<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-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)(4) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(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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Notes:
1
<PAGE>
LOGO
International Technology Corp.
INTERNATIONAL TECHNOLOGY CORPORATION
2790 MOSSIDE BOULEVARD
MONROEVILLE, PENNSYLVANIA 15146-2792
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of
International Technology Corporation (the "Company") will be held at
International Technology Corporation, located at 2790 Mosside Boulevard,
Monroeville, Pennsylvania 15146-2792 on October 6, 1998, at 9:00 a.m. Eastern
time, for the following purposes:
1. To elect four (4) directors to hold office until the 1999 Annual Meeting
of Stockholders and until their successors are 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
September 4, 1998 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 25, 1998 until October 6, 1998 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,
/s/ James G. Kirk
James G. Kirk
Secretary
September 16, 1998
Monroeville, Pennsylvania LOGO
Recycled
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
2790 MOSSIDE BOULEVARD
MONROEVILLE, PENNSYLVANIA 15146-2792
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 6, 1998
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 1998 Annual Meeting of
Stockholders of the Company to be held at 9:00 a.m. Eastern time, on Tuesday,
October 6, 1998, at International Technology Corporation, located at 2790
Mosside Boulevard, Monroeville, Pennsylvania 15146-2792, 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 1998
Annual Report to Stockholders, will first be mailed to the Company's
stockholders on or about September 16, 1998.
VOTING AT THE MEETING
The close of business on September 4, 1998 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
22,628,433 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 AND THE MERGER
At the 1996 Annual Meeting of Stockholders, 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). Carlyle's purchase of the Convertible Preferred
Stock and Warrants was financed through the private sale of interests in
limited partnerships affiliated with Carlyle or through other entities. These
partnerships and other entities then purchased the Convertible Preferred Stock
and Warrants.
<PAGE>
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.
The 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.
Pursuant to an agreement of merger dated January 15, 1998 (the "Merger
Agreement"), the Company acquired OHM Corporation ("OHM") in a two-step
transaction, comprised of a tender offer for 13,933,000 shares of OHM common
stock, or 54% of the outstanding OHM stock, for $160,300,000 in cash, which
was consummated on February 25, 1998, and a merger (the "Merger") of an IT
subsidiary into OHM on June 11, 1998. In the Merger, the former OHM
shareholders received IT common stock representing approximately 57% of the
outstanding IT common stock and 45% of the voting power of IT, as well as cash
in the aggregate amount of $30,800,000. Subsequent to the Merger, holders of
the Convertible Preferred Stock own approximately 21% (approximately 24%
assuming exercise of the Carlyle Warrants) of the Company's voting power.
At the Special Meeting of Shareholders held on June 11, 1998 (the "Special
Meeting"), at which the Merger was approved, the shareholders also voted to
eliminate the Company's classified Board of Directors system. Under that
system, the Common Stock Directors of the Company served for three year terms
which were staggered to provide for the election of approximately one-third of
the Board members each year. As a result of the shareholders' vote to
eliminate the Company's classified Board of Directors system, the holders of
the Common Stock are entitled to vote each year on the election of all Common
Stock Directors.
After the Merger, pursuant to the Merger Agreement, Richard W. Pogue and
Charles W. Schmidt were appointed to the Board of Directors as Common Stock
Directors. In connection with such appointment, the authorized number of
directors (both Common and Preferred Stock Directors) was increased to nine
(9), with the Board consisting of five Preferred Stock Directors and four
Common Stock Directors so that the Preferred Stock Directors continue to
represent a majority of the Board of Directors. To effectuate this change, one
of the Common Stock Directors, E. Martin Gibson, resigned as such and was
reappointed as a Preferred Stock Director.
CUMULATIVE VOTING AND NOMINATIONS FOR COMMON STOCK DIRECTORS
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.
2
<PAGE>
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 below, 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 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 nominees for election as Common Stock Directors, who have
been nominated by the Board of Directors, and the directors who are not
subject to election by the Common Stock (e.g., the Preferred Stock Directors)
are set forth in the following table. Should any 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>
NOMINEES FOR COMMON STOCK DIRECTORS FOR TERMS TO EXPIRE IN 1999:
Anthony J. DeLuca(1).... 51 Director, Chief Executive 1998 1996
Officer and President
James C. McGill(3)...... 54 Director 1998 1990
Richard W. Pogue........ 70 Director 1998 1998
Charles W. Schmidt...... 70 Director 1998 1998
PREFERRED STOCK DIRECTORS:
Daniel A.
D'Aniello(1)(2)........ 51 Director and Chairman of the 1998(4) 1996
Board (non-officer position)
Philip B. Dolan(1)(2)... 40 Director 1998(4) 1996
E. Martin Gibson(3)..... 60 Director 1998(4) 1994
Robert F. Pugliese(3)... 65 Director 1998(4) 1996
James David Watkins(2).. 71 Director 1998(4) 1996
</TABLE>
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(1) Member of Executive Committee
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
(4) 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, Mr. Pugliese and Mr.
Gibson each to serve an annual term to expire in 1999.
3
<PAGE>
BACKGROUND OF THE NOMINEES AND CURRENT DIRECTORS:
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 PRA
International, Inc. Mr. D'Aniello is Chairman of GTS Duratek, Inc. and Vice
Chairman of Baker & Taylor, Inc.
Mr. DeLuca was named Chief Executive Officer of the Company on July 22, 1997
and President and Acting Chief Executive Officer and a director of the Company
as of July 1, 1996. 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. 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. Gibson became a director of the Company on October 11, 1994 and served
as Chairman of the Board of Directors, a non-officer, non-employee position,
from April 6, 1995 until his resignation as such upon completion 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., NovaCare, Inc., and Primerica, 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 two private corporations that are
engaged in venture capital and health exercise equipment businesses.
Mr. Pogue is a consultant with Dix & Eaton, a public relations firm.
Effective June 30, 1994, Mr. Pogue retired as Senior Partner of the law firm
of Jones, Day, Reavis & Pogue, Cleveland, Ohio, of which he had been a partner
since 1961. Mr Pogue is also a Director of Continental Airlines, Inc., Derlan
Industries Limited, M.A. Hanna Company, KeyCorp, LAI Ward Howell, Inc., Rotek
Incorporated and TRW Inc. Mr. Pogue was a Director of OHM for 12 years (since
1986) prior to the Merger.
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 served as General Counsel
from 1976 to 1992. Mr. Pugliese is a member of the Association of General
Counsel. 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, and served as a Director of OCWEN Asset Investment
Corporation and St. Clair Memorial Hospital.
Mr. Schmidt retired in January 1991 as Senior Vice President, External
Affairs of Raytheon Company, a broadly diversified manufacturer of industrial
and consumer products, and was formerly President and Chief Executive Officer
of SCA Services, Inc., a company that provided waste management-related
services and previously was President and Chief Executive Officer of S.D.
Warren Company, a division of Scott Paper Company. Mr. Schmidt also serves as
trustee of the Massachusetts Financial Services Family of Mutual Funds and is
a Director of Mohawk Paper Company. Mr. Schmidt was a Director of OHM for 12
years (since 1986) prior to the Merger.
4
<PAGE>
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 Secretary of Energy of
the United States from 1989 to 1993. Prior to his appointment as Secretary of
Energy, the Admiral served as Director of Philadelphia Electric Company and
VESTAR, Inc. (a pharmaceutical company), and was a consultant to the Carnegie
Corporation of New York. From 1982 to 1986, he served as the Chief of Naval
Operations, capping a career spanning nearly four decades. Admiral Watkins was
also appointed to chair the Presidential Commission on AIDS from 1987 to 1988.
He was a trustee of the Carnegie Corporation of New York from 1993 to 1998.
Admiral Watkins currently serves as a Director of Edison International, and
GTS Duratek and as Chairman of Eurotech, Ltd.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the period March 31, 1997 through March 27, 1998, the end of the
Company's last fiscal year, the Company's Board of Directors held five
meetings. During such fiscal year, each director 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).
The Company's Executive Committee held three meetings during the period from
March 31, 1997 through March 27, 1998. 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 31, 1997
through March 27, 1998. 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 four meetings from March 31, 1997
through March 27, 1998. 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. Non-employee directors each receive annual compensation of
approximately $35,000, 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.
Chairman of the Board. The Chairman of the Board of Directors serves as a
member or ex-officio member of all 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 the previous chairman, Mr. E. Martin Gibson, received.
Stock Options. At the 1996 Annual Meeting, Stockholders approved the 1996
Stock Inventive 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.
Prior to the Special Meeting, the maximum number of shares of Common Stock
that could be issued pursuant to awards granted under the 1996 Plan was
639,357; and on April 1 of each of the years 1999, 2000
5
<PAGE>
and 2001, such maximum number was to be increased by a number equal to 2% of
the number of shares of Common Stock issued and outstanding on each of such
dates. At the Special Meeting, stockholders approved amendments to the plan to
provide for a one-time increase equal to 2% of the shares of Common Stock
issued in the Merger, and to change the date of occurrence of the remaining
scheduled annual increases from April 1 of each such year to the first
business day of each fiscal year of the Company through 2001, in accordance
with the previously announced change to the last Friday in December as the end
of the Company's fiscal year.
The 1996 Plan is administered by the Compensation Committee of the Board
(the "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.
Pursuant to the Merger Agreement, each holder of an option to purchase a
share of OHM Common Stock (each an "OHM Option") granted under OHM's 1986
Stock Option Plan, the Directors Deferred Fee Plan, the Incentive Stock Plan
and the Nonqualified Stock Option Plan for Directors (collectively, the "OHM
Stock Plans") was required to elect the treatment of their OHM Options under
the provisions of the Merger Agreement. OHM Option holders were permitted to
elect that each OHM Option be converted into the right to receive cash
consideration equal to the product of (x) (1) the excess of $11.50 over (2)
the exercise price per share subject to such OHM Option and (y) the number of
shares subject to such OHM Option, or that, at the effective time of the
Merger, each OHM Option would be deemed to constitute an option to acquire, on
the same terms and conditions as were applicable under such OHM Option, a
number of shares of Common Stock equivalent to the number of shares of OHM
Common Stock that could have been purchased immediately prior to the effective
time under such OHM Option multiplied by 1.394 shares of OHM Common Stock for
each share of Common Stock (the "Exchange Ratio") rounded up to the nearest
whole number of shares of Common Stock), at a price per share of Common Stock
(rounded up to the nearest whole cent) equal to (y) the aggregate exercise
price for the Shares otherwise purchasable pursuant to such OHM Option divided
by (z) the Exchange Ratio; provided, however, that in the case of any OHM
Option to which Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") applied, the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of such
option would be determined in accordance with the foregoing, subject to such
adjustments necessary in order to satisfy the requirements of Section 424(a)
of the Code. Pursuant to the Merger Agreement, the Company assumed each OHM
Option to which this second election applied in accordance with the terms of
the OHM Stock Plans under which such OHM Option was issued and the stock
option agreement by which it was evidenced. Holders of OHM Options with
respect to 188,038 shares of OHM Common Stock (convertible into 262,126 shares
of Company Common Stock) chose the second election.
Retirement Plan. Prior to the consummation of the Investment, the Company
maintained a retirement plan for non-employee directors and under certain
circumstances directors who met the plan's length of service requirements were
entitled to an accelerated lump sum payment upon a change of control such as
caused by the Investment. In connection with the Investment, however, each of
the then non-employee directors of the Company acknowledged and agreed to a
modification of the right to receive the accelerated lump sum payment. The
payments to be received by non-employee directors pursuant to the amended plan
are significantly less than the lump sum payments that were waived. Pursuant
to the plan as amended, Mr. Gibson is to receive $16,000 in annual benefits,
for a total of $80,000, and Mr. McGill is to receive $40,000 in annual
benefits, for a total of $200,000, payable in monthly installments over five
years, on account of their service as directors prior to the Investment.
6
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
CERTAIN STOCKHOLDERS OF THE COMPANY
The following table sets forth information as of September 8, 1998 with
respect to beneficial ownership of (a) Common Stock, (b) Depositary Shares,
each representing 1/100 of a share of 7% Preferred Stock (the "Depositary
Shares"), (c) Convertible Preferred Stock and (d) the Warrants, by (w) each
person known by the Company to be the beneficial owner of 5% or more of the
outstanding Common Stock (based solely on information contained in Schedules
13D, -G, or -F filed by such persons and delivered to the Company), Depositary
Shares, Convertible Preferred Stock or Warrants, (x) each director of the
Company, (y) the executive officers of the Company and (z) all directors and
persons serving as executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND AMOUNT AND PERCENT OF
NATURE OF PERCENT OF NATURE OF PERCENT OF NATURE OF CONVERTIBLE
BENEFICIAL COMMON BENEFICIAL DEPOSITARY BENEFICIAL PREFERRED
OWNERSHIP OF STOCK OWNERSHIP OF SHARES OWNERSHIP OF STOCK
COMMON BENEFICIALLY DEPOSITARY BENEFICIALLY CONVERTIBLE BENEFICIALLY
NAME STOCK(1)(2) OWNED(2) SHARES OWNED PREFERRED STOCK OWNED
- ------------------------ ------------ ------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
TCG Holdings, L.L.C..... 6,524,308(3) 22.38% 41,022 89.53%
Carlyle Investment
Management, L.L.C...... 762,342(4) 3.26% 4,797 10.47%
Brahman Capital Corp. et
al..................... 2,692,592(5) 11.9%
Libra Fund, L.P.(6)..... 1,497,576 6.6%
Baron Capital Group,
Inc.(7)................ 1,200,000 5.3%
Daniel A. D'Aniello(8).. 0 --
Philip B. Dolan(8)...... 0 --
E. Martin Gibson........ 12,226 * 5,000 *
James C. McGill(9)...... 26,963 * 1,000 *
Richard W. Pogue........ 69,841(10) *
Robert F. Pugliese...... 2,966 *
Charles W. Schmidt...... 15,940 *
James D. Watkins........ 2,966 *
Anthony J. DeLuca....... 90,089 *
James G. Kirk........... 2,267 *
James R. Mahoney........ 67,471 *
Raymond J. Pompe........ 55,298 *
Philip O. Strawbridge... 169,169 *
Franklin E. Coffman(11). 49,383 * 1,000 *
All directors and
executive officers as a
group (14 persons)(12). 539,352 2.34%
</TABLE>
- ---------------------
* Less than 1%
(1) The number of shares of Common Stock beneficially owned includes shares of
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 60 days of
September 8, 1998 upon exercise of stock options (and conversion of
Depositary Shares in the case of Messrs. Gibson, McGill, and Coffman) in
the following amounts: (i) 6,875 shares upon exercise of options and 5,351
shares upon conversion of the Depositary Shares as to Mr. Gibson, (ii)
4,375 shares upon exercise of options and 1,070 shares upon conversion of
the Depositary Shares as to Mr. McGill, (iii) 55,760 shares as to Mr.
Pogue, (iv) 13,940 shares as to Mr. Schmidt, (v) 34,334 shares as to Mr.
DeLuca, (vi) 28,834 shares as to Mr. Mahoney, (vii) 17,355 shares as to
Mr. Pompe, (viii) 2,267 shares as to Mr. Kirk, (ix) 136,566 shares as to
Mr. Strawbridge and (x) 26,795 shares upon exercise of options and 1,070
shares upon conversion of The Depositary Shares as to Mr. Coffman.
(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 such
shares is divided
7
<PAGE>
by the sum of the number of outstanding shares of Common Stock on September
8, 1998 plus (i) the number of shares of Common Stock subject to options
exercisable currently or within 60 days of September 8, 1998 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 Carlyle Warrants held
by certain limited partnerships controlled by TCG Holdings, L.L.C., a
Delaware limited liability company ("TCG Holdings"), as set forth in more
detail in the following sentence. The cumulative TCG Holdings ownership
figure represents (i) 1,815,140 shares beneficially owned by Carlyle
Partners II, L.P., a Delaware limited partnership ("CPII"), (ii) 82,541
shares beneficially owned by Carlyle Partners III, L.P., a Delaware
limited partnership ("CPIII"), (iii) 1,523,687 shares beneficially owned
by Carlyle International Partners II, L.P., a Cayman Islands limited
partnership ("CIPII"), (iv) 81,831 shares beneficially owned by Carlyle
International Partners III, L.P., a Cayman Islands limited partnership
("CIPIII"), (v) 343,025 shares beneficially owned by C/S International
Partners, a Cayman Islands partnership ("C/SIP"), (vi) 1,907 shares
beneficially owned by Carlyle Investment Group, L.P., a Delaware limited
partnership ("CIG"), (vii) 2,396,962 shares beneficially owned by Carlyle-
IT International Partners, L.P., a Cayman Islands limited partnership
("CITIP"), (viii) 80,554 shares beneficially owned by Carlyle-IT
International Partners II, L.P., a Cayman Islands limited partnership
("CITIPII"), and (ix) 198,661 shares beneficially owned by Carlyle-IT
Partners, L.P., a Delaware limited partnership ("CITP"). TC Group, L.L.C.,
a Delaware limited liability company ("TC Group"), may be deemed to be the
beneficial owner of 6,524,308 shares of ITC Common Stock as the general
partner of CPII, CPIII, CIG, and CITP, and as the managing general partner
of CIPII, CIPIII, C/SIP, CITIP and CITIPII. TCG Holdings, as a member
holding a controlling interest in TC Group, may be deemed to share all
rights herein described belonging to TC Group. Furthermore, because
certain managing members of TCG Holdings are also managing members of
Carlyle Investment Management, L.L.C., a Delaware limited liability
company ("CIM"), TCG Holdings may be deemed the beneficial owner of the
shares of Common Stock controlled by CIM (see footnote 4 below). The
principal business address of TC Group and TCG Holdings is c/o The Carlyle
Group, 1001 Pennsylvania Avenue, N.W., Suite 220 South, Washington DC
20004. The principal business address of CPII, CPIII, CIG, CITP and CIM is
Delaware Trust Building, 900 Market Street, Suite 200, Wilmington,
Delaware 19801. The principal business address of CIPII, CIPIII, C/SIP,
CITIP and CITIPII is Coutts & Co., P.O. Box 707, Cayman Islands, British
West Indies.
(4) Represents shares of Common Stock issuable upon conversion of all shares
of Convertible Preferred Stock and exercise of all Carlyle Warrants held
by the State Board of Administration of the State of Florida over which
CIM holds sole voting and disposition power. Because certain managing
members of TCG Holdings are also managing members of CIM, CIM may be
deemed to be the beneficial owner of the shares of Common Stock controlled
by TCG Holdings (see footnote 3 above).
(5) Such information is derived solely from a Schedule 13G filed by the
"Brahman Stockholders", which is comprised of the entities listed in the
following sentence (filing as joint filers), with the SEC dated August 20,
1998. The Brahman Stockholders' cumulative ownership represents (i)
415,142 shares with respect to which Brahman Partners II, L.P. has shared
power to vote or direct the vote and shared power to dispose or direct the
disposition, (ii) 937,541 shares with respect to which Brahman
Institutional Partners, L.P. has shared power to vote or direct the vote
and shared power to dispose or direct the disposition, (iii) 1,078,419
shares with respect to which BY Partners, L.P. has shared power to vote or
direct the vote and shared power to dispose or direct the disposition,
(iv) 2,431,102 shares with respect to which Brahman Management, L.L.C. has
shared power to vote or direct the vote and shared power to dispose or
direct the disposition, (v) 1,339,909 shares with respect to which Brahman
Capital Corp. has shared power to vote or direct the vote and shared power
to dispose or direct the disposition (which position includes shares owned
by Brahman Partners II Offshore, Ltd), and (vi) 2, 692,592 shares with
respect to which each of Peter A. Hochfelder, Robert J. Sobel, and
Mitchell A. Kuflik have shared power to vote or direct the vote and shared
power to dispose or direct the disposition. The Brahman Stockholders
further report in such Schedule 13G that (i) none of the above named
entities individually has the sole power to vote or direct the vote or to
dispose or direct the disposition of the shares it beneficially owns,
(ii) but that Brahman Management, as the sole general partner of Brahman
Partners II, L.P., BY Partners, L.P. and Brahman Institutional Partners,
L.P., has the power to vote and dispose of the shares owned by each of
Brahman Partners II, L.P., BY Partners, L.P. and Brahman Institutional
Partners, L.P., and (iii) further that Brahman Capital Corp., pursuant to
investment advisory contracts and arrangements, has the power to vote and
dispose of the shares owned by
8
<PAGE>
BY Partners, L.P. and Brahman Partners II Offshore, Ltd., a Cayman Islands
exempted company. The address of Brahman Capital Corp and the affiliated
reporting persons is 277 Park Avenue, 26th Floor, New York, New York 10172,
except in the case of Brahman Partners II Offshore, Ltd., the address of
which is c/o Citco, N.V. Kaya Flamboyan 9, Willemstad, Curacao, Netherlands
Antilles.
(6) Such information is derived solely from a Schedule 13G filed by the
"Libra Stockholders", which is comprised of the entities listed in the
following sentence (filing as joint filers), with the SEC dated July 2,
1998. The Libra Stockholders' cumulative ownership represents (i)
1,387,531 shares owned by Libra Fund, L.P. ("Libra") and (ii) 110,045
shares of Common Stock owned by an affiliated off-shore fund (the
"Fund"). The Libra Stockholders' report in such Schedule 13G that Libra
Advisors, LLC ("Advisors"), an Investment Advisor to the Fund, has the
power to vote and to direct the voting of and the power to dispose and
direct the disposition of the 110,045 shares of Common Stock owned by the
Fund. As the General Partner of Libra, Advisors has the power to vote and
to direct the voting of and the power to dispose and direct the
disposition of the 1,387,531 shares of Common Stock owned by Libra.
Accordingly, Advisors may be deemed to be the beneficial owner of
1,497,576 shares of Common Stock, or 6.6% of the outstanding shares of
Common Stock. In addition, as the sole voting member and Manager of
Advisors, Ranjan Tandon may be deemed to have the power to vote and to
direct the voting of and the power to dispose and direct the disposition
of the 1,497,576 shares of Common Stock owned by Advisors or 6.6% of the
outstanding shares of Common Stock. The address of Libra Fund, L.P. and
affiliated reporting persons is 277 Park Avenue, 26th Floor, New York,
New York 10172.
(7) Such information is derived solely from a Schedule 13G filed by the
"Baron Shareholders", which is composed of the entities listed in the
following sentence (filing as joint filers), with the SEC dated June 4,
1998. The Baron Stockholders is comprised of Baron Capital Group, Inc.
("BCG"), Bamco, Inc. ("BAMCO"), Baron Small Cap Fund ("BSC"), Baron Asset
Fund ("BAF"), and Ronald Baron. The Baron Stockholders report in such
Schedule 13G that (i) BCG, BAMCO, BSC and Ronald Baron have the shared
power to vote or direct the vote of 1,200,000 shares of Common Stock;
(ii) BCG, BAMCO, BAF and Ronald Baron have shared power to dispose of or
direct the disposition of 1,200,000 shares of Common Stock, but that none
of BCG, BAMCO, BSC, or Ronald Baron have the sole power to vote or direct
the vote of or the sole power to dispose or to direct the disposition of,
any Common Stock. BAMCO is a subsidiary of BCG. BSC is an investment
advisory client of BAMCO. Ronald Baron owns a controlling interest in
BCG. BCG and Ronald Baron disclaim beneficial ownership of shares held by
their controlled entities (or the investment advisory client thereof) to
the extent such shares are held by persons other than BCG and Ronald
Baron. BAMCO disclaims beneficial ownership of shares held by its
investment advisory clients to the extent such shares are held by persons
other than BAMCO and its affiliates. The address of Baron Capital Group,
Inc. and the affiliated reporting persons is 767 Fifth Avenue, 24th
Floor, New York, New York 10153.
(8) Mr. D'Aniello is a Managing Member of TCG Holdings. Mr. D'Aniello's
interest in TCG Holdings is not controlling and thus Mr. D'Aniello
expressly disclaims any beneficial ownership in the shares of ITC 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 or TCG
Holdings, and as such expressly disclaims any beneficial ownership in the
shares of ITC Common Stock beneficially owned by any of such entities.
(9) 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 4,375 shares that may be purchased upon the exercise of
options that are currently exercisable or that will become exercisable
within 60 days of September 8, 1998.
(10) Includes 1,081 shares of Common Stock owned by a revocable trust for Mr.
Pogue's wife with respect to which Mr. Pogue is a trustee. Mr. Pogue
disclaims beneficial ownership of all such shares.
(11) Mr. Coffman resigned as Senior Vice President, DOE Programs pursuant to
an Agreement dated April 17, 1998. See "Certain Transactions--Coffman
Agreement."
(12) Includes 327,101 shares of Common Stock that may be purchased upon the
exercise of options that are currently exercisable or that will become
exercisable within 60 days of September 8, 1998 and 7,000 Depositary
Shares (convertible into 7,491 shares of Common Stock).
9
<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 fiscal years
1998, 1997 and 1996 of those persons who were, as of March 27, 1998, the Chief
Executive Officer and all other executive officers of the Company (the "Named
Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- --------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) AWARDS($)(3) OPTIONS(#)(4) COMPENSATION($)(5)
- ------------------------- ---- --------- ----------- ------------------ ------------ ------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony J. DeLuca(1).... 1998 $320,000 $170,000 -- $ 0 0 $248,250
Chief Executive Officer 1997 307,981 50,000 -- 0 26,333 37,614
and President 1996 270,400 12,776 -- 296,875 0 17,732
Raymond J. Pompe........ 1998 $265,000 $106,000 -- $ 0 0 $ 29,473
Senior Vice President, 1997 248,075 26,500 -- 0 16,417 18,270
Engineering &
Construction 1996 206,691 9,923 -- 118,750 0 16,250
James R. Mahoney........ 1998 $260,000 $ 47,383 $40,681 $ 0 0 $143,687
Senior Vice President, 1997 260,000 26,000 -- 0 16,333 27,060
Consulting & Ventures 1996 260,000 12,285 -- 118,750 0 28,579
James G. Kirk........... 1998 $160,000 $ 36,074 -- $ 0 0 $ 10,863
Vice President, 1997 150,625 10,000 -- 0 4,667 8,352
General Counsel &
Secretary 1996 140,500 28,319 -- 0 0 7,168
Franklin E. Coffman(6).. 1998 $194,000 $ 47,140 -- $ 0 0 $ 29,440
Senior Vice President, 1997 194,000 19,400 -- 0 15,233 15,356
DOE Programs 1996 192,346 8,201 -- 0 0 26,923
</TABLE>
- ---------------------
(1) 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.
(2) The dollar value of perquisites and other personal benefits, if any, for
each of the Named Officers except Mr. Mahoney in 1998 was less than
reporting thresholds established by the SEC. For fiscal year 1998, Mr.
Mahoney received $17,022 for tax reimbursement for relocation expenses
reported under All Other Compensation.
(3) 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. 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).
(4) 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. Mahoney, 4,333 shares; Mr. Pompe, 4,417 shares; Mr. Kirk,
1,667 shares; and Mr. Coffman, 3,233 shares.
(5) For 1998, the amounts shown for Messrs. DeLuca, Mahoney, Pompe, Kirk and
Coffman represent $7,507, $6,943, $11,433, $165 and $1,671 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 years 1998 and 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 401k Company
matching contributions for Messrs.
10
<PAGE>
DeLuca, Mahoney, Pompe, Kirk and Coffman in the amounts of $4,800, $7,908,
$8,000, $7,975 and $8,000, respectively; the Company's contribution to the
Company's Restoration Plan, a non-qualified supplemental retirement plan, to
Messrs. DeLuca, Mahoney, Pompe, Kirk and Coffman as follows: $14,800, $5,680,
$10,040, $2,723 and $4,846, respectively; $3,500 and $10,000 for partial
principal forgiveness on a relocation loan to purchase a residence for
Messrs. DeLuca and Mahoney respectively; $27,692 and $14,923 in accrued but
unused paid time off for Mr. DeLuca and Mr. Coffman respectively; $93,951 and
$35,157 in reimbursed relocation expenses for Messrs. DeLuca and Mahoney
respectively; and $96,000 and $78,000 in relocation mobility allowances for
Messrs. DeLuca and Mahoney respectively. For 1997, the amounts shown for
Messrs. DeLuca, Mahoney, Pompe, Kirk and Coffman represent $5,255, $4,860,
$5,897, $991 and $4,596 respectively, of life insurance premiums in excess of
$50,000. 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,
Mahoney, Pompe, Kirk and Coffman in the amounts of $4,500, $7,500, $7,500,
$7,361 and $7,500, respectively; the Company's contribution to the Company's
Restoration Plan, a non-qualified supplemental retirement plan, to Messrs.
DeLuca, Mahoney, Pompe and Coffman as follows: $7,300, $4,700, $4,873 and
$3,260, 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, $5,990,
$5,706, $819 and $6,157 for Messrs. DeLuca, Mahoney, Pompe, Kirk and Coffman
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, Mahoney, Pompe, Kirk and Coffman of $6,459, $7,498, $7,209,
$6,349 and $7,058 respectively; a contribution to the Company's Restoration
Plan for Messrs. DeLuca, Mahoney, Pompe and Coffman of $5,475, $5,091, $3,334
and $2,515 respectively; and $10,000 for partial principal forgiveness of a
relocation loan to purchase a principal residence for Mr. Mahoney.
(6) Mr. Coffman resigned as Senior Vice President, DOE Programs pursuant to an
Agreement dated April 17, 1998. See "Certain Transactions--Coffman
Agreement."
11
<PAGE>
STOCK OPTION GRANTS IN THE 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 27, 1998. No stock appreciation rights ("SARs")
were granted during the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTION EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#)(1) FISCAL YEAR (PER SHARE)(2) DATE PRESENT VALUE(3)
- ------------------------ ------------- ------------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Anthony J. DeLuca....... 8,333 6.27 $7.00 5/13/07 $35,582
Raymond J. Pompe........ 4,417 3.32 $7.00 5/13/07 $19,391
James R. Mahoney........ 4,333 3.26 $7.00 5/13/07 $19,022
James G. Kirk........... 1,667 1.25 $7.00 5/13/07 $ 7,318
Franklin E. Coffman..... 3,233 2.43 $7.00 5/13/07 $14,193
</TABLE>
- ---------------------
(1) All options granted in fiscal year 1998 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 1998, the Company
used the Black-Scholes option pricing model to obtain a calculated present
value of $4.39 per share. The Company assumed a volatility of .472, a risk
free interest rate of 6.25% and assumed that the shares would be exercised
evenly throughout the four-year vesting schedule. In addition, the Company
took a 3% discount for each year in the vesting period to account for the
risk of forfeiture in the event that the executive terminates employment
with the Company. The valuation is not intended to forecast possible
future appreciation, if any, of the Common Stock. The real value of the
option depends on the actual performance of the Company's Common Stock
during the applicable period.
AGGREGATED OPTION EXERCISES DURING LAST FISCAL YEAR AND OPTION VALUES AT END
OF LAST FISCAL YEAR
The following table provides information with respect to the exercise of
stock options during the fiscal year ended March 27, 1998 by the Named
Officers, and with respect to unexercised "in-the-money" stock options
outstanding as of March 27, 1998. In-the-money stock options are options for
which the exercise price is less than the market price of the underlying stock
at the end of the fiscal year. No executive officer or any other employee of
the Company held or exercised any SARs at any time during fiscal year 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS AT
(IN SHARES) FISCAL YEAR END($)(1)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
- ------------------------ -------- ----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. DeLuca....... 0 $0 27,437 29,146 $5,344 $39,468
Raymond J. Pompe........ 0 $0 14,062 17,065 $3,563 $23,110
James R. Mahoney........ 0 $0 22,937 20,146 $3,563 $22,874
James G. Kirk........... 0 $0 2,075 3,917 $ 891 $ 7,360
Franklin E. Coffman..... 0 $0 14,562 14,421 $3,563 $19,780
</TABLE>
- ---------------------
(1) Represents the difference between the $9.8125 closing market price of the
Company's Common Stock at March 27, 1998, minus the exercise price of the
options.
(2) 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 the condition has
not been satisfied and the options therefore are not vested, such options
are not included in the "Beneficial Ownership of Shares" table.
12
<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 27, 1998.
The Compensation Committee retains the services of nationally known
independent consulting firms specializing in executive compensation 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 1998, following the merger with OHM Corporation the
Compensation Committee reviewed and reaffirmed the compensation strategy and
plans and programs adopted in fiscal 1997 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 compensation strategy is designed to align management and stockholder
interests by placing a larger percentage of an executive officer's total
compensation "at risk" in the form of annual and long-term incentives, which
at target level, are generally intended to provide about 60% of total
compensation, and by moving base salaries from the sixtieth to the fiftieth
percentile of competitive practice. In addition, a larger percentage of
management's incentive compensation, both annual and long-term incentive, will
be linked to the value of the Company's common stock. At the time the
compensation strategy was adopted, it was anticipated that these changes would
be implemented over three to five years; however, in fiscal 1998 the
Compensation Committee approved certain actions that will accelerate this
process.
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 various elements of
compensation, each of which is discussed, in addition to the Committee's
actions, in greater detail below.
BASE SALARY
As a guideline, the base salary for Company management is targeted at the
fiftieth 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
13
<PAGE>
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.
The Compensation Committee completed its annual review of officer pay levels
in fiscal year 1998. In consideration of competitive practice and the
executives' individual performance, the Committee granted salary increases to
three of the Named Officers: Mr. DeLuca to $400,000, Mr. Kirk to $166,000, and
Mr. Pompe to $280,000 per annum, respectively.
TOTAL ANNUAL CASE 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 performance
goals and targets are achieved. Upper-quartile cash compensation can be earned
only if business results significantly exceed Company goals.
THE MANAGEMENT INCENTIVE PLAN
The Management Incentive 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 goals and for
individual performance. Each fiscal year each eligible participant has a
target incentive award that generally is expressed as a percentage of the
participant's base salary for that 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 Compensation Committee, is directly linked to
the Company's annual budget goals, 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 incentive
award. Company goals 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.
For fiscal year 1998, the target incentive awards adopted under the MIP were
intended to provide an incentive to key management to continue to improve the
financial performance of the Company. The Compensation Committee selected
earnings before interest and taxes (EBIT), collection of accounts receivable,
as measured by days' sales outstanding ("DSO"), and the Company's stock price
as the key financial measures. Specific goals and financial targets associated
with these measures were established for the annual performance period.
Annualized target incentive awards ranged from 10% of salary for certain key
employees to 50% of salary for the Chief Executive Officer. Incentive awards
begin to be earned when the Company reaches a threshold level of EBIT. 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 1998 only, the MIP provided for an interim incentive
payment that may be made six months following the commencement of the
performance period on the recommendation of the Chief Executive Officer and
approval of the Committee.
Financial goals and targets were achieved for the first six months and for
the full 1998 fiscal year. The distribution of incentive awards was determined
for the first six months and the full 12 months of the performance period, at
the Compensation Committee's discretion, on the basis of an assessment of
Company, and business unit performance, and individual performance in relation
to pre-established objectives. The total incentive awards earned by the Named
Officers under the MIP for fiscal 1998 were as follows: Mr. DeLuca, $170,000;
Mr. Kirk, $36,074; Mr. Mahoney, $47,383; Mr. Pompe, $106,000; and Mr. Coffman,
$47,140.
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.
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LONG-TERM INCENTIVE COMPENSATION PROGRAM
In fiscal year 1998, following the merger with OHM Corporation, the Board of
Directors amended the 1996 Stock Incentive Plan (the "1996 Plan"), to increase
the number of shares available under the plan as a result of the increase in
the number of shares of common stock issued and outstanding, and to ensure
that the Company is able to make competitive grants of stock-based award in
order to attract, motivate and retain key management talent. The amendment was
approved by shareholders.
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 gives 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. The Compensation Committee granted non-qualified stock options
(NQSOs) to officers in fiscal year 1998 in connection with incentive awards
earned for achievement of financial targets in the 1997 fiscal year. The
shares of stock options granted to the Named Officers in fiscal 1998 were as
follows: Mr. DeLuca, 8,333 shares of NQSOs; Mr. Pompe, 4,417 shares of NQSOs;
Mr. Mahoney, 4,333 shares of NQSOs; Mr. Kirk, 1,667 shares of NQSOs; and Mr.
Coffman, 3,233 shares of NQSOs.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee assessed the competitiveness of Mr. DeLuca's salary for fiscal
year 1998 using several compensation data sources. Mr. DeLuca's salary was
found to be substantially below the fiftieth percentile of salaries paid to
comparable positions in engineering and environmental services companies. The
Committee increased Mr. DeLuca's salary to $400,000 per annum, which is
somewhat below the fiftieth percentile of comparable positions in those
companies. Mr. DeLuca earned an incentive award of $170,000 under the 1998
Management Incentive Plan, which reflected the achievement of the Company's
EBIT and other financial goals and Mr. DeLuca's individual performance in
relation to pre-established objectives. The Committee granted 8,333 shares of
non-qualified stock options to Mr. DeLuca in fiscal year 1998 in connection
with incentive awards earned for achievement of financial targets in the 1997
fiscal year.
CODE SECTION 162(M) OF THE INTERNAL REVENUE
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 when it 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 compared to the S&P 500 Index and a peer group of
companies selected by the Company consisting of companies engaged in the
environmental services industry at the end of each fiscal year. The companies
in the peer group are: Dames & Moore Group, EMCON, Harding Lawson Associates
GP, Inc., ICF Kaiser International, Inc., Sevenson Environmental Services,
Inc., TRC Companies, Inc., and Roy F. Weston, Inc. (the "Peer Group"). Also
included on the graph is the Smith Barney ("SB") Hazardous Waste Index through
March 27, 1997. Until this year, the Company used the Smith Barney Hazardous
Waste Index as the published industry index for this graph. Smith Barney has
discontinued publication of the index. The Company has selected its Peer Group
in place of the Smith Barney Hazardous Waste Index. The Company believes that
the Peer Group it has selected represents a group of reasonably comparable
companies engaged in the environmental services industry.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
INTERNATIONAL TECHNOLOGY CORPORATION, S&P 500 INDEX,
SB HAZARDOUS WASTE INDEX AND A PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Peer Group $100 $ 88 $ 64 $ 58 $ 57 $ 64
International Technology Corp. $100 $ 51 $ 40 $ 43 $ 29 $ 43
S&P 500 Index $100 $101 $117 $155 $190 $274
SB Hazardous Waste Index $100 $ 80 $ 73 $ 73 $ 58 *
</TABLE>
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* SB Hazardous Waste Index was discontinued by Smith Barney; data for 1998 not
published.
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Assumes $100 invested on March 31, 1993 in the Company's Common Stock, the
S&P 500 Index, the SB Hazardous Waste Index, and the Peer Group, 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. The Company and each of Anthony J. DeLuca, James R.
Mahoney, Raymond J. Pompe and Franklin E. Coffman have entered into employment
agreements with terms through November 1999. The employment agreements provide
for initial base salaries at the rates in effect at the time of the closing of
the Investment, 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 are at the discretion of the
Compensation Committee and will generally target long-term incentive
opportunities.
The agreements provide for severance payments under certain circumstances.
Under the agreements, the Company will have "good reason" to terminate Messrs.
DeLuca, Mahoney, Pompe or Coffman because of the Company's performance if such
persons fail to meet certain management forecasts for two consecutive fiscal
years. If the executive is terminated because of the Company's performance
(under the circumstances permitted in the agreements) within 24 months after a
change in control, is terminated without reason, or resigns for cause, he is
entitled to receive his base salary as adjusted from time to time (presently
$400,000 in the case of Mr. DeLuca, $260,000 in the case of Mr. Mahoney,
$280,000 in the case of Mr. Pompe and $194,000 in the case of Mr. Coffman) for
12 months following the termination (24 months in the case of Mr. DeLuca), or,
if he is terminated because of the Company's performance (under the
circumstances permitted in the agreements) but not within 24 months after a
change in control, he is entitled to receive his base salary for six months
following the termination (12 months in the case of Mr. DeLuca). In addition,
under certain circumstances, the executive's short-term incentive compensation
will be paid on a pro-rated basis, and he will be entitled to Company employee
benefits for a specified period.
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. The agreements each required that within three months of the closing
of the Investment, Mr. DeLuca purchase between $100,000 and $125,000 worth of
Common Stock and Messrs. Mahoney and Pompe each purchase between $75,000 and
$100,000 worth of Common Stock. All of the executives have purchased the
required amounts of Common Stock, and 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 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 at 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, Mahoney, Pompe and Coffman are bound by non-compete provisions with
the Company if they terminate their employment by resignation.
Mr. Strawbridge, as well as other senior executives at OHM, entered into
employment agreements with OHM prior to the execution of the Merger Agreement,
and the tender offer for OHM resulted in a change in control of OHM for
purposes of those employment agreements. As a result of the change in control,
under his employment agreement, Mr. Strawbridge was entitled to continue his
employment with OHM in his position at the time of the tender offer for a
period of approximately three years following the date of the change in
control. During his term of employment, Mr. Strawbridge would have been
entitled to receive a base salary and to continue to participate in incentive
and employee benefit plans at levels no less favorable to him than existed
prior to the change in control. In the event of a termination by OHM or by Mr.
Strawbridge of his employment during the employment term under circumstances
amounting to good reason under his employment agreement,
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<PAGE>
Mr. Strawbridge would have been entitled to receive a lump sum payment,
subject to an overall limitation to assure that payments will not constitute
"excess parachute payments" under federal income tax law. Mr. Strawbridge has
agreed to remain employed but the Company has agreed to pay to Mr. Strawbridge
the amount he would have received under his employment agreement if his
employment had been terminated, and pursuant to that agreement Mr. Strawbridge
has received $1,400,000.
Coffman Agreement. In connection with his resignation from the Company,
Franklin E. Coffman, a Senior Vice President, entered into an agreement dated
as of April 17, 1998 superceding his employment agreement. See "Certain
Transactions--Employment Agreements." Pursuant to that agreement Mr. Coffman
resigned as an officer of the Company and received a one-time payment of
$275,000, less payroll deductibles representing one year's salary and the cash
value of certain benefits. Mr. Coffman's eligibility to participate in Company
benefits ceased as of the date of the agreement. The Company and Mr. Coffman
also agreed that he would have the right to exercise vested options during a
two year period after the agreement and that all unvested options will expire
on the earlier of their scheduled expiration or April 7, 2000. The Company
also agreed to lift vesting restrictions on 8,971 shares of previously awarded
restricted stock. The terms of the agreement were consistent with terms that
he would have received if he had retired from the Company.
Retention of Eckert Seamans Cherin & Mellott. The Company has retained the
law firm of Eckert Seamans Cherin & Mellott, to which Robert F. Pugliese, a
director of the Company, is Special Counsel, to perform certain limited
services in connection with the Company's credit agreement and the merger with
OHM Corporation.
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 to be 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 in
California. The loan was interest free so long as Mr. Mahoney remained 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 forgiven by the Company.
Additionally, Mr. Mahoney 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. In April 1997, $122,451 remained
outstanding on this loan. In May 1998, Mr. Mahoney repaid in full the $102,451
then remaining outstanding on his loan in connection with the sale of his
California residence.
In connection with the relocation and consolidation of the Company's
corporate headquarters from Torrance, California to Pittsburgh, Pennsylvania
in June 1997, and other relocations occurring at approximately the same time,
the Company offered relocation assistance to a limited number of officers and
key employees. Relocation assistance packages offered to these individuals
involve three elements: 1) reimbursement of 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 (Mr. Mahoney received an allowance of 30% of salary in
connection with his relocation and Mr. DeLuca received a 30% allowance in
connection with his relocation). Amounts paid to reimburse out-of-pocket
expenses were "grossed-up" for tax purposes. The loans to relocating
associates have ten year terms, are to be 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 each were offered and
accepted relocation loans on such terms in the original principal amounts of
up to $100,000. Mr. DeLuca accepted a loan of $70,000 in December 1997 and the
balance of $30,000 in August, 1998, and Mr. Mahoney accepted a loan of
$100,000 in April 1998. Total relocation costs for all relocating employees
was approximately $953,000.
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
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<PAGE>
services rendered to the Company. The Company has paid $2,500,000 in
investment banking fees to Carlyle (and reimburse reasonable out-of-pocket
expenses) for services rendered in connection with the Merger transactions,
which is less than the 1% fee to which Carlyle would otherwise have been
entitled pursuant to the terms of its existing agreement with the Company.
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, the Company's Certificate of Incorporation provides 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 Agreement provides 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 Agreement 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 Agreement for the period
for which such representation or warranty survives; provided, however, that
the Company shall 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 arising out of the breach of
any representation, warranty, covenant or agreement of Carlyle contained in
the Investment Agreement for the period for which such representation or
warranty survives; provided, however, that Carlyle shall 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.
20
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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.
Further, pursuant to the Merger Agreement with OHM, the Company will, from
and after the effective time of the Merger, indemnify and hold harmless, to
the fullest extent permitted under applicable law (and the Company will also
advance expenses as incurred to the fullest extent permitted under applicable
law, provided the person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such person is not
entitled to indemnification), each present and former director and officer of
OHM and its subsidiaries against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or prior to
the effective time of the Merger, including the transactions contemplated by
the Merger Agreement, which is based or arises out of the fact that such
person is or was a director or officer of OHM or any of its subsidiaries. In
addition, for not less than six years after the effective time, the Company
and OHM will maintain OHM's and its subsidiaries' existing directors' and
officers' liability insurance ("D&O Insurance"), subject to certain maximum
premium payments, provided that the Company may substitute therefor policies
having at least the same coverage and containing terms which are no less
advantageous to the intended beneficiaries thereof than the existing D&O
Insurance with respect to matters existing or occurring at or prior to the
effective time or may purchase a six-year extended reporting endorsement under
OHM's existing D&O Insurance.
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 and noncompliance
with those requirements during fiscal year 1998. Based solely upon a review of
reports delivered to the Company, the Company believes all Section 16(a)
filing requirements were satisfied, except that Messrs. Pugliese and Watkins
each filed one late report with respect to one transaction.
INDEPENDENT AUDITOR
Ernst & Young LLP was the Company's independent auditor for the year ended
March 27, 1998 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
The Company expects to hold its 1999 annual meeting of stockholders in June
1999. Any eligible stockholder (as defined below) of the Company wishing to
have a proposal considered for inclusion in the Company's 1999 proxy
solicitation materials under Exchange Act Rule 14a-8 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 February 10, 1999 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 1999 proxy solicitation materials under applicable SEC
proxy rules. An eligible
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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. In addition, under the Company's bylaws, a stockholder who wishes to
propose business for consideration at the 1999 annual meeting or to nominate
persons for election to the Board of Directors must deliver to the Company the
information specified in the Company's Bylaws regarding such proposal or
nomination not later than the "Advance Notice Deadline Date." For this
purpose, the Advance Notice Deadline Date is the date that is 60 days in
advance of the date of the 1999 annual meeting or, if later, the fifteenth day
following the date the Company first announces the 1999 annual meeting date.
Under Exchange Act Rule 14a-4, as recently amended, the Company also may
exercise discretionary voting authority under proxies it solicits to vote on a
proposal made by a stockholder that the stockholder does not seek to include
in the Company's proxy statement pursuant to Rule 14a-8, unless the Company is
notified about the proposal before the Advance Notice Deadline Date.
ANNUAL REPORT
The Company's 1998 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 (as amended) for the fiscal year ended March 27,
1998, 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.
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 27, 1998, as
amended through Amendment No. 2 on Form 10-K/A dated September 16, 1998, and
the Quarterly Report on Form 10-Q for the quarter ended June 26, 1998.
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 MacKenzie Partners, Inc. ("MacKenzie") to assist in the
solicitation of proxies, for which MacKenzie 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
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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,
/s/ James G. Kirk
James G. Kirk
Secretary
September 16, 1998
Monroeville, Pennsylvania
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PROXY
INTERNATIONAL TECHNOLOGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 6, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned constitutes and appoints ANTHONY J. DELUCA and JAMES G. KIRK 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 "1998 Annual Meeting") to be held at 9:00 a.m. Eastern Time,
on Tuesday, October 6, 1998, at International Technology Corporation, located at
2790 Mosside Boulevard, Monroeville, Pennsylvania 15146-2792, and at any
adjournment or postponement thereof. All proxies shall be voted as directed, or,
if no direction is given, for the nominees named on the reverse side.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
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 DIRECTORS: 2. In the discretion of the proxyholders
Nominees: Anthony J. DeLuca, with respect to any other matter that
James C. McGill, Richard W. Pogue, may properly come before the 1998
and Charles W. Schmidt Annual Meeting and at any adjournment
or postponement thereof. The Board of
Directors is not aware of any other
FOR WITHHELD matters that will be presented at
[ ] [ ] the meeting.
[ ] ________________________________
For all nominees except as noted MARK HERE FOR ADDRESS CHANGE AND NOTE
above AT LEFT [ ]
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:
------------------------------------- ---------------
