<PAGE>
VECTRA
VECTRA TECHNOLOGIES, INC.
EXECUTIVE OFFICES
6203 SAN IGNACIO AVE.
SUITE 100
SAN JOSE, CA 95119
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 25, 1997
---------------------
To the Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
VECTRA Technologies, Inc. (the "Company") to be held at the Company's corporate
office, 6203 San Ignacio Avenue, Suite 100, San Jose, California 95119 on Friday
July 25, 1997, at 10:00 A.M. (PDT) for the following purposes:
1. To elect six (6) directors for a term of one year;
2. To consider and act upon a proposal to amend the Company's articles of
incorporation to decrease the size of the Board of Directors and
eliminate the classification of the Board;
3. To act on a proposal to ratify the selection of Ernst & Young LLP as
independent public accountants for 1997; and
4. To transact such other business as may properly come before the meeting.
Only Shareholders of record on the books of the Company at the close of
business on June 1, 1997, are entitled to notice of, and to vote at, the meeting
and any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Vincent Franceschi,
PRESIDENT AND CHIEF OPERATING OFFICER
San Jose, California
June 20, 1997
IMPORTANT
Whether or not you plan to attend the meeting in person, please sign, date
and return the accompanying proxy card in the enclosed, stamped and addressed
envelope. Your cooperation is appreciated since a majority of the common stock
must be represented, either in person or by proxy, to constitute a quorum for
the conduct of business. The giving of the proxy will not affect your right to
vote at the meeting if the proxy is revoked as set forth in the accompanying
proxy statement.
<PAGE>
VECTRA TECHNOLOGIES, INC.
6203 SAN IGNACIO AVENUE,
SUITE 100
SAN JOSE, CALIFORNIA 95119
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 25, 1997
---------------------
INTRODUCTION
This Proxy Statement which was first mailed to shareholders on July 5, 1997,
is furnished in connection with the solicitation of proxies by the Board of
Directors on behalf of VECTRA Technologies, Inc. (the "Company") to be voted at
the Annual Meeting (the "Meeting") of the Shareholders of the Company to be held
at the Company's corporate office at 6203 San Ignacio Avenue, Suite 100, San
Jose, California 95119 on July 25, 1997, at 10:00 A.M. (PDT) for the purposes
set forth in the accompanying Notice of Special Meeting of Shareholders.
REVOCATION OF PROXIES. Shareholders who execute proxies retain the right to
revoke them at any time before they are voted. A proxy may be revoked: (i) by
written notice to the Corporate Secretary of the Company at 6203 San Ignacio
Avenue, Suite 100, San Jose, California 95119; (ii) by submission of a proxy
with a later date; (iii) by a written request delivered in person to return the
executed proxy; or (iv) by attending the Meeting and voting at the Meeting. A
shareholder's right to revoke his or her proxy is not limited by or subject to
compliance with a specified formal procedure, but written notice should be given
to the Secretary of the Company at or before the Meeting so that the number of
shares represented by proxy can be recomputed.
VOTING OF PROXIES. When proxies are returned properly executed, the shares
represented thereby will be voted, and will be voted in accordance with the
shareholders' directions. Shareholders are urged to specify their choices by
marking the appropriate box on the enclosed proxy card; if no choice has been
specified, the shares will be voted as recommended by the Board of Directors. A
shareholder may vote for, against, or abstain from voting on, any matter that
may properly come before the Meeting. Under Washington law, shares which abstain
or constitute "Broker Non-Votes" (shares held by a broker or nominee as to which
a broker or nominee indicates on the proxy that it does not have the authority,
either express or discretionary, to vote on a particular matter) will be counted
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as not voted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. A majority of the
outstanding shares present or represented at the Meeting will constitute a
quorum.
CUMULATIVE VOTING FOR DIRECTORS. The Company's Articles of Incorporation
entitle shareholders eligible to vote to cumulate votes at any election of
directors. The maximum number of votes that a shareholder may cast equals the
number of shares of common stock owned by a shareholder multiplied by the number
of directors (six) to be elected. Any shareholder may cast all votes for a
single director or may distribute them among the number of director nominees as
the shareholder may see fit. The proxy will grant discretionary authority to
cumulate votes unless otherwise specified.
QUORUM. Shares represented by proxies containing an abstention as to any
matter will be treated as shares that are present and entitled to vote for
purposes of determining a quorum. Similarly, Broker Non-Votes will be treated as
shares that are present and entitled to vote for purposes of determining a
quorum.
EFFECT OF ABSTENTIONS AND BROKER NON-VOTES. Both abstentions and Broker
Non-Votes with respect to Proposal 2 will have the practical effect of a vote
cast against Proposal 2 since Proposal 2 must be approved by a majority of the
outstanding shares of the Company's common stock.
<PAGE>
RECORD DATE. Shareholders of record at the close of business on June 1,
1997, are entitled to vote at the Meeting on the basis of one vote for each
share of common stock held, except for cumulative voting in the election of
directors. On June 1, 1997, there were 7,833,527 shares of common stock
outstanding.
DISCRETIONARY AUTHORITY. If any nominee for director is unable to serve or
for good cause will not serve, or if any matters not specified in this Proxy
Statement come before the meeting, eligible shares will be voted as specified by
the named proxies pursuant to discretionary authority granted in the proxy. At
the time this Proxy Statement was printed, management was not aware of any other
matters to be voted on.
SOLICITATION OF PROXIES. Proxies may be solicited by officers, directors
and regular supervisory and executive employees of the Company, none of whom
will receive any additional compensation for their services. The Company has
retained the services of W.F. Doring & Co., Inc., Jersey City, New Jersey, in
connection with the solicitation of proxies. W.F. Doring & Co., Inc. will
solicit known significant shareholders (generally owners of 1,000 shares or
more) and brokerage houses which hold the Company's common stock in street name
to vote and return their proxies. W.F. Doring & Co., Inc. will be paid on the
basis of hourly fees for persons working on the account a total of approximately
$5,000.00 for its services, together with reimbursement for reasonable
out-of-pocket expenses incurred. The cost of solicitation of proxies will be
borne by the Company.
FORWARDING OF PROXY MATERIALS. The Company will also arrange with brokerage
firms and other custodians, nominees and fiduciaries to forward proxy
solicitation material to certain beneficial owners of the Company's common stock
and the Company will reimburse such brokerage firms, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith.
EXECUTIVE OFFICE. The principal executive office of the Company is 6203 San
Ignacio Avenue, Suite 100, San Jose, California 95119. The phone number for the
Company is (408) 629-9800.
2
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as to the only persons or groups
known by the Company to be the beneficial owners, as defined in Rule 13d-3 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of more
than five percent of the common stock of the Company on June 1, 1997, as well as
the Company's directors, the Company's chief executive officer; the Company's
three executive officers as of December 31, 1996; two former executive officers
who were no longer serving in that capacity at December 31, 1996; and all
directors and officers as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES(1) PERCENT OF CLASS(1)
- ------------------------------------------------------------------------- ------------------- ---------------------
<S> <C> <C>
OWNERS OF MORE THAN 5%
Combustion Engineering, Inc. .......................................... 1,714,503(2) 21.9%
501 Merritt 7
Norwalk, Connecticut 06856
Heartland Advisors, Inc. .............................................. 1,502,000 19.2%
790 North Milwaukee Street
Milwaukee, WI 53202
Orien Ventures ........................................................ 634,885(3) 8.1%
5520 SW MacAdam Avenue, Suite 112
Portland, Oregon 97201
Cable & Howse Ventures ................................................ 532,625(4) 6.8%
Security Pacific Bank Plaza
777 108th Avenue NE, Suite 2300
Bellevue, Washington 98004
DIRECTORS
Edward J. Keith........................................................ 105,333(5) 1.4%
Roy Kirkorian.......................................................... 99,833(5) 1.3%
J.E. (Ted) Ardell, III................................................. 69,500(5) *
Ray A. Fortney......................................................... 118,250(6) 1.5%
Fruzsina Harsanyi...................................................... 8,500(5) *
NAMED EXECUTIVE OFFICERS
Vincent Franceschi..................................................... 20,000(5) *
Walter R. Bak.......................................................... 18,708(5) *
Thomas B. Pfeil........................................................ 20,000(5) *
Jeffrey W. Cummings.................................................... -- *
John R. Holding........................................................ -- *
All Directors and Officers as a group (8 persons)(1),(7)................. 460,124 5.9%
</TABLE>
- ------------------------
NOTES TO SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND
EXECUTIVE OFFICERS TABLES
* Less than 1%.
(1) Represents beneficial ownership computed in accordance with Rule 13d-3 of
the Exchange Act, which includes shares deemed to be outstanding for
purposes of the percentage of ownership by the deemed owner or group but not
for purposes of determining the percentage of ownership of any other person
or group.
3
<PAGE>
(2) Combustion Engineering, Inc. is an indirect wholly-owned subsidiary of ABB
Asea Brown Boveri Ltd., a Swiss company.
(3) Includes 615,385 shares held by Orien II, L.P, 2,000 shares owned by Mr.
Anthony J. Miadich, former director of the Company, and 17,500 shares which
may be purchased by Mr. Miadich within 60 days of June 1, 1997, pursuant to
outstanding stock options. Mr. Miadich may be deemed a beneficial owner of
such shares by reason of his position as a partner in Orien II, L.P. Mr.
Miadich shares the power to dispose of and vote the shares held by that
partnership with the other general partner. Mr. Miadich disclaims beneficial
ownership of the 615,385 shares owned by Orien II, L.P.
(4) Includes 520,625 shares held by CH Partners III and 12,000 shares which may
be purchased by Mr. Elwood D. Howse, Jr., former director of the Company,
pursuant to outstanding stock options within 60 days of June 1, 1997. Mr.
Howse may be deemed a beneficial owner of the shares owned by CH Partners
III by reason of his position as a general partner in CH Partners III. Mr.
Howse shares the power to dispose of and vote the shares held by that
partnerships with the other general partners.
(5) Represents shares which may be purchased within 60 days of June 1, 1997,
pursuant to outstanding stock options.
(6) Includes 76,250 shares which may be purchased within 60 days of June 1,
1997, pursuant to outstanding stock options, 40,000 shares owned by Mr.
Fortney and 2,000 shares owned by Mr. Fortney's parents. Mr. Fortney maybe
deemed a beneficial owner of such shares.
(7) Includes a total of 418,124 shares which may be purchased within 60 days of
June 1, 1997, pursuant to outstanding stock options.
On June 1, 1997, Cede & Co., the nominee of the Depository Trust Company,
held of record 5,619,740 shares or 71.7 percent of the outstanding shares of
common stock, all of which was held for the accounts of member firms of the New
York Stock Exchange, the American Stock Exchange and various institutions
participating in the facilities of the Depository Trust Company. With the
exception of Heartland Advisors, Inc. and Orien Ventures, the Company has no
knowledge that any person owns beneficially five percent or more of the
outstanding shares of common stock which are held in the name of Cede & Co.
BOARD OF DIRECTORS
The present size of the Company's Board of Directors is five directors.
Six regular meetings of the Board of Directors were held in 1996. In
addition, the Company has two standing committees: the Audit and Finance
Committee and the Human Resources and Compensation Committee. In 1996, each
director attended at least 75% of the aggregate number of meetings of the Board
of Directors and meetings of the committees of the Board on which he or she
served. Until November 1996, the members of the Audit and Finance Committee were
Roy Kirkorian (Chairman), Elwood D. Howse, Jr. and Albert Baciocco, Jr.; and the
members of the Human Resources and Compensation Committee were J.E. (Ted)
Ardell, III (Chairman), Dr. E. Linn Draper, Jr. and Fruzsina M. Harsanyi. Since
November 1996, the members of the Audit and Finance Committee were Roy Kirkorian
(Chairman), J.E. (Ted) Ardell, III, Fruzsina M. Harsanyi and Ed Keith; and the
members of the Human Resources and Compensation Committee were Fruzsina M.
Harsanyi (Chairman), J.E. (Ted) Ardell, III, Ed Keith and Roy Kirkorian.
AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee makes recommendations to the Board of
Directors concerning the selection, engagement and termination of the Company's
independent public accountants and reviews with the independent public
accountants and the Board of Directors the scope and status of the audit, the
fees for services to be performed by the firm, and the results of the audit when
completed. The Audit and
4
<PAGE>
Finance Committee establishes and maintains communication between the Board and
the Company's independent accountants and financial management personnel. The
Audit and Finance Committee also reviews and discusses with management and the
Board of Directors such matters as accounting policies, internal controls, and
procedures for preparation of financial statements. The committee met six times
in 1996.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
The function of the Human Resources and Compensation Committee is to review
the Company's Human Resources Development and Administration Programs, to review
the Company's policies and programs relating to compensation arrangements for
officers of the Company, to make awards under the Company's incentive
compensation plan, to make recommendations to the Board of Directors with
respect to officers' and directors' compensation and to serve as the plan
administrator of the Company's stock option plans. The committee met twice in
1996.
PROPOSAL 1--ELECTION OF DIRECTORS
In November 1996, the Board of Directors amended the bylaws to reduce the
number of directors to five members subject to approval of an amendment to the
Company's articles of incorporation to decrease the size of the Board to between
four and seven members.
In addition, with mutual agreement by all directors in recognition of the
reduced size of the Company following the sale of the Waste Business, A. J.
Baciocco, E. L. Draper, Jr., and E. D. Howse, Jr. resigned from the Board of
Directors.
If the amendment to the Company's articles of incorporation is approved, the
Board of Directors has resolved to amend the Bylaws to increase the number of
directors from five to six with all directors to be elected at the Annual
Meeting of shareholders.
The Board of Directors has unanimously approved the following nominees for
director positions:
J.E. (Ted) Ardell, III
Ray A. Fortney
Vincent Franceschi
Fruzsina M. Harsanyi
Edward J. Keith
Roy Kirkorian
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES.
Unless otherwise instructed, it is the intention of the persons named in the
accompanying form of proxy to vote shares of common stock represented by
properly executed proxies for the nominees. Although the Board of Directors
anticipates that all of the nominees will be available to serve, it is intended
that the proxies will be voted for the election of a substitute nominee or
nominees designated by the Board of Directors. Information with respect to the
right to cumulate votes for the election of directors is set forth under
"Introduction" at the beginning of this Proxy Statement.
The following table lists the names and ages of the nominees. For the nature
and amount of their beneficial ownership of common stock, and the amount and
nature of the ownership of the Company's common stock by all directors and
officers as a group, see "Security Ownership of Certain Beneficial Owners,
Directors and Executive Officers".
5
<PAGE>
DIRECTORS
The following table lists as of June 1, 1997 the names and ages of the
directors:
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD (DIRECTOR SINCE)
- ------------------------------------ --- --------------------------------------------------
<S> <C> <C>
Edward J. Keith..................... 62 Chairman of the Board, Director (1994)
Roy Kirkorian....................... 51 Vice Chairman of the Board, Director (1995)
J.E. (Ted) Ardell, III.............. 57 Director (1992)
Ray A. Fortney...................... 51 Director, former President and CEO (1994)
Vincent Franceschi.................. 38 President and COO (1997)
Fruzsina Harsanyi................... 54 Director (1995)
</TABLE>
BIOGRAPHIES
Mr. Keith was elected Chairman of the Board in June 1995. He is also
Chairman of the Board of Directors of The Failure Group, a consulting firm
specializing in the analysis and prevention of engineering failures, and a
former Director of Inlex Corporation, which provides computer automation systems
to libraries. From 1969 until 1983, Mr. Keith served as Chairman of the
principal operating subsidiary, Executive Vice President and Director of Impell
Corporation. Mr. Keith was also the co-founder of the Commercial Bank of San
Francisco. He is a licensed professional engineer and structural engineer in the
state of California. Mr. Keith received his BS and MS in Engineering in 1961 and
1964, respectively, from the University of California, Berkeley.
Mr. Kirkorian was elected to the Board of Directors in August 1995, and was
elected Vice Chairman in October 1995. Mr. Kirkorian is an active partner in El
Rancho Farms and is currently active in various Sand Hill Financial Company
capital investments. He was President of C.P. National (NYSE) and former
President of Contel Corp.'s Contel Business Systems. Mr. Kirkorian received his
BS degree in Business Administration in 1967 from California State Polytechnic
University and his JD of the Law from Hastings College in 1970.
Mr. Ardell is a general partner with Technology Partners, a venture capital
firm, and a Director of a number of private companies. From 1968 to 1971, Mr.
Ardell was with Bechtel Power Corporation. From 1971 to 1984, he was a Director
of Impell Corporation and held various other positions with Impell Corporation
and its principal operating subsidiary; and from 1984 to 1986, he was President
and Chief Executive Officer of Impell Corporation. From 1961 to 1968, he served
in the U.S. Navy nuclear submarine force. Mr. Ardell is a registered nuclear
engineer in California and received a BS degree in Engineering from the U.S.
Naval Academy in 1961.
Mr. Fortney was appointed as President and Chief Executive Officer in July
1994 and resigned from the position of President in April 1997 and the position
of Chief Executive Officer effective June 17, 1997. Prior to his appointment, he
served as Executive Vice President of the Company from August 1993, and was
President of the Cygna Group of ICF Kaiser Engineers, an engineering consulting
firm, and a Senior Vice President of ICF Kaiser from 1992 to 1993. He previously
served as Vice President and General Manager of the Power Services Business at
Combustion Engineering and ABB/Combustion Engineering from 1988 through 1990,
and President and Chief Executive of Impell Corporation from 1986 to 1988. Mr.
Fortney is a registered professional engineer in over 10 states. He received his
BS degree from the U.S. Naval Academy in 1967, his MSME degree from Stanford
University in 1972 and attended the Stanford University Business School
Executive Program in 1989.
Mr. Franceschi was appointed to the position of President and Chief
Operating Officer in April 1997. Prior to this appointment, Mr. Franceschi
served as a Vice-President of the Company from January 1994, following the
Company's acquisition of ABB Impell Corporation. From 1989 until his
appointment,
6
<PAGE>
Mr. Franceschi was the Manager of projects for Impell's Western Region. From
1980 to 1989, Mr. Franceschi served in various positions of increasing
responsibility, including Manager, Systems Engineering and Manager of Business
Development for the Department of Energy market. Mr. Franceschi is a registered
professional engineer in California. He received his BS degree in Civil
Engineering from the University of California, Berkeley in 1980 and his MBA from
Saint Mary's College in 1994.
Dr. Harsanyi was elected to the Board in June 1995. She is Vice President,
Public Affairs and Corporate Communications, and a corporate officer of Asea
Brown Boveri Inc. ABB is a Connecticut based company, providing products and
services for power generation, transmission and distribution, and industrial
processes. She joined the company in 1980 after working for two years for the
Continental Group and prior to that for the U.S. Government. Dr. Harsanyi
received BA and MA degrees in International Relations and a Ph.D. in Government
from the American University. She has served as an adjunct professor of
International Business at Georgetown University's School of Foreign Service and
is a member of the Business-Government Relations Council, the Council for
Excellence in Government, the Bryce Harlow Foundation, the Public Affairs
Council, and Georgetown University's Landegger Program Advisory Board.
EXECUTIVE OFFICERS
The following table, as of June 1, 1997, sets forth the names, titles and
ages of the Company's executive officers who are serving in the indicated
positions. All executive officers serve until removed by the Board of Directors:
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ------------------------------------ --- --------------------------------------------------
<S> <C> <C>
Vincent Franceschi.................. 38 President and Chief Operating Officer (1997)
Ray A. Fortney...................... 51 Former President and Chief Executive Officer
(1994-1997)
Walter R. Bak....................... 42 Vice President (1995)
Thomas B. Pfeil..................... 50 Vice President, Chief Financial Officer and
Secretary (1996)
</TABLE>
BIOGRAPHIES
Mr. Franceschi's biography is included with the directors.
Mr. Fortney's biography is included with the directors.
Mr. Bak was appointed to Vice President, Business Development, in October
1995. Mr. Bak has held the positions of Manager, Power Services, and Manager,
Fuel Services, with VECTRA prior to his current assignment. Mr. Bak has been
involved in managing businesses in the commercial nuclear, government, and
non-nuclear sectors of Impell since 1987. Mr. Bak is a registered professional
engineer in California. He received his MS degree in Civil Engineering from the
University of California, Berkeley, in 1978, and his BS degree in Civil
Engineering from the University of Notre Dame in 1977.
Mr. Pfeil was appointed to his current position in April 1996. From 1992,
until his appointment, Mr. Pfeil served as a director and officer of several
start-up manufacturing and small businesses. From 1985 to 1992, Mr. Pfeil served
in various positions, including Corporate Controller and Chief Financial Officer
during the restructuring and turnaround of WorldCorp Inc. and its predecessor,
World Airways Inc. Prior to 1985, he served for twelve years in various
positions of increasing responsibility with Baker Hughes, a multi-national
manufacturer of oil field equipment and provider of related engineering
services. He received his MBA and BS degree in Business Administration
(Accounting) from California State University, Los Angeles.
7
<PAGE>
REPORT OF HUMAN RESOURCES AND COMPENSATION COMMITTEE
The Human Resources and Compensation Committee (the "Committee") of the
Board of Directors is composed of all outside directors on the Board of
Directors and is responsible for establishing compensation policies that apply
to the Chief Executive Officer (CEO), other executive officers and key employees
of the Company. This report reflects the Committee's actions during fiscal year
1996. Effective with Mr. Fortney's resignation, which was effective June 17,
1997, there is no executive officer of the Company serving in the capacity of
CEO.
PHILOSOPHY
The philosophy of the Company's executive compensation program is that
compensation of executive officers, and in particular that of the CEO, should be
directly and materially linked to both the operating performance of the Company
and to the interests of the Shareholders. In implementing this philosophy, the
Company's policies integrate annual base compensation with incentive awards
based upon corporate performance and individual initiatives and performance.
Annual cash compensation, together with incentive compensation and grants of
stock options, is designed to attract and retain qualified executives and to
ensure that such executives have a continuing stake in the long term success of
the Company.
Measurement of corporate performance is primarily based on Company wide
goals, while measurement of individual initiatives is primarily based on review
of individual and operations performance goals. Annual increases may also be
necessary at times, without reference to performance, to adjust the Company's
executive salaries to remain competitive with salaries paid by comparable
companies.
The Internal Revenue Code places a limit on the amount of certain types of
compensation for each of the executive officers which may be tax deductible by
the Company. The Company's policy is, primarily, to design and administer
compensation plans which support the achievement of long term strategic
objectives and enhance shareholder value and, to the extent possible, to
maximize the proportion of compensation expense that is tax deductible by the
Company. It is not anticipated that compensation payable to the executive
officers potentially covered by the restriction will be subject to the
limitation of deductibility.
The Company's executive compensation program is comprised of base salary,
annual cash incentive compensation, long term incentive compensation in the form
of stock options and various benefits, including medical and profit sharing
plans generally available to all employees of the Company.
BASE SALARY Base salary levels for the Company's CEO and other executive
officers are set in the context of the Company's total compensation philosophy
which is to align executive interests with the shareholders and make a
significant portion of their compensation opportunity contingent upon achieving
performance goals. These base salaries are generally targeted at or slightly
below the median of companies in the power and environmental services markets
and the service segment of general industry companies of comparable revenue
size. These companies which are selected with the help of a compensation
consultant differ from the broader group of companies included in the Piper
Jaffray Hazardous Remediation Disposal Index used in the stock performance graph
which follows this report. Additionally, competitive data taken from available
private and published survey sources is reviewed annually. In determining
individual salary levels, the Committee takes into account the executive
officer's experience, scope of responsibility, performance level, and relative
impact on the Company's success.
ANNUAL INCENTIVE COMPENSATION The annual incentive compensation plan is a
key element in the Company's pay for performance system and is the vehicle by
which the CEO, executive officers, and other key employees can increase their
total compensation. Annual incentive compensation constitutes that portion of
executive compensation that is at risk and is dependent on achievement of
individual and Company performance objectives. The Company's objectives, which
are not specifically weighted, are a combination of operating, financial, and
strategic goals (such as profitability, revenue growth, productivity, and cash
flow) that are considered to be critical to the Company's short and long term
financial success
8
<PAGE>
and its ability to build shareholder value. The Committee establishes Company
wide and individual goals annually for the CEO. The CEO develops, with Committee
advice and approval, individual performance goals for the executive officers.
The amount of the awards paid to the CEO, executive officers, and other key
employees at the end of the year varies depending upon the performance against
the established Company wide, operations, and individual goals, with an emphasis
on overall Company performance. In determining the size of the awards, no single
performance factor or formula is used because the Committee believes that the
rigid application of quantitative performance measures would eliminate the
consideration of qualitative factors critical to long term strategic
performance.
STOCK OPTIONS The Company's stock option plans are the long-term incentive
for the CEO, executive officers and key employees. The Committee believes that
stock options provide a strong incentive. The Committee awards stock options to
the CEO and, upon the recommendation of the CEO, to other executive officers and
key employees. Individual grants are based upon competitive practices of
companies in the service markets described above, the amount of stock options
previously granted to an individual, and individual potential and performance as
evaluated by the Committee.
SPECIFIC FACTORS IN DETERMINING 1996 EXECUTIVE COMPENSATION
The base salary for all executive officers, including the CEO, has remained
at the amount set for each respective position by the Committee in prior years
in accordance with the factors mentioned above.
In accordance with the Company's philosophy of materially linking the
compensation of the CEO, executive officers, and key employees with the
individual and Company performance objectives, in 1996 the committee recognized
individual contributions which were made during the year and awarded individual
annual incentive compensation amounts based upon the subjective impact of each
individual's contribution to the overall Company's performance.
In August 1996 the Committee canceled 193,000 qualified and non-qualified
stock options (43,750 of which were vested) which had a weighted average
exercise price of $4.37 per share, that had been granted to the CEO from August
1993 through June 1995. The Committee then issued 150,000 options (75,000 of
which are non-qualified) at an exercise price of $2.00 per share, 37,500 of
which vest in February 1997 and the balance vest ratably over the following
eighteen months. The Committee concluded that the interests of the shareholders
would best be served by reinforcing the incentive to the CEO with an exercise
price within near term achievable levels.
Members of the Human Resources and Compensation Committee at December 31,
1996
<TABLE>
<S> <C>
/s/ FRUZSINA HARSANYI /s/ EDWARD J. KEITH
---------------------------------------- ----------------------------------------
(Fruzsina Harsanyi), (Edward J. Keith)
COMMITTEE CHAIRMAN
/s/ J. E. ARDELL, III /s/ ROY KIRKORIAN
---------------------------------------- ----------------------------------------
(J. E. Ardell, III) (Roy Kirkorian)
</TABLE>
9
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth compensation paid by the Company for services
rendered in the Company's last three fiscal years ended December 31, 1996, to
the Company's chief executive officer; the Company's three highest paid
executive officers whose total compensation exceeded $100,000; and two former
executive officers who were no longer serving in that capacity at December 31,
1996.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- -------------
OTHER ANNUAL NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS COMPENSATION OPTIONS/SARS COMPENSATION
- ------------------------------------ --------- ------------ --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Vincent Franceschi ................. 1996 132,477 15,000 -- 30,000 --
President and 1995 114,810 -- -- 36,000 --
COO 1994 110,255 -- 17,605(2) -- --
Ray A. Fortney ..................... 1996 206,260 -- -- 150,000 --
Former President and CEO 1995 201,000 -- -- 173,000 --
1994 194,074 -- 17,574(2) 68,000 2,276(3)
Walter R. Bak ...................... 1996 146,761 14,000 -- 25,000 --
Vice President 1995 112,062 -- -- 34,000 --
1994 110,485 -- 3,600(4) -- --
Thomas B. Pfeil .................... 1996 124,558 20,000 -- 55,000 --
Vice President, CFO and Secretary
Jeffrey W. Cummings ................ 1996 92,977(5) 12,500 105,000(6) -- 55,462(7)
Former Vice President 1995 130,650 -- -- 46,000 --
1994 118,688 -- 28,492(8) -- --
John R. Holding .................... 1996 46,824(9) -- 37,500(6) -- 186,538(10)
Former Vice President, CFO and 1995 150,749 -- 60,000(11) 6,000 --
Secretary 1994 138,219 -- 32,377(12) 41,000 3,265(3)
</TABLE>
- ------------------------
NOTES TO SUMMARY COMPENSATION TABLE
(1) None of the named executives received compensation reportable as Restricted
Stock Awards or Long Term Incentive Plan Payouts.
(2) One time payment of accrued vacation balances reflecting change in policy
whereby officers do not accrue vacation.
(3) Matching contribution to the 401(k) and retirement plan.
(4) Payment of car allowance.
(5) For the period January 1, 1996, to August 18, 1996, the date Mr. Cummings
terminated employment with the Company.
(6) Retention incentive payments.
(7) Severance related payments.
(8) One time payment of accrued vacation (see note 2) and $19,000 employment
contract buyout.
(9) For the period January 1, 1996 to April 12, 1996, the date Mr. Holding
terminated employment with the Company.
10
<PAGE>
(10) Payment of commission for the sale of VECTRA UK and the Engineering
Businesses of $100,000 and severance related payments of $86,538.
(11) Relocation and retention incentive payments.
(12) Reimbursement of federal income tax differential of $22,336 attributable to
relocation cost reimbursement, and payment of accrued vacation of $10,041.
OPTION GRANTS DURING 1996 FISCAL YEAR
The following table provides information related to options granted to the
named executive officers during 1996.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS/ SARS PRICE APPRECIATION
GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE ---------------------
NAME GRANTED(2) FISCAL YEAR ($/SH)(3) EXPIRATION DATE 5%($) 10%($)
- ----------------------------- -------------- --------------- ------------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Vincent Franceschi........... 30,000(4) 4.09 2.00 08/19/06 37,734 95,625
Ray A. Fortney............... 75,000(4) 10.22 $ 2.00 08/19/06 $ 94,334 $ 239,061
75,000(4) 10.22 2.00 08/19/06 94,334 239,061
Walter R. Bak................ 25,000(4) 3.41 2.00 08/19/06 31,445 79,687
Thomas B. Pfeil.............. 30,000(4) 4.09 2.00 08/19/06 37,734 95,625
25,000(5) 3.41 1.75 01/15/06 27,514 69,726
Jeffrey W. Cummings.......... -- -- -- -- -- --
John R. Holding.............. -- -- -- -- -- --
</TABLE>
- ------------------------
NOTES TO OPTIONS/SAR GRANTS IN LAST FISCAL YEAR TABLE
(1) The potential realizable value portion of the table illustrates value that
might be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation on the Company's common stock over the term of the options.
These numbers do not take into account certain provisions of the options
providing for cancellation of the option following termination of
employment.
(2) Options to acquire shares of common stock.
(3) The option exercise price may be paid in shares of common stock owned by the
executive officer, in cash, or in any other form of valid consideration or a
combination of any of the foregoing, as determined by the Human Resources
and Compensation Committee in its discretion.
(4) Options are exercisable with respect to 25% of the shares covered thereby on
2/19/97, with the remaining shares becoming exercisable ratably over the
next eighteen months.
(5) Options are exercisable with respect to 25% of the shares covered thereby on
the anniversary of the exercise date in 1997, 1998, 1999 and 2000.
11
<PAGE>
OPTION EXERCISES DURING 1996 AND YEAR END OPTION VALUES
The following table provides information related to options exercised by the
named executive officers during the 1996 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights ("SARs").
AGGREGATE OPTION/SAR EXERCISES IN 1996 AND
YEAR END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS AT DECEMBER 31, MONEY OPTIONS/SARS AT DECEMBER
1996 31, 1996(1)$
SHARES ACQUIRED VALUE ---------------------------- --------------------------------
NAME ON EXERCISE REALIZED $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- ----------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Ray A. Fortney.................... -- -- 7,500 172,500 -- --
Walter R. Bak..................... -- -- 7,250 52,750 -- --
Vince Franceschi.................. -- -- 6,250 59,750 -- --
Thomas B. Pfeil................... -- -- 0 55,000 -- 6,250
Jeffrey W. Cummings............... -- -- 0 0 -- --
John R. Holding................... -- -- 0 0 -- --
</TABLE>
- ------------------------
NOTE TO AGGREGATE OPTION/SAR EXERCISES IN 1995 AND YEAR END OPTION/SAR VALUE
(1) The closing price for the Company's common stock as reported by the Nasdaq
Stock Market on December 31, 1996, was $2.00. No value is reported in the
table if the option exercise price for an officer is higher than the market
price for the Company's Common Stock on December 31, 1996.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has an Executive Employment Agreement with its former President,
Mr. Ray A. Fortney. Mr. Fortney's employment continues until terminated pursuant
to the terms of the agreement and he may be terminated by the Company if he is
disabled for more than 90 days, subject to payment of disability amounts, and
for cause, which includes the failure to follow reasonable directives of the
Board of Directors; gross malfeasance or flagrant disloyalty to the Company;
criminal conduct involving moral turpitude; or deficiency in job performance.
The Company may also terminate Mr. Fortney's employment without cause upon
sixty days notice. Mr. Fortney has the right to terminate his employment for
good reason, which includes material breach by the Company of its obligations;
reduction of base salary or alteration of his duties or responsibilities without
his consent; his geographic relocation; or a change in control of the Company.
If the termination by the Company is for cause or by Mr. Fortney without
good reason, salary ceases upon termination. If the termination is without cause
by the Company or by Mr. Fortney for good reason, Mr. Fortney receives severance
payments equal to a minimum 100% of base salary for twelve months or until the
time that he is employed on a full time basis by another employer, plus payment
of the prorated portion of incentive bonus that he would have received.
Mr. Fortney also agreed to refrain from engaging in other business
activities in the nuclear utility service industry while employed by the
Company. If Mr. Fortney terminates his employment without good reason (but not
for any other type of termination), he is required to refrain for twelve months
from competing with the Company or its subsidiaries on any pending contract,
proposal or bid on which he participated while an employee or with respect to
which he has confidential information. Mr. Fortney also agreed to maintain the
confidentiality of information belonging to, used by, or in the possession of
the
12
<PAGE>
Company relating to its business, except information available in the public
domain. Effective June 17, 1997, Mr. Fortney terminated his employment for good
reason.
COMPENSATION OF DIRECTORS AND STOCK OPTIONS FOR NON-EMPLOYEE DIRECTORS
During 1996, Directors of the Company, other than Mr. Fortney and the
Chairman of the Board, were paid a fee of $750 for each Board of Directors
meeting they attended, $750 for each committee meeting they attended, and a
monthly retainer of $667. The Chairman of the Board received $1,000 for each
Board of Directors meeting attended and a monthly retainer of $889. Mr. Fortney
received compensation as a member of the management of the Company as indicated
in the "Summary Compensation Table".
Each present director of the Company who is not an employee of the Company
is an "Eligible Director" for the grant of options under the Company's stock
option plans, which plans contain a provision for annual non-discretionary
option grants to all non-employee directors. On the first trading day of January
of each year, each individual, who is on such date an eligible director, will be
granted a nonqualified option to purchase 2,000 shares of the Company's common
stock at 100% of the fair market value of the stock on the date of such grant.
The grants for 1996 were made on January 2, 1996, at an option price of $2.25.
Additionally in August 1996, the Chairman and the Vice-Chairman of the Board
each received stock options for 100,000 shares and one other member of the Board
received stock options for 50,000 shares, at an option price of $2.00 for each
grant.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Officers and directors of the Company and greater than ten percent
shareholders are required to report to the Securities and Exchange Commission
(the "Commission") on a timely basis certain changes in their legal or
beneficial ownership of the Company's stock. Regulations promulgated by the
Commission require the Company to disclose to its Shareholders any reporting
violations occurring after May 1, 1991, that came to the Company's attention
during the current fiscal year based on a review of the applicable filings
required by the Commission to report such changes in legal or beneficial
ownership. The Company believes that during the fiscal year ended December 31,
1996, its directors, executive officers, and principal shareholders filed all
required forms, with the exception of the initial Form 3 for Mr. Pfeil.
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the Company's five year cumulative return on its
common stock to the similar returns for (a) all stocks traded under the CRSP
Total Return Index for The Nasdaq Stock Market (US) and (b) the Piper Jaffray
Hazardous Waste Remediation/Disposal Index of 38 stocks (including the Company)
of companies in the hazardous waste and environmental services industry.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET (US) PIPER JAFFRAY VECTRA TECHNOLOGIES, INC.
<S> <C> <C> <C>
12/31/91 100.0 100.0 100.0
12/31/92 116.4 98.7 100.0
12/31/93 133.6 68.0 151.1
12/31/94 130.6 51.9 57.8
12/31/95 184.7 42.0 40.0
12/31/96 227.1 36.8 35.6
Symbol
Index Description
LEGEND
</TABLE>
PROPOSAL 2--AMENDMENT OF ARTICLES OF INCORPORATION
The Board of Directors requests that the shareholders approve an amendment
to the Company's articles of incorporation to decrease the size of the Company's
Board and eliminate the classification of the Board. The Board of Directors has
unanimously determined that the amendment is in the best interest of the
shareholders and recommends its approval. Due to the sale of the Engineering and
Waste Businesses, the Company has decreased in size and no longer requires a
nine-to-twelve person Board. The Board of Directors believes that a smaller
Board will be beneficial to the Company since it will enable the Company to
operate more efficiently, more economically and to act more promptly to take
advantage of corporate opportunities.
The Company's articles of incorporation currently provide that the Company's
Board of Directors shall consist of between nine to twelve members, as
determined by the Bylaws, elected by cumulative voting. The articles further
provide that the Board shall be divided into three classes, with each class to
be elected on a staggered basis. The amendment would decrease the size of the
Board to between four and seven members, as determined by the Bylaws, and would
eliminate the division of the Board into three classes. All Board members would
be elected or reelected, as the case may be, annually. This description is
14
<PAGE>
qualified in its entirety by reference to the amendment itself, which is
included as Annex A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO DECREASE THE SIZE OF THE
COMPANY'S BOARD OF DIRECTORS AND TO ELIMINATE THE CLASSIFICATION OF THE BOARD.
PROPOSAL 3--RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors is seeking the shareholders' ratification of the
Board's decision to select Ernst & Young LLP as independent public accountants
of the Company for the fiscal year 1997. The proposal must receive more votes
for than against after it is determined that a quorum is represented at the
Shareholders' Meeting. See "INTRODUCTION" for information regarding the effect
of abstentions and Broker Non-Votes.
If the proposal is not adopted, the adverse vote will be considered as a
direction to the Board of Directors to select other independent public
accountants for the following year. Because of the difficulty and expense of
making any substitution of accountants so long after the beginning of the year,
it is contemplated that the appointment for the year 1997 will be permitted to
stand unless the Board of Directors finds other good reason for making a change.
A representative of Ernst & Young LLP is expected to be present at the
annual meeting to respond to appropriate questions and to make a statement if
desired.
During 1996 Ernst & Young provided the Company with audit services including
work related to the examination of the annual financial statements, filings with
the Securities and Exchange Commission and consultation regarding various tax
and accounting matters.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
PROPOSALS FOR FUTURE MEETINGS
The 1998 annual Meeting of Shareholders of VECTRA Technologies, Inc. will be
held in April, 1998. Any shareholder who would like to nominate a director or
submit a proposal for inclusion in the Company's proxy statement for the 1998
annual meeting may do so by submitting a written proposal which must be received
at the principal executive offices of VECTRA Technologies, Inc. on or before
December 31, 1997. Any proposal received after that date will not be considered
for inclusion.
OTHER MATTERS
The Board of Directors has no knowledge of any other matter which may come
before the Meeting and does not intend to present any other matters. If any
matters properly come before the Meeting or any adjournment thereof, the persons
named as proxies will have discretionary authority to vote the shares
represented by the accompanying proxy in accordance with their best judgment.
15
<PAGE>
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10K FOR FISCAL YEAR 1996 AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE BY
CONTACTING:
Chief Financial Officer
VECTRA Technologies, Inc.
2333 San Ramon Valley Blvd.
Suite 225
San Ramon, CA 94583
Dated: June 20, 1997, San Jose, California
BY ORDER OF THE BOARD OF DIRECTORS
Vincent Franceschi,
PRESIDENT
16
<PAGE>
ANNEX A
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
VECTRA TECHNOLOGIES, INC.
ARTICLES OF AMENDMENT of the Articles of Incorporation of VECTRA
Technologies, Inc. (the "Corporation") are herein executed by said Corporation,
pursuant to the provisions of the Washington Business Corporation Act ("WBCA")
Section 23B.10.060, as follows:
FIRST: The name of the Corporation is VECTRA Technologies, Inc.
SECOND: Article Eighth, Paragraphs 8.3 and 8.4 of the Corporation's Restated
Articles of Incorporation are hereby amended, and shall read as follows:
8.3 The corporation's Board of Directors shall consist of between four
(4) and seven (7) members, as determined by the Bylaws. Shareholders shall
have the right to cumulate votes for the election of directors of the
corporation.
8.4 The Board of Directors shall be elected at each annual meeting of
the corporation.
THIRD: This amendment does not provide for an exchange, reclassification, or
cancellation of issued shares.
FOURTH: The date of the adoption of said Amendment by the Directors of said
Corporation was the day of , 1997.
FIFTH: The Amendment was approved by the shareholders of the Corporation in
accordance with WBCA Sections 23B.10.030 and 23B.10.040.
The foregoing is executed under penalty of perjury by the undersigned, who
is authorized to do so on behalf of the Corporation.
DATED this day of , 1997.
VECTRA TECHNOLOGIES, INC.
By:____________________________________
Name:
Title:
<PAGE>
VECTRA Technologies, Inc.
ANNUAL MEETING OF SHAREHOLDERS
Friday, July 25, 1997
The undersigned hereby appoints Vincent Franceschi and Thomas B. Pfeil as
proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and vote, and for the election of directors to
cumulate votes at their discretion, all the shares of common stock of VECTRA
Technologies, Inc. which the undersigned would be entitled to vote at the Annual
Meeting of Shareholders to be held at the Company's offices at 6203 San Ignacio
Avenue, Suite 100, San Jose, California, on July 25, 1997 at 10 a.m. local time,
and at any and all adjournments thereof. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" ALL PROPOSALS.
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Please mark /X/
your votes as
indicated in
this example
WITHHOLD
FOR VOTE FOR FOR AGAINST ABSTAIN
Proposal 1. The election as Directors of the / / / / Proposal 2. To amend the Company's / / / / / /
nominees listed below (except as marked to articles of incorporation to decrease
the contrary). the size of the Board of Directors
J.E. (Ted) Ardell, III Ray A. Fortney and eliminate the classification of
Fruzsina M. Harsanyi Vincent Franceschi the Board.
Edward J. Keith Roy Kirkorian
(INSTRUCTION: To withhold your vote for any
individual nominee, write that nominee's name
in the space provided below. To direct a
specific allocation of votes, indicate the
number of votes to be voted for a specific
nominee after his name. The proxies may
cumulate the remainder of the votes at their
discretion.
---------------------------------------------
FOR AGAINST ABSTAIN
Proposal 3. To ratify the selection of Ernst / / / / / /
& Young LLP as independent public accountants
for 1997.
Proposal 4. In their discretion, upon such other
business as may properly come before the meeting.
This proxy is solicited by the Board of Directors
who recommend a vote for each of the proposals.
This proxy, when properly executed, will be voted
and will be voted in the manner directed on this
proxy card. If no specification is made, this proxy
will be voted for each of the Proposals with
authority to cumulate votes and for the election of
Directors.
Please complete, Date, Sign, and Mail this Proxy
promptly in the enclosed self-addressed
postage-Prepaid Envelope.
Signature(s) Dated , 1997
-------------------------------------------------------------------------------- ------------
IMPORTANT When shares are held by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a partnership, please sign in partnership
name by an authorized person.
</TABLE>
