<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
DAMES & MOORE GROUP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Dames & Moore Group on August 10, 1998, beginning at 8:00 a.m., at the Los
Angeles Marriott Downtown Hotel, 333 South Figueroa Street, Los Angeles,
California 90071.
Details of business to be conducted at the annual meeting are provided in
the enclosed Notice of Annual Meeting of Shareholders and Proxy Statement. Also
enclosed for your information is a copy of our Annual Report to Shareholders for
1998.
It is important that your shares be represented at the meeting, regardless
of the size of your holdings. Therefore, please complete and return the enclosed
proxy card as soon as possible.
We hope you can attend the meeting. If you plan to do so and are a
shareholder of record, please indicate that you plan to attend the meeting in
the space provided on your proxy card.
Very truly yours,
/s/ George D. Leal
George D. Leal
Chairman of the Board
June 23, 1998
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE>
DAMES & MOORE GROUP
911 WILSHIRE BOULEVARD, SUITE 700
LOS ANGELES, CALIFORNIA 90017
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 10, 1998
The Annual Meeting of the Shareholders of Dames & Moore Group, a Delaware
corporation (the "Company"), will be held on August 10, 1998, beginning at 8:00
a.m., at the Los Angeles Marriott Downtown Hotel, 333 South Figueroa Street, Los
Angeles, California 90071 for the following purposes:
1. To elect a Board of Directors of ten members.
2. To approve an amendment of the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock
from 27,000,000 to 54,000,000.
3. To approve an amendment to the Company's 1995 Stock Option Plan for
Non-Employee Directors.
4. To approve an amendment to the Company's Amended and Restated Long-Term
Incentive Plan.
5. To consider and transact such other business as may properly come before
the meeting or at any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on June 12, 1998 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the meeting and at any adjournment thereof.
By Order of the Board of Directors,
/s/ Mark A. Snell
Mark A. Snell
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
June 23, 1998
Los Angeles, California
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE SO THAT YOUR SHARES
WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH YOUR INSTRUCTIONS.
<PAGE>
DAMES & MOORE GROUP
911 WILSHIRE BOULEVARD, SUITE 700
LOS ANGELES, CALIFORNIA 90017
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 10, 1998
This Proxy Statement and the accompanying form of proxy are being mailed to
shareholders on or about June 23, 1998 in connection with the solicitation by
the Board of Directors of Dames & Moore Group, a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Shareholders of the
Company on August 10, 1998, and at any adjournment or postponement thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting.
Although the principal solicitation of proxies is being made through this
Proxy Statement, proxies may also be solicited personally, by telephone or by
mail by directors, officers or employees of the Company. Such persons will not
receive any additional compensation for their solicitation services. The Company
will pay the entire expense of preparing, printing and mailing proxy
solicitation material on behalf of the Board of Directors, including amounts
paid in reimbursement to banks, brokerage firms and others for their expenses in
forwarding soliciting material to beneficial owners of shares of the Company's
common stock, $0.01 par value ("Common Stock").
VOTING SECURITIES
The Board of Directors has fixed the close of business on June 12, 1998 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the annual meeting and at any adjournment thereof. As of June 12, 1998,
there were 18,358,430 shares of Common Stock issued and outstanding and entitled
to vote at the annual meeting. The Company has no other voting securities
outstanding. Each shareholder of record is entitled to one vote per share owned
on all matters submitted to a vote of shareholders except that, as described in
more detail below, each shareholder is entitled to cumulate his or her votes in
electing directors.
Shares represented by duly executed and dated proxies in the accompanying
form and received before the annual meeting will be voted at the annual meeting.
Where a shareholder specifies a choice on the proxy with respect to any matter
to be acted upon, the shares will be voted accordingly by the proxy holders
named in the proxy. Where no choice is specified, the shares represented by the
proxy will be voted as described in this Proxy Statement with respect to the
election of directors, in favor of the other proposals described in this Proxy
Statement and in accordance with the best judgment of the proxy holders with
respect to any other business that properly comes before the annual meeting.
A shareholder has the power to revoke a proxy at any time before it is
exercised by filing with the Secretary of the Company either an instrument
revoking the proxy or a duly executed proxy bearing a later date. A proxy may
also be revoked by a shareholder who is present at the annual meeting and who
expresses a desire to vote in person.
A majority of the Company's outstanding shares of Common Stock as of June
12, 1998, represented in person or by proxy, will constitute a quorum for the
transaction of business at the annual meeting. The ten director nominees who
receive the greatest number of affirmative votes will be elected as directors of
the Company. Approval of Proposal 2 described in this Proxy Statement requires
the affirmative vote of the holders of a majority of the Company's outstanding
shares of Common Stock. Approval of Proposals 3 and
1
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4 described in this Proxy Statement requires the affirmative vote of the holders
of a majority of the shares present at the meeting and entitled to vote on the
proposal.
Abstentions on any particular matter will be counted as present for purposes
of determining the existence of a quorum. Proxies marked as abstaining as to
Proposals 2, 3 and/or 4 or withholding a vote in connection with the election of
one or more nominees for director will not be counted as casting votes for
Proposals 2, 3 and/or 4 or for such nominees.
If a broker indicates on the proxy that it does not have discretionary
authority to vote certain shares on a particular matter (a broker non-vote),
those shares will be counted as present for purposes of determining the
existence of a quorum. Proxies subject to broker non-votes would not, however,
be counted as casting votes for or against any proposal, and the shares covered
by such proxies would not be included in determining the number of shares
present at the meeting and entitled to vote on the subject matter in question.
Such brokers have authority to vote on all of the proposals presented below.
PROPOSAL 1
ELECTION OF DIRECTORS
VOTING PROCEDURES
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall consist of not less than eight nor more than twelve
directors, the exact number of directors to be determined from time to time by
resolution adopted by the directors then in office. The Board of Directors has
set the authorized number of directors at ten. Accordingly, ten directors are to
be elected at the annual meeting, each to hold office until the next annual
meeting of shareholders and the election and qualification of a successor or the
director's earlier death, resignation or removal.
Because cumulative voting is permitted in the election of the Company's
directors, each shareholder, in person or by proxy, is entitled to cast a number
of votes equal to the number of shares of Common Stock standing in such
shareholder's name as of June 12, 1998, multiplied by the number of directors to
be elected (in this case, ten). A shareholder is entitled to cast all such votes
for a single nominee for director or for any two or more nominees in such
proportion as the shareholder may decide.
If a shareholder desires to cumulate his or her votes, the accompanying
proxy should be marked to indicate clearly that the shareholder desires to
exercise the right to cumulate votes and to specify how the votes are to be
allocated among the nominees for directors. For example, a shareholder may write
next to the name of the nominee or nominees for whom the shareholder desires to
cast votes the number of votes to be cast for such nominee or nominees.
Alternatively, without exercising his or her right to vote cumulatively, a
shareholder may instruct the proxy holders not to vote for one or more nominees
by striking a line through the name(s) of such nominee or nominees.
The Board of Directors recommends that shareholders grant proxies to vote
for all ten of the nominees for directors listed below. In order to permit the
election of as many as possible of the following nominees, the Board of
Directors also recommends that shareholders do not cast their votes on a
cumulative basis. Unless marked otherwise, proxies will be voted by the proxy
holders in such a manner as to elect all or as many of the following nominees as
possible. Unless marked otherwise, proxies will give the proxy holders
discretionary authority to cumulate votes if they so choose and to allocate
votes among the nominees in such a manner as they determine is necessary in
order to elect all or as many of such nominees as possible.
If any of the nominees listed below refuses or is unable to serve as a
director, the proxy holders will vote for a substitute nominee or nominees
recommended by the Board of Directors. Each of the following nominees has agreed
to serve if elected, and the Board of Directors has no reason to believe that
any of such nominees will be unwilling or unable to serve if elected as a
director.
2
<PAGE>
NOMINEES TO THE BOARD OF DIRECTORS
The following persons have been nominated for election as directors at the
1998 annual meeting:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION WITH THE COMPANY
- -------------------------------------- --- ------------------------------------------------
<S> <C> <C>
Ursula M. Burns....................... 39 Director
Robert F. Clarke...................... 56 Director
Arthur C. Darrow...................... 54 Chief Executive Officer, President and Director
Gary R. Krieger....................... 47 Vice President and Director
George D. Leal........................ 64 Chairman of the Board of Directors
A. Ewan Macdonald..................... 56 Director
Anthony R. Moore...................... 52 Director
Michael R. Peevey..................... 60 Director
Harald Peipers........................ 70 Director
Arthur E. Williams.................... 60 Director
</TABLE>
Ursula M. Burns is Vice President and General Manager, Departmental Business
Unit within the Office Document Products Group of Xerox Corporation. Prior to
her assignment to this position in 1997, Ms. Burns served as Vice President of
three other Xerox business units from 1992 to 1997, as Executive Assistant to
the Chairman and Chief Executive Officer of Xerox Corporation from 1991 to 1992
and in various other positions with Xerox Corporation from 1982 to 1991. She has
served as a director of the Company since 1997. Ms. Burns has bachelor's and
master's degrees in mechanical engineering from Polytechnic Institute of New
York and Columbia University, respectively.
Robert F. Clarke is President and Chief Executive Officer and a director of
Hawaiian Electric Industries, the parent company of Hawaiian Electric Company
and other non-utility subsidiaries. Prior to his election as President and Chief
Executive Officer in 1991, he served as Group Vice President from 1988 to 1990
and as Vice President of Strategic Planning from 1987 to 1988. He has a
bachelor's degree in economics and a master's degree in business administration
from the University of California, Berkeley. He has served as a director of the
Company since 1997.
Arthur C. Darrow has been employed by the Company since 1973. He has served
as a director since 1994 and as Chief Executive Officer and President since
1995. Between 1993 and 1994, he served as President and Chief Operating Officer;
between 1991 and 1993, as Senior Vice President--Western North America Division;
and between 1988 and 1991, as the Company's Western Region General Manager and
Division Manager--Western North America. Mr. Darrow has bachelor's and master's
degrees in geology from the University of California, Santa Barbara.
Gary R. Krieger has been employed by the Company since 1988 as Corporate
Head of Health & Safety and has served as Vice President and Manager of Health
Consulting Services since 1991. He has a bachelor's degree in English literature
and chemistry and a medical degree from the University of North Carolina, Chapel
Hill; and a master's degree in public health from Johns Hopkins University. Dr.
Krieger completed a residency in internal medicine at the Mayo Clinic.
George D. Leal has been employed by the Company since 1959. He has served as
Chairman of the Board of Directors since 1981, and served as Chief Executive
Officer from 1981 through 1994. Mr. Leal has bachelor's and master's degrees in
civil engineering from Santa Clara University and the California Institute of
Technology, respectively, and a master's degree in business administration from
the University of Chicago.
A. Ewan Macdonald retired as Chairman and Chief Executive Officer of Del
Monte Foods, a consumer products company, in 1994. He served as the Chairman and
Chief Executive Officer of Del Monte Foods from 1990 to 1994, as President and
Chief Executive Officer from 1987 to 1990 and as
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<PAGE>
Marketing Director from 1985 to 1987. He has served as a director of the Company
since 1997. He has a master's degree in economics from the University of
Edinburgh, Scotland.
Anthony R. Moore has been President of NEVTechnologies, L.L.C., a Los
Angeles based energy services company, since April 1, 1998. Prior to that he was
a Managing Director with investment bank Credit Suisse First Boston which firm
acquired BZW, the investment banking division of the Barclay's group which he
joined in 1993, serving as Chairman, Corporate Finance between 1996 and 1997, as
a Member of the Board of Bankers Trust International from 1992 to 1994, and as a
Member of the Management Committee of County NatWess from 1991 to 1992. Mr.
Moore has served as a director of the Company since 1995. Between 1983 and 1991,
Mr. Moore served in a number of senior positions for Goldman Sachs & Co. He
attended Worthing College and has a bachelor's degree from the University of
Exeter, United Kingdom.
Michael R. Peevey has served as President of New Energy Ventures, L.L.C.
since 1995. He retired in 1993 as President and a director of Edison
International, Inc. and its subsidiary, Southern California Edison Company, a
position he accepted in 1990. He was an Executive Vice President of these
companies from 1985 to 1990. He has served as a director of the Company since
1993, and he is also a director of Electro Rent Corporation, Amerigon
Incorporated and Ocal, Inc. Mr. Peevey has bachelor's and master's degrees in
economics from the University of California, Berkeley.
Harald Peipers has served as a director of the Company since 1985. Dr.
Peipers is an Attorney-at-Law in Essen, Germany. He served as a member of the
Board of Executive Directors of Hochtief Aktiengesellschaft vorm. Gebr. Helfmann
("Hochtief AG"), a German corporation engaged in civil engineering and
construction, between 1975 and 1994. He has a doctorate degree in law from the
University of Heidelberg, is a director of Keller Group plc, and is Vice
Chairman of the Board of Directors of Athens International Airport S.A.
Arthur E. Williams retired as Chief of Engineers and Commanding General of
the U.S. Army Corps of Engineers in 1996. He was the National President of the
Society of Military Engineers from 1995 to 1996 and served as President of the
Mississippi River Commission from 1989 to 1991. He has served as a director of
the Company since 1997 and currently serves on the Advisory Board for the School
of Engineering, Rensselaer Polytechnic Institute (RPI). Mr. Williams has
bachelor of science degrees from St. Lawrence University and RPI, a master of
science degree in civil engineering and economic planning from Stanford
University, and an honorary doctorate degree in engineering from RPI. He is also
a graduate of the Naval War College and is a registered professional engineer.
Robert M. Perry, who currently serves as a director, is not a nominee for
reelection. His service as director will terminate upon the election of ten
directors at the annual meeting. Mr. Perry has been employed by the Company
since 1955. He has served as a director since 1981, and as an Executive Vice
President since 1991. Between 1978 and 1995, he served as Chief Financial
Officer. He has a bachelor of science degree in civil engineering from the
University of Michigan, and is a registered professional engineer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The business of the Company is managed by and under the direction of the
Board of Directors as provided by the laws of Delaware, the Company's state of
incorporation. During the fiscal year ended March 27, 1998, the Board of
Directors met five times. Each current director attended more than 75 percent of
the aggregate number of meetings of the Board of Directors held during the
period for which he was a director and meetings of the committees of the Board
held during the periods he served on such committees.
The Audit Committee of the Board of Directors reviews the scope of the
independent public auditors' examination and related fees, the accounting
principles applied by the Company in financial reporting, the
4
<PAGE>
scope of internal auditing procedures and the adequacy of internal controls.
Robert F. Clarke (Chairman), Ursula M. Burns and Harald Peipers are the members
of the Audit Committee. The committee met three times during the 1998 fiscal
year.
The Compensation Committee administers the Company's Long-Term Incentive
Plan. The Compensation Committee also establishes the salary and bonus of the
Company's Chief Executive Officer and approves the salaries and bonuses of the
Company's other executive officers. The Compensation Committee's report on
Executive Compensation is contained in a subsequent section of this Proxy
Statement. Michael R. Peevey (Chairman), Ursula M. Burns and A. Ewan Macdonald
are the members of the Compensation Committee. The Compensation Committee met
three times during the 1998 fiscal year.
The Executive Action Committee of the Board of Directors is permitted to
approve certain contracts and to take various other specified actions on behalf
of the Board of Directors between meetings of the Board. The members of the
Executive Action Committee are George D. Leal, Arthur C. Darrow, Robert M. Perry
and Mark A. Snell. The Executive Action Committee did not hold any meetings
during the 1998 fiscal year.
The Management Succession Committee of the Board of Directors is responsible
for working with the Chief Executive Officer to develop a succession plan for
key executive positions within the Company, and to recommend a management
succession plan to the Board of Directors with the intent of updating the
succession plan on an annual basis. The members of the Management Succession
Committee are Robert F. Clarke (Chairman), Anthony R. Moore and Arthur E.
Williams. The Management Succession Committee met one time during the 1998
fiscal year.
The Board of Directors is responsible for the nomination of candidates for
election as directors. In March 1995, the Board appointed a Nominating Committee
to establish criteria for desired qualifications of director candidates,
evaluate and recommend qualified candidates for nomination, and recommend
directors for membership on the various Board committees. Recommendations of the
Nominating Committee are subject to the approval of the Board of Directors. The
members of the Nominating Committee are Anthony R. Moore (Chairman), Gary R.
Krieger, A. Ewan Macdonald and Michael R. Peevey. The Nominating Committee met
four times during the 1998 fiscal year. In connection with future shareholders'
meetings, the Board of Directors and the Nominating Committee will consider
director nominations recommended by the Company's shareholders but have not
established formal procedures for the submission of such recommendations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
With respect to each person known by the Company to be the beneficial owner
of more than five percent of its Common Stock, each director and nominee for
director of the Company, each of the executive officers named in the Summary
Compensation Table presented below and all directors and executive officers of
the Company as a group, the following table sets forth the number of shares of
Common Stock beneficially owned as of March 27, 1998 by each such person or
group and the percentage of the outstanding shares of the Company's Common Stock
beneficially owned as of March 27, 1998 by each such person or group. As of
March 31, 1998, the Company had 18,167,277 shares of Common Stock outstanding.
Unless otherwise indicated, each of the following shareholders has, to the
Company's
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<PAGE>
knowledge, sole voting and investment power with respect to the shares
beneficially owned, except to the extent that such authority is shared by
spouses under applicable law.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK PERCENT OF COMMON STOCK
BENEFICIALLY BENEFICIALLY OWNED AS
OWNED AS OF OF
NAME OF BENEFICIAL OWNER MARCH 27, 1998 MARCH 27, 1998
- ------------------------------------------------------ ----------------- -----------------------
<S> <C> <C>
BENEFICIAL OWNERS OF MORE THAN 5%
State of Wisconsin Investment Board (1)
P.O. Box 7842
Madison, WI 53707................................... 1,210,200 6.7
State Teachers Retirement Board of Ohio (2)
275 East Broad Street
Columbus, OH 43215.................................. 932,700 5.1
Wellington Management Company, LLP (3)
75 State Street
Boston, MA 02109.................................... 1,072,000 5.9
DIRECTORS
Ursula M. Burns....................................... 2,000 *
Robert F. Clarke...................................... 2,000 *
Arthur C. Darrow (4).................................. 284,498 1.6
Gary R. Krieger (5)................................... 17,752 *
George D. Leal (6).................................... 418,776 2.3
A. Ewan Macdonald..................................... 1,000 *
Anthony R. Moore (7).................................. 5,066 *
Michael R. Peevey (8)................................. 8,666 *
Harald Peipers........................................ 500 *
Robert M. Perry (9)................................... 376,477 2.1
Arthur E. Williams.................................... 1,000 *
NAMED EXECUTIVE OFFICERS NOT INCLUDED ABOVE**
Henry Klehn, Jr. (10)................................. 407,883 2.2
Mark A. Snell (11).................................... 5,060 *
Leslie S. Puget (12).................................. 500 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (14
PERSONS) (13)....................................... 1,531,178 8.4
</TABLE>
- ------------------------
* Owns less than 1% of the Company's outstanding shares of Common Stock.
** Mr. Darrow and Mr. Perry are also named executive officers.
(1) Information presented for the State of Wisconsin Investment Board is based
solely on a filing on Schedule 13G dated January 26, 1998, in which it
reported sole voting and dispositive power with respect to such shares.
(2) Information presented for the State Teachers Retirement Board of Ohio is
based solely on a filing on Schedule 13G dated February 4, 1998, in which
it reported sole voting and dispositive power with respect to such shares.
(3) Information presented for Wellington Management Company, LLP is based
solely on a filing on Schedule 13G dated February 9, 1998, in which it
reported shared dispositive power with respect to all such shares and
shared voting power with respect to 809,000 shares.
6
<PAGE>
(4) Information presented for Mr. Darrow includes 173,467 shares owned by the
Darrow Family Trust, of which Mr. Darrow is trustee. Information presented
for Mr. Darrow also includes 30,625 shares that he has the right to acquire
through the exercise of stock options within 60 days.
(5) Information presented for Mr. Krieger includes 14,311 shares that he has
the right to acquire through the exercise of stock options within 60 days.
(6) Information presented for Mr. Leal includes 19,000 shares owned by the
George and Mary Ann Leal Foundation, a charitable non-profit corporation,
and as to which Mr. Leal may be deemed the beneficial owner. Mr. Leal is
President and Chairman of the Board of the foundation and, subject to the
approval and supervision of the foundation's Board of Directors, is
responsible for directing the voting and disposition of these shares. Mr.
Leal has no pecuniary interest in these shares and disclaims beneficial
ownership of them. Information presented for Mr. Leal also includes 34,500
shares that he has the right to acquire through the exercise of stock
options within 60 days.
(7) Information presented for Mr. Moore includes 1,666 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(8) Information presented for Mr. Peevey includes 3,666 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(9) Information presented for Mr. Perry includes 23,950 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(10) Information presented for Mr. Klehn includes 24,800 shares owned by the
Klehn Family Foundation, a charitable non-profit corporation, and as to
which Mr. Klehn may be deemed the beneficial owner. Mr. Klehn is President
and Chairman of the Board of the Klehn Family Foundation and, subject to
the approval and supervision of the foundation's Board of Directors, is
responsible for directing the voting and disposition of these shares. Mr.
Klehn has no pecuniary interest in these shares and disclaims beneficial
ownership of them. Information presented for Mr. Klehn also includes
26,350 shares that he has the right to acquire through the exercise of
stock options within 60 days.
(11) Information presented for Mr. Snell includes 400 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(12) Information presented for Ms. Puget includes 500 shares that she has the
right to acquire through the exercise of stock options within 60 days.
(13) Information presented for the directors and executive officers as a group
includes a total of 135,968 shares that certain of such persons have the
right to acquire through the exercise of stock options within 60 days and
43,800 shares as to which beneficial ownership is disclaimed.
SECTION 16(b) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and regulations adopted thereunder require the Company's
directors and executive officers and persons who own more than ten percent of
the outstanding shares of the Company's Common Stock to file with the Securities
and Exchange Commission, the New York Stock Exchange and the Company initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Based solely upon (a) the Company's
review of Forms 3, 4 and 5 (and any amendments thereto) that were furnished to
the Company pursuant to Section 16(a) and applicable regulations by the
foregoing persons and (b) written representations by such reporting persons, the
Company believes that all applicable Section 16(a) filing requirements were
complied with on a timely basis by these reporting persons with respect to the
Company's most recent fiscal year.
7
<PAGE>
COMPENSATION OF DIRECTORS
The Company pays each of its non-employee directors an annual retainer fee
of $18,000 plus $1,000 per day for each Board meeting or committee meeting
attended by the director. Each non-employee director who chairs a Board
committee receives an additional annual retainer of $3,000 for each committee
chaired. Retainer fees are paid in arrears at fiscal year-end and may be taken
in cash, applied to the purchase of Company stock, or deferred under the terms
of the Dames & Moore Group Deferred Compensation Plan. Meeting fees are payable
currently or may be deferred or applied to the purchase of stock. Non-employee
directors also are reimbursed for actual out-of-pocket travel expenses in
connection with attendance at Board or committee meetings.
Under the terms of the Company's 1995 Stock Option Plan for Non-Employee
Directors, each newly elected non-employee director receives an option grant on
the first business day which follows the date of the conclusion of the annual
meeting to purchase 5,000 shares of Common Stock at an exercise price equal to
100 percent of the fair market value of the stock as of the grant date. Each
continuing non-employee director on subsequent reelection receives an annual
option grant to purchase 1,000 shares of Common Stock on the same date and at
the same exercise price described in the preceding sentence.
Other directors receive no remuneration for serving as directors other than
reimbursement of travel expenses.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows aggregate cash and long-term compensation paid or
accrued for each of the last three fiscal years to the Chief Executive Officer
and the four other most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
ANNUAL COMPENSATION (1) --------------------------------
RESTRICTED SECURITIES
FISCAL ----------------------- STOCK AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(2) OPTIONS/SARS (#) COMPENSATION ($)(3)
- ---------------------------------------- ------ ----------- --------- ------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Arthur C. Darrow ....................... 1998 $400,000 $75,000 0 0 $34,679
Chief Executive Officer and President 1997 400,000 0 0 0 8,724
1996 374,712 90,000 0 0 8,661
Mark A. Snell .......................... 1998 260,000 30,000 20,000 1,600 3,000
Chief Financial Officer 1997 140,000 0 0 40,000 0
1996 -- -- -- -- --
Henry Klehn, Jr. ....................... 1998 240,000 10,000 0 0 4,542
Executive Vice President 1997 240,000 0 0 0 8,805
1996 209,039 55,000 0 0 6,858
Robert M. Perry ........................ 1998 120,834(4) 10,000 0 0 1,961
Executive Vice President 1997 158,974(4) 0 0 0 5,244
1996 191,346 20,000 0 0 8,171
Leslie S. Puget ........................ 1998 159,228 10,000 0 0 4,578
Corporate Controller 1997 150,000 0 0 1,000 1,513
1996 43,269 7,500 0 0 0
</TABLE>
- ------------------------
(1) The dollar value of perquisites and other personal benefits, if any, for
each of the named executive officers was less than the reporting thresholds
established by the Securities and Exchange Commission.
(2) Mr. Snell was awarded 4,660 shares of restricted stock on March 29, 1997,
the value in excess of purchase price is $20,000. Dividends will be paid on
the 4,660 shares of restricted stock.
8
<PAGE>
(3) The compensation reported under All Other Compensation includes Company
contributions to the Capital Accumulation Plan ("CAP"), a defined
contribution retirement plan, made during the 1996, 1997 and 1998 fiscal
years, and premiums paid on term-life insurance policies for the benefit of
the named executive officer. With respect to the 1998 fiscal year: (i) the
amount reported for Mr. Darrow represents a $4,500 contribution to the CAP
and $30,179 paid by the Company in premiums for a term life insurance policy
for his benefit; (ii) the amount reported for Mr. Snell represents a $3,000
contribution to the CAP; (iii) the amount reported for Mr. Klehn represents
a $4,542 contribution to the CAP; (iv) the amount reported for Mr. Perry
represents a $1,961 contribution to the CAP; and (v) the amount reported for
Ms. Puget represents a $4,578 contribution to the CAP.
(4) The salary reported for Mr. Perry reflects a reduction in his working hours
during and after fiscal year 1996.
OPTION/SAR GRANTS DURING THE 1998 FISCAL YEAR
The following table provides information with respect to the grant of stock
options during the fiscal year ended March 27, 1998 by the Company to the
executive officers named in the Summary Compensation Table. No stock
appreciation rights ("SARs") were granted during the year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTION/SARS GRANTED EXERCISE OR GRANT DATE
OPTIONS/SARS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE (1)
- --------------------------------------------------- --------------- ------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Art C. Darrow...................................... 0 0 0 -- 0
Mark A. Snell...................................... 1,600 20% $ 12.875 03/29/07 $ 8,736
Henry Klehn, Jr.................................... 0 0 0 -- 0
Robert M. Perry.................................... 0 0 0 -- 0
Leslie S. Puget.................................... 0 0 0 -- 0
</TABLE>
- ------------------------
(1) The Black-Scholes valuation method was used to determine the Grant Date
Present Value. The valuation method assumes an expected volatility of 28.3%,
an expected life of 6 years and a risk-free interest rate of 6.81%.
AGGREGATED OPTION/SAR EXERCISES DURING THE 1998 FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information with respect to the exercise of
stock options during the fiscal year ended March 27, 1998 by the executive
officers named in the Summary Compensation Table and with respect to unexercised
"in-the-money" stock options outstanding as of March 27, 1998. In-the-money
stock options are options for which the exercise price is less than the market
price of the underlying stock on a particular date. No executive officer or any
other employee of the Company held or exercised any SARs at any time during the
1998 fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS HELD AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE REALIZED -------------------------- --------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur C. Darrow............... 0 0 26,625 8,000 $ 6,500 $ 6,500
Mark A. Snell.................. 0 0 0 41,600 0 42,500
Henry Klehn, Jr................ 0 0 23,975 4,750 3,859 3,859
Robert M. Perry................ 0 0 21,950 4,000 3,250 3,250
Leslie S. Puget................ 0 0 250 750 422 1,266
</TABLE>
- ------------------------
(1) These values are based on a price of $12.813 per share, the closing price of
the Common Stock on the New York Stock Exchange on March 27, 1998.
9
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
On April 1, 1997, the Company and Mr. Darrow entered into an employment
agreement with a term of four years for Mr. Darrow's employment as Chief
Executive Officer and President of the Company. During this period, Mr. Darrow's
annual base salary will not be less than $400,000, unless he agrees to a
reduction, and will be subject to review and potential adjustment to a higher
level no less frequently than annually. During the term of employment, Mr.
Darrow is eligible to receive a cash bonus based upon the Company's achievement
of certain operating and/or financial goals, and he is eligible to participate
in any equity-based incentive compensation plan or program approved by the Board
of Directors. The agreement requires the Company to purchase and maintain term
life insurance in the amount of $3,000,000 on Mr. Darrow's life, with death
benefits payable to beneficiaries designated by him. The agreement also
specifies that Mr. Darrow is required to own directly or through trusts for his
benefit a number of shares of the Company's Common Stock with a fair market
value of at least $1,600,000 or four times his base salary if base salary is
adjusted.
The employment agreement provides that, if Mr. Darrow's employment is
terminated by the Company without cause or by Mr. Darrow for good reason (which
includes assignment of any duties inconsistent with his position, authority or
responsibilities or a failure by the Company to comply with any provisions of
the agreement), he will receive a severance benefit equal to two times the sum
of his base salary and target bonus. Mr. Darrow is eligible for the same
severance benefit if he voluntarily terminates his employment in the thirteenth
month following a change-in-control of the Company. However, if Mr. Darrow's
employment is terminated by the Company within two years after a
change-in-control or if he terminates for good reason within two years after a
change-in-control, he will receive a severance benefit equal to three times the
sum of his base salary and target bonus.
Under the terms of the agreement, a change-in-control is deemed to have
occurred if (a) another individual, entity or group becomes the beneficial owner
of thirty percent or more of the combined voting power of the outstanding
securities of the Company entitled to vote in the election of directors, (b)
current members of the Board of Directors cease to constitute at least
two-thirds of the Board unless individuals becoming directors were approved by
Mr. Darrow and a majority of the directors comprising the incumbent Board, (c)
the Company's shareholders approve a reorganization, merger or consolidation in
which the individuals and entities that are beneficial owners of the capital
stock and voting securities of the Company will not beneficially own more than
seventy percent of the capital stock and voting securities of the Company after
the transaction, or (d) there is a complete liquidation or dissolution of the
Company or a sale or other disposition of all or substantially all of the
Company's assets, excluding certain transfers of assets to another corporation
which is controlled by the Company's shareholders.
The Company has not entered into employment agreements, severance agreements
or change-in-control arrangements with any of the other executive officers who
are named in the Summary Compensation Table.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In line with the Company's objective to maximize long-term return to its
shareholders, the Compensation Committee (the "Committee") annually reviews and
adjusts, as required, the compensation of the Company's executive officers. The
Committee believes that maintaining appropriate compensation policies and
programs is an important factor in attracting, motivating and retaining
effective senior executives. A significant portion of each executive's annual
and long-term compensation is linked directly to performance. Moreover, the
Company requires that senior executives and other officers hold significant
stock positions in the Company, thereby making their long-term interests
compatible with those of public shareholders.
10
<PAGE>
The Company and the Committee have historically compensated senior
executives with a combination of salary, annual incentive cash bonuses, and
long-term incentive compensation in the form of stock option grants. In fiscal
1998, the Committee reviewed and affirmed the existing policy regarding salary
compensation which generally seeks to set officers' salaries at the median level
in comparison to peer group companies. However, the Committee concurred with the
Company's management that the existing policy on annual and long-term incentive
compensation should be reexamined. A study by an independent compensation
consultant was conducted during fiscal 1998 for this purpose, and the
recommendations of the consultant were adopted by the Committee and the Board of
Directors for use beginning in fiscal 1998. The modified compensation program
for the Company's executive officers during fiscal 1998 consisted of base salary
plus performance-related incentive compensation paid partly in cash and partly
in restricted stock. Stock options were also awarded to one executive officer
during fiscal 1998.
EXECUTIVE OFFICER COMPENSATION
In establishing executive officer compensation levels for fiscal 1998, the
Committee examined compensation paid to executives within the engineering
services industry. The Committee recognized that few engineering firms are
comparable overall to the Company in size, scope of operations, and performance
characteristics. Accordingly, several executive compensation surveys were also
examined to obtain corroborating data for firms of comparable size in other
industries. After reviewing these sources of compensation data, the Committee
exercised considerable subjective judgment in establishing executive officer
compensation for fiscal 1998.
The Committee determined that the base salary levels of each of the
Company's executive officers were generally in line with the median salaries
paid to executives holding positions of comparable responsibility. Accordingly,
the Committee determined that executive officers' salaries should remain
unchanged from the salaries set at the beginning of fiscal 1997. The Committee
agreed to review salaries on a quarterly basis to confirm that they remained
competitive. No modifications were made as a result of the Committee's quarterly
reviews.
For purposes of incentive compensation awards, executive officers'
performance was judged based on measurement of results achieved against
objectives set in the Company's fiscal 1998 operations plan. The aspects of
performance that were evaluated included achieving targets for revenue growth,
improvement in quality of services provided to clients, the price of the
Company's Common Stock, increases in market share, human resource development,
and profitability. Of these factors, the most heavily weighted were those
relating to revenue growth (excluding acquisitions), profit and the price of the
Company's Common Stock. After evaluating performance and taking into
consideration the modified incentive compensation program adopted in fiscal
1998, the Committee determined that each executive officer should receive a cash
bonus as set forth in the Summary Compensation Table, three of the executive
officers (including the CEO) should receive restricted stock awards and two of
the executive officers (including the CEO) should receive stock option awards.
The restricted stock, which will be awarded in late June, will cliff vest in
three years and will not require any cash for its purchase. The stock options,
which will also be awarded in late June, will vest at a rate of 25% each year
for four years and will have an exercise price of the fair market value of the
stock on the date of issuance. Mr. Snell will be awarded 2,300 shares of
restricted stock and granted an option to purchase 25,000 shares of Common Stock
and Mr. Klehn willl be awarded 1,500 shares of restricted stock. Mr. Darrow's
awards are discussed in the following section.
CHIEF EXECUTIVE OFFICER COMPENSATION
At the beginning of fiscal 1998, the Committee reviewed the scope and
complexity of the CEO's responsibilities in relation to the base salary of
$400,000 that had been set for the CEO during the previous year. The Committee's
judgment was that this salary level remained competitive with median salary
compensation offered by firms of comparable size both within and outside the
engineering services industry. Accordingly, no salary increase was granted to
the CEO during fiscal 1998.
11
<PAGE>
The Committee set an incentive compensation level of 40 percent of salary as
the CEO's target bonus for fiscal 1998. This bonus would be awarded if the CEO's
performance met agreed upon objectives. Among these objectives, the following
were considered the most relevant: (a) execution of the Company's Strategic
Plan; (b) meeting planned revenue and profit objectives for fiscal 1998; (c)
meeting personal performance objectives; and (d) enhancement of shareholder
value through stock price appreciation. After evaluating the performance of the
CEO against these objectives and taking into consideration the modified
incentive compensation program adopted in fiscal 1998, the Committee determined
that Mr. Darrow should receive a $75,000 cash bonus, 6,000 shares of restricted
stock and granted an option to purchase 100,000 shares of Common Stock. As
discussed above, the restricted stock, which will be awarded in late June, will
cliff vest in three years and will not require any cash for its purchase. The
stock options, which will also be awarded in late June, will vest at a rate of
25% each year for four years and will have an exercise price of the fair market
value of the stock on the date of issuance.
SHARE OWNERSHIP
Upon the conversion from a limited partnership to a publicly held
corporation in March 1992, the former partners who became officers of the
Company acquired significant holdings of the Company's stock. At that time, the
Board of Directors adopted a policy that encouraged all officers to retain a
substantial percentage of the acquired shares as a means of aligning the
interests of the Company's key management and professional personnel with the
interests of the Company's public shareholders.
With the recent recruitment or promotion of key executives who were not
significant shareholders at the time of the 1992 public offering, the Board of
Directors and the Committee have concluded that the policy on share retention
should be replaced by a policy which establishes a share ownership objective
that is a function of organizational position and base salary. The policy which
was adopted during fiscal 1998 requires that the CEO own company stock valued at
four times base salary, and that Executive Vice Presidents own stock valued at
three times base salary. Non-executive officers have share ownership
requirements at two times and one times salary based on organizational position.
Officers who are not currently in compliance with the policy are allowed up to
five years to achieve compliance.
As a means of emphasizing the importance of stock ownership, and of
assisting executive officers and all other officers to attain their share
ownership objectives, the Incentive Compensation Program was modified in fiscal
1998 to allow awards to be made partially in restricted stock.
INTERNAL REVENUE CODE RESTRICTIONS
Effective in 1994, Internal Revenue Code Section 162(m) generally precludes
a publicly held corporation from taking a tax deduction for compensation in
excess of $1,000,000 that is paid to its Chief Executive Officer or any of its
four other highest paid executive officers. Certain performance-based
compensation is not subject to the deduction limit if specified requirements are
satisfied.
It is the policy of the Committee that, under ordinary circumstances, the
Company's compensation programs should be structured in a manner that is
designed to comply with the requirements of Section 162(m) and any regulation
promulgated thereunder in order to ensure the full deductibility of all
compensation paid to the Company's executive officers. The Committee will
reexamine its policy with respect to Section 162(m) on an ongoing basis.
COMPENSATION COMMITTEE
Michael R. Peevey, Chairman
Ursula M. Burns
A. Ewan Macdonald
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the Company's cumulative total shareholder
return on its Common Stock as compared to the S&P 500 Index, a peer group of
seven environmental companies (Peer Group 1 in the graph) and a peer group of
three engineering and construction companies (Peer Group 2 in the graph) based
upon an assumed initial investment of $100 in each of the Common Stock, the S&P
500 Index and the two peer groups. The graph covers the period from March 26,
1993 through March 27, 1998 (the last day of the Company's most recent fiscal
year). The stock price performance shown below is not necessarily indicative of
future price performance, and the companies in the peer groups are not
necessarily comparable for any purpose other than the graph.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURN
<S> <C> <C> <C> <C>
Year Ended Dames & Moore S&P 500 Index Peer Group 1 Peer Group 2
1993 $100.00 $100.00 $100.00 $100.00
1994 $104.05 $101.47 $63.61 $99.55
1995 $65.86 $117.27 $54.33 $89.05
1996 $61.63 $154.92 $53.89 $112.60
1997 $72.68 $185.63 $43.01 $110.61
1998 $75.11 $274.73 $61.37 $144.87
</TABLE>
- ------------------------
(1) In addition to an assumption of an investment of $100 at the opening of
business on March 26, 1993 in each of the Common Stock, the S&P 500 Index
and the two peer groups, the graph assumes the reinvestment of all
dividends. Investment in the peer groups is weighted by relative market
capitalization.
(2) The environmental peer group of publicly held companies (Peer Group 1)
excludes the Company and includes Emcon; Fluor Daniel/GTI; Harding Lawson
Associates, Inc.; ICF Kaiser International, Inc.; International Technology
Corporation; URS Corp.; and Roy F. Weston, Inc. (Class A). The engineering
and construction peer group of publicly held companies (Peer Group 2)
excludes the Company and includes Jacobs Engineering Group, Inc.; Stone &
Webster, Inc.; and Michael Baker Corp.
PROPOSAL 2
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
The Board of Directors recommends that shareholders approve an amendment to
the Company's Restated Certificate of Incorporation to increase the number of
shares of stock that the Company is authorized to issue to an aggregate of
55,000,000 shares, of which 1,000,000 shares will be Preferred Stock and
54,000,000 shares will be Common Stock. The Restated Certificate of
Incorporation currently provides for 28,000,000 authorized shares, of which
1,000,000 are Preferred Stock and 27,000,000 are Common
13
<PAGE>
Stock. The amendment to the Company's Restated Certificate of Incorporation will
not increase the amount of Preferred Stock of the Company.
Upon the effectiveness of the proposed amendment, Article IV.A of the
Restated Certificate of Incorporation will read in its entirety as follows:
A. The Corporation is authorized to issue two classes of shares of
capital stock to be designated, respectively, "Preferred Stock" and "Common
Stock." The total number of shares of capital stock which the Corporation
shall have authority to issue is 55,000,000, of which 1,000,000 shares shall
be Preferred Stock with a par value of $0.01 per share and 54,000,000 shares
shall be Common Stock with a par value of $0.01 per share.
The Company's original Certificate of Incorporation, which was filed with
the Delaware Secretary of State on March 7, 1991, provided that the Company had
authority to issue an aggregate of 70,000,000 shares, of which 10,000,000 shares
were Preferred Stock with a par value of $0.01 per share and 60,000,000 shares
were Common Stock with a par value of $0.01 per share. Several months later, the
Company filed an amendment that reduced the number of authorized shares to the
current amount. The purpose of reducing the number of authorized shares was to
achieve a reduction in the annual Delaware franchise tax by authorizing fewer
shares in the Certificate of Incorporation until additional shares were needed
for various corporate purposes.
Since 1991, the Company has made several acquisitions of businesses by using
both cash and stock. As the Company continues to implement its strategic growth
plan in future years, it is anticipated that larger acquisitions are likely to
be primarily stock rather than cash acquisitions. The Company also anticipates
that shares of Common Stock will continue to be issued pursuant to its Amended
and Restated 1991 Long-Term Incentive Plan and its 1995 Stock Option Plan for
Non-Employee Directors. The additional authorized shares for which shareholder
approval is sought may be used by the Company for other purposes, including,
without limitation, the issuance of stock to obtain additional capital or the
issuance of stock in connection with stock dividends, stock splits or other
equity compensation and employee benefit plans that may be adopted in the
future.
The additional authorized shares of Common Stock may also be issued upon the
exercise of stock purchase rights ("Rights") granted in connection with the
shareholder rights plan (the "Rights Plan") that was adopted pursuant to the
Rights Agreement dated as of March 28, 1997 between the Company and ChaseMellon
Shareholder Services LLC. As provided in more detail in the summary of the
Rights Plan that the Company delivered to shareholders on approximately March
28, 1997, the Board of Directors declared a dividend of one Right for each share
of Common Stock that was outstanding on that date. When exercisable, each Right
will entitle the holder to purchase one two-hundredth of a share of Series A
Junior Participating Preferred Stock at a price of $65.00, subject to the
adjustment provisions of the Rights Plan. One Right also will be issued with
respect to each share of Common Stock that the Company issues after March 28,
1997. Approximately 135,000 shares of Preferred Stock have been reserved for
issuance upon exercise of the Rights.
In general, the Rights are not exercisable until after a person or group
acquires 15 percent or more of the Company's outstanding shares of Common Stock
or makes a tender offer for 15 percent or more of such shares. Under certain
circumstances, including the acquisition by a person or group of 15 percent or
more of the Company's outstanding shares of Common Stock, the Rights Plan
permits shareholders (other than the acquiring person or group) to exercise the
Rights by purchasing shares of Common Stock at one-half market value. The Rights
are designed to assure that all shareholders receive fair and equal treatment in
the event of an unsolicited attempt to acquire the Company and to guard against
partial, two-tier or inadequate tender offers and other abusive takeover
tactics, which the Board of Directors believes are not in the best interests of
shareholders.
14
<PAGE>
The added flexibility of having additional authorized shares available for
the purposes described in the preceding paragraphs without the expense and delay
of obtaining shareholder approval at the time of the issuance of additional
shares is now considered by the Board of Directors to far outweigh the cost
savings of maintaining fewer authorized shares. Assuming that the proposed
amendment is approved at the annual meeting, the Board of Directors will be
entitled to authorize the issuance of the additional shares of Common Stock
without further approval of the Company's shareholders, subject to any
applicable laws or New York Stock Exchange rules which require shareholder
approval for certain stock issuances. Among other things, the New York Stock
Exchange requires shareholder approval of certain stock issuances to officers
and directors, and in connection with significant acquisitions that exceed
specified amounts.
As of June 12, 1998, of the 27,000,000 authorized shares of Common Stock,
18,358,430 shares were outstanding, 2,224,484 shares were reserved for issuance
under the Amended and Restated 1991 Long-Term Incentive Plan and 50,000 shares
were reserved for issuance under the 1995 Stock Option Plan for Non-Employee
Directors. Thus, 6,367,086 shares of Common Stock were unissued and unreserved
as of that date. As of June 12, 1998, no shares of Preferred Stock were
outstanding although, as described previously, approximately 135,000 shares were
reserved under the Rights Plan.
Shareholders do not have preemptive rights with respect to the issuance of
additional shares of Common Stock. The issuance of additional shares of stock
could have a dilutive effect on earnings per share under certain circumstances
and on existing shareholders' proportionate ownership and voting interests in
the Company.
The Company does not have any present arrangements, agreements or plans to
issue any of the additional shares of the newly authorized Common Stock.
Under certain circumstances, an increase in the authorized number of shares
of Common Stock could have an anti-takeover effect by making it more difficult
for a person or group to obtain control of the Company (and thereby remove
incumbent management) by means of a tender offer, merger or other transaction.
For example, the Company's issuance of additional shares in a public or private
sale, merger or other transaction or pursuant to the exercise of the Rights
would increase the number of outstanding shares and thereby dilute the equity
interest and voting power of a person who is attempting to obtain control of the
Company. By potentially discouraging initiation of an attempt by a third party
to gain control of the Company, the proposed increase in the authorized number
of shares could, under certain circumstances, limit the ability of shareholders
to dispose of their shares at the higher prices that are sometimes available in
takeover attempts or similar transactions.
Other provisions in the Company's current Restated Certificate of
Incorporation and Bylaws which could under certain circumstances have an
anti-takeover effect include (a) a limit on the maximum size of the Board of
Directors, with the exact number of directors within a specified size range to
be determined by the then-current Board, (b) a requirement of the approval of a
majority of all directors in office (rather than a simple majority of the
directors present at a Board meeting) for certain corporate actions, (c) a
requirement that newly created directorships and vacancies on the Board may be
filled only by the directors then in office, and (d) a prohibition on
shareholder action by written consent in lieu of a meeting.
Notwithstanding the foregoing, the proposal by the Board of Directors to
increase the number of authorized shares of stock is not being made in response
to any effort known by the Board to acquire control of the Company by means of a
merger, accumulation of stock, tender offer, solicitation in opposition to
management or otherwise, and the Board of Directors does not presently intend to
adopt or propose other anti-takeover provisions not described in this Proxy
Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
15
<PAGE>
PROPOSAL 3
AMENDMENT TO 1995 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
The Board of Directors recommends that shareholders approve an amendment to
the Company's 1995 Stock Option Plan for Non-Employee Directors (the "Directors'
Plan") to increase the number of shares available for grant under the Directors'
Plan from 50,000 to 100,000.
The purpose of the Directors' Plan is to encourage ownership by outside
directors of the Company's Common Stock and thereby to attract and retain
qualified non-employees to serve as directors of the Company. At the annual
meeting, all remaining shares under the Directors' Plan will be issued.
Accordingly, an amendment to the Directors' Plan increasing the number of shares
available for grant is required before more grants can be made under the
Directors' Plan.
Each member of the Board of Directors automatically is eligible to
participate in the Directors' Plan if such Board member is not an officer or
employee of the Company or any of its subsidiaries. Each director of the Company
who satisfies all of the eligibility requirements described in the preceding
sentence is referred to herein as a "non-employee director." No other persons
are eligible to participate in the Directors' Plan.
The Directors' Plan is administered by a committee consisting of all of the
members of the Board of Directors who are not eligible to participate in the
Directors' Plan. As a result of the eligibility requirements of the Directors'
Plan, the committee does not have any discretion to select the plan's
participants.
Under the current plan, up to 50,000 shares of Common Stock are available
for issuance upon the exercise of options granted under the Directors' Plan,
subject to certain adjustments. On the first business day immediately following
the annual meeting on August 10, 1998, all 50,000 shares authorized under the
plan will have been granted. The shares offered under the Directors' Plan are
made available, at the discretion of the committee, from authorized but unissued
Common Stock, from Common Stock reacquired by the Company or from a combination
of such unissued Common Stock and reacquired Common Stock.
Under the Directors' Plan, an option to purchase shares of Common Stock
automatically is granted to each non-employee director who is elected or
reelected as a member of the Board of Directors at the annual meeting. The
option is granted on the first business day which follows the date of the
conclusion of the annual meeting. The first option that is granted to any
non-employee director covers 5,000 shares of Common Stock; each option that is
subsequently granted to the same non-employee director covers 1,000 shares of
Common Stock. All options granted under the Directors' Plan are nonqualified
options not intended to qualify as incentive stock options under Section 422 of
the Code, and all options are evidenced by an option agreement in a form
approved by the committee.
The purchase price of each share of Common Stock that is subject to an
option equals the closing price of a share of the New York Stock Exchange as of
the date the option is granted. Each option terminates ten years after the date
of its grant and becomes exercisable in three equal annual installments
beginning on the first anniversary of the date of the option grant. An option
becomes fully vested on the third anniversary of its grant. A vested portion of
an option is exercisable at any time prior to the tenth anniversary of the
option grant.
Except with respect to a director's removal from office for cause, if a
non-employee director ceases for any reason to be a director of the Company, all
outstanding options held by him or her continue to vest in accordance with the
provisions described in the preceding paragraph, and such options will not
terminate until the tenth anniversary of their respective grant dates. If a
non-employee director is removed from office for cause, all outstanding options
held by him or her immediately terminate upon such removal and
16
<PAGE>
are not exercisable thereafter. A non-employee director will cease to be
eligible for additional option grants upon the termination for any reason of his
or her service as a director.
An option may be exercised, in whole or in part, (i) by delivery to the
Company of cash or a check payable to the order of the Company in the amount of
the purchase price of shares of Common Stock as to which the option is
exercised, (ii) by delivery to the Company of shares of Common Stock already
owned by the non-employee director, valued based upon the closing price of a
share on the New York Stock Exchange as of the date immediately preceding the
date of delivery of such shares, (iii) by delivery to the Company of
instructions that, upon receipt of the purchase price for the shares as to which
an option is exercised from the non-employee director's broker, the Company
should issue such shares directly to the broker, or (iv) by delivery to the
Company of a combination of the foregoing. The committee is authorized to take
such actions as it deems necessary or appropriate in order to withhold any taxes
that are required to be withheld upon the exercise of an option.
A non-employee director is not permitted to transfer an option granted under
the Directors' Plan other than by will or the laws of descent and distribution.
However, the committee has discretion to grant a transferable option to a
non-employee director so long as certain requirements of Rule 16b-3 under the
Exchange Act and other conditions specified in the Directors' Plan are
satisfied.
If the outstanding shares of Common Stock are increased, decreased, changed
into or exchanged for a different number or kind of shares or securities of the
Company through reorganization, capitalization, merger, consolidation,
reclassification, exchange of stock, stock dividend, stock split, reverse stock
split or other similar transaction, an appropriate and proportionate adjustment
will be made in the maximum number and kind of shares as to which options may be
granted under the Director's Plan. A corresponding adjustment will be made to
previously granted but unexercised options. Upon a vote of the Company's
directors and shareholders authorizing (i) the dissolution or liquidation of the
Company, (ii) the reorganization, merger or consolidation of the Company with
one or more other corporations as a result of which the Company will not be the
surviving corporation or will become a subsidiary of another corporation, or
(iii) the sale of all or substantially all of the Company's assets, all
outstanding options granted under the Directors' Plan will immediately become
exercisable in full.
The Directors' Plan has no specified expiration date. The Board of Directors
may amend or terminate the Directors' Plan at any time. However, no amendment of
the Directors' Plan will become effective without the approval of the Company's
shareholders if such approval is required in order to comply with Rule 16b-3
under the Exchange Act or any other applicable law, rule or regulation.
In general, provisions in the Directors' Plan relating to the amount, price
and timing of options may not be amended more than once every six months.
Furthermore, unless required by applicable law, rule or regulation, no amendment
or termination of the Directors' Plan may affect in a material and adverse
manner any option granted prior to the date of the amendment or termination
without the written consent of the non-employee director holding the option.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
PROPOSAL 4
AMENDMENT TO AMENDED AND RESTATED
LONG-TERM INCENTIVE PLAN
The Board of Directors recommends that the shareholders approve an amendment
to the Company's Amended and Restated Long-Term Incentive Plan (the "Plan") to
increase the number of shares available for grant under the Plan from 2,500,000
to 2,700,000.
The purpose of the Plan is to promote the interests of the Company and its
shareholders by strengthening the Company's ability to attract and retain
officers and key employees. The Plan also
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provides a means of encouraging share ownership in the Company by its officers
and key employees. As of March 27, 1998, 1,821,041 grants or shares of Common
Stock had been issued under the Plan, leaving 669,320 shares available for
future grants. The Board of Directors believes the amendment is in the best
interests of the Company to ensure that sufficient shares are available to
attract and retain officers and key employees.
The Plan provides for the grant of options to purchase shares of Common
Stock that are intended to qualify as "incentive stock options" under Section
422 of the Code and for the grant of stock options that do not qualify under
Section 422 ("nonqualified stock options"). Incentive stock options and
nonqualified stock options are jointly referred to below as "stock options." The
Plan also provides for the sale of shares of Common Stock that are subject to
specified restrictions ("restricted stock"). All awards under the Plan must be
made by May 22, 2005.
The shares offered under the Plan are made available, at the discretion of
the Board of Directors, from authorized but unissued Common Stock, from Common
Stock re-acquired by the Company and held in the Company's treasury, or from a
combination of such unissued Common Stock and re-acquired Common Stock.
The Plan is administered by the Compensation Committee of the Board of
Directors. The Plan requires the Compensation Committee to consist of two or
more directors who are "non-employee directors" within the meaning set forth in
Rule 16b-3 under the Exchange Act and, assuming the Board of Directors
determines that compliance with Section 162(m) of the Code is advisable, who are
also "outside directors" within the meaning of Section 162(m) and the
regulations promulgated thereunder.
Compensation Committee members are not eligible to receive awards under the
Plan. If permitted by Rule 16b-3 under the Exchange Act and Section 162(m) of
the Code and the regulations thereunder, and if so determined by the Board of
Directors, any determination, decision or action of the Compensation Committee
provided for in the Plan may be made or taken by action of the Board of
Directors or by an officer or officers of the Company duly authorized by the
Board of Directors.
Officers and employees of the Company or its subsidiaries are eligible to
participate in the Plan. The Plan provides that the Compensation Committee is
authorized to select the officers and employees who are permitted to participate
in the Plan and to set the terms and conditions of awards to Plan participants.
An officer or employee is not permitted to transfer an option or restricted
stock granted under the Plan other than by will or the laws of descent and
distribution. However, the Compensation Committee has discretion to grant a
nonqualified stock option or restricted stock that is transferable by an officer
or employee to family members or other designated persons and entities so long
as certain conditions specified in the Plan are satisfied. The Compensation
Committee may also amend an outstanding option or grant of restricted stock to
provide for such transferability.
Either the Board of Directors or the Compensation Committee may amend the
Plan at any time and the Board of Directors may terminate the plan at any time.
However, if required by any applicable law, rule or regulation, no amendment of
the Plan will become effective unless approved by the Company's shareholders.
The Compensation Committee is authorized to amend the Plan only if such
amendment does not require the approval of the Company's shareholders under any
applicable law, rule or regulation. The Compensation Committee is authorized to
amend the terms of outstanding awards made under the Plan, subject to certain
specified limitations.
STOCK OPTIONS
Each option granted under the Plan is evidenced by an option agreement in
such form as the Compensation Committee from time to time approves. The
Compensation Committee determines the number of shares of Common Stock that are
covered by each option grant and the exercise price of each option. However,
within any calendar year, the maximum number of shares of Common Stock with
respect
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to which options may be granted to any officer or employee is 100,000, subject
to the adjustment provisions described below.
The exercise price for an incentive stock option may not be less than 100%
of the fair market value of a share of Common Stock on the date the option is
granted. Under the Plan, the fair market value of a share of Common Stock is
deemed to equal the closing price of a share on the New York Stock Exchange on
the date that the fair market value is to be determined. In furtherance of its
goal of rewarding the Company's officers for performance that equals or exceeds
annual target levels, the Compensation Committee may determine that some or all
options that are awarded to executive officers and other officers in any given
year will have an exercise price that exceeds the closing price of the
underlying shares on the date of grant.
The Compensation Committee specifies the term of each option and the dates
on which it becomes exercisable. Subsequent to granting an option, the
Compensation Committee may extend its term. However, an incentive stock option
may not be exercised more than ten years after its grant date. Furthermore, no
option may become exercisable less than six months after the date of grant
except that the Compensation Committee has discretion to accelerate the time at
which any option may be exercised if such acceleration does not conflict with
any applicable law. In accordance with applicable provisions of Section 422 of
the Code, various additional limitations specified in the Plan apply to the
grant and exercise of incentive stock options.
An option may be exercised, in whole or in part, by delivery to the Company
of a cashier's check, or such other form of payment as is deemed acceptable by
the Compensation Committee, in the amount of the purchase price of the shares of
Common Stock as to which the option is exercised. At the discretion of the
Compensation Committee or if so provided in the option agreement, an officer or
employee may elect to pay for some or all of the shares covered by an option
with shares of Common Stock that are already owned at the time of exercise by
the officer or employee, valued based upon the closing price of a share on the
New York Stock Exchange as of the date immediately preceding the date of the
delivery of such shares to the Company. The Compensation Committee may permit an
option to be exercised pursuant to a cashless exercise procedure involving a
simultaneous exercise of the option and sale of the underlying shares through
the officer's or employee's broker.
If the employment of an officer or employee terminates for any reason other
than death, disability or retirement, any incentive stock option or nonqualified
stock option held by him or her will terminate on the earlier of its normal
termination date or the ninetieth day after the employment termination date,
provided that the option will terminate immediately if (i) the officer's or
employee's employment is terminated for cause or (ii) the option was granted
prior to August 15, 1995 to a person who is subject to the provisions of Section
16 of the Exchange Act as of that date. If the employment of an officer or
employee terminates by reason of death, disability or retirement, (i) a
nonqualified stock option held by the officer or employee will terminate on its
normal termination date, and (ii) an incentive stock option held by the officer
or employee will terminate on the earlier of its normal termination date or a
specified period of up to one year after the employment termination date.
To the extent permitted by applicable laws and regulations, the Compensation
Committee retains discretion (i) to specify in an option agreement that a
termination of employment will result in consequences that are different from
the normal consequences described in the Plan and (ii) to permit an outstanding
option to terminate at any time up to its normal termination date
notwithstanding that the option agreement may provide for an earlier termination
date as a result of an officer's or employee's termination of employment.
RESTRICTED STOCK
Each award of restricted stock under the Plan is evidenced by a restricted
stock agreement in such form as the Compensation Committee from time to time
approves. The Compensation Committee
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determines the number of shares of Common Stock to be awarded and whether the
officer or employee receiving the stock will have to pay a purchase price for
the restricted stock. However, within any calendar year the maximum number of
shares of restricted stock that may be granted to any officer or employee is
50,000, subject to the adjustment provisions described below. If a purchase
price is required to be paid by the officer or employee, it is payable in the
manner provided in the restricted stock agreement.
In general, the Compensation Committee establishes a "restriction period" at
the time of each restricted stock award. During the restriction period, an
officer or employee has the rights of a shareholder with respect to the
restricted stock, including, without limitation, the right to vote the
restricted stock and to receive any dividends thereon that are paid by the
Company. Unless otherwise provided by the Compensation Committee, restricted
stock may not be sold or otherwise transferred until the expiration of the
restriction period. The Compensation Committee has discretion to reduce or
eliminate the restriction period that is applicable to an award of restricted
stock.
If the employment of an officer or employee terminates prior to the
expiration of the restriction period for any reason other than death, disability
or retirement, the officer or employee must sell all of the stock for which the
restriction period has not lapsed to the Company at a price equal to the lesser
of the price originally paid for the restricted stock or the fair market value
of the restricted stock on the date of the employment termination. If the
officer or employee did not pay a purchase price for any restricted stock for
which the restriction period has not lapsed, such restricted stock shall be
forfeited to the Company without any payment being made by the Company to the
officer or employee. If the employment of the officer or employee terminates
prior to the expiration of the restriction period by reason of death, disability
or retirement, the officer or employee (or his or her beneficiaries) will be
entitled to retain a pro rata amount of the restricted stock. The pro rata
amount is based upon the portion of the restriction period that was satisfied
prior to the employment termination or such greater amount as may be determined
by the Compensation Committee. The remainder of the restricted stock must be
resold to the Company at a price determined in the manner specified in the first
sentence of this paragraph. However, if the Employee did not pay a purchase
price for any such remaining restricted stock for which the restriction period
has not lapsed, such restricted stock shall be forfeited to the Company without
any payment being made by the Company to the officer or employee.
To the extent permitted by applicable laws and regulations, the Compensation
Committee retains discretion (i) to specify in a restricted stock agreement that
a termination of employment will result in consequences that are different from
the normal consequences described in the Plan and (ii) to permit an officer or
employee who holds restricted stock to retain some or all of such stock
following a termination of employment notwithstanding that the restricted stock
agreement may provide for such restricted stock to be resold to the Company.
ADJUSTMENT PROVISIONS
If the outstanding shares of Common Stock are increased, decreased, changed
into or exchanged for a different number or kind of shares or securities of the
Company through reorganization, recapitalization, merger, consolidation,
reclassification, exchange of stock, stock dividend, stock split, reverse stock
split or other similar transaction, upon authorization of the Compensation
Committee an appropriate and proportionate adjustment will be made in the
maximum number and kind of shares which may be issued under the Plan. A
corresponding adjustment will be made to previously granted but unexercised
options.
In general, upon (i) the dissolution or liquidation of the Company, (ii) the
reorganization, merger or consolidation of the Company with one or more other
corporations as a result of which the Company is not the surviving corporation
or becomes a subsidiary of another corporation, or (iii) the sale of all or
substantially all of the Company's assets, the Plan and any then-outstanding
awards of options and restricted stock will terminate. However, prior to the
occurrence of the event described in the preceding
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sentence, all outstanding options will become exercisable in full and all
outstanding grants of restricted stock will vest in full on a date specified by
the Compensation Committee.
TAX CONSEQUENCES
GENERAL. The following discussion is an outline of the basic federal income
tax consequences pertaining to stock options and restricted stock granted under
the Plan. The discussion does not cover state, local or foreign tax effects or
estimated tax requirements. The Plan is not qualified under Section 401(a) of
the Code and is not subject to the provisions of the Employee Retirement Income
Security Act of 1974.
NONQUALIFIED STOCK OPTIONS. Under federal income tax law, the grant of a
nonqualified stock option generally has no tax effect on the Company or the
option holder to whom it is granted. If the shares received on exercise of a
nonqualified stock option are not subject to restrictions on transfer and risk
of forfeiture, the exercise will result in ordinary income to the option holder
equal to the excess of the fair market value of the shares at the time of
exercise over the option exercise price.
If the option holder pays cash to exercise the stock option, the option
holder's tax basis in the shares received will equal the aggregate exercise
price paid by the option holder plus the amount of taxable income recognized.
Upon any subsequent disposition of the shares, any further gain or loss will
normally be capital gain or loss and will be long-term if held for more than one
year after exercise. The Company will generally be allowed, at the time of
recognition of ordinary income by the option holder, to take a deduction for
federal income tax purposes in an amount equal to such recognized income. If the
option holder pays the exercise price by delivering shares of Common Stock, the
tax treatment will be the same, except that shares received on exercise equal to
the number of shares delivered will, in effect, be treated for basis and holding
period purposes as if they were the shares given up.
If the shares received on exercise of a nonqualified stock option are
subject to restrictions on transfer and risk of forfeiture, the exercise of the
stock option generally will only result in a taxable transaction to the option
holder and a deduction to the Company if the option holder elects to be taxed at
the time of exercise. If such an election is made, the tax consequences will be
as described in the preceding paragraphs; if the stock is in fact subsequently
forfeited, there will be no offsetting deduction. If an effective election is
not made, however, income will only be recognized when the restriction on
transfer or risk of forfeiture lapses, at which time the option holder will
recognize ordinary income equal to the excess of the fair market value at the
time of the lapse of the restriction for the purchased shares over the exercise
price and the Company will generally be allowed an equal deduction. The option
holder's tax basis in the shares received will equal the aggregate option
exercise price plus the amount of taxable income recognized. Taxation of any
subsequent disposition of shares will normally generate capital gain or loss as
described above.
If an officer or employee transfers a nonqualified stock option for no
consideration in a transaction which is not at arms length, the transfer should
have no income tax effect. When the transferee exercises the option, the
exercise will result in ordinary income to the transferor and the transferee's
basis in the shares received will equal the aggregate exercise price plus the
amount of taxable income recognized on exercise by the transferor. If the shares
received on exercise of the option are subject to restrictions on transfer and
risk of forfeiture, taxation of the transaction will be deferred in the manner
discussed in the preceding paragraph.
INCENTIVE STOCK OPTIONS. In general, incentive stock options, like
nonqualified stock options, have no federal income tax consequences to the
Company or the option holder as a result of the grant of the option. Unlike
nonqualified stock options, however, the option holder does not have taxable
income on the exercise of an incentive stock option (although the gain upon
exercise of an incentive stock option can be taxed under the alternative minimum
tax) and the Company does not generally have a deduction. Another difference is
that, if the option holder retains his or her shares for at least two years
after the date of the
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grant of the incentive stock option and for at least one year after the date of
the exercise of the option, all gain or loss on a subsequent sale is taxed as
capital gain or loss.
If the option holder disposes of his or her shares prior to satisfying both
of the holding periods described in the preceding paragraph (a "disqualifying
disposition"), then (i) the option holder will realize ordinary income in the
year of such disposition in an amount equal to the difference between the option
exercise price and the lesser of the sales price or the fair market value of
such shares on the date of exercise; (ii) the Company will generally be entitled
to a deduction for such year in the amount of the ordinary income so realized;
and (iii) the option holder will realize capital gain or loss in an amount equal
to the difference between the amount realized by the option holder upon such
sale of the shares and the option exercise price paid by the option holder
increased by the amount of ordinary income, if any, realized by the option
holder upon such disposition. Disqualifying dispositions of shares can include
(in addition to ordinary sales) gifts and pledges of shares.
The alternative minimum tax may apply to an incentive stock option holder
because the spread between the market value of the shares subject to the option
and the exercise price of the option on the exercise date generally constitutes
an item of tax preference. The alternative minimum tax may produce a higher
total tax than the regular income tax otherwise applicable to the option holder.
RESTRICTED STOCK. An officer or employee receiving an award of restricted
stock will generally recognize ordinary income at the time the restrictions
lapse in an amount equal to the excess of (i) the fair market value of the
shares of Common Stock at the time the restrictions lapse over (ii) the amount
that the officer or employee paid for the restricted stock. However, the officer
or employee may elect, within 30 days after the date of receipt of the
restricted stock, to report ordinary income at the time of such receipt equal to
the excess of (i) the fair market value of the restricted stock at the time of
receipt (without regard to the restrictions which will lapse) over (ii) the
amount which he or she paid for the restricted stock. One risk in making such an
election is that, if the restrictions fail to lapse for any reason, the officer
or employee will not be entitled to a deduction. The Company will be entitled to
a deduction equal to the amount of income recognized by the officer or employee
at the time he or she recognizes the income.
If an officer or employee transfers restricted stock prior to the time the
restrictions have lapsed in a transaction that involves no consideration and is
not at arms length, the transfer should have no tax effect. If the officer or
employee did not elect to recognize income early, he or she will recognize
income at the time the restrictions lapse.
Assuming that the officer or employee did not elect to recognize income
early, an officer or employee (or transferee) disposing of restricted stock
after the restrictions have lapsed will recognize short-term or long-term
capital gain or loss, depending on whether the stock is held for more than one
year from the date the restrictions lapse. The cost basis for the gain or loss
will be the fair market value of the restricted stock on the date on which the
restrictions lapse. If the officer or employee elects to include the value of
the stock in his or her income upon receipt, the officer or employee (or
transferee) will recognize short-term or long-term capital gain or loss,
depending on whether the stock is held for more than one year after such
receipt. The cost basis in this case will be equal to the fair market value of
the stock (without regard to the restrictions which will lapse) on the date of
receipt of the stock.
DEDUCTIBILITY. The Plan is intended to facilitate compliance with Section
162(m) of the Code so that the Company may deduct any compensation paid to its
Chief Executive Officer and its other four most highly compensated executive
officers. Section 162(m) provides that income received by any such officer in
excess of $1,000,000 per year is not deductible unless such income is based on
objective performance goals. In general, compensation generated by stock options
will meet the performance-based exception if the options are granted at fair
market value or above on the date of grant under a plan which (i) is
administered by a committee consisting solely of "outside directors" within the
meaning of Section 162(m), (ii) is effective only upon approval by the Company's
shareholders, and (iii) limits the maximum number of shares with respect to
which options may be granted to any officer or employee during a specified
period.
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Options granted at a price below fair market value on the date of grant and
restricted stock generally will be subject to the Section 162(m) deduction
limitation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP was selected as the Company's independent public
accountants for the 1998 fiscal year. It is expected that a representative of
KPMG Peat Marwick LLP will be present at the meeting. Such representative may
make a statement if he or she desires to do so and will be available to respond
to appropriate questions. The Company has not yet selected its independent
public accountants for the 1999 fiscal year because it is considering requesting
proposals.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no other business to be presented at the
annual meeting. If any other business properly comes before the annual meeting,
it is the intention of the persons named in the accompanying form of proxy or
their substitute(s) to vote on that business in accordance with their best
judgment.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Shareholders of the Company who intend to submit proposals to the Company's
shareholders at the next annual meeting of shareholders must submit such
proposals to the Company no later than February 24, 1999 in order to be included
in the Company's proxy statement and form of proxy relating to that meeting.
Such proposals must also comply with the requirements of the Securities and
Exchange Commission relating to proposals of security holders. Shareholder
proposals should be submitted in writing to the Company's principal executive
offices at: 911 Wilshire Boulevard, Suite 700, Los Angeles, California 90017,
Attention: Corporate Secretary.
By Order of the Board of Directors
/s/ MARK A. SNELL
Mark A. Snell
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
June 23, 1998
Los Angeles, California
SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING MAY OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED MARCH 27, 1998, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES THERETO, UPON WRITTEN REQUEST TO THE COMPANY AT: 911 WILSHIRE
BOULEVARD, SUITE 700, LOS ANGELES, CALIFORNIA 90017, ATTENTION: INVESTOR
RELATIONS. UPON WRITTEN REQUEST, THE COMPANY WILL ALSO FURNISH TO SUCH
SHAREHOLDERS A COPY OF ANY EXHIBITS TO ITS ANNUAL REPORT ON FORM 10-K FOR A FEE
OF $0.20 PER PAGE, PAYABLE IN ADVANCE. THIS FEE COVERS ONLY THE COMPANY'S
REASONABLE EXPENSES IN FURNISHING SUCH EXHIBITS.
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DAMES & MOORE GROUP
PROXY - ANNUAL MEETING OF SHAREHOLDERS - AUGUST 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned shareholder hereby appoints George D. Leal and Arthur C.
Darrow, and each of them as proxies for the undersigned, each with the power
to appoint his substitute, to represent and to vote, as designated on the
reverse side of this proxy, all of the shares of the common stock of Dames &
Moore, Inc. (the "Company") held of record by the undersigned on June 12,
1998 at the annual meeting of shareholders to be held on August 10, 1998 and
at any adjournment or postponement thereof.
The undersigned shareholder hereby revokes any proxy heretofore given to
vote at said meeting and any adjournment thereof. Receipt of the Notice of
Annual Meeting of Shareholders, the Proxy Statement accompanying said Notice,
and the Annual Report to Shareholders for the fiscal year ended March 27,
1998 hereby is acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE PERSONS NOMINATED AS DIRECTORS BY THE
BOARD OF DIRECTORS AND FOR PROPOSALS 2, 3 AND 4 DESCRIBED ON THE REVERSE SIDE
OF THIS PROXY.
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Please mark your votes as indicated in this example. /X/
1. ELECTION OF DIRECTORS
FOR all nominees listed (except as marked to the contrary). Discretionary
authority to cumulate votes is granted. / /
WITHHOLD AUTHORITY to vote for all nominees listed. / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
strike a line through the name(s) of the nominee(s) in the list below:
Ursula M. Burns A. Ewan Macdonald
Robert F. Clarke Anthony R. Moore
Arthur C. Darrow Michael R. Peevey
Gary R. Krieger Harald Peipers
George D. Leal Arthur E. Williams
2. Proposal to amend the Restated Certificate of Incorporation to increase
the number of authorized shares of common stock from 27,000,000 to
54,000,000.
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to amend the 1995 Stock Option Plan for Non-Employee Directors.
FOR / / AGAINST / / ABSTAIN / /
4. Proposal to amend the Amended and Restated Long-Term Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
I plan to attend the meeting. / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TEN NOMINEES LISTED ABOVE
AND FOR PROPOSALS 2, 3 AND 4.
Please sign exactly as the name or names appear on this proxy. When shares
are held by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee or guardian, please give your full title as
such. If a corporation, please sign in full corporate name by the President
or another authorized officer. If a partnership, please sign in partnership
name by authorized person.
Signature(s)
-------------------------------------------------
DATED: , 1998
--------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. PLEASE MARK INSIDE THE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL
RECORD YOUR VOTES.
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
