<PAGE> 1
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
VERSAR, INC.
- --------------------------------------------------------------------------------
(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):
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, schedule or registration no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[VERSAR INC. LOGO]
Dear Stockholder:
You are cordially invited to attend Versar, Inc.'s Annual Meeting of
Stockholders to be held at our offices, 6850 Versar Center, Springfield,
Virginia 22151, on Wednesday, December 1, 1999, at 10:00 a.m. local time.
The matters scheduled for consideration at the meeting are the election of
directors and other matters described in the enclosed Proxy Statement. We will
also report to you on Versar's condition and performance, and you will have the
opportunity to question management on matters that affect the interests of all
stockholders.
You can reach the offices of Versar by car, from either I-395 or I-495.
From I-395: exit Edsall Road West to Backlick Road; left (south) on Backlick to
Hechinger Drive; left on Hechinger Drive to Versar Center. From I-495: exit
Braddock Road East to Backlick Road; right (south) on Backlick to Hechinger
Drive; left on Hechinger Drive to Versar Center.
The stockholders' interest in the affairs of Versar is encouraged and it is
important that your shares be represented at the meeting. We hope you will be
with us. WHETHER YOU PLAN TO ATTEND OR NOT, PLEASE COMPLETE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE POSTPAID ENVELOPE
PROVIDED. Sending in your proxy will not limit your right to vote in person or
to attend the meeting, but it will assure your representation if you cannot
attend. Your vote is important.
Sincerely yours,
/s/ BENJAMIN M. RAWLS
Benjamin M. Rawls
Chairman and Chief Executive Officer
October 28, 1999
<PAGE> 3
[VERSAR INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Versar, Inc.
The Annual Meeting of Stockholders of Versar, Inc. (the "Company") will be
held at the Company's offices, 6850 Versar Center, Springfield, Virginia 22151,
on Wednesday, December 1, 1999, at 10:00 A.M. local time for the following
purposes:
1. To elect nine directors to serve until the 2000 Annual Meeting of
Stockholders;
2. To ratify the appointment of Arthur Andersen LLP as independent
accountants for fiscal year 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 4, 1999,
will be entitled to notice of and to vote at the meeting and any adjournments
thereof.
Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete statement regarding the matters to be acted upon at the
meeting.
By Order of the Board of Directors,
/s/ JAMES C. DOBBS
James C. Dobbs
Secretary
October 28, 1999
IMPORTANT NOTICE
YOUR PROXY IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE POST-PAID ENVELOPE
PROVIDED.
<PAGE> 4
[VERSAR INC. LOGO]
VERSAR, INC.
------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 1, 1999
------------------------------------------------------------
GENERAL
This Proxy Statement and the enclosed proxy card are being mailed on or
about October 28, 1999, to stockholders ("Stockholders") of Versar, Inc.
("Versar" or the "Company") in connection with the solicitation by the Board of
Directors of the Company of proxies for use at the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") and any adjournment or postponement thereof.
The Annual Meeting will be held at the Company's offices at 6850 Versar Center,
Springfield, Virginia 22151, on December 1, 1999. Any person giving a proxy
pursuant to this Proxy Statement may revoke it at any time before it is
exercised at the meeting by filing with the Secretary of the Company an
instrument revoking it or by delivering to the Company a duly executed proxy
bearing a later date. In addition, if the person executing the proxy is present
at the Annual Meeting, he or she may revoke such proxy by voting his or her
shares in person. Proxies in the form enclosed, if duly signed and received in
time for voting, and not revoked, will be voted at the Annual Meeting in
accordance with the directions specified therein.
RECORD DATE AND VOTING RIGHTS
Only holders of record of Versar's common stock, par value $.01 per share
("Common Stock"), at the close of business on October 4, 1999 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting and any
adjournment(s) thereof. There were 6,273,407 shares of Common Stock outstanding
and entitled to vote as of the Record Date. Each share of Common Stock is
entitled to one vote on all matters of business at the meeting.
The By-laws of the Company require that the holders of a majority of the
outstanding shares of the Company's Common Stock entitled to vote at the Annual
Meeting be present in person or represented by proxy in order for a quorum to
exist for the transaction of business at that meeting. Abstentions and "broker
non-votes" (which occur if a broker or other nominee does not have discretionary
authority and has not received voting instructions from the beneficial owner
with respect to the particular item) are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Assuming that a
quorum is present for the Annual Meeting, then those nine nominees for director
who receive the highest number of votes cast will be elected. Proposal No. 2 may
be approved by the affirmative vote of a majority of the shares present in
person or by proxy at the Annual Meeting and entitled to vote thereon. For
purposes of Proposal No. 2, abstentions are counted for purposes of calculating
shares entitled to vote but are not counted as shares voting and therefore have
the effect of a vote against each such proposal. For purposes of Proposal No. 2,
broker non-votes are not counted as shares eligible to vote and therefore have
no effect. Abstentions and broker non-votes will have no effect on the outcome
of the election of directors.
1
<PAGE> 5
Any proxy which is returned by a stockholder properly completed and which
is not revoked will be voted at the Annual Meeting in the manner specified
therein. Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying proxy card (or their substitutes) will vote FOR the
election of the Board of Directors' nominees, FOR proposal 2 and in the proxy
holders' discretion with regard to all other matters. Any unmarked proxies,
including those submitted by brokers (other than broker non-votes) or nominees,
will be voted in favor of the proposals and the nominees for the Board of
Directors, as indicated in the accompanying proxy card.
The cost of preparing, assembling and mailing all proxy materials will be
borne by Versar. In addition to solicitation by mail, solicitations may be made
by personal interview, telephone, and telegram by officers and regular employees
of the Company or its subsidiaries, acting without additional compensation. It
is anticipated that banks, brokerage houses, and other custodians, nominees, and
fiduciaries will forward this material to beneficial owners of shares of Common
Stock entitled to vote at the Annual Meeting, and such persons will be
reimbursed for the out-of-pocket expenses incurred by them in this regard.
The Annual Report of the Company for fiscal year 1999 (including financial
statements), the Notice of Annual Meeting, this Proxy Statement, and the
enclosed proxy card were initially mailed in a single envelope to holders of the
Common Stock as of the Record Date on or about October 28, 1999.
PRINCIPAL SHAREHOLDERS
The table below sets forth, as of October 4, 1999, the only persons known
by the Company to be the beneficial owners of more than 5% of the outstanding
shares of Common Stock.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS OF STOCK
- --------------------------------------------------------------------------------------------------------
Dr. Michael Markels, Jr.(1) 850,831 13.6%
6850 Versar Center
Springfield, VA 22151
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Dr. Robert L. Durfee(1) 683,585 10.9%
6850 Versar Center
Springfield, VA 22151
- --------------------------------------------------------------------------------------------------------
Versar, Inc., Employee Savings and Stock 1,059,041 16.9%
Ownership Plan(2)
- --------------------------------------------------------------------------------------------------------
</TABLE>
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(1) For a description of the nature of the beneficial ownership of Drs. Markels
and Durfee, see "SECURITY HOLDINGS OF MANAGEMENT". The information with
respect to shares of Common Stock held by Drs. Markels and Durfee are based
upon filings with the Securities and Exchange Commission.
(2) All of the 1,059,041 shares of Common Stock held by the Employee Savings and
Stock Ownership Plan ("ESSOP") are allocated to individual ESSOP
participants' accounts and are voted by those participants. The ESSOP
Trustees have investment power over all shares of Common Stock held by the
ESSOP. The ESSOP Trustees are Michael Markels, Jr., Benjamin M. Rawls and
James C. Dobbs. Each disclaims beneficial ownership of the Common Stock held
by the ESSOP. The information with respect to shares of Common Stock held by
the ESSOP is based upon filings with the Securities and Exchange Commission
and a report by the Company's stock transfer agent.
2
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Board of Directors of the Company recommends the election of the
persons named below who will be nominated to serve as directors of Versar until
the fiscal year 2000 Annual Meeting of Stockholders and until their successors
have been duly elected and qualified. The persons named in the accompanying
proxy will vote for the election of the nominees named below unless authority is
withheld. Except for Theodore M. Prociv, each nominee is presently a director of
the Company and has served as such for the time indicated opposite his name. If
for any reason any of the persons named below should become unavailable to
serve, an event that management does not anticipate, proxies will be voted for
the remaining nominees and such other person or persons as may be designated by
the Board of Directors.
<TABLE>
<CAPTION>
SERVED AS
NAME DIRECTOR BUSINESS EXPERIENCE AND AGE
---- --------- ---------------------------
<S> <C> <C>
Benjamin M. Rawls 1991 to the present Chairman of the Board of Versar since November
1993, President and Chief Executive Officer
of Versar since April 1991; a director of
Sarnia Corporation ("Sarnia"), the Company's
former real estate holding company since
1992. Age 58.
Michael Markels, Jr. 1969 to the present Chairman of the Board, President and Chief
Executive Officer of Ocean Farming, Inc.
since 1995; Co-founder of the Company;
Chairman Emeritus of the Board of Versar;
retired former Chairman of the Board of
Directors from April 1991 to November 1993;
President, Chief Executive Officer, and
Chairman of the Board and director from 1969
to March 1991; a director of Sarnia since
1982. Age 73.
Robert L. Durfee 1969 to the present Co-founder of the Company; Executive Vice
President of the Company since 1986 and
President of GEOMET Technologies, Inc., a
subsidiary of the Company since 1991. Age 63.
M. Lee Rice 1969-1976; 1983 to the Business consultant since 1986; President of
present the Shipbuilders Council of America from 1983
to 1986; President and Chief Executive
Officer of Ogden Transportation Corporation
and a director of its parent Ogden
Corporation from 1972 to 1983; Age 74.
Charles I. Judkins, Jr. 1992 to the present President and Chief Executive Officer of Sarnia
since June 1994; business consultant from
June 1993 to present; retired former Senior
Vice President of Versar from August 1992 to
May 1993; Senior Vice President and Chief
Financial Officer of Versar from July 1991 to
August 1992; President of GEOMET
Technologies, Inc., a subsidiary of the
Company from 1986 to 1991; Age 68.
Thomas J. Shields 1996 to the present Managing Director of Shields & Company, Inc.,
an investment banking firm, since 1991; and a
director of Seaboard Corporation, Clean
Harbors, Inc., and BJ's Wholesale Club, Inc.
Age 52.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
SERVED AS
NAME DIRECTOR BUSINESS EXPERIENCE AND AGE
---- --------- ---------------------------
<S> <C> <C>
Constantine G. Caras 1997 to the present Private investor since June 1997; Executive
Vice President, Chief Administrative Officer
and Director of Ogden Corporation from July
1990 to May 1997; a director of OMI Corp. Age
61.
Pat H. Moore 1997 to the present Private investor since 1995; Adjunct Faculty,
School of Engineering, Rice University since
1995; Executive Vice President and director
of Brown & Root, Inc. from 1990 to 1995. Age
69.
Theodore M. Prociv new nominee President of Versar starting November 1999;
Deputy Assistant Secretary of the Army from
May 1998 to October 1999; Deputy Assistant to
the Secretary of Defense from April 1994 to
April 1998; Corporate Vice President of
Environmental Business of Science
Applications International Corporation from
February 1992 to March 1994. Age 51.
</TABLE>
David Gladstone, a director of the Company since November 1997, is not standing
for reelection.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Versar has standing Executive, Audit,
Compensation, Nominating and Strategic Planning Committees.
During fiscal year 1999, the members of the Executive Committee were Mr.
Rawls (Chairman), Dr. Durfee, Dr. Markels and Mr. Rice. The primary duty of the
Executive Committee is to act in the Board's stead when the Board is not in
session, during which time the Committee possesses all the powers of the Board
in the management of the business and affairs of the Company, except as
otherwise limited by law.
During fiscal year 1999, the Audit Committee, composed exclusively of
directors who were not employees of the Company, consisted of Messrs. Judkins
(Chairman), Gladstone, Moore and Rice. This Committee's primary responsibilities
are to provide oversight of the Company's accounting and financial controls,
review the scope of and procedures to be used in the annual audit, review the
financial statements and results of the annual audit, and evaluate the
performance of the independent accountants and the Company's financial and
accounting personnel.
The Compensation Committee, the members of which, during fiscal year 1999,
were Messrs. Shields (Chairman), Caras, Gladstone and Judkins, reviews and
adjusts compensation paid to the President of the Company and all executive
officers, and administers the Company's cash bonus and stock option plans.
The Nominating Committee, the members of which, during fiscal year 1999,
were Dr. Durfee (Chairman), Dr. Markels and Mr. Rawls develops criteria for
Board membership and proposes Board members who meet the criteria for the annual
election of directors. The Committee also identifies potential Board members to
fill vacancies which may occur between annual stockholder meetings. Stockholders
may submit nominees for the Board of Directors in writing to the Nominating
Committee at the Company's Springfield office no later than June 23, 2000 for
the 2000 Annual Meeting of Stockholders.
The Strategic Planning Committee, the members of which are Messrs. Moore
(Chairman); Rawls, Shields, Caras and Dr. Durfee provide guidance to management
on strategic planning and the direction of the Company.
BOARD AND COMMITTEE MEETINGS
During fiscal year 1999, the Board of Directors met five times. The
Executive Committee met once. The Audit Committee met four times. The Strategic
Planning Committee met twice. The Compensation Committee met once. The
Nominating Committee did not meet. All directors of the Company attended at
4
<PAGE> 8
least 75% of all meetings of the Board and committees on which they served,
except Mr. Gladstone who attended three out of the five Board of Director
meetings, and none of the Audit or Compensation Committee meetings. Mr. James A.
Skidmore, Jr., who did not stand for election as a director in November 18,
1998, did not attend the two Board of Director meetings in fiscal year 1999 held
prior to that date.
DIRECTORS' COMPENSATION AND CERTAIN TRANSACTIONS
Directors who are not employees of the Company are paid an annual fee of
$3,000 plus an attendance fee of $1,000 for each meeting of the Board and of its
committees where the director is physically present and $500 for each meeting of
the Board or of its Committees attended telephonically. Under the 1996 Stock
Option Plan directors may receive options in the discretion of the administrator
of the plan, but no formula grants are provided. No options were issued to
directors in fiscal year 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Rawls, an executive officer of Versar, serves on the Board of Directors
of Sarnia Corporation. Mr. Judkins, an executive officer of Sarnia Corporation
is a member of the Compensation Committee of Versar.
5
<PAGE> 9
SECURITY HOLDINGS OF MANAGEMENT
The following table sets forth certain information regarding the ownership
of Versar's Common Stock by the Company's directors and each executive officer
named in the Summary Compensation Table, each nominee for director and the
Company's directors and executive officers as a group, as of October 4, 1999.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
AS OF
INDIVIDUAL OR GROUP OCTOBER 4, 1999 (1)
- -----------------------------------------------------------------------------------------
NUMBER PERCENT
<S> <C> <C>
- -----------------------------------------------------------------------------------------
Michael Markels, Jr.(2) 850,831 13.6%
- -----------------------------------------------------------------------------------------
Robert L. Durfee(3) 683,585 11.4%
- -----------------------------------------------------------------------------------------
Thomas J. Shields 0 *
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M. Lee Rice 1,500 *
- -----------------------------------------------------------------------------------------
Benjamin M. Rawls(5) 285,985 4.5%
- -----------------------------------------------------------------------------------------
Charles I. Judkins, Jr.(6) 80,844 1.3%
- -----------------------------------------------------------------------------------------
David Gladstone 0
- -----------------------------------------------------------------------------------------
Constantine Caras 2,000 *
- -----------------------------------------------------------------------------------------
Pat H. Moore 1,000 *
- -----------------------------------------------------------------------------------------
Theodore M. Prociv 0 *
- -----------------------------------------------------------------------------------------
Thomas S. Rooney(7) 180,250 2.9%
- -----------------------------------------------------------------------------------------
Lawrence A. White(8) 131,608 2.1%
- -----------------------------------------------------------------------------------------
Gayaneh Contos(9) 135,945 2.2%
- -----------------------------------------------------------------------------------------
William M. Greenwood(10) 2,000 *
- -----------------------------------------------------------------------------------------
All directors and executive officers as a group (15
persons)(11) 2,498,371 39.82%
- -----------------------------------------------------------------------------------------
</TABLE>
- ---------------
* Less than 1%
(1) For the purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule l3d-3 under the Securities Exchange
Act of 1934, as amended, under which, in general, a person is deemed to be
the beneficial owner of a security if he or she has or shares the power to
vote or to direct the voting of the security or the power to dispose or to
direct the disposition of the security, or if he or she has the right to
acquire beneficial ownership of the security within 60 days of October 4,
1999. With respect to ownership of shares which are held in the ESSOP but
allocated to individuals' accounts, the information is current as of
October 4, 1999.
(2) Includes 425,900 shares owned by adult children of Dr. Markels as to which
he shares voting and investment power. Includes 700 shares that may be
purchased upon the exercise of stock options exercisable within 60 days
after October 4, 1999. Dr. Markels is a Trustee of the ESSOP and as such he
has shared investment power over 1,059,041 shares and shared voting power
over 1,059,041 shares held by the ESSOP, none of which are included in the
above table. Dr. Markels disclaims beneficial ownership of the ESSOP
shares.
(3) Includes 34,000 shares owned by adult children of Dr. Durfee as to which he
shares voting and investment power. Includes 19,000 shares that may be
purchased upon the exercise of stock options exercisable within 60 days
after October 4, 1999.
6
<PAGE> 10
(4) Includes 10,000 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999.
(5) Includes 217,000 shares that may be purchased upon the exercise of stock
options exercisable within 60 days after October 4, 1999. Mr. Rawls is a
Trustee of the ESSOP and as such he has shared investment power over
1,059,041 shares and shared voting power over 1.059,041 shares held by the
ESSOP, none of which are included in the above table. Mr. Rawls disclaims
beneficial ownership of the ESSOP shares.
(6) Includes 26,200 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999.
(7) Includes 127,500 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999.
(8) Includes 108,000 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999.
(9) Includes 70,600 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999.
(10) Includes 2,000 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999.
(11) Includes 686,800 shares that may be purchased upon the exercise of stock
options within 60 days after October 4, 1999. Excludes 1,059,041 shares
held by the ESSOP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon copies of reports furnished to Versar, the Company believes that
all reports required to be filed by persons subject to Section 16 of the
Securities Exchange Act of 1934, and the rules and regulations thereunder, have
been timely filed.
7
<PAGE> 11
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth information on compensation paid by Versar
for services rendered in all capacities during the three fiscal years ended June
30, 1999, to the Company's Chief Executive Officer and the four most highly
compensated executive officers of the Company (collectively the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------
AWARDS
---------------------------------------------------------------------------------------------------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME, PRINCIPAL POSITION, SALARY BONUS COMPENSATION OPTIONS/SARS ALL OTHER
AND FISCAL YEAR $ $ $(1) # COMPENSATION
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Benjamin M. Rawls
Chairman of the Board, President and Chief Executive Officer
---------------------------------------------------------------------------------------------------------
1999 $240,645 0 0 0 $10,214(2)
1998 268,750 $50,000 0 45,000 10,890(2)
1997 259,462(7) 0 0 0 8,465(2)
---------------------------------------------------------------------------------------------------------
Thomas S. Rooney
Executive Vice President
---------------------------------------------------------------------------------------------------------
1999 $186,646 0 0 25,000 $13,447(3)
1998 190,902 $25,000 0 35,000 11,266(3)
1997 187,025(7) 6,800 0 0 10,627(3)
---------------------------------------------------------------------------------------------------------
Lawrence A. White
Executive Vice President
---------------------------------------------------------------------------------------------------------
1999 $180,646 0 0 10,000 $ 9,547(4)
1998 180,333 $10,000 0 10,000 8,315(4)
1997 181,721(7) 4,000 0 0 7,633(4)
8,144(4)
---------------------------------------------------------------------------------------------------------
William Greenwood
President of The Greenwood Partnership, Ltd.
---------------------------------------------------------------------------------------------------------
1999 $173,000 $ 0 0 0 $ 7,245(5)
---------------------------------------------------------------------------------------------------------
Gayaneh Contos
Senior Vice President
---------------------------------------------------------------------------------------------------------
1999 $170,000 $ 8,000 0 10,000 $10,496(6)
1998 167,308 10,000 0 13,000 10,226(6)
1997 164,307(7) 8,600 0 0 8,479(6)
---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) No amounts are shown in "Other Annual Compensation" column for fiscal years
1999, 1998 and 1997 because the aggregate amount of any perquisites or other
personal benefits for each of the Named Executive Officers did not exceed
the lesser of (i) $50,000 or (ii) 10 percent of the combined fiscal year
1997, 1997 or 1996 salary and bonus for the Named Executive Officer and the
Company does not pay any other type of compensation that would have to be
reported under this column.
8
<PAGE> 12
(2) The amounts shown in this column for Mr. Rawls are comprised of the
following: (i) in 1999 a payment of $4,500 for life insurance premiums on
term life insurance, in 1998 a payment of $4,223 for life insurance premiums
on term life insurance, and in 1997 a payment of $3,894 for insurance
premiums on term life insurance; and, (ii) in 1999 a contribution of $5,714
to the Company's 401(k) Plan on behalf of Mr. Rawls, in 1998 a contribution
of $6,667 to the Company's 401(k) Plan on behalf of Mr. Rawls; in 1997 a
contribution of $4,571 to the Company's 401(k) Plan on behalf of Mr. Rawls.
(3) The amounts shown in this column for Mr. Rooney are comprised of the
following: (i) in 1999 a payment of $8,568 for life insurance premiums on
term life insurance, in 1998 a payment of $4,910 for life insurance premiums
on term life insurance, and in 1997 a payment of $4,520 for insurance
premiums on term life insurance; and (ii) in 1999 a contribution of $4,879
to the Company's 401(k) Plan on behalf of Mr. Rooney in 1998 a contribution
of $6,555 to the Company's 401(k) Plan on behalf of Mr. Rooney, in 1997 a
contribution of $6,107 to the Company's 401(k) Plan on behalf of Mr. Rooney.
(4) The amounts shown in this column for Mr. White are comprised of the
following: (i) in 1999 a payment of $2,880 for insurance premiums on term
life insurance, in 1998 a payment of $2,131 for life insurance premiums on
term life insurance, in 1997 a payment of $1,794 for insurance premiums on
term life insurance; and (ii) in 1999 a contribution of $6,667 to the
Company's 401(k) Plan on behalf of Mr. White, in 1998 a contribution of
$6,264 to the Company's 401(k) plan on behalf of Mr. White and in 1997 a
contribution of $5,839 to the Company's 401(k) Plan on behalf of Mr. White.
(5) The amount shown in this column for Mr. Greenwood reflects a payment of
$2,141 for insurance premiums on term life insurance; and a contribution of
$5,104 to the Company's 401(k) Plan on behalf of Mr. Greenwood.
(6) The amounts shown in this column for Mrs. Contos are comprised of the
following: (i) in 1999 a payment of $4,072 for insurance premiums on term
life insurance, in 1998 a payment of $3,996 for life insurance premiums on
term life insurance, and in 1997 a payment of $3,937 for insurance premiums
on term life insurance, and; (ii) in 1999 a contribution of $6,424 to the
Company's 401(k) Plan on behalf of Mrs. Contos, in 1998 a contribution of
$6,230 to the Company's 401(k) Plan on behalf of Mrs. Contos, in 1997 a
contribution of $4,542 to the Company's 401(K) Plan on the behalf of Mrs.
Contos.
(7) The salary for fiscal year 1997 reflects payments for 27 pay periods instead
of 26 due to the change in financial reporting by the Company. This change
did not have any effect on the total salary received by these individuals
for the calendar year 1998.
9
<PAGE> 13
The following tables set forth certain information with respect to stock
options (i) granted to the Named Executive Officers and (ii) exercised under the
Company's 1996 Stock Option Plan during the fiscal year ended June 30, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
POTENTIAL
REALIZED
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM(4)
----------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE OR
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED#(1) FISCAL YEAR(2) ($ PER SHARE)(3) DATE 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benjamin M. Rawls 0 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------
Thomas S. Rooney 25,000 6.9% 1.75 1/25/09 140,297 329,489
----------------------------------------------------------------------------------------------------------------
Lawrence A. White 10,000 2.8% 1.75 1/25/09 56,119 131,795
----------------------------------------------------------------------------------------------------------------
William M. Greenwood 0 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------
Gayaneh Contos 10,000 2.8% 1.75 1/26/99 56,119 131,795
----------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The options were granted for a term of 10 years, 20% of which were vested
immediately and 80% of which vest equally over a four year period, subject
to earlier termination in certain events related to termination of
employment. The 1996 Stock Option Plan includes a change-in-control
provision providing for immediate vesting upon the happening of certain
events defined as a change-in-control of the Company. The option plan grants
the Compensation Committee broad discretion to change or modify the material
terms of the option grants.
(2) The total number of options granted to employees for fiscal year 1999 was
362,400.
(3) The exercise price equals the fair market value of the underlying Common
Stock on the date of the grant for all options disclosed in this table.
(4) The dollar amounts in these columns are determined using assumed rates of
appreciation set by the Securities and Exchange Commission and are not
intended to forecast future appreciation, if any, in the market value of the
Company's Common Stock. Such amounts are based on the assumptions that the
named persons hold the options for their full ten-year term. Actual value of
the options will vary in accordance with the market price of the Company's
Common Stock.
10
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT 6/30/99 IN-THE-MONEY
EXERCISE REALIZED (#) OPTIONS AT 6/30/99
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Benjamin M. Rawls.......... 0 0 275,990/77,000 $0(2)
--------------------------------------------------------------------------------------------------------------
Thomas S. Rooney........... 0 0 127,500/90,000 $24,375/48,750(3)
--------------------------------------------------------------------------------------------------------------
Lawrence A. White.......... 0 0 102,000/18,000 $41,875/19,500(4)
--------------------------------------------------------------------------------------------------------------
Gayaneh Contos............. 0 0 81,200/21,800 $14,623/19,500(5)
--------------------------------------------------------------------------------------------------------------
William M. Greenwood....... 0 0 2,000/8,000 $4,875/19,500
--------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) On June 30, 1999, the closing price of the Company's Common stock was
$2.4375.
(2) All 345,000 options granted to Mr. Rawls were out-of-the-money which means
that the option exercise price for those options exceeded the closing price
of the Company's Common Stock on the American Stock Exchange on June 30,
1999.
(3) 188,000 options granted to Mr. Rooney were out-of-the money.
(4) 110,000 options granted to Mr. White were out-of-the money.
(5) 89,000 options granted Mrs. Contos were out-of-the money.
EMPLOYMENT CONTRACTS
On January 30, 1999, the Company renewed its Employment Agreement with Mr.
Rawls for a period of twenty-four months which provides for him to serve as
Chairman, President and Chief Executive Officer at a base salary of $275,000
plus any fringe benefits available to executive officers of the Company
including any incentive compensation programs which may be in effect. If Mr.
Rawls' employment is terminated during the term of the employment agreement,
except for voluntary termination or termination for cause, he will be paid 12
months salary, fringe benefits, incentive compensation due and shall be entitled
to immediate vesting of all stock options. If there is a change in circumstances
(change in title, salary reduction, or change in geographic location) or change
in control of the Company (as defined in this agreement), Mr. Rawls could
terminate the agreement and will be paid 24 months salary and fringe benefits
and shall be entitled to immediate vesting of all stock options.
On January 30, 1999, the Company renewed its Employment Agreement with Mr.
Rooney for a period of twenty-four months which provides for him to serve as
Executive Vice President and Chief Operating Officer at a base salary of
$175,000 plus any fringe benefits available to executive officers of the Company
including any incentive compensation programs which may be in effect. If Mr.
Rooney's employment is terminated for any reason during the term of the
employment agreement, except for termination for cause or voluntary termination,
he will be paid 24 months salary, fringe benefits, incentive compensation due
and shall be entitled to immediate vesting of all stock options. If there is a
change in circumstances (change in title, salary reduction or change in
geographic location) or change in control of the Company (as defined in the
agreement), Mr. Rooney could terminate the agreement and will be paid 24 months
salary and fringe benefits and shall be entitled to immediate vesting of all
stock options.
11
<PAGE> 15
CHANGE IN CONTROL AGREEMENTS
On January 30, 1999, the Company entered into Change-in-Control Severance
Agreements with Lawrence W. Sinnott, Vice President and Chief Financial Officer
and James C. Dobbs, Vice President and General Counsel, for a period of
twenty-four months. These agreements provide that if there is a change in
circumstances (change in title, salary reduction or change in geographic
location) or change in control of the Company (as defined in the Agreement),
Messrs. Sinnott or Dobbs could terminate their employment and will receive
twenty-four months salary, fringe benefits, and incentive compensation due and
shall be entitled to immediate vesting of all stock options.
12
<PAGE> 16
STOCK PERFORMANCE GRAPH
The following graph and table show a comparison of the cumulative total
return since June 30, 1994 on $100 invested in Versar Common Stock, the Standard
& Poors 500 Stock Index and a Peer Group consisting of ten companies (EA
Engineering, Science and Technology, Inc.; Ecology & Environment, Inc.; EMCON;
GZA Environmental Technologies, Inc.; Harding Associates, Incorporated; ICF
Kaiser International, Inc.; TRC Companies, Inc.; Roy F. Weston, Inc. and
International Technology Corp. and Jacobs Engineering Group, Inc.), and Versar,
which in each case includes reinvestment of dividends where applicable.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VERSAR, INC., THE S&P 500 INDEX
AND A PEER GROUP
[LINE GRAPH]
<TABLE>
<CAPTION>
VERSAR, INC. PEER GROUP S&P 500
------------ ---------- -------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 102.00 102.00 126.00
1996 118.00 108.00 159.00
1997 118.00 102.00 214.00
1998 122.00 121.00 279.00
1999 76.00 143.00 342.00
</TABLE>
- ---------------
* $100 Invested on 6/30/94 in stock or index -- including reinvestment of
dividends. fiscal year ending June 30.
CUMULATIVE SHAREHOLDER'S RETURN TABLE
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
CUMULATIVE SHAREHOLDER'S RETURN
-------------------------------------------------------------------------------------------------------
LAST TRADING DATE IN FISCAL YEARS
---------------------------------------------------------------
1994 1995 1996 1997 1998 1999
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Versar, Inc. $100(1) $102 $118 $118 $122 $76
-------------------------------------------------------------------------------------------------------
Peer Group $100 $102 $108 $102 $121 $143
-------------------------------------------------------------------------------------------------------
S&P 500 $100 $126 $159 $214 $279 $342
-------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) On June 30, 1994, Versar spun-off its real estate subsidiary, Sarnia
Corporation (formerly Versar Virginia, Inc.) to Versar's Stockholders on a
one to one share basis. Because of its negative equity position after the
spin-off Sarnia Common Stock had a zero tax basis.
13
<PAGE> 17
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee") of the Board of Directors has
furnished the following report on executive compensation for fiscal year 1999.
The compensation decisions reported below were made in November 1998 based upon
the Company's and each executives' performance for fiscal year 1998 which ended
June 30, 1998. The Committee provides oversight of all policies under which
compensation is paid to the Company's executive officers and stock options are
granted. The Committee consists entirely of non-employee directors. This report
does not reflect the performance of the Company or its executives for fiscal
year 1999 which will be reported in next year's Proxy Statement.
EXECUTIVE COMPENSATION PHILOSOPHIES AND POLICIES
The Committee's executive compensation policies are designed to provide
competitive levels of compensation which integrate pay with performance,
recognize individual initiative and achievements and assist the Company in
attracting and retaining qualified executives. Target levels of the executive
officers' overall compensation are intended to be consistent with others'
compensation in the Company's industry for similar executives, but are also
weighed toward results that contribute to increases in shareholder value and
enhance the Company's long-term performance.
The Company's executive compensation program includes three components:
<TABLE>
<C> <S>
(1) Base salary;
(2) Annual Bonus (stock or cash); and
(3) Long-term incentive awards.
- Base Salary -- ranges of appropriate base salaries are
determined by analysis of salary data on positions of
comparable responsibility within the environmental services
industry. Committee approval of individual salary changes is
based upon performance of the executive against the
Company's financial and strategic objectives and of the
position of the executive in the competitive salary range.
- Annual Bonus -- bonuses are paid pursuant to an executive
incentive bonus plan established each year by the Board of
Directors for key employees and managers of the Company and
its subsidiaries. Under the bonus plan, an incentive pool is
created each fiscal year and is distributed if certain
financial goals for the Company are met. The amount of the
incentive pool distributed depends on the extent to which
the Company's consolidated net income before taxes exceeds
targeted amounts as set forth in the bonus pool schedule.
- Long-Term Incentive Awards -- the purpose of this element of
the executive compensation program is to link management pay
with the long-term interest of shareholders, rather than
only the performance of the Company in a single fiscal year.
The Committee is currently using incentive stock options
from the Company's 1996 Stock Option Plan for key employees
and managers. In determining annual stock option grants, the
Committee bases its decision on the individual's performance
or potential to improve shareholder value.
</TABLE>
In determining executive compensation for fiscal year 1999, the Committee
took into account the performance of the Company's stock, the financial
performance of the Company and the continued growth of the Company in fiscal
year 1998. The performance in fiscal year 1998 was disappointing. The loss of
business by the various Science Management Corporation business units,
especially the engineering design and construction business in Houston, Texas
and the information management business in New Jersey adversely affected the
performance of the Company. This required the winding down and sale of the SMC
businesses resulting in the write down of goodwill and a significant loss per
share.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee reviewed Mr. Rawls performance and accomplishments for fiscal
year 1998 in setting his compensation for fiscal year 1999. Despite superior
performance during difficult times, based upon the performance of the Company as
a whole no salary increase or bonus was granted. The Committee agreed to
14
<PAGE> 18
renew Mr. Rawls' Employment Agreement for two years with certain changes
recommended by the Company's outside counsel.
COMPENSATION FOR NAMED EXECUTIVE OFFICERS
The Committee recognized the continued strong performance of the AFCEE and
other Air Force Contracts and the Rocky Mountain Region under Thomas S. Rooney's
leadership. While no salary increase was approved, the Committee granted Mr.
Rooney 25,000 incentive stock options. The Committee also agreed to renew Mr.
Rooney's Employment Agreement for two years with certain changes recommended by
the Company's outside counsel.
Despite the Company's difficulties, new orders of $58 million were strong.
The Committee observed that this accomplishment laid the groundwork for the
future. Lawrence A. White's efforts had increased the Company's backlog. While
no salary increase was approved, the Committee granted Mr. White 10,000
incentive stock options.
The Committee agreed that Mrs. Contos was a strong technical and financial
unit manager, especially with respect to financial controls. The units reporting
to Mrs. Contos, ESG, ESM and Atlantic, were successful in fiscal year 1998.
While no salary increase was approved, the Committee granted Mrs. Contos 13,000
incentive stock options.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Thomas J. Shields, Chairman
Constantine Caras
David Gladstone
Charles I. Judkins, Jr.
PROPOSAL NO. 2
APPOINTMENT OF ACCOUNTANTS
The Board of Directors considers it desirable that its appointment of the
firm of Arthur Andersen LLP ("Arthur Andersen") as independent accountants of
the Company for fiscal year 2000 be ratified by the Stockholders. Arthur
Andersen served as the Company's independent accountant in fiscal years 1996
through 1999. Representatives of Arthur Andersen will be present at the Annual
Meeting, will be given an opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions from the Stockholders.
The Board of Directors recommends a vote "FOR" this proposal and the
enclosed proxy will be so voted unless the proxy specifically indicates
otherwise.
15
<PAGE> 19
2000 ANNUAL MEETING
It is presently contemplated that the 2000 Annual Meeting of Stockholders
will be held on or about November 15, 2000. In order for any appropriate
stockholder proposal to be considered for inclusion in the proxy materials for
the 2000 Annual Meeting of Stockholders, it must be received by the Secretary of
the Company no later than June 31, 2000, by certified mail, return receipt
requested.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has no
knowledge of any matters to be presented for consideration at the Annual Meeting
other than those referred to above. If any other matters properly come before
the Annual Meeting, the persons named in the accompanying proxy intend to vote
such proxy, to the extent entitled, in accordance with their best judgment.
By Order of the Board of Directors,
/s/ JAMES C. DOBBS
James C. Dobbs
Secretary
October 28, 1999
16
<PAGE> 20
VERSAR, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 1, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes Michael Markels, Jr., Benjamin M. Rawls
and Robert L. Durfee, and each of them individually, with power of
substitution, to vote and otherwise represent all of the shares of Common Stock
of Versar, Inc. (the "Company"), held of record by the undersigned, at the
Annual Meeting of Stockholders of the Company to be held at the Company's
offices, 6850 Versar Center, Springfield, Virginia, on Wednesday, December 1,
1999 at 10:00 a.m. local time, and any adjournment(s) thereof, as indicated on
the reverse side hereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated, in each case, October 28, 1999. All
other proxies heretofore given by the undersigned to vote shares of the
Company's Common Stock are expressly revoked.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DESCRIBED ON THE
REVERSE HEREOF BY THE STOCKHOLDER. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES FOR DIRECTORS LISTED IN PROPOSAL 1 AND FOR PROPOSALS
REFERRED TO IN ITEMS 2 AND 3 ON THE REVERSE SIDE.
(Continued, and to be signed and dated on the reverse side)
VERSAR, INC.
P.O. BOX 11078
NEW YORK, N.Y. 10203-0078
<PAGE> 21
<TABLE>
<S> <C> <C> <C>
(1) Election of Directors VOTE FOR all nominees [X] WITHHOLD authority to vote [X] EXCEPTIONS* [X]
listed below. for all nominees listed below.
</TABLE>
Nominees: Benjamin M. Rawls, Michael Markels, Jr., Robert L. Durfee,
M. Lee Rice, Charles I. Judkins, Jr., Thomas J. Shields,
Constantine G. Caras, Theodore M. Prociv and Pat H. Moore.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW).
*Exception
------------------------------------------------------------------
(2) Ratification of the appointment of Arthur Andersen LLP as independent
accountants for fiscal year 2000.
FOR [X] AGAINST [X] ABSTAIN [X]
(3) In their discretion upon such other matters as may properly come before the
meeting or any adjournment(s) thereof and upon matters incident to the
conduct of the meeting.
Change of Address and [X]
or Comments Mark Here
Please sign exactly as your name
appears herein. If you are signing
for the stockholder, please sign
the stockholder's name, your name
and state the capacity in which you
are signing.
Date: ______________________, 1999
----------------------------------
----------------------------------
(Signature)
PLEASE INDICATE VOTES [ ]
(X) IN BLACK OR BLUE INK.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
