SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement ___ Confidential For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e) (2))
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NSC CORPORATION
_______________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
N/A
_______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_ No fee required.
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
_______________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
N/A
_______________________________________________________________________________
(3) Per unit price of other underlying value of transaction computed pursuant
to Exchange Act Rule -011 (set forth the amount on which the filing fee is
calculated and state how it was determined)
N/A
_______________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
N/A
_______________________________________________________________________________
(5) Total fee paid:
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_______________________________________________________________________________
___ Fee paid previously with preliminary materials:
N/A
_______________________________________________________________________________
___ Check box if any part of the fee is offset as provided by the Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
_______________________________________________________________________________
(2) Form Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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_______________________________________________________________________________
<PAGE>
NSC CORPORATION
49 Danton Drive
Methuen, Massachusetts 01844
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
----------------------
To the Stockholders of
NSC Corporation:
The Annual Meeting of Stockholders of NSC Corporation (the "Company") will be
held at the Company's Headquarters, located at 49 Danton Drive, Methuen,
Massachusetts 01844 on Thursday, May 15, 1997 at 11:00 a.m., local time for the
purpose of (i) electing seven directors to serve for the ensuing year, and (ii)
transacting such other business as may properly come before the meeting or any
adjournment thereof.
Only stockholders of record at the close of business on March 28, 1997 will be
entitled to vote at the meeting and any adjournment thereof. A list of such
stockholders will be available at the time and place of the meeting and, during
the ten days prior to the meeting, at the Company's principal office.
By Order of the Board of Directors
J. Drennan Lowell
Vice President, Chief Financial Officer,
Treasurer and Secretary
Methuen Massachusetts
April 14, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT EXPECT TO ATTEND,
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY IN THE ENCLOSED
PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE.
<PAGE>
TABLE OF CONTENTS
Page
VOTING 1
ELECTION OF DIRECTORS 2
Information Concerning the Nominees 2
Committees of the Board of Directors and Meetings Held 4
Directors' Fees 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 5
Security Ownership of the Company 5
Security Ownership of OHM 7
Security Ownership of WMX 8
EXECUTIVE COMPENSATION 9
Summary of Cash and Certain Other Compensation 9
Stock Options 10
Employment Agreements 10
Compensation Committee Interlocks and Insider Participation 10
Board Compensation Committee Report 11
Performance Graph 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 13
Revolving Credit Agreement 13
Other 13
INDEPENDENT AUDITORS 14
STOCKHOLDER PROPOSALS 14
OTHER MATTERS 14
<PAGE>
NSC CORPORATION
49 Danton Drive
Methuen, Massachusetts 01844
----------------------
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
----------------------
NSC Corporation (the "Company") is mailing this Proxy Statement to the
stockholders of the Company in connection with the solicitation of proxies by
the Company's Board of Directors. These proxies will be used at the Annual
Meeting of Stockholders to be held at 11:00 a.m. on Thursday, May 15, 1997 at
the Company's headquarters, located at 49 Danton Drive, Methuen, Massachusetts
01844 and at any adjournment thereof (the "Annual Meeting").
If a stockholder properly executes and returns the enclosed form of proxy, it
will be voted according to his or her instructions. If no instructions are
given, it will be voted for the election as directors of the seven nominees
named below and in the discretion of the proxies with respect to any other
matter that may come before the meeting. Any proxy may be revoked by giving
notice of revocation to the Company in writing or in open meeting before the
proxy is exercised. No appraisal rights exist for any action proposed to be
taken at the Annual Meeting.
The Company will pay the expenses of soliciting proxies, including the charges
and expenses of brokers, nominees, fiduciaries and custodians incurred in
sending proxy materials to principals and obtaining their instructions. In
addition to the use of the mail, proxies may be solicited in person or by
telephone or telegraph. Directors, officers and regular employees of the Company
may solicit proxies without additional compensation.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about April 14, 1997.
VOTING
The Board of Directors has fixed the close of business on March 28, 1997 as the
record date (the "Record Date") for determining stockholders entitled to notice
of and to vote at the Annual Meeting. On the Record Date, there were outstanding
9,971,175 shares of the Company's Common Stock, $0.01 par value (the "Common
Stock"), all of one class and all of which are entitled to be voted at the
Annual Meeting. On the Record Date, each of OHM Corporation ("OHM") and Rust
International Inc. ("Rust"), an affiliate of WMX Technologies, Inc. ("WMX"), was
the owner of record of 4,010,000, or approximately 40%, of the issued and
outstanding shares of Common Stock. See "Election of Directors." Holders of
issued and outstanding shares of Common Stock are entitled to one vote for each
share held by them.
At the Annual Meeting, the results of stockholder voting will be tabulated by
the inspector of elections appointed for the Annual Meeting. Under Delaware law
and the Company's Certificate of Incorporation and By-Laws, properly executed
proxies either marked "abstain" or held in "street name" by brokers that are not
voted on one or more particular proposals (if otherwise voted on at least one
proposal) will be counted for purposes of determining whether a quorum has been
achieved at the Annual Meeting but will not be treated as either a vote for or a
vote against any of the proposals to which such abstention or broker non-vote
applies.
1
<PAGE>
ELECTION OF DIRECTORS
Information Concerning the Nominees
Seven directors will be elected at the Annual Meeting. Each director elected at
the Annual Meeting will hold office until the next Annual Meeting and until his/
her successor is duly elected and qualified, or until earlier death, resignation
or removal from office. The Company's management intends that the shares
represented by the enclosed proxy will be voted, unless the stockholder
executing the proxy otherwise instructs, for the election to the Board of
Directors of each of the seven nominees below.
On May 4, 1993 the Company purchased substantially all the assets of the
asbestos-abatement division (the "Division") of The Brand Companies, Inc.
("Brand") pursuant to a Purchase Agreement, dated as of December 23, 1992 as
amended, by and among the Company, NSC Industrial Services Corp., OHM, Brand and
WMX (the "Purchase Agreement"). The Purchase Agreement provides that for so long
as OHM and Rust each own 20% or more of the outstanding Common Stock of the
Company, each of OHM and Rust will have the right to nominate certain members of
the Board of Directors of the Company and contains other agreements concerning
the makeup of the membership of the Board of Directors. Each of OHM and Rust has
informed the Company that they intend to vote all the shares of Common Stock
owned by them (collectively, approximately 80% of the outstanding Common Stock)
in favor of the election of the nominees named below.
The Company has no reason to believe that any of such nominees will be unable,
if elected, to serve as a director. However, if such an event should occur, the
Company's management intends that the shares represented by the enclosed proxy
will be voted for the remainder of the nominees, and for such substitute nominee
or nominees as may be selected by the Company's current Board of Directors.
All of the nominees for director named below are currently serving as directors
of the Company for terms expiring at the Annual Meeting. Ms. Pamela K.M. Beall
took her position as a Director, effective November 7, 1996 and Mr. William P.
Hulligan took his position as a Director effective February 20, 1997. Mr. Frank
J. Fradella resigned effective August 28, 1996 and John J. Ray III resigned
effective November 7, 1996.
Positions and Other
Name Age Relationships with the Company
and Business Experience
Eugene L. Barnett 68
Director. Mr. Barnett is retired and was a Vice President of Pittway Corp.,
a diversified conglomerate, from 1976 to 1992. He was formerly Chairman and
Chief Executive Officer of Brand from 1976 through February 1991. Mr.
Barnett is a Director of Aptar Group, Inc. and Pittway Corp.
Victor J. Barnhart 54
Director. Mr. Barnhart has been Chairman and Chief Executive Officer
of the Company since December 5, 1996. Prior to joining the Company,
Mr. Barnhart was the President of Integrated Environmental Services -
WMX Technologies since December 1995 and President of Rust Industrial
Services Inc., a subsidiary of Rust and Vice President of Rust since
May 1993. Prior to that time, he was the President of Brand from
November 1990 and Chief Executive Officer from March 1991 to May 1993.
2
<PAGE>
Pamela K.M. Beall 40
Director. Ms. Beall has been Director of Finance, Treasurer and
Assistant Secretary of OHM Remediation Services Corporation, a
subsidiary of OHM, since September 1985. Ms. Beall became Vice
President of OHM Remediation Services in August 1994. Ms. Beall is a
Director of System One Technical, Inc.
Robert J. Blackwell 40
Director. Mr. Blackwell has been Senior Vice President - Sales and
Marketing of OHM Remediation Services Corporation since August 1993.
Prior to joining OHM, Mr. Blackwell served as Vice President - Sales
and Marketing for EBASCO since August 1986.
Herbert A. Getz 41
Director. Mr. Getz has been Senior Vice President and General Counsel
of WMX since May 1995 and before that Vice President and General
Counsel of WMX since August 1992 and Secretary of WMX since January
1988. Mr. Getz also served as the Vice President, General Counsel and
Secretary of Wheelabrator Technologies Inc. from November 1990 to May
1993. In addition, Mr. Getz had been Vice President and Secretary of
Rust from December 1992 until May 1994. Mr. Getz is a Director of OHM
Corporation.
William P. Hulligan 53
Director. Mr. Hulligan has been Executive Vice President of Waste
Management, Inc. - North America since January 1996, President of
Waste Management, Inc.-Midwest since March 1993 and President of Waste
Management, Inc.-East since September 1992. Mr. Hulligan is Chairman
of Waste Management of New York and a Director of National Seal
Company and OHM Corporation.
William M. R. Mapel 65
Director. Mr. Mapel is a private investor and was formerly a Senior
Vice President of Citibank, N.A. from 1969 to 1988, where he was
employed for more than 30 years. Mr. Mapel is a Director of Mercantile
& General Reinsurance Company of America, Mercantile & General Life
Reassurance Company of America, Brundage, Story & Rose Investment
Trust, Carolina Freight Corporation, Churchill Capital Partners, Galey
& Lord and USLIFE Income Fund, Inc.
3
<PAGE>
Committees of the Board of Directors and Meetings Held
During 1996, the Board of Directors of the Company held a total of six meetings.
Mr. Barnhart (Chairman), Ms. Beall and Mr. Hulligan are currently members of the
Executive Committee, the function of which is to exercise, when the full Board
is not in session, and except as otherwise may be provided by law, all of the
powers and authority of the Board of Directors in the management of the business
and affairs of the Company. The Executive Committee did not meet during 1996.
Messrs. Mapel (Chairman) and Barnett are members of the Stock Option Committee,
the primary function of which is to administer the Company's 1990 Stock Option
Plan and approve awards of stock options made thereunder. The Stock Option
Committee met two times during 1996.
Messrs. Getz (Chairman), Blackwell and Mapel are members of the Compensation
Committee, the primary function of which is to review and approve salaries and
other benefits for executive officers of the Company and to make recommendations
to the Board of Directors with respect to the adoption of employee benefit
programs. The Compensation Committee met three times during 1996.
The Company has a standing Audit Committee, the primary function of which is to
oversee the accounting and auditing affairs of the Company. Mr. Barnett
(Chairman), Ms. Beall and Mr. Hulligan serve as members of the Audit Committee.
The Audit Committee met two times during 1996.
No director attended less than 75% of Board and applicable committee meetings.
The Company has no standing nominating committee or committee performing similar
functions.
Directors' Fees
Directors of the Company who are not employees of the Company, OHM or WMX or
their affiliates receive $22,000 per annum.
4
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Security Ownership of the Company
The Company's Common Stock is the Company's only outstanding class of voting
securities. The following table sets forth certain information as of March 14,
1997, except as otherwise indicated, with respect to the beneficial ownership of
the Company's Common Stock (i) by holders of 5% or greater, (ii) each director
of the Company, (iii) each executive officer identified under the caption
"Executive Compensation -- Summary of Cash and Certain Other Compensation --
Summary Compensation Table," and (iv) by all directors and executive officers of
the Company as a group.
Amount and
Name of Nature of
Beneficial Beneficial Percentage
Owner (1) Ownership (2) of Class
--------- ------------- --------
OHM Corporation 4,010,000 40.01%
16406 U.S. Route 224 East
Findlay, Ohio 45840
Rust International Inc. 4,010,000 40.01%
100 Corporate Parkway
Birmingham, Alabama 35242
Eugene L. Barnett (3) 10,000 *
Victor J. Barnhart 5,000 *
Pamela K.M. Beall 0 -
Robert J. Blackwell 0 -
Herbert A. Getz 500 *
William P. Hulligan 0 -
William M. R. Mapel (3) 11,000 *
Darryl G. Schimeck (3) 8,500 *
Denice P. McMahon 0 -
J. Drennan Lowell (3) 25,000 *
David R. Krache (3) 7,600 *
T. William Bartlett, Jr. (3) 5,000 *
Thomas W. Gilmore (3) 3,750 *
Efstathios A. Kouninis (3) 3,125 *
All directors and executive officers
as a group (14 persons) (4) 69,475 *
- -------------------
* Less than 1%
(1) The address of each stockholder is c/o NSC Corporation, 49 Danton Drive,
Methuen, Massachusetts 01844.
(2) Information with respect to beneficial ownership is based on information
furnished to the Company by each stockholder included in this table. Except
as indicated in the notes to the table, each stockholder included in the
table has sole voting and investment power with respect to the shares shown
to be beneficially owned.
5
<PAGE>
(3) Assumes the exercise of options, presently exercisable or exercisable
within 60 days, to purchase up to 10,000, 10,000, 7,500, 25,000, 7,500,
5,000, 3,750, 3,125 shares of Common Stock by Messrs. Barnett, Mapel,
Schimeck, Lowell, Krache, Bartlett, Gilmore and Kouninis, respectively,
granted pursuant to the Company's 1990 Stock Option Plan.
(4) Assumes the exercise of options, presently exercisable or exercisable within
60 days, to purchase up to 61,875 shares
6
<PAGE>
Security Ownership of OHM
The following table sets forth certain information as of March 14, 1997 except
as otherwise noted, with respect to the beneficial ownership of OHM common stock
by (i) each director of the Company, (ii) each executive officer identified
under the caption "Executive Compensation -- Summary of Cash and Certain Other
Compensation -- Summary Compensation Table," and (iii) by all directors and
executive officers of the Company as a group.
Amount and
Name of Nature of
Beneficial Beneficial Percentage
Owner (1) Ownership (2) of Class
--------- ------------- --------
Eugene L. Barnett 0 -
Victor J. Barnhart (3) 15,000 *
Pamela K.M. Beall (4) 48,737 *
Robert J. Blackwell (5) 41,748 *
Herbert A. Getz (3) 15,000 *
William P. Hulligan (3) 15,000 *
William M. R. Mapel 0 -
Darryl G. Schimeck 0 -
Denice P. McMahon 0 -
J. Drennan Lowell 0 -
David R. Krache 0 -
T. William Bartlett, Jr. 0 -
Thomas W. Gilmore 0 -
Efstathios A. Kouninis 0 -
All directors and executive officers
as a group (14 persons) (6) 135,485 *
- -------------------
* Less than 1%
(1) The address of each stockholder is c/o NSC Corporation, 49 Danton Drive,
Methuen, Massachusetts 01844.
(2) Information with respect to beneficial ownership is based on information
furnished to the Company by each stockholder included in this table. Except
as indicated in the notes to the table, each stockholder included in the
table has sole voting and investment power with respect to the shares
shown to be beneficially owned.
(3) Assumes the exercise of options, presently exercisable or exercisable within
60 days, to purchase 15,000 shares.
(4) Assumes the exercise of options, presently exercisable or exercisable
within 60 days, to purchase 47,078 shares. Includes 676 shares held under
the OHM Corporation Retirement Savings Plan and the equivalent of 583 shares
convertible from subordinated debentures.
(5) Assumes the exercise of options, presently exercisable or exercisable within
60 days, to purchase 36,507 hares. Includes 1,741 shares held under the OHM
Corporation Retirement Savings Plan.
(6) Assumes the exercise of options, presently exercisable or exercisable within
60 days, to purchase 128,585 shares.
7
<PAGE>
Security Ownership of WMX
The following table sets forth certain information as of March 14, 1997,
except as otherwise noted, with respect to the beneficial ownership of WMX
common stock by (i) each director of the Company, (ii) each executive officer
identified under the caption "Executive Compensation -- Summary of Cash and
Certain Other Compensation -- Summary Compensation Table," and (iii) by all
directors and executive officers of the Company as a group.
Amount and
Name of Nature of
Beneficial Beneficial Percentage
Owner (1) Ownership (2) of Class
--------- ------------- --------
Eugene L. Barnett 0 -
Victor J. Barnhart (3) 40,993 *
Pamela K.M. Beall 0 -
Robert J. Blackwell 0 -
Herbert A. Getz (4) 213,446 *
William P. Hulligan (5) 253,031 *
William M. R. Mapel 0 -
Darryl G. Schimeck (6) 32 *
Denice P. McMahon 0 -
J. Drennan Lowell (6) 211 *
David R. Krache 0 -
T. William Bartlett, Jr. 944 *
Thomas W. Gilmore 0 -
Efstathios A. Kouninis 0 -
All directors and executive officers
as a group (14 persons) (7) 508,625 *
- --------------------
* Less than 1%
(1) The address of each stockholder is c/o NSC Corporation, 49 Danton Drive,
Methuen, Massachusetts 01844.
(2) Information with respect to beneficial ownership is based on information
furnished to the Company by each stockholder included in this table. Except
as indicated in the notes to the table, each stockholder included in the
table has sole voting and investment power with respect to the shares shown
to be beneficially owned.
(3) Assumes the exercise of options, presently exercisable or exercisable
within 60 days, to purchase 40,137 shares. Includes 263 held under the WMX
Profit Sharing and Savings Plan.
(4) Assumes the exercise of options, presently exercisable or exercisable
within 60 days, to purchase 132,314 shares, but does not include 240 shares
held by Mr. Getz's wife and 161 shares held on behalf of one of his
children as to which he disclaims beneficial ownership. Includes 2,804
shares held under the WMX Profit Sharing and Savings Plan.
(5) Assumes the exercise of options, presently exercisable or exercisable
within 60 days, to purchase 198,201 shares.
(6) Mr. Schimeck held 32 shares under the WMX Profit Sharing and Savings Plan.
Mr. Lowell held 211 shares under the Wheelabrator/Rust Savings and
Retirement Plan.
(7) Assumes the exercise of options, presently exercisable or exercisable
within 60 days, to purchase 370,65 shares.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended December 31, 1996, 1995,
and 1994, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each of
the most highly compensated executive officers of the Company, including the
Chief Executive Officer of the Company, in all capacities in which they served:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Securities
Underlying All Other
Name and Annual Compensation Options Compensation
Principal Position Year Salary($) Bonus($)(1) (#) ($)(4)
- ------------------ ---- --------- ----------- ------------- ------------
Victor J. Barnhart 1996 - - 250,000(2) -
Chairman of the Board
and Chief Executive Officer
Frank J. Fradella 1996 147,221 74,003 - 35,220
Former President and 1995 200,013 101,316 - 89,373
Chief Executive Officer 1994 166,522 90,750 - 86,341
Darryl G. Schimeck 1996 137,954 59,519 100,000(3) 40,340
President and Chief 1995 124,432 49,773 - 44,451
Operating Officer
J. Drennan Lowell 1996 170,780 78,717 100,000(3) 20,000
Vice President, Chief 1995 149,354 60,000 - -
Financial Officer, 1994 126,354 55,375 - -
Treasurer and Secretary
David R. Krache 1996 135,013 70,000 30,000(3) 20,000
President, National
Service Cleaning Corporation
T. William Bartlett, Jr. 1996 104,000 11,500 20,000(3) 20,000
President, Olshan
Demolishing Management, Inc.
(1) Messrs. Schimeck and Lowell received the full 1996 bonus amount in 1997 in
addition to half of the 1995 bonus amounts deferred for 1996 including one
year interest on these deferred amounts.
(2) The options granted to Mr. Barnhart vest after December 5, 1999 and are
exercisable at the fair market value of the underlying securities at the
date of the grant.
(3) The options granted to Messrs. Schimeck, Lowell, Krache and Bartlett vest
proportionately over a four year period and are exercisable at the fair
market value of the underlying securities at the date of the grant.
(4) "All Other Compensation" includes in 1996 the following: (i) $25,000
forgiveness of the second one third of a $75,000 interest free loan and
$3,759 one year imputed interest on $50,000, the outstanding loan balance
to Mr. Fradella, (ii) $20,000 execution bonus for the signing of an
Employment Security Agreement and $20,340 tax gross-up associated with the
relocation expenses reimbursed to Mr. Schimeck in 1995 (iii) $20,000
execution bonus for the signing of Employment Security Agreement to each of
Messrs. Lowell, Krache, and Bartlett.
9
<PAGE>
Option Exercises and Holdings
The following table sets forth information with respect to the named
executives concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Value realized Number of Securities Value of Unexercised in the
Shares (Market price at Underlying Unexercised Money
acquired on exercise less Options at FY-End (#) Options at FY-End ($)
exercise (#) exercise price) Exercisable Unexercisable Exercisable Unexercisable
------------ --------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Victor J. Barnhart - - - 250,000 - 109,375
Darryl G. Schimeck - - 7,500 92,500 3,281 40,469
Denice P. McMahon - - - 15,000 - -
J. Drennan Lowell - - 25,000 75,000 10,938 32,813
David R. Krache - - 7,500 22,500 3,281 9,844
T. William Bartlett, Jr. - - 5,000 15,000 2,188 6,563
Thomas W. Gilmore - - 3,750 11,250 1,641 4,922
Efstathios A. Kouninis - - 3,125 11,875 1,367 4,102
</TABLE>
Employment Agreements
The Company entered into an Employment Agreement with Victor J. Barnhart dated
March 12, 1997 in order to secure his services as Chairman and Chief Executive
Officer. This Agreement provides the Company with the benefit of certain
non-competition provisions, and it assures Mr. Barnhart that his base salary of
$250,000 will not be reduced during his employment. If the Company terminates
Mr. Barnhart without cause, as defined in the Agreement, prior to December 31,
1999, he is entitled to receive, as severance, his salary until the later of
that date or one year following his termination. If he is terminated without
cause after that date, he is entitled to receive his salary for one year
following the termination. If a change of control of the Company, as defined in
the Agreement, occurs and Mr. Barnhart is then terminated without cause or
voluntarily terminates his employment after a reduction in his duties or
compensation or a request that he relocate, he is entitled to the
above-described severance benefits.
The Company also entered into Employment Security Agreements with each of
Messrs. Schimeck, Lowell, Krache and Bartlett dated October 2, 1996. They
provide the Company with the benefit of certain non-competition provisions, and
they assure each of Messrs. Schimeck, Lowell, Krache and Bartlett that his
respective base salary of $135,000, $175,000, $135,000 and $104,000 will not be
reduced during the period ending on December 31, 1998 and that he will receive
supplemental incentive payments for continued employment through 1997 and 1998
which will be the greater of 35% of his actual earned incentive payment under
applicable incentive plans or $15,000. If he is terminated without cause, he is
entitled to the greater of the amount of the base salary remaining to be paid
before December 31, 1998 or one year of base salary.
Compensation Committee Interlocks and Insider Participation
Messrs. Getz, Blackwell and Mapel were members of the Compensation Committee of
the Board of Directors during 1996. Mr. John J. Ray, who resigned from the Board
effective November 7, 1996 was a member of the Compensation Committee during a
portion of 1996.
10
<PAGE>
Board Compensation Committee Report *
The primary function of the Compensation Committee is to review and approve
salaries and other benefits for executive officers of the Company and to make
recommendations to the Board of Directors with respect to the adoption of
employee benefit programs. The Compensation Committee is currently composed of
three directors, Messrs. Getz, Blackwell and Mapel who are not executive
officers of the Company, although Mr. Getz is an executive officer of WMX which
currently, through ownership of Rust, is the owner of approximately 40% of the
issued and outstanding Common Stock of the Company. Set forth below is a report
of Messrs. Getz, Blackwell and Mapel in their capacity as the Board's
Compensation Committee addressing the Company's compensation policies for 1996
as they affected the executive officers who, for 1996, were the Company's most
highly paid executive officers.
Compensation Policies Towards Executive Officers. The majority of the
compensation received by the executive officers of the Company, as reflected in
the compensation table, consisted of a base salary, and an incentive payment for
1996 as determined under the 1994 Management Incentive Compensation Plan (the
"Incentive Plan").
The base salaries of the executive officers generally were set at levels
recommended by the President and Chief Executive Officer of the Company and
approved by the Compensation Committee. Each of the executive officers was given
a raise in 1996 based on the Compensation Committee's subjective view of their
performance and the length of time that had elapsed since their last raise.
Each of the executive officers had the opportunity to earn incentive payments
under the Incentive Plan based on the achievement of certain performance goals
determined by the Compensation Committee in conjunction with the Company's
annual business plan. The amount of incentive payment is targeted at a
percentage of each executive's base salary and can be increased or decreased
depending on whether the operating cash flow and operating income of the Company
meet, exceed or fall below the targeted operating cash flow and operating income
set by the Compensation Committee.
Mr. Barnhart. After serving as acting Chief Executive Officer, Mr. Barnhart
became Chairman and Chief Executive Officer on December 5, 1996. He did not
receive any compensation in 1996, but his base salary was set at $250,000 per
year with the intention that future increases would be tied to both the future
performance of the Company and to his personal performance as assessed by the
Compensation Committee. The Company entered into an Employment Agreement dated
March 12, 1997 with Mr. Barnhart.
Messrs. Schimeck, Lowell, Krache and Bartlett. In an effort to retain the
services of key employees, the Company entered into Employment Security
Agreements with each of Messrs. Schimeck, Lowell, Krache and Bartlett dated
October 2, 1996. These Agreements provided each of the respective employees with
a $20,000 execution bonus.
Mr. Fradella. In 1996, $25,000 of an interest free loan to Mr. Fradella and
$3,759 of inputted interest were forgiven. Upon his voluntary termination as an
employee on August 28, 1996, he repaid the then $25,000 balance of the interest
free loan according to its terms.
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits a
publicly held corporation, such as the Company, from claiming a deduction on its
federal income tax return for compensation in excess of $1,000,000 paid for a
given fiscal year to certain executives. The Compensation Committee does not
believe it is likely that the deductibility of compensation paid by the Company
will be limited by the operation of Section 162(m).
HERBERT A. GETZ
ROBERT J. BLACKWELL
WILLIAM R. MAPEL
* Note: This report is not incorporated by reference in any prior or future
Commission filing, directly or by reference to the incorporation of
the proxy statements of the Company, unless such filing specifically
incorporates this report.
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Performance Graph *
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return on the Common Stock against the cumulative
total return for S&P Composite-500 Stock Index and a peer group of companies
selected by the Company consisting of companies in which significant amounts of
revenues are derived from the asbestos-abatement business (the "Peer Group") for
the period of five years commencing December 31, 1991 and ending December 31,
1996. The Peer Group includes Allwaste, Inc., American ECO Group, Inc., Foster
Wheeler Corporation, PDG Environmental, Inc. and Philip Environmental, Inc.,
which went public February 1993. Certain companies (Chempower, Inc. which merged
with AmericanEco and Lehigh Group, no revenue of which is now derived from the
asbestos-abatement business) included in the Peer Group for the Performance
Graph contained in the Proxy Statement for the Company's 1996 Annual Meeting
have been excluded from the following Performance Graph because of the reasons
mentioned above.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON
COMMON STOCK, S&P 500 AND PEER GROUP
(Market Value of $100 Invested on December 31, 1990)
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
Peer Group 100.00 109.24 102.32 94.95 125.20 145.94
NSC Corporation 100.00 142.60 92.20 81.00 70.00 81.75
S&P 500 100.00 104.46 111.83 110.11 147.67 177.60
*WARNING* The above numeric data table is depicted in a graph format in the
original printed copy.
*Note: This information is not incorporated by reference in any prior or
future Commission filing, directly or by reference to the incorporation
of the proxy statements of the Company, unless such filing specifically
incorporates this information.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Revolving Credit Agreement
Rust provided a $25 million revolving credit facility to the Company pursuant to
a revolving credit agreement (the "Rust Credit Agreement"). Under the Rust
Credit Agreement, Rust would make revolving loans to the Company until May 3,
1996 in amounts not to exceed $25 million. No amounts were outstanding under the
Rust Credit Agreement for the years ended December 31, 1996, 1995, 1994 and
1993. This revolving credit agreement terminated June 6, 1996.
Other
In connection with his election as President and Chief Executive Officer, Mr.
Fradella received a $75,000 interest free loan to be forgiven in equal
installments over three consecutive years. The balance of the loan became due
and payable in the event Mr. Fradella voluntarily left the employ of the Company
or was terminated for cause prior to September 7, 1997. According to this
agreement, two thirds of this loan or $50,000 was forgiven and the remaining
$25,000 was repaid to the Company by Mr. Fradella upon his departure on August
28, 1997.
The Company has, from time to time, provided asbestos-abatement and related
services to OHM and its affiliates on a subcontract basis. Revenues earned from
these affiliates for such services were $40,000 for the year ended December 31,
1996. Also, OHM provided in 1996 removal and cleaning services of waste material
to the Company on a subcontract basis. The cost for such services was $121,000.
In addition, the Company has, from time to time, provided asbestos-abatement and
related services to Rust and certain of its affiliates on a subcontract basis.
Revenues earned from Rust and its affiliates for such services were $84,000 for
the year ended December 31, 1996. Rust and certain of its affiliates also
provided scaffolding, disposal, demolition, and other related services to the
Company on a subcontract basis. The costs for such services were $1,503,000 for
the year ended December 31, 1996. Rust also rented demolition equipment to the
Company for which it was charged $527,000 for the year ended December 31, 1996.
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INDEPENDENT AUDITORS
Ernst & Young LLP, has been selected as the Company's independent auditors for
the fiscal year ending December 31, 1997. Ernst & Young LLP has served as the
Company's independent auditors since May 1990. A representative of Ernst & Young
LLP is expected to be present at the Annual Meeting with an opportunity to make
a statement if he desires to do so and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals for the 1998 Annual Meeting of Stockholders must be received by
December 19, 1997 to be included in the Company's proxy statement and proxy.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for action at
the forthcoming Annual Meeting. However, the proxy confers upon the persons
named therein discretionary authority to act upon any other matter that may
properly come before the meeting.
The Company will furnish a copy of its Annual Report on Form 10-K for the year
ended December 31, 1996 including financial statements and schedules thereto,
but excluding other exhibits, without charge, to any person upon written request
addressed to J. Drennan Lowell, Vice President, Chief Financial Officer,
Treasurer and Secretary, NSC Corporation, 49 Danton Drive, Methuen Massachusetts
01844.
J. Drennan Lowell
Vice President, Chief Financial Officer,
Treasurer and Secretary
April 14, 1997
Methuen, Massachusetts
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