate Center
Rye, NY 10580-1434
The IBM Retirement Plan Trust Fund ......... 382,180 6.6%
262 Harbor Place
Stamford, CT 06904-2399
- ------------
(1) To the best of the Company's knowledge, except as otherwise indicated
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) 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 117,500 shares as to
which the voting power is contingent.
4
<PAGE>
Security Ownership of Management
As of April 1, 2000, the following directors, executive officers and all
directors and executive officers as a group, were the beneficial owners of
shares of Common Stock of the Company as follows:
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned as of
April 1, 2000(1)
------------------------------
Number of Percent
Name and Position with Company Shares of Class
- ---------------------------------------------------------------------- ------------------ ---------
<S> <C> <C>
Class A Directors
John T. DiLacqua, President and Chief Executive Officer ........... 33,333(3) *
Jeffrey G. Miller ................................................. 6,427(2) *
Jon D. Ralph ...................................................... -- --
Class B Directors
Wallace B. Askins ................................................. 21,574(2) *
John M. Roth ...................................................... 2,741,013(4) 47.1%
J. Frederick Simmons .............................................. 2,741,013(4) 47.1%
Class C Directors
Raymond P. Caldiero ............................................... 6,427(2) *
Robert N. Gurnitz, Chairman of the Board .......................... 22,506(2) *
Ronald P. Spogli .................................................. 2,741,013(4) 47.1%
Other Most Highly Compensated Executive Officers
John P. Carroll ..................................................... 10,191(3) *
William B. Davis .................................................... 21,257(3) *
John C. Heenan ...................................................... 5,000(3) *
Leon Z. Heller ...................................................... 9,875(3) *
All directors and executive officers as a group (14 persons) ......... 2,895,058(5) 49.8%
</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 shares for which options under the Envirosource Stock Option Plan
for Non-Affiliate Directors or otherwise are exercisable by directors
within 60 days, as follows: Mr. Askins, 21,574 shares; Mr. Caldiero, 6,427
shares; Mr. Gurnitz, 22,506 shares; and Mr. Miller, 6,427 shares.
(3) Includes (i) shares for which options under the Envirosource Incentive
Stock Option Plan, Envirosource 1993 Stock Option Plan and Envirosource
1999 Stock Option Plan are exercisable by executive officers within 60
days, as follows: Mr. Carroll, 2,286 shares; Mr. Davis, 4,167 shares; Mr.
DiLacqua, 33,333 shares; Mr. Heenan, 5,000 shares; and Mr. Heller, 3,858
shares; and (ii) shares held through the Envirosource, Inc. Savings Plan
and Envirosource, Inc. Profit Sharing Plan as of December 31, 1999, as
follows: Mr. Carroll, 7,877 shares; Mr. Davis, 17,090; and Mr. Heller,
5,803 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 (i) 107,768 shares for which options under the Envirosource
Incentive Stock Option Plan, Envirosource 1993 Stock Option Plan,
Envirosource 1999 Stock Option Plan, Envirosource Stock Option Plan for
Non-Affiliate Directors or otherwise are exercisable within 60 days; and
(ii) 46,035 shares held through the Envirosource, Inc. Savings Plan or the
Envirosource, Inc. Profit Sharing Plan as of December 31, 1999.
5
<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(2)
- -------------------------------- ------ ----------- ----------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
John T. DiLacqua(1) ............ 1999 $378,974 $176,000 100,000 $ 0
Chief Executive Officer
John C. Heenan(1) .............. 1999 163,692 82,000 15,000 0
Senior Vice President and
Chief Financial Officer
John P. Carroll ................ 1999 110,000 44,000 0 25,306
Vice President, Human Resources 1998 100,000 0 2,143 24,500
1997 99,250 0 0 24,429
William B. Davis ............... 1999 124,000 15,200 0 12,703
Vice President and Treasurer 1998 122,000 0 1,000 13,420
1997 122,000 0 0 13,262
Leon Z. Heller ................. 1999 130,667 47,200 0 11,383
Vice President, General 1998 124,000 0 2,143 13,640
Counsel and Secretary 1997 123,011 0 0 13,530
</TABLE>
- ------------
(1) Neither Mr. DiLacqua nor Mr. Heenan was employed by the Company prior to
1999.
(2) In 1999, includes Company contributions to accounts in the Envirosource,
Inc. Savings Plan, as follows: Mr. Carroll, $4,806; Mr. Davis, $6,503; and
Mr. Heller, $4,850; Company contributions to accounts in the Envirosource,
Inc. Profit Sharing Plan, as follows: Mr. Davis, $6,200; and Mr. Heller,
$6,533; and a Company contribution of $5,500 to Mr. Carroll's account in
the Retirement Plan for Salaried Employees of International Mill Service,
Inc., a qualified cash balance plan. Each year, an amount equal to 5% of
Mr. Carroll's salary and bonus (excluding any portion of bonus paid in
excess of his target bonus under the Company's incentive compensation
program) is added to Mr. Carroll's cash balance account, and interest is
added to such account at a rate equal to the interest rate on 30-year
United States Treasury Bonds, which rate is adjusted on an annual basis
and is 6.63% for the year 2000. Also includes for Mr. Carroll, in each of
1999, 1998 and 1997, loan forgiveness of $15,000 with respect to a
relocation loan extended to him by the Company in 1995.
Options/SAR Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Grant Date Present
Name Granted (#)(1) Fiscal Year ($/Sh) Expiration Date Value ($)(2)
- -------------------------- ---------------- -------------- ------------ ----------------- -------------------
<S> <C> <C> <C> <C> <C>
John T. DiLacqua ......... 100,000 60.6% $ 4.5625 2/25/09 $109,000
John C. Heenan ........... 15,000 9.1% 2.0625 2/25/09 21,300
</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 grant date present values were determined using the Black-Scholes
pricing model and the following assumptions: .58% expected stock price
volatility, 6.6% risk free rate of return, zero dividend yield and option
exercise at the end of the 8th year.
6
<PAGE>
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, 1999
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, 1993 Stock Option Plan
and 1999 Stock Option Plan. In 1999, none of the named executive officers
exercised any options, and none held any unexercised in-the-money options as of
December 31, 1999.
Number of
Shares
Underlying
Unexercised
Options/SARs at
FY-End (#)
----------------
Exercisable/
Name Unexercisable
---- ----------------
John T. DiLacqua .................................... 33,333/66,667
John P. Carroll ..................................... 2,286/714
William B. Davis .................................... 4,167/333
Leon Z. Heller ...................................... 3,858/1,286
John C. Heenan ...................................... 5,000/10,000
Employment Agreements
The Company entered into an employment agreement with Mr. DiLacqua dated
January 20, 1999 that provides that Mr. DiLacqua will serve as President and
Chief Executive Officer of the Company for an initial term of three years,
subject to renewal for successive three-year terms by mutual agreement of the
parties. The agreement provides for a base annual salary to Mr. DiLacqua of
$400,000 and an annual incentive bonus based on the achievement of certain
performance targets set by the Compensation Committee. Mr. DiLacqua's target
bonus is 50% of his base salary. The agreement guaranteed Mr. DiLacqua an
annual bonus for 1999 of at least $100,000, but it does not guarantee any bonus
for 2000 or thereafter. (See "Summary Compensation Table" and "Compensation
Committee Report on Executive Compensation -- Incentive Compensation.") The
agreement also provided Mr. DiLacqua with an option to purchase 100,000 shares
of Common Stock. In the event the Company terminates the agreement without
cause, the Company is obligated to pay Mr. DiLacqua a severance payment equal
to one year's salary plus the amount of his target bonus for the year in which
the termination occurs. Mr. DiLacqua is also entitled to receive this amount if
he terminates the agreement following a change in control of the Company if he
is not offered a similar position with similar responsibilities and equal or
greater compensation, or if he is asked to relocate more than 50 miles
following such change in control. If the Company does not renew the agreement
at the end of the initial three-year term, it will be obligated to pay Mr.
DiLacqua a severance payment equal to one year's salary.
The Company entered into employment agreements dated January 3, 2000 with
each of Mr. Carroll, Mr. Heenan and Mr. Heller. The agreements provide for an
initial term of three years and are subject to renewal for successive
three-year terms by mutual agreement of the parties. The agreements provide for
a base annual salary not less than the employee's current base annual salary
($120,000 in the case of Mr. Carroll, $198,000 in the case of Mr. Heenan, and
$140,000 in the case of Mr. Heller) and an annual incentive bonus based on the
achievement of certain performance targets set by the Compensation Committee.
The target bonus is to be set each year by the Compensation Committee; for
2000, the target bonus is 40% of base salary for Mr. Carroll and Mr. Heller,
and 45% for Mr. Heenan. The agreements do not guarantee any bonus. In the event
the Company terminates the agreement without cause, the Company is obligated to
pay the employee severance pay equal to one year's salary plus the amount of
his target bonus for the year in which the termination occurs. The employee is
also entitled to receive this amount if he terminates the agreement following a
change in control of the Company if he is not offered a similar position with
similar responsibilities and equal or greater compensation, if he is asked to
relocate more than 35 miles following such change in control, or if the
acquiring company does not assume the agreement. If the Company does not renew
the agreement at the end of the initial three-year term, it will be obligated
to pay the employee severance pay equal to one year's salary.
In connection with the retirement in July 1999 of James C. Hull, the
Company's former Vice President and Chief Financial Officer, the Company agreed
to continue Mr. Hull's salary ($198,000) for one year.
7
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors is composed of two
independent 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 in addition to base compensation.
Base Compensation. The Company attempts to offer new executive officers
base compensation competitive with 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 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 program's participants. This pool may be increased or decreased,
depending on the extent to which the Company meets specified financial
targets, typically expressed in relation to operating income, excluding
unusual charges. For 1999 and 2000 the target bonus was set at 50% of base
compensation for the Company's Chief Executive Officer and 15-45% 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 nonfinancial
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.
The bonuses awarded to executive officers for 1999 reflected in the
Summary Compensation Table were based on the Company's achievement of
operating income targets and each executive officer's overall performance
and individual achievements of his non-financial objectives.
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 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, and 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 may
also be granted to newly-hired officers based on responsibilities and
anticipated performance requirements.
8
<PAGE>
Compensation of Chief Executive Officer. The compensation of the Chief
Executive Officer is intended to reflect a combination of performance
indicators and long-term increase in stockholder value. The base salary of
Mr. DiLacqua, the Company's Chief Executive Officer, may be somewhat above
the average salary of peers at other comparable companies in recognition of
his experience and the complexity of the Company's businesses.
Compensation and Stock Option
Committee
WALLACE B. ASKINS
RAYMOND R CALDIERO
JOHN M. ROTH
J. FREDERICK SIMMONS
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 Dow Jones
Industrial-Diversified Index assuming $100 was invested on December 31, 1994.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ENVIROSOURCE, INC. THE RUSSELL 2000 INDEX
AND THE DOW JONES INDUSTRIAL DIVERSIFIED INDEX
<TABLE>
<CAPTION>
12/94 12/95 12/96 12/97 12/98 12/99
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Envirosource, Inc. 100 90.57 81.13 90.57 22.10 3.32
Russell 2000 100 127.49 154.73 203.91 190.75 187.92
Dow Jones Industrial Diversified 100 130.95 169.43 221.95 255.12 277.24
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENEDS.
FISCAL YEAR ENDING DECEMBER 31.
9
<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.
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.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission initial reports of beneficial
ownership and reports of changes in beneficial ownership of the Company's
Common Stock 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 1999 all filing
requirements applicable to officers and directors were met.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP ("Grant Thornton")
as the Company's independent public accountants for the fiscal year ending
December 31, 2000. A representative of Grant Thornton 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.
On September 24, 1999, the Executive Committee of the Board of Directors
dismissed Ernst & Young LLP ("E&Y") as the Company's independent accounting
firm, and appointed Grant Thornton to replace E&Y. Accordingly, Grant Thornton
examined the financial statements of the Company and its subsidiaries for the
fiscal year ending December 31, 1999. The decision to change independent
accountants had been recommended by the Audit Committee of the Board of
Directors.
E&Y's audit report on the Company's financial statements for the two years
ended December 31, 1998 contained no adverse opinion or disclaimer of opinion,
nor was it qualified or modified as to uncertainty, audit scope, or accounting
principles.
During the two fiscal years ended December 31, 1998, and subsequent
interim periods up through September 24, 1999, the date of E&Y's dismissal,
there were no disagreements with E&Y on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of E&Y, would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement.
Prior to September 24, 1999, the Company did not consult with Grant
Thornton regarding the application of accounting principles to any
transactions, either completed or proposed, or the type of audit opinion that
might be rendered by Grant Thornton for the year ended December 31, 1999.
OTHER MATTERS
The Board of Directors 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
matter. 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.
10
<PAGE>
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 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 2001 Annual
Meeting of Stockholders must be received at the Company's principal executive
offices on or before January 2, 2001 for inclusion in the Company's Proxy
Statement with respect to such meeting. Additionally, stockholder proposals
submitted outside the processes of Rule 14a-8 of the Exchange Act for
consideration at the 2001 Annual Meeting of Stockholders must be received by
the Company on or by March 15, 2001 in order to be considered timely for
purposes of Rule 14a-4 of the Exchange Act.
By Order of the Board of Directors,
/s/ John T. DiLacqua
JOHN T. DILACQUA,
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, 1999 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.
11
<PAGE>
ENVIROSOURCE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders to be held at
The Homestead Restaurant, Three Village Road,
Horsham, Pennsylvania on June 8, 2000 at 10:00 A.M.
The undersigned hereby constitutes and appoints John T. DiLacqua, John
C. Heenan and Leon Z. Heller, 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 8, 2000 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)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ENVIROSOURCE, INC.
June 8, 2000
Please Detach and Mail in the Envelope Provided
Please mark your
A [X] votes as in this DO NOT PRINT
example IN THIS AREA
- --------------------------------------------------------------------------------
FOR WITHHOLD
1. Election of [ ] [ ] Nominees: Wallace B. Askins
Class B John M. Roth
Directors J. Frederick Simmons
(INSTRUCTION: To withold authority to vote for any
individual nominees, print that nominee's name on the
line provided below.)
- ----------------------------------------------------
Dated , 2000
--------------------------
- ------------------------------------------------
Signature
- ------------------------------------------------
Signature if held jointly
(Please sign exactly as name appears hereon. If stock
is held in names of joint owners, such 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.
