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CH2M HILL Companies, Ltd.
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ANNOUNCEMENT CH2M HILL
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Nomination of Directors for 2000
TO: Shareholders of CH2M HILL Companies, Ltd.
DATE: January 10, 2000
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This announcement is being provided as required by CH2M HILL's Bylaws. It is not
intended to solicit your vote for members of the Board of Directors. In March or
April 2000 you will receive a proxy statement that will contain important
information about the election of the Board of Directors and any other issues to
be voted on at the annual shareholders meeting. Please read the proxy statement
carefully when you receive it for additional information on topics covered by
this announcement. Once available, the proxy statement and all additional
relevant information will also be found at no cost on the Securities and
Exchange Commission's (SEC) website @www.sec.gov. Information about the current
share ownership of the company's directors and proposed director nominees is
available upon request to Liz McAdams/COR, Assistant Secretary.
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As employee-owners of CH2M HILL, one of your important responsibilities is the
selection of our Board of Directors. To assist you in understanding and
fulfilling this responsibility, the five purposes of this announcement are to: o
Announce the slate of candidates proposed by the Nominating Committee of the
Board, consistent with the process, criteria, and strategic issues outlined in
Phil Hall's and Ralph Peterson's December 9, 1999 memo.
o Outline the experience and credentials of the nominees in order to provide
you with background information about the candidates.
o Describe the intent and the reasons for the Board's decision to adopt a
management model that combines the Chief Executive Officer and Chairman of
the Board roles into a single position.
o Outline the next steps for electing Board members, so you can actively
participate in the election process.
o Explain your opportunity to nominate other candidates by means of a
petition process.
Board Nominating Committee
Under our Bylaws, the Nominating Committee is comprised of the Chairman, the
CEO, two directors, and two stockholder representatives who are not directors.
This year, the
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Committee included Phil Hall, Ralph Peterson, Ken Durant, Craig
Zeien (until his death), Joan Miller and Cliff Thompson.
The Nominating Committee met last on December 22, 1999, to consider all of the
candidates and the input received from our employee-owners. The Committee
carefully reviewed all your responses in determining who could best fulfill the
outlined criteria for Board membership. In considering potential candidates, the
Nominating Committee was cognizant of the three Board members whose terms are
expiring (Ken Durant, Don Evans and Sue King) and the need to fill the remaining
term of Craig Zeien.
Candidates and Credentials
As a result of these deliberations, the Nominating Committee intends to propose
the following candidates for shareholder consideration at the annual
shareholders meeting scheduled for May 9, 2000:
o Bob Card
o Sue King
o Ralph Peterson
In addition, the Nominating Committee will recommend that Bud Ahearn be elected
to complete Craig Zeien's remaining term.
If the candidates are elected at the annual shareholders meeting, the resulting
Board will consist of the following members and their terms of office:
Director Term Expiration
Mike Kennedy 2000
Michael Marcussen 2000
Jim Ferris 2000
Jill Sideman (Shapiro) 2001
Phil Hall 2001
Bud Ahearn 2001
Bob Card 2002
Sue King 2002
Ralph Peterson 2002
The following are brief descriptions of Bob's, Sue's, Ralph's and Bud's
backgrounds and a few comments on why the Nominating Committee intends to
propose them for Board membership.
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Bob Card
Bob has served on the Board for two previous terms, and is a proven, strong
contributor to the Board.
Bob's current assignment is President of Kaiser-Hill, the joint venture company
running the Rocky Flats Project. The Rocky Flats team was recently selected by
the Department of Energy to negotiate a closure contract for the site -- a
strong vote of confidence from a major client. In addition, the strength of our
Rocky Flats work positioned CH2M HILL to be approved by DOE to purchase the
Lockheed Martin contract at Hanford, Washington.
With his current assignment, Bob almost brings an outsider's perspective to the
Board. In addition, Bob has always been an "out of the box" thinker and
strategist who brings exceptional insight to the Board's deliberations.
Sue King
Sue is the Chief Financial Officer of the Industrial Business Group and is based
in the IBG's corporate offices in Portland, Oregon.
Sue is nominated as the one returning Board Member. She has served very well in
this capacity for the past three years and the Committee felt that her
experience will be invaluable as the Board addresses its upcoming agenda. Her
industrial and design/build experience is critical as we build these components
of our business.
In Sue's CFO role at IBG, she is fully engaged in all aspects of our industrial
business, and thus brings this important perspective to Board discussions. In
addition, as a financial "pro," her insights and perspective on the total firm's
financial position are exceedingly helpful.
Bud Ahearn
Bud, President of our Transportation Business Group, has served on the Board one
prior term (1996-98).
Bud has been an especially effective director, revitalizing the firm's strategic
planning process, and demonstrating extraordinary insight in how best to
maximize opportunities for the entire family of companies. He chaired the
Board's Ownership and Incentive Compensation Committee in his past term.
The TBG is one of our fastest growing business groups, and Bud's global
perspective on transportation opportunities and international affairs is a vital
asset in the Board's deliberations.
Ralph Peterson
Ralph is proposed as a director to fill the aforementioned Chairman/CEO
position. This will implement the management model for 2000 and beyond, which
the Board has selected. See the attached memo from Phil Hall dated January 10,
2000 for more explanation. Phil's memo is based on an earlier (12/10/99) memo he
sent to CH2M HILL Key Employees seeking input on the Chairman/CEO position.
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As CEO of the CH2M HILL family of companies, Ralph has attended all Board
meetings during his eight-year tenure, plus he previously served three terms as
a director in the 1980s. He has been a CH2M HILL employee for 34 years.
As Chairman and CEO, Ralph will bring greater emphasis on the expanding array of
issues such as acquisitions, financing the firm's growth, and external
stakeholder affairs, while continuing to contribute his knowledge of the firm's
history, keen insight, strategic view, and company-wide perspectives to the
Board's deliberations.
Next Steps in the Nominating Process
As provided by CH2M HILL's Bylaws, after January 10, thirty days are allowed for
the nomination of additional candidates by petitions signed by stockholders
representing at least ten percent of the common stock outstanding. The petitions
for additions to the Nominating Committee slate must be submitted to the
Assistant Secretary of the corporation (Liz McAdams/COR) on or before the
expiration of the 30-day period (February 9, 1999). Since CH2M HILL is now
registered with the SEC, the petition nomination process is subject to the SEC
proxy rules, which you should follow if you decide to submit additional
nominations through petition.
This announcement is being provided as required by CH2M HILL Bylaws. We
anticipate that a proxy statement will be sent to the shareholders in March or
April 2000. It will include information on all Board of Directors nominees and
on any other issues to be voted at the next annual shareholders meeting,
scheduled for May 9, 2000.
In closing, we want to reemphasize the importance of your comments to the
Nominating Committee on the Board of Directors candidates. Although the
nominations are made annually, the process of selecting nominees is really
ongoing and continuous. The input from this year's selection process becomes the
starting point for next year's nominating process. So your comments on
candidates and issues are highly valued and earnestly sought. Thank you for your
participation in this process.
[Attachment follows on next page]
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Nomination of Directors for 2000
MEMORANDUM CH2M HILL
Adoption of a Chairman/CEO Position Model for CH2M HILL
TO: CH2M HILL Employees
FROM: Phil Hall, Chairman of the Board
DATE: January 10, 2000
As part of the implementation of the Ownership and Incentive Compensation
Program (O&ICP), the CH2M HILL Board endorsed and plans to implement the
adoption of a combined Chairman and CEO position at CH2M HILL. This decision,
made at the annual Board retreat in October 1999, was part of the comprehensive
long-range planning process to most effectively implement the O&ICP and deal
with future operations under an SEC-type environment.
The Chairman/CEO model has for decades been authorized under both the old
(pre-O&ICP) and new (post-O&ICP) corporate articles, bylaws and policies. This
model was used early in CH2M HILL's history, but has not been used since the
1970s. In the ensuing years, we have used various management models, as the
firm's organization has expanded and evolved. At present, I serve as Chairman on
a part-time (25 percent) basis, while serving in my primary role as Southwest
Region Manager.
The key reasons for adopting the combined Chairman/CEO model at this time are
described below. This memorandum was originally sent to the "Key Employees"
because this is the group of firm leaders who are most familiar with the current
model. Even though the "Key Employee" group no longer exists as it has in the
past (effective 1/1/00), in December, when input to the Nominating Committee was
sought, they were the firm's shareholders. I wanted to share these plans now
with all employees, as background to the Nominating Committee announcement to
which this memo is attached.
There are four primary reasons for adopting the Chairman/CEO model at this time:
CH2M HILL's management structure; succession planning; O&ICP: "life in the fish
bowl"; and my personal job needs and objectives.
CH2M HILL's Management Structure
In 1996, our management structure was changed to a configuration of five
Business Group (BG) Presidents and a Regional Operations (RO) President, all
reporting to Ralph as holding company President/CEO. This structure, with strong
operating people in all of the BG/RO President roles, has changed the role of
the holding company President/CEO from a primary focus on day-to-day business
unit operations, to a focus on oversight and integration; strategic direction
and resource allocation; and holding company issues such as financial matters,
ownership
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programs, acquisitions and external stakeholder matters. Simply
stated, the Chairman/CEO model is a closer fit to the way we are actually
operating today. I'm convinced it will improve our operating efficiency.
Succession Planning
By adopting the more common Chairman/CEO model, we will establish a platform to
facilitate top management succession, as is done in over 90 percent of major
U.S. corporations today. This is done by using the titles of Chairman, CEO,
President, and COO in a "mix-and-match" fashion to effect an orderly transition
of people in the senior management positions. We will be carrying out another
senior management succession in a few years and the Board--especially our
outside directors--strongly favor this facilitation strategy.
O&ICP: "Life in the Fish Bowl"
Registration and public filings with the SEC, states, and eventually foreign
countries make CH2M HILL transparent and fully "visible" to a whole new range of
external parties with whom we do business. These include financial institutions,
joint venture partners (foreign and domestic), acquisition candidates and
clients. The Board feels it would be advantageous to our expanding range of
business interests to have a more common management model that is readily
understood and accepted by clients and other stakeholders.
Personal Job Needs
A significant driving factor is that I feel a strong need to devote my full-time
attention to the Southwest Region Manager position. This is the firm's largest
region in terms of revenue: a $250 million/year business! The firm has
extraordinary opportunities in the Southwest to which I want to devote my full
attention. In addition, this fits my personal desire to solidify my regional
management operation as I look ahead a few years and hope to phase into a
project management role as I close out my career at CH2M HILL.
I hope this background will be helpful in your review of the Nominating
Committee announcement. The feedback I received from the Key Employees in
December was supportive of this approach. Comments and suggestions received from
the Key Employees will be handed off to a Board task group that will oversee
implementation of the Chairman/CEO model and ongoing succession planning over
the next several years. I would welcome any additional thoughts or comments you
may have.
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