<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Preliminary Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GRANITE CONSTRUCTION INCORPORATED
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules o-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2)
of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
GRANITE CONSTRUCTION INCORPORATED
585 WEST BEACH STREET
WATSONVILLE, CALIFORNIA 95076
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
GRANITE CON-STRUCTION INCORPORATED, a Delaware corporation (the "Company"), will
be held on May 18, 1998, at 10:30 a.m. local time, at the Monterey Marriott
Hotel, 350 Calle Principal, Monterey, California for the following purposes:
1. To elect two (2) directors of the Company for the ensuing three-year
term.
2. To act upon a proposal to amend the Certificate of Incorporation of the
Company so as to increase the authorized Common Stock.
3. To ratify the appointment of Coopers & Lybrand, L.L.P. as the
independent accountants of the Company for the fiscal year ending
December 31, 1998.
4. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on April 3, 1998 are
entitled to notice of, and to vote at, this meeting and any continuations or
adjournments thereof. For ten days prior to the meeting, a complete list of
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose germane to the meeting during ordinary
business hours at the Monterey Marriott Hotel, 350 Calle Principal, Monterey,
California 93940.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT
AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THE MEETING.
The vote of every stockholder is important in achieving this goal, and your
cooperation in promptly returning your executed Proxy will be appreciated. Each
Proxy is revocable and will not affect your right to vote in person in the event
that you decide to attend the meeting.
By Order of the Board of Directors,
Michael Futch
Vice President, General Counsel and
Secretary
Watsonville, California
April 30, 1998
<PAGE> 3
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
------------------------
GRANITE CONSTRUCTION INCORPORATED
585 WEST BEACH STREET
WATSONVILLE, CALIFORNIA 95076
This Proxy Statement is furnished in connection with the solicitation by
the management of GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation
(hereinafter called the "Company") of Proxies for use at the Annual Meeting of
Stockholders to be held on May 18, 1998, or any adjournment thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting. This Proxy
Statement and accompanying Proxy are first being sent to stockholders on
approximately April 30, 1998. The cost of the solicitation of Proxies will be
borne by the Company. The Company may use the services of its officers,
directors and others to solicit Proxies personally or by telephone, without
additional compensation.
VOTING RIGHTS
All shares represented by valid Proxies received prior to the meeting will
be voted and, where a stockholder specifies by means of the Proxy a choice with
respect to any matter to be acted upon, the shares will be voted in accordance
with the specifications so made. If no instructions are given on the executed
Proxy, the Proxy will be voted in favor of the proposals described. A
stockholder who signs and returns a Proxy in proper form will have the power to
revoke it at any time before it is voted. A Proxy may be revoked by filing with
the Secretary of the Company a written revocation or duly executed Proxy bearing
a later date, or by appearing at the meeting and electing to vote in person. The
Company's bylaws provide that a majority of the shares entitled to vote, whether
present in person or represented by Proxy, shall constitute a quorum for the
transaction of business at the meeting.
The voting securities of the Company entitled to vote at the meeting
consist of shares of Common Stock. Only stockholders of record at the close of
business on April 3, 1998 are entitled to notice of, and to vote at, the Annual
Meeting. On April 3, 1998, there were 18,409,411 shares of Common Stock issued
and outstanding. Each share of Common Stock is entitled to one vote.
NOMINATION AND ELECTION OF DIRECTORS
The Company currently has an eight-member Board of Directors. Directors are
elected for three-year terms and are divided into three classes, with one class
elected at each annual meeting of stockholders.
Two (2) directors of the Company are to be elected for the ensuing
three-year term and until their successors are elected and qualified. The
nominees are Rebecca A. McDonald and Brian C. Kelly. Certain information with
respect to their ages and background is set forth below. Ms. McDonald was
elected to her present term of office at the 1995 Annual Meeting of Stockholders
of the Company. Mr. Kelly was appointed by the Board in 1995 to fill the
unexpired term of a vacant directorship. Mr. Kelly's appointment was ratified by
the Stockholders at the 1996 Annual Meeting.
Denman K. McNear was also elected to his present term of office at the 1995
Annual Meeting and which term will expire at this year's Annual Meeting. The
Board of Directors' retirement policy provides that a director may continue to
serve as a director until the end of the term of office in which the director
reaches his or her 72nd birthday. Accordingly, Mr. McNear will retire from the
Board, and the Board of Directors will elect a new director at the earliest
practicable date.
Each nominee will hold office until his or her term expires or until his or
her successor is elected and qualified unless he or she resigns or his or her
office becomes vacant by death, removal, or other cause in accordance with the
bylaws of the Company.
<PAGE> 4
It is intended that votes pursuant to the Proxies will be cast for the
named nominees. The persons named in the accompanying form of Proxy will vote
the shares represented thereby for the nominees. Management knows of no reason
why any of these nominees should be unable or unwilling to serve. However, if
any nominee(s) should for any reason be unable or unwilling to serve, the
Proxies will be voted for the election of such other person(s) for the office of
director as the Board may recommend in the place of such nominee(s).
If a quorum is present and voting, the two nominees receiving the highest
number of votes will be elected for the ensuing three-year term. Abstentions and
shares held by brokers that are present, but not voted because the brokers were
prohibited from exercising discretionary authority, i.e., broker nonvoter, will
be counted as present in determining if a quorum is present.
<TABLE>
<CAPTION>
DIRECTOR POSITION AGE DIRECTOR SINCE
-------- -------- --- --------------
<S> <C> <C> <C>
NOMINEES
Rebecca A. McDonald.......... Director 45 Director since 1994; term ends 1998.
Brian C. Kelly............... Director 66 Director since 1995; term ends 1998.
CONTINUING
Richard C. Solari............ Chairman of the Board 73 Director since 1979; term ends 1999.
David H. Watts............... President, Chief Executive 59 Director since 1988; term ends 1999.
Officer and Director
Joseph J. Barclay............ Director 65 Director since 1988; term ends 1999.
Richard M. Brooks............ Director 69 Director since 1990; term ends 2000.
Raymond E. Miles............. Director 65 Director since 1988; term ends 2000.
RETIRING
Denman K. McNear............. Director 72 Director since 1988; term ends 1998.
</TABLE>
Granite Construction Incorporated was incorporated in Delaware in January,
1990 as the holding company for Granite Construction Company, which was
incorporated in California in 1922. All dates for people listed in this proxy
referring to the dates of service with the Company include the periods in which
they served for Granite Construction Company.
MR. SOLARI has been Chairman of the Board since 1985. Mr. Solari was
employed by the Company from 1945 until his retirement in 1995. He served as
President and Chief Executive Officer from 1979 to 1987.
MR. WATTS is currently, and has been since 1987, President and Chief
Executive Officer of the Company. He was formerly President and Chief Executive
Officer and a director of Ford, Bacon & Davis, Inc., an industrial engineering
and construction firm. Mr. Watts currently serves as a director of TIC Holdings,
Inc., the California State Chamber of Commerce, the Beavers, Nationwide Public
Projects Coalition, the Construction Industry Roundtable, the Monterey Bay Area
Council of the Boy Scouts of America, and the Community Foundation for Monterey
County. He holds a B.A. degree in Economics from Cornell University.
MR. MCNEAR is the retired Chairman, President and Chief Executive Officer
of the Southern Pacific Transportation Company. He holds a B.S. degree in Civil
Engineering from the Massachusetts Institute of Technology and an M.B.A. degree
from Stanford University. Mr. McNear will retire from the Board after his term
expires at the Annual Meeting.
MR. BROOKS is self-employed as a Financial Consultant. He was formerly
President and Chief Executive Officer of SFA Management Corporation and Vice
President, Finance and Treasurer of Lucky Stores, Inc. Mr. Brooks is a director
of Longs Drug Stores Corporation, BEI Technologies, Inc. and Western Farm Credit
Bank. He holds a B.S. degree in Applied Economics from Yale University and an
M.B.A. degree from the University of California, Berkeley.
MS. MCDONALD is currently President and Chief Executive Officer of Amoco
Energy Development and Managing Director of Amoco Energy Group North America.
She was formerly President of Amoco's Natural
2
<PAGE> 5
Gas Group. Ms. McDonald is a director of Morton International. She holds a B.S.
degree in Education from Stephen F. Austin University.
MR. BARCLAY is currently Chairman of Cascade Corporation, a manufacturer of
materials handling equipment. He was formerly President and Chief Executive
Officer of Cascade. Mr. Barclay is a director of Cascade Corporation and
Columbia Machine, Inc. He holds a B.S. degree in Industrial Engineering from
Illinois Institute of Technology.
MR. KELLY is self-employed as a Construction Consultant. He is utilizing
his business expertise as a volunteer with the Diocese of Monterey and as a
member of the Board of the Hospice of the Central Coast. Mr. Kelly holds a B.S.
degree in Civil Engineering from Iowa State University and an M.B.A. degree from
Stanford University.
DR. MILES is the Trefethen Professor Emeritus at the Walter A. Haas School
of Business at the University of California, Berkeley. He has been a member of
the faculty since 1963 and is a former Dean of the School. Dr. Miles is a
director of the Union Bank of California. He holds B.A. and M.B.A. degrees from
the University of North Texas and a Ph.D. in Organizational Behavior and
Industrial Relations from Stanford University.
The Company has an Audit/Compliance Committee, a Compensation Committee, a
Nominating Committee, a Strategic Planning Committee, and an Executive
Committee.
AUDIT/COMPLIANCE COMMITTEE
Richard M. Brooks, Chairman
Joseph J. Barclay
Brian C. Kelly
Rebecca A. McDonald
Denman K. McNear
Raymond E. Miles
The functions of the Audit/Compliance Committee include recommending the
independent accountants to the Board of Directors, reviewing and approving the
planned scope of the annual audit, proposed fee arrangements and the results of
the annual audit, reviewing the adequacy of accounting and financial controls,
reviewing the independence of the independent accountants, approving all
assignments to be performed by the independent accountants, instructing the
independent accountants, as deemed appropriate, and to undertake special
assignments. The committee also oversees the Ethics and Compliance Program
including participation in the annual evaluation of the Compliance Officer and
giving a detailed annual report to the Board on the progress of the Program and
plans for its future activities. The Audit/Compliance Committee is comprised
entirely of non-employee directors. During fiscal year 1997, the
Audit/Compliance Committee held two (2) meetings.
COMPENSATION COMMITTEE
Richard C. Solari, Chairman
Joseph J. Barclay
Richard M. Brooks
Denman K. McNear
The Compensation Committee reviews and recommends salaries for corporate
officers and key employees. In addition, the Compensation Committee administers
the 1990 Omnibus Stock and Incentive Plan with respect to persons subject to
Section 16 of the Securities Exchange Act of 1934. The Compensation
3
<PAGE> 6
Committee is comprised entirely of non-employee directors. The Compensation
Committee held one (1) meeting in 1997.
NOMINATING COMMITTEE
Richard C. Solari, Chairman
Joseph J. Barclay
Denman K. McNear
Raymond E. Miles
The Nominating Committee recommends and nominates persons to serve on the
Board of Directors. The Committee will consider nominees recommended by
stockholders as long as the stockholder gives timely notice in writing of his or
her intent to nominate a director. To be timely, a stockholder nomination for a
director to be elected at the 1999 Annual Meeting must be received at the
Company's principal office on or before December 12, 1998. The Nominating
Committee held no meetings in fiscal year 1997.
STRATEGIC PLANNING COMMITTEE
Raymond E. Miles
Rebecca A. McDonald
Brian C. Kelly
The function of the Strategic Planning Committee is to develop, in
conjunction with management, the Company's Strategic Plan and to provide overall
strategic planning direction for the Company. The Strategic Planning Committee
held no meetings in fiscal year 1997.
EXECUTIVE COMMITTEE
Richard C. Solari
David H. Watts
Joseph J. Barclay
The Executive Committee's responsibility is to exercise all powers and
authority of the Board of Directors in the management of business affairs of the
Company as authorized by the Board. The Committee reviews and approves specific
decisions as established by the current "Limits of Authority" schedule. It may
exercise the power and authority of the Board of Directors to declare a
dividend, authorize the issuance of stock or to adopt a certificate of ownership
and merger pursuant to Section 253 of the Delaware General Corporation Law.
Members of the Executive Committee do not receive any meeting fees or other
compensation for their service on the Committee.
During fiscal year 1997, the Board of Directors held six (6) meetings. No
Director attended fewer than seventy-five percent (75%) of the meetings of the
Board or any committee on which he or she served.
4
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table contains information as of April 1, 1998 (i) regarding
the ownership of the Common Stock of the Company by all persons who, to the
knowledge of the Company, were the beneficial owners of 5% or more of the
outstanding shares of Common Stock of the Company (except for Primecap
Management Company and Capital Guardian Trust which ownership interest is as of
December 31, 1997), (ii) each director and director nominee of the Company,
(iii) the Chief Executive Officer and the three other most highly compensated
executive officers of the Company as of April 1, 1998, whose salary and bonus
for the fiscal year ended exceeded $100,000, and (iv) all executive officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME OWNERSHIP(1) OUTSTANDING
---- ----------------- ------------
<S> <C> <C>
Emben & Co. (ESOP Trust).................................... 5,529,124 30.03%
c/o BNY Western Trust Company
One Wall Street
New York, NY 10286
Capital Guardian Trust Company(2)........................... 1,421,450 7.72%
333 S. Hope St.
Los Angeles, CA 90071
Primecap Management Company................................. 1,400,000 7.61%
Pasadena, California
Richard C. Solari(3)........................................ 92,676 *
David H. Watts(4)........................................... 160,742 *
Joseph J. Barclay........................................... 7,500 *
Richard M. Brooks........................................... 3,000 *
Brian C. Kelly.............................................. 3,500 *
Rebecca A. McDonald......................................... 500 *
Denman K. McNear............................................ 1,500 *
Raymond E. Miles............................................ 500 *
William E. Barton(5)........................................ 61,034 *
Patrick M. Costanzo(6)...................................... 152,841 *
William G. Dorey(7)......................................... 186,017 *
All executive officers and directors as a group (11
persons)(2)(3) (5)(6)..................................... 669,810 3.64%
</TABLE>
- ---------------
* Less than 1%.
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community
property laws where applicable.
(2) The Company has been advised by Capital Guardian Trust Company that Capital
Guardian Trust Company, a bank as defined in Section 3(a)6 of the Securities
Exchange Act of 1934 (the "Act"), is a wholly-owned subsidiary of Capital
Group Companies, Inc. ("Capital Group") and serves as the investment manager
of various institutional accounts. Capital Group is the parent holding
company of six investment management companies that hold investment power,
and, in some cases, voting power with respect to 1,566,700 shares of Common
Stock. Capital Group does not have investment power or voting power over the
securities; however, may be deemed to be the beneficial owner of such
securities by virtue of Rule l3d-3 under the Act. Of Capital Group's six
subsidiaries only Capital Guardian Trust Company by itself owns 5% or more
of the outstanding securities.
(3) Includes 75,000 shares of Common Stock held by the Solari-Lane Trust I and
10,719 shares held by the Solari Family Trust as of April 1, 1998. Mr.
Solari is the trustee and a beneficiary under the trusts. Also includes
1,648 shares held in an IRA Roll-Over Account.
5
<PAGE> 8
(4) Includes approximately 30,783 shares of Common Stock owned by the Employee
Stock Ownership Plan ("ESOP") but allocated to Mr. Watts' account as of
April 1, 1998, and 91,006 shares of restricted stock over which Mr. Watts
has voting, but not dispositive power, as of April 1, 1998. These shares are
subject to vesting and distribution restrictions. Also included are 6,750
shares for options previously vested under the 1990 Omnibus Stock and
Incentive Plan and which Mr. Watts has the right to acquire. Mr. Watts may
be deemed to be the beneficial owner of such shares.
(5) Includes approximately 29,695 shares of Common Stock owned by the Employee
Stock Ownership Plan ("ESOP") but allocated to Mr. Barton's account as of
April 1, 1998, and 23,502 shares of restricted stock over which Mr. Barton
has voting, but not dispositive power, as of April 1, 1998. These shares are
subject to vesting and distribution restrictions. Also included are 3,000
shares for options previously vested under the 1990 Omnibus Stock and
Incentive Plan and which Mr. Barton has the right to acquire. Mr. Barton may
be deemed to be the beneficial owner of such shares.
(6) Includes approximately 56,329 shares of Common Stock owned by the Employee
Stock Ownership Plan ("ESOP") but allocated to Mr. Costanzo's account as of
April 1, 1998, and 58,303 shares of restricted stock over which Mr. Costanzo
has voting, but not dispositive power, as of April 1, 1998. These shares are
subject to vesting and distribution restrictions. Also included are 6,750
shares for options previously vested under the 1990 Omnibus Stock and
Incentive Plan and which Mr. Costanzo has the right to acquire. Mr. Costanzo
may be deemed to be the beneficial owner of such shares.
(7) Includes approximately 99,588 shares of Common Stock owned by the Employee
Stock Ownership Plan ("ESOP") but allocated to Mr. Dorey's account as of
April 1, 1998, and 55,400 shares of restricted stock over which Mr. Dorey
has voting, but not dispositive power, as of April 1, 1998. These shares are
subject to vesting and distribution restrictions. Also included are 6,000
shares for options previously vested under the 1990 Omnibus Stock and
Incentive Plan and which Mr. Dorey has the right to acquire. Mr. Dorey may
be deemed to be the beneficial owner of such shares.
EXECUTIVE COMPENSATION AND OTHER MATTERS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth a summary of compensation as to the Chief
Executive Officer and the three other most highly compensated executive officers
as of December 31, 1997, whose salary and bonus exceeded $100,000 for the fiscal
year ended December 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
AWARDS
--------------------- PAYOUTS
ANNUAL COMPENSATION(1) RESTRICTED -------
------------------------- STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS(2) AWARDS(3) SARS PAYOUTS COMPENSATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)
------------------ ---- ------- -------- ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Watts............... 1997 270,000 305,000 516,839 -- -- 14,235
President and Chief 1996 240,000 290,000 379,540 -- -- 13,680
Executive Officer 1995 240,000 290,000 505,515 -- -- 18,000
William E. Barton............ 1997 140,000 130,000 144,009 -- -- 14,235
Vice President and 1996 115,000 134,000 105,606 -- -- 13,680
Chief Financial Officer 1995 115,000 134,000 158,323 -- -- 18,000
Patrick M. Costanzo.......... 1997 170,000 285,000 170,689 -- -- 14,235
Senior Vice President 1996 135,000 270,000 224,170 -- -- 13,680
and Manager 1995 135,000 270,000 276,124 -- -- 18,000
Heavy Construction Division
William G. Dorey............. 1997 170,000 285,000 340,774 -- -- 14,235
Senior Vice President and 1996 135,000 270,000 241,259 -- -- 13,680
Manager Branch Division 1995 135,000 270,000 276,124 -- -- 18,000
</TABLE>
6
<PAGE> 9
- ---------------
(1) For the year ended December 31, 1997, compensation deferred at the election
of the officer under the Key Management Deferred Compensation Plan for
Messrs. Watts, Barton, Costanzo and Dorey was $295,203; $6,000; $273,283 and
$6,000, respectively. For the year ended December 31, 1996 such deferred
compensation amounted to $63,000; $3,000; $257,718 and $3,000, respectively,
while for the year ended December 31, 1995 deferred compensation amounted to
$103,000; $2,370; $255,000 and $3,000, respectively.
(2) Amounts include cash bonuses earned in the current year but, pursuant to the
Company's incentive compensation plan, paid in the following year. The
amounts, however, do not include cash bonuses paid in the current year but
earned in the previous year.
(3) The amount of awards for each year is based on the Company's stock closing
price on the grant date multiplied by the number of shares awarded for the
year. Such awards are earned in the current year but issued as stock in the
following year. The aggregate number of restricted shares outstanding at
December 31, 1997 for Messrs. Watts, Barton, Costanzo and Dorey were 76,721;
18,493; 68,105 and 47,238, respectively, with an aggregate market value for
those same officers of $1,764,583, $425,339, $1,566,415 and $1,086,474,
respectively, based on the Company's stock closing price of $23.00 at
December 31, 1997. The number of shares and values for each officer at
December 31, 1997 exclude the shares issued in March 1998 for services
performed in 1997 which appear in the table as 1997 compensation. A portion
of the restricted stock reflected for 1997 and 1996 was awarded based on
deferred compensation from 1990. Such deferred compensation reflects a one
time event of accelerated income to the Company caused by the Company's 1990
change from the completed contract to the percentage of completion
accounting method, on which incentive compensation was deferred and is paid
through restricted stock awards not to exceed $50,000 per year. At December
31, 1997, the amounts of 1990 deferred compensation remaining to be paid
were $36,139 and $11,383 for Messrs. Watts and Dorey, respectively. None of
the restricted stock issued vests within three years of the date of grant.
Dividends are paid on restricted shares on the same basis as all other
outstanding shares.
(4) Amounts represent contributions to the Employee Stock Ownership Plan and to
the Profit Sharing and 401(K) Plan that were earned during the current year,
of which a portion was allocated in the following year.
OPTIONS OF EXECUTIVE OFFICERS
The following table provides the specified information concerning exercises
of options to purchase the Company's Common Stock in the fiscal year ended
December 31, 1997, and unexercised options held as of December 31, 1997, by the
persons named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END(1)
SHARES ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David H. Watts............ -- -- 6,750 -- $78,773 --
William E. Barton......... -- -- 3,000 -- $35,010 --
Patrick M. Costanzo....... -- -- 6,750 -- $78,773 --
William G. Dorey.......... -- -- 6,000 -- $70,020 --
</TABLE>
- ---------------
(1) For each named executive officer, the value of the exercisable options is
based on a closing stock sale price of $23.00 on December 31, 1997, less the
grant price of $11.33 per share.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
In April, 1990, Granite Construction Company, a subsidiary of the Company
("Granite"), entered into employment agreements with William E. Barton, Mark E.
Boitano, Patrick M. Costanzo, William G. Dorey,
7
<PAGE> 10
and David H. Watts. Granite also entered into such agreements with Roxane C.
Allbritton and Michael L. Thomas on January 1, 1991, Arthur B. Nickerson on
January 1, 1993. On January 2, 1996 and May 19, 1997, the Company entered into
the same form of employment agreement with Michael Futch and Garry M. Higdem,
respectively. Effective February 1, 1997 the employment agreements entered into
with Messrs. Barton, Boitano, Costanzo, Dorey, Watts, Nickerson, Thomas and Ms.
Allbritton were formally assigned to, and the obligations thereunder accepted
by, the Company. These agreements provide that if the individual's employment
with the Company is terminated for certain reasons within two and one-half years
after a "change in control" of the Company, then the Company will pay to the
individual amounts up to three times the average gross annual compensation paid
to the individual over the five years prior to the "change in control." A
"change in control" is defined as (i) a merger, consolidation or acquisition of
the Company where the stockholders of the Company do not retain a majority
interest in the surviving or acquiring corporation; (ii) the transfer of
substantially all of the Company's assets to a corporation not controlled by the
Company or its stockholders; or (iii) the transfer to affiliated persons of more
than 30% of the voting stock of the Company, leading to a change of a majority
of the members of the Board of Directors.
Also in the event of a "change in control," options and grants of
restricted stock ("Awards") awarded under the 1990 Omnibus Stock and Incentive
Plan (the "Plan") are affected. The Plan provides that the surviving, successor,
or acquiring corporation shall either assume outstanding Awards or substitute
new Awards having an equivalent value. In the event that does not occur, the
Company's Board shall provide that any Awards otherwise unexercisable and/or
unvested shall be immediately exercisable and vested in full. The Plan further
provides that if such newly exercisable or vested Awards have not been exercised
as of the date of the change in control, they shall terminate effective as of
the date of the change in control.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and more than 10% stockholders were complied with, except that, due to
in-house administrative error, the Forms 5 for Messrs. Watts, Barton, Dorey, and
Costanzo were not timely filed.
COMPENSATION OF DIRECTORS
Mr. Solari, in his role as Chairman of the Board currently receives an
annual retainer of $36,000, payable quarterly. Mr. Watts receives $250 for each
month he serves as director of the Company. Messrs. Barclay, Brooks, Kelly,
McNear and Miles and Ms. McDonald currently receive an annual retainer of
$20,000, payable quarterly, for serving on the Board. In addition, Messrs.
Barclay, Brooks, Kelly, McNear, Miles and Solari and Ms. McDonald receive $800
for each Board of Directors meeting they attend and $600 for each Board of
Directors Committee meeting (except for meetings of the Executive Committee)
they attend.
8
<PAGE> 11
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the S&P 500 and the Dow Jones Heavy Construction Industry Index
(Fluor, Jacobs Engineering, Morrison Knudsen, Foster Wheeler, Stone & Webster
and Zurn Industries) for the period commencing on December 31, 1992, and ending
on December 31, 1997.
The graph assumes $100 invested on December 31, 1992 in the Company's stock
of $22.25 per share, and in the S&P 500 Index, and Dow Jones Construction
Industry Index. The Total Return also assumes reinvestment of dividends.
<TABLE>
<CAPTION>
Measurement Period Granite Dow Jones Heavy
(Fiscal Year Covered) Construction Inc. S & P 500 Construction
<S> <C> <C> <C>
Dec-92 100 100 100
Dec-93 113 110 105
Dec-94 93 112 101
Dec-95 147 153 141
Dec-96 135 189 134
Dec-97 167 252 101
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Solari, Barclay, Brooks and McNear served as members of the
Compensation Committee during fiscal 1997. All Committee members are
non-employee directors.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is responsible for formulating the Company's
executive compensation policy. The Committee reviews, adopts and administers
incentive compensation plans applicable to executive officers and other senior
management personnel, with the intention of providing both competitive and
appropriate levels of compensation.
The Committee's primary compensation policy is that a substantial portion
of the annual compensation of each executive should be directly linked to the
performance of the Company. In addition, compensation should link the long-term
interests of executives and shareholders and encourage career service by
including stock ownership as an integral part of the compensation package.
The Committee has, on occasion, retained the services of compensation
consultants to assist the Committee in developing and maintaining a competitive
executive compensation program. Hewitt Associates,
9
<PAGE> 12
for example, has regularly provided the Compensation Committee information
comparing the Company's executive compensation to certain companies in the
construction industry, including companies in the Dow Jones Heavy Construction
Group.
The Committee has considered the potential impact of Section 162(m) (the
"Section") of the Internal Revenue Code adopted under the Federal Reserve
Reconciliation Act of 1933. This section disallows a tax deduction for any
publicly-held corporation for individual compensation exceeding $1 million in
any taxable year for any of the named executive officers, unless such
compensation is subject to performance-based exemptions. Since most of the
targeted compensation of each of the named executive officers is performance
based, the exemption applies and this section will not materially, if at all,
reduce the tax deduction available to the Company. Although future grants of
restricted stock may not be exempt, the company believes that the value of the
restricted stock upon vesting combined with other non-exempt income will not
materially, if at all, exceed the one million dollar threshold in any year.
The Company's compensation package includes salary and annual incentive
compensation comprised of bonuses payable in cash or restricted stock. Following
a review of officer salaries, the Compensation Committee recommended to the full
board on December 16, 1996, to bring officer salaries into alignment with
competitive guidelines developed in 1993. Effective January 1, 1997, CEO Watts'
salary was increased from $240,000 to $270,000.
The incentive compensation plan is designed so that when bonuses exceed a
predetermined cap on total annual cash compensation, the amount in excess of the
cap is converted into long-term compensation in the form of restricted stock
with five year cliff vesting. Restricted stock limits have also been established
by the Committee to fix total compensation limits at appropriate levels. The
Committee determined the appropriate participation of officers as well as the
performance threshold, cash caps, and restricted stock limits to ensure an
officer's cash caps and restricted stock limits in 1997. Effective January 1,
1997, CEO Watts' cash limit was increased to $575,000 and his total compensation
limit to $1,150,000.
The Committee continued the Return on Net Assets (RONA) based compensation
plan in 1997 for Corporate Officers and Middle Managers. The Committee believes
that using RONA as the key performance factor ties earnings performance to the
Company's asset growth, asset utilization, and the cost of capital, and that
RONA is a superior measure of performance in an asset-heavy business. For the
Branch and Heavy Construction Division officers, the Committee assigned
performance measures both at the Corporate and Division Level. Approximately 30%
of their incentive compensation was determined in 1996 by Corporate RONA, while
70% of their incentive compensation was based on the profitability of their
respective Divisions.
In addition to his 1997 base salary, CEO Watts also received an incentive
cash payment of $290,000 and restricted stock valued at $448,015 (both paid and
awarded in 1997 for performance provided in 1996 except for $50,000 of the
restricted stock which relates to the 1990 deferred compensation as discussed in
Footnote 3 of the Summary Compensation Table) under the incentive plan in
accordance with the terms of the plan described above. The Committee believes
Mr. Watts' compensation for the year ending December 31, 1997 reflects the
Company's performance and was in the general range of compensation for
executives with like responsibilities in comparable companies and industries
achieving similar financial results.
The Committee met one (1) time in 1997.
<TABLE>
<S> <C>
Richard C. Solari Richard M. Brooks
Joseph J. Barclay Denman K. McNear
</TABLE>
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
CHANGE IN AUTHORIZED CAPITAL STOCK
The Company's Board of Directors has unanimously approved, recommends and
deems it advisable that the stockholders approve an Amendment to the Certificate
of Incorporation of the Company to increase the number of shares of Common Stock
which the Company is authorized to issue from 27,000,000 shares of Common Stock
to 50,000,000 shares of Common Stock.
10
<PAGE> 13
The proposed additional 23,000,000 shares would be a part of the existing
class of Common Stock and, if and when issued, would have the same rights and
privileges as the shares of Common Stock presently issued and outstanding. The
holders of Common Stock of the Company are not entitled to preemptive rights. As
of April 3, 1998, there were issued and outstanding 18,409,411 shares of Common
Stock, 246,235 shares were reserved for issuance upon the exercise of options
under the 1990 Omnibus Stock Option Plan and an additional 13,100 shares were
held as treasury stock by the Company.
The Board believes that authorization of the additional shares of Common
Stock may be required for the Company's future growth, both through acquisitions
and through expansion of existing business, or by reason of stock dividends or
splits, which in the long run may tend to broaden ownership of the Company's
stock. Authorization of such additional shares in such event could significantly
improve the Company's bargaining position in negotiating possible acquisitions
of other businesses. Such authorization will also provide the Company with
greater flexibility in financing future expansion of its existing business. The
Company presently has no plans, commitments or understanding for the issuance of
shares of Common or Preferred Stock or for stock dividends or splits, although
such matters have been and will continue to be considered from time to time. The
Board does not intend to issue any shares except upon terms that the Board deems
to be in the best interest of the Company and its shareholders.
The additional shares of Common Stock which are proposed for authorization
may be issued at the discretion of the Board of Directors for any corporate
purpose without further action by the shareholders, except as required by law,
applicable stock exchange regulations or otherwise. The Rules and Regulations of
The New York Stock Exchange, Inc., as currently in effect, would require
shareholder approval in connection with an issuance of Common Stock (including
securities convertible into Common Stock) in any transaction or a series of
related transactions, other than a public offering for cash, if (i) the Common
Stock to be issued has voting power equal to or in excess of 20% of the voting
power outstanding before such issuance, (ii) the number of shares of Common
Stock to be issued is equal to or in excess of 20% of the Common Stock
outstanding before such issuance, or (iii) the issuance would result in a change
of control of the Company.
The Board believes it will be advantageous to Granite and its shareholders
for Management to be in a position to act promptly with respect to stock
dividends and splits, and with respect to investment in, or acquisition of,
other companies, without the expense and passage of time necessarily involved in
arranging special meetings of the shareholders to authorize additional shares,
particularly where the number and value of shares to be issued is relatively
small. Granite will solicit shareholder approval of any acquisition, investment
or other transaction involving issue of shares of capital stock when required to
do so by law, the Rules and Regulations of The New York Stock Exchange, Inc. or
if otherwise deemed advisable by Management.
The proposed amendment to the Certificate of Incorporation will not revise
the par value of the Common Stock from the present one cent ($0.01) per share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Coopers & Lybrand,
L.L.P. to serve as independent accountants to audit the financial statements of
the Company for fiscal 1998. Coopers & Lybrand, L.L.P. has acted in such
capacity since its appointment for fiscal 1982. A representative of Coopers &
Lybrand, L.L.P. will be present at the Annual Meeting, will be given the
opportunity to make a statement if the representative desires and will be
available to respond to appropriate questions. The affirmative vote of a
majority of the votes cast affirmatively or negatively at the Annual Meeting of
Stockholders at which a quorum is present and voting either in person or by
Proxy is required for approval of this proposal. Votes for and against,
abstentions and "broker nonvoter" will each be counted as present for purposes
of determining a quorum. Neither abstention nor "broker nonvoter" will be
counted as having been cast affirmatively or negatively on the proposal.
11
<PAGE> 14
In the event that ratification by the stockholders of the appointment of
Coopers & Lybrand, L.L.P. as the Company's independent accountants is not
obtained, the Board of Directors will reconsider said appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders of the Company (i) must be properly brought before the
meeting and be received by the Company at its offices at 585 West Beach Street,
Watsonville, California 95076, on or before December 12, 1998 and (ii) must
satisfy the conditions established by the Securities and Exchange Commission for
stockholder proposals to be included in the Company's Proxy Statement for that
meeting and the other requirements contained in the Company's bylaws.
INCORPORATION BY REFERENCE
Certain information required by Item 13(a) of Schedule 14A is incorporated
by reference to the Company's 1997 Annual Report to Shareholders mailed April
30, 1998.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which management
intends to present or knows that others will present at the meeting is as
hereinabove set forth. If any other matter or matters are properly brought
before the meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of Proxy to vote the Proxy on such
matters in accordance with their best judgment.
Michael Futch
Vice President, General Counsel and
Secretary
Dated: April 30, 1998
12
<PAGE> 15
GRANITE CONSTRUCTION INCORPORATED
UNALLOCATED SHARES VOTING DIRECTIVE CARD FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby directs BNY Western Trust Company as Trustee of the
GRANITE CONSTRUCTION Employee Stock Ownership Plan to vote the participant's pro
rata portion of the unallocated shares of GRANITE CONSTRUCTION INCORPORATED
beneficially held by the Plan at the Annual Meeting of the Stockholders of
GRANITE CONSTRUCTION INCORPORATED (the "Company") to be held at the Marriott
Hotel, 350 Calle Principal, Monterey, California on May 18, 1998, at 10:30 a.m.,
local time, and at any adjournment thereof (1) as hereinafter specified upon the
proposals listed below and as more particularly described in the Proxy Statement
of the Company dated April 30, 1998 (the "Proxy Statement"), receipt of which is
hereby acknowledged, and (2) in their discretion upon such other matters as may
properly come before the meeting. The undersigned hereby acknowledges receipt of
the Company's 1997 Annual Report to Stockholders.
- --------------------------------------------------------------------------------
IMPORTANT: PLEASE DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED UNALLOCATED
SHARES VOTING DIRECTIVE CARD IN THE ENCLOSED RETURN ENVELOPE TO ASSURE THAT YOUR
SHARES ARE REPRESENTED AT THE MEETING. IF YOU FAIL TO RETURN YOUR VOTING
DIRECTIVE CARD TO THE TRUSTEE BY MAY 18, 1998, YOU WILL BE DEEMED TO HAVE
AUTHORIZED THE PLAN'S COMMITTEE TO DIRECT THE TRUSTEE HOW TO VOTE THESE SHARES.
AS A PARTICIPANT IN THE GRANITE CONSTRUCTION EMPLOYEE STOCK OWNERSHIP PLAN (THE
"PLAN"), YOU ARE ENTITLED TO VOTE YOUR PRO RATA PORTION OF THE UNALLOCATED
SHARES OF THE COMMON STOCK HELD IN THE PLAN. YOUR VOTING DIRECTION SUBMITTED TO
THE BNY WESTERN TRUST COMPANY, TRUSTEE OF THE PLAN, WILL BE CONFIDENTIAL.
- --------------------------------------------------------------------------------
(continued, and to be signed, on other side)
-- FOLD AND DETACH HERE --
<PAGE> 16
(continued from other side)
PLEASE MARK
YOUR VOTES AS
INDICATED IN X
THIS EXAMPLE
<TABLE>
<S> <C> <C>
A vote FOR the following proposals is recommended FOR WITHHOLD
by the Board of Directors: all nominees listed below AUTHORITY
(except as marked to to vote for all
1. To elect Rebecca A. McDonald and Brian C. Kelly the contrary) nominees listed below
as directors to hold office for a three-year term
and until their respective successors are elected
and have qualified.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME BELOW.)
REBECCA A. McDONALD BRIAN C. KELLY
FOR AGAINST ABSTAIN
2. To amend the Certificate of Incorporation of the Company so as to increase
the authorized Common Stock to 50,000,000 Shares.
3. To ratify the appointment of Coopers & Lybrand, L.L.P. as the Company's
independent accountants for the fiscal year ending December 31, 1998.
4. With discretionary authority, upon such other matters as may properly come
before the meeting. The persons making this solicitation know at this time
of no other matters to be presented at the meeting.
The shares represented hereby shall be voted as specified. IF NO SPECIFICATION
IS MADE, I AUTHORIZE THE PLAN'S COMMITTEE TO DIRECT THE TRUSTEE HOW TO VOTE
THESE SHARES.
</TABLE>
Signature of Stockholder* _______________________________ Dated: _______, 1998
*(Please sign your name exactly as it appears on the stock certificate
representing your shares.)
-- FOLD AND DETACH HERE --
<PAGE> 17
PROXY
GRANITE CONSTRUCTION INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints David H. Watts and William E. Barton and each
of them with full power of substitution to represent the undersigned and to
vote all the shares of stock in GRANITE CONSTRUCTION INCORPORATED (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
the Stockholders of the Company to be held at the Monterey Marriott Hotel, 350
Calle Principal, Monterey, California on May 18, 1998, at 10:30 a.m., local
time, and at any adjournment thereof (1) as hereinafter specified upon the
proposals listed below and as more particularly described in the Proxy
Statement of the Company dated April 30, 1998 (the "Proxy Statement"), receipt
of which is hereby acknowledged, and (2) in their discretion upon such other
matters as may properly come before the meeting. The undersigned hereby
acknowledges receipt of the Company's 1997 Annual Report to Stockholders.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
-- FOLD AND DETACH HERE --
<PAGE> 18
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:
PLEASE MARK
YOUR VOTE AS
INDICATED IN
THIS EXAMPLE X
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLDING AUTHORITY
To elect Rebecca A. McDonald and Brian C. Kelly as directors to hold office listed below (except as to vote for all
for a three-year term and until their respective successors are elected and marked to the contrary) nominees listed below
have qualified.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW)
Nominees: Rebecca A. McDonald
Brian C. Kelly
FOR AGAINST ABSTAIN
2. To amend the Certificate of Incorporation so as to increase the authorized
Common Stock to 50,000,000 shares.
3. To ratify the appointment of Coopers & Lybrand as the Company's
independent accountants for the fiscal year ending December 31, 1998.
4. With discretionary authority, upon such other matters as may properly come
before the meeting. The persons making this solicitation know at this time of
no other matters to be presented at the meeting.
The shares represented hereby shall be voted as specified. If no specification
is made, such shares will be voted in favor of proposals 1 and 2.
IMPORTANT: PLEASE DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
ENCLOSED RETURN ENVELOPE TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. If you attend the meeting, you may vote in person should you wish to
do so even though you have already sent in your Proxy.
Signature(s)*_____________________________________Dated:____________________1998
(Please sign your name exactly as it appears on the stock certificate representing your shares.)
</TABLE>
-- FOLD AND DETACH HERE --
<PAGE> 19
GRANITE CONSTRUCTION INCORPORATED
ALLOCATED SHARES VOTING DIRECTIVE CARD FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby directs BNY Western Trust Company as Trustee of the
GRANITE CONSTRUCTION Employee Stock Ownership Plan to vote all of the allocated
shares of stock of GRANITE CONSTRUCTION INCORPORATED beneficially held for me by
the Plan at the Annual Meeting of the Stockholders of GRANITE CONSTRUCTION
INCORPORATED (the "Company") to be held at the Marriott Hotel, 350 Calle
Principal, Monterey, California on May 18, 1998, at 10:30 a.m., local time, and
at any adjournment thereof (1) as hereinafter specified upon the proposals
listed below and as more particularly described in the Proxy Statement of the
Company dated April 30, 1998 (the "Proxy Statement"), receipt of which is hereby
acknowledged, and (2) in their discretion upon such other matters as may
properly come before the meeting. The undersigned hereby acknowledges receipt of
the Company's 1997 Annual Report to Stockholders.
- --------------------------------------------------------------------------------
IMPORTANT: PLEASE DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED ALLOCATED SHARES
VOTING DIRECTIVE CARD IN THE ENCLOSED RETURN ENVELOPE TO ASSURE THAT YOUR SHARES
ARE REPRESENTED AT THE MEETING. IF YOU FAIL TO RETURN YOUR VOTING DIRECTIVE CARD
TO THE TRUSTEE BY MAY 18, 1998, YOU WILL BE DEEMED TO HAVE AUTHORIZED THE PLAN'S
COMMITTEE TO DIRECT THE TRUSTEE HOW TO VOTE THESE SHARES. AS A PARTICIPANT IN
THE GRANITE CONSTRUCTION EMPLOYEE STOCK OWNERSHIP PLAN (THE "PLAN"), YOU ARE
ENTITLED TO VOTE YOUR ALLOCATED PORTION OF THE SHARES OF THE COMMON
STOCK HELD IN THE PLAN. YOUR VOTING DIRECTION SUBMITTED TO THE BNY WESTERN TRUST
COMPANY, TRUSTEE OF THE PLAN, WILL BE CONFIDENTIAL.
- --------------------------------------------------------------------------------
(continued, and to be signed, on other side)
-- FOLD AND DETACH HERE --
<PAGE> 20
(continued from other side)
PLEASE MARK
YOUR VOTES AS
INDICATED IN X
THIS EXAMPLE
<TABLE>
<S> <C> <C>
A vote FOR the following proposals is recommended FOR WITHHOLD
by the Board of Directors: all nominees listed below AUTHORITY
(except as marked to to vote for all
1. To elect Rebecca A. McDonald and Brian C. Kelly the contrary) nominees listed below
as directors to hold office for a three-year term
and until their respective successors are elected
and have qualified.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME BELOW.)
REBECCA A. McDONALD BRIAN C. KELLY
FOR AGAINST ABSTAIN
2. To amend the Certificate of Incorporation of the Company so as to increase
the authorized Common Stock to 50,000,000 Shares.
3. To ratify the appointment of Coopers & Lybrand, L.L.P. as the Company's
independent accountants for the fiscal year ending December 31, 1998.
4. With discretionary authority, upon such other matters as may properly come
before the meeting. The persons making this solicitation know at this time
of no other matters to be presented at the meeting.
The shares represented hereby shall be voted as specified. IF NO SPECIFICATION
IS MADE, I AUTHORIZE THE PLAN'S COMMITTEE TO DIRECT THE TRUSTEE HOW TO VOTE
THESE SHARES.
</TABLE>
Signature of Participant* ______________________________ Dated: _______, 1998
*(PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON THE PLAN CERTIFICATE
REPRESENTING YOUR SHARES.)
FOLD AND DETACH HERE
