<PAGE> 1
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for use of the Securities and Exchange Commission only (as
permitted by Rule 14a-6(e)(2))
VERITAS DGC INC.
(Name of Registrant as specified in its charter)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and
O-11.
Title of each class of securities to which transaction applies:
Aggregate number of securities to which transaction applies:
Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule O-11. (Set forth the amount on which the filing
fee is calculated and state how it was determined.):
Proposed maximum aggregate value of transaction:
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 O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by Registration Statement No., or the
Form or Schedule and the date of its filing.
Amount Previously Paid:
Form, Schedule or Registration Statement No.:
Filing Party:
Date Filed:
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<PAGE> 2
[VERITAS LOGO]
VERITAS DGC INC.
10300 TOWN PARK
HOUSTON, TEXAS 77072
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 5, 2000
----------
We will hold the annual meeting of the holders of common stock of Veritas
DGC Inc. and the holders of exchangeable shares and class A exchangeable shares
series 1 of Veritas Energy Services Inc., a wholly-owned subsidiary of Veritas
DGC (all such holders are collectively referred to in this Notice as
"stockholders") at the offices of Veritas DGC, 10300 Town Park, Houston, Texas
77072, on Tuesday, December 5, 2000, at 10:00 a.m., Houston time, for the
following purposes:
1) To elect a board of eight directors for Veritas DGC to serve
until the next annual meeting of stockholders or until their
successors are elected and qualify; and
2) To transact any other business as may properly be presented at
the meeting or any adjournment of the meeting.
A record of stockholders has been taken as of the close of business on
October 19, 2000 and only those stockholders of record on that date are entitled
to notice of and to vote at the meeting. A stockholders' list will be available
beginning November 24, 2000, and may be inspected during normal business hours
before the annual meeting at the offices of Veritas DGC, 10300 Town Park,
Houston, Texas.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. Whether
or not you plan to attend the meeting, please sign and date the enclosed proxy
and return it promptly in the enclosed envelope. Returning your proxy will not
prevent you from voting in person at the meeting if you wish to do so.
By Order of the Board of Directors,
Larry L. Worden
Secretary
October 24, 2000
<PAGE> 3
VERITAS DGC INC.
10300 TOWN PARK
HOUSTON, TEXAS 77072
PROXY STATEMENT
We are furnishing this proxy statement in connection with the solicitation
of proxies by our board of directors for use at our annual meeting of
stockholders to be held December 5, 2000, and at any adjournment of the meeting.
The meeting will be held at the time and place and for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders.
As of October 19, 2000, the record date for determining the stockholders
entitled to vote at the meeting, there were outstanding and entitled to vote
28,417,065 shares of Veritas DGC common stock, par value $.01 per share,
1,415,077 Veritas Energy Services Inc. exchangeable shares and 470,749 Veritas
Energy Services class A exchangeable shares series 1. In this proxy statement,
all such shares are referred to collectively as "shares," and all holders of
shares are referred to collectively as "stockholders." This proxy statement
addresses you if you are a stockholder. All shares vote together as a single
class and each share entitles its holder to one vote on each matter presented at
the meeting. Holders of a majority of the outstanding shares must be present, in
person or by proxy, to constitute a quorum for the transaction of business.
Abstentions will be treated as present for purposes of determining whether a
quorum is present.
The proxy accompanying this proxy statement, when properly signed and
returned, permits you to vote by proxy on all matters to come before the meeting
or any adjournment of the meeting. If you specify your choice on the proxy with
respect to a matter being voted upon, your shares will be voted as you specify.
UNLESS YOU SPECIFY OTHERWISE, YOUR SHARES WILL BE VOTED IN FAVOR OF THE EIGHT
NOMINEES TO THE BOARD OF DIRECTORS IF YOU SIGN, DATE AND RETURN YOUR PROXY.
We are not aware of any business to be acted upon at the meeting other than
those set forth in the accompanying Notice. If, however, other matters are
properly brought before the meeting, or any adjournment of the meeting, the
persons appointed as proxies will have discretion to vote or abstain from voting
on any such matter according to their best judgment.
You may revoke your proxy by (i) giving written notice to Larry L. Worden,
Vice President, General Counsel & Secretary, Veritas DGC Inc., 10300 Town Park,
Houston, Texas 77072, (ii) signing and delivering a later dated proxy to Mr.
Worden at any time before its exercise, or (iii) attending the meeting and
voting in person. Our inspectors of election, who are required to decide
impartially any interpretive questions as to the conduct of the vote will
certify the results, will tabulate the votes at the meeting.
We will bear the cost of soliciting proxies in the accompanying form. In
addition to solicitations by mail, our employees may solicit proxies in person,
by telephone, fax or electronic mail.
This proxy statement and form of proxy is first being sent or given to
stockholders on or about October 24, 2000.
<PAGE> 4
ELECTION OF DIRECTORS
The stockholders will elect eight directors at the meeting. Each director
elected will hold office until the next annual meeting of stockholders, until
his successor is elected and qualifies or until his earlier death, resignation
or removal. By signing, dating and returning the accompanying proxy, you will
grant your proxy to vote your shares as you direct. Unless you specify
otherwise, your shares will be voted FOR the eight nominees to the board of
directors if you sign, date and return your proxy. All nominees previously have
been elected directors by the stockholders. If any nominee becomes unavailable
for election, the proxy may be voted for a substitute nominee selected by the
persons named in the proxy or the board of directors may be reduced accordingly;
however, we are not aware of any circumstances likely to render any nominee
unavailable.
The eight nominees who receive a majority of the votes cast will be the
duly elected directors of Veritas DGC. Abstentions and broker non-votes will not
be counted as a vote for or against any nominee, and will not effect the outcome
of the election. Cumulative voting is not allowed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL EIGHT NOMINEES.
NOMINEES
The names of the eight nominees and certain information concerning each of
them is set forth below:
<TABLE>
<CAPTION>
Principal Position with Director
Name (1) Veritas DGC Age Since Member of
------------------------- --------------------------- ------- ----------- ----------------------------------
<S> <C> <C> <C> <C>
Clayton P. Cormier Director 68 1991 Audit committee
Lawrence C. Fichtner Director 55 1996 Health, safety and environment
committee
James R. Gibbs Director 56 1997 Audit, compensation, executive
and nominating committees
Steven J. Gilbert Director 53 1991 Compensation committee
Stephen J. Ludlow Director, vice chairman 50 1994 Executive and health, safety and
environment committees
Brian F. MacNeill Director 61 1996 Compensation and nominating
committees
Jan Rask Director 45 1998 Audit, health, safety and
environment and nominating
committees
David B. Robson Director, chairman of the 61 1996 Audit, compensation, executive,
board and chief executive health, safety and environment
officer and nominating committees (2)
</TABLE>
----------
(1) See "Other Information - Certain Stockholders" for shares beneficially
owned by each nominee as of September 30, 2000.
(2) Ex officio non-voting member of the audit, compensation and health, safety
and environment committees.
Clayton P. Cormier is currently a financial and insurance consultant. Prior
to that, Mr. Cormier was a senior vice president in the oil and gas division of
Johnson & Higgins, an insurance broker, from 1986 to 1991 and previously served
as chairman of the board, president, and chief executive officer of Ancon
Insurance Company, S.A. and as an assistant treasurer of Exxon.
Lawrence C. Fichtner is president of Entrada Management. Mr. Fichtner
retired from his position as executive vice president - corporate communications
of Veritas DGC in December 1998, a position he had held since August 1996, upon
consummation of the business combination between Veritas DGC, then known as
Digicon Inc., and Veritas Energy Services. Prior to that, he had been executive
vice president
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<PAGE> 5
of Veritas Energy Services or its predecessors since 1978. During the ten years
prior to joining Veritas Energy Services, he held various positions as a
geophysicist with Geophysical Services Inc., Texaco Exploration Ltd. and Bow
Valley Exploration Ltd.
James R. Gibbs is chairman, president and chief executive officer of
Frontier Oil Corporation, an oil refining and marketing company. He has been
chairman since January 1999, chief executive officer since 1992 and president
since 1987. He has been employed there for eighteen years. Mr. Gibbs is a
director of Frontier Oil Corporation, Smith International, Gundle/SLT
Environmental, Inc. and Talon International Energy, Ltd. and is an advisory
director of Frost Bank.
Steven J. Gilbert has been chairman of Gilbert Global Equity Partners, L.P.
since 1997. From 1992 to 1997 he was managing general partner of Soros Capital
L.P., the principal venture capital and leveraged transaction entity of Quantum
Group of Funds, and was a principal advisor to Quantum Industrial Holdings Ltd.
From 1988 to 1992, he was the managing director of Commonwealth Capital
Partners, L.P., a private equity investment fund and from 1984 to 1988, Mr.
Gilbert was the managing general partner of Chemical Venture Partners, which he
founded. Mr. Gilbert is a director of The Asian Infrastructure Fund, LLC
International Inc. (NASDAQ) and OneTel, Ltd. (AUS).
Stephen J. Ludlow became vice chairman of Veritas DGC in January 1999. From
August 1996, upon consummation of the business combination between Veritas DGC
and Veritas Energy Services until January 1999, he was president and chief
operating officer of Veritas DGC. He has been employed by Veritas DGC for 25
years and served as president and chief executive officer of Veritas DGC from
1994 to 1996. Prior to 1994, he served as executive vice president of Veritas
DGC for four years following eight years of service in a variety of
progressively more responsible management positions, including several years of
service as the executive responsible for operations in Europe, Africa and the
Middle East.
Brian F. MacNeill is currently chief executive officer and, prior to
September 2000, had been president and chief executive officer of Enbridge Inc.,
a crude oil and liquids transportation and natural gas distribution company and
formerly IPL Energy Inc., since 1991. He was executive vice president and chief
operating officer of IPL Energy Inc. or its predecessors from 1990 to 1991 and
previously served as chief financial officer of Interhome Energy, Inc. and Home
Oil Company Limited and as vice president and treasurer of Hiram Walker
Resources Ltd.
Jan Rask has been president, chief executive officer and director of Marine
Drilling Companies, Inc. since July 1996. Mr. Rask served as president and chief
executive officer of Arethusa (Off-Shore) Limited from May 1993 until the
acquisition of Arethusa (Off-shore) Limited by Diamond Offshore Drilling, Inc.
in May 1996. Mr. Rask joined Arethusa (Off-shore) Limited's principal operating
subsidiary in 1990 as its president and chief executive officer.
David B. Robson has been chairman of the board of Veritas DGC since
consummation of the business combination between Veritas DGC and Veritas Energy
Services in August 1996. He is currently chief executive officer and has been
since August 1996 with the exception of January 24 through July 24, 2000. Prior
thereto, he held similar positions with Veritas Energy Services or its
predecessors since 1974. Mr. Robson is also a director of Marine Drilling
Companies, Inc.
COMMITTEES AND MEETINGS OF DIRECTORS
During fiscal year 2000, the board of directors met on six regularly and
specially scheduled occasions. Committees of the board of directors held
meetings as follows: audit - three meetings; compensation - two meetings;
executive - no meetings; nominating - no meetings; and health, safety and
environment - one meeting. During fiscal year 2000, all directors attended at
least 75% of the meetings of the board of directors and committees on which they
served, with the exception of James R. Gibbs who attended 73% of the meetings of
the board of directors and committees on which he served.
The audit committee assists the board of directors in assuring that our
accounting and reporting practices are in accordance with all applicable
requirements. The audit committee has reviewed and discussed our audited
financial statements for the year ended July 31, 2000 with management and has
discussed with PricewaterhouseCoopers LLP, certified public accountants, the
independent auditors and
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<PAGE> 6
accountants for Veritas DGC, the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380) with respect
to those statements. The audit committee has received the written disclosures
and the letter from PricewaterhouseCoopers LLP required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), and has discussed with
PricewaterhouseCoopers LLP, its independence in connection with its audit of our
most recent financial statements. Based on this review and these discussions,
the audit committee recommended to the board of directors that these audited
financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended July 31, 2000. The members of the audit committee are
independent, as defined in Sections 303.01(B)(2)(a) and (3) of the NYSE's
listing standards. Clayton P. Cormier, James R. Gibbs, Jan Rask and David B.
Robson are the members of the audit committee. The board of directors has
adopted a written charter for the audit committee, a copy of which is attached
to this proxy statement as Annex A. The information in this paragraph shall not
be deemed to be soliciting material, or be filed with the SEC or subject to
Regulation 14A or 14C or to liabilities of Section 18 of the Securities Act, nor
shall it be deemed to be incorporated by reference into any filing under the
Securities Act or the Exchange Act, except to the extent that we specifically
incorporate these paragraphs by reference.
The compensation committee administers our compensation plans, including
stock option and restricted stock plans, and recommends officers' compensation,
including awards of stock options and restricted stock, to the board of
directors for approval.
The nominating committee recommends nominees for election to the board of
directors at each annual meeting and to fill existing or anticipated vacancies
on the board of directors. The nominating committee will consider nominees
recommended by stockholders.
The health, safety and environment committee assists the board of directors
by overseeing our environmental and occupational health and safety policies and
programs and monitoring related current and future regulatory issues.
DIRECTOR COMPENSATION
Each of our directors who is not also an employee is paid an annual fee of
$15,000 plus travel expenses, a fee of $1,500 per regular or special board of
directors meeting, $750 per telephonic board of directors meeting and $750 per
regular, special or telephonic committee meeting attended. We maintain a stock
option plan for non-employee directors providing for stock options to be granted
to each non-employee director. Under the stock option plan for non-employee
directors, each eligible director is granted options to purchase 5,000 shares of
common stock on the date of the first meeting of the board of directors each
calendar year. If a director is initially elected or appointed to the board of
directors other than at the first meeting of the calendar year, the board of
directors may grant an option to such director for a number of shares of common
stock not to exceed 5,000. The exercise price for each option granted is the
closing sale price of a share of common stock on the day immediately before the
date of grant. Each option is exercisable as follows: 25% of the options are
immediately exercisable on the date of grant and an additional 25% become
exercisable on each succeeding anniversary of the date of grant until all are
exercisable on the third anniversary of the date of grant. All options granted
to non-employee directors expire ten years after the date of grant.
MANAGEMENT
EXECUTIVE OFFICERS
Except as described under "Employment Agreements", our executive officers
serve at the pleasure of the board of directors and are subject to annual
appointment by the board of directors at its first meeting following each annual
meeting of stockholders. In addition to Messrs. Robson and Ludlow, who are
listed under "Nominees" with their biographical information, our executive
officers include the following individuals:
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<PAGE> 7
Timothy L. Wells, age 47, was appointed president and chief operating
officer of Veritas DGC in January 1999. He has been employed by Veritas DGC for
17 years, having served as president of Veritas DGC's Asia Pacific division,
regional manager of North and South American processing, manager of research and
programming and in various other capacities in North and South America.
Anthony Tripodo, age 48, was appointed executive vice president, chief
financial officer and treasurer of Veritas DGC in April 1997. Prior to that, he
was employed by Baker Hughes Incorporated for sixteen years in various financial
management capacities, most recently as vice president of finance and
administration for its Baker Performance Chemicals Incorporated unit. Prior to
his service with Baker Hughes, Mr. Tripodo was employed by the accounting firm
of Price Waterhouse from 1974 to 1980.
Rene M.J. VandenBrand, age 42, became vice president - business development
of Veritas DGC in August 1996 upon consummation of the business combination
between Veritas Digicon and Veritas Energy Services. Prior to that, he served as
vice president - finance and secretary of Veritas Energy Services since November
1995, following two years of service in comparable positions with Taro
Industries Limited. He was previously a partner of Coopers & Lybrand Chartered
Accountants in Calgary, Alberta.
Larry L. Worden, age 48, was appointed vice president, general counsel &
secretary in December 1998. For ten years prior to that, Mr. Worden served as
vice president, general counsel & secretary of King Ranch, Inc., a privately
held Texas corporation. Prior to that he held positions at National Gypsum
Company and two private law firms.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of Messrs. Robson,
VandenBrand, Ludlow, Tripodo and Wells. Each agreement automatically renews for
successive one-year periods unless terminated by prior written notice of either
party. We also entered into an employment agreement with Mr. Fichtner, who
retired effective December 31, 1998. By mutual agreement and in lieu of a
lump-sum payment to Mr. Fichtner of an amount equal to two-years' salary as
provided in his employment agreement, we pay Mr. Fichtner in equal monthly
installments an annual amount equal to his annual salary at the time of his
retirement, $150,000, through December 2000. As of July 31, 2000, the executive
officers are entitled to annual salaries under their employment agreements as
follows: Mr. Robson - $387,500; Mr. Ludlow - $265,000; Mr. Wells - $240,000; Mr.
Tripodo - $220,000; and Mr. VandenBrand - $164,000. Within 30 days of
termination without cause, each executive officer is entitled to a one-time
payment under his employment agreement equal to several months of his salary as
follows: Messrs. Robson, Ludlow and Wells - 24 months; Mr. Tripodo - 18 months;
and Mr. VandenBrand - 12 months. We do not currently have an employment
agreement with Mr. Worden.
In accordance with the terms of an employment agreement dated January 24,
2000, we made certain payments to Richard C. White, who resigned as chief
executive officer effective July 24, 2000, and as a director effective August
14, 2000. Those payments are described in the table below.
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to us
for the years ended July 31, 2000, 1999 and 1998 of those individuals who (i)
served as our chief executive officer during fiscal 2000, or (ii) were among our
four most highly compensated executive officers at July 31, 2000, other than the
chief executive officer and whose annual salary and bonus exceeded $100,000.
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<PAGE> 8
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation Awards
------------------------------------ -------------------------
Restricted Stock All Other
Name and Principal Fiscal Stock Options(1) Compen-
Position Year Salary Bonus Other Awards (Shares) sation(2)
----------------------------- ------ --------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David B. Robson (3) 2000 $ 338,397 $ 122,337 -- -- 36,993 --
Chairman and Chief 1999 330,000 52,553(4) -- -- 30,812 --
Executive Officer 1998 297,916 243,133(5) -- -- -- --
Richard C. White 2000 $ 177,692 See note 7 $ 710,000(7) $ 429,688(8) 18,902 --
Chief Executive Officer (6) 1999 -- -- -- -- -- --
(Resigned 7/24/00) 1998 -- -- -- -- -- --
Stephen J. Ludlow 2000 $ 265,021 $ 83,740 -- -- 15,179 $ 4,000
Vice Chairman (9) 1999 265,342 38,584(4) -- -- 24,743 4,000
1998 241,667 175,038(5) -- -- -- 4,000
Timothy L. Wells 2000 $ 228,308 $ 63,457 -- -- 13,747 $ 4,000
President & Chief Operating 1999 168,615 36,473(4) 184,728(11) -- 20,542 4,000
Officer (10) 1998 142,500 96,106 182,601(11) -- -- 4,000
Anthony Tripodo 2000 $ 202,470 $ 63,990 -- -- 12,601 $ 4,000
Executive Vice President, 1999 190,245 27,664(4) -- -- 17,740 4,000
Chief Financial Officer 1998 184,167 132,171 -- -- -- 1,584
& Treasurer
Larry L. Worden 2000 $ 184,162 $ 58,197 -- -- 7,255 $ 4,000
Vice President, General 1999 120,232 19,656(4) -- -- 19,673 --
Counsel & Secretary (12) 1998 -- -- -- -- -- --
</TABLE>
----------
(1) All options granted were options to purchase shares of common stock.
(2) Represents company contributions to Messrs. Robson's, White's, Ludlow's,
Wells', Tripodo's and Worden's accounts pursuant to our 401(k) Plan.
(3) Mr. Robson's compensation is paid in Canadian dollars -- amounts shown
have been converted to U.S. dollars.
(4) Includes value of the following shares of common stock issued in lieu of
cash bonuses at a fair market value of $10 5/16 per share, the closing
price on the date of payment: Mr. Robson - 2,208 shares; Mr. Ludlow -
1,717 shares; Mr. Wells - 1,484 shares; Mr. Tripodo - 1,155 shares; and
Mr. Worden - 580 shares.
(5) Includes value of the following shares of common stock issued in lieu of
cash bonuses at a fair market value of $16 11/16 per share, the closing
price on the date of payment: Mr. Robson - 6,654 shares and Mr. Ludlow -
3,387 shares.
(6) Mr. White served as chief executive officer from January 24 through July
24, 2000 and as a director from March 7 through August 14, 2000.
(7) We paid Mr. White $710,000 upon his resignation as chief executive officer
effective July 24, 2000, under the terms of his employment agreement and
in full settlement of certain claims for additional cash compensation,
including unpaid bonus.
(8) Represents 25,000 shares of restricted stock valued at $17 3/16 per share,
the closing price for common stock on January 24, 2000, the date of issue.
Restrictions were removed from these shares effective July 24, 2000, the
effective date of Mr. White's resignation as chief executive officer.
(9) Mr. Ludlow was promoted to vice chairman effective January 25, 1999.
(10) Mr. Wells was promoted to president and chief operating officer effective
January 25, 1999. Prior to that date, Mr. Wells was employed and
compensated by a subsidiary, Veritas DGC Asia Pacific Ltd.
(11) For fiscal year 1999, includes a $12,500 relocation bonus and a domestic
allowance for temporary living expenses incurred during Mr. Well's
relocation from Singapore to Houston; for fiscal years 1998 and 1997
includes foreign bonus, cost of living adjustment and housing paid to Mr.
Wells by Veritas DGC Asia Pacific Ltd. through June 30, 1999.
(12) We hired Mr. Worden in November 1998.
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<PAGE> 9
The following table sets forth options granted by Veritas DGC during the
fiscal year ended July 31, 2000 to each of Messrs. Robson, White, Ludlow, Wells
Tripodo and Worden:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR ENDED JULY 31, 2000
----------------------------------------------------------------------------------------------------------------------
Individual Grants (1)
------------------------------------------------------------------------------------------------------
Percent of
Number of total options
securities granted to Exercise
underlying options employees in price Expiration Grant Date
Name of Officer granted fiscal year ($/share) date Fair Value(2)
-------------------------------- -------------------- ---------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
David B. Robson................. 36,993 6.7 $26.1875 3/13/2010 $739,997
Richard C. White................ 18,902 3.5 26.1875 3/13/2010 (3) 378,110 (3)
Stephen J. Ludlow............... 15,179 2.7 26.1875 3/13/2010 303,636
Timothy L. Wells................ 13,747 2.5 26.1875 3/13/2010 274,991
Anthony Tripodo................. 12,601 2.3 26.1875 3/13/2010 252,067
Larry L. Worden................. 7,255 1.3 26.1875 3/13/2010 145,127
</TABLE>
----------
(1) Except as otherwise noted, each option grant expires ten years from the
date of grant. Except as otherwise noted, each grant is exercisable as
follows: 25% of the options are immediately exercisable on the date of
grant and an additional 25% become exercisable on each succeeding
anniversary of the date of grant until all are exercisable on the third
anniversary of the date of grant.
(2) Calculated using the Black-Scholes option valuation method assuming no
dividends, a 5.9% risk-free interest rate, 62.3% expected volatility and a
ten-year expected life.
(3) Options valued as of the date of grant assuming a ten-year term. In
accordance with the terms of Mr. White's employment agreement, options
granted to him became vested upon his resignation as chief executive
officer effective July 24, 2000. Under the terms of the option plan, he had
ninety days after his resignation, or until October 22, 2000, to exercise
these options.
The following table sets forth information with respect to Messrs.
Robson's, White's, Ludlow's, Wells', Tripodo's and Worden's options to purchase
Veritas DGC common stock that were exercised during the fiscal year ended July
31, 2000 or unexercised at fiscal year end.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES DURING FISCAL YEAR ENDED JULY 31, 2000
AND OPTION VALUES AS OF JULY 31, 2000
------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of In-the-Money
Options Exercised During Options Held at Fiscal Year Unexercised Options Held at
Fiscal Year End Fiscal Year End (1)
------------------------- ---------------------------- ---------------------------
Shares
Acquired on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------ --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David B. Robson......... -- -- 110,545 49,603 $ 1,193,623 $ 179,941
Richard C. White (2).... -- -- 18,902 -- -- --
Stephen J. Ludlow....... 39,876 $ 380,649 32,374 34,564 167,927 156,458
Timothy L. Wells........ 10,271 158,327 13,476 25,602 21,335 10,667
Anthony Tripodo......... -- -- 25,353 22,766 112,373 101,263
Larry L. Worden......... 5,433 62,981 6,216 15,279 47,508 90,679
</TABLE>
----------
(1) Value of in-the-money unexercised options are calculated based on the July
31, 2000, closing price of Veritas DGC common stock of $21 1/2 per share on
the New York Stock Exchange.
(2) In accordance with the terms of his employment agreement, all options
granted to Mr. White became vested upon his resignation as chief executive
officer effective July 24, 2000.
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<PAGE> 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robson, Chairman and Chief Executive Officer, is an ex officio
non-voting member of the compensation committee of the board of directors. As
such, he is invited to and attends meetings of the compensation committee from
time to time. He is not allowed to vote on any item that comes before the
committee, nor is he allowed to be present during the committee's discussions of
his compensation. None of the three voting members of the compensation committee
- Messrs. Gibbs, Gilbert, and MacNeill - is or has been at any time an executive
officer or employee of Veritas DGC or any of its subsidiaries nor have any of
them had any relationship with Veritas DGC that would otherwise require
disclosure.
COMPENSATION COMMITTEE REPORT
The compensation committee of the board of directors has furnished the
following report on executive compensation for fiscal 2000:
We seek to relate a significant portion of potential total executive
compensation to Veritas DGC's financial performance. Our executive compensation
consists of three elements: base compensation, bonus and stock-based benefits.
We intend the base compensation for executive officers to afford a
reasonable degree of financial security and flexibility to those individuals
whom we regard as acceptably discharging the levels and types of responsibility
implicit in the various executive positions.
We last increased the base pay for executive officers effective March 2000.
At the time of the increase, we gave little consideration to the compensation
plans of executives in other seismic companies, because some of our principal
competitors are subsidiaries of larger, more diversified oilfield service
concerns, and compensation data was not publicly available for the comparable
executive positions in those subsidiaries. Moreover, the few publicly held
seismic operators had such disparate operating and financial characteristics and
were of such dissimilar sizes, that the compensation committee found little
basis for reliable comparison. In setting the salaries of the executive
officers, we considered the salary histories of each executive, his past
performance, credentials, age and experience with Veritas DGC, as well as his
perceived future utility to Veritas DGC.
We require a minimum level of company financial performance before the
executive officers earn any annual bonuses, and we award bonuses for achieving
higher levels of performance directly tied to the level achieved. In fiscal
1998, we recommended and the board of directors adopted an incentive
compensation program pursuant to which some 200 managerial personnel (including
the executive officers) became eligible to earn bonuses based upon Veritas DGC's
actual results of operations as a percentage of those results anticipated in the
annual budget approved by the board of directors at the beginning of the fiscal
year. We awarded the following bonuses under the incentive compensation program
for performance during fiscal 2000: Mr. Robson - $122,337; Mr. Ludlow - $83,740;
Mr. Wells - $63,457; Mr. Tripodo - $63,990; and Mr. Worden - $58,197. (See the
table set forth in the table in the section entitled "Executive Compensation"
for amounts paid to Mr. White).
We believe periodic grants of significant blocks of stock options to
executive officers helps to align the executive's economic interests with those
of stockholders and to provide a direct and continuing focus on the goal of
increasing stockholder value. We will consider such grants every year. We last
granted options on March 13, 2000.
The Compensation Committee,
Brian F. MacNeill (Chairman)
James R. Gibbs
Steven J. Gilbert
David B. Robson (ex officio, non-voting member)
8
<PAGE> 11
CERTAIN STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares at September 30, 2000, by (i) each person we know to own
beneficially more than 5% of the outstanding shares, (ii) all directors and
director nominees, (iii) Messrs. Robson, White, Ludlow, Wells, Tripodo, Worden
and VandenBrand and (iv) all directors, director nominees and executive officers
as a group.
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
----------------------------------------------------------------------------------------------------------------
Currently
exercisable
options to Percentage
purchase of Class
Name and Address (1) Shares (2, 3) shares Total (2) (4)
------------------------------------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Beneficial Owner of 5% or more of Shares:
Geo Capital LLC 1,631,135 - 1,631,135 5.98
767 Fifth Avenue
New York, New York 10153-4590
Executive Officers, directors and director nominees:
David B. Robson....................... 1,254,888(5) 110,545 1,365,433 4.98
Richard C. White...................... 27,500 18,902 46,402 *
Stephen J. Ludlow..................... 9,626 32,374 42,000 *
Timothy L. Wells...................... -- 13,476 13,476 *
Anthony Tripodo....................... 5,677 25,353 31,030 *
Larry L. Worden....................... 1,938 6,216 8,154 *
Rene M.J. VandenBrand................. 2,863 26,138(6) 29,001 *
Clayton P. Cormier.................... 2,004 11,250 13,254 *
Lawrence C. Fichtner.................. 3,003 69,427 72,430 *
James R. Gibbs........................ 1,000 6,875 7,875 *
Steven J. Gilbert..................... 1,437 11,250 12,687 *
Brian F. MacNeill..................... 4,000 19,917 23,917 *
Jan Rask.............................. -- 4,125 4,125 *
------------------------------------------- --------------- ------------- ------------ ------------
All directors, director nominees and
executive officers as a group........... 1,652,384 5.95
</TABLE>
----------
* Does not exceed one percent
(1) The address of each person shown is c/o Veritas DGC Inc., 10300 Town Park,
Houston, Texas 77072, unless an address is listed.
(2) Unless otherwise indicated, the numbers shown refer to shares of common
stock or options to purchase common stock.
(3) Each person has sole voting and investment power with respect to the shares
listed unless otherwise specified.
(4) Percentages are calculated based on total of all outstanding shares as of
September 30, 2000.
(5) Includes 1,244,826 shares of Veritas Energy Services exchangeable shares
owned by 607749 BC Ltd., a British Columbia corporation owned and
controlled by Mr. Robson, 8,862 shares of common stock owned by Mr. Robson,
and 1,200 shares of common stock owned by Mr. Robson's wife.
(6) Includes 2,500 shares of common stock held by a minor child.
9
<PAGE> 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors and persons who own more than 10% of a registered class
of our equity securities to file reports of ownership and changes of ownership
with the Securities and Exchange Commission. We believe that our officers,
directors and greater than 10% stockholders met all applicable filing
requirements for fiscal year ended July 31, 2000.
COMMON STOCK PERFORMANCE GRAPH
The following graph illustrates the performance of our common stock
compared with the cumulative total return on (i) Standard & Poor's 500 Stock
Index and (ii) an index of peer companies we selected for the period beginning
July 31, 1995 and ending July 31, 2000. The graph assumes that the value of the
investment in our common stock and each index was $100 at July 31, 1995. In all
cases the cumulative total return assumes, as contemplated by the Securities and
Exchange Commission rules, that any cash dividends on the common stock of each
entity included in the data presented below were reinvested in that security.
[GRAPH]
TOTAL RETURN ANALYSIS
<TABLE>
<CAPTION>
7/31/1995 7/31/1996 7/31/1997 7/31/1998 7/31/1999 7/31/2000
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
VERITAS DGC $ 100.00 $ 202.22 $ 441.81 $ 584.69 $ 314.38 $ 378.13
INDEX OF PEER COMPANIES $ 100.00 $ 120.82 $ 226.69 $ 189.99 $ 169.22 $ 217.01
S & P 500 STOCK INDEX $ 100.00 $ 116.55 $ 177.30 $ 211.48 $ 254.22 $ 277.02
</TABLE>
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data
from Bloomberg Financial Markets.
The index of peer companies consists of Dawson Geophysical Company,
Petroleum Geo-Services, Inc., Schlumberger Limited, Seitel, Inc. and Baker
Hughes Incorporated. Before 1999, Western Atlas was included in the index of
peer companies and Baker Hughes Incorporated was not. Western Atlas was
10
<PAGE> 13
acquired by, and is now a wholly-owned subsidiary of, Baker Hughes Incorporated.
As a result, Baker Hughes Incorporated was substituted for Western Atlas.
The graph above depicts the past performance of our common stock should not
be used to predict future performance. We do not make or endorse any predictions
as to future share performance. These price performance comparisons shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or under the Exchange Act except to the extent that we specifically incorporate
this graph by reference, and shall not otherwise be deemed filed under such
acts.
AUDITORS
PricewaterhouseCoopers LLP, independent accountants, have served as the
independent accountants of Veritas DGC since November 1996. No action will be
taken at the meeting with respect to the continued employment of
PricewaterhouseCoopers. PricewaterhouseCoopers continues to provide audit
services to us, and representatives of the firm plan to attend the annual
meeting and will be available to answer questions. Its representatives will also
have an opportunity to make a statement at the meeting if they so desire.
AVAILABILITY OF ANNUAL REPORT AND FORM 10-K
We have mailed our annual report to stockholders covering the fiscal year
ended July 31, 2000 to each stockholder entitled to vote at the annual meeting.
We will provide a copy of our annual report on Form 10-K for the fiscal
year ended July 31, 2000 without charge to any stockholder making written
request to Larry L. Worden, Vice President, General Counsel & Secretary, 10300
Town Park, Houston, Texas 77072.
ADVANCE NOTICE DEADLINE
If you wish to submit a proposal for action to be included in the proxy
statement and form of proxy relating to our 2001 annual meeting of stockholders
you must submit your proposal to us before July 1, 2001, and otherwise comply
with Rule 14a-8 under the Securities Exchange Act of 1934.
By Order of the Board of Directors,
Larry L. Worden
Secretary
October 24, 2000
11
<PAGE> 14
VERITAS DGC INC.
AUDIT COMMITTEE CHARTER
The audit committee is a committee of the board of directors. Its primary
function is to assist the board in fulfilling its oversight responsibilities by
reviewing the financial information which will be provided to the shareholders
and others, the systems of internal controls which management and the board of
directors have established, and the audit process.
It is RESOLVED, therefore, that the charter and powers of the Audit Committee of
the Board of Directors (the "Audit Committee") shall be:
o Overseeing that management has maintained the reliability and integrity of
the accounting policies and financial reporting and disclosure practices of
the Company;
o Overseeing that management has established and maintained processes to
assure that an adequate system of internal control is functioning within
the Company;
It is RESOLVED, that the Audit Committee shall have the following specific
powers and duties:
1. Holding at least three regular meetings per year and such special meetings
(at least one per year) as may be called by the Chairman of the Audit
Committee or at the request of the independent accountants or the internal
auditors, and including in such meetings members of management to provide
information as needed;
2. Reviewing the performance of the independent accountants and internal
auditors and making recommendations to the Board of Directors regarding the
appointment or termination of the independent accountants and internal
auditors;
3. Conferring with the independent accountants and the internal auditors
concerning the scope of their examinations of the books and records of the
Company and its subsidiaries; reviewing and approving the independent
accountants' annual engagement letter; reviewing and approving the
Company's internal audit plans and reports, annual audit plans and budgets;
directing the special attention of the auditors to specific matters or
areas deemed by the Committee or the auditors to be of special
significance; and authorizing the auditors to perform such supplemental
reviews or audits as the Committee may deem desirable;
4. Reviewing with management, the independent accountants and internal
auditors significant risks and exposures, audit activities and significant
audit findings;
5. Reviewing the range and cost of audit and non-audit services performed by
the independent accountants;
6. Reviewing the Company's audited annual financial statements and the
independent accountants' opinion rendered with respect to such financial
statements, including reviewing the nature and extent of any significant
changes in accounting principles or the application
ANNEX A
Page 1 of 2
<PAGE> 15
thereof, and providing for the review of interim financial reports before
they are filed with the SEC or other regulators;
7. Providing for review of the Company's quarterly earnings releases by the
Chairman, or his designee, and reviewing the Company's annual fiscal year
earnings release in a meeting of the full Audit Committee before such
releases are made public;
8. Through the internal audit process and the independent accountants,
reviewing the adequacy of the Company's systems of internal control;
9. Obtaining from the independent accountants and internal auditors their
recommendations regarding internal controls and other matters relating to
the accounting procedures and the books and records of the Company and its
subsidiaries and reviewing the correction of controls deemed to be
deficient;
10. Providing an independent, direct communication between the Board of
Directors, internal auditors and independent accountants;
11. Reporting through its Chairman to the Board of Directors following the
meetings of the Audit Committee such recommendations as the committee deems
appropriate;
12. Maintaining minutes or other records of meetings and activities of the
Audit Committee;
13. Conducting or authorizing investigations into any matters within the Audit
Committee's scope of responsibilities, including retaining independent
counsel, accountants, or others to assist it in the conduct of any
investigation;
14. Considering such other matters in relation to the financial affairs of the
Company and its accounts, and in relation to the internal and external
audit of the Company as the Audit Committee may, in its discretion,
determine to be advisable;
15. Meeting with the director of internal auditing, the independent accountant,
and management in separate executive sessions to discuss any matters that
the committee or these groups believe should be discussed privately with
the audit committee;
It is RESOLVED, that the membership of the audit committee shall consist of at
least three independent members of the board of directors who shall serve at the
pleasure of the board of directors. Audit committee members and the committee
chairman shall be designated by the full board of directors upon the
recommendation of the nominating committee. Members of the audit committee shall
have a familiarity with basic finance and accounting practices and at least one
member of the committee shall have an accounting or financial management
background.
ANNEX A
Page 2 of 2
<PAGE> 16
VERITAS DGC INC.
PROXY SOLICITATION BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON DECEMBER 5, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints DAVID B. ROBSON, STEPHEN J. LUDLOW, TIMOTHY
L. WELLS, ANTHONY TRIPODO, RENE M.J. VANDENBRAND and LARRY L. WORDEN, or any of
them, attorneys and proxies, with power of substitution and revocation, to
vote, as designated on the reverse side, all shares of stock which the
undersigned is entitled to vote, with all powers which the undersigned would
possess if personally present, at the Annual Meeting (including all adjournments
thereof) of Stockholders of Veritas DGC Inc. to be held on Tuesday, December 5,
2000 at 10:00 a.m. Houston time, at the offices of the Company, 10300 Town Park,
Houston, Texas 77072.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IN THE ABSENCE OF SUCH INSTRUCTIONS THIS PROXY
WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
o FOLD AND DETACH HERE o
<PAGE> 17
<TABLE>
<S> <C> <C>
Please mark
your vote as [ ]
indicated in
this example
Item 1 - Election of Directors Nominees: 01 Clayton P. Cormier, 02 Lawrence C. Fichtner, 03 James R. Gibbs,
04 Steven J. Gilbert, 05 Stephen J. Ludlow, 06 Brian F. MacNeill, 07 Jan Rask
and 08 David B. Robson.
FOR all nominees WITHHOLD
(except as AUTHORITY
specified hereon) to vote for all (Instruction: To withhold authority to vote for an individual nominee write
nominees listed that nominee's name in the space provided below.)
at right
------------------------------------------------------------------------------
Item 2 - As such proxies may determine in their discretion upon such other business The undersigned hereby acknowledges receipt
(including procedural and other matters relating to the conduct of the meeting) of the Notice of Annual Meeting of
that may properly come before the meeting and any adjournment thereof. Stockholders and the Proxy Statement
furnished therewith.
Please date, sign and return this Proxy in
the enclosed business envelope.
"By checking the box to the right, I
consent to future access of the Annual
Report, Proxy Statements prospectuses and
other communications electronically via the
Internet. I understand that the Company
may no longer distribute printed materials
to me from any future shareholder meeting
until such consent is revoked. I understand
that I may revoke any consent at any time
by contacting the Company's transfer agent,
ChaseMellon Shareholder Services,
Ridgefield Park, NJ and that costs normally
associated with electronic access, such as
usage and telephone charges, will be my
responsibility."
SIGNATURE_____________________________________SIGNATURE_________________________________________DATE_______________________________
(SIGN EXACTLY AS NAME(S) APPEARS ON YOUR STOCK CERTIFICATE. IF SHARES ARE HELD JOINTLY EACH HOLDER SHOULD SIGN. IF SIGNING FOR
ESTATE, TRUST OR CORPORATION, TITLE OR CAPACITY SHOULD BE STATED.)
*FOLD AND DETACH HERE*
--------------------------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] VOTE BY TELEPHONE OR INTERNET [GRAPHIC APPEARS HERE]
QUICK *** EASY *** IMMEDIATE
--------------------------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF THREE WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form
---------------------------------------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
---------------------------------------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
---------------------------------------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each proposal separately, press 0. You will hear these instructions:
---------------------------------------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
The instructions are the same for all remaining proposals.
OR
2. VOTE BY INTERNET: Follow the instructions at our Website Address: http://www.eproxy.com/vts
OR
3. VOTE BY PROXY: Mark, sign and date you proxy card and return promptly in the enclosed envelope.
NOTE: If you vote by internet or telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
THANK YOU FOR VOTING.
</TABLE>
<PAGE> 18
VERITAS DGC INC.
PROXY SOLICITATION BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING
OF
STOCKHOLDERS TO BE HELD ON DECEMBER 5, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints David B. Robson, Stephen J.
Ludlow, Timothy L. Wells, Anthony Tripodo, Rene M.J. VandenBrand
and Larry L. Worden, or any of them, attorneys and proxies, with
power of substitution and revocation, to vote, as designated on
the reverse side, all shares of stock which the undersigned is
PROXY entitled to vote, with all powers which the undersigned would
FOR possess if personally present, at the Annual Meeting (including
ANNUAL all adjournments thereof) of Stockholders of Veritas DGC Inc. to
MEETING be held on Tuesday, December 5, 2000 at 10:00 a.m., Houston
OF time, at the offices of the Company, 10300 Town Park, Houston,
STOCKHOLDERS Texas 77072.
DECEMBER 5,
2000 1. [ ] FOR all nominees (except as specified hereon):
Clayton P. Cormier, Lawrence C. Fichtner, James R. Gibbs,
Steven J. Gilbert, Stephen J. Ludlow, Brian F. MacNeill,
Jan Rask and David B. Robson.
[ ] WITHHOLD authority to vote for all nominees listed
above.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.
------------------------------------------------------------
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
<PAGE> 19
2. [ ] As such proxies may determine in their discretion upon such other
business (including procedural and other matters relating to the
conduct of the meeting) that may properly come before the meeting and
any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned. in the absence of such instructions this proxy will
be voted FOR the nominees listed in Item 1.
The undersigned hereby acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and the
Proxy Statement furnished therewith.
Dated this ___ day of ________, 2000
------------------------------------
------------------------------------
Signature(s) of Stockholder
(Sign exactly as name(s) appear on
your stock certificate. If shares
are held jointly each holder should
sign. If signing for estate, trust
or corporation, title or capacity
should be stated.)
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED BUSINESS ENVELOPE.
