CERBCO, Inc.
3421 Pennsy Drive
Landover, Maryland 20785
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, DECEMBER 8, 2000
To the Stockholders of CERBCO, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
CERBCO, Inc., a Delaware corporation (the "Company"), for the fiscal year ended
June 30, 2000, will be held at the Club Hotel by Doubletree, 9100 Basil Court,
Landover, Maryland, on Friday, December 8, 2000, at 9:00 a.m. local time, for
the following purposes:
1. Proposal 1: To elect directors of the Company;
2. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors has fixed the close of business on October 12,
2000, as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2000, a Proxy, and a Proxy Statement accompany this Notice.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN,
DATE AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES. A PROMPT RESPONSE WILL ASSURE YOUR
PARTICIPATION IN THE MEETING AND REDUCE THE COMPANY'S EXPENSE IN SOLICITING
PROXIES. IF YOU ARE PRESENT AT THE MEETING, YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY AND VOTE YOUR SHARES PERSONALLY.
By Order of the Board of Directors,
/s/ Robert F. Hartman
Robert F. Hartman
Secretary
Landover, Maryland
October 30, 2000
<PAGE>
CERBCO, Inc.
3421 Pennsy Drive
Landover, Maryland 20785
Annual Meeting of Stockholders to be Held
December 8, 2000
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of CERBCO, Inc., a Delaware corporation
("CERBCO" or the "Company"), for use at the Annual Meeting of Stockholders to be
held at the Club Hotel by Doubletree, 9100 Basil Court, Landover, Maryland, on
Friday, December 8, 2000, at 9:00 a.m. local time, and at any adjournments
thereof (the "Meeting").
The Board of Directors (the "Board") has fixed the close of business on
October 12, 2000, as the record date (the "Record Date") for the determination
of stockholders who are entitled to notice of, and to vote at, the Meeting.
Stockholders are requested to complete, sign and date the enclosed
proxy and return it promptly to the Company in the enclosed envelope. If the
enclosed proxy is executed and returned, it may be revoked at any time before it
is voted at the Meeting by a written notice of revocation to the Secretary of
the Company, or by executing a proxy bearing a later date, or by voting at the
Meeting.
Shares of Common Stock and shares of Class B Common Stock represented
by valid proxies received in time for the Meeting, and not revoked, will be
voted as specified therein. If no instructions are given, the respective shares
of common stock will be voted as follows: (i) FOR the election as director of
the Company that nominee for director designated for election by the holders of
Common Stock and listed under the caption "Proposal No. 1 - Election of
Directors" herein; (ii) FOR the election as directors of the Company those
nominees for director designated for election by the holders of Class B Common
Stock and listed under the caption "Proposal No. 1 - Election of Directors"
herein; and (iii) if authority is given to them, at the discretion of the proxy
holders, on any other matters that may properly come before the Meeting.
The cost of solicitation will be borne by the Company. Additional
solicitations may be made by mail, telephone, telegraph, personal contact or
other means by the Company or by its directors or regular employees. The Company
may make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy statements to the beneficial owners of
shares of the Company's common stock and to reimburse them for their reasonable
expenses in so doing.
This Proxy Statement and the accompanying Notice of Annual Meeting,
Proxy and Annual Report on Form 10-K for the fiscal year ended June 30, 2000 are
first being mailed to the Company's stockholders of record on or about October
30, 2000.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the Record Date, there were outstanding 1,482,956 shares,
comprised of 1,189,476 shares of Common Stock, $.10 par value (the "Common
Stock"), and 293,480 shares of Class B Common Stock, $.10 par value (the "Class
B Common Stock"), which are the only classes of stock of the Company
outstanding. A quorum shall be constituted by the presence at the Meeting of
one-third (1/3) of the outstanding shares of Common Stock, or 396,492 of such
shares, and one-third (1/3) of the outstanding shares of Class B Common Stock,
or 97,827 of such shares.
Each share of Common Stock is entitled to one vote, and each share of
Class B Common Stock is entitled to ten votes, except with respect to the
election of directors and any other matter requiring the vote of Common Stock or
Class B Common Stock separately as a class. The holders of Common Stock, voting
as a separate class, are entitled to elect that number of directors which
constitutes 25% of the authorized number of members of the Board of Directors
and, if such 25% is not a whole number, then the holders of Common Stock are
entitled to elect the nearest higher whole number of directors that is at least
25% of such membership. The holders of Class B Common Stock, also voting as a
separate class, are entitled to elect the remaining directors. The affirmative
vote of the holders of a majority of each class of common stock present in
person or represented by proxy, provided a quorum of that class is present, is
necessary for the election of directors by the class. For purposes of
determining whether a proposal has received a majority vote, abstentions will be
included in the vote totals with the result that an abstention will have the
same effect as a negative vote. Where authority to vote shares is withheld,
including instances where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not returned a proxy (so-called "broker
non-votes"), those shares will not be included in the vote totals and,
therefore, will have no effect on the vote.
The following information is furnished with respect to each person or
entity who is known to the Company to be a beneficial owner of more than five
percent of any class of the Company's voting securities as of the Record Date:
<TABLE>
<CAPTION>
Amount and Nature of
Name & Address of Beneficial Owner Title of Class Beneficial Ownership Percent of Class
---------------------------------- -------------- -------------------- ----------------
<S> <C> <C> <C>
Robert W. Erikson Common Stock 60,700 1/ 5.1%
3421 Pennsy Drive Class B Common Stock 131,750 1/ 44.9%
Landover, MD 20785
George Wm. Erikson Common Stock 59,602 2/ 5.0%
3421 Pennsy Drive Class B Common Stock 115,814 2/ 39.5%
Landover, MD 20785
Schaenen Capital Management, LLC Common Stock 165,000 3/ 13.9%
200 Park Avenue, Suite 3900
New York, NY 10166
1/ Record and beneficial ownership, sole voting and sole investment power.
2/ Record and beneficial ownership. Includes 2,246 shares of each class of
stock owned jointly with Mr. Erikson's spouse, as to which there is shared
voting and investment power.
3/ Beneficial ownership, sole voting and sole investment power as publicly
disclosed in Form 4 filed on February 14, 2000 with the U.S. Securities and
Exchange Commission.
</TABLE>
The following information is furnished with respect to all directors of
CERBCO who were the beneficial owners of any shares of Common Stock and/or Class
B Common Stock as of the Record Date, and with respect to all directors and
officers of CERBCO as a group:
<TABLE>
<CAPTION>
Amount & Nature of Beneficial Ownership
Name of Beneficial Owner Title of Class Owned Outright Exercisable Options Percent of Class
------------------------ -------------- -------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Robert W. Erikson Common Stock 60,700 1/ 15,000 6.1%
Class B Common Stock 131,750 1/ 0 44.9%
George Wm. Erikson Common Stock 59,602 2/ 15,000 6.0%
Class B Common Stock 115,814 2/ 0 39.5%
Webb C. Hayes, IV Common Stock 4,500 15,000 1.6%
Paul C. Kincheloe, Jr. Common Stock 7,500 15,000 1.8%
All Directors and Officers as a Group (5 persons Common Stock 132,302 60,000 15.4%
Including those named above) 3/ Class B Common Stock 247,564 0 84.4%
1/ Record and beneficial ownership, sole voting and sole investment power.
2/ Record and beneficial ownership. Includes 2,246 shares of each class of
stock owned jointly with Mr. Erikson's spouse, as to which there is shared
voting and investment power.
3/ Mr. George Erikson also is the beneficial owner of 16,500 shares of Common
Stock (less than 1% of such class) of Insituform East, Incorporated, a
subsidiary of the Company. In addition, Messrs. George Erikson and Robert
Erikson each are the beneficial owners of exercisable options on 75,000
shares of the Common Stock (approximately 1.7% of such class) of Insituform
East, Incorporated, pursuant to the Insituform East 1994 and 1999 Board of
Directors' Stock Option Plans.
</TABLE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The authorized number of directorships of the Board of Directors is
four. Four directors are presently serving. Accordingly, in accordance with the
Company's Certificate of Incorporation and By-laws, the Board has nominated one
director to be elected by the holders of shares of Common Stock and three
directors to be elected by holders of shares of Class B Common Stock. The terms
of all presently serving directors expire upon the election and qualification of
the directors to be elected at the Meeting, and the four persons presently
serving as directors are all nominees to be elected at the Meeting. The
directors elected will serve subject to the Company's By-laws until the next
Annual Meeting of Stockholders for the fiscal year ending June 30, 2001 and
until their respective successors shall have been duly elected and qualified.
It is intended that the individuals named in the enclosed form of proxy
will vote their proxies in favor of the election of the persons listed below as
the Board's nominees for the Company's directors, unless otherwise directed. The
Board has no reason to believe that any of the nominees for the office of
director will not be available for election as director. However, should any of
them become unwilling to be elected or unable to serve, it is intended that the
individuals named in the enclosed proxy may vote for the election of such other
person as the Board may recommend.
PRESENT DIRECTORS WHO ARE NOMINATED FOR RE-ELECTION
One of the four nominees for election to the Board of Directors
identified below has been designated for election by the holders of shares of
Common Stock, and only the holders of such shares may vote with respect to such
nominee. The remaining three nominees have been designated for election by the
holders of shares of Class B Common Stock, and only the holders of such shares
may vote with respect to such nominees. Accordingly, the following list contains
a designation as to that nominee to be elected by holders of shares of Common
Stock and those nominees to be elected by holders of shares of Class B Common
Stock:
<TABLE>
<CAPTION>
First Became Class of Common Stock
Name, Age, Principal Occupation, Business Experience and Directorships A Director for Which Nominated
---------------------------------------------------------------------- ---------- -------------------
<S> <C> <C>
Robert W. Erikson, Age 55 2/ 3/ 1974 1/ Class B Common Stock
President and a Director of CERBCO since 1988; Insituform
East, Inc. - Vice Chairman since 1986 and President since
1991, a Director since 1985 and Vice Chairman of the Board
of Directors from 1985 to 1986; CERBERONICS, Inc. - a
Director since 1974, Chairman since 1988, and President from
1977 to 1988; a Director of Palmer National Bancorp, Inc.
and The Palmer National Bank from 1983 to 1996, and a
Director of The Palmer National Bank's successor, The George
Mason Bank, N.A., from 1996 to 1997; Capitol Office
Solutions, Inc. - Vice Chairman and a Director from 1987 to
June 30, 1997.
George Wm. Erikson, Age 58 2/ 3/ 1975 1/ Class B Common Stock
Chairman, General Counsel and a Director of CERBCO since
1988; Insituform East, Inc. - Chairman and General Counsel
since 1986, a Director since 1984 and Chairman of the Board
of Directors from 1985 to 1986; CERBERONICS, Inc. - a
Director since 1975, General Counsel since 1976, Chairman
from 1979 to 1988, and Vice Chairman since 1988; Capitol
Office Solutions, Inc. - Chairman, General Counsel and a
Director from 1987 to June 30, 1997.
Webb C. Hayes, IV, Age 52 4/ 1991 Class B Common Stock
Managing Director of Private Client Services at Friedman,
Billings, Ramsey Group, Inc. Director and Vice Chairman of
United Bank from June 1997 to May 1999. Director and
Executive Vice President of George Mason Bankshares, Inc.
and Chairman, President and CEO of The George Mason Bank,
N.A., from 1996 to 1997; Chairman of the Board of Palmer
National Bancorp, Inc. and The Palmer National Bank from
1985 to 1996, President and Chief Executive Officer from
1983 to 1996; Insituform East, Inc. - a Director since 1994;
Capitol Office Solutions, Inc. - a Director from 1992 to
June 30, 1997; a Director of the Federal Reserve Bank of
Richmond from 1992 to 1995.
Paul C. Kincheloe, Jr., Age 59 4/ 1991 Common Stock
Practicing attorney and real estate investor since 1967;
Partner in the law firm of Kincheloe and Schneiderman since
1983; Insituform East, Inc. - a Director since 1994; Capitol
Office Solutions, Inc. - a Director from 1992 to June 30,
1997; Director of Herndon Federal Savings & Loan from 1970
to 1983; Director of First Federal Savings & Loan of
Alexandria from 1983 to 1989.
1/ Includes service as a director of CERBERONICS, Inc., now a wholly-owned
subsidiary of the Company.
2/ Member of the Corporate Executive Committee of the Company, and the Chief
Executive Officer Committee of Insituform East, Incorporated, which
committees perform the functions of the Chief Executive Officer of each of
the respective companies.
3/ Messrs. Robert Erikson and George Erikson are brothers.
4/ Member of the Audit Committee.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
AND MEETING ATTENDANCE
The Board of Directors has an Audit Committee, the members of which are
all outside directors. The names of the committee's members are indicated in the
table above. The Board of Directors does not have standing nominating or
compensation committees, or committees performing similar functions.
The Audit Committee, among its functions, reviews the Company's
financial policies and accounting systems and controls, reviews the scope of the
independent public accountants' audit and approves the duties and compensation
of the independent public accountants, both with respect to audit and any
non-audit services. The non-management members of the Audit Committee consult
with the independent public accountants outside the presence of corporate
management or other employees to discuss matters of concern, receive
recommendations or suggestions for change and have a free exchange of views and
information.
During the fiscal year ended June 30, 2000, the Board of Directors of
the Company held eight meetings and the Audit Committee held two meetings. Each
of the Company's directors attended 75% or more of the total of (i) the number
of meetings of the Board of Directors and (ii) the number of meetings held by
all committees of the Board on which such Director served during the fiscal year
ended June 30, 2000.
EXECUTIVE COMPENSATION
COMPENSATION REPORT BY THE BOARD OF DIRECTORS
GENERAL
CERBCO, Inc. ("CERBCO" or the "Company") is a parent holding company
which, through its wholly-owned subsidiary, CERBERONICS, Inc. ("CERBERONICS"),
holds a controlling interest in Insituform East, Incorporated ("Insituform
East") [excavationless sewer and pipeline rehabilitation].
The Company does not have a compensation committee. The Corporate
Executive Committee (the "CEC")(1), with the annual review and oversight of the
Board, determines the base salary for all officers of the Company except the
members of the CEC. The Board, as a whole, considers compensation arrangements
proposed by and for members of the CEC and, pursuant to the By-laws, is the
ultimate determiner of compensation arrangements for members of the CEC. When
considering CEC compensation arrangements, a portion of Board review may be
conducted in camera, excluding CEC members, and resolutions of the Board
determining CEC compensation arrangements typically are voted upon twice, once
with CEC members abstaining.
(1) Pursuant to the Company's By-laws, the CEC performs the functions of the
Chief Executive Officer of the Company. The CEC presently has two members,
Messrs. George Wm. Erikson, Chairman, and Robert W. Erikson, President.
PHILOSOPHY
The executive compensation philosophy of the Company (which is intended
to apply to all of the executive officers of the Company, including members of
the CEC) is aimed at: (i) attracting and retaining qualified management to
implement the Company's business plan; (ii) establishing a direct link between
management compensation and the achievement of the Company's annual and
long-term performance goals; and (iii) recognizing and rewarding individual
initiative and achievement. The Board believes management compensation should be
set at levels competitive with compensation arrangements provided by other
companies with which the Company competes for executive talent, and by other
companies of similar size, business or location. It is also the Board's view
that the compensation of management should have a component contingent upon the
Company's level of performance. By aligning the financial interests of the
Company's executive officers and those of its shareholders, the Company
encourages executive officers to enhance the profitability of the Company and
thus increase shareholders' value. Since CERBCO officers devote a predominate
portion of their time to the affairs of CERBCO's subsidiaries, the Board reviews
and considers the compensation decisions of such subsidiaries when determining
the total compensation arrangements of its officers. The Board and the CEC
review the compensation arrangements of the Company's executive officers on a
continuing basis to ensure that such arrangements are consistent with this
executive compensation philosophy.
COMPONENTS OF COMPENSATION
The compensation program for the Company's officers (including members
of the CEC), which includes compensation received from CERBCO, Insituform East
and CERBERONICS, consists of: (a) base salaries; (b) compensation pursuant to
plans; and (c) incentive cash bonuses. The Board and/or the CEC determine the
base salaries of CERBCO officers and the Board administers the Company's
Supplemental Executive Retirement Plan (the "CERBCO SERP") covering the
Company's officers. However, each CERBCO officer additionally has employment
responsibilities and serves as an officer with the Company's subsidiaries and
receives most of his compensation, including base salary, compensation pursuant
to plans and incentive cash bonuses, from such subsidiaries. The CERBCO Board
carefully reviews the compensation decisions of the subsidiaries as they relate
to each of the officers of CERBCO.
Commencing in 1994, a publicly held corporation may not, subject to
limited exceptions, deduct for federal income tax purposes certain compensation
paid to certain executives in excess of $1 million in any taxable year (the
"Deduction Limitation"). While the Company's compensation programs generally are
not intended to qualify for any of the exceptions to the applicability of the
Deduction Limitation, it is not expected that compensation to executives of the
Company will exceed the Deduction Limitation in the foreseeable future.
(a) Base Salary. The base salary level for each executive officer
(including members of the CEC) is considered annually in September, and yearly
adjustments, if any, are made effective on or about October 1st of each year.
The timing of such yearly reviews permits consideration of information which is
developed each year for the Company's annual report, including audited financial
statements for the fiscal year then ended June 30th. The CEC is empowered to
adjust the annual base salary level of executive officers (other than members of
the CEC) at other times during the year should it deem any such adjustments
appropriate. Such adjustments are included in the annual officer compensation
review and approvals conducted by the Board each September.
The annual September review of base salary levels is subjective. No
specific factors, targets or criteria, such as the market value of the Company's
stock, are employed in any formula or other quantitative prescription to
determine base compensation. However, consistent with the Company's compensation
philosophy, consideration is given to individual initiative, individual
achievement and the Company's performance, as well as information on salaries
and other remuneration at other companies of similar size, business or location.
Since the officers of CERBCO are employed by and receive most of their salaries
from one or more of the Company's subsidiaries, the CERBCO Board reviews and
considers the base salary received from such subsidiaries and determines whether
the aggregate base compensation received by each officer is commensurate with
the time and effort devoted to the activities of the Company and each
subsidiary.
Applying the Company's compensation philosophy during the annual review
in September 1999, it was the judgment of the CEC and the Board that the base
salary level of each executive officer of the Company (including members of the
CEC) should be increased 4% effective October 1, 1999. In addition, the officers
of CERBCO, including members of the CEC, are also officers of Insituform East
and CERBERONICS, and the Board concurred with the decisions of the Insituform
East Board of Directors, and the CERBERONICS Board of Directors, to increase by
4% the base salaries of its officers effective October 1, 1999.
(b) Compensation Pursuant to Plans. The officers of CERBCO are eligible
to receive plan compensation through the CERBCO SERP. In addition, the officers
of CERBCO, including members of the CEC, as employees of Insituform East, are
eligible to receive plan compensation through any plan offered to the employees
of Insituform East. Participation in, and benefits acquired under such plans
(other than stock option plans) are on a nondiscretionary formula basis
applicable to all Insituform East employees (see "Compensation Pursuant to Plans
- Insituform East, Incorporated Plans").
Pursuant to the CERBCO SERP, the members of the CEC will receive a
monthly retirement benefit for life equivalent to 50% of the final aggregate
monthly salary such executives received from the Company and its subsidiaries as
defined in and limited by the executives' agreement. The other executive
presently covered by the CERBCO SERP will receive a monthly retirement benefit
for life equivalent to 25% of the final aggregate monthly salary such executive
received from the Company and its subsidiaries as defined in and limited by the
executive's agreement (see "Compensation Pursuant to Plans - CERBCO, Inc.
Plans").
The terms of the CERBCO SERP require the Company to establish a trust
to facilitate the Company's satisfaction of its obligations thereunder to pay
supplemental retirement benefits to the Company's executive officers. The
Company has established such a trust, which has been funded by life insurance
policies.
The Board views the CERBCO SERP as providing important benefits to the
covered executives after their retirement. Further, the Board believes that the
adoption of the CERBCO SERP is fully consistent with CERBCO's compensation
philosophy and is a customary form of supplemental executive retirement similar
to that adopted by comparable companies.
(c) Incentive Cash Bonuses. CERBCO has deferred the direct employ of an
incentive cash bonus as part of the compensation package of its officers.
However, the Company believes that the compensation of its officers is typically
more directly linked to the overall profitability of the Company's operations as
a whole because each of the officers is employed by the Company's principal
operating subsidiary, Insituform East, which does offer incentive cash bonuses.
Insituform East employs an annual return-on-equity ("ROE") incentive cash bonus
which is tied to its earnings. The Insituform East ROE incentive bonus amount is
calculated by multiplying Insituform East's annual ROE percentage (net earnings
divided by weighted average equity less current earnings) by the base
compensation paid to the officer over the fiscal year. The maximum annual
individual bonus available to any officer is normally limited to an upper cap of
30% of the officer's base compensation used in the respective ROE formula. For
the most recent fiscal year ended June 30, 2000, due to negative net earnings,
no incentive cash bonuses were awarded to Insituform East officers. The
Company's Board concurred with the incentive bonus decisions made by Insituform
East for fiscal year 2000.
COMPENSATION OF MEMBERS OF THE CEC
On September 7, 1999, the CERBCO Board approved an increase in base
salary from $11,475 to $11,934 per year, effective October 1, 1999, for each
current member of the CEC, namely, Messrs. George Erikson and Robert Erikson.
The decision made by the CERBCO Board was subjective, taking into account the
philosophical aim of setting executive compensation and was not based on any
particular performance criteria. As part of its analysis when it determined the
compensation packages for Messrs. George Erikson and Robert Erikson, the Board
reviewed the compensation they received from Insituform East and CERBERONICS in
order to ensure that their aggregate compensation was reasonably apportioned in
relation to the time, duties and responsibilities among each of the three
companies.
At Insituform East, the base salary received by Messrs. George Erikson
and Robert Erikson increased to a rate of $225,271 per year, effective October
1, 1999, from the base rate of $216,607 per year. Due to the negative earnings
results obtained by Insituform East for fiscal year 2000, no incentive cash
bonus was earned by either Mr. George Erikson or Mr. Robert Erikson. No stock
options were granted to either Mr. George Erikson or Mr. Robert Erikson under
the Insituform East 1999 Employee Stock Option Plan.
At CERBERONICS, the base salary received by Messrs. George Erikson and
Robert Erikson increased to a rate of $94,266 per year, effective October 1,
1999, from the base rate of $90,640 per year.
As previously discussed, in approving the compensation package for the
CEC members, the Board considered that Messrs. George Erikson and Robert Erikson
devote a predominate portion of their time and effort directly to the activities
of CERBCO's subsidiaries, and that their work for CERBCO requires a smaller
portion of their time and effort. The Board concurred in the compensation paid
to the members of the CEC by each such subsidiary and believes the components of
the aggregate compensation paid to Messrs. George Erikson and Robert Erikson by
the Company and its subsidiaries provide a compensation package that fairly
reflects the time and effort devoted by such officers to the Company and each of
its subsidiaries.
THE ABOVE COMPENSATION REPORT IS MADE OVER THE NAME OF EACH MEMBER OF THE BOARD
OF DIRECTORS.
Robert W. Erikson
George Wm. Erikson
Webb C. Hayes, IV
Paul C. Kincheloe, Jr.
SUMMARY COMPENSATION
CERBCO is a parent holding company with a controlling interest, through
its wholly-owned subsidiary, CERBERONICS, in Insituform East ("IEI"). CERBCO
officers participate in the management of each of these subsidiaries. The
following table sets forth information concerning the compensation paid to each
of the named executive officers of the Company and its subsidiaries for the
fiscal years ended June 30, 2000, 1999 and 1998:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
----------------------------
Annual Compensation Awards Payouts
---------------------------------------------- -------------------- -------
Name Other Total Restricted
and Annual Annual Stock Options/ LTIP All Other
Principal Salary Bonus Compensation Compensation Awards SARs Payouts Compensation
Position Year ($) ($) ($) 3/ ($) ($) (#) ($) ($) 4/
------------------------ ---- -------- --------- ------------- ------------- ---------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. Erikson 2000 CERBCO $ 11,819 $ 0 $0 $ 11,819 $0 5,000 $0 $ 0
Director & President 1/ IEI 223,106 0 0 223,106 0 15,000 0 1,140
CERBERONICS 93,359 0 0 93,359 0 0 0 0
-------- ------- -- -------- - ------ -- -------
$328,284 $ 0 $0 $328,284 $0 20,000 $0 $ 1,140
======== ======= == ======== == ====== == =======
1999 CERBCO $ 11,475 $ 0 $0 $ 11,475 $0 5,000 $0 $ 0
IEI 216,607 0 0 216,607 0 15,000 0 13,076
CERBERONICS 90,640 0 0 90,640 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$318,722 $ 0 $0 $318,722 $0 20,000 $0 $13,076
======== ======= == ======== == ====== == =======
1998 CERBCO $ 11,480 $ 0 $0 $ 11,480 $0 5,000 $0 $ 0
IEI 215,030 0 0 215,030 0 15,000 0 2,345
CERBERONICS 90,339 0 0 90,339 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$316,849 $ 0 $0 $316,849 $0 20,000 $0 $ 2,345
======== ======= == ======== == ====== == =======
George Wm. Erikson 2000 CERBCO $ 11,819 $ 0 $0 $ 11,819 $0 5,000 $0 $ 0
Director, Chairman IEI 223,106 0 0 223,106 0 15,000 0 3,540
& General Counsel 1/ CERBERONICS 93,359 0 0 93,359 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$328,284 $ 0 $0 $328,284 $0 20,000 $0 $ 3,540
======== ======= == ======== == ====== == =======
1999 CERBCO $ 11,475 $ 0 $0 $ 11,475 $0 5,000 $0 $ 0
IEI 216,607 0 0 216,607 0 15,000 0 15,476
CERBERONICS 90,640 0 0 90,640 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$318,722 $ 0 $0 $318,722 $0 20,000 $0 $15,476
======== ======= == ======== == ====== == =======
1998 CERBCO $ 11,480 $ 0 $0 $ 11,480 $0 5,000 $0 $ 0
IEI 215,030 0 0 215,030 0 15,000 0 4,745
CERBERONICS 90,339 0 0 90,339 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$316,849 $ 0 $0 $316,849 $0 20,000 $0 $ 4,745
======== ======= == ======== == ====== == =======
Robert F. Hartman 2000 CERBCO $ 8,729 $ 0 $0 $ 8,729 $0 0 $0 $ 0
Vice President, IEI 94,962 0 0 94,962 0 0 0 1,004
Secretary & CERBERONICS 3,089 0 0 3,089 0 0 0 0
Treasurer 2/ -------- ------- -- -------- -- -- -- -------
$106,780 $ 0 $0 $106,780 $0 0 $0 $ 1,004
======== ======= == ======== == == == =======
1999 CERBCO $ 8,475 $ 0 $0 $ 8,475 $0 0 $0 $ 0
IEI 92,195 0 0 92,195 0 0 0 7,626
CERBERONICS 3,000 0 0 3,000 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$103,670 $ 0 $0 $103,670 $0 0 $0 $ 7,626
======== ======= == ======== == ====== == =======
1998 CERBCO $ 9,207 $ 0 $0 $ 9,207 $0 0 $0 $ 0
IEI 91,524 2,000 0 93,524 0 0 0 2,874
CERBERONICS 2,273 0 0 2,273 0 0 0 0
-------- ------- -- -------- -- ------ -- -------
$103,004 $ 2,000 $0 $105,004 $0 0 $0 $ 2,874
======== ======= == ======== == ====== == =======
1/ The Company's Corporate Executive Committee, consisting of the Chairman and
the President, exercises the duties and responsibilities of the Chief
Executive Officer of the Company. Information concerning Messrs. George
Erikson and Robert Erikson is provided under the section entitled "Proposal
No. 1 - Election of Directors."
2/ Mr. Robert Hartman, age 53, has been Vice President and Controller of
CERBCO since February 1988, Secretary since June 1991, Treasurer and
Chief Financial Officer since December 1997. He has also been Vice
President - Administration and Secretary of Insituform East,
Incorporated since June 1991. From October 1985 to February 1988, Mr.
Hartman was Controller of Dynamac International, Inc. From August 1979
to September 1985, Mr. Hartman served in various capacities with
CERBERONICS, Inc., including Vice President and Treasurer.
3/ None of the named executive officers received perquisites or other
personal benefits in excess of the lesser of $50,000 or 10% of his
total salary and bonus.
4/ Insituform East contributions to the IEI Advantage Plan.
</TABLE>
COMPENSATION PURSUANT TO PLANS
CERBCO, Inc. Plans
CERBCO Supplemental Executive Retirement Plan
During fiscal year 1994, CERBCO entered into Supplemental Executive
Retirement Agreements with Messrs. Robert Erikson, George Erikson and Robert
Hartman pursuant to a Supplemental Executive Retirement Plan (the "CERBCO
SERP"). The agreements provide for monthly retirement benefits of 50% of the
executive's final aggregate monthly salary from CERBCO and its subsidiaries as
defined in and limited by the executives' agreement, for Messrs. Robert Erikson
and George Erikson. In the case of Mr. Robert Hartman, the agreement provides
for 25% of the executive's final aggregate monthly salary from CERBCO and its
subsidiaries as defined in and limited by the executive's agreement. Each
covered executive's benefit under the plan is payable in equal monthly amounts
for the remainder of the covered executive's life beginning as of any date on or
after his 62nd birthday (at the covered executive's election) but not before his
termination of service. Payments under the CERBCO SERP are not subject to any
reduction for Social Security or any other offset amounts but are subject to
Social Security and other applicable tax withholding.
To compute the monthly retirement benefits, the percentage of final
monthly salary is multiplied by a ratio (not to exceed 1) of:
the completed years (and any fractional year) of employment by CERBCO
after 1992
to
the total number of years (and any fractional year) of
employment after 1992 that the executive would have completed if he had
continued in employment to age 65.
If the executive dies prior to retirement, the executive's beneficiary
will receive a pre-retirement death benefit under a split-dollar insurance
arrangement. The executive's beneficiary will receive a one-time lump sum
payment in the amount of $1,400,000 (in the case of Messrs. Robert Erikson or
George Erikson) or $700,000 (in the case of Mr. Robert Hartman). If the
executive dies after commencement of the payment of retirement benefits, but
before receiving 180 monthly payments, the executive's beneficiary will continue
to receive payments until the total payments received by the executive and/or
his beneficiary equal 180.
The CERBCO SERP is technically unfunded, except as described below.
CERBCO will pay all benefits from its general revenues and assets. To facilitate
the payment of benefits and provide the executives with a measure of benefit
security without subjecting the CERBCO SERP to various rules under the Employee
Retirement Income Security Act of 1974, CERBCO has established an irrevocable
trust called the CERBCO, Inc. Supplemental Executive Retirement Trust. This
trust is subject to the claims of CERBCO's creditors in the event of bankruptcy
or insolvency. The trust has purchased life insurance on the lives of the
executive officers covered by the Supplemental Executive Retirement Agreements
to provide for CERBCO's financial obligations under the plan. Assets in the
trust consist of the cash surrender values of the executive life insurance
policies and are carried on CERBCO's balance sheet as assets. The trust will not
terminate until participants and beneficiaries are no longer entitled to
benefits under the plan. Upon termination, all assets remaining in the trust
will be returned to CERBCO.
The following tables set forth the annual retirement benefits that
would be received under the CERBCO SERP at various compensation levels after the
specified years of service:
<TABLE>
Pension Plan Table Where Formula Provides 50% of Compensation 1/
<CAPTION>
(Final) Years of Service (Under Plan)
Remuneration 15 20 25 30 35
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $ 58,594 $ 62,500 $ 62,500 $ 62,500 $ 62,500
$150,000 $ 70,313 $ 75,000 $ 75,000 $ 75,000 $ 75,000
$175,000 $ 82,031 $ 87,500 $ 87,500 $ 87,500 $ 87,500
$200,000 $ 93,750 $100,000 $100,000 $100,000 $100,000
$225,000 $105,469 $112,500 $112,500 $112,500 $112,500
$250,000 $117,188 $125,000 $125,000 $125,000 $125,000
$300,000 $140,625 $150,000 $150,000 $150,000 $150,000
$350,000 $154,627 $175,000 $175,000 $175,000 $175,000
$400,000 $154,627 $182,101 $200,000 $200,000 $200,000
$450,000 $154,627 $182,101 $201,055 $221,961 $225,000
$500,000 $154,627 $182,101 $201,055 $221,961 $245,085
1/ Assumes at the time the Plan was established (i) the individual is age 50,
(ii) maximum covered compensation is $250,000 and is increased 2% (compounded
annually) each year of service after 1992, and (iii) retirement is effective at
the beginning of the year.
</TABLE>
<TABLE>
Pension Plan Table Where Formula Provides 25% of Compensation 2/
<CAPTION>
(Final) Years of Service (Under Plan)
Remuneration 15 20 25 30 35
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,929 $11,905 $12,500 $12,500 $12,500
$ 75,000 $13,393 $17,858 $18,750 $18,750 $18,750
$100,000 $17,858 $23,810 $25,000 $25,000 $25,000
$200,000 $21,206 $31,218 $36,190 $39,957 $44,115
$300,000 $21,206 $31,218 $36,190 $39,957 $44,115
$400,000 $21,206 $31,218 $36,190 $39,957 $44,115
$500,000 $21,206 $31,218 $36,190 $39,957 $44,115
2/ Assumes at the time the Plan was established (i) the individual is age 45,
(ii) maximum covered compensation is $90,000 and is increased 2% (compounded
annually) each year of service after 1992, and (iii) retirement is effective at
the beginning of the year.
</TABLE>
Each executive's covered compensation under the CERBCO SERP is equal to
his final monthly salary as defined in and limited by the executive's agreement.
The maximum covered compensation for Messrs. Robert Erikson and George Erikson
is limited to $20,834 per month ($250,000 annually), increased 2% annually
beginning in 1993. The maximum covered compensation for Mr. Robert Hartman is
limited to $7,500 per month ($90,000 annually), increased 2% annually beginning
in 1993.
The following table sets forth information concerning vested annual
benefits as of October 30, 2000 for the executives listed in the Summary
Compensation Table covered by the CERBCO SERP:
<TABLE>
<CAPTION>
Years of Credited Current Annual Vested Vested
Name Service Under Plan Covered Compensation Percentage Annual Benefit
<S> <C> <C> <C> <C>
Robert W. Erikson 8 $287,171 44.44% $63,816
George Wm. Erikson 8 $287,171 53.33% $78,579
Robert F. Hartman 8 $103,382 40.00% $10,338
</TABLE>
CERBCO 1997 Directors' Stock Option Plan
CERBCO adopted, with stockholder approval at the 1997 Annual Meeting of
Stockholders, the CERBCO, Inc. 1997 Board of Directors' Stock Option Plan (the
"CERBCO 1997 Directors' Plan"). The purpose of the CERBCO 1997 Directors' Plan
is to promote the growth and general prosperity of CERBCO by permitting the
Company, through the granting of options to purchase shares of CERBCO's Common
Stock, to attract and retain the best available persons as members of CERBCO's
Board of Directors with an additional incentive for such persons to contribute
to the success of the Company. A maximum of 125,000 shares of Common Stock may
be made subject to options under the CERBCO 1997 Directors' Plan. Options shall
be granted to all directors of CERBCO pursuant to the terms of the plan. Each
option granted under the CERBCO Directors' Plan entitles each director to whom
such option is granted the right to purchase shares of CERBCO's Common Stock at
a designated option price, any time and from time to time, within five years
from the date of grant, provided the director has served continually for at
least six months following the date of the grant.
The CERBCO Board of Directors administers the CERBCO 1997 Directors'
Plan and has exclusive authority to interpret, construe and implement the
provisions of the plan, except as may be delegated in whole or in part by the
Board to a committee of the Board which may consist of three or more members of
the Board. No such delegation of authority has been made. Each determination,
interpretation or other action that may be taken pursuant to the CERBCO 1997
Directors' Plan by the Board is final and binding and conclusive for all
purposes and upon all persons. The Board from time to time may amend the plan as
it deems necessary to carry out the purposes thereof.
The terms of the CERBCO 1997 Directors' Plan contemplated that each
director of the Company be granted an option to purchase 5,000 shares of the
Company's Common Stock each year for five years, for a total of 25,000 shares of
Common Stock per director, beginning in fiscal year 1997. On December 10, 1999,
options on a total of 20,000 shares of Common Stock were granted to directors of
the Company (options on 5,000 shares to each of four directors) at a per share
price of $5.375. No options available under the plan were exercised by directors
of the Company during fiscal year 2000.
Insituform East, Incorporated Plans
Insituform East Employee Advantage Plan
As executive officers of Insituform East, Messrs. Robert Erikson,
George Erikson and Robert Hartman participate in the Insituform East,
Incorporated Employee Advantage Plan (the "IEI Advantage Plan"). The IEI
Advantage Plan is a noncontributory profit sharing (retirement) plan in which
all employees not covered by a collective bargaining agreement and employed with
Insituform East for at least one year are eligible to participate. No employee
is covered by a collective bargaining agreement. The IEI Advantage Plan is
administered by the Insituform East Board of Directors which determines, at its
discretion, the amount of Insituform East's annual contribution. The Insituform
East Board of Directors can authorize a contribution, on behalf of Insituform
East, of up to 15% of the compensation paid to participating employees during
the year. The plan is integrated with Social Security. Each participating
employee is allocated a portion of Insituform East's contribution based on the
amount of that employee's compensation plus compensation above FICA limits
relative to the total compensation paid to all participating employees plus
total compensation above FICA limits. Amounts allocated under the IEI Advantage
Plan begin to vest after three years of service (at which time 20% of the
contribution paid vests) and are fully vested after seven years of service. No
contribution was authorized for the fiscal year ended June 30, 2000.
The IEI Advantage Plan also includes a salary reduction profit sharing
feature under Section 401(k) of the Internal Revenue Code. Each participant may
elect to defer a portion of his compensation by any whole percentage from 2% to
16% subject to certain limitations. As mandated by the plan, Insituform East
contributed an employer matching contribution equal to 25% of the participant's
deferred compensation up to a maximum of 1.5% of the participant's total paid
compensation for the fiscal year. Participants are 100% vested at all times in
their deferral and employer matching accounts. During the fiscal year ended June
30, 2000, Insituform East made the following contributions for the Company's
officers:
<TABLE>
<CAPTION>
Names and Capacities in Which Contributions for Vested Percent
Cash Contributions Were Made Fiscal Year 2000 as of 10/30/00
<S> <C> <C>
George Wm. Erikson, Chairman $2,400 100%
Robert W. Erikson, President $ 0 100%
Robert F. Hartman, Vice President - Administration & Secretary $ 337 100%
Executive Officers of Insituform East as a Group,
(6 persons, including those named above) $7,199
1/ Total contributions to employees of $78,810 include Insituform East's
matching contribution of $54,760 and reallocated amounts totaling $24,050
forfeited by former participants who terminated employment with Insituform
East during fiscal year 2000.
</TABLE>
Insituform East 1999 Board of Directors' Stock Option Plan
Insituform East adopted, with stockholder approval at the 1999 Annual
Meeting of Stockholders, the Insituform East, Incorporated 1999 Board of
Directors' Stock Option Plan (the "IEI 1999 Directors' Plan"). The purpose of
this plan is to promote the growth and general prosperity of Insituform East by
permitting Insituform East, through the granting of options to purchase shares
of its Common Stock, to attract and retain the best available persons as members
of Insituform East's Board of Directors with an additional incentive for such
persons to contribute to the success of Insituform East. The term of the plan is
for ten years, unless terminated sooner by the Board of Directors. The IEI 1999
Directors' Plan is administered and options are granted by the Insituform East
Board of Directors. As directors of Insituform East, Messrs. Robert Erikson and
George Erikson participate in this plan.
Each grant of options under the IEI 1999 Directors' Plan will entitle
each Insituform East director to whom such options are granted the right to
purchase 15,000 shares of Insituform East's Common Stock at a designated option
price, any time and from time to time, within five years from the date of grant.
Options are granted under the IEI Directors' Plan each year for five years to
each member of the Board of Directors of Insituform East serving as such on the
date of grant, i.e., for each director serving for five years, a total of five
options covering in the aggregate 75,000 shares of Common Stock (subject to
adjustments upon changes in the capital structure of Insituform East) over a
five year period. Under the terms of this plan, up to 525,000 shares of
Insituform East's Common Stock have been reserved for the directors of
Insituform East.
On December 10, 1999, options on a total of 105,000 shares of
Insituform East's Common Stock were granted to directors of Insituform East
(options on 15,000 shares to each of seven directors, including Messrs. Robert
Erikson and George Erikson) at a per share option price of $1.328. No options
available under this plan were exercised by directors of Insituform East during
fiscal year 2000.
Insituform East 1994 Board of Directors' Stock Option Plan
Insituform East adopted, with stockholder approval at the 1994 Annual
Meeting of Stockholders, the Insituform East, Incorporated 1994 Board of
Directors Stock Option Plan (the "IEI 1994 Directors' Plan). The purpose of this
plan is the same as the IEI 1999 Directors' Plan. The term of the plan is for
ten years, unless terminated sooner by the Board of Directors. Options were
first granted to directors on December 9, 1994 and each of the four succeeding
Board of Directors meetings following the Annual Meetings of Stockholders in
1995, 1996, 1997 and 1998. Each grant of options under the plan entitles each
director to whom such options were granted the right to purchase 15,000 shares
of Insituform East's Common Stock at a designated option price, any time and
from time to time, within five years from the date of grant. Although no further
options are anticipated to be granted under this plan, options previously
granted, and which have not already been exercised or expired, will remain in
effect until exercise or expiration, whichever comes first. No options available
under the plan were exercised by directors of Insituform East during fiscal year
2000. Under the terms of this plan, up to 360,000 shares of Insituform East
Common Stock remain reserved for the directors of Insituform East. As directors
of Insituform East, Messrs. Robert Erikson and George Erikson participate in
this plan.
OPTION/SAR GRANTS
The following table sets forth information concerning options or Stock
Appreciation Rights granted to each of the named executive officers during
fiscal year 2000 under the CERBCO 1997 Directors' Plan and the IEI 1999
Directors' Plan:
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realized
Value at Assumed
Individual Grants Annual Rates of Stock
Price Appreciation
for Option Term
------------------------------------------------------------ -----------------------
Option/ % of Total Options/SARs Exercise or Expiration
Name SARs Granted to Employees in Base Date 5% ($) 10% ($)
Granted (#) Fiscal Year ($/Share)
--------------------------- ------------- ------------------------------ ------------- ----------- --------- ---------
Robert W. Erikson
CERBCO 1997
<S> <C> <C> <C> <C> <C> <C>
Directors' Plan 5,000 25% $5.375 12/10/04 $7,425 $16,405
IEI 1999 Directors' Plan 15,000 14% $1.328 12/10/04 $5,505 $12,165
George Wm. Erikson
CERBCO 1997
Directors' Plan 5,000 25% $5.375 12/10/04 $7,425 $16,405
IEI 1999 Directors' Plan 15,000 14% $1.328 12/10/04 $5,505 $12,165
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE
No option or Stock Appreciation Right grants made under the CERBCO 1997
Directors' Plan or the IEI 1999 and 1994 Directors' Plans to any of the named
executive officers were exercised during fiscal year 2000. The following table
sets forth information concerning option or Stock Appreciation Right grants held
by each of the named executive officers under all plans as of June 30, 2000:
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of Unexercised Value of Unexercised in the
Options/SARs at FY-End(#) Money Options/SARs at FY-End($)
-----------------------------------------------------------
Shares
Name Acquired on Value Realized Exercisable Unexercisable Exercisable Unexercisable
Exercise (#) ($)
-------------------------------- ---------------- ---------------- ------------ ------------- ----------- -------------
Robert W. Erikson
CERBCO 1997
<S> <C> <C> <C> <C> <C> <C>
Directors' Plan 0 $0 15,000 0 $ 0 $0
IEI 1994 Directors' Plan 0 $0 60,000 0 $4,460 $0
IEI 1999 Directors' Plan 0 $0 15,000 0 $1,648 $0
George Wm. Erikson
CERBCO 1997
Directors' Plan 0 $0 15,000 0 $ 0 $0
IEI 1994 Directors' Plan 0 $0 60,000 0 $4,460 $0
IEI 1999 Directors' Plan 0 $0 15,000 0 $1,648 $0
</TABLE>
REPRICING OF OPTIONS/SARs
Neither the Company nor its subsidiaries adjusted or amended the
exercise price of stock options or SARs previously awarded to any of the named
executive officers during fiscal year 2000.
LONG-TERM INCENTIVE PLAN AWARDS
Neither the Company nor its subsidiaries have any long-term incentive
plans.
DEFINED BENEFIT OR ACTUARIAL PLANS
The Company maintains a defined benefit plan called the CERBCO
Supplemental Executive Retirement Plan to provide annual retirement benefits to
covered executives. See "Compensation Pursuant to Plans - CERBCO, Inc. Plans" as
to the basis upon which benefits under the plan are computed.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are no employment contracts between the Company or its
subsidiaries and any named executive officer. There are no arrangements between
the Company or its subsidiaries and any named executive officer, or payments
made to an executive officer, that resulted, or will result, from the
resignation, retirement or other termination of employment with the Company or
its subsidiaries, in an amount that exceeds $100,000.
COMPENSATION OF DIRECTORS
Non-officer directors of the Company are paid an annual fee of $5,000
and an attendance fee of $1,000 for each meeting of the Board of Directors, and
each committee meeting, attended in person. Meetings attended by telephone are
compensated at the rate of $200. Directors who are also officers of the Company
do not receive separate fees for service as directors, but are eligible with all
other directors to participate in the CERBCO 1997 Directors' Stock Option Plan,
as described under the section entitled, "Compensation Pursuant to Plans -
CERBCO, Inc. Plans." All directors of the Company are reimbursed for Company
travel-related expenses.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors does not have a compensation
committee; the Board of Directors as a whole serves in that equivalent capacity.
Messrs. George Erikson and Robert Erikson, both members of the Board of
Directors and executive officers of the Company, holding the offices of Chairman
& General Counsel and President, respectively, participated during fiscal year
2000 in deliberations of the Board of Directors concerning executive officer
compensation.
Messrs. George Erikson and Robert Erikson are both members of the Board
of Directors and executive officers of Insituform East. In their capacities as
directors of this subsidiary company, they participated in deliberations of its
Board of Directors concerning executive officer compensation.
PERFORMANCE GRAPH
The following graph compares the total stockholder return on the
Company's Common Stock to the Total Return Index for the NASDAQ Stock Market
(U.S. Companies) and to a Peer Group Index based on NASDAQ Stocks SIC Code 162,
"Heavy Construction, Except Highway," for the last five fiscal years.
<TABLE>
Comparison of Five-Year Cumulative Total Returns
Performance Report for
CERBCO, Inc.
Prepared by the Center for Research in Security Prices
Produced on 08/17/2000 including data to 06/30/2000
Company Index: CUSIP Ticker Class Sic Exchange
15671310 CERB 1620 NASDAQ
Fiscal Year-end is 06/30/2000
Market Index: Nasdaq Stock Market (US Companies)
Peer Index: NASDAQ Stocks (SIC 1620-1629 US Companies)
Heavy Construction, Except Highway and Street Construction
<CAPTION>
Date Company Index Market Index Peer Index
<S> <C> <C> <C> <C>
06/30/1995 100.000 100.000 100.000
07/31/1995 112.821 107.344 99.020
08/31/1995 130.769 109.522 107.704
09/29/1995 146.154 112.046 106.110
10/31/1995 135.897 111.400 101.872
11/30/1995 148.718 114.014 98.415
12/29/1995 138.462 113.411 104.460
01/31/1996 138.462 113.978 97.357
02/29/1996 129.487 118.323 99.784
03/29/1996 128.205 118.720 109.378
04/30/1996 128.205 128.556 134.894
05/31/1996 158.974 134.451 161.230
06/28/1996 144.673 128.390 143.823
07/31/1996 124.006 116.962 140.058
08/30/1996 131.756 123.534 144.919
09/30/1996 134.340 132.980 163.518
10/31/1996 124.006 131.502 188.577
11/29/1996 131.756 139.654 185.954
12/31/1996 129.173 139.537 198.508
01/31/1997 149.840 149.436 222.940
02/28/1997 143.382 141.166 211.403
03/31/1997 157.591 131.962 234.393
04/30/1997 193.759 136.075 227.335
05/30/1997 191.499 151.486 237.646
06/30/1997 249.193 156.144 250.492
07/31/1997 235.445 172.596 294.315
08/29/1997 214.583 172.339 365.230
09/30/1997 250.346 182.552 395.974
10/31/1997 241.405 173.041 406.707
11/28/1997 229.484 173.953 336.883
12/31/1997 333.795 170.955 344.625
01/30/1998 241.405 176.370 313.263
02/27/1998 220.543 192.955 351.812
03/31/1998 233.955 200.086 409.353
04/30/1998 223.523 203.459 444.941
05/29/1998 222.033 192.154 433.327
06/30/1998 215.715 205.577 364.660
07/31/1998 208.173 203.178 297.893
08/31/1998 205.156 162.900 224.851
09/30/1998 211.190 185.504 271.180
10/30/1998 172.723 193.656 241.445
11/30/1998 190.071 213.345 190.553
12/31/1998 187.054 241.063 197.277
01/29/1999 165.180 276.035 199.154
02/26/1999 181.020 251.324 183.822
03/31/1999 174.986 270.331 262.573
04/30/1999 150.850 279.046 299.412
05/28/1999 156.884 271.598 282.111
06/30/1999 159.445 296.026 330.119
07/30/1999 136.448 290.590 301.154
08/31/1999 151.779 302.808 300.739
09/30/1999 147.180 303.218 264.616
10/29/1999 144.114 327.496 255.239
11/30/1999 128.783 367.345 265.834
12/31/1999 130.316 448.121 296.920
01/31/2000 122.650 431.540 315.763
02/29/2000 134.915 513.782 421.090
03/31/2000 134.915 503.038 454.741
04/28/2000 119.584 422.971 429.186
05/31/2000 105.786 371.945 457.168
06/30/2000 111.376 437.267 507.303
The index level for all series was set to 100.0 on 06/30/1995
Copyright(C)2000
</TABLE>
TRANSACTIONS WITH MANAGEMENT
In accordance with the Company's By-laws and pursuant to authorizations
by the Board of Directors, the Company made certain advancements to Mr. George
Erikson, Director, Chairman & General Counsel, and certain advancements to Mr.
Robert Erikson, Director and President (together the "Eriksons") for their
respective legal fees and expenses which each incurred for personal legal
representation in connection with a stockholder lawsuit filed in August 1990
challenging a proposed but unconsummated transaction between each of the
Eriksons and Insituform Technologies, Inc. The Company expensed and advanced in
total $600,482 to Mr. George Erikson and $600,482 to Mr. Robert Erikson. Such
advances were made subject to an agreement with the Company executed by each of
the Eriksons and delivered to the Board of Directors that should it be
ultimately determined by the Board of Directors or otherwise in accordance with
Section 145 of Delaware Corporation Law that Mr. George Erikson and/or Mr.
Robert Erikson were not entitled to indemnification for such legal fees and
expenses under Section 145 of Delaware Corporation Law, such advances would be
reimbursed by Mr. George Erikson and/or Mr. Robert Erikson to the Company.
Pending a final outcome of these legal proceedings, and as contemplated
by the Company's By-laws, the Board of Directors deferred consideration and
ultimate determination of entitlement of Mr. George Erikson and/or Mr. Robert
Erikson to indemnification by the Company for their legal fees and expenses.
These legal proceedings are now complete. On June 30, 2000, the Board of
Directors, having completed its consideration of the Erikson's request for
indemnification under Section 145 of Delaware Corporation Law, determined that
Mr. George Erikson and Mr. Robert Erikson were each entitled to indemnification
for 96% of the total amounts of legal fees and expenses for which they had
requested indemnification and for which they had received advances. In
accordance with their agreements with the Company, Mr. George Erikson and Mr.
Robert Erikson have each repaid to the Company all amounts in excess of the
amounts advanced to them.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche, LLP was engaged to audit the financial
statements of the Company for the fiscal year ended June 30, 2000. A
representative of Deloitte & Touche will be at the Meeting and will have an
opportunity to make a statement if he or she desires to do so. The
representative will also be available to respond to appropriate questions from
any stockholders present at the Meeting.
The Audit Committee of the Board of Directors has not yet recommended,
and the Board has not yet approved, the appointment of independent public
accountants to audit the financial statements of the Company for the fiscal year
ending June 30, 2001. It is anticipated that the Audit Committee will make its
recommendation to the Board and that the appointment of independent public
accountants will be made by the Board prior to June 30, 2001.
OTHER MATTERS
The Board of Directors is not aware of any other matters which are
likely to be brought before the Meeting. However, if any other matters are
properly brought before the Meeting, it is the intention of the individuals
named in the enclosed form of Proxy to vote the proxy in accordance with their
judgment on such matters.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Financial statements of the Company are contained in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2000, a copy of
which is enclosed herewith.
DEADLINE FOR SUBMITTING STOCKHOLDER PROPOSALS
FOR INCLUSION IN THE BOARD'S PROXY STATEMENT IN CONNECTION
WITH THE FISCAL YEAR 2001 ANNUAL MEETING
A proposal submitted by a stockholder for action at the Company's
Annual Meeting of Stockholders for the fiscal year ending June 30, 2001 must be
received by the Company no later than July 4, 2001, in order to be included in
the Company's Proxy Statement for that meeting. Any stockholder proposal that is
received later than September 17, 2001, will be deemed to be untimely. It is
suggested that proponents submit their proposals by certified mail-return
receipt requested.
A proponent of a proposal must be a record or beneficial owner entitled
to vote at the next Annual Meeting on the proposal and must continue to be
entitled to vote through the date on which the meeting is held.
By Order of the Board of Directors,
/s/ Robert F. Hartman
Robert F. Hartman
Secretary
Landover, Maryland
October 30, 2000
<PAGE>
ATTACHMENT A
COMMON STOCK
CERBCO, Inc.
3421 Pennsy Drive
Landover, Maryland 20785-1608
(301) 773-1784
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 8, 2000
PROXY - COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.W. Erikson and G.Wm. Erikson, and
each of them, with full power of substitution, the Proxies of the undersigned to
represent and to vote, as designated on the reverse side of this proxy card, all
the shares of Common Stock of CERBCO, Inc. held of record by the undersigned on
October 12, 2000, at the Annual Meeting of Stockholders to be held on December
8, 2000 or any adjournments thereof.
(TO BE SIGNED ON REVERSE SIDE)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
/ X / Please mark your votes as in this example.
FOR, the nominee WITHHOLD
listed at right (except authority to vote Nominee: P.C. Kincheloe, Jr.
as noted to the for the nominee
contrary below) listed at right
1. Proposal - / / / /
Election of
Director.
(INSTRUCTION: To indicate that you do not wish to have your shares voted for the
nominee, print the name of such nominee on the line provided below.)
---------------------------------------------------
2. In their own discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
PLEASE SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Dated: , 2000
---------------------------------------------- ------------------
SIGNATURE SIGNATURE (IF HELD JOINTLY)
NOTE: Signature(s) should be exactly as name(s) appearing on your certificate.
If stock is held jointly, each holder should sign. If signing is by attorney,
executor, administrator, trustee, guardian or corporate officer, etc., please
give your full title as such.
<PAGE>
ATTACHMENT B
CLASS B COMMON STOCK
CERBCO, Inc.
3421 Pennsy Drive
Landover, Maryland 20785-1608
(301) 773-1784
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 8, 2000
PROXY - CLASS B COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.W. Erikson and G. Wm. Erikson, and
each of them, with full power of substitution, the Proxies of the undersigned to
represent and to vote, as designated on the reverse side of this proxy card, all
the shares of Class B Common Stock of CERBCO, Inc. held of record by the
undersigned on October 12, 2000, at the Annual Meeting of Stockholders to be
held on December 8, 2000 or any adjournments thereof.
(TO BE SIGNED ON REVERSE SIDE)
/ X / Please mark your votes as in this example.
FOR, all nominees WITHHOLD
listed at right (except authority to vote Nominees: R.W. Erikson
as noted to the for all nominees G.Wm. Erikson
contrary below) listed at right W.C. Hayes, IV
1. Proposal - / / / /
Election of
Directors.
[INSTRUCTION: To indicate that you do not wish to have your shares voted for one
or more individual nominee(s), check the FOR box above and print the name(s) of
such nominee(s) on the lines provided below.]
--------------------------------------------
2. In their own discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
PLEASE SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Dated: , 2000
-------------------------------------------- ------------------
SIGNATURE SIGNATURE (IF HELD JOINTLY)
NOTE: Signature(s) should be exactly as name(s) appearing on your certificate.
If stock is held jointly, each holder should sign. If signing is by attorney,
executor, administrator, trustee, guardian or corporate officer, etc., please
give your full title as such.
