<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
JACOBS ENGINEERING GROUP INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
JACOBS ENGINEERING GROUP INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4)Proposed maximum aggregate value of transaction:
[X]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:
$125.00
(2) Form, Schedule or Registration No:
Schedule 14A- Preliminary
Proxy Materials
(3) Filing Party:
Registrant
(4) Date Filed:
December 2, 1993
<PAGE>
JACOBS ENGINEERING GROUP INC.
251 South Lake Avenue
Pasadena, California 91101
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
TO OUR SHAREHOLDERS
The Annual Meeting of Shareholders of Jacobs Engineering Group Inc. will be
held on Tuesday, February 8, 1994 at 3:30 p.m. at 251 South Lake Avenue, First
Floor Conference Center, Pasadena, California, for the following purposes:
1. To elect four directors to hold office until the 1997 annual
meeting;
2. To approve the adoption of the Outside Director Stock Option Plan;
3. To approve the appointment of Ernst & Young as auditors for the year
ending September 30, 1994; and
4. To act upon such other matters as may properly come before the
meeting.
The shareholders of record at the close of business on December 27, 1993 will
be entitled to vote at such meeting and any adjournment thereof. This notice
and proxy statement and the accompanying proxy are being mailed to such
shareholders on or about January 7, 1994. The stock transfer books will not
close.
By Order of the Board of Directors
Robert M. Barton
Secretary
Dated: December 27, 1993
YOU ARE URGED TO DATE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED.
<PAGE>
JACOBS ENGINEERING GROUP INC.
251 South Lake Avenue
Pasadena, California 91101
----------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Jacobs Engineering Group Inc., a Delaware corporation
(the "Company"), of proxies to be used at the annual meeting of shareholders of
the Company to be held February 8, 1994, and any adjournment thereof. The
expense of the solicitation will be paid by the Company. Some officers and
regular employees may solicit proxies personally and by telephone if deemed
necessary. The proxy is revocable by you by written notice to the Secretary of
the Company at any time prior to the exercise of the authority granted thereby
or by your being present at the meeting and electing to vote in person.
The holders of common stock of record at the close of business on December
27, 1993, the record date fixed by the Board of Directors (the "Record Date"),
will be entitled to one vote per share on all business of the meeting. The
presence in person or by proxy of the holders of a majority of the outstanding
shares of common stock will constitute a quorum for the transaction of business
at the meeting. This proxy statement and the accompanying proxy are being
mailed on or about January 7, 1994 to the shareholders of record on the Record
Date. As of the Record Date the Company had 24,788,847 shares of common stock
outstanding.
In connection with the solicitation of proxies by the Board of Directors for
the Annual Meeting of Shareholders, the Board of Directors has designated
Joseph J. Jacobs, Noel G. Watson and Robert M. Barton as proxies. Shares
represented by all properly executed proxy cards received in time for the
meeting will be voted in accordance with the choice specified on the proxy
card. Unless contrary instructions are indicated on the proxy card, the shares
of common stock will be voted FOR the election of the nominees listed below
under "1. Election of Directors". Where no choice is specified, the shares of
common stock will be voted FOR the approval of the Outside Directors Stock
Option Plan described under "2. Approval of Outside Director Stock Option
Plan", below, and FOR the approval of the appointment of Ernst & Young as the
independent auditors for the Company for the year ending September 30, 1994 as
described under "3. Approval of Ernst & Young as Auditors", below. The Board of
Directors is not aware of any other issue to be brought before the meeting. If
other matters are properly brought before the meeting, then the proxies will
vote in accordance with their best judgment.
Votes cast by proxy or in person at the annual meeting will be tabulated by
the inspectors of election appointed for the meeting who will determine whether
or not a quorum is present. The inspectors of election will treat abstentions
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as not voted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. If a broker indicates
on a proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, then those shares will not be considered as
present and entitled to vote with respect to that matter.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables, based in part upon information supplied by officers,
directors and principal shareholders, set forth certain information regarding
the ownership of the common stock of the Company as of the Record Date by (i)
all those persons known by the Company to be beneficial owners of more than
five percent of the outstanding common stock of the Company; (ii) each
director; (iii) each executive officer named in the compensation tables, below
("Named Executive Officer"); and (iv) all officers and directors of the Company
as a group. Unless otherwise indicated, each of these shareholders has sole
voting and investment power with respect to the shares beneficially owned,
subject to community property laws where applicable.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (a)
<TABLE>
<CAPTION>
AMOUNT
AND PERCENT
NATURE OF OF
NAME AND ADDRESS OWNERSHIP CLASS
---------------- --------- -------
<S> <C> <C>
Joseph J. Jacobs..................................... 4,448,000 17.9%
251 S. Lake Avenue
Pasadena, California 91101
Wilshire Oil Company of Texas........................ 1,770,680(b) 7.1%(b)
921 Bergen Avenue
Jersey City, New Jersey 07306
The Trust Company of New Jersey...................... 1,199,780(c) 4.8%(c)
35 Journal Square
Jersey City, New Jersey 07306
</TABLE>
- - --------
(a) Security ownership information for beneficial owners is taken from
statements filed with the Securities and Exchange Commission pursuant to
Sections 13(d), (f) and (g) and information made known to the Company.
(b) In an amendment to its Schedule 13D dated January 6, 1993, Wilshire Oil
Company of Texas reported that it had sole voting and dispositive power
over all shares.
(c) In an amendment to its Schedule 13G dated February 13, 1993, The Trust
Company of New Jersey reported that it had sole voting and dispositive
power with respect to 926,780 shares, and shared voting and dispositive
power with respect to 273,000 shares.
2
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OF AMOUNT OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(A) OF CLASS(B)
---------------- ---------------------- ----------
<S> <C> <C>
Joseph F. Alibrandi......................... 2,000 *
Robert M. Barton............................ 10,888 *
James E. Berkley............................ 8,596(c) *
Peter H. Dailey............................. 2,000 *
Joseph J. Jacobs............................ 4,448,000 17.9%
Linda K. Jacobs............................. 281,500 1.1%
William R. Kerler........................... 30,717(c) 0.1%(c)
James Clayburn La Force..................... 2,000 *
David M. Petrone............................ 7,500 *
James L. Rainey, Jr......................... 200 *
J. W. Simmons............................... 12,000 *
Gerald L. Stevenson......................... 52,490(c) 0.2%(c)
Jerry M. Sudarsky........................... 5,410 *
Noel G. Watson.............................. 172,388(c) 0.7%(c)
All directors and executive officers as a
group...................................... 5,237,503(c) 21.1%(c)
</TABLE>
* Less than 0.1%
- - --------
(a) Ownership is direct unless indicated otherwise.
(b) Calculation is based on 24,788,847 shares of Common Stock outstanding as of
December 27, 1993.
(c) Shares beneficially held include shares subject to unexercised employee
stock options exercisable within 60 days following the date of this proxy
statement, as follows: Mr. Berkley, 1,800; Mr. Kerler, 22,600; Mr.
Stevenson, 19,000; and Mr. Watson, 11,800, and all directors and officers
as a group, 127,000.
1. ELECTION OF DIRECTORS
The bylaws of the Company presently provide for eleven directors. The
Certificate of Incorporation and the bylaws of the Company divide the Board of
Directors into three classes with the terms of office of the directors of each
class ending in different years: The terms of Classes I, II and III end at the
annual meetings in 1994, 1995 and 1996, respectively. Classes I and II have
four directors, each, and Class III has three directors.
3
<PAGE>
The nominees for Class I are to be voted upon at this annual meeting. The
directors in Classes II and III will continue in office until expiration of
their respective terms. The Board of Directors has nominated Noel G. Watson,
James Clayburn La Force, David M. Petrone and James L. Rainey, Jr. for election
as Class I directors for three year terms expiring at the 1997 annual meeting.
The persons named as proxies on the accompanying proxy card intend to vote
the shares as to which they are granted authority to vote for the election of
the nominees listed above. The proxies may not vote for a greater number of
persons than four. In the event that anyone other than these individuals should
be nominated for election as a director, the proxies will vote in accordance
with their best judgment.
Although the Board of Directors does not know of any reason why any nominee
will be unavailable for election, in the event any nominee should be
unavailable at the time of the meeting, the proxies may be voted for a
substitute nominee as selected by the Board of Directors.
The following table sets forth information about these nominees and the
directors whose terms of office do not expire at the 1994 annual meeting.
<TABLE>
<CAPTION>
NAME AND POSITIONS DIRECTOR
HELD WITH THE COMPANY CLASS SINCE
- - --------------------- ----- --------
<S> <C> <C>
Joseph J. Jacobs, Chairman of the Board and Director. Dr. III 1974
Jacobs, age 77, was chief executive officer of the Company and
its predecessors from 1957 until November 19, 1992. Dr. Jacobs
founded the Company as a sole proprietorship in 1947 and
incorporated it in 1957.
Noel G. Watson, President, Chief Executive Officer and I 1986
Director. Mr. Watson, age 57, has been with the Company since
1965 and has held senior executive positions with the Company
for more than the past five years. On November 19, 1992
Mr. Watson was elected Chief Executive Officer of the Company.
Jerry M. Sudarsky, Vice Chairman of the Board, Senior III 1986
Consultant and Director. Mr. Sudarsky, age 75, has been a
consultant for more than five years. Since 1982 he has been
employed as a Senior Consultant to the Company in the fields
of biotechnology, fermentation and business planning.
Robert M. Barton, Secretary and Director. Mr. Barton, age 71, III 1974
is counsel to the law firm of Barton, Klugman & Oetting. He
was a partner in that firm from 1957 until December 31, 1992.
The firm has been general counsel to the Company and its
predecessors since 1957.
Joseph F. Alibrandi, Director. Mr. Alibrandi, age 65, has been II 1988
Chairman of the Board and Chief Executive Officer of Whittaker
Corporation for more than five years. He became Chairman of
the Board of BioWhittaker, Inc. in November 1991 when that
company was spun off from Whittaker Corporation. Mr. Alibrandi
is also a director of Santa Fe Pacific Corporation, Catellus
Development Corporation, BankAmerica Corporation and Bank of
America, N.T.&S.A.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITIONS DIRECTOR
HELD WITH THE COMPANY CLASS SINCE
- - --------------------- ----- --------
<S> <C> <C>
The Hon. Peter H. Dailey, Director. Mr. Dailey, age 63, is Chairman II 1991
of Enniskerry Financial, a private investment firm. He was formerly
Ambassador to Ireland and Special Envoy to NATO. Prior to
government service, he was Vice-chairman of Interpublic Group of
the Dailey International Group. He serves as non-executive Chairman
of Memorex Telex, Inc. and is a Director of Chicago Title and
Trust, Pinkerton's, Inc. and Sizzler, Inc.
Linda K. Jacobs, Director. Dr. Linda K. Jacobs, age 46, is II 1986
President of Middle East Technology Assistance, a non-profit
corporation. From 1985 until 1993 she was a principal in Jabara-
Jacobs Associates, a consulting firm. She is a daughter of Dr.
Joseph J. Jacobs.
James Clayburn LaForce, Director. Dr. LaForce, age 65, was Dean of I 1987
the Anderson Graduate School of Management, University of
California at Los Angeles from 1978 until 1993, when he retired.
Dr. LaForce is a director of Shearson V.I.P. Separate Account, Eli
Lilly & Co., Rockwell International Corporation, Imperial Credit
Industries, Inc., Blackrock Funds, Provident Investment Counsel
Mutual Funds and Payden and Rygel Investment Trust.
David M. Petrone, Director. Mr. Petrone, age 49, is Chairman of I 1987
Petrone, Petri & Company, a real estate finance and investment
firm. He was Vice Chairman of Wells Fargo & Co. from 1986 until
March 1, 1992. He is a director of The Ralphs Grocery Company,
General Growth Properties, Inc. and Spielker Properties, Inc.
James L. Rainey, Jr., Director. Mr. Rainey, age 64, is retired. He I 1993
was President and Chief Executive Officer of Farmland Industries,
Inc., an agricultural cooperative, from 1986 until 1991. Mr. Rainey
is a director of AIR . CURE Environmental, Inc. and Chairman of the
Board of Serv-Ice, Inc.
J. W. Simmons, Director. Mr. Simmons, age 75, held various II 1986
positions with Atlantic Richfield Company for 35 years until his
retirement in 1983. Mr. Simmons is also a director of Western
Waste Industries.
</TABLE>
Board Committees. The Board has two standing committees. The Audit Committee
advises the Board on internal control and external audit matters affecting the
Company, including recommendations as to the appointment of the independent
auditors of the Company; reviews with such auditors the scope and results of
their examination of the financial statements of the Company and any
investigations by such auditors. During fiscal 1993 the Audit Committee held
two meetings. The members of the Audit Committee are Messrs. Petrone
(Chairman), Alibrandi and Dailey and Dr. Linda K. Jacobs.
The Compensation and Benefits Committee approves the salaries and bonuses of
the executive officers and approves all grants of stock options under the
Company's 1981 Executive Incentive Plan (other than options issued under the
Outside Director Stock Option Plan described below under "2. Approval of
Outside Director Stock Option Plan"). During fiscal 1993 this committee held
five meetings. The members of the Compensation and Benefits Committee are
Messrs. Barton (Chairman) and Simmons and Dr. LaForce.
5
<PAGE>
Compensation of Directors. The Company pays directors who are not employed by
the Company ("Outside Directors") a retainer at the rate of $15,000 per year
plus a fee of $1,000 for each meeting of the board and each committee on which
they serve that they attend.
Pursuant to the terms of the Outside Director Stock Option Plan being
submitted to the shareholders for their approval at the annual meeting (see "2.
Approval of Outside Director Stock Option Plan", below), and subject to the
shareholders' giving such approval, each of the Outside Directors received an
option for 2,000 shares of common stock at an option price of $28.20 on April
1, 1993 and will hereafter receive an option for 1,000 shares at an option
price equal to the Fair Market Value (as defined in the Plan) of the common
stock on the first day of March of each year commencing March 1, 1994.
The Board of Directors held 12 meetings during the year ended September 30,
1993. All directors attended at least 75% of all meetings of the Board of
Directors and of the committees on which they served during fiscal 1993.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and long-
term compensation of the Chief Executive Officer and the other four most highly
compensated officers ("Named Executive Officers") of the Company for services
in all capacities to the Company and its subsidiaries during its 1991, 1992 and
1993 fiscal years:
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION (1) COMPENSATION
----------------- OTHER ANNUAL ------------ ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
NAME YEAR ($) ($) ($) (2) (SHS)(3) ($) (4)
---- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Noel G. Watson 1993 $423,450 $383,540 $12,900 15,000 $4,460
Chief Executive 1992 287,200 352,250 11,000 4,600
Officer 1991 296,790 284,100 24,000 4,130
Joseph J. Jacobs 1993 432,200 130,000 -0- -0- -0-
Chairman of the 1992 432,200 352,250 -0- -0-
Board 1991 432,200 284,100 -0- -0-
James E. Berkley 1993 271,120 244,970 8,300 12,000 4,460
Executive Vice 1992 256,580 287,230 9,000 4,600
President 1991 241,790 230,150 20,000 4,030
William R.
Kerler 1993 223,270 151,190 14,600(5) 20,000 4,460
Group Vice 1992 210,100 175,790 7,000 4,600
President 1991 191,270 135,880 16,000 4,230
Gerald L.
Stevenson 1993 214,150 144,960 7,300 10,000 4,460
Senior Vice 1992 206,600 172,770 7,000 4,840
President 1991 191,270 145,880 16,000 4,170
</TABLE>
- - --------
(1) Represents amounts earned by the named executive during the year indicated,
and includes amounts deferred under the Company's qualified 401(k) Thrift
Savings Retirement Plan and the Company's nonqualified 1991 Executive
Deferral Plan (the "1991 EDP").
6
<PAGE>
(2) These amounts represent interest credited to the employees' deferred
compensation account balance under the Company's 1991 EDP in excess of 120%
of the applicable federal rate in effect at the times the interest
crediting rates were set for the 1991 EDP. Under the terms of the 1991 EDP,
executives may defer salary and bonus and are credited interest on such
deferrals at rates based on the Moody's Corporate Bond Yield Averages and
the number of years in the 1991 EDP. The maximum interest rate is credited
to deferral amounts only after seven years of plan participation. Although
none of the named executives have seven years plan participation, the
amounts shown here were computed using the maximum interest rate allowed
under the 1991 EDP. Amounts deferred are used by the Company to purchase
life insurance contracts on the lives of the participants (including the
named executives participating in the plan). Because it is anticipated that
over the life of the plan, the insurance contracts will return value to the
Company approximating, on an after-tax basis, the amounts credited as
interest to the participants' account balances, this plan should have no
net cost to the Company over its life.
(3) Consists solely of non-qualified stock options pursuant to the 1981
Executive Incentive Plan.
(4) Consists solely of Company contributions to the Thrift Savings Retirement
((S) 401(k)) Plan.
(5) Also includes reimbursement of income tax paid on reimbursed moving
expenses.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company's 1981 Executive Incentive plan permits the grant of options and
stock appreciation rights to employees of, and consultants and advisors to, the
Company and its subsidiaries, including officers and directors who are serving
in such capacities. The following table contains information concerning options
granted during the fiscal year 1993 to the only Named Executive Officers who
were granted options that year. No stock appreciation rights have been granted
to date.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
OPTION TERM (7 YRS.)
--------------------------------
PERCENTAGE OF
TOTAL OPTIONS/SARS
OPTIONS GRANTED TO EXERCISE OR MARKET PRICE
GRANTED EMPLOYEES IN BASE PRICE ON DATE OF EXPIRATION
NAME (SHS)(1) FISCAL YEAR ($/SH) GRANT ($/SH) DATE 0% ($) 5% ($) 10% ($)
---- -------- ------------------ ----------- ------------ ---------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noel G. Watson 15,000 4.282% $27.875 $27.875 3-25-2000 $ 0 $ 170,200 $ 396,700
James E. Berkley 12,000 3.426% 27.875 27.875 3-25-2000 0 136,200 317,300
William R. Kerler 10,000 5.709% 27.875 27.875 3-25-2000 0 113,500 264,500
10,000 20.931 24.625 7-15-2000 36,900 85,200 198,600
Gerald L. Stevenson 10,000 2.855% 27.875 27.875 3-25-2000 0 113,500 264,500
Gain for all shareholders (based on 24,757,300
shares outstanding at September 30, 1993 and a
September 30, 1993 closing price of $23.25) 234,329,945 546,088,417
Gain to Named Executive Officers as a percent
of total gain to all shareholders 0.26% 0.26%
</TABLE>
- - --------
(1) All grants were non-qualified options pursuant to the 1981 Executive
Incentive Plan. Options are exercisable in five cumulative annual
installments of 20% of the shares subject to option commencing on the first
anniversary of the date of grant. Exercisability will be automatically
accelerated if the optionee is terminated within three years following a
Change in Control of the Company unless the Board of Directors determines
that the event shall not constitute a Change of Control.
7
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION SAR
VALUES
The following table sets forth information regarding option exercises during
the fiscal year 1993 by the Named Executive Officers and the value of their
unexercised options at September 30, 1993. All options were granted under the
1981 Executive Incentive Plan. The Company has not granted any stock
appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY- OPTIONS/SARS
SHARES END (SHS) AT FY-END ($)
ACQUIRED
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (SHS) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Noel G. Watson.......... 18,400 $366,690 11,800/63,000 $ 70,700/520,100
James E. Berkley........ 25,600 421,980 1,800/48,800 -0-/387,300
William E. Kerler....... 4,000 82,210 24,600/42,000 306,200/329,800
Gerald L. Stevenson..... -0- -0- 19,000/39,800 243,600/339,700
</TABLE>
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The overall objectives of the Company's executive compensation program are as
follows:
--To enable the Company to attract, motivate and retain highly-qualified
executives by offering competitive base salaries that are consistent
with the Company's size.
--To reward executives for past performance through a bonus program that
places a substantial component of their pay at risk based on Company
performance as measured by its return on net equity.
--To provide an incentive for continued service and future performance
through the use of stock options.
--To encourage executives to have an equity ownership in the Company.
The Company has no pension plan, but all eligible employees, including
executives, may participate in the Company's Thrift Savings Retirement
((S) 401(k)) Plan and the 1989 Employee Stock Purchase Plan.
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving the compensation of all executive officers and all
stock option grants to all employees.
Base Salary. In setting executive officer base salaries for 1993 the
Committee considered the recommendations of Dr. Jacobs and Mr. Watson, who made
salary recommendations as to all executive officers except themselves, the
Committee's own subjective evaluations of those executive officers, the salary
spread that has normally been maintained by the Company between levels of
management, and information compiled by the Company regarding prevailing
salaries for professional engineers being offered by companies that the Company
regards as its competitors.
8
<PAGE>
The Committee also considered a regression analysis of the executive
compensation paid by the publicly-traded engineering and construction companies
that are comparable to, or greater in size than the Company, that compete with
the Company for experienced employees at all levels and for which executive
salary information is publicly available (the "Peer Group") made by the
Company's financial staff. The Peer Group consists of Guy F. Atkinson, Blount,
Inc., CRSS, Fluor Corporation, Foster Wheeler, International Technology,
Michael Baker Corp., Morrison-Knudsen Corp., Stone & Webster, Inc., and the
Company. This analysis relates the revenues of the members of the Peer Group to
the base salaries paid to their five highest paid executives in the order of
their compensation as reported in their annual reports and proxy statements for
the prior year.
Mr. Watson's initial base salary for 1993 was established in the same manner
as the base salaries of the other executive officers of the Company except that
neither Dr. Jacobs nor Mr. Watson made any recommendation to the Committee
regarding Mr. Watson's salary. In addition, the Committee approved an increase
in Mr. Watson's base salary in November 1992, when he was elected Chief
Executive Officer, based upon the Committee's subjective evaluation of his
increased responsibilities.
In general, the base salaries for Mr. Watson and the Named Executive Officers
approved by the Committee for 1993 were close to or at the median level for
base salaries of officers of comparable rank in companies of comparable size in
the Peer Group for 1992 as determined by the regression analysis. However, this
regression analysis also shows that, when bonuses under the Company's Incentive
Bonus Plan, described below, are included, the combined salary and bonus
awarded to Mr. Watson and the Named Executive Officers for 1993 were in most
cases higher than the median for officers of comparable rank in companies of
comparable size in the Peer Group for 1992. The Committee believes that the
total salary and bonus paid to Mr. Watson and each of the Named Executive
Officers was reasonable in light of the performance of the Company for fiscal
1993.
Dr. Jacobs was the Chief Executive Officer of the Company from its
organization in 1957 until he resigned that position in November 1992; he
continues to serve as Chairman of the Board and as a full-time employee of the
Company. The Company has an employment agreement, originally entered into on
October 1, 1987, with Dr. Jacobs, described below under "Employment Contracts
and Termination of Employment and Change-in-Control Arrangements", that
establishes, among other matters, his base salary. The original agreement
received the approval of the Board of Directors of the Company in 1987, without
dissent and with Dr. Jacobs not voting. The Board subsequently delegated all
decisions regarding this agreement to the Committee, which has approved
subsequent amendments to it, including extensions of its term, which now
expires on September 30, 1998, but there has been no change to Dr. Jacobs' base
salary since 1987. The Committee has approved these amendments based on its
subjective judgment of Dr. Jacobs' past and continuing contributions to the
business strategy, marketing and reputation of the Company.
Annual Incentive Bonuses. Pursuant to the Company's Incentive Bonus Plan,
each year the Compensation Committee approves a target percentage of pre-tax
profits to the net equity of the Company that must be achieved before any
bonuses are paid. This target percentage is established on the basis of the
Committee's judgment of what constitutes a reasonable minimum return for the
shareholders on their investment in the Company. If pre-tax profits exceed the
target, then a predetermined percentage of profits in excess of the target is
placed in the bonus pool; if pre-tax earnings exceed two times the target, then
a larger percentage of the excess is placed into the bonus pool. A major
percentage of the bonus pool is allocated to
9
<PAGE>
the officers and key managers of the Company. Fifty percent of the allocation
to the officers and key employees is then individually allocated to them in
proportion to their weighted salaries, with the salaries of the executive
officers given the greatest weight. The remainder of the executive officer pool
is usually allocated in the same proportions as the initial allocations, but
individual allocations are in some cases adjusted on the basis of the
Committee's subjective evaluations of individual performance. Bonuses are paid
in three annual installments contingent upon continued employment and may be
further deferred by participants in the Company's deferred compensation plans.
The bonus paid to Mr. Watson for 1993 was determined in the same manner as
the bonuses of the other executive officers. Mr. Watson's 1993 bonus does not
reflect an adjustment to his formula allocation. Dr. Jacobs' bonus for 1993 was
determined on the basis of the Committee's subjective evaluation of his
contribution to the business and management of the Company as its Chairman of
the Board, and was limited by a suggestion made by Dr. Jacobs.
Long-Term Incentives. In determining stock option awards to executive
officers for 1993 the Committee considered Dr. Jacobs' and Mr. Watson's
recommendations with respect to all executive officers other than themselves,
the Committee's own subjective evaluations of the executive officers and
previous option awards to the executive officers. The Committee also considered
the stock option awards made by four of the largest competitors of the Company
that are public companies (CRSS, Fluor, Foster Wheeler and Morrison-Knudsen) to
their executive officers as a percent of outstanding shares. In general, option
grants by the Company as a percentage of outstanding shares have been the
second highest in the named group, but the Committee considered the fact that
the Company is the only company in the group that has no pension plan in
evaluating the significance of its ranking in the group.
The number of options granted to Mr. Watson for 1993 was approved before his
election as Chief Executive Officer and was determined in the same manner as
those for the other executive officers, except that neither Dr. Jacobs nor Mr.
Watson made any recommendation to the Committee regardingMr. Watson's option
grant. Dr. Jacobs has never been eligible for stock options by reason of his
percentage interest in the outstanding stock of the Company.
ROBERT M. BARTON, Chairman
J. W. SIMMONS
JAMES CLAYBURN LAFORCE
10
<PAGE>
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Robert M. Barton, a director and Secretary of the Company and Chairman of the
Compensation Committee, retired as a partner of the law firm of Barton, Klugman
& Oetting, which rendered legal services to the Company during the fiscal year,
on December 31, 1992. He continues to serve as counsel to the firm.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG JACOBS ENGINEERING GROUP INC., S&P 500 INDEX
AND THE DOW JONES HEAVY CONSTRUCTION INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Peer Group/
Measurement Period D J Heavy
(Fiscal Year Covered) Jacobs Enginering S&P 500 Construction
- - --------------------- ----------------- ------- ------------
<S> <C> <C> <C>
Measurement Pt- 09/30/1988 $100 $100 $100
FYE 09/1989 122 133 137
FYE 09/1990 185 121 137
FYE 09/1991 559 158 165
FYE 09/1992 590 176 170
FYE 09/1993 471 199 173
</TABLE>
- - ----------
*$100 INVESTED ON 09/30/88 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER 30.
11
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has an agreement with Dr. Joseph J. Jacobs, originally entered
into in 1986 providing for base pay at an annual rate of $425,000 per year for
a term that ends on September 30, 1998. He is also entitled to participate in
any bonus plan provided for Company executives. The agreement will continue in
force whether or not Dr. Jacobs continues to be employed by the Company or
becomes disabled. If Dr. Jacobs should die during the term of the agreement,
then payments under the agreement will be made to a beneficiary named by Dr.
Jacobs. If Dr. Jacobs ceases to be an employee of the Company, he will continue
as a consultant to the Company in community and public affairs, in the
promotion of the business expansion and goodwill of the Company and in
undertaking such special assignments as the Company or its Board of Directors
may request. During the term of the agreement, the Company will provide Dr.
Jacobs with the same medical and life insurance and other benefits as are made
available to senior management officials of the Company and will provide him
with office and secretarial services. Under Company policy Dr. Jacobs also
receives a taxable car allowance of $7,200 per year. The agreement contains
provisions intended to prevent Dr. Jacobs from entering into any form of
competition with the Company or disclosing confidential information of the
Company. The original agreement, as well as the initial extensions of its term,
received the approval of the Board of Directors of the Company without dissent
and with Dr. Jacobs not voting. Subsequently, the Board of Directors delegated
to the Compensation Committee of the Board the sole power to approve amendments
to the agreement extending its term. See "Board Compensation Committee Report
on Executive Compensation", above.
2. APPROVAL OF OUTSIDE DIRECTOR STOCK OPTION PLAN
At the annual meeting the shareholders will be asked to approve amendments to
the Jacobs Engineering Group Inc. 1981 Executive Incentive Plan (the "1981
Plan") that create an "Outside Director Stock Option Plan" (the "Outside
Director Plan") and transfer to a separate reserve for the Outside Director
Plan 100,000 shares of the authorized but unissued common stock of the Company
previously included in the 2,000,000 shares of common stock reserved for the
1981 Plan at the 1992 Annual Meeting of Shareholders. Accordingly, the
shareholders are not being asked to reserve any additional shares of the
authorized but unissued common stock of the Company for the Outside Director
Plan. As of the Record Date there were 1,391,700 shares of common stock
reserved for the grant of options under the 1981 Plan.
The Outside Director Plan was approved by the Board of Directors of the
Company on March 25, 1993 subject to the approval of the shareholders at the
1994 annual meeting.
The Board of Directors believes that the grant of stock options to directors
who are not employed by the Company ("Outside Directors"), and accordingly are
not otherwise eligible to receive options under the 1981 Plan, will assist the
Company in attracting and retaining highly qualified individuals to serve as
directors of the Company and will align the Outside Directors' compensation
more closely to the performance of the Company and its common stock as well as
the interests of the shareholders.
The Outside Director Plan provides that each Outside Director will receive an
initial grant (an "Appointment Grant") of an Outside Director Option to
purchase 2,000 shares of common stock on the first day of the month following
the date of the adoption of the Plan or the first day of the month following
the date upon which the Outside Director is elected as a director. Thereafter,
all Outside Directors will also
12
<PAGE>
receive annually on the first day of March an additional grant (an "Annual
Grant") of an Outside Director Option to purchase 1,000 shares of common stock.
However, Outside Director Options may not be granted for more than 100,000
shares of the common stock of the Company. Outstanding Director Stock Options
and the reserve of 100,000 shares of common stock for the Outside Director
Stock Option Plan are subject to appropriate and proportionate adjustments in
the event of any stock split, stock dividend or other like recapitalization.
However, the provision for Appointment Grants and Annual Grants of 2,000 shares
and 1,000 shares, respectively, is not subject to such adjustment.
The option price for Outside Director Options is the "Fair Market Value" of
the common stock at the time of grant. For this purpose "Fair Market Value"
means the greater of the average closing price of the common stock of the
Company as reported in the composite transactions report of the New York Stock
Exchange for the ten trading days ending on the second trading day prior to the
date on which the option is granted and 85% of the closing price on the New
York Stock Exchange on the date of grant.
Outside Director Options may not be exercised until the later of one year
following the date of grant or six months following the date upon which the
shareholders approve of the Outside Director Plan. Outside Director Options are
exercisable in four successive annual installments of 25% of each option
commencing one year following the date of grant and expire unless sooner
exercised or terminated ten years following the date of grant. No installment
of an Outside Director Option that has not become exercisable on the date on
which the holder of the option ceases to be a director of the Company for any
reason will thereafter become exercisable. If the holder of an Outside Director
Option retires, resigns or is replaced as a director for any reason other than
death, retirement or disability, while holding such an option, then the option
will expire on the later of three months from retirement or one year following
the date of death if the holder dies within the three-month period. Otherwise,
the option will expire one year from the date of death of the holder or, in the
case of disability, one year from the date upon which the holder resigns from
the Board by reason of such disability. If an Outside Director retires, then
the option will terminate one year from the date of retirement, or one year
from the date of death if the director dies during the year following
retirement.
Outside Director Options may not be transferred other than by will, the laws
of descent and distribution or pursuant to a qualified domestic relations
order. After the death of the holder of an option the exercisable portion may
be exercised by the director's personal representative or any person empowered
to do so during the time periods stated above.
When exercising an Outside Director Option the holder may pay for the shares
in cash or with shares of common stock of the Company having a total Fair
Market Value equal to the total option price of the shares being purchased.
The Outside Directors will not recognize any income upon the receipt of an
Outside Director Stock Option, and the Company will not be entitled to a
deduction for federal income tax purposes in the year of grant. Ordinary income
will be realized by the holder at the time the Director Stock Option is
exercised and the shares delivered to the holder. The amount of such income
will be the difference, if any, between the option price and the Fair Market
Value of the shares on the date of exercise. The Company will be entitled to a
deduction at the same time and in the same amount as the ordinary income the
holder is deemed to have realized at the time of exercise. When the holder of
stock acquired upon the exercise of an Outside Director Stock Option disposes
of the shares, the difference between the sales price and the holder's tax
basis in such shares will be treated as long or short-term capital gain or loss
depending upon the holding period for the shares.
13
<PAGE>
The Board of Directors may terminate the Outside Director Plan in whole or in
part at any time, but they may not amend the Plan other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act or the rules thereunder. Unless the shareholders vote to extend the term of
the Outside Director Plan, it will expire on January 1, 1999, the date on which
the 1981 Plan expires.
The Outside Director Plan is not subject to the Change of Control provisions
of the 1981 Plan. However, upon the dissolution or liquidation of the Company
or upon a reorganization, merger or consolidation of the Company with one or
more other companies as a result of which the Company is not the surviving
corporation or upon the sale or substantially all of the assets of the Company
all Outside Director Options then outstanding become fully vested and
exercisable unless provisions are made in connection with such transaction for
the continuation of the Outside Director Plan and the assumption or
substitution of new options for stock of the successor corporation for the old
options by the successor corporation, with appropriate adjustments as to the
number and kind of shares and prices.
The last reported sale of the common stock on the New York Stock Exchange on
December 27, 1993 was at $23.25 per share.
Approval of the Outside Director Stock Option Plan requires the affirmative
vote of the holders of a majority of the outstanding common stock represented
at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE OUTSIDE DIRECTOR
STOCK OPTION PLAN.
3. APPROVAL OF ERNST & YOUNG AS AUDITORS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Ernst & Young to audit the accounts of the Company for its fiscal year
ending September 30, 1994. The Company has been advised by Ernst & Young that
the firm has no relationship with the Company or its subsidiaries other than
that arising from the firm's engagement as auditors.
If the selection of Ernst & Young is not approved by the holders of a
majority of the shares represented at the meeting and voting on the proposal,
or if prior to the Annual Meeting to be held in February, Ernst & Young should
decline to act or otherwise become incapable of acting, or if its employment
should be otherwise discontinued by the Board of Directors, then in any such
case the Board of Directors will appoint other independent auditors whose
employment for any period subsequent to the 1994 Annual Meeting will be subject
to ratification by the shareholders at the 1995 Annual Meeting.
The Company has been advised that representatives of Ernst & Young will be
present at the Annual Meeting where they will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE SELECTION OF ERNST &
YOUNG AS AUDITORS FOR THE YEAR ENDING SEPTEMBER 30, 1994.
4. OTHER BUSINESS
The Board of Directors does not intend to present any other business for
action at the meeting and does not know of any business intended to be
presented by others.
14
<PAGE>
SHAREHOLDERS' PROPOSALS
Proposals of shareholders for consideration at the annual meeting of
shareholders to be held on Tuesday, February 14, 1995 must be received by the
Company no later than September 2, 1994 in order to be included in the
Company's proxy statement and proxy relating to that meeting.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission ("SEC") and the New York Stock Exchange initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of the Company. Officers, directors and greater than ten-
percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by them.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were
complied with on a timely basis during the fiscal year ended September 30,
1993.
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's annual report for the year ended September 30, 1993
is being mailed concurrently with this Proxy Statement to each shareholder of
record on the Record Date.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF THE COMPANY'S REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, TO THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION TO ANY PERSON REQUESTING IN
WRITING AND STATING THAT HE WAS THE BENEFICIAL OWNER OF COMMON STOCK OF THE
COMPANY ON DECEMBER 27, 1993. THE COMPANY WILL ALSO FURNISH COPIES OF ANY
EXHIBITS TO THE FORM 10-K TO ELIGIBLE PERSONS REQUESTING EXHIBITS AT $0.50 PER
PAGE, PAID IN ADVANCE. THE COMPANY WILL INDICATE THE NUMBER OF PAGES TO BE
CHARGED FOR UPON WRITTEN INQUIRY. REQUESTS AND INQUIRIES SHOULD BE ADDRESSED
TO:
Investor Relations
Jacobs Engineering Group Inc.
251 South Lake Avenue
Pasadena, California 91101
Neither the annual report nor the Form 10-K is to be regarded as proxy
soliciting material or as a communication by means of which a solicitation of
proxies is to be made.
By Order of the Board of Directors
Robert M. Barton
Secretary
Pasadena, California
December 27, 1993
15
<PAGE>
A PERFORMANCE GRAPH SHOWING A COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG JACOBS ENGINEERING, S&P 500 INDEX AND DOW JONES HEAVY CONSTRUCTION INDEX
APPEARS ON PAGE 11. (THE NUMBERS USED IN GRAPH APPEAR ON PAGE 11.)
<PAGE>
JACOBS ENGINEERING GROUP INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS OF JACOBS ENGINEERING GROUP INC.
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, FEBRUARY 8, 1994
THE UNDERSIGNED hereby appoints Joseph J. Jacobs, Noel G. Watson and Robert
M. Barton his true and lawful proxies (with full power of substitution) to vote
in the undersigned's name, place and stead all shares in Jacobs Engineering
Group Inc. that the undersigned owns or is entitled to vote at the Annual
Meeting of Shareholders to be held February 8, 1994, and at any adjournment
thereof, upon the matters listed below in accordance with the following
instructions:
1. To elect Noel G. Watson, James Clayburn LaForce, David M. Petrone and
James L. Rainey, Jr., as directors.
VOTE (except as marked to the contrary below) [_] DO NOT VOTE [_]
(Instructions: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
- - --------------------------------------------------------------------------------
2. To approve the Outside Director Stock Option Plan.
FOR [_]AGAINST [_]DO NOT VOTE [_]
3. To approve Ernst & Young as auditors:
FOR [_]AGAINST [_]DO NOT VOTE [_]
IF ANY OF THE FOREGOING BOXES ARE CHECKED, THE SHARES COVERED BY THIS PROXY
WILL BE VOTED IN ACCORDANCE THEREWITH. IF NO BOX IS CHECKED UNDER ANY OF THE
FOREGOING, THE SHARES WILL BE VOTED FOR THE PERSONS NOMINATED AS DIRECTORS BY
THE BOARD OF DIRECTORS AND FOR THE APPROVAL OF ITEMS 2 AND 3. IF ANY OTHER
ISSUE IS PROPERLY BROUGHT BEFORE THE MEETING, THEN THE PROXIES WILL VOTE THE
SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT.
Receipt of the Jacobs Engineering Group Inc. Proxy Statement dated December
27, 1993 and Annual Report for the year ended September 30, 1993 is hereby
acknowledged. Please vote my (our) shares as indicated on the face of this
proxy.
-------------------------------
-------------------------------
Dated: ______ , 1994
Attorneys,
executors,
trustees, etc.
should show such
capacity when
signing and unless
the certificate(s)
is (are) registered
in their names,
should submit a
Proxy from the
record owner.
Evidence of their
authority should
accompany the
Proxy. Joint owners
should each sign
individually.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. PLEASE SPECIFY CHOICES,
DATE, SIGN AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES.
