<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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- -----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------------------
(5) Total fee paid:
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<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:
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(2) Form, Schedule, or Registration Statement No.:
- -----------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<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 29, 1998
_________________________________
TO OUR SHAREHOLDERS
You are cordially invited to the Annual Meeting of Shareholders of TENERA,
Inc. (the "Company") which will be held at 1:00 p.m. (local time) on Monday,
June 29, 1998, 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 four (4) 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, 1998
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 26, 1998, 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/ ROBERT C. MCKAY
--------------------------------
Robert C. McKay
President and Chief Executive Officer
May 29, 1998
<PAGE> 4
Mailed to shareholders on
or about June 5, 1998
TENERA, INC.
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of TENERA, Inc. ("TENERA" or the "Company"),
a Delaware corporation, for use at the 1998 Annual Meeting of Shareholders
("Annual Meeting") to be held at 1:00 p.m. (local time) on Monday, June 29,
1998, 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.
Each shareholder of record of Common Stock of the Company ("Common Stock")
on May 26, 1998 ("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 26, 1998, 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, one (1) Class II director,
and two (2) Class III directors of the Company are to be elected to serve
until the annual meeting in 1999, 2000, and 2001, 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 four (4) nominees of the Board of Directors named
below. The Board of Directors has nominated Delbert F. Bunch to serve a one-
year term ending in 1999, Andrea R. Wagner to serve a two-year term ending in
2000, and Jeffrey R. Hazarian and George L. Turin to serve for three-year
terms ending in 2001. Messrs. Hazarian and Turin currently serve as Class III
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
current 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 MS. WAGNER AND
MESSRS. BUNCH, HAZARIAN, AND TURIN 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>
Delbert F. Bunch ...... 56 Nominee Director -- I 1999
William A. Hasler ..... 56 Director 1992 I 1999
Robert C. McKay ....... 46 Director, President and 1997 I 1999
Chief Executive Officer
Thomas S. Loo ......... 54 Director 1997 II 2000
Andrea R. Wagner ...... 27 Nominee Director -- II 2000
Jeffrey R. Hazarian ... 42 Director, Executive 1996 III 1998
Vice President, Chief
Financial Officer, and
Corporate Secretary
George L. Turin ....... 68 Director 1995 III 1998
_____________________________________________________________________________________
</TABLE>
Except as set forth below, both of the director nominees and each of the
other five 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.
Delbert F. Bunch, 56, has been nominated to serve as a Director of the
Company. He previously served as a Senior Vice President of the Company's
predecessor, TENERA, L.P. (the "Predecessor Partnership"), from 1988 to
1991. Mr. Bunch has been President, since 1992, of Management Strategies,
Inc., a private consulting firm to the commercial and U.S. government
nuclear industry. Mr. Bunch was the Principal Deputy Assistant Secretary
for Nuclear Energy, U.S. Department of Energy from 1983 to 1988.
William A. Hasler, 56, 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. Prior to his
appointment as Dean in 1991, Mr. Hasler was Vice Chairman of Management
Consulting for
2
<PAGE> 6
KPMG Peat Marwick from 1986 to 1991. Mr. Hasler is also a director of Asia
Pacific Wire and Cable Corporation, LTD., Aphton Corporation, Walker
Systems, and TCSI Corporation.
Jeffrey R. Hazarian, 42, has served as a Director of the Company since
his election in October 1996, and was named its Executive Vice President in
November 1997. He has also served as its Chief Financial Officer and
Corporate Secretary since 1992. Previously, Mr. Hazarian held the position
of Vice President of Finance from 1992 to 1997.
Thomas S. Loo, Esq., 54, 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, 46, has served as a Director of the Company since his
election in June 1997, and was appointed its President and Chief Executive
Officer in November 1997. Previously, Mr. McKay was Chief Operating Officer
of the Company since April 1997. He was elected Senior Vice President of
the Company in December 1992.
George L. Turin, Sc.D., 68, 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.
Andrea R. Wagner, 27, has been nominated to serve as a Director of the
Company. Ms. Wagner is an Applications Marketing Coordinator for Oracle
Corporation. Prior to her joining Oracle Corporation in 1996, Ms. Wagner
was Marketing Coordinator, Latin America, for TIBCO, a Reuters Company,
from 1993 to 1995.
BOARD MEETINGS, COMMITTEES, AND DIRECTOR COMPENSATION
The Board of Directors held eighteen (18) meetings during 1997. 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, Thomas S. Loo, and since December 1997,
George L. Turin. 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 three (3)
times during 1997.
The Board of Directors has an Audit Committee, currently composed of three
members, William A. Hasler, Jeffrey R. Hazarian, and 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 four (4) times during 1997.
The Board of Directors has a Nominating Committee, currently composed of
two members, George L. Turin and Thomas S. Loo. The Nominating Committee is
responsible for support of the Board's director nomination process. Although
there were no formal meetings, the Nominating Committee met informally several
times during 1997.
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, and George L. Turin, as non-employee directors,
3
<PAGE> 7
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
meeting held on separate days, 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 1995, 1996, and 1997, 15,000, 12,500, and 8,000 stock
options, respectively, were issued to each of Messrs. Hasler, Turin, and Barry
L. Williams (resigned in December 1997). Additionally, Mr. Loo was granted
8,000 stock options in February 1997. 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 May 20, 1998, 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(1) Percent (2)
________________________________________________________________________________________
<S> <C> <C>
William A. Hasler ..................................... 65,500 (3) *
Jeffrey R. Hazarian ................................... 89,186 (4) *
Thomas S. Loo ......................................... 8,000 (3) *
Robert C. McKay ....................................... 143,289 (4) 1.4%
Michael D. Thomas (5) ................................. 21,400 *
George L. Turin ....................................... 81,004 (3) *
Joe C. Turnage (5) .................................... 23,237 (4) *
Kenneth S. Voss (5) ................................... 0 *
---------------- ------------
All Directors and Executive Officers as a
Group (8 persons) ..................................... 431,616 (3)(4) 4.3%
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) The persons named above have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, subject to community
property laws where applicable.
(2) Asterisks represent less than 1% ownership.
(3) Includes options under the Company's 1993 Outside Directors Compensation and Stock
Option Plan which are exercisable on May 20, 1998, or within 60 days thereafter.
(4) Includes options under the Company's 1992 Stock Option Plan which are exercisable
on May 20, 1998, or within 60 days thereafter.
(5) Messrs. Thomas, Voss, and Turnage resigned from the Company in November 1997.
(6) Such shares are held of record by Incline Village Investment Group Limited
Partnership, a Georgia limited partnership, and were contributed to the Incline
Village Investment Group Limited Partnership by Mr. 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 Investment
Group Limited Partnership by Mr. Wagner's spouse, Leslie Wagner, in exchange for a
1% general partner interest. The Incline Village Investment Group Limited
Partnership has sole voting and investment power with respect to all such shares.
(7) 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>
Beneficial ownership as shown in the tables above has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934. 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,
5
<PAGE> 9
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>
Robert C. McKay* ...... 46 President and Chief Executive Officer
Jeffrey R. Hazarian* .. 42 Executive Vice President, Chief Financial Officer, and
Corporate Secretary
_____________________________________________________________________________________
* Director of the Company.
</TABLE>
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, 1997, 1996, and 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
____________________________________________________________________________________________________________
Long-Term Compensation
------------------------
Annual Compensation Awards Payouts
--------------------- ---------- -----------
Securities
Name and Underlying LTIP All Other
Principal Position Year Salary Bonus Options(1) Payouts(2) Compensation(3)
____________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Robert C. McKay .......... 1997 $ 179,375 $ 2,179 90,000 $ -- $ --
President and 1996 145,390 -- 28,000 -- 8,777
Chief Executive Officer 1995 169,030 -- 20,000 -- 9,000
Michael D. Thomas (4) .... 1997 204,417 -- -- -- --
Chief Executive Officer 1996 220,915 -- 55,000 -- 9,000
1995 214,000 -- 25,000 -- 8,602
Joe C. Turnage (4) ....... 1997 171,650 5,007 25,000 -- --
Senior Vice President 1996 169,295 -- 45,000 -- 105,351 (5)
1995 170,000 -- 20,000 55,750 8,703
Jeffrey R. Hazarian ...... 1997 145,875 25,000 -- -- --
Executive Vice President 1996 142,500 -- 27,000 -- 8,586
and Chief Financial 1995 142,192 -- 13,000 -- 8,058
Officer
Kenneth S. Voss (4) ...... 1997 123,750 60,000 (6) 50,000 -- --
Senior Vice President 1996 70,096 -- -- -- 3,375
1995 -- -- -- -- --
____________________________________________________________________________________________________________
<FN>
(1) Reflects options granted under the 1992 Stock Option Plan. The options expire at the earlier of the
end of the option period or three months after employment termination.
(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) Except as indicated in Note 5, these amounts represent the amounts accrued for the Company's Profit
Sharing/401(k) Plan for 1996 and 1995, respectively, and allocated to the named executive officers.
(4) Messrs. Thomas, Voss, and Turnage resigned from the Company in November 1997.
(5) This amount includes forgiveness of interest from the repricing of indebtedness to the Company
incurred in connection with the purchase of common stock ($96,351) (see "Other Compensation
Arrangements.").
(6) Amount reflects sales commissions paid in 1997.
</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. In 1995, 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,
the base elements of which are set forth below. The Committee continued this
program during 1997.
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 (generally ranging from 25% to 40% of salary for executives) is
generally linked to job grade, corporate plan, and/or individual performance.
Incentives are designed to reward the achievement of significant, agreed-upon
expectations, that contribute to the achievement of key, Company- and/or
subsidiary-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- and/or subsidiary-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 sets the target range of options to be granted to each
individual executive based primarily on the level of responsibilities. The
actual number of options granted are based on performance against established
annual corporate, subsidiary, 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
8
<PAGE> 12
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.
1997 Compensation for the Chief Executive Officer. Mr. Thomas was paid a
salary of $204,417 ($223,000 base salary set in 1996), based upon competitive
compensation market information for chief executives of similar companies. Mr.
Thomas resigned from the Company in November 1997.
In November 1997, Mr. McKay was appointed Chief Executive Officer at a base
salary of $200,000, based upon competitive compensation market information for
chief executives of similar companies.
1997 Compensation for Other Executives. The salary and annual and long-term
incentives for the other executives were based upon competitive compensation
information and the establishment and attainment of annual Company- and/or
subsidiary-wide goals, as well as level of job resonsibilities, contributions
made by these individuals in helping the Company and/or subsidiaries,
achievement of their annual and long-term goals, continued cost control
attainment, and meeting planned operating results for 1997.
The 1997 annual bonus plan provided for the payment of bonuses to
executives only after business plan objectives are exceeded. No bonuses were
paid in 1997 based upon achievement of Company-wide performance objectives, as
such objectives were not met. Mr. Hazarian was paid a $25,000 bonus related to
his activities in the sale of the business assets of the Company's
technologies subsidiary. Management of the Company's energy and government
services subsidiaries were also paid bonuses reflective of their achievement
of the subsidiaries' 1997 business plan objectives.
Compensation Committee
William A. Hasler, Chairman (Acting)
Thomas S. Loo
George L. Turin
9
<PAGE> 13
The following table sets forth certain information concerning options
granted during 1997 to the named executive officers:
<TABLE>
OPTION GRANTS IN 1997
<CAPTION>
___________________________________________________________________________________________________________________
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
---------------------------------------------------- --------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/Share) Date 5% 10%
___________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Robert C. McKay ........... 40,000 9.52 $ 0.70 3/12/2003 $ 9,523 $ 21,604
50,000 11.90 0.65 5/01/2003 11,053 25,076
Michael D. Thomas ......... -- -- -- -- -- --
Joe C. Turnage ............ 25,000 5.95 0.70 2/14/1998 (1) 802 1,604
Jeffrey R. Hazarian ....... -- -- -- -- -- --
Kenneth S. Voss ........... 50,000 11.90 0.70 2/14/1998 (1) 1,604 3,208
___________________________________________________________________________________________________________________
<FN>
(1) Options generally vest over a four-year period and expire at the earlier of the end of the option period or
three months after employment termination.
</FN>
</TABLE>
OTHER COMPENSATION ARRANGEMENTS
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.
Other than as set forth below for Messrs. McKay and Turnage, the Company
has no employement contracts or arrangements for its executive officers.
Mr. McKay, upon appointment to Chief Operating Officer in early 1997, was
granted a retention bonus arrangement, amounting to $100,000, dependent upon
his continued employment through June 30, 1998.
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 (of $300,419). The amount of indebtedness
forgiven is included in the Summary Compensation Table under the captions
"LTIP Payouts." Mr. Turnage resigned from the Company in November 1997.
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 Roy 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 1992 1993 1994 1995 1996 1997
__________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
TENERA, Inc. ............. 100 $ 110.00 $ 54.96 $ 74.96 $ 54.96 $ 64.96
S&P Small Cap 600 Index .. 100 118.79 113.12 147.01 178.35 223.98
Peer Group ............... 100 76.01 71.33 83.89 86.78 110.25
__________________________________________________________________________________________________
<FN>
(1) Assumes $100 invested on December 31, 1992, in TENERA, S&P Small Cap 600 Index, and the Peer
Group, and any dividends that were reinvested.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Compensation Committee was composed of Thomas S. Loo,
William A. Hasler, Barry L. Williams (until his resignation in December 1997),
and George L. Turin (since December 1997). 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. Harvey E. Wagner is the beneficial owner of
approximately 50% of the limited partnership interests in Incline Village
Investment Group Limited Partnership, the Company's largest stockholder and is
the sole stockholder and a director of Teknekron Corporation.
11
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Nominee Director, Andrea R. Wagner, is the daughter of Harvey E. Wagner.
See "Compensation Committee Interlocks and Insider Participation."
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, 1998. 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 1999
Proposals of shareholders that are intended to be presented at the
Company's 1999 Annual Meeting of Shareholders must be received by the Company
no later than December 31, 1998. 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.
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 1997, 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 1997 Annual Report was previously distributed to
shareholders.
12
<PAGE> 16
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, Executive Vice President,
Chief Financial Officer, and
Corporate Secretary
San Francisco, California
May 29, 1997
13
<PAGE> 17
ANNEX A
FORM OF PROXY CARD
FRONT OF PROXY CARD
PROXY
TENERA, INC.
PROXY for 1998 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 Robert C. McKay 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 29, 1998 at 1:00 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) ---------- ---------- ----------
Delbert F. Bunch -- Class I
Andrea R. Wagner -- Class II
Jeffrey R. Hazarian -- Class III
George L. Turin -- Class III
</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, 1998 ------- ------- -------
</TABLE>
Signature of Shareholder(s) __________________________ Date: ________ , 1998
IMPORTANT: In signing this proxy, please sign your 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
