<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INTERNATIONAL TECHNOLOGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
INTERNATIONAL TECHNOLOGY CORPORATION
2790 MOSSIDE BOULEVARD
MONROEVILLE, PENNSYLVANIA 15146-2792
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders (the "Annual Meeting") of
International Technology Corporation (the "Company") will be held at the
DoubleTree Hotel, located at 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222 on
September 16, 1997, at 9:00 a.m. Eastern time, for the following purposes:
1. To elect one director to hold office until the 2000 Annual Meeting of
Stockholders and until his successor is elected and qualified; and
2. To transact such other business as may properly come before the Annual
Meeting.
Holders of record of the Company's Common Stock at the close of business on
July 31, 1997 are entitled to notice of and to vote at the Annual Meeting and at
any adjournment(s) or postponement(s) thereof. A list of stockholders entitled
to vote at the Annual Meeting will be open to examination by any stockholder for
any purpose germane to the Annual Meeting, during ordinary business hours, from
September 5, 1997 until September 16, 1997 at the Company's executive offices
located at 2790 Mosside Boulevard, Monroeville, Pennsylvania 15146-2792.
Each stockholder is requested to sign and date the enclosed proxy card and
to return it without delay in the enclosed postage-paid envelope. Any
stockholder present at the Annual Meeting may withdraw the proxy and vote
personally on each matter brought before the Annual Meeting.
By Order of the Board of Directors,
[SIG]
James G. Kirk
SECRETARY
August 15, 1997
Monroeville, Pennsylvania
recycled paper symbol
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
2790 MOSSIDE BOULEVARD
MONROEVILLE, PENNSYLVANIA 15146-2792
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 16, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of International Technology Corporation, a
Delaware corporation (the "Company"), for use at the 1997 Annual Meeting of
Stockholders of the Company to be held at 9:00 a.m. Eastern time, on Tuesday,
September 16, 1997, at the DoubleTree Hotel, located at 1000 Penn Avenue,
Pittsburgh, Pennsylvania 15222, and at any adjournment(s) or postponement(s)
thereof (the "Annual Meeting"). It is anticipated that this Proxy Statement,
together with the proxy and the 1997 Annual Report to Stockholders, will first
be mailed to the Company's stockholders on or about August 15, 1997.
VOTING AT THE MEETING
The close of business on July 31, 1997 has been fixed as the record date for
determination of holders ("Stockholders") of the Company's Common Stock, $0.01
par value (the "Common Stock"), entitled to notice of and to vote at the Annual
Meeting. On that date, there were outstanding and entitled to vote 9,740,304
shares of Common Stock. The presence, either in person or by proxy, of persons
entitled to cast a majority of such votes constitutes a quorum for the
transaction of business at the Annual Meeting.
Stockholders are entitled to one vote per share on all matters submitted for
consideration at the Annual Meeting, subject to cumulative voting rights in the
election of Common Stock Directors (see "Election of Directors"). With regard to
the election of Common Stock Directors, votes may be cast in favor of or
withheld from nominees. Votes that are withheld will be excluded entirely from
the vote and will have no effect. Abstentions may be specified on all proposals
other than the election of Common Stock Directors. Abstentions on returned
proxies are counted as shares present in the determination of whether the shares
of stock represented at the Annual Meeting constitute a quorum. Each proposal is
tabulated separately. Abstentions are counted in tabulations of the votes cast
on proposals presented to the stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised by (i) attending the Annual Meeting and voting in person,
(ii) duly executing and delivering a proxy for the Annual Meeting bearing a
later date or (iii) delivering written notice of revocation to the Secretary of
the Company prior to use of the enclosed proxy at the Annual Meeting.
ELECTION OF DIRECTORS
BOARD OF DIRECTORS FOLLOWING THE CARLYLE INVESTMENT
At the 1996 Annual Meeting of Stockholders, held November 20, 1996,
stockholders approved a cash investment (the "Investment") of $45,000,000 in the
Company by certain investors affiliated with The Carlyle Group (collectively,
"Carlyle"), a private merchant bank headquartered in Washington, D.C. In
consideration of its investment, Carlyle received 45,000 shares of newly issued
Cumulative Convertible Participating Preferred Stock, par value $100 per share
(the "Convertible Preferred Stock"), and warrants (the "Warrants") to purchase
up to 1,250,000 shares of the Company's Common Stock (at the current exercise
price of $11.39 per share). Holders of the Convertible Preferred Stock own
approximately 38% of the voting power of the Company (43% assuming exercise of
the Warrants). Carlyle's purchase of the Convertible Preferred Stock and
Warrants was financed through the private sale of interests in limited
<PAGE>
partnerships affiliated with Carlyle or through other entities. These
partnerships and other entities then purchased the Convertible Preferred Stock
and Warrants.
Pursuant to the terms of the Investment, Carlyle is entitled to elect a
majority of the Company's Board of Directors, until November 20, 2001, which
date is five years from the consummation of the Investment (the "Five-Year
Period"), provided that Carlyle continues to own at least 20% of the voting
power of the Company. Also pursuant to the terms of the Investment, the number
of directors comprising the Company's Board shall be an odd number. A majority
of the directors (the "Preferred Stock Directors") will be elected by the
holders of the Convertible Preferred Stock acting by written consent and without
a meeting of the Common Stock holders, and the remaining directors (the "Common
Stock Directors") will be elected by the Common Stock holders. Presently, the
Board of Directors consists of seven members, four of whom are Preferred Stock
Directors and three of whom are Common Stock Directors. The four Preferred Stock
Directors serve for annual terms. The Investment agreements also provide that at
least two of the directors elected by the holders of the Common Stock will have
no employment or other relationship with the Company or Carlyle, other than
their positions as directors of the Company. During the Five-Year Period,
holders of the Convertible Preferred Stock will not participate in elections of
the Common Stock Directors and the Preferred Stock Directors will not have the
right to vote on the election of any director to fill a vacancy among the Common
Stock Directors. At the end of the Five-Year Period, provided that Carlyle
continues to own at least 20% of the voting power of the Company, holders of the
Convertible Preferred Stock will be entitled to elect the largest number of
directors which is a minority of the directors of the Company and to vote with
the Common Stock holders (as a single class) on the election of the remaining
directors. Additionally, the holders of the Convertible Preferred Stock, in the
event they no longer have the right to elect at least a minority of the
directors, will have the right (voting as a class with holders of the Company's
7% Cumulative Convertible Exchangeable Preferred Stock, par value $100 per
share, and any other parity stock) to elect two directors to the Board in the
event the Company fails to make payment of dividends on the Convertible
Preferred Stock for six dividend periods.
CUMULATIVE VOTING AND NOMINATIONS FOR COMMON STOCK DIRECTORS
Under the classified Board of Directors provisions of the Company's
Certificate of Incorporation, the Common Stock Directors of the Company serve
for three-year terms which are staggered to provide for the election of
approximately one-third of the Board members each year. As the term of only one
Common Stock Director expires in 1997, only one Common Stock Director is to be
elected at the 1997 Annual Meeting of Stockholders.
Stockholders are entitled to cumulate voting rights in the election of
Common Stock Directors. Under cumulative voting, each stockholder is entitled to
a number of votes equal to the number of Common Stock Directors to be elected
multiplied by the number of shares of Common Stock the stockholder is entitled
to vote. Such votes may be cast for one nominee or distributed among two or more
candidates. The candidates for election receiving the highest number of
affirmative votes of the shares entitled to vote for them up to the number of
Common Stock Directors to be elected by those shares will be elected.
No stockholder shall be entitled to cumulate votes for a candidate unless
such candidate's name has been placed in nomination prior to the voting. In
voting by proxy, a stockholder is conferring upon the proxyholders the
discretionary authority to cumulate votes in electing Common Stock Directors. If
any person is properly nominated for Common Stock Director other than the
nominee set forth in the table above, the persons named in the accompanying
proxy may vote at their discretion cumulatively for a director other than the
Company's nominee.
Under the Company's Bylaws, in order to be effective, nominations for
election as a Common Stock Director must be submitted to the Secretary of the
Company not later than sixty days in advance of the Annual Meeting or, if later,
the fifteenth day following the first public disclosure of the date of the
Annual Meeting. Any such notice of nomination must set forth: (i) the name and
address of the stockholder who
2
<PAGE>
intends to make the nomination and of the person or persons to be nominated;
(ii) a representation that the stockholder is a holder of record of Common Stock
of the Company entitled to vote at the Annual Meeting and intends to appear in
person or by proxy at the Annual Meeting and nominate the person or persons
specified in the notice; (iii) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, (iv) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the rules and regulations of the
Securities and Exchange Commission had the nominee been nominated, or intended
to be nominated, by the Board of Directors; and (v) the consent of each nominee
to serve as director of the Company if so elected. In addition, a stockholder
making such a nomination must promptly provide any other information reasonably
requested by the Company.
The name of the nominee for election as a Common Stock Director, who has
been nominated by the Board of Directors, and the present directors whose terms
of office do not expire in 1997 or who are not subject to election by the Common
Stock are set forth in the following table. Should the nominee become
unavailable to serve, the proxies solicited hereby may be voted for election of
such other person as shall be nominated by the Board of Directors.
<TABLE>
<CAPTION>
TERM TO DIRECTOR OF THE
NAME AGE CURRENT POSITION EXPIRE COMPANY SINCE
- --------------------------------------------- --- ----------------------------------- ----------- -----------------
<S> <C> <C> <C> <C>
NOMINEE FOR TERM EXPIRING IN 2000:
Anthony J. DeLuca(1)......................... 50 Director, Chief Executive Officer 1997 1996
and President
COMMON STOCK DIRECTORS WHOSE TERMS EXPIRE AFTER 1997 OR PREFERRED STOCK DIRECTORS (NOT SUBJECT
TO ELECTION BY THE HOLDERS OF COMMON STOCK):
COMMON STOCK DIRECTORS:
E. Martin Gibson(3).......................... 59 Director 1998 1994
James C. McGill(3)........................... 53 Director 1999 1990
PREFERRED STOCK DIRECTORS:
Daniel A. D'Aniello(1)(2).................... 50 Director and Chairman of the Board 1997(4) 1996
(non-officer position)
Philip B. Dolan(1)(2)........................ 39 Director 1997(4) 1996
James David Watkins(2)....................... 70 Director 1997(4) 1996
Robert F. Pugliese(3)........................ 64 Director 1997(4) 1996
</TABLE>
- ------------------------
(1) Member of Executive Committee.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
(4) The Preferred Stock Directors serve for annual terms. The holders of the
Convertible Preferred Stock have indicated to the Company their intention to
reelect, on or before the date of the Annual Meeting, Mr. D'Aniello, Mr.
Dolan, Admiral Watkins and Mr. Pugliese each to serve an annual term to
expire in 1998.
3
<PAGE>
BACKGROUND OF THE NOMINEES AND CURRENT DIRECTORS
Mr. DeLuca was named President and Acting Chief Executive Officer and a
director of the Company as of July 1, 1996 and Chief Executive Officer and
President as of July 22, 1997. Prior thereto, Mr. DeLuca had been Senior Vice
President and Chief Financial Officer of the Company since March 1990. Before
joining the Company, Mr. DeLuca had been a senior partner at the public
accounting firm Ernst & Young LLP.
Mr. Gibson became a director of the Company on October 11, 1994 and was
Chairman of the Board of Directors, a non-officer, non-employee position, from
April 6, 1995 until the closing of the Investment. From 1990 until December
1994, Mr. Gibson served as Chairman of Corning Life Sciences, Inc., a subsidiary
of Corning Incorporated. Mr. Gibson served in various other senior management
capacities with Corning Incorporated during his 32 year career there, including
as a Senior Vice President and General Manager of Corning Medical and Scientific
Division from 1980 until 1983, and as Group President of Corning Consumer
Products and Laboratory Sciences from 1983 until 1990. From 1983 to 1994, Mr.
Gibson served on the Board of Directors of Corning Incorporated. Mr. Gibson also
serves on the Boards of Directors of Hardinge, Inc. and NovaCare, Inc.
Mr. McGill is currently, and has been for at least five years, a private
investor. He served as Chairman of McGill Environmental Systems, Inc. from 1970
to 1987. Mr. McGill serves on the Board of Trustees of the University of Tulsa
and on the Boards of Directors of four private corporations that are engaged in
tax consulting, health care, pipeline construction and golf.
Mr. D'Aniello has been a Managing Director for Carlyle since 1987. Mr.
D'Aniello was Vice President, Finance and Development for Marriott Corporation,
a hospitality company, from 1981 to 1987. He currently serves on the Board of
Directors for GTS Duratek, Inc., an environmental services company, Baker &
Taylor, Inc., a wholesale distributor of books, and CB Commercial Real Estate
Group, Inc., a commercial real estate firm. Mr. D'Aniello is Chairman of GTS
Duratek, Inc. and Vice Chairman of Baker & Taylor, Inc.
Mr. Dolan has been a Vice President for Carlyle since 1989. Prior to joining
Carlyle, Mr. Dolan was an investment analyst and fund manager with the Trust
Division of the Mercantile-Safe Deposit and Trust Company and was engaged in
management consulting and practiced public accounting with Seidman & Seidman.
Mr. Dolan is a Certified Public Accountant. Mr. Dolan also serves on the Board
of Directors of Baker & Taylor, Inc.
Admiral Watkins has been the President of the Joint Oceanographic
Institutions, Inc. since 1993 and President of Consortium Oceanographic Research
and Education since 1994. Admiral Watkins was appointed Chief of Naval
Operations in 1982 by President Reagan and served as Secretary of Energy under
President Bush from 1989 to 1993. Prior to his appointment as Secretary of
Energy, Admiral Watkins served on the Board of New York Medical College and the
Math/Science Advisory Council of the National Executive Service Corps. He also
served as a consultant to the Carnegie Corporation of New York, the Education
Commission of the States and the Exxon Education Foundation. Additionally, he
was a member of the Marymount University's Board of Trustees and co-chair of the
National Committee for the Vatican Judaica Exhibition. In 1987, Admiral Watkins
was appointed Chairman of the Presidential Commission on the Human
Immunodeficiency Virus Epidemic. Admiral Watkins has also served on the Boards
of Directors of the Philadelphia Electric Company, a biopharmaceutical company,
VESTAR, Inc. and the Ford Aerospace Corporation. After leaving the Department of
Energy, Admiral Watkins became a trustee to the Carnegie Corporation of New
York, a Director of Edison International, a Director of GTS-Duratek, Inc. and a
member of Advisory Boards of Digital Systems Research, Inc. and Eurotech, Ltd.
The Admiral is a graduate of the United States Naval Academy, the U.S. Naval
Postgraduate School and the Oak Ridge National Laboratory.
Mr. Pugliese has been Special Counsel to Eckert Seamans Cherin & Mellott
since 1993. Mr. Pugliese was Executive Vice President, Legal and Corporate
Affairs for Westinghouse Electric Corporation and
4
<PAGE>
served as General Counsel from 1976 to 1992. Mr. Pugliese is a member of the
Association of General Counsel and a director of Ocwen Asset Investment
Corporation. Mr. Pugliese has served as Secretary to the Board of Directors of
Westinghouse Electric Corporation and Chairman of the Board of Trustees at the
University of Scranton.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the period March 30, 1996 through March 28, 1997, the end of the
Company's last fiscal year, the Company's Board of Directors held eight
meetings. During such fiscal year, each director, with one exception, attended
75% or more of the aggregate of (i) the total number of meetings of the Board of
Directors (held during the period for which he has been a director) and (ii) the
total number of meetings held by all committees of the Board on which he served
(during the period that he served). Mr. Dolan was unable to attend one committee
meeting due to airline delays beyond his control.
The Company's Executive Committee, which was reconstituted following the
Investment, held one meeting during the period from March 30, 1996 through March
28, 1997. The Executive Committee manages the business and affairs of the
Company between regularly scheduled Board Meetings.
The Company's Audit Committee held three meetings from March 30, 1996
through March 28, 1997. The Audit Committee makes recommendations to the Board
of Directors concerning the selection of the Company's independent auditors and
reviews with the independent auditors the scope and results of the annual audit.
The Company's Compensation Committee held three meetings from March 30, 1996
through March 28, 1997. The Compensation Committee reviews salaries, bonuses and
other aspects of executive compensation and administers the Company's 1996 Stock
Incentive Plan, which was approved by stockholders at the 1996 Annual Meeting of
Stockholders.
COMPENSATION OF DIRECTORS
RETAINER FEES. Following the closing of the Investment, non-employee
directors each receive annual compensation at the rate of approximately $35,000
per year, consisting of a retainer fee of $6,000 per quarter and a board meeting
fee of $2,750 for each board meeting attended (no additional compensation is
given for attendance at committee meetings). Directors' compensation may be paid
in cash and/or stock as determined by the Executive Committee. Payments on
account of directors fees earned by Messrs. D'Aniello and Dolan are paid
directly to Carlyle.
In February 1997 the Company adopted a plan pursuant to which the directors
could receive their directors fees in Common Stock in lieu of cash. Directors
who elect in writing to be paid in stock are entitled to be paid Common Stock in
lieu of all fees other than reimbursement of out-of-pocket expenses. Directors
may elect to receive stock in lieu of cash fees for a fiscal quarter by
delivering notice to the Company at least five days before the end of the
quarter (except in case of fees due as of the adoption of the plan). The number
of shares to be issued is determined by dividing the dollar amount of fees
payable by the closing sale price on the New York Stock Exchange of the
Company's Common Stock on the first business day of the quarter (and each
succeeding quarter) after the director elects to be paid in stock (except in the
case of fees payable as of the adoption of the plan, which were determined using
the closing sale price as of the date of adoption of the plan), until the
director revokes his election. A maximum of 100,000 shares may be awarded under
the plan. Common Stock issued under the plan will be treasury stock or stock
purchased in the open market, to avoid dilution to stockholders. Common Stock
may not be awarded after February 26, 2002, or the earlier termination of the
plan by the Compensation Committee.
Prior to the closing of the Investment, non-employee directors received a
retainer fee of $5,000 per quarter, $1,000 for each Board or committee meeting
attended, $500 for each telephonic Board or committee meeting attended, $500 per
day for travel on business days and reimbursement of air travel and
5
<PAGE>
other expenses incurred in connection with attending Board or committee
meetings. Committee chairmen received $1,500 for each committee meeting attended
and $750 for each telephonic committee meeting attended. The fees paid for
meeting attendance were limited to no more than one committee meeting for all
committee meetings held in tandem with a Board meeting, regardless of the actual
number of committee meetings attended. Additionally, effective with the third
quarter of fiscal year 1996 through and including the third quarter of fiscal
year 1997, the quarterly retainer fee payable to each director for the third
quarter of each fiscal year was paid in the form of shares of Common Stock,
rather than in cash. Such shares were purchased by the Company in the open
market and reissued to directors.
CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors serves as a
member or ex-officio member of certain committees of the Board and is required
to spend significant time on Company matters. The chairmanship is a non-officer,
non-employee position.
Upon completion of the Investment, Carlyle named one of the Preferred Stock
Directors, Mr. Daniel A. D'Aniello, Chairman of the Board. Mr. D'Aniello is
compensated for his services at the rate of $120,000 per year, in lieu of the
non-employee director fees described above. Mr. D'Aniello receives the same
compensation as the previous chairman, Mr. E. Martin Gibson, received.
Mr. E. Martin Gibson served as Chairman of the Board from his election on
April 6, 1995 until his resignation as Chairman on November 20, 1996, upon
completion of the Investment. As indicated above, Mr. Gibson continues to serve
as a director.
STOCK OPTIONS. At the 1996 Annual Meeting, stockholders approved the 1996
Stock Incentive Plan (the "1996 Plan"). The purpose of the 1996 Plan is to
enable the Company and its subsidiaries to attract, retain and motivate
employees by providing for or increasing their proprietary interests in the
Company, and to attract non-employee directors and further align their interests
with those of the stockholders by providing for or increasing their proprietary
interests in the Company. Every employee of the Company or any of its
subsidiaries is eligible to be considered for the grant of awards under the 1996
Plan.
The maximum number of shares of Common Stock that may be issued pursuant to
awards granted under the 1996 Plan is currently 444,767. On April 1 of each of
the years 1998, 1999, 2000 and 2001, such maximum number will be increased by a
number equal to 2% of the number of shares of Common Stock issued and
outstanding on each of such dates. The 1996 Plan is administered by the
Compensation Committee of the Board (the "Compensation Committee"). Subject to
the provisions of the 1996 Plan, the Committee has full and final authority to
adopt, amend and rescind rules and regulations relating to the 1996 Plan, select
the employees to whom awards will be granted thereunder, to grant such awards
and to determine the terms and conditions of such awards and the number of
shares to be issued pursuant thereto.
Pursuant to the terms of the 1996 Plan, grants of stock options to
non-employee directors are within the discretion of the Compensation Committee,
and since the approval of the 1996 Plan at the 1996 Annual Meeting of
Stockholders, no grants have been made to non-employee directors.
Prior to the expiration of the 1991 Stock Incentive Plan (the "1991 Plan")
on March 31, 1996, each non-employee director also received automatic grants of
nonqualified stock options under the 1991 Plan. Pursuant to the 1991 Plan, the
options held by non-employee directors would have vested upon completion of the
Investment; however, all non-employee directors waived acceleration of the
vesting of their options.
RETIREMENT PLAN. Under the Company's retirement plan for non-employee
directors in effect prior to the completion of the Investment, non-employee
directors qualified for five years of retirement payments if on retirement (i)
they had five years of Board service (in which case payments would begin at age
70, or upon retirement if the director is between 70 and 73 when he retired) or
(ii) they had ten years of Board service (in which case payments would begin at
age 65, or upon retirement if the director was between 65 and 73 when he
retired).
6
<PAGE>
Pursuant to the terms of the Retirement Plan, the consummation of the
Investment would have caused the payment of certain benefits payable to
non-employee directors of the Company who did not elect to remain on the Board
of Directors following such a change in control to be accelerated to a lump sum
payment. The Company and the non-employee directors of the Company who did not
remain on the Board following the closing of the Investment agreed to amend the
Retirement Plan, effective upon the consummation of the Investment, such that
the vested benefits otherwise payable to each director as a lump sum are to be
paid over a five-year period and that directors whose benefits had not vested
prior to the closing of the Investment had such benefits vest partially under
the Retirement Plan pro rata based on their years of service. In addition, such
amendment provides that Messrs. Gibson and McGill will be paid amounts under the
Retirement Plan, in lieu of any benefits that may become payable to them under
the Retirement Plan in the future, notwithstanding that they remain on the Board
following the Investment. Each of the non-employee directors of the Company
acknowledged and agreed to a waiver of the right to receive the accelerated lump
sum payment. Pursuant to the Retirement Plan as amended, the directors began
receiving the following payments in November 1996:
<TABLE>
<CAPTION>
YEARS OF VESTED ANNUAL
DIRECTOR SERVICE(1) BENEFIT PAYMENT(2)
- ------------------------------------------------------ --------------- ------------- -----------
<S> <C> <C> <C>
Jack O. Vance......................................... 9 $ 200,000 $ 40,000
Donald S. Burns....................................... 9 200,000 40,000
Ralph S. Cunningham................................... 13 200,000 40,000
James C. McGill....................................... 6 200,000 40,000
W. Scott Martin....................................... 2 80,000 16,000
E. Martin Gibson...................................... 2 80,000 16,000
Kirby L. Cramer....................................... 1 40,000 8,000
Henry E. Riggs........................................ 1 40,000 8,000
------------- -----------
$ 1,040,000 $ 208,000
------------- -----------
------------- -----------
</TABLE>
- ------------------------
(1) Directors with five years of service as of October 31, 1996 qualified for
the full vested benefit of $200,000. The benefit for directors with less
than five years service was prorated.
(2) Benefits are to be paid in equal monthly installments over five years.
7
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth information as of July 21, 1997 with respect
to beneficial ownership of (i) the Company's Common Stock, (ii) the Company's
Depositary Shares, each representing 1/100 of a share of 7% Preferred Stock,
(iii) the Company's Cumulative Convertible Participating Preferred Stock, par
value $100 per share (the "Convertible Preferred Stock"), and (iv) the Warrants,
by (a) each person known by the Company to be the beneficial owner of 5% or more
of the outstanding Common Stock, Depositary Shares, Convertible Preferred Stock
or Warrants (b) each director and nominee, (c) the named officers listed in the
following Summary Compensation Table (the "Named Officers"), and (d) all
directors and persons serving as executive officers as a group. All amounts have
been adjusted to reflect the one-for-four reverse stock split approved at the
1996 Annual Meeting of Stockholders.
<TABLE>
<CAPTION>
PERCENT OF AMOUNT AND NATURE
AMOUNT AND NATURE COMMON AMOUNT AND NATURE PERCENT OF OF BENEFICIAL
OF BENEFICIAL STOCK OF BENEFICIAL DEPOSITARY SHARES OWNERSHIP OF
OWNERSHIP OF BENEFICIALLY OWNERSHIP OF BENEFICIALLY CONVERTIBLE
NAME COMMON STOCK(1)(2) OWNED(2) DEPOSITARY SHARES OWNED PREFERRED STOCK
- -------------------------- ------------------ ----------- ------------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Carlyle Stockholders...... 7,178,855(3) 42.44% 45,000
Wisconsin Investment
Board(4)................. 887,950 9.70%
Dimension Fund Advisors
Inc.(5).................. 513,300 5.61%
Michael A. Roth & Brian J.
Stark (6)................ 553,400 5.75%
Daniel A. D'Aniello(7).... 0 --
Philip B. Dolan(7)........ 0 --
E. Martin Gibson.......... 9,101 * 5,000 *
James C. McGill (8)....... 23,838 * 1,000 *
Robert F. Pugliese........ 2,605 *
James D. Watkins.......... 2,605 *
Robert B. Sheh(9)......... 114,149 1.12%
Franklin E. Coffman....... 36,052 * 1,000 *
Anthony J. DeLuca......... 80,465 *
James G. Kirk............. 1,325 *
James R. Mahoney.......... 73,987 *
Raymond J. Pompe.......... 53,300 *
All directors and
executive officers as a
group (11 persons)(10)... 283,278 2.88%
<CAPTION>
PERCENT OF
CONVERTIBLE
PREFERRED STOCK
BENEFICIALLY
NAME OWNED
- -------------------------- -----------------
<S> <C>
Carlyle Stockholders...... 100%
Wisconsin Investment
Board(4).................
Dimension Fund Advisors
Inc.(5)..................
Michael A. Roth & Brian J.
Stark (6)................
Daniel A. D'Aniello(7)....
Philip B. Dolan(7)........
E. Martin Gibson..........
James C. McGill (8).......
Robert F. Pugliese........
James D. Watkins..........
Robert B. Sheh(9).........
Franklin E. Coffman.......
Anthony J. DeLuca.........
James G. Kirk.............
James R. Mahoney..........
Raymond J. Pompe..........
All directors and
executive officers as a
group (11 persons)(10)...
</TABLE>
- ------------------------------
* Less than 1%
(1) The number of shares of the Common Stock beneficially owned includes shares
of the Common Stock in which the persons set forth in the table have either
investment or voting power. Unless otherwise indicated, all of such
interests are owned directly, and the indicated person or entity has sole
voting and investment power, subject to community property laws where
applicable. The number of shares beneficially owned also includes shares
that the following individuals have the right to acquire within sixty days
of July 21, 1997 upon exercise of stock options (and conversion of
Depositary Shares in the case of Messrs. Gibson, McGill and Coffman) in the
following amounts: (i) 3,750 shares upon exercise of options and 5,351
shares upon conversion of the Depositary Shares as to Mr. Gibson, (ii) 6,250
shares upon exercise of options and 1,070 shares upon conversion of the
Depositary Shares as to Mr. McGill, (iii) 103,125 shares upon exercise of
options as to Mr. Sheh, (iv) 22,937 shares as to Mr. DeLuca, (v) 13,062
shares upon exercise of options and 1,070 shares upon conversion of
Depositary Shares as to Mr. Coffman, (vi) 33,687 shares as to Mr. Mahoney,
(vii) 14,062 shares as to Mr. Pompe and (viii) 1,325 shares as to Mr. Kirk.
8
<PAGE>
(2) For the purposes of determining the number of shares of Common Stock
beneficially owned as well as the percentage of outstanding Common Stock
held by each person or group set forth in the table, the number of shares is
divided by the sum of the number of outstanding shares of the Common Stock
on July 21, 1997 plus (i) the number of shares of Common Stock subject to
options exercisable currently or within 60 days of July 21, 1997 by such
person or group, (ii) shares of Common Stock into which persons who hold
Depositary Shares or Convertible Preferred Stock may convert such security
(or otherwise obtain Common Stock), and/or receive Common Stock upon
exercise of Warrants, in accordance with Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended ("Rule 13d-3(d)(1)"). Depositary
Shares may be converted at any time into Common Stock at the ratio of 1.0702
Shares of Common Stock for each Depositary Share. The Convertible Preferred
Stock may be converted at any time into Common Stock at the ratio of 131.75
shares of Common Stock for each share of Convertible Preferred Stock
(reflecting a conversion price of $7.59 per share of Convertible Preferred
Stock).
(3) Represents shares of Common Stock issuable upon conversion of all shares of
Convertible Preferred Stock and exercise of all Warrants held by the Carlyle
Stockholders, which stockholders are comprised of the entities listed in the
following sentence. The cumulative Carlyle Stockholders ownership figure
represents (i) 1,781,965 shares beneficially owned by Carlyle Partners II,
L.P., (ii) 81,357 shares beneficially owned by Carlyle Partners III, L.P.,
(iii) 1,504,210 shares beneficially owned by Carlyle International Partners
II, L.P., (iv) 81,042 shares beneficially owned by Carlyle International
III, L.P., (v) 338,682 shares beneficially owned by C/S International
Partners, (vi) 1,907 shares beneficially owned by Carlyle Investment Group,
L.P., (vii) 2,366,299 shares beneficially owned by Carlyle-IT International
Partners, L.P., (viii) 79,765 shares beneficially owned by Carlyle-IT
International Partners II, L.P., (ix) 748,520 shares beneficially owned by
The State Board of Administration of the State of Florida (the "State
Board") and (x) 195,107 shares beneficially owned by Carlyle-IT Partners,
L.P. Carlyle Investment Management, L.L.C. acts as investment advisor and
manager with authority and responsibility to invest certain assets of the
State Board. Since Carlyle Investment Management, L.L.C. has the power to
vote and dispose of all such shares owned by the State Board, it may be
deemed to be the beneficial owner of such shares. TC Group, L.L.C. may be
deemed to be the beneficial owner of 6,430,335 shares of Common Stock as the
general partner of Carlyle Partners II, L.P., Carlyle Partner III, L.P.,
Carlyle Investment Group, L.P., and Carlyle-IT Partners, L.P., and as the
managing general partner of Carlyle International Partners II, L.P., Carlyle
International Partners III, L.P., C/S International Partners, Carlyle-IT
International Partners, L.P., and Carlyle-IT International Partners II,
L.P., TCG Holdings, L.L.C., as a member holding a controlling interest in TC
Group, L.L.C., may be deemed to share all rights herein described belonging
to TC Group, L.L.C. Furthermore, because certain managing members of TCG
Holdings, L.L.C. are also managing members of Carlyle Investment Management,
L.L.C., Carlyle Investment Management, L.L.C. may be deemed to be part of
the Carlyle Stockholders and consequently, TCG Holdings, L.L.C. may be
deemed the beneficial owner of the shares of Common Stock controlled by
Carlyle Investment Management, L.L.C. The principal business address of TC
Group, L.L.C. and TCG Holdings, L.L.C. is c/o The Carlyle Group, 1001
Pennsylvania Avenue, N.W., Suite 220 South, Washington D.C. 20004. The
principal business address of Carlyle Partners II, L.P., Carlyle Partners
III, L.P., Carlyle Investment Group, L.P., Carlyle-IT Partners, L.P., and
Carlyle Investment Management, L.L.C. is Delaware Trust Building, 900 Market
Street, Suite 200, Wilmington, Delaware 19801. The principal business
address of Carlyle International Partners II, L.P., Carlyle International
Partners III, L.P., C/S International Partners, Carlyle-IT International
Partners, L.P., and Carlyle-IT International Partners II, L.P. is Coutts &
Co., P.O. Box 707, Cayman Islands, British West Indies.
(4) Such information is derived solely from a Schedule 13G filed by such
beneficial owner with the SEC dated February 10, 1997. The address of the
Wisconsin Investment Board set forth in its Schedule 13G is P.O. Box 7842,
Madison, Wisconsin 53707.
(5) Such information is derived solely from a Schedule 13G dated February 5,
1997 filed by such beneficial owner with the SEC. The address of Dimensional
Fund Advisors Inc. set forth in its Schedule 13G is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401. Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 513,300 shares of International Technology stock as
of December 31, 1996, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business trust,
or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares.
(6) Such information is derived solely from a Schedule 13G filed by such
beneficial owners (filing as joint filers) with the SEC dated September 19,
1996. The address of the Michael A. Roth and Brian J. Stark set forth in
their Schedule 13G is George J. Mazin Stark Investments, 150 West Market
Street, Mequon, Wisconsin 53092. Shares beneficially owned by such filers
include 469,741 shares beneficially owned by Reliant Trading upon the
conversion of 438,928 shares of the Company's Depositary Shares and 83,659
shares beneficially owned by Shepherd Trading Limited upon the conversion of
78,172 shares of the Company's Depositary Shares.
9
<PAGE>
(7) Mr. D'Aniello is a Managing Member of TCG Holdings, L.L.C. Mr. D'Aniello's
interest in TCG Holdings, L.L.C. is not controlling and thus Mr. D'Aniello
expressly disclaims any beneficial ownership in the Common Stock
beneficially owned by TCG Holdings. Mr. Dolan is an employee of The Carlyle
Group and holds no economic interest in either TC Group L.L.C. or TCG
Holdings, L.L.C., and as such expressly disclaims any beneficial ownership
in the Common Stock beneficially owned by any of the Carlyle Stockholders.
(8) Includes 1,000 shares of Common Stock and 1,000 Depositary Shares
(convertible into 1,070 shares of Common Stock) owned by Mr. McGill's wife,
as to which Mr. McGill has no voting or dispositive power, and 1,250 shares
owned by McGill Resources, Inc., a company owned by Mr. McGill. Mr. McGill
disclaims beneficial ownership of all such shares. Also includes 6,250
shares that may be purchased upon the exercise of options that are currently
exercisable or that will become exercisable within 60 days of July 21, 1997.
(9) Mr. Sheh resigned as President and Chief Executive Officer and a director of
the Company effective July 1, 1996, but will be treated as an employee of
the Company through June 26, 1998. See "Certain Transactions--Sheh
Agreements."
(10) Includes 95,073 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of July 31, 1997 and 7,000 Depositary Shares (convertible into 7,491
shares of Common Stock). Excludes shares owned by Robert B. Sheh, who
resigned as President and Chief Executive Officer of the Company effective
July 1, 1996.
10
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual, long-term compensation and other
compensation for services in all capacities to the Company for the fiscal years
1997, 1996 and 1995 of those persons who were, as of March 28, 1997, the Chief
Executive Officer, or who had served as Chief Executive Officer at any time
during the 1997 fiscal year and the other four most highly compensated executive
officers of the Company (the "Named Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
AWARDS
ANNUAL COMPENSATION -----------------------------
-------------------------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(3) COMPENSATION($)(4) AWARDS($)(5) OPTIONS(#)(6)
- ---------------------------- --------- ----------- ----------- ------------------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. DeLuca(1)........ 1997 $ 307,981 $ 50,000 -- $ 0 26,333
Chief Executive 1996 270,400 12,776 -- 296,875 0
Officer and President 1995 270,400 108,160 -- 173,550 19,250
Franklin E. Coffman......... 1997 $ 194,000 $ 19,400 -- $ 0 15,233
Senior Vice President, 1996 192,346 8,201 -- 0 0
DOE Programs, 1995 183,999 55,200 -- 155,888 8,750
Corporate Business
Development
James R. Mahoney............ 1997 $ 260,000 $ 26,000 -- $ 0 16,333
Senior Vice President, 1996 260,000 12,285 -- 118,750 0
Consulting and Ventures 1995 256,925 104,000 -- 172,163 19,250
and Corporate
Development
Raymond J. Pompe............ 1997 $ 248,075 $ 26,500 -- $ 0 16,417
Senior Vice President, 1996 206,691 9,923 -- 118,750 0
Engineering and 1995 192,992 57,000 -- 156,498 8,750
Construction
James G. Kirk............... 1997 $ 150,625 $ 10,000 -- $ 0 4,667
Vice President, General 1996 140,500 28,319 -- 0 0
Counsel and Secretary 1995 140,500 28,100 -- 0 1,325
Robert B. Sheh(2)........... 1997 $ 112,500 $ 0 -- $ 0 0
President and 1996 450,000 26,578 -- 475,000 0
Chief Executive Officer 1995 450,000 225,000 -- 74,993 37,500
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION($)(7)
- ---------------------------- -------------------
<S> <C>
Anthony J. DeLuca(1)........ $ 37,614
Chief Executive 17,732
Officer and President 16,519
Franklin E. Coffman......... $ 15,356
Senior Vice President, 26,923
DOE Programs, 27,529
Corporate Business
Development
James R. Mahoney............ $ 27,060
Senior Vice President, 28,579
Consulting and Ventures 20,330
and Corporate
Development
Raymond J. Pompe............ $ 18,270
Senior Vice President, 16,250
Engineering and 11,328
Construction
James G. Kirk............... $ 8,352
Vice President, General 7,168
Counsel and Secretary 5,681
Robert B. Sheh(2)........... $ 5,077
President and 52,100
Chief Executive Officer 34,519
</TABLE>
- ------------------------------
(1) On July 22, 1997, Mr. DeLuca was named Chief Executive Officer and President
of the Company. As of July 1, 1996, Mr. DeLuca was named President and
Acting Chief Executive Officer and a director of the Company. Prior to that
time Mr. DeLuca served as Senior Vice President and Chief Financial Officer
of the Company.
(2) Mr. Sheh resigned as President and Chief Executive Officer and a director of
the Company as of July 1, 1996, but will be treated as an employee of the
Company through June 26, 1998. See "Certain Transactions--Sheh Agreements."
(3) Bonus amounts are reported in the fiscal year they are earned or accrued,
even though some or all of the actual cash payment may be made in the next
fiscal year. For fiscal year 1997, each Named Officer who received a "Bonus"
also received a grant of stock options in fiscal year 1998 for achieving the
performance objectives set forth in the 1997 Management Incentive Plan. Such
stock options are reported in this table under Securities Underlying Options
in 1997. The amount reported for Mr. Kirk in 1996 includes a special,
one-time cash payment of $25,000 for his efforts in resolving the Motco
litigation. Certain Named Officers also received an award of restricted
stock in fiscal year 1996 attributable to the fiscal year 1995 incentive
compensation plan. The value of such restricted stock awards is reported in
this table under Restricted Stock Awards in 1995. The total value of
bonuses, including the aforementioned restricted stock awards, earned in
fiscal year 1995, by each of the Named Officers are as follows: Mr. DeLuca,
$144,210; Mr. Coffman, $73,588; Mr. Mahoney, $138,663; Mr. Pompe, $75,998;
and Mr. Sheh, $299,993.
(4) The dollar value of perquisites and other personal benefits, if any, for
each of the Named Officers was less than the reporting thresholds
established by the SEC.
(5) 12,500 shares of restricted stock were awarded to each of Messrs. DeLuca,
Coffman, Mahoney and Pompe on March 2, 1995, with a fair market value of
$11.00 per share on the date of grant. The shares vest in 20% increments
over five years provided that Messrs. Mahoney, DeLuca and Pompe remain
employed by the Company on the vesting dates. In lieu of cash, certain
11
<PAGE>
Named Officers received awards of restricted stock in connection with a
fiscal year 1995 incentive compensation plan. A total of 14,646 shares of
restricted stock were awarded to the Named Officers on July 5, 1995 with a
fair market value of $12.50 per share. The shares awarded were as follows:
Mr. DeLuca, 2,884 shares; Mr. Coffman, 1,471 shares; Mr. Mahoney, 2,773
shares; Mr. Pompe, 1,159 shares; and Mr. Sheh, 5,999 shares. The
restrictions on the shares will lapse three years from the date of award
provided that each Named Officer remains employed by the Company at that
date. On March 28, 1996, the following number of restricted shares were
issued to the Named Officers, with a fair market value of $9.50 per share on
the date of grant: Mr. Sheh, 50,000 shares (which shares were returned to
the Company pursuant to Mr. Sheh's separation agreement with the Company
(see "Certain Transactions--Sheh Agreements")); Mr. DeLuca, 31,250 shares;
Mr. Mahoney, 12,500 shares; and Mr. Pompe, 12,500 shares. The restrictions
on the shares will lapse upon the earlier of: (i) attainment of an average
$16.00 or greater price of the Company's Common Stock for any period of
sixty consecutive calendar days; (ii) four years from the date of issuance
of the restricted shares; or (iii) upon death, disability or retirement of
the holder or a change of control (as defined).
(6) For fiscal year 1997, each Named Officer who received a "Bonus" also
received a grant of non-qualified stock options in fiscal year 1998 for
achieving the performance objectives set forth in the 1997 Management
Incentive Plan. The options vest in 25% increments over four years beginning
one year from the date of grant, expire ten years after grant and were
issued at an exercise price equal to the fair market value of the Common
Stock on the date of grant. The number of option shares granted to the Named
Officers in fiscal year 1998 are as follows: Mr. DeLuca, 8,333 shares; Mr.
Coffman, 3,233 shares; Mr. Mahoney, 4,333 shares; Mr. Pompe, 4,417 shares;
and Mr. Kirk, 1,667 shares.
(7) For 1997, the amounts shown for Messrs. DeLuca, Coffman, Mahoney, Pompe and
Kirk represent $5,255, $4,596, $4,860, $5,897 and $991, respectively, of
life insurance premiums in excess of $50,000. Although required to be
reported as income, the Named Officers, as do all salaried employees, pay
the cost for all life insurance premiums for coverage in excess of one times
their salary in calendar year 1997 and one and one-half times their salary
in calendar year 1996. In addition, the amounts shown include: the Company's
contribution to the Company's Retirement Plan, a defined contribution plan,
for the Company's fixed and 401(k) Company matching contributions for
Messrs. DeLuca, Coffman, Mahoney, Pompe, Kirk and Sheh in the amounts of
$4,500, $7,500, $7,500, $7,500, $7,361 and $1,702, respectively; the
Company's contribution to the Company's Restoration Plan, a non-qualified
supplemental retirement plan, to Messrs. DeLuca, Coffman, Mahoney, Pompe and
Sheh as follows: $7,300, $3,260, $4,700, $4,873 and $3,375, respectively;
$10,000 for partial principal forgiveness on a relocation loan to purchase a
residence for Mr. Mahoney; $17,508 in accrued but unused paid time off for
Mr. DeLuca; and $3,052 in reimbursed relocation expenses for Mr. DeLuca. For
1996, the amounts shown include: $5,798, $6,157, $5,990, $5,706, $819 and
$20,034 for Messrs. DeLuca, Coffman, Mahoney, Pompe, Kirk and Sheh,
respectively, for life insurance premiums in excess of $50,000; the
Company's contribution to the Company's Retirement Plan for the Company's
fixed, discretionary profit sharing and 401(k) Company matching contribution
for Messrs. DeLuca, Coffman, Mahoney, Pompe, Kirk and Sheh of $6,459,
$7,058, $7,498, $7,209, $6,349 and $9,003, respectively; a contribution to
the Company's Restoration Plan for Messrs. DeLuca, Coffman, Mahoney, Pompe
and Sheh of $5,475, $2,515, $5,091, $3,334 and $13,063, respectively;
$10,000 for partial principal forgiveness of a relocation loan to purchase a
principal residence for each of Messrs. Mahoney and Sheh; and $11,192 for
accrued but unused paid time off for Mr. Coffman. For 1995: the amounts
shown for Messrs. DeLuca, Coffman, Mahoney, Pompe, Kirk and Sheh include
life insurance premiums in excess of $50,000 in the amount of $4,711,
$6,071, $3,731, $4,711, $764 and $17,947, respectively; the Company's
contribution to the Company's Retirement Plan for Messrs. DeLuca, Coffman,
Mahoney, Pompe, Kirk and Sheh in the respective amounts of $6,608, $7,304,
$6,599, $6,617, $4,918 and $6,572; $10,000 for partial principal forgiveness
of a relocation loan to purchase a principal residence for each of Messrs.
Mahoney and Sheh; and $5,200 and $14,154, respectively, for Messrs. DeLuca
and Coffman for accrued but unused vacation.
12
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information related to grants of stock options
to the Named Officers pursuant to the Company's Stock Incentive Plans during the
fiscal year ended March 28, 1997. No stock appreciation rights ("SARs") were
granted during the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTION EMPLOYEES IN PRICE (PER EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR SHARE)(2) DATE VALUE(3)
- ------------------------------------------- ------------- --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Franklin E. Coffman........................ 12,000 7.0 $ 8.625 2/25/07 $ 64,920
Anthony J. DeLuca.......................... 18,000 10.5 $ 8.625 2/25/07 $ 97,380
James G. Kirk.............................. 3,000 1.7 $ 8.625 2/25/07 $ 16,230
James R. Mahoney........................... 12,000 7.0 $ 8.625 2/25/07 $ 64,920
Raymond J. Pompe........................... 12,000 7.0 $ 8.625 2/25/07 $ 64,920
</TABLE>
- ------------------------
(1) All options granted in fiscal year 1997 vest in 25% increments over four
years beginning one year from the date of grant. Full vesting occurs on the
fourth anniversary date and expires ten years after grant. Options become
100% vested and are exercisable for two years after retirement from the
Company.
(2) The exercise price on options granted is the fair market value of the Common
Stock on the date of grant.
(3) When calculating the present value of options granted in 1997, the Company
used the Black-Scholes option pricing model to obtain a calculated present
value of $5.41 share. The Company assumed a volatility of 0.462, a risk free
interest rate of 6.55% and assumed that the shares would be exercised evenly
throughout the four-year vesting schedule. In addition, the Company took a
3% discount for each year in the vesting period to account for the risk of
forfeiture in the event that the executive terminates employment with the
Company. The valuation is not intended to forecast possible future
appreciation, if any, of the Common Stock. The real value of the option
depends on the actual performance of the Company's Common Stock during the
applicable period.
AGGREGATED OPTION EXERCISES DURING LAST FISCAL YEAR AND OPTION VALUES AT END OF
LAST FISCAL YEAR
The following table provides information with respect to the exercise of
stock options during the fiscal year ended March 28, 1997 by the Named Officers,
and with respect to unexercised "in-the-money" stock options outstanding as of
March 28, 1997. In-the-money stock options are options for which the exercise
price is less than the market price of the underlying stock at the end of the
fiscal year. No executive officer or any other employee of the Company held or
exercised any SARs at any time during fiscal year 1997.
13
<PAGE>
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR
(IN SHARES) END($)(2)
SHARES ACQUIRED VALUE ------------------------------ ---------------
NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE(3) EXERCISABLE
- ----------------------------- ----------------- --------------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Anthony J. DeLuca............ 0 $ 0 32,999 31,501 $ 0
Franklin E. Coffman.......... 0 0 9,999 17,251 0
James G. Kirk................ 0 0 1,208 3,117 0
James R. Mahoney............. 0 0 27,499 25,001 0
Raymond J. Pompe............. 0 0 10,749 19,501 0
Robert B. Sheh(1)............ 0 0 90,625 21,875 0
<CAPTION>
NAME UNEXERCISABLE
- ----------------------------- -----------------
<S> <C>
Anthony J. DeLuca............ $ 0
Franklin E. Coffman.......... 0
James G. Kirk................ 0
James R. Mahoney............. 0
Raymond J. Pompe............. 0
Robert B. Sheh(1)............ 0
</TABLE>
- --------------------------
(1) Mr. Sheh resigned as President and Chief Executive Officer and a director of
the Company as of July 1, 1996, but will be treated as an employee of the
Company through June 26, 1998. See "Certain Transactions--Sheh Agreements."
(2) Represents the difference between the $6.875 fair market value of the
Company's Common Stock on March 28, 1997 (represented by the closing market
price on March 27, 1997), minus the exercise price of the options.
(3) Messrs. DeLuca, Mahoney and Pompe's options with respect to 2,500 shares,
2,000 shares and 2,000 shares, respectively, have vested as a result of the
passage of time but may not be exercised unless the Company's stock price
increases to certain predetermined levels. Because this condition has not
been satisfied and the options therefore are not vested, such options are
not included in the foregoing "Beneficial Ownership of Shares" table.
1997 MANAGEMENT INCENTIVE PLAN
Pursuant to the Company's 1997 Management Incentive Plan, $500,000 in cash
and 83,333 shares of stock options were reserved to reward key associates if
pre-established performance targets for the second half of the fiscal year were
achieved. Payments and stock option grants under the Plan were dependent upon
achieving three targets: 1) a required level of pre-tax operating income, 2) an
improvement in the collection of accounts receivable (days sales outstanding)
and 3) individual performance goals. The plan was administered by the
Compensation Committee. Target incentive awards ranging from 10% to 50% of
participants' salary were reduced pro-rata to reflect the one-half year
performance period and the grant of stock options supplemental to the payment of
cash awards. Individual incentive awards and stock option grants may have been
increased or decreased from their targets depending upon individual performance.
Cash incentive awards in the aggregate of $499,705 and 80,221 shares of stock
options in the aggregate were awarded to the 90 plan participants. The total
incentive awards earned and shares of stock options granted to the Named
Officers were as follows:
<TABLE>
<CAPTION>
NAMED OFFICER CASH BONUS STOCK OPTION SHARES
- -------------------------------------------------- ----------- ---------------------
<S> <C> <C>
Anthony J. DeLuca................................. $ 50,000 8,333
Franklin E. Coffman............................... 19,400 3,233
James G. Kirk..................................... 10,000 1,667
James R. Mahoney.................................. 26,000 4,333
Raymond J. Pompe.................................. 26,500 4,417
</TABLE>
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of three
non-employee directors. The Compensation Committee reviews management
compensation levels and evaluates management performance and related matters.
The Compensation Committee also administers the Company's various management
incentive plans, including the 1996 Stock Incentive Plan. This report relates to
the fiscal year ended March 28, 1997.
The Compensation Committee retains the services of nationally known
independent consulting firms specializing in executive compensation issues to
assist it in performing its functions. The Compensation Committee reviews
surveys and other materials describing the compensation practices of companies
from which the Company recruits and with which it competes for management
talent, including (i) large engineering-companies, (ii) environmental services
companies, including some that are and some that are not in the peer group index
in the Five-Year Stock Price Performance Graph included in this Proxy Statement
and (iii) other companies in general industry of similar size. The Committee
considers this information and other factors in its deliberations on management
compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current officer or
associate of the Company or its subsidiaries and there are no Compensation
Committee interlocks.
COMPENSATION PROGRAM OBJECTIVES
In fiscal year 1997, following the Investment and management changes, the
Compensation Committee initiated a review of the Management Compensation
Program. On the basis of that review, the Committee adopted a revised
compensation strategy and plans and programs that are designed to attract,
retain and motivate key management and to align the financial interests of the
Company's executive officers with those of its stockholders.
The revised compensation strategy is designed to better align management and
stockholder interests by placing a larger percentage of an executive officer's
compensation "at risk" in the form of annual and long-term incentives, which at
target levels, are generally intended to provide about 60% of total
compensation, and moving base salaries from the sixtieth to the fiftieth
percentile of competitive practice. In addition, a larger portion of
management's incentive compensation, both annual and long-term incentive, will
be linked to the value of the Company's common stock. It is anticipated that
this change will be implemented over three to five years.
The Company's Management Compensation Program is designed to provide:
(i) Base salaries that are competitive with those of engineering,
environmental services and general industry companies;
(ii) Competitive total annual cash compensation, delivered through annual
incentive compensation that varies in a consistent and predictable manner with
the financial performance of the Company; and
(iii) Long-term incentive compensation that focuses management on building
stockholder value through the attainment of longer-term financial and strategic
goals, and encourages management stock ownership.
In the design and administration of the Management Compensation Program, the
Company attempts to achieve an appropriate balance among the various elements of
compensation, each of which is discussed, in addition to the Committee's
actions, in greater detail below.
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<PAGE>
BASE SALARY
As a guideline, the base salary for Company management is targeted at from
the fiftieth to the sixtieth percentile level of comparable engineering and
environmental services companies and other companies of similar size. This was
done to attract and retain key talent in this highly competitive industry. The
Company's salary plan for executive officers is approved, on an annual basis, by
the Compensation Committee and takes into account individual performance, the
Company's overall financial performance and competitive practice. Annual
performance reviews and formal merit increase guidelines determine individual
salary increases.
The Compensation Committee completed its annual review of officer pay levels
in fiscal year 1997. The Committee granted salary increases to only three Named
Officers: Mr. DeLuca, to reflect his promotion to President and Acting Chief
Executive Officer; Mr. Kirk, to reflect his promotion to Vice President, General
Counsel and Secretary; and Mr. Pompe, to reflect his increased responsibilities
related to an organizational realignment. The salaries of the other two Named
Officers were deemed to be within competitive norms.
TOTAL ANNUAL CASH COMPENSATION (BASE SALARY PLUS ANNUAL INCENTIVE)
As a guideline, total annual cash compensation is set at between the
fiftieth percentile and upper-quartile of comparable engineering and
environmental services and general industry companies when annual objectives and
targets are achieved. Upper-quartile cash compensation can be earned only if
business results significantly exceed Company objectives.
MANAGEMENT INCENTIVE PLAN
The Management Incentive "Bonus" Plan (the "MIP") is designed to reward
executive officers and other key employees, on an annual basis, for their
contributions to the achievement of corporate and business unit/division
objectives and for individual performance. Each eligible participant has a
target incentive award that generally is expressed as a percentage of the
participant's base salary for such fiscal year. The aggregate target incentive
awards of all participants cannot exceed the size of an incentive fund, the
dollar amount of which is determined by the Compensation Committee. The
incentive fund, approved by the Committee, is directly linked to the Company's
annual budget objectives, which are approved by the Board of Directors. If the
Company's performance exceeds budget, the maximum incentive award payable to
participants is in the range of 150% of the target. Company objectives are
expressed in terms of specific financial targets that are established as part of
the annual budgeting process, which includes a review of the performance of a
comparable group of environmental services, engineering and remediation
companies.
In light of the management changes that occurred during fiscal year 1997,
the performance period under the MIP included only the last two quarters of the
fiscal year. The target incentive awards adopted under the MIP were intended to
provide an incentive to key management to improve the financial performance of
the Company. The Committee selected operating income and collection of accounts
receivable, as measured by days' sales outstanding ("DSO") as the key financial
measures, for fiscal year 1997. Specific financial targets associated with these
measures were established for the performance period. Annualized target
incentive awards ranged from 10% of salary for certain key employees to 50% of
salary for the Chief Executive Officer, prorated for the two-quarter performance
period. Incentive awards begin to be earned when the Company reaches a threshold
level of operating income. Any incentive award funds accrued are distributed at
the end of the fiscal year, contingent on the performance of the individual and
the individual's business unit. For fiscal year 1997, shares of nonqualified
stock options (NQSOs) were granted in recognition of achieving performance goals
and to encourage a sharp focus on stock price appreciation.
Financial targets were achieved in the last two quarters of the 1997 fiscal
year. The distribution of all incentive awards was determined, at the
Compensation Committee's discretion, on the basis of an
16
<PAGE>
assessment of Company and individual performance in relation to pre-established
objectives. The total incentive awards earned and shares of stock options
granted to the Named Officers under the MIP for fiscal 1997 were as follows: Mr.
DeLuca, $50,000 paid in cash and 8,333 shares of NQSOs; Mr. Coffman, $19,400
paid in cash and 3,233 shares of NQSOs; Mr. Kirk, $10,000 paid in cash and 1,667
shares of NQSOs; Mr. Mahoney, $26,000 paid in cash and 4,333 shares of NQSOs;
and Mr. Pompe, $26,500 paid in cash and 4,417 shares of NQSOs.
TOTAL DIRECT COMPENSATION (TOTAL ANNUAL CASH COMPENSATION PLUS THE ANNUALIZED
VALUE OF LONG-TERM INCENTIVES)
As a guideline, total direct compensation for executive officers, through
long-term incentive awards under the 1996 Plan, is set at between the fiftieth
percentile and the upper quartile of comparable engineering, environmental
services and general industry companies, when the Company's long-term goals to
increase stockholder value are achieved or exceeded.
LONG-TERM INCENTIVE COMPENSATION PROGRAM
In fiscal year 1997, the Compensation Committee adopted the 1996 Stock
Incentive Plan (the "1996 Plan") to ensure that the Company has a long-term
incentive program that is competitive with those of comparable engineering,
environmental services and general industry companies and to enable the Company
to attract, motivate and retain key management talent. The 1996 Plan was
approved by the Board of Directors and the Company's stockholders.
The 1996 Plan authorizes the granting of various stock and cash-based
incentive awards to officers and key employees of the Company and its
subsidiaries. The 1996 Plan provides the Compensation Committee the flexibility
to make longer-term incentive awards in a variety of forms to better align the
long-term interests of the Company's management with those of its stockholders.
In fiscal year 1997, the Compensation Committee considered the desirability
of granting stock-based awards to officers and other key employees under the
1996 Plan and, on the recommendation of management, granted stock options to
selected employees. In determining the grant of awards to officers and other key
employees, the Compensation Committee considered, among other things, the
ability of the individual to influence stockholder value, personal performance
and prior option grants. The following grants of nonqualified stock options were
made to the five Named Officers during fiscal year 1997: Mr. DeLuca, 18,000
shares; Mr. Coffman, 12,000 shares; Mr. Kirk, 3,000 shares; Mr. Mahoney, 12,000
shares; and Mr. Pompe, 12,000 shares.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
On his election as President and Acting Chief Executive Officer, Mr.
DeLuca's salary for fiscal year 1997 was increased to $320,000. The Committee
assessed the competitiveness of Mr. DeLuca's salary for fiscal year 1997 using
several compensation data sources. Mr. DeLuca's salary was found to be below the
fiftieth percentile of salaries paid by engineering and environmental services
companies. Mr. DeLuca earned an incentive award of $50,000 and was granted 8,333
shares of stock options at an exercise price equal to the fair market value of
the Company's stock on the date of grant and which vest at 25% per year under
the 1997 Management Incentive Plan, which reflected the achievement of the
Company's pretax income goals and Mr. DeLuca's individual performance in
relation to pre-established goals, including execution of the Company's
acquisition and diversification strategy. To recognize Mr. DeLuca's contribution
to the Company in fiscal 1997, to improve the alignment of his interests with
those of stockholders and to encourage him to remain with the Company, the
Company granted Mr. DeLuca 18,000 stock options at an exercise price equal to
the fair market value of the Company's stock on the date of grant and which vest
at 25% per year. As a further inducement to increase his ownership position in
the Company and increase the alignment of his interests with those of
stockholders, Mr. DeLuca, under the terms specified in his
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<PAGE>
employment agreement, purchased an aggregate of 12,600 shares of the Company's
stock at prices of $9.75 and $9.50 per share. The purchases occurred on December
5 and December 6, 1996 and were made with the proceeds of a Company-provided
loan in the amount of $125,000, which bears interest at the rate of 8.25% per
year and is repayable on the earlier of Mr. DeLuca's termination of employment
or November 19, 1999. Under the terms of the loan the Compensation Committee may
elect to forgive a certain portion of the loan principal and interest if certain
targets are met or exceeded.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
As of January 1, 1994, the Internal Revenue Code of 1986 (the "Code") was
amended to eliminate the deductibility of certain compensation in excess of $1
million. Compensation awarded under a "performance-based" compensation program
that was approved by stockholders is exempted from the deduction limitation. The
Compensation Committee considered the effect of Section 162(m) of the Code on
the Company's compensation programs and adopted the 1996 Stock Incentive Plan,
which qualifies as a "performance-based" compensation program under the Code.
The Company intends to adopt "performance-based" compensation programs in the
future as may be required. However, the Compensation Committee believes that its
primary responsibility is to provide compensation programs that attract, retain
and reward executive talent in a manner that is in the best interests of both
the Company and its stockholders. Accordingly, the Compensation Committee will
consider tax-deductibility levels, but will not necessarily be limited by this
consideration as it determines the Company's executive compensation strategy.
THE COMPENSATION COMMITTEE
Philip B. Dolan, Chairman
Daniel A. D'Aniello
James David Watkins
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STOCK PRICE PERFORMANCE GRAPH
The following graph sets forth the Company's cumulative total stockholder
return on its Common Stock as compared to the S&P 500 Index and the Smith Barney
("SB") Hazardous Waste Index on March 31 of each listed year. The graph covers
the period from March 31, 1992 through March 28, 1997.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
INTERNATIONAL TECHNOLOGY CORPORATION, S&P 500 INDEX,
SB HAZARDOUS WASTE INDEX(I)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INT'L TECHNOLOGY
SB HAZARDOUS WASTE CORP. S&P 500 INDEX
<S> <C> <C> <C>
1992 $100 $100 $100
1993 $86 $94 $115
1994 $69 $48 $117
1995 $63 $38 $135
1996 $63 $40 $178
1997 $50 $28 $214
</TABLE>
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SB Hazardous Waste $ 100 $ 86 $ 69 $ 63 $ 63 $ 50
Int'l Technology Corp. $ 100 $ 94 $ 48 $ 38 $ 40 $ 28
S&P 500 Index $ 100 $ 115 $ 117 $ 135 $ 178 $ 214
</TABLE>
- ------------------------
(1) Assumes $100 invested on March 31, 1992 in the Company's Common Stock, the
S&P 500 Index, and the SB Hazardous Waste Index, and assumes the
reinvestment of all dividends.
THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE PERFORMANCE AND IS NOT
NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE.
THE FOREGOING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH
THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
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CERTAIN TRANSACTIONS
EMPLOYMENT AGREEMENTS. In connection with the Carlyle Investment, Anthony
J. DeLuca, Franklin E. Coffman, James R. Mahoney and Raymond J. Pompe each
entered into an employment agreement with the Company effective upon the closing
of the Investment for a term of three years, unless terminated. The employment
agreements of each of Messrs. DeLuca and Mahoney replace in their entirety their
respective prior severance benefit agreements with the Company.
The employment agreements provide for initial base salaries at the rates in
effect at the time of the closing of the Investment, namely $320,000 in the case
of Mr. DeLuca, $194,000 in the case of Mr. Coffman, $260,000 in the case of Mr.
Mahoney and $265,000 in the case of Mr. Pompe. Salaries are subject to annual
upward adjustment at the discretion of the Compensation Committee of the Board
of Directors (the "Compensation Committee"). Salaries are subject to reduction
only in connection with action taken by the Board of Directors for all
management employees. Each of the employment agreements provides for a
short-term incentive compensation plan to be administered by the Compensation
Committee. The target short-term incentive compensation level is 40%, and the
maximum level is 60%, of base salary, except in the case of Mr. DeLuca, for whom
the target level is 50%, and the maximum level is 75%, of base salary. The
Company also is required to maintain long-term incentive plans to be
administered by the Compensation Committee, which will make awards, primarily of
stock options, based on appropriate performance criteria. The annual awards will
be at the discretion of the Compensation Committee but will generally target
long-term incentive opportunities. The Company will have "good reason" to
terminate Messrs. DeLuca, Coffman, Mahoney or Pompe if such persons fail to meet
certain management forecasts for two consecutive fiscal years. The agreements
provide for severance payments under certain circumstances.
The Company has provided loans to Messrs. DeLuca, Mahoney and Pompe to allow
them to make substantial purchases of the Company's Common Stock in the open
market. Messrs. DeLuca, Mahoney, and Pompe have received loans in the principal
amounts of $125,000, $100,000, and $100,000, respectively, to purchase the
stock. In November and December, 1996, Mr. DeLuca purchased 12,600 shares of
Common Stock and each of Messrs. Coffman, Mahoney and Pompe purchased 7,700,
10,300 and 10,595 shares of Common Stock, respectively. In connection with the
short-term compensation plan described above, the Company may provide for
forgiveness of a certain portion of the loan principal and interest if
previously agreed to targets are met or exceeded. The loans bear interest at the
rate of 8.25% per year and are repayable upon the earlier of the executive's
termination of employment or November 19, 1999. The employment agreements also
provide for reimbursement for business expenses and vacation and other benefits
consistent with existing Company policies and practices.
Additionally, as part of their employment agreements, each of Messrs.
DeLuca, Coffman, Mahoney and Pompe are bound by non-compete provisions with the
Company if any of them terminates his employment by resignation.
SHEH AGREEMENTS. In connection with his employment as Chief Executive
Officer, Mr. Sheh and the Company entered into an agreement dated July 15, 1992.
The agreement was intended to specify annual stock option grants and a minimum
level of base pay for Mr. Sheh, as well as to address certain other matters.
Pursuant to the agreement, Mr. Sheh's annual base salary was $450,000 subject to
merit increases and the agreement provides the opportunity to participate in the
Company's Incentive Bonus Plan with a bonus of up to 50% of base salary at
target levels. Pursuant to the agreement, Mr. Sheh received stock options
covering 62,500 shares of Common Stock upon joining the Company and was entitled
to receive a minimum specified number of stock options during the first three
years of his employment. The agreement provided for certain insurance and other
benefits. The agreement also provided that if Mr. Sheh was terminated for
"cause," he would be entitled to receive one year of base salary and bonuses.
Mr. Sheh resigned as President and Chief Executive Officer and a director of
the Company as of July 1, 1996. Pursuant to the terms of an agreement between
the Company and Mr. Sheh, Mr. Sheh will
20
<PAGE>
continue to be treated as an employee of the Company until June 26, 1998, but
has no further duties or responsibilities to the Company. Pursuant to the
agreement, until June 26, 1998, Mr. Sheh will continue to be paid $450,000 per
annum and will receive a car allowance of $5,850 per annum. Mr. Sheh also
received a one-time payment of $40,300 for accrued but unused vacation.
Additionally, a relocation loan made by the Company to Mr. Sheh with an
outstanding principal amount of $150,000 was forgiven. Mr. Sheh will retain a
club membership in his name for which the Company previously paid admission and
membership fees. Mr. Sheh remained eligible for certain insurance benefits and
certain other benefits until January 1, 1997, the date on which Mr. Sheh became
eligible for such benefits as a full-time employee of another company. Under the
agreement, 5,999 shares of restricted Common Stock awarded to Mr. Sheh in July
1995 will become fully vested on June 26, 1998, and options to purchase a total
of 112,500 shares of Common Stock will continue to vest in accordance with the
terms of the applicable stock option agreements and will become fully vested on
April 27, 1998. Finally, 50,000 shares of restricted stock awarded to Mr. Sheh
in March 1996 were returned to the Company.
RELOCATION LOANS. In certain circumstances, the Company has granted and may
in the future grant interest-free loans to executive officers, officers and
certain other employees principally for real estate purchases in connection with
company-initiated transfers to a new location. All loans are approved by the
Compensation Committee and are secured by the principal residence of the
individual. Mr. James R. Mahoney, Senior Vice President, entered into a
relocation loan arrangement with the Company with an original principal amount
of $200,000 and secured by a deed of trust on his personal residence. The loan
will remain interest free so long as Mr. Mahoney remains an employee. Beginning
December 31, 1991 and on each December 31st thereafter until the due date of the
loan, 5% of the original principal amount (to a maximum of 50% of the original
principal amount) was scheduled to be forgiven by the Company, provided Mr.
Mahoney remains employed by the Company. The loan to Mr. Mahoney is due and
payable on December 31, 2000. Additionally, Mr. Mahoney has agreed to repay the
remaining 50% of the original principal amount in installments related to the
issuance of awards under the Company's incentive compensation plan. During the
fiscal year ended March 28, 1997, (i) Mr. Mahoney repaid $10,000 of the loan,
and (ii) the maximum amount owed by Mr. Mahoney to the Company under the loan
was $140,000. As of March 28, 1997, the principal amount outstanding for Mr.
Mahoney's loan was $122,451. The principal amount outstanding will be repaid
upon completion of the sale of Mr. Mahoney's California residence and a new loan
may be granted Mr. Mahoney to purchase a residence in the Washington, D.C. area
in connection with the Company's relocation of its corporate headquarters as
described below.
In connection with the relocation and consolidation of the Company's
corporate headquarters from Torrance, California to Pittsburgh, Pennsylvania,
and other relocations occurring at approximately the same time, the Company is
offering relocation assistance to a limited number of officers and key
employees. Relocation assistance packages offered to these individuals involve
three elements: 1) reimbursement of specific out-of-pocket relocation expenses,
including travel, real estate brokerage commissions (up to a 6% maximum), and
loan origination fees (up to a maximum of two points), 2) a loan to be used for
the purchase of a new residence, and 3) a mobility allowance of between 15% and
30% of salary to provide relief from otherwise non-reimbursable expenses and as
an incentive to move. Amounts paid to reimburse out-of-pocket expenses are
"grossed-up" for tax purposes. The loans offered to relocating associates have
ten year terms, are secured by the residence purchased, and do not bear interest
as long as the associate stays with the Company. Five percent of the loan
principal is required to be repaid annually by the associate and 5% will be
forgiven annually by the Company for each year the associate remains with the
Company. The loans are also due upon the sale of the residence purchased. Mr.
DeLuca and Mr. Mahoney have been offered and they have stated their intention to
accept, if necessary, relocation loans on such terms in amounts of the lesser of
20% of the purchase price of their respective residences or $100,000. Mr. DeLuca
and Mr. Mahoney will each receive a mobility allowance of 30% of salary in
connection with their relocations to Pittsburgh and Washington, D.C.,
respectively. The Company expects that consolidation of the corporate
headquarters will result in an annual cost savings which the Company expects
will result in a "payback" of all relocation expenses in less than two years.
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<PAGE>
CARLYLE FINANCIAL ADVISORY FEES. In connection with the Investment, the
Company agreed to pay Carlyle (i) an annual financial advisory fee of $100,000,
payable quarterly, and (ii) investment banking fees (equal to 1% of transaction
value and reimbursement of reasonable out-of-pocket expenses) for investment
banking services rendered to the Company. The Company paid no investment banking
fees to Carlyle during fiscal year 1997.
INDEMNIFICATION. The General Corporation Law of the State of Delaware, the
state of incorporation of the Company, and the Bylaws of the Company provide for
indemnification of directors and officers. Section 145 of the Delaware General
Corporation Law provides generally that a person sued as a director, officer,
employee or agent of a corporation may be indemnified by the corporation for
reasonable expenses, including attorneys' fees, if, in cases other than actions
brought by or in the right of the corporation, he or she has acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the corporation (and in the case of a criminal proceeding, had
no reasonable cause to believe that his or her conduct was unlawful). Section
145 provides that no indemnification for any claim or matter may be made, in the
case of an action brought by or in the right of the corporation, if the person
has been adjudged to be liable, unless the Court of Chancery or other court
determines that indemnity is fair and reasonable despite the adjudication of
liability. Indemnification is mandatory in the case of a director, officer,
employee or agent who has been successful on the merits, or otherwise, in
defense of a suit against him or her. The determination of whether a director,
officer, employee or agent should be indemnified must be made by a majority of
disinterested directors, independent legal counsel or the stockholders.
Directors and officers of the Company are covered under policies of
directors' and officers' liability insurance. The directors and all officers
serving the Company as Senior Vice President or in a higher position and certain
other officers are parties to Indemnity Agreements (the "Indemnity Agreements").
The Indemnity Agreements provide indemnification for the directors and covered
officers in the event the directors' and officers' liability insurance does not
cover a particular claim for indemnification or if such a claim or claims exceed
the limits of such coverage. The Indemnity Agreements are generally intended to
provide indemnification for any amounts a director or covered officer is legally
obligated to pay because of claims arising out of the director's or officer's
service to the Company.
Additionally, in 1987 the Company's Certificate of Incorporation was amended
with the approval of stockholders to provide that its directors are not to be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty to the fullest extent permitted by law. This provision is
intended to allow the Company's directors the benefit of the Delaware General
Corporation Law which provides that directors of Delaware corporations may be
relieved of monetary liabilities for breach of their fiduciary duty of care,
except under certain circumstances, including breach of the director's duty of
loyalty, acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law or any transaction from which the director derived
an improper personal benefit.
The Investment agreements also contain additional provisions for the
indemnification of Company directors and officers in certain circumstances. The
Investment agreements provide that the Company will indemnify, defend and hold
harmless Carlyle, and its affiliates, directors, officers, advisors, employees
and agents to the fullest extent lawful from and against all demands, losses,
damages, penalties, claims, liabilities, obligations, actions, causes of action
and reasonable expenses ("Losses") arising out of the Investment agreements or
the related transactions or arising by reason of or resulting from the breach of
any representation, warranty, covenant or agreement of the Company contained in
the Investment agreements for the period for which such representation or
warranty survives; PROVIDED, HOWEVER, that the Company does not have any
liability to indemnify Carlyle with respect to Losses arising from the bad faith
or gross negligence of the Carlyle indemnified party.
The Investment agreements also provide that Carlyle will indemnify, defend
and hold harmless the Company, its affiliates, directors, officers, advisors,
employees and agents from and against all Losses
22
<PAGE>
arising out of the breach of any representation, warranty, covenant or agreement
of Carlyle contained in the Investment agreements for the period for which such
representation or warranty survives; PROVIDED, HOWEVER, that Carlyle does not
have any liability to indemnify the Company with respect to Losses arising from
the bad faith or gross negligence of the Company indemnified party.
The Investment agreements provide that no claim may be made against an
indemnifying party for indemnification until the aggregate dollar amount of all
Losses exceeds $1,500,000 and the indemnification obligations of the respective
parties shall be effective only until the dollar amount paid in respect of the
Losses indemnified against aggregates to an amount equal to $45,000,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires directors, certain officers of the Company and persons holding more
than 10% of the Company's Common Stock to file reports concerning their
ownership of Common Stock by dates established under the Exchange Act and also
requires that the Company disclose in this Proxy Statement any noncompliance
with those requirements during fiscal year 1997. Based solely upon a review of
reports delivered to the Company, the Company believes all Section 16(a) filing
requirements were satisfied.
INDEPENDENT AUDITOR
Ernst & Young LLP was the Company's independent auditor for the year ended
March 28, 1997 and has been selected as the auditor for the current fiscal year,
as recommended by the Audit Committee. A representative of that firm is expected
to be at the Annual Meeting and will have an opportunity to make a statement, if
desired. The representative will also be available to respond to appropriate
questions from stockholders.
STOCKHOLDER PROPOSALS
Any eligible stockholder (as defined below) of the Company wishing to have a
proposal considered for inclusion in the Company's 1998 proxy solicitation
materials must set forth such proposal in writing and file it with the Secretary
of the Company a reasonable time in advance of the date of mailing the Company's
proxy statement. The Company will consider any proposal filed on or before April
17, 1998 to be in compliance with such requirement. The Board of Directors of
the Company will review any proposals from eligible stockholders which it
receives by that date and, with advice of counsel, will determine whether any
such proposal will be included in its 1998 proxy solicitation materials under
applicable SEC proxy rules. An eligible stockholder is one who is the record or
beneficial owner of at least 1% or $1,000 in market value of securities entitled
to be voted at that annual meeting and has held such securities for at least one
year and who shall continue to own such securities through the date on which the
annual meeting is held.
ANNUAL REPORT
The Company's 1997 Annual Report to Stockholders is being mailed to
stockholders together with this Proxy Statement. Stockholders are referred to
the report for financial and other information about the Company, and such
information is incorporated in this Proxy Statement by reference and is part of
the proxy soliciting material.
FORM 10-K ANNUAL REPORT
The Company will provide to any stockholder, without charge, a copy of its
Annual Report on Form 10-K for the fiscal year ended March 28, 1997, as amended
by Amendment No. 1 on Form 10-K/A dated July 28, 1997, including financial
statements, filed with the SEC, upon the request of any such stockholder.
Requests should be directed to International Technology Corporation, Attention:
Investor Relations, 2790 Mosside Boulevard, Monroeville, Pennsylvania
15146-2792, 412-372-7701.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Proxy Statement its
Annual Report on Form 10-K for the fiscal year ended March 28, 1997, as amended
by Amendment No. 1 on Form 10-K/A dated July 28, 1997, and the Quarterly Report
on Form 10-Q for the quarter ended June 27, 1997.
GENERAL AND OTHER MATTERS
The Company will bear the cost of this solicitation of proxies, including
expenses in connection with preparing, assembling and mailing the proxy
solicitation materials and the charges and expenses of brokerage firms and
others for forwarding solicitation materials to beneficial owners. The Company
has engaged Corporate Investor Communications, Inc. ("CIC") to assist in the
solicitation of proxies, for which CIC will be paid a management fee of $5,000
plus out-of-pocket expenses.
As of the date of this Proxy Statement, there are no other matters to be
brought before the Annual Meeting. Pursuant to the Company's Bylaws, in order to
present business at the Annual Meeting other than that proposed by the Board, a
stockholder must give written notice to the Secretary of the Company not later
than sixty days in advance of the Annual Meeting or, if later, the fifteenth day
following the first public disclosure of the date of the Annual Meeting. Any
such notice must set forth as to each matter the stockholder proposes to bring
before the meeting: (i) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the Company's books, of
the stockholder proposing such business; (iii) the class, series and number of
shares of the Company that are beneficially owned by the stockholder, and (iv)
any material interest of the stockholder in such business. In addition, a
stockholder making any such proposal must promptly provide any information
reasonably requested by the Company. Should any other matters come before the
Annual Meeting, action may be taken thereon pursuant to the proxies in the form
enclosed, which confer discretionary authority on the persons named therein or
their substitutes with respect to such matters.
By Order of the Board of Directors,
[LOGO]
James G. Kirk
SECRETARY
August 15, 1997
Monroeville, Pennsylvania
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1970-PS-97
<PAGE>
DETACH HERE
P
R INTERNATIONAL TECHNOLOGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
O SEPTEMBER 16, 1997
X THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y
The undersigned constitutes and appoints ANTHONY J. DELUCA and E.
MARTIN GIBSON and each of them, attorneys-in-fact and proxies of the
undersigned, to represent the undersigned and to vote all shares of Common
Stock, $0.01 par value, of International Technology Corporation (the
"Company") which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company (the "1997
Annual Meeting") to be held at 9:00 a.m. Eastern Time, on Tuesday,
September 16, 1997, at the DoubleTree Hotel, located at 1000 Penn Avenue,
Pittsburgh, Pennsylvania 15222, and at any adjournment or postponement
thereof. All proxies shall be voted as directed, or, if no direction is
given, for the nominee named on the reverse side under Proposal 1.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
DETACH HERE
Please mark
/X/ votes as in
this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERNATIONAL
TECHNOLOGY CORPORATION
1. Election of Director
NOMINEE: Anthony J. DeLuca
FOR / / WITHHELD / /
2. In the discretion of the proxyholders with respect to any other matter
that may properly come before the 1997 Annual Meeting and at any adjournment(s)
or postponement(s) thereof. The Board of Directors is not aware of any other
matters that will be presented at the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please date and sign exactly as your name or names appear hereon. If more
than one owner, all should sign. Executors, administrators, trustees,
guardians, attorneys and corporate officers should indicate their fiduciary
capacity or full title when signing.
Signature: Date:
-------------------------- ---------
Signature: Date:
-------------------------- ---------
