<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
TENERA, 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
- -----------------------------------------------------------------------------
(1) Title of each class of securities to which transaction applies:
- -----------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
- -----------------------------------------------------------------------------
<PAGE> 2
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
- -----------------------------------------------------------------------------
(1) Amount Previously Paid:
- -----------------------------------------------------------------------------
(2) Form, Schedule, or Registration Statement No.:
- -----------------------------------------------------------------------------
(3) Filing Party:
- -----------------------------------------------------------------------------
(4) Date Filed:
- -----------------------------------------------------------------------------
<PAGE> 3
[TENERA, INC. LOGO]
TENERA, INC.
ONE MARKET, SPEAR TOWER, SUITE 1850
SAN FRANCISCO, CA 94105-1018
_________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 1997
_________________________________
TO OUR SHAREHOLDERS
You are cordially invited to the Annual Meeting of Shareholders of TENERA,
Inc. (the "Company") which will be held at 1:30 p.m. (local time) on Monday,
June 30, 1997, at the One Market building, Spear Tower, Fourth Floor, at One
Market Street, San Francisco, California 94105-1018, for the following
purposes as described in the accompanying Proxy Statement:
1. To elect three (3) directors to the Board of Directors
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company for the year ending December 31, 1997
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on May 30, 1997, are
entitled to notice of, and to vote at the meeting or any adjournments thereof.
Your vote is important to the Company. Please complete, sign, date, and
return the enclosed proxy card in the enclosed, postage-paid envelope. If you
attend the meeting and wish to vote in person, you may withdraw your proxy and
vote your shares personally.
Sincerely,
/s/ MICHAEL D. THOMAS
--------------------------------
Michael D. Thomas
Chairman of the Board and
Chief Executive Officer
May 30, 1997
<PAGE> 4
Mailed to shareholders on
or about June 6, 1997
TENERA, INC.
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company, for use at the 1997 Annual
Meeting of Shareholders ("Annual Meeting") to be held at 1:30 p.m. (local
time) on Monday, June 30, 1997, at the One Market building, Spear Tower,
Fourth Floor, at One Market Street, San Francisco, California 94105-1018. The
Company's principal executive offices are located at One Market, Spear Tower,
Suite 1850, San Francisco, California 94105-1018.
TENERA, Inc. ("TENERA" or the "Company"), a Delaware corporation, was
formed in connection with the conversion of TENERA, L.P. (the predecessor of
the Company, the "Predecessor Partnership") into corporate form (the "Merger"
or "Conversion"), completed on June 30, 1995. Pursuant to the Merger, the
Company succeeded to the business, assets, and liabilities of the Predecessor
Partnership. Therefore, the Company and the Predecessor Partnership are
sometimes collectively referred to herein as TENERA or the Company.
Each shareholder of record of Common Stock of the Company ("Common Stock")
on May 30, 1997 ("Record Date"), is entitled to vote at the Annual Meeting and
will have one vote for each share of Common Stock held at the close of
business on the Record Date. A majority of the shares entitled to vote will
constitute a quorum. On May 30, 1997, there were 10,123,153 shares of Common
Stock outstanding.
If you are unable to attend the Annual Meeting, you may vote by proxy. The
proxies will vote your shares according to your instructions. If you return a
properly signed and dated proxy card, but do not mark a choice on one or more
items, your shares will be voted in accordance with the recommendations of the
Board of Directors as set forth in this proxy statement. The proxy card gives
authority to the proxies to vote your shares at their discretion on any other
matter presented at the Annual Meeting.
You may revoke your proxy at any time prior to voting at the Annual Meeting
by delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy, or by attending the meeting and voting in person at
the meeting. Under applicable state law and the bylaws of the Company, a
quorum is required for the matters to be acted upon at the Annual Meeting. A
quorum is defined as a majority of the shares entitled to vote, represented in
person or by proxy, at the meeting. To pass, each matter submitted to a vote,
except the election of directors, must be approved by a majority of the shares
represented and voting in person or by proxy at the meeting. Shares
represented by proxies which are marked abstain or to deny discretionary
authority on any matter will be counted as shares present for purposes of
determining the presence of a quorum; such shares will also be counted as
shares present and entitled to vote, which will have the same effect as a vote
against any matter other than election of directors. Proxies relating to
"street name" shares which are not voted by brokers on one or more matters,
will not be treated as shares present for purposes of determining the presence
of a quorum, unless they are voted by the broker on at least one matter. Such
non-voted shares will not be treated as shares represented at this meeting as
to any matter for which non-vote is indicated on the brokers' proxy. Director
nominees must receive a plurality of the votes cast at the meeting, which
means that a vote withheld will not affect the outcome of the election.
The Company will bear the cost of preparing, handling, printing, and
mailing this Proxy Statement, the accompanying proxy card, and any additional
material which may be furnished to shareholders, and the actual expense
incurred by brokerage houses, fiduciaries, and custodians in forwarding such
materials to beneficial owners of Common Stock held in their names. The
solicitation of proxies will be made by the use of the mails and may also be
made through direct communication with certain shareholders or their
representatives by officers, directors, or employees of the Company who will
receive no additional compensation therefor.
<PAGE> 5
PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual Meeting, one (1) Class I director and two (2) Class II
directors of the Company are to be elected to serve until the annual meeting
in 1999 and 2000, respectively, and until their respective successors are
elected or appointed. The authorized number of directors of the Company has
been fixed at seven (7) by the Board of Directors. The Board of Directors is
divided into three classes: Class I, Class II, and Class III. The number of
directors in each class shall be the whole number contained in the quotient
obtained by dividing the authorized number of directors by three. Directors of
each class serve for three years, which terms do not coincide.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR the three (3) nominees of the Board of Directors named
below. The Board of Directors has nominated Robert C. McKay to serve a two-
year term ending in 1999, and Thomas S. Loo and Barry L. Williams to serve for
the three-year terms ending in 2000. Messrs. Loo and Williams currently serve
as Class II directors of the Company. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. It is not expected that
any nominee will be unable or will decline to serve as a director. In the
event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them FOR the remaining
nominees and such proxies may be voted for the election of a substitute
nominee recommended by the Board of Directors.
MANAGEMENT RECOMMENDS THAT SHAREHOLDERS VOTE TO ELECT MESSRS. MCKAY, LOO,
AND WILLIAMS AS DIRECTORS OF THE COMPANY.
The current and continuing directors and nominees of the Company are:
<TABLE>
<CAPTION>
_____________________________________________________________________________________
Director Term
Name Age Title Since Class Expires
_____________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Michael D. Thomas ..... 49 Chairman of the Board and 1991 I 1999
Chief Executive Officer
William A. Hasler ..... 55 Director 1992 I 1999
Robert C. McKay, Jr. .. 45 Senior Vice President -- I 1999
Thomas S. Loo ......... 53 Director 1997 II 1997
Barry L. Williams ..... 52 Director 1993 II 1997
Jeffrey R. Hazarian ... 41 Director, Chief Financial 1996 III 1998
Officer, Vice President
of Finance, and Corporate
Secretary
George L. Turin ....... 67 Director 1995 III 1998
_____________________________________________________________________________________
</TABLE>
Except as set forth below, each of the three director nominees and each of
the other four current directors, has been engaged in the principal occupation
described below. There are no family relationships among any of the executive
officers or directors of the Company.
Michael D. Thomas, 49, has served as Chairman of the Board of the
Company since his election in August 1991, and was named its Chief
Executive Officer in September 1994. He was President of Teknekron
Corporation from 1991 until December 31, 1994, and was Vice President of
Marketing and Corporate Business Development for Teknekron Corporation from
1989 to 1991.
William A. Hasler, 55, has served as a Director of the Company since his
election in March 1992. Mr. Hasler is dean of the Walter A. Haas School of
Business at the University of California, Berkeley.
2
<PAGE> 6
Prior to his appointment as dean in 1991, Mr. Hasler was Vice Chairman of
Management Consulting for KPMG Peat Marwick from 1986 to 1991. Mr. Hasler
is also a director of The Gap, Inc., Aphton Corporation, Walker Systems,
and TCSI Corporation.
Jeffrey R. Hazarian, 41, has served as a Director of the Company since
his election in October 1996, and was named its Chief Financial Officer,
Vice President of Finance, and Corporate Secretary in 1992. Previously,
Mr. Hazarian held the position of Vice President, Planning and Analysis of
the Company from 1990 to 1992.
Thomas S. Loo, Esq., 53, was elected as a Director of the Company in
February 1997. He previously served as a Director of the Predecessor
Partnership from August 1987 to September 1993. Mr. Loo has been a partner,
since 1986, of Bryan Cave LLP, general counsel to the Company. Mr. Loo has
also served as a director of Teknekron Corporation since March 1989.
Robert C. McKay, 45, was appointed Chief Operating Officer of the
Company in April 1997 and was elected Senior Vice President of the Company
in December 1992. Previously, Mr. McKay was a Vice President of the Company
from 1991 to 1992, and a senior technical manager of the Company from 1990
to 1991. Formerly, Mr. McKay was Manager, Management Systems for the
Tennessee Valley Authority from 1988 to 1990.
George L. Turin, Sc.D., 67, has served as a Director of the Company
since his election in March 1995. Previously, Mr. Turin served as a
Professor of Electrical Engineering and Computer Science at the University
of California at Berkeley from 1960 to 1990. Mr. Turin also served as Vice
President, Technology for Teknekron Corporation from 1988 to 1994.
Barry L. Williams, J.D., 52, has served as a Director of the Company
since his election in September 1993. Mr. Williams has been President of
Williams Pacific Venture, Inc., a venture capital consulting company, since
1987. From 1988 until its sale in 1992, Mr. Williams was also President of
C.N. Flagg Power, Inc., a company that provides construction services
primarily to the electric utility industry. Mr. Williams is also a director
of American President Companies, PG&E, and Simpson Manufacturing Co., Inc.
BOARD MEETINGS, COMMITTEES, AND DIRECTOR COMPENSATION
The Board of Directors held nine (9) meetings during 1996. No Board member
attended fewer than 75% of the meetings of the Board of Directors and of the
Committees of the Board on which such director served.
Among the standing committees of the Board of Directors of the Company are
the Compensation Committee, the Audit Committee, and the Nominating Committee.
The Board of Directors has a Compensation Committee, currently composed of
three members, William A. Hasler and Barry L. Williams, and since February
1997, Thomas S. Loo. The Compensation Committee of the Board of Directors,
composed entirely of non-employee directors, is responsible for establishing
and reviewing annually, the compensation levels of executive officers of the
Company and reviewing recommendations made by Company management concerning
salaries and incentive compensation for employees of the Company. The
Compensation Committee also serves as the administrative committee of the
Company's 1992 Stock Option Plan. The Compensation Committee met two (2) times
during 1996.
The Board of Directors has an Audit Committee, currently composed of four
members, William A. Hasler, Jeffrey R. Hazarian, Barry L. Williams, and since
February 1997, Thomas S. Loo. The Audit Committee reviews the results and
scope of the audit and other services provided by the Company's independent
auditors and recommends the appointment of independent auditors to the Board
of Directors. (See Proposal 2.) The Audit Committee met five (5) times during
1996.
The Board of Directors has a Nominating Committee, currently composed of
two members, George L. Turin, and since February 1997, Thomas S. Loo. The
Nominating Committee is responsible for nominating new directors to the Board.
The Nominating Committee met one (1) time during 1996.
3
<PAGE> 7
Except as described below, the directors of the Company are paid no
compensation by the Company for their services as directors. Thomas S. Loo,
William A. Hasler, George L. Turin, and Barry L. Williams, as non-employee
directors, are paid a retainer of $1,000 per month. These non-employee
directors are also paid a fee of $1,000 for each meeting of the Board and any
Board Committee which they attend. The 1993 Outside Directors Compensation and
Stock Option Plan, which was approved by the Board effective March 1, 1994,
provides for the annual issuance of options for non-employee directors. During
1994, 10,000 stock options were issued to each of Messrs. Hasler and Williams.
During 1996 and 1995, 12,500 and 15,000 stock options, respectively, were
issued to each of Ms. Cheng (resigned in February 1997) and Messrs. Hasler,
Turin, and Williams. The options expire ten (10) years after the date of
grant, vest one (1) year after the date of grant, and have an exercise price
equal to the fair market value of the shares of Common Stock on the date of
grant. Upon exercise of the options, a director may not sell or otherwise
transfer more than 50% of the shares until six (6) months after the date on
which the director ceases to be a director of the Company.
4
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS, AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of April 30, 1997, concerning
ownership of Common Stock by (i) each director, (ii) each executive officer
named in the Summary Compensation Table, (iii) all directors and named
executive officers as a group, and (iv) each person known by the Company to
own beneficially 5% or more of the outstanding shares of its Common Stock.
Unless otherwise noted, the listed persons have sole voting and dispositive
powers with respect to the shares of Common Stock shown as beneficially owned
by them, subject to community property laws if applicable.
<TABLE>
<CAPTION>
________________________________________________________________________________________
Amount and Nature of
Beneficial Ownership
----------------------------
Name Number Percent (1)
________________________________________________________________________________________
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS
William A. Hasler ..................................... 57,500 (2) *
Jeffrey R. Hazarian ................................... 52,186 (3) *
Thomas S. Loo ......................................... 0 0
Robert C. McKay, Jr. .................................. 97,539 (3) 1.0%
Michael D. Thomas ..................................... 116,400 (3) 1.1%
George L. Turin ....................................... 73,004 (2) *
Joe C. Turnage ........................................ 85,737 (3) *
Barry L. Williams ..................................... 37,500 (2) *
---------------- ------------
All directors and named executive officers as a
group (eight persons) ................................. 519,866 (2)(3) 5.1%
PRINCIPAL SHAREHOLDERS OTHER THAN DIRECTORS AND
EXECUTIVE OFFICERS
Harvey E. Wagner ...................................... 3,708,658 (4) 36.6%
P.O. Box 7463
Incline Village, NV 89450
Dr. Michael John Keaton Trust ......................... 1,106,887 (5) 10.9%
P.O. Box 400
Orinda, CA 94563-0400
________________________________________________________________________________________
<FN>
(1) Asterisks represent less than 1% ownership.
(2) Includes options under the Company's 1993 Outside Directors Compensation and Stock
Option Plan which are exercisable on April 30, 1997, or within 60 days thereafter.
(3) Includes options under the Company's 1992 Stock Option Plan which are exercisable
on April 30, 1997, or within 60 days thereafter.
(4) Such shares are held of record by Incline Village Investment Group Limited
Partnership ("Incline Village, LP"), a Georgia limited partnership, of which
Leslie Kipus Wagner is the sole general partner. Leslie Kipus Wagner is the spouse
of Harvey E. Wagner. Such shares were contributed in 1996 to the Incline Village,
LP by Harvey E. Wagner in exchange for a 99% limited partnership interest. An
additional 37,462 shares, as to which Mr. Wagner disclaims beneficial ownership,
were contributed to the Incline Village, LP by Leslie Kipus Wagner, in exchange
for a 1% general partner interest. Subsequently, Mr. Wagner transferred
approximately one-half of his limited partnership interest in equal shares to
three trusts (the "Trusts"), whose beneficiaries are the children of Mr. Wagner.
Mr. Loo, a director of the Company and Ms. Wagner or the adult beneficiaries of
the Trusts, are the trustees of the Trusts. Mr. Wagner disclaims beneficial
ownership of the beneficial interests represented by the limited partnership
interest held by the Trusts. The Incline Village, LP has sole voting and
investment power with respect to all such shares.
(5) Mr. Keaton has sole voting and investment power with respect to all shares shown
as beneficially owned by him, subject to community property laws where applicable.
</FN>
</TABLE>
5
<PAGE> 9
Beneficial ownership as shown in the tables above has been determined in
accordance with Rule 13d-3 under the Exchange Act. Under this Rule, certain
securities may be deemed to be beneficially owned by more than one person
(such as where persons share voting power or investment power). In addition,
securities are deemed to be beneficially owned by a person if the person has
the right to acquire the securities (for example, upon exercise of an option
or the conversion of a debenture) within 60 days of the date as of which the
information is provided; in computing the percentage of ownership of any
person, the amount of securities outstanding is deemed to include the amount
of securities beneficially owned by such person (and only such person) by
reason of these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the preceding tables does not necessarily
reflect the person's actual voting power at any particular date.
EXECUTIVE OFFICERS
The names, ages, and principal occupations (if not set out previously) of
the current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
_____________________________________________________________________________________
Name Age Position
_____________________________________________________________________________________
<S> <C> <C>
Michael D. Thomas* .... 49 Chief Executive Officer
Raymond A. Allen III .. 37 Vice President
Jeffrey R. Hazarian* .. 41 Chief Financial Officer, Vice President of Finance,
and Corporate Secretary
Robert C. McKay, Jr. .. 45 Chief Operating Officer and Senior Vice President
Joe C. Turnage ........ 51 Senior Vice President
Kenneth S. Voss ....... 46 Vice President
_____________________________________________________________________________________
* Director of the Company.
</TABLE>
Raymond A. Allen III, 37, has served as Vice President of the Company
since his arrival at the Company in July 1996. Previously, Mr. Allen was
Vice President of Commercial Operations for ABB Environmental Services,
Inc. and was employed by ABB in various positions since 1984.
Joe C. Turnage, Ph.D., 51, has served as Senior Vice President of the
Company since his arrival at the Company in 1988.
Kenneth S. Voss, 46, has served as Vice President of Business
Development since his arrival at the Company in June 1996. Previously,
Mr. Voss was Vice President of Sales and Service at Software Professionals,
Inc. from 1992 to 1996, and General Manager for SHL Systemhouse, Inc. from
1981 to 1992.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following tables set forth certain information covering compensation
paid by TENERA to the Chief Executive Officer ("CEO") and each of the
Company's other executive officers, other than the CEO, whose total annual
salary and bonus exceeded $100,000 (the "named executive officers") for
services to TENERA in all their capacities during the fiscal years ended
December 31, 1996, 1995, and 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
________________________________________________________________________________________________________
Long-Term Compensation
------------------------
Annual Compensation Awards Payouts
--------------------- ---------- -----------
Securities
Underlying
Name and Options/ LTIP All Other
Principal Position Year Salary Bonus SARs (1) Payouts (2) Compensation (3)
________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Michael D. Thomas (4) .... 1996 $ 220,915 $ -- 55,000 $ -- $ 8,602
Chief Executive Officer 1995 $ 214,000 -- 25,000 -- $ 8,602
1994 -- -- 100,000 -- --
Joe C. Turnage ........... 1996 169,295 -- 45,000 -- 105,054 (5)
Senior Vice President 1995 170,000 -- 20,000 55,750 8,703
1994 158,100 -- 35,000 55,751 8,452
Robert C. McKay, Jr. ..... 1996 145,390 -- 28,000 -- 9,000
Chief Operating Officer 1995 169,030 -- 20,000 -- 9,000
1994 135,000 -- 70,000 -- 3,531
Jeffrey R. Hazarian ...... 1996 142,500 -- 27,000 -- 8,058
Chief Financial Officer 1995 142,192 -- 13,000 -- 8,058
1994 126,046 -- 20,000 -- 7,563
________________________________________________________________________________________________________
<FN>
(1) Reflects the number of options granted under the 1992 Stock Option Plan; no SARs have been issued.
(2) These amounts reflect forgiveness of certain indebtedness pursuant to notes executed by the
individual in payment for partnership units acquired pursuant to the Entrepreneurial Equity
Incentive Plan ("EEIP"). The EEIP was discontinued in March 1992.
(3) These amounts represent the amounts accrued for the Company's Profit Sharing/401(k) Plan for 1996,
1995, and 1994, respectively, and allocated to the named executive officers.
(4) Mr. Thomas was President of Teknekron Corporation until December 31, 1994. He assumed the position
of Chief Executive Officer of the Company in September 1994, for which he received no compensation.
(5) This amount includes forgiveness of interest from the repricing of indebtedness to the Company
incurred in connection with the purchase of company stock ($96,351) (see "Certain Relationships
and Related Transactions").
</FN>
</TABLE>
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors ("Committee") is made
up of only outside directors and oversees the Company's executive compensation
programs. The Committee oversees all elements of executive compensation
including base compensation, annual incentive bonuses, and long-term
incentives such as the Company's 1992 Stock Option Plan. The Committee
consults periodically with outside compensation and benefit consultants and
the Company's executive management regarding overall plan design and
competitively-based, as well as performance-based, individual targets and
awards. Annually, the Committee makes recommendations to the Board of
Directors for approval, but has the discretion to make mid-year
recommendations. In 1994, the Committee enlisted the assistance of
compensation and benefit consultants to review and make recommendations on
overall compensation philosophy and policy, as well as to make recommendations
on specific programs. Based on the consultant's recommendations, the Committee
recommended, and the Board of Directors adopted, an updated, competitively-
based and performance-oriented Executive Compensation Program for 1995. The
Committee continued this program during 1996.
Executive Compensation Philosophy. TENERA's overall executive compensation
philosophy is as follows:
- Attract, motivate, and retain executives of exceptional ability and
potential, who are critical to both the short-term and long-term success
of the Company
- Reinforce strategic performance objectives through the use of annual and
long-term incentive compensation programs
- Create a mutuality of interest between executives and shareholders
through compensation structures that share the rewards and risks of
strategic decision-making
- Provide executives with the opportunity to hold substantial stock options
in TENERA, to more closely align executives' interests with those of the
shareholders.
Base Compensation. The Committee's approach to base compensation is to
offer competitive salaries in comparison with market practices. Salary
determination is based on a combination of factors including evaluation of
compensation for executive positions within similar size and like companies
and the individual's past performance against established annual goal
attainment.
Annual Incentive Bonus Plans. The annual bonus program for executives and
top performing nonexecutives was established to promote teamwork and
cooperation, and the attainment of defined performance objectives. The target
bonus (from 25% to 40% of salary for executives) is linked to job grade,
corporate plan, and individual performance. Incentives are designed to reward
the achievement of significant, agreed-upon expectations, that contribute to
the achievement of key, company-wide business goals such as increased
profitability, improvement in contracted backlog, and improved margins. The
primary measure of bonus eligibility for each employee will be their level of
performance as measured against the mutually agreed upon performance
expectations for each year after company-wide performance has exceeded plan.
Long-Term Incentive Compensation. Executives and top performing
nonexecutives are eligible for stock option awards under the Company's 1992
Stock Option Plan. It is the Committee's philosophy that executive ownership
of substantial levels of stock options further aligns the executive's
interests with those of the shareholders.
The Committee, based on consultation with outside compensation consultants,
sets the target range of options to be granted to each individual executive
based primarily on job grades. The actual number of options granted are based
on performance against established annual corporate and individual goals. In
evaluating the performance of executives other than the Chief Executive
Officer, the Committee consults with the Chief Executive Officer and others in
management, as applicable. In evaluating the performance of the Chief
Executive Officer, the Committee consults with the Board of Directors.
Executive performance for each fiscal year is reviewed and evaluated by the
Committee following the end of such fiscal year. In an effort to attract and
retain highly qualified executives and other employees, stock options may also
be granted by the Committee to newly-hired executives and other employees as
an inducement to accept employment with the Company.
8
<PAGE> 12
1996 Compensation for the Chief Executive Officer. Beginning January 1,
1995, Mr. Thomas was paid a base salary of $214,000, based upon competitive
compensation market information for chief executives of similar companies
provided by outside compensation consultants. Effective February 1, 1996,
Mr. Thomas' base salary was increased by 4% to $223,000, which percentage
increase was consistent with annual increases received by other chief
executives of similar companies.
The 1996 annual bonus plan provided for the payment of bonuses to
executives only after business plan objectives are exceeded. No executive
bonuses were paid for 1996 performance because the business plan objectives
were not met.
In early 1996, the Committee undertook an evaluation of the performance of
the Chief Executive Officer in 1995 and granted an option for 55,000 shares of
Common Stock on February 1, 1996, at the then fair market value. Among the
1995 achievements considered by the Committee were, meeting the planned
operating results for 1995, establishing a new business group and the
recruiting of over 100 people at the Rocky Flats Environmental Technology Site
in Colorado, shifting the strategic focus toward the development of more
application software products, and implementation of the Conversion.
1996 Compensation for Other Executives. The salary and annual and long-term
incentives for the other executives were based upon competitive compensation
information provided by outside compensation consultants, and the
establishment and attainment of annual goals, as well as contributions made by
these individuals in helping the Company achieve its annual and long-term
goals, such as the implementation of the Conversion, continued cost control
attainment, the completion of the Company's "rightsizing" activities, and
meeting planned operating results for 1995.
Compensation Committee
Barry L. Williams, Chairman
William A. Hasler
Thomas S. Loo
9
<PAGE> 13
The following table sets forth certain information concerning options/SARs
granted during 1996 to the named executive officers:
<TABLE>
OPTIONS/SAR GRANTS IN 1996
<CAPTION>
_______________________________________________________________________________________________________________
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term (1)
---------------------------------------------------- --------------------------
Number of % of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise or
SARs Employees in Base Price Expiration
Name Granted Fiscal Year ($/Share) Date 5% 10%
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Michael D. Thomas ........ 55,000 14.05 $ 1.00 2/1/2002 $ 18,700 $ 42,400
Joe C. Turnage ............. 45,000 11.49 1.00 2/1/2002 15,300 34,700
Robert C. McKay, Jr. ..... 28,000 7.20 1.00 2/1/2002 9,500 21,600
Jeffrey R. Hazarian ........ 27,000 6.90 1.00 2/1/2002 9,200 20,800
_______________________________________________________________________________________________________________
<FN>
(1) Amounts reflect arbitrary rates of appreciation set forth in the Securities and Exchange Commission's
executive compensation disclosure rules. Actual gains, if any, on stock option exercises depend on future
performance of the Common Stock and overall stock market conditions. No assurance can be given that the
amounts reflected in these columns will be achieved.
</FN>
</TABLE>
OTHER COMPENSATION ARRANGEMENTS
Joe C. Turnage, Senior Vice President, executed an employment agreement
upon joining the Company in 1988. The employment agreement provided for
purchases of limited partnership units of the Predecessor Partnership by
Mr. Turnage at the fair market value upon the date of issuance, dependent upon
meeting various objectives set forth in the agreement. Pursuant to the
Agreement and the EEIP, Mr. Turnage purchased an aggregate of 289,371 limited
partnership units, the purchase price of which was payable by notes, which
notes were to be forgiven over specified periods, provided Mr. Turnage
remained in the employ of the Company. In late 1991, the terms of the EEIP
awards made to Mr. Turnage and others with similar arrangements, were modified
and the period over which the remaining balance of the notes was extended and
the conditions for future forgiveness modified. In 1996, these notes were
repriced to the then current fair market value of the stock held as security,
resulting in a special item charge (see "Certain Relationships and Related
Transactions"). The amount of indebtedness forgiven is included in the Summary
Compensation Table under the captions "LTIP Payouts." Mr. Turnage's employment
may be terminated at any time by the Company under the terms of the employment
agreement.
The 1992 Stock Option Plan provides that options may become exercisable over
such periods as provided in the agreement evidencing the option award. Options
granted to date, including options granted to executive officers and set forth
in the above tables, generally call for vesting over a four-year period. The
1992 Stock Option Plan provides that a change in control of the Company will
result in immediate vesting of all options granted and not previously vested.
10
<PAGE> 14
PERFORMANCE GRAPH
The Comparison Stock Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed under such Acts.
The graph compares the cumulative, five-year total return on the Company's
Common Stock with the Standard & Poor's Small Cap 600 Index and an index of
peer companies. The peer group consists of six other professional services and
information systems companies which provide services and products similar to
that of TENERA. The companies included in the peer group are COMARCO, Inc.;
STV Group, Inc.; TRC COS, Inc.; URS Corp.; VSE Corp.; and Ray F. Weston, Inc.
Information concerning the peer group and the Standard & Poor's Small Cap 600
Index was supplied to the Company by Standard & Poor's Compustat, a division
of the McGraw-Hill Companies.
[PERFORMANCE GRAPH]
<TABLE>
[TABULAR DATA IN PLACE OF PERFORMANCE GRAPH]
<CAPTION>
__________________________________________________________________________________________________
Indexed Returns
-----------------------------------------------------
Year Ending December 31,
------------------------------------------------------------------
Base
Period
Company Name/Index 1991 1992 1993 1994 1995 1996
__________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
TENERA, Inc. ............. 100 $ 66.67 $ 73.33 $ 36.64 $ 49.97 $ 36.64
S&P Small Cap 600 Index .. 100 121.04 143.78 136.92 177.94 215.88
Peer Group ............... 100 92.76 70.51 66.16 77.82 80.50
__________________________________________________________________________________________________
</TABLE>
(1) Assumes $100 invested on January 1, 1992 in TENERA, L.P. (the Company's
"Predecessor Partnership"), S&P Small Cap 600 Index, and the Peer
Group, and any dividends that were reinvested.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Compensation Committee was composed of Susan T. Cheng,
William A. Hasler, and Barry L. Williams. Susan T. Cheng was Treasurer and
Vice President of Teknekron Corporation until February 1, 1997. (See "Certain
Relationships and Related Transactions.")
11
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain members of management or shareholders of the Company have certain
direct or indirect interests in certain transactions involving the Company,
separate from their interests as shareholders, as follows:
(i) The Company had made certain loans to various employees, including
officers, generally pursuant to employee benefit plan(s) and generally in
connection with the purchase of stock or units. In making loans to
officers, the Company held the stock as collateral securing the repayment
for such loans. In December 1996, certain terms of the note related to the
purchase of stock by an executive officer (Mr. Turnage) in 1988 were
renegotiated to provide for a purchase price adjustment on the stock
securing the note balance and a corresponding reduction in the note
balance. The remaining balance of the note was paid off by the transfer to
the Company of the stock purchased by Mr. Turnage in 1988 at the fair
market value of the stock as reported on AMEX at the date of the transfer.
As a result, a charge of approximately $300,000 was made in 1996 to adjust
the price of the stock to the then current fair market value. As of
December 31, 1996, the Company had no notes receivable from its executive
officers. The largest amount outstanding during 1996 was $347,639.
(ii) Susan T. Cheng, a director of the Company until her resignation in
February 1997, was Treasurer and Vice President of Teknekron Corporation
until February 1, 1997. Harvey E. Wagner, is the beneficial owner of
approximately 50% of the limited partnership interests in Incline Village,
LP, the Company's largest stockholder, and also is the sole stockholder and
a director of Teknekron Corporation.
(iii) Thomas S. Loo, a director of the Company since February 7, 1997,
is a partner in the law firm of Bryan Cave LLP, general counsel to the
Company and Teknekron Corporation, and is a director of Teknekron
Corporation.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 1997. Ernst & Young
LLP or its predecessor has audited the Company's financial statements since
1985. Representatives of Ernst & Young LLP, expected to be at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2
SHAREHOLDER PROPOSALS FOR 1998
Proposals of shareholders that are intended to be presented at the
Company's 1998 Annual Meeting of Shareholders must be received by the Company
no later than December 31, 1997. Such proposals may be included in next year's
Proxy Statement if they comply with certain rules and regulations promulgated
by the Securities and Exchange Commission.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors, and more than ten percent shareholders are
required by Securities and Exchange Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
12
<PAGE> 16
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during 1996, its officers, directors, and more than ten percent
beneficial owners complied with all filing requirements applicable to them.
ANNUAL REPORT TO SHAREHOLDERS
The Company's 1996 Annual Report was previously distributed to
shareholders.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
Annual Meeting, but if any other matters should properly come before the
meeting, it is intended that the persons named in the accompanying proxy will
vote the same in accordance with their best judgment.
By Order of the Board of Directors
/s/ JEFFREY R. HAZARIAN
------------------------------------
Jeffrey R. Hazarian
Director, Chief Financial Officer,
Vice President of Finance, and
Corporate Secretary
San Francisco, California
May 30, 1997
13
<PAGE> 17
ANNEX A
FORM OF PROXY CARD
FRONT OF PROXY CARD
PROXY
TENERA, INC.
PROXY for 1997 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TENERA, INC.
The undersigned shareholder of TENERA, Inc., a Delaware corporation (the
"Company"), hereby appoints Jeffrey R. Hazarian and Michael D. Thomas as the
undersigned's proxies, each with full power of substitution to attend and act
for the undersigned at the Annual Meeting of Shareholders of the Company to be
held on Monday, June 30, 1997 at 1:30 p.m., local time, at the One Market
building, Spear Tower, Fourth Floor, One Market Street, San Francisco,
California, and any adjournments thereof, and to represent and vote as
designated on the other side, all of the shares of Common Stock of the Company
that the undersigned would be entitled to vote.
The proxies, and each of them, shall have all the powers that the
undersigned would have if acting in person. The undersigned hereby revokes any
other proxy to vote at the Annual Meeting and hereby ratifies and confirms all
that the proxies, and each of them, may lawfully do by virtue hereof. With
respect to matters not known at the time of the solicitation of this proxy,
the proxies are authorized to vote in accordance with their best judgment.
The proxies present at the Annual Meeting, either in person or by
substitute (or if only one shall be present and act, then that one), shall
vote the shares represented by this proxy in the manner indicated on the other
side by the undersigned. IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED ON
THIS PROXY, IT WILL BE VOTED FOR ITEMS 1 AND 2 SHOWN ON THE OTHER SIDE.
<PAGE> 18
BACK OF PROXY CARD
<TABLE>
<CAPTION>
Please mark -------
your votes as | |
indicated in | X |
this example. -------
Management recommends a vote FOR ALL of the nominees in Item 1.
<S> <C> <C> <C>
WITHHOLD WITHHOLD
FOR all AUTHORITY AUTHORITY
of the to vote for all of to vote for
nominees the nominees as one nominee as
listed below indicated below indicated below
Item 1. Election of Directors: ---------- ---------- ----------
(INSTRUCTION: TO WITHHOLD AUTHORITY | | | | | |
TO VOTE FOR ANY NOMINEE, DRAW A LINE | | | | | |
THROUGH THAT NOMINEE'S NAME BELOW) ---------- ---------- ----------
Robert C. McKay, Jr. -- Class I
Thomas S. Loo -- Class II
Barry L. Williams -- Class II
</TABLE>
<TABLE>
<CAPTION>
Management recommends a vote FOR Item 2.
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
Item 2. Ratification of the appointment of Ernst & Young LLP as ------- ------- -------
independent auditors for the Company for the year end- | | | | | |
ing December 31, 1997 ------- ------- -------
</TABLE>
Signature of Shareholder(s) __________________________ Date: ________ , 1997
IMPORTANT: In signing this proxy, please sign you name or names on the
signature line in the same way as stenciled on this proxy. When signing as an
attorney, executor, administrator, trustee or guardian, please give your full
title as such. EACH JOINT OWNER MUST SIGN.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE-PAID
ENVELOPE PROVIDED
