<PAGE>
June 11, 1996
Dear Shareholder:
You are cordially invited to the 1996 Annual Meeting of
Shareholders of Law Companies Group, Inc. (the "Company").
The meeting will be held at 4:00 p.m., local time, on July
8, 1996 at The Carter Center, One Copenhill Avenue, N.E.,
453 Freedom Parkway, Atlanta, GA 30307. Admission to the
meeting will begin at 3:00 p.m.
The attached Notice of Annual Meeting of Stockholders
and Proxy Statement cover the formal business of the
meeting, which includes the proposal to elect a Board of
thirteen (13) directors. Also during the meeting,
management will address other corporate matters that may be
of interest to you as a shareholder.
The Company's 1995 financial performance was far below
established plans. Based on a comparison of our plan versus
actual performance, net fees fell short of plan (actual -
$314.9 million versus plan - $322.7 million). The
international group achieved 100% of its targeted operating
income goal and Law Engineering and Environmental Services,
Inc. achieved only 45% of its operating income goal (actual
- $8.5 million versus goal - $19.1 million). The total
operating income for the Company was 37% of our 1995 goal
(actual - $7.3 million versus goal - $19.8 million). This
shortfall in operating income and several extraordinary
costs led to an after-tax loss of $2.3 million for 1995.
Extraordinary costs were factors in the magnitude of
the loss incurred in 1995. The nature of these costs were:
professional fees and expenses and loan fees surrounding
debt refinancing (approximately $1.6 million); sublease
write downs (approximately $2.5 million); severance
(approximately $.8 million); and the write-off of certain
foreign (IHT) and domestic (IAM) investments (approximately
$1.5 million) for a pre-tax total of $6.4 million.
Management decided that proactive steps were necessary to
recognize these costs and restructure for future
profitability. The 1994 and 1995 financial operating
results clearly show significant changes are required,
especially in the U.S. operations, to bring the Company back
to the level of profitability our employees are capable of
delivering.
<PAGE>
Several programs have been initiated throughout the
Company in order to bring the Company back to acceptable
profitability. The most comprehensive of these is a program
of business actions referred to as the CEO Improvement
Initiatives. Management believes that these initiatives are
essential to achieve minimally acceptable levels of
profitability and cash flow in 1996 and to position the
Company to achieve its performance potential in 1997 and
beyond.
This program is currently focused on the Company's
domestic operations. At a minimum, the goal is to accomplish
the following:
. Preserve and build local market share in the U.S.
. Expand the Company's national and multi-national
client base.
. Effect positive change in the Company's culture.
. Maximize the Company's efficiency and profitability.
. Restore the Company's balance sheet integrity.
. Establish and implement use of uniform, consistent
financial performance indicators.
These initiatives are intended to improve the quality
of the Company's client services and its internal support
activities, increase the Company's overall productivity, and
reduce or eliminate unnecessary cost. As the Company
implements these initiatives, technical and administrative
activities will become more cost efficient, resulting in the
Company getting more done with less.
---- ----
More specifically, the domestic CEO Improvement
Initiatives consist of certain Company-wide and office-level
business programs. The Company-wide initiatives consist
of:
. National Business Development Program.
. Contribution Measurement, including an overhead
cost review.
. Organization/Fee Alignment.
. Management of WIP (Work-In-Progress)/AR
(Accounts Receivable)/DSO (Days
Sales Outstanding).
. National Procurement Program.
The office-level initiatives consist of:
. Office Business Development and Project
Management.
. Technical Delivery and Quality Control/Assurance.
. Office Administration and Financial Management.
<PAGE>
It is not by chance that the CEO Improvement
Initiatives include a business development focus at both the
national and local office level. These initiatives
reinforce management's belief of the importance of business
development at all levels of the Company to achieve
sustainable profitability and continuous growth of
----------- ----------
shareholder value. As with all of the CEO Improvement
Initiatives, business development is not a program with a
beginning and an end, but rather a continuous process
ingrained in the culture of the Company. All employees
should understand how they can continuously contribute to
this and all other essential business functions in the
performance of their daily activities.
To this end, certain Financial Drivers have been
identified to measure the impact of the CEO Improvement
Initiatives and the overall performance of the Company.
Management believes that these Financial Drivers represent
the primary measure of essential performance necessary for
the financial success of the Company. How we all contribute
to the achievement of the goals for each of the Financial
Drivers will make the difference between an efficient,
profitable Company, and one that will not be able to compete
in today's rapidly changing marketplace. The Financial
Drivers and our 1996 goals for each consist of:
. Net Fees - $320,000,000 (Domestic - $230,000,000 &
International - $90,000,000).
. Utilization - 65% of hours worked.
. Project Net Labor Multiplier - 3.56.
. Project Variances - less than 2% of net fees.
. Indirect Expenses - 51% of net fees.
. Days Sales Outstanding (DSO) - 80 days.
Company employees are expected to understand these Financial
Drivers and how each individual can favorably impact them in
their respective job functions.
Moreover, as part of increasing the Company's efforts
in the U.S. to press forward with the re-focus and
re-organization and in order to regain momentum toward
achieving U.S. profitability goals for 1996, executive
leadership has taken a hands-on approach in connection with
the domestic operations. As a result, James I. Dangar has
been named the Regional Manager for a combined West and
Southwest Region. Frederick J. Krishon manages the Los
Angeles office, and Jon McCarthy leads the Business
Development efforts for the Southwest Region. Michael W.
Montgomery has been named the Regional Manager for a
combined Central and Florida Region. Robert S. Gnuse
coordinates the National Marketing Program, which reports to
me, and Joe Amon manages the Tampa office.
<PAGE>
It is important that your shares be represented at this meeting,
whether or not you attend the meeting in person and regardless of the number
of shares you own. To be sure your shares are represented, we urge you to
complete and mail the enclosed proxy card as soon as possible. If you attend
the meeting and wish to vote in person, the ballot that you submit at the
meeting will supercede your proxy.
In an effort to be expedient and to avoid the redundancy of a
separate Annual Report and Form 10-K, this letter is being added as a cover to
the Company's Form 10-K. The 1995 operating results are disclosed under the
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" of the Form 10-K. I invite your attention to that discussion.
In conclusion, 1995's less than stellar financial performance is
indicative that change is necessary in order for the Company to return to
profitability. Through the development and implementation of the CEO
Improvement Initiatives, as well as the identification of and management's
emphasis on the Company's Financial Drivers, management clearly evidences its
commitment to change in order to enhance shareholder value. With a deep sense
of stewardship, the management team is committed to restoring the Company to
profitability, to increasing shareholder value and to re-establishing the
Company to its pre-eminence in the professional engineering and environmental
service industry.
Sincerely,
LAW COMPANIES GROUP, INC.
/s/ Bruce C. Coles
----------------------------------
Bruce C. Coles
Chairman of the Board of Directors and
Chief Executive Officer
<PAGE>
LAW COMPANIES GROUP, INC.
114 Townpark Drive
Kennesaw, Georgia 30144
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 1996
--------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Meeting")
of Law Companies Group, Inc., a Georgia corporation (the "Company"), will be
held on July 8, 1996, at 4:00 p.m., local time, at The Carter Center, One
Copenhill Avenue, N.E., 453 Freedom Parkway, Atlanta, Georgia 30307, for the
following purpose:
(1) To elect a Board of thirteen (13) directors of the Company to
serve until the next Annual Meeting and until their successors are duly
elected and qualified;
(2) To consider and take action upon any other business as may
properly come before the Meeting or any postponements or adjournments
thereof;
all as set forth in the Proxy Statement accompanying this Notice.
Only holders of record of the Company's Common Stock, par value $1.00 per
share, as of the close of business on June 1, 1996 are entitled to notice of,
and to vote at, the Meeting and any postponement or adjournment thereof.
By Order of the Board of Directors,
/s/ Darryl B. Segraves
---------------------------------------
Darryl B. Segraves
Executive Vice President, Secretary and
General Counsel
Kennesaw, Georgia
June 11, 1996
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ IMPORTANT +
+ +
+ WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON, PLEASE VOTE BY MEANS OF THE +
+ ENCLOSED PROXY CARD THAT YOU ARE REQUESTED TO SIGN, DATE AND RETURN AS SOON +
+ AS POSSIBLE IN THE ENCLOSED ENVELOPE SO THAT WE MAY BE ASSURED OF A QUORUM TO+
+ TRANSACT BUSINESS. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND +
+ VOTE IN PERSON. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
LAW COMPANIES GROUP, INC.
114 Townpark Drive
Kennesaw, Georgia 30144
---------------------------------
PROXY STATEMENT
---------------------------------
This Proxy Statement and the accompanying proxy card are being furnished to
the shareholders of Law Companies Group, Inc., a Georgia corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Shareholders (the
"Meeting") to be held on July 8, 1996 at 4:00 p.m., local time, at The Carter
Center, One Copenhill Avenue, N.E., 453 Freedom Parkway, Atlanta, Georgia 30307,
or at any postponement or adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The Proxy Statement and
accompanying proxy card are first being mailed or otherwise distributed to
shareholders on or about June 11, 1996.
Holders of record of outstanding shares of the Company's common stock, par
value $1.00 per share (the "Common Stock") at the close of business on June 1,
1996 (the "Record Date") are entitled to notice of and to vote at the Meeting.
Each shareholder is entitled to one vote for each share of Common Stock held on
the Record Date. On the Record Date, there were 1,913,095 shares of Common
Stock outstanding.
Shares of Common Stock cannot be voted at the Meeting unless the owner is
present or represented by proxy. A proxy may be revoked at any time before it
is voted by (1) giving written notice of revocation to the Secretary of the
Company, (2) executing and delivering to the Company at the address shown above
a new proxy bearing a later date, or (3) attending the Meeting and voting in
person. All properly executed proxies, unless previously revoked, will be voted
at the Meeting or at any postponement or adjournment thereof in accordance with
the directions given.
With respect to the election of Directors, shareholders of the Company
voting by proxy may vote in favor of the nominees, may withhold their vote for
the nominees, or may withhold their vote as to specific nominees. The Board of
Directors does not intend to present and knows of no others who intend to
present at the Meeting any matter of business other than those matters set forth
in the accompanying Notice of Annual Meeting of Shareholders. However, if other
matters properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy to vote the proxy in accordance with their best
judgment.
At the Meeting, inspectors of election will determine the presence of a
quorum and tabulate the results of the voting by shareholders. A majority of
the outstanding shares of Common Stock must be present in person or by proxy at
the Meeting in order to have the quorum necessary for the transaction of
business. Abstentions will be counted for purposes of determining the presence
of a quorum at the Meeting. All matters require for their approval the
favorable vote of a majority of the shares of Common Stock voted in person or by
proxy at the Meeting. An abstention from voting by a shareholder on a proposal
has the same effect as a vote "Against" such proposal. The Company's shares are
owned of record and beneficially primarily by employees of the Company, its
subsidiaries and affiliates; accordingly, the Company receives no "broker non-
votes."
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE.
The cost of soliciting proxies will be paid by the Company. Officers and
other regular employees of the Company may also request the return of proxies by
telephone, telegram, or in person.
<PAGE>
ELECTION OF DIRECTORS
The following sets forth certain information with respect to the thirteen (13)
nominees for the Board of Directors of the Company. Directors hold office until
the next annual meeting of shareholders. Messrs. Andrew J. Young, J. Richard
Cottingham, Clay E. Sams, Frederick J. Krishon, and Walter T. Kiser were
appointed to the Board of the Company on June 16, 1995 to fill vacancies created
by the resignations of Messrs. R. K. Sehgal, Richard G. Rosselot, Jimmy L.
Williams, Michael W. Montgomery, L. David Wheeless III, and Dr. Charles B.
Knapp.
Messrs. Henry J. Hatch and James C. Richards declined to stand for re-election
to the Board of the Company and on July 14, 1995, the Board of Directors
nominated Messrs. W. Allen Walker and Lawrence D. Young to serve as directors of
the Company. On August 14, 1995, Messrs. Walker and L. Young resigned their
positions as directors of the Company. On August 18, 1995, Bruce C. Coles was
elected as Chairman of the Board of Directors and Chief Executive Officer
effective September 1, 1995. On December 8, 1995, John Y. Williams was elected
as a director by the Board of Directors to fill a vacant position on the Board.
In early 1996, Robert B. Fooshee was elected as Chief Financial Officer,
Executive Vice President and Treasurer of the Company. After many years of
loyal service, Clifford M. Kirtland, Jr. has declined to stand for re-election
to the Board of the Company and the Board nominated Peter D. Brettell and Robert
B. Fooshee to serve as directors of the Company.
It is not contemplated that any of the nominees will be unable or unwilling to
serve as a director, however, if that should occur, the proxies will be voted
for the election of such other person or persons as are nominated by the Board
of Directors. The thirteen (13) nominees for director receiving a plurality of
the votes cast shall be elected.
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITIONS WITH THE COMPANY
- ----------------------- --- ----------------------------------------------------
<S> <C> <C>
Bruce C. Coles 51 Chairman of the Board of Directors and Chief
Executive Officer
James I. Dangar 52 President, Chief Operating Officer and Director of
the Company; President of Law Engineering and
Environmental Services, Inc.
Robert B. Fooshee 53 Executive Vice President, Chief Financial Officer,
Treasurer and Director-Nominee
Andrew J. Young 64 Vice Chairman and Director
Clarence D. Zimmerman 59 Executive Vice President of Law Engineering and
Environmental Services, Inc.; and Director
Geoffrey J. Brice 56 Director of Sir Alexander Gibb and Partners Ltd.
and Director
J. Richard Cottingham 52 Senior Vice President and Regional Manager of Law
Engineering and Environmental Services, Inc.; and
Director
Clay E. Sams 55 Vice President and Corporate Geotechnical
Consultant of Law Engineering and Environmental
Services, Inc.; and Director
Frederick J. Krishon 49 Vice President of Law Engineering and
Environmental Services, Inc.; Corporate Consultant;
and Director
Steven Muller 68 Director
Walter T. Kiser 59 Director
John Y. Williams 53 Director
Peter D. Brettell 43 Managing Director of Sir Alexander Gibb and
Partners Ltd.; Director-Nominee
</TABLE>
2
<PAGE>
BRUCE C. COLES joined the Company in September 1995 and is the Chairman of the
Board of Directors and Chief Executive Officer of the Company. Prior to joining
the Company Mr. Coles was Chairman and Chief Executive Officer of Stone &
Webster Incorporated. Prior to August 1995, Mr. Coles held various technical
and management positions with Stone & Webster Incorporated and its related
affiliates since June, 1968. Mr. Coles also serves on the Board of Trustees of
Clarkson University, the National Board of Directors of Junior Achievement, the
Board of Councilors of The Carter Center, the Board of the Civil Engineering
Research Foundation, the advisory council for the Accreditation Board for
Engineering and Technology and the Civil Engineering Association of the
University of Maine.
JAMES I. DANGAR joined the Company in 1967 and has been President of the
Company's engineering subsidiary since January, 1989 and was Vice President from
March 1985 to December 1988. He has been a Director of the Company since 1984.
On November 29, 1994, he was elected President and Chief Operating Officer of
the Company. On February 13, 1995, he was elected Interim Chief Executive
Officer of the Company, a position he held until September, 1995. In March,
1996, Mr. Danger was assigned to manage two regions of the Company's domestic
operations.
ANDREW J. YOUNG joined the Company in 1990 and became Chairman and Chief
Executive Officer of a subsidiary of the International Group in November, 1990.
He has been a Director of the Company since June 16, 1995. On May 7, 1993, Mr.
Young was appointed by the Board of Directors to be Vice Chairman of the
Company. Prior thereto, he served as Mayor of the City of Atlanta from 1981 to
1989. Mr. Young serves as Chairman of the Metro Atlanta Chamber of Commerce,
Chairman of the Southern Africa Enterprise Development Fund and as Co-Chairman
of the Board of the Atlanta Committee for the 1996 Olympic Games. Mr. Young
serves as a director of Delta Air Lines, Cox Communications, Host Marriott,
Thomas Nelson Publishers, Film Fabricators, and Argus Newspaper.
ROBERT B. FOOSHEE joined the Company in January, 1996 as Executive Vice
President and Chief Financial Officer. Mr. Fooshee also serves as Treasurer of
the Company. Prior to joining the Company Mr. Fooshee provided consulting
services for RBF & Associates from February 1995 until joining the Company.
From August 1994 through January 1995, Mr. Fooshee was Executive Vice President
and Chief Financial Officer for Eddie Haggar Limited. From June 1992 until
August 1994, Mr. Fooshee was Chief Financial Officer for The Fresh Market. From
April 1986 until June 1992, Mr. Fooshee was Chief Financial Officer for Kayser-
Roth Corporation.
CLARENCE D. ZIMMERMAN joined the Company in 1966, and has held various technical
and management positions with the Company and/or its related affiliates. Mr.
Zimmerman has served as an Executive or Senior Vice President of various
affiliates of the Company since 1989. He has been a Director of the Company
since 1993.
GEOFFREY J. BRICE joined Sir Alexander Gibb & Partners Ltd. in 1960. He has
served in various engineering and management positions, most recently as a
Director of Sir Alexander Gibb and Partners Ltd. since 1989. He has been a
Director of the Company since 1994.
J. RICHARD COTTINGHAM joined the Company in 1988 as a branch manager of the
Company's engineering subsidiary. Since January 1991 he has served as Senior
Vice President, Vice President, Area Manager and/or Regional Manager of various
affiliates of the Company. Prior thereto, he served as
3
<PAGE>
Assistant Vice President of Law Engineering from March 1989 until January 1991.
Mr. Cottingham has been a Director of the Company since 1995.
CLAY E. SAMS joined the Company in 1964. Since December 1988, he has served as
Vice President and Corporate Geotechnical Consultant of the various affiliates
of the Company. Prior thereto, he served in various engineering and management
positions with the Company. Mr. Sams has been a Director of the Company since
1995.
FREDERICK J. KRISHON joined the Company in 1972 and in 1986 was elected as
Assistant Vice President for the Company's engineering subsidiary. He currently
serves as Vice President of an affiliate of the Company and is a corporate
consultant in facilities engineering. He has served in various engineering and
management positions with the Company or its affiliates. Mr. Krishon has been a
Director of the Company since 1995.
STEVEN MULLER has served as a Director of the Company since March 1991. Dr.
Muller is President Emeritus of The Johns Hopkins University where he served as
President from 1972 to 1990. Dr. Muller is also a director of Van/Kampen
American Capital Closed End and Common Sense Trust Funds; Beneficial
Corporation; Alex. Brown, Incorporated; Millipore Corporation; and Organization
Resources Counselors, Inc.
WALTER T. KISER joined the Company in 1962 and held various engineering and
management positions with the Company, including Chairman and Chief Executive
Officer of Law Companies Engineering Group, Inc. from 1991 until his retirement
in 1993. He served as Chairman and Chief Executive Officer of Law Engineering,
Inc. from 1989 until 1991, and served as President of the Company from March
1985 until December 1988. Additionally, from 1977 to 1993 Mr. Kiser served as a
Director of the Company. Mr. Kiser has been a Director since 1995.
JOHN Y. WILLIAMS has served as a Director of the Company since 1995. Mr.
Williams has been a Managing Director of Equity South Partners, L.P., a merchant
banking partnership, since January 1995 and of its affiliate Grubb & Williams,
Ltd. since 1987. Mr. Williams also serves as a Director of Tech Data
Corporation.
PETER D. BRETTELL joined Sir Alexander Gibb & Partners Ltd., an affiliate of the
Company in 1975 and has served in various engineering and management positions.
Since 1995, Mr. Brettel has served as Managing Director of Sir Alexander Gibb &
Partners Ltd.
The Board of Directors of Law Companies Group, Inc. met nine (9) times during
1995. All members of the Board of Directors attended at least 75% of the
meetings of the Board and the various committees of the Board of which they are
members except for Mr. Andrew J. Young who was excused from two Board and
Committee meetings due to Company commitments.
COMMITTEES OF THE BOARD
FINANCE & AUDIT COMMITTEE: Current members are Messrs. Kirtland (Chairman),
Cottingham, Kiser, Sams, Williams, Dangar and Coles (ex officio). The Finance
and Audit Committee met five times during 1995. The Committee monitors the
financial plans and performance of the Company; meets with the outside auditors
and reviews the scope of audit activities and the recommendations of the
auditors; and reviews other matters related to accounting and auditing.
COMPENSATION COMMITTEE: Current members are Messrs. Muller (Chairman),
Kirtland, Brice, Zimmerman and Coles (ex officio). The Compensation Committee
met three times during 1995. The Committee generally administers matters
relating to executive compensation. This includes recommendation of salary
4
<PAGE>
levels. The Committee makes recommendations concerning approval of the variable
compensation plan and administration thereof.
HUMAN RESOURCES DEVELOPMENT COMMITTEE: Current Members are Messrs. Muller
(Chairman), Krishon, Young, Zimmerman, Dangar and Coles (ex officio). The
Committee met three times during 1995. The Committee generally monitors,
reviews and recommends actions concerning human resources matters. These
include recruiting, diversity, compensation and benefits, training and personnel
administration.
NOMINATING COMMITTEE: There is no standing Nominating Committee of the Board as
such. The entire Board of Directors considers nominees and makes its
recommendations to the shareholders. The Company does not consider nominees
recommended by shareholders and there are no procedures by which shareholders
can submit recommendations for nominees to the Board.
COMPENSATION OF DIRECTORS
The Company pays its non-employee directors $3,000 per quarter for their
services, $2,000 for each Board meeting attended and $1,000 for each Board
Committee meeting attended. Committee chairmen receive $1,500 per meeting
chaired. The Company also reimburses all of its directors for reasonable
expenses incurred in connection with attending Board and Board Committee
meetings.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of June 1, 1996,
regarding the ownership interests in Common Stock of each executive officer
named in the summary compensation table, director and director-nominee
individually and of all directors and executive officers of the Company as a
group, and each person known to the Company to own beneficially more than five
percent of any class of the Company's voting securities. Each person or group
has sole voting and investment power with respect to all shares of the Company's
stock so owned, except as otherwise noted.
<TABLE>
<CAPTION>
Common Percent of
Name of Beneficial Owner Stock (1) Class
- --------------------------------------- --------- -----------
<S> <C> <C>
Bruce C. Coles 9,751 (2)
James I. Dangar 41,074 2%
Andrew J. Young 10,125 (2)
Robert B. Fooshee 0 (2)
W. Allen Walker 8,704 (2)
Darryl B. Segraves 1,700 (2)
Robert S. Gnuse 15,297 (2)
Lawrence J. White 168 (2)
Clarence D. Zimmerman 29,450 1%
Geoffrey J. Brice 6,250 (2)
Steven Muller 1,000 (2)
J. Richard Cottingham 14,169 (2)
Clay E. Sams (3) 85,439 4%
Frederick J. Krishon 36,327 1.8%
Walter T. Kiser 0 (2)
John Y. Williams 0 (2)
Peter D. Brettell 100 (2)
All executive officers, directors and
director nominees as a group (17 259,554 7.6%
persons)
=======================
</TABLE>
5
<PAGE>
(1) The number of shares of Common Stock beneficially owned by the persons
named in the table consists of shares owned and of shares subject to
options which may be exercised within 60 days of June 1, 1996.
(2) The percentage of shares beneficially owned by these persons is less than
1% of the class of stock so owned.
(3) Mr. Sams' address is 2801 Yorkmont, Charlotte, NC 28208.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation paid
during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers, based on salary and bonus earned during fiscal 1995. Bruce C. Coles
received a Restricted Stock Award of approximately 9,751 shares of the Company's
Common Stock.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------
RESTRICTED OPTIONS ALL OTHER
NAME & PRINCIPAL STOCK GRANTED COMPENSATION
POSITION YEAR SALARY($) BONUS ($) AWARDS (#) ($)
- --------------------------------- ------ ---------- --------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Bruce C. Coles 1995(1) 171,350 $200,000 50,000(2) 49,117(3)
Chairman of the Board, 1994 n/a
Chief Exec. Officer 1993 n/a
Andrew J. Young 1995 210,000
Vice Chairman and 1994 205,770
Director 1993 200,000
James I. Dangar 1995 170,231
President, Chief Operating 1994 166,773 10,000
Officer and Director;
President, Law Engineering 1993 160,020
and Environmental
Services, Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
RESTRICTED OPTIONS ALL OTHER
NAME & PRINCIPAL STOCK GRANTED COMPENSATION
POSITION YEAR SALARY($) BONUS ($) AWARDS (#) ($)
- --------------------------------- ------ ---------- --------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Darryl B. Segraves 1995 143,106
Executive Vice President, 1994 125,077 5,000
Secretary and General
Counsel 1993 111,107
Lawrence J. White 1995 125,432
Vice President and Chief 1994(4) 60,000
Information Officer
1993 n/a
</TABLE>
(1) Salary Amount for Mr. Coles represents only a partial year's salary since
joining the Company in September 1995.
(2) See "Option Grants in 1995."
(3) The amounts hereunder reflect relocation expenses, auto and life insurance
premiums and club dues paid by the Company.
(4) 1994 Salary Amount for Mr. White represents only a partial year salary
since joining the Company in June 1994.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
On November 29, 1994, R.K. Sehgal resigned as Chairman of the Board and Chief
Executive Officer of the Company, and the Board of Directors elected Henry J.
Hatch as Chairman of the Board and James I. Dangar as President (Subsequent
thereto, Mr. Dangar was elected Interim Chief Executive Officer by the Board).
On June 16, 1995, at a special meeting of the Board, Mr. Hatch resigned his
employment with the Company effective July 25, 1995. Subsequently, Mr. Hatch
submitted a letter dated July 10, 1995 wherein he declined to stand for re-
election to the Board of the Company.
On September 1, 1995 the Company, and Bruce C. Coles entered into an employment
agreement whereby Mr. Coles compensation, fringe benefits, stock options,
restrictive stock grant, base salary and relocation expense reimbursement were
set out. Moreover, Mr. Coles, subject to certain conditions, was guaranteed the
payment of his base salary (and targeted bonuses as approved by the Board of the
Company) to September 1, 1998. All of the obligations under the Agreement are
guaranteed by an irrevocable letter of credit. See "Report of Board of
Directors on Executive Compensation - Chief Executive Officer."
On December 12, 1995, the Company entered into an employment agreement with
James I. Dangar whereby Mr. Dangar's compensation fringe benefits were set out.
The Company also agreed that in the event Mr. Dangar was involuntarily
terminated from employment for any reason other than cause, then he is
guaranteed the payment of his base salary to September 1, 1998.
On January 10, 1996 the Company entered into an employment agreement with Robert
B. Fooshee whereby Mr. Fooshee's compensation, fringe benefits, and relocation
were set out. The Company also agreed that in
7
<PAGE>
the event Mr. Fooshee is involuntarily terminated from employment for any reason
other than cause, then he is guaranteed the payment of his base salary for
eighteen months.
On January 10, 1996 the Company entered into an agreement with Robert S. Gnuse
whereby Mr. Gnuse's salary and fringe benefits were set out. The Company also
agreed that in the event that Mr. Gnuse is terminated for any reason other than
cause that his severance would not be less than one week of pay for each year of
service rounded-up to the next whole year.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1995
Number of % of Total Potential Realized Value at Assumed
Securities Options Annual Rates of Stock Price
Underlying Granted to Exercise Appreciation for Option Term
Options Employees Price Per ------------------------------------
Name Granted in 1995 Share Expiration Date 5% 10%
- ---- ---------- ----------- ---------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Bruce C. Coles 50,000 100% $20.51 September 1, 2005 $645,000 $1,634,500
Andrew J. Young -0-
James I. Dangar -0-
Darryl B. Segraves -0-
Lawrence J. White -0-
</TABLE>
OPTIONS EXERCISED DURING 1995 AND YEAR END OPTION VALUES
There were no options exercised by the named executive officers during 1995.
The Company does not have any outstanding stock appreciation rights or warrants.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following employee directors served on the Compensation Committee: Messrs.
Brice, Zimmerman, Dangar (ex officio), and Coles (ex officio) during 1995. To
the Company's knowledge, there were no other interrelationships involving
members of the Compensation Committee or other directors requiring disclosure in
this proxy statement.
8
<PAGE>
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During 1995, the composition of the Compensation Committee fluctuated with the
resignation and addition of new directors throughout the year. At the time of
the preparation of this report, the Compensation Committee was composed of
Messrs. Muller (Chairman), Kirtland, Brice, Zimmerman and Coles (ex officio).
During 1995, the Board of Directors formed a task force to conduct a search for
a new chief executive officer. The candidate and his compensation package were
authorized by the Board. However, the Compensation Committee functioned with
respect to the compensation of all other executive officers. The Compensation
Committee determines variable compensation awards and makes recommendations
regarding executive officer salaries to the Board.
The Company's primary objective is to maximize, over the long-term, the
investments of shareholders. The Company has adopted a business strategy which
it believes will achieve its primary objective. The Company has also developed
a compensation strategy which will support the achievement of its business
strategy.
Key components of the executive compensation strategy are as follows:
MARKET COMPETITIVE - The Company's executive officer compensation program is
- ------------------
competitive with those organizations with which it competes for executive
talent. The market, consisting primarily of ten engineering consulting firms,
is monitored closely by the Company to assure that the Company has a program in
place to attract and retain superior executive talent. The Company's intent is
for compensation to be targeted at the median of this group; however, specific
facts and circumstances may cause deviations from the median. Competitive
market data and general compensation advice is provided to the Committee by an
independent compensation consultant.
LONG-TERM - The program is structured to deliver competitive pay over a number
- ---------
of years rather than focus on any single year. Superior pay is provided when
Company earnings performance exceeds expectations.
AT-RISK - A more significant portion of the compensation provided executive
- -------
officers will be based on Company performance. This will serve to control fixed
costs by shifting a portion of pay from fixed to variable.
EQUITY-BASED - Executive officers are encouraged to own a substantial amount of
- ------------
stock and will be provided opportunities to acquire additional shares through
stock option grants and other stock purchase opportunities. Stock option grants
will provide value to executives only if stock price appreciation is achieved
for all shareholders. Equity related pay is intended to be a major portion of
the executives' overall pay program. Equity opportunities are based on relative
potential contribution, accountability and responsibility of the various
executive positions.
CHIEF EXECUTIVE OFFICER
During 1995, the Company commenced a search for a chief executive officer who
had the experience to lead the Company through its current transition. After an
extensive search, the Board identified Mr. Coles as an individual with the
requisite experience and engineering background necessary to lead the Company.
The Board entered into negotiations with Mr. Coles and sought to offer him an
equity interest in the Company as well as salary commensurate with the position
and responsibilities of chief executive officer. The Company authorized a base
salary of $550,000 per year, effective September 1, 1995. Moreover, on November
20, 1995, Mr. Coles as part of his salary package received stock options for
50,000 shares of Company Common Stock. As part of his salary package, Mr. Coles
received a signing bonus on November 20, 1995 of restricted stock in the Company
having a then fair market value of $200,000 as determined by the November 15,
1995 appraisal of the shares of the Company. As part of the salary package Mr.
Coles was also granted an automobile allowance, relocation expenses, insurance,
and other fringe benefits as well as stock options for 50,000 shares of the
Company's common stock. Mr. Coles also received a cash bonus of $120,000 in
1996 based upon his employment agreement.
9
<PAGE>
SALARY
All but three (3) executive officers received increases to bring their salaries
more in line with the competitive market and with other executives at the
Company with comparable responsibilities.
BONUS
Decisions regarding bonuses are based primarily on the Committee's subjective
analysis of factors contributing to the Company's performance and of the
executive officer's individual contribution to such performance. Other than as
previously noted, bonuses were not paid to any executive officers in 1995.
VARIABLE COMPENSATION
In 1994, the Committee adopted a Variable Compensation Plan for executive
officers and selected members of management. The purpose of the Variable
Compensation Plan is to reward participants for achieving increases in
shareholder value, to provide competitive total cash compensation (salary plus
variable compensation) opportunities when compared to the competitor group
described above, and to increasingly shift future compensation from fixed
sources, such as base salary, to variable sources such as this plan.
The Variable Compensation Plan awards would be based on the achievement of
Economic Value Added (EVA). EVA is the net operating profit after taxes
remaining after subtracting a charge for the cost of capital employed in the
business. The Committee believes EVA most directly correlates with the creation
of shareholder value. A portion of the EVA above a threshold level is set aside
in a variable compensation pool. Each Participant receives a Predetermined
percentage of the pool. The executive officer participants' awards for 1995 are
zero in light of the Company's net operating loss in 1995.
EQUITY
The Board of Directors of the Company granted stock options for 50,000 shares of
Company common stock to Mr. Coles as part of his compensation package. No other
stock options were granted in 1995.
The Compensation Committee believes the compensation provided to the Company's
executive officers effectively rewards them based heavily on the performance of
the overall Company by emphasizing variable compensation features and long-term
equity incentives. The Committee believes this approach links executive
compensation to the performance of the Company over the long term.
INTERNAL REVENUE CODE SECTION 162M
The Committee has considered Internal Revenue Code Section 162M (Million Dollar
Limit on Deductible Executive Compensation) in structuring compensation
arrangements for 1996. The Committee does not expect this limit to be reached
in 1996, and expects that all compensation paid to named executives will be
fully tax deductible by the Company.
To the extent there were any, the Board of Directors approved without change all
decisions of the Compensation Committee during 1995. This report has been
submitted on behalf of the Board of Directors. For purposes of this report, the
Board of Directors consisted of the following members:
Bruce C. Coles
James I. Dangar
Andrew J. Young
J. Richard Cottingham
Walter T. Kiser
Steven Muller
10
<PAGE>
Clifford M. Kirtland, Jr.
Frederick J. Krishon
Clay E. Sams
Geoffrey J. Brice
Clarence D. Zimmerman
John Y. Williams
PENSION AND RETIREMENT BENEFITS
The Company has a noncontributory defined benefit plan covering substantially
all United States employees who have completed one full year of service and have
attained the age of 21. Benefits are calculated in accordance with the
following formula: 1.4% of average compensation multiplied by years of service
not in excess of 20 years, plus .65 percent of average compensation in excess of
social security covered compensation multiplied by years of service not in
excess of 20 years, plus one percent of average compensation times years of
service in excess of 20 years, but not in excess of 35 years of service. The
maximum annual benefit is limited in accordance with Section 415(b) of the Code,
and commencing in 1989, the compensation that may be taken into account in the
calculation of benefits is limited in accordance with section 401(a)(17) of the
Code. The maximum compensation and benefit for 1995 are $150,000 (subject to a
"grandfather" rule for employees who began participation in the plan before
1994) and $120,000 respectively. These amounts are subject to annual indexing
by the Internal Revenue Service.
For purposes of the plan, compensation is deemed to be the participant's highest
average compensation during any three consecutive years of service within the
ten consecutive plan years of service immediately preceding retirement or
separation from the Company. The compensation that is taken into account in
determining highest average compensation is the participant's annualized rate of
base salary (as of each January 1) not including bonuses, commissions, project,
overseas or other premium pay and other nonrecurring compensation. In general,
base salary taken into account in calculating pension plan benefits is the same
as "Salary" in the summary compensation table above (subject to the $150,000
maximum). Benefits may be paid monthly over the life of the participant (with
joint and survivor options available at reduced rates). The following table
reflects estimated annual benefits (expressed as a straight-life annuity) as
determined under the revised formula (based on the assumption that a participant
was born 1930 and retired at age 65 at the end of 1995, with the indicated
amounts of compensation and years of service):
<TABLE>
<CAPTION>
Retirement Benefits at Normal Retirement
Date Based on Years of Service
- ------------------------------------------------------
Average
Compensation 10 Years 20 Years 25 Years 35 Years
- -------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
25,000 $ 3,500 $ 7,000 $ 8,250 $ 10,750
50,000 8,565 17,130 19,630 24,630
100,000 18,815 37,630 42,630 52,630
150,000 29,065 58,130 65,630 80,630
200,000 37,275 76,602 87,655 107,655
250,000 43,309 90,180 102,340 120,000
</TABLE>
Although the benefit formula under the pension plan is "integrated" with Social
Security benefits, the amounts listed in the table above are not subject to any
deduction for Social Security or other offset amounts.
The following represents the credited years of service toward pension and
retirement benefits, as of December 31, 1995, for each of the five most highly
paid executive officers: Mr. Coles - .4 years; Mr. Young - 6 years; Mr. Dangar
- - 29 years; Mr. Segraves - 7 years and Mr. White - 2 years.
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return (assuming
reinvestment of dividends) to the Company's holders of Common Stock since the
first day of the fiscal year in which the Company became subject to the
reporting requirements of the Securities Exchange Act of 1934, as well as an
overall stock market index (S&P 500) and the Company's self-constructed peer
group index.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG LAW COMPANIES GROUP, S&P INDEX AND COMPETITIVE INDEX
Law
Measurement period Companies S&P 500 Competitive
(Fiscal year Covered) Group(1) Index Index(2)
- --------------------- --------- ------------ -----------
Measurement PT -
12/31/90 $100.00 $100.00 $100.00
FYE 12/31/91 $140.28 $126.88 $109.43
FYE 12/31/92 $125.05 $132.55 $ 99.23
FYE 12/31/93 $160.33 $142.56 $ 67.02
FYE 12/31/94 $123.46 $139.72 $ 50.46
FYE 12/31/95 $ 79.02 $187.37 $ 52.58
The stock performance graph assumes $100 was invested in the Company's Common
Stock on
January 1, 1991.
(1) The Company's Common Stock is not traded on any public market. The
Company's Third Restated Articles of Incorporation, as amended, mandate
that an independent appraiser conduct an appraisal of the Company for
purposes of determining the "fair market value" of the Company's Common
Stock at least as often as annually. The appraisal of the Company's Common
Stock as of December 31, 1995 provides that the fair market value per share
of Common Stock is $16.91.
(2) The competitive index includes the following companies: Michael Baker
Corp.; Greiner Engineering, Inc.; Harding Associates, Inc.; International
Technology Corp.; Groundwater Technology Inc.; and Roy F. Weston, Inc. For
purposes of computing the index, these companies have been weighted based
on their respective market capitalizations.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent (10%) of the Company's common stock, to file with the
Securities Exchange Commission ("SEC") initial reports of beneficial ownership
and reports of changes in beneficial ownership of the Company's Common Stock.
The rules promulgated by the SEC under Section 16(a) of the Exchange Act require
those persons to furnish the Company with copies of all reports filed with the
SEC pursuant to Section 16(a).
12
<PAGE>
Based solely on these reports delivered to the Company, certain filings with the
SEC were late in connection with the following individuals (1 late filing each):
Messrs. Coles, Krishon, Young, Sams, Brice, Zimmerman, Cottingham, Dangar,
Williams, Segraves, Walker, Gnuse, and White. All other executive officers and
directors have filed with the SEC on a timely basis all reports required to be
filed under Section 16(a) of the Exchange Act.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Walter T. Kiser, a Director of the Company, is a former officer, and shareholder
of the Company, who took early retirement in 1993. At that time, he entered
into an agreement whereby the Company redeemed 95,000 shares of Company stock
owned by Mr. Kiser for $2,028,153.60 of which Mr. Kiser received 10% in cash and
the remainder subject to a promissory note with principal payments to be made
annually on July 1 for five years and interest payable quarterly at 8%. On
February 18, 1994, Mr. Kiser sold his remaining 10,000 shares of Company stock
to the Company for $343,100.
Henry J. Hatch, formerly an employee of the Company, resigned on June 16, 1995,
effective July 25, 1995. Subsequently, Mr. Hatch submitted a letter dated July
10, 1995, wherein he declined to stand for re-election to the Board of the
Company. See "Employments Contracts and Termination of Employment
Arrangements".
Frederick J. Krishon, a Director of the Company, received a loan, secured by his
Company stock, as part of a relocation package from a Company affiliate for
$62,000 in the form of a demand note with interest payable quarterly at 8%.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP (Ernst & Young), independent certified public
accountants, audited the Consolidated Financial Statements of the Company as of
and for the year ended December 31, 1995. This firm has served in this capacity
since 1987.
The Company has previously disclosed that in late 1994 the Company dismissed
Coopers & Lybrand LLP (Coopers & Lybrand), Cyprus as its independent auditor of
the financial statements of the consolidated Company's affiliate, Gibb Africa
International Limited ("Gibb Africa"). For each of the years ended December 31,
1990 through 1993, Ernst & Young, the principal independent auditors for the
Company, relied upon the audit report of Coopers & Lybrand in its audit report
on the Company's Consolidated Financial Statements. Neither Ernst & Young's
audit reports on the Company's financial statements for the past two years nor
Cooper & Lybrand's audit reports on Gibb Africa's financial statements for the
past two years contained an adverse opinion or disclaimer of opinion, and
neither was qualified as to uncertainty, audit scope, or accounting principles.
The process leading to the decision to change Gibb Africa's independent auditors
from Coopers & Lybrand to Ernst & Young began with managements recommendation to
effect the change in independent auditor for Gibb Africa in 1994. The
recommendation was made on May 5, 1994, to the Finance and Audit Committee of
the Board of Directors which authorized management to proceed with the change,
culminating in the notification to Coopers & Lybrand referenced above. On May
6, 1994, the Board of Directors of the Company authorized the appointment of
Ernst & Young as the Company's worldwide independent auditor. The
recommendation to change independent auditors for Gibb Africa was made due to
the Company's desire to consolidate its independent audit work with a single
accounting firm in order to achieve consistency and efficiencies. During the
Company's two most recent audited fiscal years and the subsequent interim period
preceding the dismissal of Coopers & Lybrand, there were no disagreements
between the Company and Coopers & Lybrand on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Coopers & Lybrand,
would have caused it to make a reference to the subject matter of the
disagreement in connection with its report. Ernst & Young has served as the
principal
13
<PAGE>
independent auditor of the Company's Consolidated Financial Statements since
1987. In that capacity, Ernst & Young has been consulted by the Company on all
matters of financial reporting and accounting principles, except for matters
involving the financial statements of subsidiaries or affiliates of the Company
that are audited by independent accountants other than Ernst & Young. During
the Company's two most recent fiscal years and subsequent, the Company has not
consulted with Ernst & Young regarding the application of accounting principles
to any transaction involving Gibb Africa, either completed or proposed (except
as to how those accounting principles or transactions impact the Consolidated
Financial Statements of the Company), or the type of audit opinion that might be
tendered on Gibb Africa.
STOCKHOLDER PROPOSALS
Any proposal by a stockholder intended to be presented at the Annual
Meeting of Shareholders to be held in 1997, must be received by the Company on
or before March 9, 1997 to be included in the proxy materials of the Company
relating to such meeting.
OTHER BUSINESS
It is not anticipated that any other matters will be brought before the
Meeting for action; however, if any such other matters shall properly come
before the Meeting, it is intended that the persons authorized under the proxies
may, in the absence of instructions to the contrary, vote or act thereon in
accordance with their best judgment.
By Order of the Board of Directors,
/s/ Darryl B. Segraves
-----------------------------------
Darryl B. Segraves
Executive Vice President,
Secretary and General Counsel
Kennesaw, Georgia
June 11, 1996
14
<PAGE>
<TABLE>
<S> <C>
LAW COMPANIES GROUP, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
114 TOWNPARK DRIVE DIRECTORS. The undersigned hereby appoints Robert S. Gnuse and
KENNESAW, GEORGIA 30144 Clifton S. Cochran and each of them with power of substitution in each,
Proxy proxies to appear and vote, as designated below, all Common Stock of
_____________________________________ Law Companies Group, Inc. held of record on June 1, 1996 by the
undersigned, at the Annual Meeting of Stockholders to be held on July 8,
1996, and at all adjournments thereof. Management recommends a vote
in favor of all nominees listed in Item 1.
1. ELECTION OF DIRECTORS
To elect a Board of thirteen (13) directors composed of the following director nominees:
Bruce C. Coles Frederick J. Krishon
James I. Dangar Steven Muller
Andrew J. Young Walter T. Kiser
Clarence D. Zimmerman John Y. Williams
Geoffrey J. Brice Peter D. Brettell
J. Richard Cottingham Clay E. Sams
Robert B. Fooshee
[ ] FOR all director nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all director nominees listed above
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE RESPECTIVE LIST ABOVE.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED. IF NO INDICATION IS MADE, IT WILL BE
VOTED IN FAVOR OF ALL DIRECTOR-NOMINEES AND IN FAVOR OF PROPOSAL 1.
Dated: , 1996
-------------------------------------
-------------------------------------------------
-------------------------------------------------
Signature(s)
(Please print and sign as name appears on proxy. When shares are held by joint tenants,
---
both should sign. When signing in a fiduciary or representative capacity, give full title as
such.)
PLEASE MARK, DATE, AND SIGN THIS PROXY, INDICATING ANY CHANGE OF ADDRESS, AND RETURN IT PROMPTLY TO PAULA
WOODMAN, 3 RAVINIA DRIVE, SUITE 1830, ATLANTA, GEORGIA 30346 IN THE ENCLOSED RETURN ENVELOPE.
</TABLE>
